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A federal law signed by President Joe Biden on Dec. 31 aimed at preventing Chinese goods made by forced labor from entering the U.S. takes effect this month, and Arkansas importers must be prepared to adjust their supply chains accordingly.
The Uyghur Forced Labor Prevention Act (UFLPA) takes effect June 21. It creates a rebuttable presumption that “any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part” in the Xinjiang Uyghur Autonomous Region (XUAR) in China, or by entities with ties to forced labor in the region, were made using forced labor and cannot be imported.
The act will affect virtually every importer because it replaces the U.S. Customs & Border Protection’s case-by-case implementation of withhold and release orders (WROs) with a broad import ban. Some sectors have already been targeted by WROs, including tomato products, cotton and polysilicon from the XUAR.
The WROs on cotton and polysilicon are causing customs to block broad categories of products incorporating those materials. An estimated 20% of the world’s supply of cotton and 85% of China’s supply of cotton is from the XUAR. And adding polysilicon, a key material in solar panels, to the list affects the U.S. solar energy industry: Nearly half of the world’s polysilicon is produced in the XUAR.
Customs is due to provide guidance on the evidentiary standard required for importers to overcome the presumption that certain goods have been made under forced labor conditions. That will include making sure the importer has complied with forthcoming guidance from the Forced Labor Enforcement Task Force and that “clear and convincing” evidence shows that the goods were not produced with forced labor.
What guidance does the Task Force provide? Unfortunately, it’s still working on it. As part of its writing process, the Task Force held a public hearing in April. There, industry groups urged clarification of “clear and convincing evidence” and delayed enforcement of the act, while companies based in China denied the use of forced labor.
Meanwhile, human rights groups sought strict enforcement, argued against industry requests for advance notice of U.S. Customs & Border Protection’s evidentiary requirements, and requested blanket WROs for companies and products linked to the XUAR. The Task Force will take those views into account when drafting its strategy.
Ahead of the guidance, U.S. Customs & Border Protection expects importers to review their supply chains and institute measures to make sure imported goods are not made with forced labor. Importers should also look to trusted resources for direction. The U.S. issued the Xinjiang Supply Chain Business Advisory to inform those doing business in the XUAR about potential exposure to entities engaged in human rights abuses. The advisory suggests internationally recognized sources for information. And while third-party audits can help due diligence efforts, they alone cannot guarantee credible information.
While there are no definitive guides at this time, questions regarding the U.S. Customs & Border Protection’s implementation of the act can be sent to customs at UFLPAInquiry@cbp.dhs.gov.
The agency also provides information on sourcing and business risks related to forced labor at cbp.gov/trade/forced-labor/UFLPA#. And it provides a supply chain management tool at responsiblesourcingtool.org. There are more resources, including the U.S. Department of Labor’s Comply Chain mobile app and the U.S. Department of State’s Responsible Sourcing Tool.
To comply with this new law, companies must assess their business risks and approaches to their supply chain and due diligence process. Regardless of the company and its business, and however disparate and complex the supply chain may be, the day to track the sources of every upstream component and material is here.
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