Uyghur Forced Labor Prevention Act in Effect: What Importers Need to Know - International Trade & Compliance and Environmental, Social & Corporate Governance Alert

Orrick, Herrington & Sutcliffe LLP

The Uyghur Forced Labor Prevention Act (the “Uyghur Act”) came into effect on June 21, 2022. As we described previously, the Uyghur Act establishes a rebuttable presumption that goods mined, produced, or manufactured, in whole or in part, in the Xinjiang Uyghur Autonomous Region in China (“Xinjiang”) or by any entity identified on the UFLPA Entity List (such entities, “UFLPA Entities”) were made with forced labor. Such goods are prohibited from entry into the United States. This presumption also applies to goods made in, or shipped through, China and other countries that include inputs made in Xinjiang.

What Should Importers Do?

All importers are now required to comply with the Uyghur Act. To provide compliance guidance, the Department of Homeland Security (“DHS”) published the Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People's Republic of China (the “Strategy”). As a supplement to the Strategy, U.S. Customs and Border Protection (“CBP”) published Operational Guidance for Importers (the “Guidance”).

To comply with the UFLPA, importers and manufacturers should:

  • Review their entire supply chain entities against the UFLPA Entity List.
  • Conduct supply chain due diligence, which, pursuant to the Strategy, should include:
    • Supply chain tracing.
    • Supply chain management measures.

Specifically, to rebut the CBP presumption, importers and their suppliers should implement the following measures.

  • Due Diligence. Put in place and administer a due diligence system designed to ensure they do not import any goods mined, produced, or manufactured wholly or in part with forced labor. The Strategy cites the following key elements as commonly effective, mirroring the Department of Labor’s Comply Chain guidance:
    • Engage stakeholders and partners.
    • Assess risks and impacts.
    • Develop a code of conduct.
    • Communicate and train across supply chain.
    • Monitor compliance.
    • Remediate violations.
    • Conduct independent review.
    • Report performance and engagement.
  • Supply Chain Tracing. Map the entire supply chain up to raw materials suppliers as follows:
    • Supplement information on the supplier entities with information on the workers and their working conditions.
    • Demonstrate the chain of custody from downstream to the finished product.
    • Trace each product input separately (the “identity preservation” method) or demonstrate that each batch of commingled inputs is fully free of forced labor prior to mixing (the “segregation” method).
  • Supply Chain Management Measures.
    • Vet potential suppliers for forced labor concerns.
    • Require in relevant contracts corrective action by the supplier if forced labor is detected.
    • Specify consequences of supplier failing to take corrective action (such as contract termination).
    • Manage and regularly update supply chain data.
    • Be able to demonstrate how risk and impact assessment information is used to inform forced labor risk prevention and mitigation.

An importer may consider taking a phased approach to UFLPA compliance:

  • Phase 1: Conduct a gap analysis of the company’s current supply chain due diligence, tracing, and management measures against the Guidance and the Strategy requirements.
  • Phase 2: Implement incremental measures to address any gaps. Develop a compliance playbook to memorialize supply chain due diligence, supply chain traceability and supply chain management measures adopted.
  • Phase 3: Work toward full supply chain transparency by engaging with suppliers to map the supply chain of goods from raw materials to finished products and establish chain of custody of goods and materials from the beginning of the supply chain to the buyer of the finished project.

High-Priority UFLPA Enforcement Sectors

  • Silica-based products (including polysilicon). The U.S. solar sector may be heavily impacted given that a significant portion of the world’s polysilicon is produced in Xinjiang. A key issue for the U.S. solar sector is how strictly the U.S. government enforces the Uyghur Act.
  • Apparel.
  • Cotton and cotton products.
  • Tomatoes and related downstream products.

While the Uyghur Act primarily affects importers, American manufacturers whose inputs include any of the above items should review their supply chains and plan for potential disruptions if shipments are detained by CBP.

How Will the Uyghur Act Be Enforced?

CBP will be the lead enforcement agency. CBP may detain, seize, or exclude goods subject to the presumption and may issue civil penalties. CBP will prioritize goods imported directly from Xinjiang and from UFLPA Entities, as well as illegally transshipped goods with inputs from Xinjiang and goods imported by entities related to UFLPA Entities.

Since 2019, CBP has used “Withhold Release Orders” (“WROs”) as the primary tool to combat forced labor in Xinjiang. The Uyghur Act supersedes any Xinjiang-related WROs that were in place as of June 21, 2022—any goods subject to these WROs will now be subject to the rebuttable presumption.

The Uyghur Act procedures differ from the WRO procedures. Most notably:

  • Importers bear the burden of proof under UFLPA (under the WRO procedures, CBP bears such burden).
  • Importers will only have 30 days upon receipt of a detention notice to provide sufficient evidence (under the WRO procedures, importers have 90 days).

Responding to a Shipment Detained by CBP; Evidence Required

Importers have two options to respond to a CBP enforcement action (i.e., detention, exclusion or seizure) under the Uyghur Act (other than seeking permission from the port director to export detained shipments at any point prior to exclusion or seizure):

  • Provide information to CBP that the imported merchandise is fully outside the scope of the Uygur Act.
  • Request an exception to CBP’s rebuttable presumption if the imported items fall within the scope of the Uyghur Act.

    Importers must demonstrate either that indicators of forced labor do not exist in connection with the imported goods or that such indicators have been fully remediated. Evidence may include mapping of the entire supply chain and transport along the supply chain, including which entities were involved at each stage, a complete list of all workers at an entity subject to the rebuttable presumption with information demonstrating the lack of forced labor practices, evidence of voluntary recruitment and working conditions, and other types of admissible evidence outlined in the Strategy.

    CBP must submit to Congress and the public a report each time it grants an exception to the presumption of forced labor. The report will identify the good and the evidence considered in reaching the determination by CBP. Although certain information may be withheld under existing Freedom of Information Act protections, some information considered confidential by an importer could be publicly disclosed.

    1. Prove no connection to Xinjiang or UFLPA Entities.

      If imported goods, including all inputs to the imported goods, are sourced entirely from outside Xinjiang and have no connection to UFLPA Entities, then the imported goods are outside the scope of the Uyghur Act, and the importer does not need to rebut the presumption that the imported goods were produced with forced labor. CBP will release the goods if the importer establishes the lack of connection.

      In order for CBP to release the goods, an importer must provide CBP with complete supply chain tracking information for the imported good and components thereof that substantiates this lack of connection to Xinjiang or UFLPA Entities.

      Documentation provided to CBP in this regard should include:

      Importers may consider using DNA traceability or isotopic testing as part of the evidence, provided that the reliability of such tests must be demonstrated and the test results must be traceable to the particular shipment under CBP review.

      • The provenance of each component of the imported good.
      • A detailed description of the supply chain, from raw materials and inputs to the finished good. For commingled raw materials/inputs from different suppliers (as may be particularly important in the case of solar cells and panels), importers must show the origin and control of each raw material or input.
    2. Rebut the presumption of forced labor/request an exception.

      If imported goods or any inputs thereto are sourced from Xinjiang or produced by UFLPA Entities, the importer must rebut (request an “exception” from) the presumption.

      Overcoming the rebuttable presumption requires:

      • Complying with the Strategy and providing complete and substantive responses to CBP’s inquiries.
      • Providing “clear and convincing evidence” that the imported goods are not products of forced labor.

Importers must demonstrate either that indicators of forced labor do not exist in connection with the imported goods or that such indicators have been fully remediated. Evidence may include mapping of the entire supply chain and transport along the supply chain, including which entities were involved at each stage, a complete list of all workers at an entity subject to the rebuttable presumption with information demonstrating the lack of forced labor practices, evidence of voluntary recruitment and working conditions, and other types of admissible evidence outlined in the Strategy.

CBP must submit to Congress and the public a report each time it grants an exception to the presumption of forced labor. The report will identify the good and the evidence considered in reaching the determination by CBP. Although certain information may be withheld under existing Freedom of Information Act protections, some information considered confidential by an importer could be publicly disclosed.

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.

© Orrick, Herrington & Sutcliffe LLP | Attorney Advertising

Written by:

Orrick, Herrington & Sutcliffe LLP
Contact
more
less

Orrick, Herrington & Sutcliffe LLP on:

Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide
- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.