The Uyghur Forced Labor Prevention Act (UFLPA or Act) became effective June 21, 2022. It creates a rebuttable presumption that all products produced in whole or in part in the Xinjiang Uyghur Autonomous Region of China (XUAR or Xinjiang) or by persons designated to the UFLPA Entity List were produced with forced labor and must be denied entry into the United States. The Act builds on Section 307 of the Tariff Act of 1930, which generally prohibits the importation into the United States of all goods “mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions.”
To comply and rebut the presumption, U.S. importers are required to meet forced labor due diligence standards set forth in the Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China (Guidance) published by the Department of Homeland Security (DHS). The Guidance provides the elements of an effective compliance program that importers are expected to have in place.
This briefing provides an overview of the Guidance and key considerations for all U.S. companies with supply chains involving China to ensure compliance with the UFLPA and its due diligence requirements.
What Goods Are Subject to the UFLPA’s Rebuttable Presumption?
All goods sourced in whole or in part directly or indirectly from Xinjiang or from an entity on the UFLPA Entity List are subject to the UFLPA’s rebuttable presumption, including raw materials and intermediate or finished goods imported into the United States from China or third countries. To date, Customs and Border Protection (CBP) has focused on products that are at high risk of forced labor, including goods containing any cotton, tomatoes or silica from the region or any goods involving the UFLPA Entity List entities. In a multi-agency report, the Xinjiang Supply Chain Business Advisory, the U.S. government has highlighted industries at high risk in the region including renewable energy, construction, sugar, textiles, electronics assembly, extractives and food processing.
What Mechanism Will CBP Use for Imports Within the Scope of the UFLPA?
CBP will identify imports subject to the rebuttable presumption through data collection and analytics. CBP will notify importers of enforcement actions taken under the UFLPA on importations, which may include detention, exclusion, and seizure/forfeiture.
How Can Importers Respond to UFLPA Enforcement?
Importers may respond to UFLPA enforcement action by providing information sufficient to: (1) rebut the presumption and meet the conditions and requirements set forth in Section 3(b) of the UFLPA, or (2) demonstrate that the importation is outside the scope of the UFLPA (essentially, that it does not contain goods sourced from Xinjiang or companies on the UFLPA Entity List).
Rebutting the presumption requires the importer of record to show with sufficient documentation that it has:
- Fully complied with the Guidance and any implementing regulations;
- Fully responded to all inquiries for information to ascertain whether the goods were mined, produced or manufactured in whole or in part with forced labor; and
- By clear and convincing evidence shown that the good was not mined, produced or manufactured in whole or in part with forced labor.
The Guidance states that to fulfill the first prong of the rebuttable presumption test, importers must show effective due diligence (for example, monitoring compliance and remediating violations), supply chain tracing from the beginning to the finished product, and supply chain management to mitigate identified risks of forced labor. For example, documents evidencing an importer has UFLPA-compliant:
- Due diligence systems in place will include supply chain mapping and assessments as well as a code of conduct and evidence of training and monitoring compliance;
- Supply chain tracing measures will include information on all stages of production, all components and materials and all persons involved in the supply chain; and
- Supply chain management will include internal controls to prevent and mitigate forced labor risk and related accounting and auditing systems.
Showing that goods from China were not produced in whole or in part with forced labor will also require detailed supply chain mapping of the goods and their components, all stages of production including sourcing, information on the workers involved at each stage and credible audits. Additional information is required for goods involving high-risk materials like cotton, tomatoes or silica as noted in the Guidance.
Similar documentation can be used by importers to show that the imported goods and their inputs are sourced completely from outside of the Xinjiang region of China and have no connection to the UFLPA Entity List.
What Should All U.S. Companies with Supply Chains in China Do Right Now?
U.S. companies should take steps to understand whether they are importing or purchasing goods produced in whole or in part from Xinjiang or involving UFLPA Entity List entities and take the following steps:
- Assess whether current procedures for due diligence, supply chain tracing and supply chain management are aligned with the UFLPA.
- Gather and prepare documentation necessary for rebutting the presumption set forth in the Guidance and familiarize themselves with the CBP’s Operational Guidance for Importers.
- Research and prepare for alternative sourcing and supply chains to comply with the UFLPA.
U.S. companies with supply chains in the region involving high-risk materials should:
- Understand their company’s forced labor risk profile and identify goods that may be subject to the UFLPA.
- Engage their suppliers and request supply chain tracing information.
- Revise supplier codes of conduct and other terms and conditions on purchase orders.
- Train and educate internal stakeholders on supply chain tracing and the UFLPA requirements.
- If applicable, assess the impact of the UFLPA’s enforcement on their supply chains to determine whether alternate sourcing will be necessary.
Alyssa Mottahed (American University Washington College of Law, ’24) contributed significantly to this article as a Thompson Hine summer associate; she is not admitted to the practice of law. Please contact Julia Zerman to learn more about our summer program.
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