As of June 21, the US’s UFLPA law has started prohibiting imports from China’s Xinjiang Uyghur Autonomous Region (XUAR), as well as products made with materials sourced in that area, unless the importer can offer clear and convincing evidence that the goods were not produced using forced labor.
A new law, the Uyghur Forced Labor Prevention Act (UFLPA), states that imports of all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the XUAR, or by entities identified by the US government on the UFLPA Entity List, are presumed to be made with forced labor and are prohibited from entry into the United States.
Prior to June 21, the US has used Withhold Release Orders (WROs) to target entities believed to be connected with forced labor. The new law replaces this case-by-case approach with a more far-reaching ban that gives Customs and Border Protection (CBP) greatly expanded enforcement authority.
The new law will likely impact many US importers and foreign entities manufacturing or distributing in the US. As a freight forwarder and customs broker, Dimerco is tracking this issue closely. The following Questions and Answers offer a brief primer on the UFLPA.
How will I know if my goods are impacted?
If you are importing products under scrutiny by CBP’s previous WROs – like cotton (where an estimated 20% of the world supply and 85% of Chinese supply is from Xinjiang), tomato products, polysilicon (a key component in solar panels and photovoltaic products), you should be deep into preparation to ensure your company’s compliance with the new law. Check the CBP website for specific compliance guidance and a link to the Forced Labor Enforcement Task Force’s list of specific entities.
Has the CBP issued any guidance for importers on the new law?
Yes. Read the UFLPA Operational Guidance for Importers for information on CBP’s operational approach.
Also, the Forced Labor Enforcement Task Force just published the UFLPA Strategy and a UFLPA Entity List of companies connected with forced labor.
Are import bans common?
No, these types of blanket bans are rare. But they do occur. For example, CBP banned US imports from Malaysia-based Top Glove Corporation, the world’s largest glove maker, when it found evidence gloves were being made with forced labor. The ban was lifted after the company provided evidence it had addressed concerns, but not before it absorbed huge financial losses.
If my goods are held by CBP, can I request an exception to get them released?
Yes, you can. The UFLPA uses the language “rebuttable presumption.”
- Presumption because CBP will presume that finished goods or components that are traceable to the XUAR have been made with forced labor and will be banned
- Rebuttable because you can challenge the ban by providing clear and convincing evidence that items are not mined or made (wholly or in part) in the XUAR
Any granted exception by the CBP Commissioner will be subject to public disclosure and Congressional reporting.
What’s the process for requesting an exception?
Importers may request an exception from CBP during a detention, after an exclusion or during a seizure process. The previously mentioned CBP Guidance document contains a detailed review of the types of information CBP may require in an exception request.
Will CTPAT members be treated differently under the new law?
Yes. When reviewing requests for exceptions, CBP will attempt to prioritize the requests of members of the Customs Trade Partnership Against Terrorism (CTPAT). CTPAT members should remember that the program now includes minimum security criteria requirements for forced labor. CBP has hinted that non-compliance related to forced labor could result in suspension from the program.
Will this require more work and more investment in our Trade Compliance Program?
It could, yes. A recent announcement by CBP stated, “all importers are expected to review their supply chains thoroughly and institute reliable measures to ensure imported goods are not produced wholly or in part with convict labor, forced labor, and/or indentured labor.” It could be a very complex process that may require an upgrade to your due diligence program. If you’ve never traced the source of components and materials, it may require an investment to do so, a deeper engagement with your foreign business partners, as well as a higher level of management scrutiny.
The new UFLPA law is not a short-term focus. It reflects global demand for a greater level of corporate accountability in following ethical practices in sourcing and manufacturing. Increasingly, there will be a need for companies to report on material tracing in their Environmental, Social, and Governance (ESG) reports.
What can I do now to address this challenge?
Here are some steps you can take:
- Stay informed on CBP announcements about implementation of the new law and read all CBP guidance on UFLPA as soon as it’s available.
- Map your supply chain as far back to the source as possible. If you are importing products, like solar panels or cotton apparel, previously known to have had ties to forced labor, be especially diligent. Be confident there’s no known forced labor anywhere in your supply chain, including in the production of component materials.
- Review the UFLPA Entity List of organizations known to be associated with forced labor. Check it carefully against your business partner list and ask your business partners to certify they are not working with any entities on the list.
- Engage with your trade associations to learn about best practices, and network with others who are facing the same challenge. Attend CBP and industry webinars and trade events that will help you navigate the new requirements.
If you lack the resources to tackle this major challenge on your own, you may want to seek help from an expert like a trade consultant or your customs broker or global freight forwarder. A knowledgeable partner can help you mitigate risk and ensure that your cargo keeps flowing, uninterrupted. To talk to a Dimerco trade compliance expert, contact us to start a discussion.