The House UFLPA aims to clamp down on the import to the US of items produced by alleged forced labor in the XUAR, while offering less guidance for importers than similar July 2021 Senate bill.
On 8 December 2021, the US House of Representatives passed the Uyghur Forced Labor Prevention Act (House UFLPA) by a margin of 428-1. The House UFLPA is one of a number of measures that the US hopes to use to prevent what it views as forced labor and human rights abuses in the Xinjiang Uyghur Autonomous Region (the XUAR) of China. This vote came days after the United States announced a diplomatic boycott of the 2022 Winter Olympic Games in Beijing due to what the White House described as the “PRC’s egregious human rights abuses and atrocities in Xinjiang.”
The House UFLPA would, in the majority of cases, prohibit imports into the US of items “mined, produced, or manufactured wholly or in part in the XUAR,” or by persons working with the XUAR government for purposes of the “poverty alleviation” program or the “pairing-assistance” program. Such items would be automatically deemed to contravene the Tariff Act 1930, unless:
- US Customs and Border Protection (CBP) determines, by clear and convincing evidence, that the items were not produced wholly or in part by convict labor, forced labor, or indentured labor under penal sanctions
- CBP submits to the appropriate US Congressional committees and makes available to the public a report that contains such determination
The House UFLPA would also require certain US-listed companies that engage in XUAR-related activities to make regular public disclosures in relation to those activities, a framework similar to the Iran-related public disclosure requirements under Section 13(r) of the Securities Exchange Act of 1934.
To enter into legislation, the House UFLPA must now be approved by the Senate and signed into law by President Biden. The Senate unanimously approved a similar bill — also known as the Uyghur Forced Labor Prevention Act — on 14 July 2021 (the Senate UFLPA). While the Senate UFLPA contained similar provisions to those found in the House UFLPA, there are noticeable discrepancies between the two that lead to the House UFLPA being generally less importer-friendly.
Differences between House UFLPA and Senate UFLPA
The Senate UFLPA would require various US governmental departments to consult on and develop a comprehensive strategy within 270 days of the passing of the act designed to prevent the import of items created using XUAR-based forced labor. The Senate UFLPA also would require that strategy to include guidance (the Guidance) for importers with respect to:
- Due diligence and supply chain management measures that importers may adopt in relation to items produced using Chinese labor
- The type of evidence that demonstrates items produced in China were not, in fact, produced in the XUAR
- The type, nature, and extent of evidence that demonstrates that items originating in China, including goods detained at the US border, were not produced using forced labor
The Senate UFLPA also would provide importers the opportunity to rebut the presumption that items produced in whole or in part in the XUAR were produced by forced labor if the importer had: (1) followed the Guidance; (2) completely and substantively responded to any follow up queries from the CBP; and (3) the items were, in fact, not produced by forced labor.
The House UFLPA includes no such requirement for the US government to produce Guidance for importers, and as a result the House bill lacks the clearly articulated ability for importers to rebut the presumption of illegality. Instead, the House bill gives discretion to the CBP to determine whether there is “clear and convincing evidence” that the items were produced ethically. In addition, the House UFLPA introduces a new requirement that the CBP must submit a report to the US Congress and the public on any occasion it determines that a XUAR-produced item was not manufactured by forced labor, which could result in a conservative view by the CBP as to what constitutes “clear and convincing evidence.”
Companies with supply chains extending into China should be monitoring developments with respect to the UFLPA as well as other current or proposed legislation in the US and globally, and should be thinking strategically about how to deal with the potential impact on their supply chain presence in China.
Please contact one of the authors listed in this post or your usual Latham & Watkins contact for:
- A detailed breakdown of the different US and international regimes targeting alleged human rights abuses in the XUAR
- Practical guidance to deal with the potential impact on supply chains in China, from due diligence to contractual terms to monitoring