We have received multiple requests to provide guidance regarding the critically important area of the Uyghur Forced Labor Prevention Act (UFLPA). Because of the recency of the UFLPA, which went into effect on June 21, 2021, most companies are still in the early stages of compliance. So, to help companies navigate this Act, we have divided our coverage into three areas: (1) the basic requirements of the Act; (2) UFLPA compliance best practices; and (3) how to cope with a UFLPA detention. We will cover the first part in today’s post; the remainder will appear in two subsequent posts in the upcoming weeks.

The UFLPA bans the import of goods produced in the Xinjiang Uyghur Autonomous Region (XUAR) and has had a major impact on U.S. Customs and Border Protection’s (CBP or Customs) detention of goods. CBP has already engaged in over 5500 UFLPA detentions (formally known as “admissibility reviews”), with an aggregate value of over $1.9 billion, and the agency shows every sign of ramping up its enforcement. The first step to understanding why Customs has become so aggressive in combating this particular form of forced labor regulation is to understand the legal requirements put in place by Congress in the UFLPA and the basic steps that Customs expects importers to follow when engaging in imports that have a heightened risk of sourcing in violation of the UFLPA.

UFLPA Requirements

Under the UFLPA, the following goods are presumed to be the product of forced labor and are barred from entering the United States:

• Goods wholly or in part mined, manufactured, or produced in the XUAR;
• Goods produced by entities that work with the Xinjiang regional government to recruit, transport, transfer, harbor, or receive forced labor out of Xinjiang;
• Export products to the United States that are (i) made wholly or in part in Xinjiang or (ii) made by entities that work with the Xinjiang regional government to recruit, transport, transfer, harbor, or receive forced labor out of Xinjiang;
• Goods from companies that source material from Xinjiang;
• Goods from companies that source material from persons working with the Xinjiang regional government or the Xinjiang Production and Construction Corps. (XPCC) in connection with government programs that use forced labor, such as the “poverty alleviation” and “pairing-assistance” programs; or
• Goods linked with companies on the UFLPA Entity List.

Notably this presumption is not limited to goods produced by companies that are located in Xinjiang. It also applies to products made by companies based outside of XUAR and outside of China that source material from the XUAR or produce even a portion of the product inside XUAR. A list of companies on the current UFLPA Entity List, or that otherwise have taken actions that violate the UFLPA, are found on the DHS UFLPA Entity List page, which is regularly updated.

Under the UFLPA, the presumption of forced labor is rebuttable if an importer can demonstrate to CBP that:

• The goods were not produced wholly or in part by convict labor, forced labor, or indentured labor;
• The importer has complied with diligence requirements; and
• The importer has been responsive to CBP follow-up inquiries.

CBP’s UFLPA Expectations

Earlier this year, the Forced Labor Enforcement Task Force (the U.S. government interagency group responsible for the enforcement strategy to implement the UFLPA) held its first public meeting to discuss UFLPA enforcement. Information from this meeting and the work of these agencies has resulted in key briefings by the agencies, including:

• Four agencies have come together to release the “Xinjiang Supply Chain Business Advisory” and the “Addendum to the Xinjiang Supply Chain Business Advisory,” which provide strategies importers should use to prevent the use of forced labor relating to the XUAR.
• The Department of Homeland’s Security Guidance to Importers,” found in its most recent Report to Congress on its Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China, provides due diligence and compliance best practices.
• CBP’s “Uyghur Forced Labor Prevention Act: U.S. Customs and Border Protection Operational Guidance for Importers” provides strategies for compliance with the UFLPA as well as guidance regarding what types of information CBP is seeking in an admissibility review.
• CBP’s Frequently Asked Questions on the UFLPA provides responses to common questions on UFLPA compliance.
• CBP’s Best Practices for Applicability Reviews: Importer Responsibilities provides advice regarding how to respond when CBP receives a UFLPA detention notice.
• CBP’s Guidance on Executive Summaries and Sample Tables of Contents: Preparing a UFLPA Applicability Review Submission provides a sample organization for providing “documentation produced in the ordinary course of business that details the order, purchase, manufacture, and transportation of inputs throughout their supply chain,” thereby providing CBP with “clear and convincing evidence” that a given shipment should be released if the documentation shows the goods were not produced, in whole or in part, in violation of the UFLPA.

Parsing the import expectations found in these documents shows the following:

First, CBP expects importers to conduct systematic, regular due diligence:

• Importers should engage with suppliers and other supply chain participants.
• Importers should assess forced labor risks throughout their supply chains, from raw material inputs to production of the product to be imported into the United States.
• Importers should map out and understand their supply chains, right down to the last sub-supplier.

Second, CBP expects that importers will adopt appropriate, risk-based compliance measures and internal controls:

• Importers should incorporate terms and conditions into all of their long-term agreements, purchase orders, and other legal documents that require compliance with forced labor, human trafficking, and UFLPA requirements.
• Importers should adopt a written supplier code of conduct forbidding the use of forced labor and the use of products obtained, in whole or in part, in violation of the UFLPA.
• Importers should monitor supplier compliance with the code of conduct.
• Importers should use effective supply chain tracing and supply chain management measures to support due diligence processes.
• Importers should obtain evidence of supplier remediation of any forced labor conditions identified or termination of the supplier.
• Importers should obtain independent verification of the implementation and effectiveness of importer’s due diligence.

Third, CBP expects that importers will use compliance training to reinforce the UFLPA compliance requirements, including training on forced labor risks and the UFLPA for importer employees and agents who select, oversee, and interact with suppliers.

Fourth, CBP expects that companies will proactively gather and maintain information showing their goods are in compliance with the UFLPA requirements. The type, nature, and extent of evidence that can overcome the presumption that goods originating in China were not created “wholly or in part” in Xinjiang or are not otherwise products of forced labor programs includes:

• Evidence regarding inputs from China generally or the XUAR specifically, including the identity and location of all suppliers providing parts, components, and sub-components.
• Evidence permitting tracing of specific materials or component inputs, to negate any link to the XUAR.
• Evidence permitting tracing to specific manufacturing, mining, or production sites, again, to negate any link to the XUAR.
• Evidence regarding compliance policies, internal controls, labor and recruitment policies, and other site-specific information verifying the lack of any forced labor or XUAR-related inputs.
• Evidence of the conduct of risk-based audits to verify compliance.

Fifth, CBP expects that importers will respect its advice regarding best practices for UFLPA compliance, including:

• Using a risk-based approach to conduct due diligence: DHS implementation guidance identifies designated high-risk products/industries (cotton, polysilica, and tomatoes — a list later expanded to include aluminum and PVC). Additional public information will be issued identifying other potential high-risk products, with recent reports flagging vinyl flooring and batteries as products of concern. Importers should maintain awareness of red flags for forced labor in their product lines and use those to guide how to prioritize their due diligence.
• Effective supply chain tracing: DHS has indicated that importers should use a combination of direct questionnaires to first-tier suppliers, contractual provisions and flow-down requirements, due diligence (including third-party due diligence), and screening of UFLPA-listed entities to all parties identified in the supply chain, including sub-suppliers.
• Addressing problematic Chinese programs in Chinese regions other than Xinjiang: Although not strictly a UFLPA concern, DHS and CBP also are focused on suppliers in China that use programs that may be presumed to have forced labor inputs. Importers will need to factor this into their due diligence on suppliers not sourcing products directly from Xinjiang.

Sixth, CBP expects that importers will document that their products are not in violation of the UFLPA, to allow prompt responses to CBP admissibility reviews. At a minimum, this includes documentation, for each tier of supplier, which includes:

• The name and address of specific location from which items were sourced.
• A description of the item(s) supplied.
• The purchaser of item(s) supplied.
• Date of transaction(s) and value of the transaction(s).
• Evidence of controls or risk mitigation measure taken by specific supplier(s) and/or site location(s) to minimize the risk of forced labor inputs or sourcing in violation of the UFLPA.

With CBP detaining over 5,500 shipments, worth close to $2 billion, it is apparent that importers need to take this import guidance seriously. In our next update, we will provide an eight-step compliance and due diligence program to help importers at risk of UFLPA detentions to implement these CBP expectations.

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Customs is detaining record amounts of products for UFLPA admissibility reviews. If you need more information or help regarding setting up a UFLPA or forced labor compliance system, please contact the authors or your Foley relationship attorney for more information.