July 12, 2022
On December 23, 2021, President Joe Biden signed the Uyghur Forced Labor Prevention Act (UFLPA) into law. The UFLPA supports enforcement of Section 307 of the U.S. Customs and Border Protection’s (CBP) Tariff Act of 1930, prohibiting the importation to the U.S. of goods made with forced labor. Specifically, the UFLPA establishes a rebuttable presumption that all goods mined, produced, or manufactured in the Xinjiang Uyghur Autonomous Region (XUAR) or by entities on the UFLPA Entity List are made with forced labor and thus prohibited from entering the U.S. This rebuttable presumption went into effect on June 21, 2022. To outline the UFLPA enforcement process and provide importers with guidance, the Department of Homeland Security recently released a UFLPA Strategy, and the CBP released an Operational Guidance for Importers.
Importers will have two separate mechanisms for navigating the UFLPA. If enforcement action is taken under the UFLPA on a shipment the importer believes is not subject to the UFLPA, the importer must prove the good and its contents are sourced entirely from outside the XUAR and have no connection to the UFLPA Entity List. If a good does fall within the scope of the UFLPA, and the importer wants to receive an exception to the rebuttable presumption, then the importer must prove it has fully complied with the UFLPA Strategy. They must respond entirely and substantively to all CBP requests for information and demonstrate “clear and convincing evidence” that the import was not produced wholly or partly with forced labor.
To comply with the UFLPA Strategy, importers must show they have implemented effective due diligence systems, supply-chain tracing measures, and supply-chain management measures. Importers will also need to trace their supply chains from raw materials to final products to prove an import was not produced in the XUAR or that an import with components from the XUAR was not produced wholly or partly with forced labor.
The UFLPA largely preserves the CBP Withhold Release Order detainment procedure; however, under the UFLPA, the CBP will grant importers only 30 days to provide “clear and convincing evidence” that their importations were not made wholly or in part with forced labor. If a good is detained, the importer must decide whether to claim the good is outside the UFLPA, rebut the presumption, or re-export the good within 30 days. Additionally, the importer will need to evaluate whether further shipments are in transit or intended for import. Following this evaluation, the importer must formulate a plan for returning goods or postponing shipments.
The CBP will establish a public affairs liaison with the business community who will enforce the UFLPA and function as a best practices clearinghouse on responsible sourcing policy.
Notably, the UFLPA has no de minimis threshold—meaning an importer will need to account for every component or material in the importer’s shipment. The CBP Operational Guidance emphasizes that importers must provide the CBP with a clear, complete trail of hard documentation, such as time sheets and employee interviews, for the entire production process. Moreover, the broad scope of the UFLPA necessitates traceability and reliable audits across the entire supply chain. Therefore, importers must consider factory locations, facility headquarters, corporate affiliations, and imports through third countries.
Questions?
Contact GrayRobinson Shareholder Kevin Levy or Senior Government Affairs Advisor Chris McCannell.