CBP and DHS Issue Guidance on Implementation of the Uyghur Forced Labor Prevention Act

Faegre Drinker Biddle & Reath LLP

The week of June 12, 2022, the Department of Homeland Security (DHS) and U.S. Customs and Border Protection (CBP) released two important guidance documents to prepare the public for the implementation of the Uyghur Forced Labor Prevention Act (UFLPA) on June 21, 2022. (For more information, see our previous client alert on the UFLPA.) In brief, the UFLPA requires CBP to apply a rebuttable presumption that any imported goods mined, produced or manufactured wholly or in part in China’s Xinjiang Uyghur Autonomous Region violate 19 U.S.C. 1307, which prohibits the importation of goods manufactured wholly or in part with convict labor, forced labor and/or indentured labor.

FLEFT Strategy

On June 17, 2022, the Forced Labor Enforcement Task Force (FLEFT), chaired by the Secretary of DHS, released its “Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China.” Importantly, the Strategy clarifies that the UFLPA will supersede the nine Withhold Release Orders (WROs) issued by CBP with respect to other products or manufacturers allegedly linked to Uyghur forced labor, but that all imports prior to June 21, 2022, would be adjudicated using the WRO/Findings process while all imports beginning June 21, 2022, presumably subject to the UFLPA would be subject to the processes below.

The Strategy identifies the following manufacturers either located in Xinjiang or known to source raw materials from Xinjiang as subject to CBP’s presumption beginning June 21 (i.e., subject to detention at the time of import), including the targeted products, where identified:

Aksu Huafu Textiles Co. (including two aliases: Akesu Huafu and Aksu Huafu Dyed Melange Yarn) (targeted for textiles and clothing) Hefei Bitland Information Technology Co., Ltd. (including three aliases: Anhui Hefei Baolongda Information Technology; Hefei Baolongda Information Technology Co., Ltd.; and Hefei Bitland Optoelectronic Technology Co., Ltd.) (targeted for computer parts; electronics)
Baoding LYSZD Trade and Business Co., Ltd (targeted for apparel) Changji Esquel Textile Co. Ltd. (and one alias101: Changji Yida Textile) (targeted for textiles and clothing)
Hetian Haolin Hair Accessories Co. Ltd. (and two aliases: Hotan Haolin Hair Accessories; and Hollin Hair Accessories) (targeted for hair products) Hetian Taida Apparel Co., Ltd (and one alias: Hetian TEDA Garment) (targeted for garments)
Hefei Meiling Co. Ltd. (including one alias: Hefei Meiling Group Holdings Limited) (targeted for electronics) KTK Group (including three aliases: Jiangsu Jinchuang Group; Jiangsu Jinchuang Holding Group; and KTK Holding) (targeted for rail transportation equipment)
Lop County Hair Product Industrial Park (targeted for hair products) Lop County Meixin Hair Products Co., Ltd. (targeted for hair products)
Nanjing Synergy Textiles Co., Ltd. (including two aliases: Nanjing Xinyi Cotton Textile Printing and Dyeing; and Nanjing Xinyi Cotton Textile) (targeted for textiles; clothing) No. 4 Vocation Skills Education Training Center (VSETC)
Hoshine Silicon Industry (Shanshan) Co., Ltd (including one alias: Hesheng Silicon Industry (Shanshan) Co.) and subsidiaries (targeted silica-based products) Xinjiang Daqo New Energy, Co. Ltd (including three aliases: Xinjiang Great New Energy Co., Ltd.; Xinjiang Daxin Energy Co., Ltd.; and Xinjiang Daqin Energy Co., Ltd.) (targeted for polysilicon, including solar-grade polysilicon)
Xinjiang East Hope Nonferrous Metals Co. Ltd. (including one alias: Xinjiang Nonferrous) (targeted for polysilicon, including solar-grade polysilicon) Xinjiang GCL New Energy Material Technology, Co. Ltd (including one alias: Xinjiang GCL New Energy Materials Technology Co.) (targeting polysilicon, including solar-grade polysilicon)
Xinjiang Junggar Cotton and Linen Co., Ltd (targeted for cotton and processed cotton) Xinjiang Production and Construction Corps (including three aliases: XPCC; Xinjiang Corps; and Bingtuan) and its subordinate and affiliated entities (targeted for cotton and cotton products)
Tanyuan Technology Co. Ltd. (including five aliases: Carbon Yuan Technology; Changzhou Carbon Yuan Technology Development; Carbon Element Technology; Jiangsu Carbon Element Technology; and Tanyuan Technology Development) (targeted for touch screens for handheld devices and cars and similar products; electronics) Yili Zhuowan Garment Manufacturing Co., Ltd. (targeted for apparel)

The agencies which make up the FLEFT can add, remove or modify the entities in the above list.

The Strategy also highlights the high risk of forced labor for the following industry sectors, meaning that a presumption of forced labor would allow CBP to also detain goods suspected of being manufactured with materials originating from or produced in Xinjiang, irrespective of the declared “country of origin”:

  • Apparel;
  • Cotton and cotton products;
  • Silica-based products (including polysilicon), including those used in aluminum alloys, silicones and polysilicon, which is then used in buildings, automobiles, petroleum, concrete, glass, ceramics, sealants, electronics, solar panels and other goods; and
  • Tomatoes and downstream products, especially tomato paste.

The Strategy states that CBP would target imports based on risk, in the following order:

  1. Imports directly from Xinjiang or from an entity list manufacturer;
  2. Imports of illegally transshipped goods with inputs from Xinjiang;
  3. Imports from manufacturers affiliated with entities in Xinjiang; and
  4. Although not explicitly stated, imports likely to contain inputs from the identified sectors in Xinjiang

Finally, the FLEFT identifies the technology CBP believes will be helpful in targeting imports, including those that support enhanced visibility into trade networks and supply chains as well as automated systems to streamline communication between importers and CBP.

CBP Guidance

As referred to in the Strategy, on June 13, 2022, CBP published its UFLPA Operational Guidance for Importers. The guidance clarifies that CBP has the right to detain shipments if it has information they may have been manufactured with forced labor in Xinjiang, manufactured by Uyghur forced labor outside Xinjiang, or manufactured outside Xinjiang containing inputs or raw materials utilizing forced labor in Xinjiang. CBP has five days (excluding weekends and holidays) from the date the shipment is presented for CBP exam to decide whether to detain a shipment. Shipments not released within five days of exam will be considered detained merchandise.

If the importer receives a detention notice, it will have 30 days to provide information the goods are not subject to the UFLPA. If an importer receives an exclusion notice, it may file an administrative protest pursuant to 19 C.F.R. Part 174. If an importer receives a seizure notice, the importer may file a petition pursuant to 19 C.F.R. Part 171. Prior to seizure or exclusion, importers may present an Immediate Export in-bond requesting permission to export a detained shipment.

To have the goods released, an importer may prove that its imports are sourced completely from outside Xinjiang and have no connection to the UFLPA Entity List. If a good is within the scope of the UFLPA, an importer may request an exception from the presumption applied by CBP by providing evidence that it complied with CBP’s due diligence guidance as well as clear and convincing evidence that the goods were not produced, mined or manufactured, wholly or in part, with forced labor. If an exception is granted, the shipment will be released and CBP must submit to Congress and the public a report setting out the details of the exclusion.

To grant an exception or release the goods, CBP requires that the importer provide proof it has fully complied with the guidance on due diligence steps, completely respond to all CBP inquiries, and provide clear and convincing evidence that the subject shipment was not mined, produced or manufactured wholly or in part by forced labor.

CBP recommends the following due diligence steps, mirroring the Department of Labor’s Comply Chain guidance:

  • Engaging stakeholders and partners
  • Assessing risks and impacts
  • Developing a code of conduct
  • Communicating and training across supply chain
  • Monitoring compliance
  • Remediating violations
  • Reviewing the due diligence program independently
  • Reporting performance and engagement
  • Mapping and tracing the supply chain, including batch-tracing

Additionally, CBP provided examples of the forms of evidence which would facilitate a determination that imported goods are not subject to UFLPA, ideally all translated into English (but this list is not exclusive):

  • Evidence of compliance with the due diligence requirements above.
  • Evidence of supply chain tracing, including all stages of mining, production, and manufacture with purchase orders, production records, transportation documents, invoices, certificates of origin, bills of materials, inventory records, payment records, affidavits from all involved parties, etc.
    • Where products are commingled, evidence of how to identify where raw materials are sourced.
  • List of all workers at an entity, including demonstrating how and to whom wages are paid, how workers are recruited, living and working conditions are free of any forced labor indicators the worker’s residency status, and that output is consistent with the stated number of workers.
  • Results of any audits.

Conclusion

To the extent U.S. importers have not already begun to prepare for the implementation of the UFLPA, we recommend they immediately review their supplier list for entities located in Xinjiang or for suppliers that match the list of suppliers provided on the UFLPA Entity List. Additionally, to the extent U.S. importers import any products from China identified in any of the targeted industry sectors, we recommend beginning a move toward meeting the Comply Chain requirements, including beginning to map their supply chains.

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Faegre Drinker Biddle & Reath LLP
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