Task Force Solicits Comments Strategy to Implementing Import Ban on Forced-Labor Goods from China

WilmerHale
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Yesterday, the US Department of Homeland Security, on behalf of the interagency Forced Labor Enforcement Task Force (Task Force), published a Notice in the Federal Register that seeks public comment on the implementation of the Uyghur Forced Labor Prevention Act (UFLPA), which was passed with bipartisan support and signed into law last month. The UFLPA is a novel statute that will restrict certain imports from China, based on concerns related to forced labor in the Xinjiang Uyghur Autonomous Region (Xinjiang) and elsewhere in China. The UFLPA will require US and global companies to introduce new due diligence measures to ensure supply chain integrity and uninterrupted trade flows, to the extent that their supply chains run through China.

The Federal Register notice provides companies with a first opportunity to influence the implementation of the restrictions that are due to come into effect in June 2022.

Import Ban Targeting Forced Labor in China

The UFLPA creates a new rebuttable presumption that goods mined, produced or manufactured in Xinjiang were produced with forced labor and therefore are subject to a preexisting statutory prohibition on imports of such products.1 The legislation also requires the Task Force to generate a list of entities and facilities—whether or not located within Xinjiang—that facilitate the use of forced labor in China or engage in exports from China of products produced with forced labor. Imports from such entities/facilities will also be subject to the rebuttable presumption.

To rebut the presumption, importers must fully comply with forthcoming US government guidance and associated regulations on due diligence, effective supply chain tracing and supply chain management measures, among other things; completely and substantively respond to US Customs and Border Protection (CBP) inquiries for information; and demonstrate by “clear and convincing evidence” that the products to which the presumption applies were not produced wholly or in part with forced labor.

The UFLPA import ban is the latest enforcement measure in the US government’s campaign to prevent the importation of Chinese goods produced with forced labor. In FY2020, CBP issued eight withhold release orders (WROs) against goods from China.2 This trend continued in FY2021 with three additional WROs, one of which was a first-ever region-wide WRO against certain goods originating in Xinjiang, including cotton, tomatoes and their downstream products. On July 13, 2021, the executive branch issued an updated Xinjiang Supply Chain Business Advisory that outlines the heightened risks for businesses with supply chain and investment links to Xinjiang, given the US government’s findings regarding forced labor and other human rights abuses in the region.

The new UFLPA import restrictions will be administered and enforced by CBP—possibly through new regulations that have yet to be issued—and will come into effect on June 21, 2022. The request for public comment in yesterday’s Federal Register notice is one of several administrative steps before the effective date.

Opportunity for Public Comment

The Federal Register notice seeks public comment on how to “ensure that goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part with forced labor in the People’s Republic of China are not imported into the United States.” This includes goods produced by certain persecuted minorities in China (including Uyghurs, Kazakhs, Kyrgyz and Tibetans), as well as by other individuals from Xinjiang. The notice lists 18 questions for commenters to address, including input on the following themes:

  • Import Risks: What are the risks of importing items tainted by forced labor?
  • Entities Using Forced Labor: How can the United States identify entities that export products that are produced with forced labor?
  • Due Diligence for US Importers: What due diligence, effective supply chain tracing and supply chain management measures can importers leverage to ensure that they do not import from China any goods that are produced with forced labor?
  • Sectors: What sectors, beyond cotton, tomatoes and polysilicon (which are listed in the UFLPA), should be high-priority areas of enforcement?
  • Evidence to Rebut the Presumption: What type/nature/extent of evidence can companies provide to demonstrate that China-origin items are not tainted by forced labor?
  • Origin Tracing: What measures can be taken to trace the origin of goods, offer greater supply chain transparency and identify third-country supply chain routes for items from China that are tainted by forced labor?
  • Public-Private Collaboration: How can the US government improve coordination with NGOs and the private sector to combat forced labor in supply chains, and how can this serve as a model for implementing the UFLPA?

Upcoming Implementation Dates

Upcoming dates related to implementation of the UFLPA include the following:

  • Comment Period: The period for submitting comments in response to the notice will last for 45 days from the date of publication (i.e., comments will be due by March 10, 2022).
  • Public Hearing: Within 45 days after the close of the comment period, the Task Force will conduct a public hearing to discuss measures to effectively implement the law (i.e., by April 25, 2022, assuming no delays).
  • Submission of Enforcement Strategy to Congress: Not later than 180 days after the date of the enactment of the UFLPA, and annually thereafter, the Task Force is due to submit a report to Congress with a strategy to enforce the prohibition on the importation from China of goods produced with forced labor (i.e., by June 21, 2022, and annually thereafter).
  • Effective Date: As noted above, the effective date for the import restrictions imposed under the UFLPA is not later than 180 days after the date of the enactment of the Act (i.e., by June 21, 2022).

Given that the Task Force strategy is due to be submitted to Congress on the same day that the UFLPA’s import restrictions come into effect, the business community may have limited opportunity to comment on the strategy before it starts influencing implementation of the UFLPA. Comments responding to the notice will be posted on a publicly available portal. (There is a process for excluding confidential business information from the public portal.)

Implications

US and global businesses that have supply chains running through China, and that supply goods to the US market, should consider responding to yesterday’s request for comment—either individually or through a coalition or trade association—to shape the implementation of the UFLPA. In addition, such companies should consider the due diligence measures they need to undertake to assess risks associated with forced labor in their supply chains, as well as possible remedial and preparatory steps in advance of the UFLPA’s June 2022 effective date.

***

Footnotes -
  1. Section 307 of the Tariff Act of 1930, as amended (19 U.S.C. § 1307).

  2. A WRO has the effect of detaining all shipments of the merchandise within the WRO parameters and may result in forfeiture proceedings.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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