US Authorities Begin Enforcement of Uyghur Forced Labor Prevention Act and Issue Guidance for Importers
7 min read
On June 21, 2022, US Customs and Border Protection ("CBP") began to enforce the Uyghur Forced Labor Prevention Act ("UFLPA"), which prohibits the importation of goods produced wholly or in part in the Xinjiang Uyghur Autonomous Region ("XUAR") of China, or by certain entities affiliated with the XUAR, absent "clear and convincing evidence" that such goods were not produced with forced labor.1 The United States has long prohibited the importation of goods produced wholly in part with forced labor, pursuant to Section 307 of the Tariff Act of 1930.2 However, the UFLPA goes beyond Section 307 by: (1) establishing a "rebuttable presumption" that goods produced wholly or in part in the XUAR or by certain identified entities are made with forced labor, and are therefore subject to the import prohibition; and (2) establishing a high burden of proof for importers to demonstrate otherwise. Importantly, the UFLPA contains no de minimis exception, which means that if any part of a product is produced in the XUAR or by identified entities, the final product is subject to the rebuttable presumption, regardless of the product's country of origin for purposes of duties, or the country from which it was imported. The UFLPA's entry into force significantly heightens the risk that CBP will detain, exclude, or seize imported goods with a nexus to the XUAR, and impose penalties. This risk is especially high for products that the US government has identified as high priority for UFLPA enforcement, such as silica-based products (including polysilicon and other downstream products), textiles and apparel, and tomatoes.
In recent days, the US government has published new guidance for importers concerning the implementation and enforcement of the UFLPA. This includes an "Operational Guidance" document published by CBP, and an enforcement strategy issued by the interagency Forced Labor Enforcement Task Force ("FLETF").3 The guidance documents describe the types of information that importers may provide, and the actions they must take, to demonstrate: (1) that their goods are outside the UFLPA's scope, and therefore are not subject to the rebuttable presumption; or, alternatively (2) by clear and convincing evidence, that goods within the UFLPA's scope were not made with forced labor, that the importer's compliance program has implemented measures identified in the FLETF strategy, and that the importer has responded fully to CBP's related requests for information (thereby overcoming the rebuttable presumption and making the goods admissible). Satisfying these requirements is likely to prove difficult, given the nature and extent of the information required and the applicable legal standards, and the fact that supply chains can involve several layers of entities.
- Demonstrating that goods are outside the UFLPA's scope. CBP's Operational Guidance confirms that, prior to or following an attempted entry of merchandise, an importer may argue that goods are outside the UFLPA’s scope, because the goods and any of their inputs are sourced completely from outside the XUAR and have no connection to companies on the UFLPA "Entity List."4 The guidance provides a non-exhaustive list of the types of information required to establish that an importation is outside the UFLPA's scope, including a detailed description of the supply chain of the imported merchandise and components thereof (covering all stages of mining, production, or manufacture); the roles of entities in the supply chain; a list of suppliers associated with each step of the production process; and affidavits from each company involved in the production process.5 If the importer succeeds in demonstrating that the goods are outside the scope of the UFLPA, CBP will release the shipments, provided they otherwise comply with US law.
- Overcoming the UFLPA's rebuttable presumption. If an importer acknowledges that its goods are within the scope of the UFLPA (or fails to demonstrate otherwise), it may seek to avoid seizure of the goods and penalties by rebutting the presumption that its goods were produced with forced labor. Importers seeking to do so will face a high evidentiary burden, as the UFLPA requires "clear and convincing evidence" that the goods were not produced with forced labor. CBP's guidance indicates that, in addition to providing detailed information with respect to the due diligence an importer conducts to address forced labor risks and impacts and supply chain tracing information, importers will need to provide information on their supply chain management practices (i.e., internal controls to prevent forced labor risk), as well as information on the workers at each entity involved in the production of the goods in China (i.e., wage payments and production output per worker, worker recruitment practices, and the results of "credible audits" to identify forced labor indicators).6 With reference to US and international standards, resources and tools (including the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises), the FLETF Strategy provides more detailed guidance on the due diligence, supply chain tracing (and chain of custody), and supply chain management measures importers would be expected to implement to demonstrate compliance with the FLETF Strategy.7 Importers must also respond "completely and substantively" to all CBP requests for information, and must comply with guidance set forth in the FLETF Strategy (as well as any regulations implementing that guidance.)8
Now that the UFLPA has entered into force, importers of goods with a nexus to the XUAR face a significant risk that their shipments will be subject to enforcement actions by CBP, including seizure of such shipments for forfeiture and the imposition of civil penalties equivalent to the value of the merchandise involved. This risk will be especially high where the importer has not implemented internal procedures to identify, assess and address forced labor risks in its supply chain and demonstrate the absence of any nexus to XUAR or listed entities. However, even companies with robust compliance systems that integrate human rights/ESG may find it challenging to overcome the UFLPA's rebuttable presumption. Both CBP's Operational Guidance and the FLETF Strategy acknowledge the challenges that importers may face in gathering the required information (e.g., lack of tracing technologies and inability to obtain credible audits in China), but are clear that such obstacles do not relieve importers of their obligations under the UFLPA and the applicable guidance.
The FLETF has identified four "high-priority sectors" for enforcement of the UFLPA: (1) apparel; (2) cotton and cotton products; (3) silica-based products (including polysilicon); and (4) tomatoes and downstream products.9 China-origin and even third-country-origin goods falling within these categories are likely to face particular scrutiny under the UFLPA, as the US government considers their supply chains to present a high risk of forced labor. The prioritization of silica-based products in particular could affect a wide range of downstream goods such as aluminum alloys, silicones, polysilicon, automobiles, petroleum, concrete, glass, ceramics, sealants, electronics, and solar panels. CBP intends to take a "risk-based" enforcement approach with respect to the high-priority sectors, focusing on (1) goods imported directly from the XUAR and from entities on the UFLPA Entity List; (2) transshipped goods with inputs from the XUAR; and (3) goods imported by entities that, although not located in the XUAR, are related to an entity there, and likely to contain inputs from that region.
1 Pub. L. No. 117-78, 135 Stat. 1525 (2021).
2 19 U.S.C. § 1307.
3 CBP's Operational Guidance for Importers can be viewed here. The FLETF's "Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People's Republic of China" is available here.
4 Pursuant to the UFLPA, the FLETF has published a "UFLPA Entity List" identifying (1) entities in Xinjiang that allegedly produce goods using forced labor; (2) entities allegedly working with the government of Xinjiang to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of Xinjiang; (3) entities that allegedly export products mined, produced, or manufactured wholly or in part by the aforementioned entities; and (4) facilities and entities that allegedly source materials from Xinjiang or from persons working with the government of Xinjiang or the Xinjiang Production and Construction Corps for purposes of the "poverty alleviation" program or the "pairing-assistance" program or any other government-labor scheme that uses forced labor. The list can be viewed here.
5 CBP Operational Guidance, Section IV, Subsections B and D.
6 CBP Operational Guidance, Section IV, Subsections A, B, C, and E.
7 FLETF Strategy at pp. 40-48.
8 CBP Operational Guidance, Section II.
9 FLETF Strategy at p. 27-28.
White & Case means the international legal practice comprising White & Case LLP, a New York State registered limited liability partnership, White & Case LLP, a limited liability partnership incorporated under English law and all other affiliated partnerships, companies and entities.
This article is prepared for the general information of interested persons. It is not, and does not attempt to be, comprehensive in nature. Due to the general nature of its content, it should not be regarded as legal advice.
© 2022 White & Case LLP
