June 17, 2022 By Isa Mirza , Luciano Racco , Gare A. Smith
Categories: Trade , Compliance , Supply Chains
On June 13, 2022, the U.S. Department of Homeland Security's Customs and Border Protection (“CBP”) published guidance for importers regarding compliance requirements under the Uyghur Forced Labor Prevention Act (“UFLPA”), which is effective as of June 21, 2022. Under the UFLPA, all goods produced in whole or in part in the Xinjiang Uyghur Autonomous Region (“XUAR”) of China, or produced by entities on the UFLPA Entity List, are presumed to be made with forced labor and are prohibited from entry into the U.S. This presumption also applies to goods made in, or shipped through, other parts of China and other countries that include inputs made in the XUAR. When the UFLPA goes into effect on June 21, 2022, importers must produce “clear and convincing” evidence in order to rebut the presumption of forced labor after a shipment is detained. Importers should be aware that restrictions under the UFLPA are stricter than the current restrictions in place under the Tariff Act regarding the import of goods made with forced labor.
CBP's new guidance for importers provides information on what evidence is required from importers to overcome the presumption that goods are made with forced labor so that a detained shipment can be released. The guidance also describes the detention/release process and provides information regarding supply chain due diligence, tracing, and management. This guidance has been anticipated by industry, especially importers sourcing products from China, since December 23, 2021, when the UFLPA was signed into law by President Biden.
In addition to the guidance, CBP will release a forthcoming “UFLPA Strategy.” The UFLPA Strategy will contain specific due diligence requirements for importers who must comply with the UFLPA Strategy in order to overcome the rebuttable presumption that detained goods are made with forced labor. In addition to the UFLPA Strategy, the UFLPA will also contain an UFLPA Entity List, which will be composed of entities operating in the XUAR or working with the XUAR government to move forced labor out of the region. All items produced by entities on the UFLPA Entity List are presumed to be made with forced labor and prohibited from entry into the U.S., even if such items did not originate in the XUAR. Both the UFLPA Strategy and the UFLPA Entity List are scheduled for release by June 21, 2022.
The key provisions of CBP's new guidance are as follows:
General Provisions
Due Diligence Processes
The guidance states that importers should be able to provide to CBP documentation showing a due diligence system or process that may include the following:
Supply Chain Tracing Information
The guidance provides the following examples of information that importers may provide (or that may be requested by CBP to provide) to demonstrate their imports are either (1) not subject to the UFLPA because their supply chains are wholly outside of Xinjiang and unconnected to listed entities; or (2) to show that their imports are free of forced labor and in compliance with the UFLPA.
Evidence Pertaining to Overall Supply Chain
Evidence Pertaining to Merchandise or Any Component Thereof
Evidence Pertaining to Miner, Producer, or Manufacturer
Regarding information pertaining to a miner, producer, or manufacturer, the guidance calls for the evidence listed above as it relates to merchandise or any of its raw material components. For high-risk commodities such as cotton and polysilicon, however, the guidance calls for additional evidence, including:
Commodity-Specific Supply Chain Tracing Documentation
The guidance's appendix also provides specific direction for supply chain documentation that importers may consider submitting to address commodities associated with a high risk of forced labor, such as cotton, polysilicon, and tomatoes. The guidance notes that the lists in the appendix are not exhaustive and that CBP may request additional documentation based on individual circumstances.
Foley Hoag's Trade Sanctions & Export Controls and Global Business & Human Rights practice groups provide guidance on compliance regarding these laws and regulations, and help clients implement best practices for supply chain management and develop individually tailored compliance procedures.