Authors
On June 17, 2022 – just a few days before the UFLPA’s rebuttable presumption took effect on June 21, 2022 – the Forced Labor Enforcement Task Force (FLETF), chaired by the U.S. Department of Homeland Security, published its Uyghur Forced Labor Prevention Act enforcement strategy (the Strategy), as required by the UFLPA. On June 13, 2022, prior to the issuance of the Strategy, the U.S. Customs and Border Protection (CBP) issued its UFLPA operational guidance, outlining the enforcement process and the types of documentation and information importers may need to overcome the UFLPA’s rebuttable presumption. A general summary and key highlights from the Strategy are outlined below.
FLETF’s enforcement strategy overview
The Strategy includes 60 pages of information covering the following topics:
- An evaluation and description of common forced-labor schemes, the UFLPA Entity List, enforcement plans, and high-priority sectors for enforcement
- A description of how CBP plans to enhance its use of legal authorities and tools to prevent the entry of goods at U.S. ports that violate 19 U.S.C. section 1307
- Guidance for importers on effective due diligence measures and the types of evidence necessary to overcome the UFLPA’s rebuttable presumption
- The U.S. government’s comprehensive assessment of the risk of importing goods mined, produced, or manufactured (in whole or in part) in China using forced labor
- Recommendations for efforts, initiatives, tools, and technologies to ensure that CBP can accurately identify and trace goods made in the Xinjiang region
- The U.S. government’s plan to collaborate and coordinate with appropriate nongovernmental organizations and entities in the private sector to update and implement the Strategy
- A description of additional resources necessary for CBP to ensure that no goods made with forced labor enter through U.S. ports
The Strategy’s key takeaways for importers
- UFLPA’s Entity List: The FLETF Strategy includes a list of specific entities and products (UFLPA Entity List) subject to the UFLPA’s rebuttable presumption. The initial source for the newly listed entities are existing CBP Withhold Release Orders (WROs) and the U.S. Department of Commerce Bureau of Industry and Security’s Entity List. Importers should begin reviewing and screening existing and new Chinese suppliers and vendors against the UFLPA Entity List, and should continue to monitor this list for changes.
- Due diligence and supply-chain tracing and management: The Strategy outlines best practices for an effective due diligence system, outlines how to conduct supply chain mapping exercises, and addresses supply chain management measures to prevent and mitigate identified risks of forced labor. The Strategy refers importers to the U.S. Department of Labor’s “Comply Chain” publication and provides the following recommendations for an effective due diligence system to ensure importers do not import goods mined, produced, or manufactured with forced labor:
- 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
The Strategy also discusses the importance of mapping the entire supply chain, up to and including suppliers of raw materials used in the production of the imported good or material; having processes in place to vet potential suppliers; requiring that supplier contracts necessitate corrective actions if forced labor is identified in a supply chain; and outlining consequences if corrective actions are not taken, such as termination of the contractual relationship.
While the Strategy recognizes the inherent challenges in performing due diligence and supply chain tracing related to the Xinjiang region, the Strategy makes clear that an importer’s failure to conduct due diligence and adopt adequate compliance measures could prevent an importer from overcoming UFLPA’s rebuttable presumption.
- High-priority sectors for enforcement: The FLETF’s Strategy also identifies a list of high-priority sectors for UFLPA enforcement, including: cotton and cotton products; tomatoes and downstream products; silica-based products, including polysilicon; and apparel. Companies importing these high-risk products should be on heightened alert for forced labor indicators as CBP’s initial enforcement efforts will likely be focused on these sectors.
Conclusion
As we highlighted in our previous client alerts, multinational companies with supply chains involving Xinjiang and importers of high-risk commodities should ensure that adequate measures are in place to screen suppliers of each product input, including raw materials, against the UFLPA Entity List, and implement due diligence and supply chain tracing and management measures consistent with the UFLPA’s guidance. Importers that do not engage in adequate due diligence are likely to face significant challenges in overcoming the UFLPA’s rebuttable presumption and risk having their products excluded from entry.
Client Alert 2022-170