U.S. Issues Guidance for Importers on the Enforcement of the Uyghur Forced Labor Prevention Act

On June 21, 2022, U.S. Customs and Border Protection (“CBP”) began enforcing the Uyghur Forced Labor Prevention Act (Pub. L. 117-78) (the “UFLPA”), which establishes a “rebuttable presumption” that goods produced wholly or in part in the Xinjiang Uyghur Autonomous Region (“XUAR”) in China or by certain identified entities are made with forced labor, and are subject to the import prohibition. The UFLPA also establishes a high burden of proof for importers to demonstrate otherwise.

In addition to an “Operational Guidance” document already published by the CBP, the Forced Labor Enforcement Task Force (“FLETF”) published its “Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China” (the “FLETF Strategy Report”), for importers concerning the implementation and enforcement of the UFLPA. Below are some key points.

I. FLETF Enforcement Strategy

The FLETF Strategy Report identifies entities that must be treated with the presumption of forced labor, provides additional guidance on the implementation of the UFLPA, and describes compliance requirements for companies seeking to rebut the presumption of forced labor. Specifically, the FLETF Strategy Report sets forth the requisite due diligence, supply chain tracing and management evidence required to demonstrate that goods were not mined, produced, or manufactured either wholly or in part in the XUAR, or by entities listed as engaged in forced labor, and to obtain an “exception” for goods which do originate in the XUAR but can be shown not to be produced using forced labor.

A. Priority Sectors for Enforcement

The FLETF identifies a list of “high-priority sectors for enforcement,” which the UFLPA statute indicates must include cotton, tomatoes, and polysilicon.

Importantly, there is no de minimis exception in the UFLPA. The rebuttable presumption applies to downstream products that incorporate goods produced in the XUAR or by the Entity List, even if those goods are produced outside the XUAR. This means that if any part of a product is produced in the XUAR or by identified entities, the final product is subject to the rebuttable presumption, regardless of the product’s country of origin for purposes of duties, or the country from which it was imported. Thus, it is entirely possible that goods may originate outside the XUAR, but still be prohibited from importation due to raw materials or components originating in the XUAR, or a specific supplier’s presence on the UFLPA Entity List, discussed infra. Consequently, there is a significantly heightened risk that the CBP will detain, exclude, or seize imported goods with a nexus to the XUAR, and impose penalties. Accordingly, if the goods originate from the XUAR, an importer will be tasked with rebutting the UFLPA presumption by “clear and convincing evidence” proving that the goods are not the product of forced labor.

B. Publication of UFLPA Entity List

The FLETF Strategy Report introduced the UFLPA Entity List identifying: (1) entities in XUAR that allegedly produce goods using forced labor; (2) entities allegedly working with the government of XUAR to recruit, transport, transfer, harbor or receive forced labor; (3) entities that allegedly export products mined, produced, or manufactured wholly or in part by the aforementioned entities; and (4) facilities and entities that allegedly source materials from XUAR or from persons working with the government of XUAR or the XUAR Production and Construction Corps for purposes of the “poverty alleviation” program or the “pairing-assistance” program or any other government-labor scheme that uses forced labor.

The entities listed are subject to the presumption that their products are prohibited from entry into the United States due to forced labor. There are approximately thirty companies listed, which were selected from existing CBP Withhold Release Orders (“WROs”) and the Entity List issued under the Export Administration Regulations. However, the lists do not identify any companies not previously named in WROs. The UFLPA Entity List may be expanded, and future entries will be published in the Federal Register. Thus, manufacturers and importers will need to assess their supply chains for touch points with these entities and monitor for updated listings.

II. Importers May Demonstrate Merchandise Is Not Subject To The UFLPA

The UFLPA requires the Commissioner of CBP to apply a rebuttable presumption that all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in XUAR, or by entities on the UFLPA Entity List, are prohibited from entry into the United States under 19 U.S.C. § 1307.

Per the CBP Operational Guidance, if an importer believes that its goods have been wrongfully detained under the UFLPA, the importer may submit detailed documentation to prove that the goods and its components were produced outside of the XUAR and by entities not subject to the UFLPA Entity List. If CBP determines the UFLPA does not apply, the importer will not be required to overcome the rebuttable presumption regarding forced labor and the shipments will be released.

III. Overcoming the Rebuttable Presumption

A. “Clear and Convincing” Standard

When merchandise is subject to the UFLPA, rebutting the presumption is necessary to obtain an “exception” allowing importation of the goods; such “exceptions” must be reported to Congress and therefore may attract public notice and controversy.

An exception requires that an importer provide “clear and convincing” evidence that a product imported into the United States was not “mined, produced, or manufactured wholly or in part by forced labor.” The CBP has noted that the “clear and convincing evidence is a higher standard of proof than a preponderance of the evidence, and generally means that a claim or contention is highly probable.” Information provided to rebut the presumption should show that the evidence is “substantially more likely to be true than untrue.”

B. Compliance Requirements

In addition, rebutting the presumption of forced labor requires that CBP determine—among other things—that an importer has “fully complied” with the FLETF guidance and any regulations issued to implement that guidance, as well as responded completely and substantially to all CBP requests for information.

In this regard, the FLETF Strategy includes guidance to importers on due diligence, effective supply chain tracing, and supply chain management measures.

An effective due diligence system includes, for example, the following elements:

• Engagement with relevant stakeholders in the supply chain;
• Assessment of risks associated with the supply chains;
• A written code of conduct that provides a framework for addressing the risk of forced labor;
• Communication of standards and providing training across the supply chain regarding the risks of forced labor in the supply chain; and
• Monitoring of compliance.

For purposes of supply-chain tracing, importers must know their suppliers and labor sources at all levels of the supply chain, including demonstration of supply chain mapping, and a chain of custody. Separately, supply chain management includes supplier vetting, and contractual requirements for corrective action, as well as an information system to manage supply chain data.

IV. Types of Evidence Expected by CBP

CBP’s Operational Guidance for Importers highlights the following non-exhaustive categories of evidence that importers can provide to prove that the goods are not produced in XUAR. These largely overlap with the categories provided by the FLETF Strategy discussed above. The FLETF stresses that providing English translations of such evidence will be helpful in facilitating the CBP’s review.

• Supply Chain Tracing Information: evidence pertaining to the overall supply chain, manufacturer/producer and the merchandise and its components. Specifically, CBP will review the role of shippers and exporters, assess whether any entities in the supply chain are related/affiliated, and require a list of suppliers associated with each step of the production process and affidavits from each company or entity involved in the production process. CBP will review evidence such as certificates of origin, purchase orders, invoices, bill of materials, invoices, buyer and seller inventory records, production records, and reports on factory site visits by importers.
• Due Diligence System Information: documentation demonstrating engagement with suppliers to assess and address forced labor risk, a written supplier code of conduct, training of employees and agents who interact with suppliers on forced labor risks, independent verification of the effectiveness of the due diligence system and reporting performance and engagement publicly on its due diligence system.
• Information on Supply Chain Management Measures: documentation on supply chain management measures, such as internal controls to prevent or mitigate forced labor risk and remediate any use by the company of forced labor identified in the mining, production, or manufacture of imported goods. Importers who contend their imports are not within the purview of the UFLPA because they are not produced wholly or in part in XUAR still will be required to substantiate their claims through the supply chain tracing documentation.

V. Demonstrating that the Goods are not the Product of Forced Labor

The FLETF Strategy Report provides guidance as to the specific evidence an importer may provide to show that the goods subject to the UFLPA presumption are not the products of forced labor.

• Evidence mapping 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 in the production of the imported goods. Such evidence may include documentation demonstrating how and to whom wages are paid at each workplace; evidence to identify each worker’s residency status; and evidence to demonstrate that output is consistent with the documented workers.
• Evidence that none of the workers who were involved in the production of the product were recruited, transported, transferred, harbored, or received with the involvement of XUAR, or any entities on the UFLPA Entity List. Evidence should specifically address the controls each entity has in place to ensure that all workers are recruited voluntarily.
• Evidence that reliably demonstrates that every worker from the XUAR is working voluntarily, and without menace or threat of penalty.

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