On January 24, 2022, the Biden administration, as part of the implementation of the newly-signed Uyghur Forced Labor Prevention Act (UFLPA), issued a notice in the Federal Register seeking public comments on “how best to ensure” that goods connected with forced labor in China are not imported into the United States.
The public comment period — which runs through March 10, 2022 — is the first phase of a UFLPA implementation process that will occur over the next six months.
Since 2016, U.S. Customs and Border Protection (CBP) has ramped up its enforcement of Section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307), which prohibits the importation of “merchandise mined, produced or manufactured, wholly or in part, in any foreign country by … forced labor or/and indentured labor.” According to CBP’s latest statistics, in Fiscal Year (FY) 2021, the agency issued seven withhold/release orders (WROs) and two formal “findings” under pre-existing WROs. Collectively, these actions led to the detention of 1,469 shipments containing approximately $486 million of goods suspected to be made with forced labor.
Among these enforcement actions, some of the broadest measures pertain to goods tied to the alleged use of forced labor of ethnic Uyghur Muslims and members of other persecuted groups in China’s Xinjiang Uyghur Autonomous Region. For example, a January 13, 2021 WRO targeted cotton and tomato products and a June 23, 2021 WRO targeted polysilicon-based products.
Signed into law on December 23, 2021, the UFLPA is intended to forcefully address the alleged use of forced labor in Xinjiang. Specifically, the UFLPA requires CBP to presume that all imported goods that are (1) “mined, produced, or manufactured” in Xinjiang; or (2) produced by certain entities operating, direct or indirectly, in Xinjiang, are produced with forced labor and, thus, potentially subject to detention and seizure pursuant to Section 307.
This presumption will go into effect on June 21, 2022, but in the interim, the UFLPA requires the Biden administration to obtain public comments to enable it to account for a “diverse and wide range of perspectives” as to the U.S. forced labor enforcement strategy.
In its request for public comments, CBP has provided a “non-exhaustive” list of questions seeking information on, among other things:
- The type, nature, and extent of evidence that companies can provide to reasonably demonstrate that goods originating in China are “not mined, produced, or manufactured wholly or in part with forced labor” in Xinjiang.
- The tools that companies need to “provide greater clarity” for ensuring that supply chains are disconnected from forced labor (e.g., “a common set of supply chain traceability and verification standards, through a widely endorsed protocol”).
- The ways in which the U.S. government can improve coordination with the private sector to combat forced labor in supply chains.
Following the comment period, the Forced Labor Enforcement Task Force (Task Force) — as established via the United States-Mexico-Canada Agreement Implementation Act — will review the submitted comments; conduct a public hearing; and then develop, in consultation with the Secretary of Commerce and the Director of National Intelligence, a “strategy for supporting enforcement of Section 307 of the Tariff Act of 1930” that will be submitted to Congress by June 21, 2022.
As underscored by the United States Trade Representative’s (USTR) recent announcement regarding the development of a “first-ever focused trade strategy to combat forced labor,” UFLPA implementation is just one of many forced labor enforcement initiatives the Biden administration is expected to undertake in 2022.
CBP has already begun issuing Risk Analysis and Survey Assessment (RASA) questionnaires to importers in various industries to understand more about supply chains involving Xinjiang manufacturers and potential products from Xinjiang. CBP undertook similar actions in the fall of 2020 prior to issuing the WRO on cotton and tomato products from Xinjiang. We believe CBP will likely use the data gathered during this outreach to begin identifying potential products and/or manufacturers to target for future enforcement action.
In advance of the UFLPA’s implementation, we anticipate that CBP will issue periodic guidance to importers on how to comply with Section 307, particularly in light of the law’s new directives—while at the same time, look to expand forced labor enforcement to new geographic and product sectors. Regardless of the agency’s guidance, we recommend that importers carefully review their supply chains for (1) products mentioned in the Xinjiang Business Advisory issued this past summer; and (2) any manufacturers with addresses located in Xinjiang, as we believe those are likely to be among the first products and manufacturers targeted by CBP.
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The escalating U.S. (and global) focus on forced labor practices has exposed many challenges facing importers and other stakeholders in ensuring that existing supply chains — often multi-layered and highly complex—are disconnected from forced-labor activities. Faegre Drinker has assisted clients at all stages of government trade inquiries and assessments, from responding to questionnaires to successfully implementing strategies to protect supply chains and ensure regulatory compliance.