International Trade & Compliance and Environmental, Social & Corporate Governance Alert | June.28.2022
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.
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:
Specifically, to rebut the CBP presumption, importers and their suppliers should implement the following measures.
An importer may consider taking a phased approach to UFLPA compliance:
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.
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 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):
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.
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:
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.
The Orrick team has extensive experience counseling companies on import compliance, investigations and wide range of other CBP-related matters as well as building supply chain programs. We have a deep familiarity with supply chain best practices and industry standards. We can assist companies with comprehensive Uyghur Act compliance, including conducting a supply chain inventory and gap analysis and implementing due diligence, tracing and supply chain management measures. Please contact a member of the Orrick team if you’d like to discuss how Orrick can support your company in complying with the Uyghur Act or responding to customer inquiries.