An introduction to the Uyghur Forced Labor Prevention Act (“UFLPA”)
Enacted by the Congress in December 2021—and signed into law by President Joseph R. Biden, Jr. later the same month—the Uyghur Forced Labor Prevention Act (“UFLPA”)[1] is a federal law principally designed to obstruct the ability of the People’s Republic of China (“PRC”) to benefit from the use of forced labor in conjunction with products originating from, and manufactured in, the Xinjiang autonomous region of China. Now notoriously known for being associated with the repression of ethnic Muslim minorities, the Xinjiang region in particular is the focal point of Chinese government efforts to abduct, illegally detain, and exploit the labor of, more than one million ethnic minority Muslims of varying backgrounds in as many as 1,200 state-run internment camps scattered throughout the region.
As enacted, the UFLPA contains two principal, substantive components: (1) a presumption that any goods, wares, articles, and merchandise mined, produced, or manufactured wholly, or in part, in the Xinjiang region of the PRC or produced by certain designated entities are presumed to have been made utilizing forced labor and are thus barred from importation to the United States; and (2) a requirement that the Forced Labor Enforcement Task Force—a collaborative undertaking involving several federal agencies established under Section 741 of the United States-Canada Agreement Implementation Act[2]—submit to Congress a comprehensive enforcement strategy that sufficiently outlines the mechanisms the government has implemented to minimize the risk that the United States remains complicit in the perpetuation of human rights abuses by PRC officials in the Xinjiang region.
The UFLPA’s importation prohibition
Section 4 of the UFLPA explicitly provides that “all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of China . . . shall not be entitled to entry at any of the ports of the United States.” As such, Section 4 operates as a blanket prohibition on U.S.-based organizations accustomed to importing raw materials and/or finished products from the Xinjiang region for incorporation into final products or resale in the United States. Nonetheless, Section 4 makes this presumption “rebuttable” by allowing Customs and Border Protection (“CBP”) to determine, by “clear and convincing evidence” that specific goods, wares, articles, or merchandise otherwise banned from importation were not produced, wholly, or in part, by convict labor, forced labor, and/or indentured servitude imposed as a penal sanction.
On June 13, 2022, CBP released operational guidance under the auspices of the UFLPA’s delegation of administrative authority to that agency for enforcement purposes. Under the guidance, CBP clarified the process by which goods initially detained by CBP at ports of entry for violating Section 4 could nonetheless be cleared and released if the conditions described above were satisfied. The operational guidance in question calls for organizations to maintain appropriate documentation regarding the commodities potentially subject to exclusion by virtue of the UFLPA’s forced labor prohibitions in connection with broader due diligence efforts.
For organizations availing themselves of the aforementioned exception, the operational guidance requires that such entities maintain and furnish to CBP: (1) documentation evidencing a due diligence system or other process utilized by the organization that includes engagement with suppliers and other stakeholders to assess and address forced labor risk; (2) detailed supply chain tracing information sufficient to demonstrate that a finished good or product manufactured or otherwise produced in the Xinjiang region was not made in whole or partial reliance on forced labor; (3) supply chain management information demonstrating that an organization has adopted internal controls to mitigate or prevent forced labor risk and remediate any known use of forced labor identified in the mining, production or manufacture of imported goods; and (4) satisfactory evidence that goods originating in China were not mined, produced, or manufactured wholly, or in part, by forced labor. While the CBP list is not exhaustive, the latter criteria can be satisfied by furnishing documentary evidence to CBP in the form of supply chain mapping information identifying all entities involved in the production of the goods in question; information concerning workers at each entity involved in the production of the goods in the PRC (such as wage payment and production output information); information concerning worker recruitment to demonstrate that workers in China were employed voluntarily; and credible audit information from any entity involved in the supply chain that appropriately identifies forced labor indicators and explains what the entity in question is doing to remediate the issue, where applicable.
Conversely, organizations that contend their supply chains do not include any contacts with the Xinjiang region of the PRC at all must provide documentation that none of the entities or individuals involved in the mining, production or manufacture of imported goods from China were located in the Xinjiang region. This includes, but is not limited to, a detailed description of the importing organization’s supply chain respecting PRC-origin merchandise and any components thereof; the role of each entity in the supply chain, including shippers and exporters; a description of close relationships pursuant to 19 C.F.R. 152.102(g) concerning any entity designated in the supply chain; and affidavits from each entity involved at every stage of the production process.
A distinctive feature of the operational guidance is the timelines CBP has established in an effort to maximize efficiency in the application of the UFLPA. Under the relevant portion of that guidance, organizations in receipt of a “detention notice” from CBP—under suspicion that the import in question may be of Xinjiang origin—have thirty days from the date the merchandise is presented for examination to CBP to argue either that the rebuttable presumption is wholly inapplicable or to submit evidence to overcome the statutory presumption. In cases where the product is excluded from entry, organizations must avail themselves of the protest procedures embodied in 17 C.F.R. Part 174. Finally, for items that are seized by CBP, organizations must utilize the procedures contained in 17 C.F.R. Part 171 to submit a petition for review.
Forced Labor Enforcement Task Force Strategy
While an exhaustive examination of the Forced Labor Enforcement Task Force Strategy (“FLETF Strategy”)—adopted and released by the Department of Homeland Security (“DHS”) and other federal government partners nearly simultaneous to the issuance of CBP’s operational guidance—is beyond the scope of this introductory primer, several aspects of the FLETF Strategy are worth mentioning from the standpoint of the risk facing organizations with business operations that implicate the Xinjiang region.
This includes the designation by CBP of specific entities located in Xinjiang known to “mine, produce, or manufacture wholly or in part any goods, wares, articles and merchandise with forced labor”; a list of entities working in conjunction with the regional government to recruit, transfer, harbor, or receive forced labor out of Xinjiang; and a list of entities and facilities known to source material from Xinjiang and/or conduct business with the Xinjiang Production and Construction Corps (“XPCC”) under the guise of “poverty alleviation” and “pairing-assistance.” In line with the UFLPA’s express requirements, the FLETF Strategy makes it clear that imports from entities designated by CBP are similarly prohibited pursuant to 19 U.S.C. Section 1307, unless the importer can overcome the same statutory presumption described in greater detail above.
Moreover, the FLETF Strategy designates several “high-priority” sectors for targeted CBP enforcement efforts. The sectors initially identified by FLETF broadly include: (1) the production of apparel; (2) the cultivation and production of cotton and cotton products; (3) the manufacture of silica-based products (including polysilicon); and (4) the production of tomatoes and related downstream products. According to the FLETF Strategy, it is the intention of the federal government to utilize both existing and emerging processes to interdict goods from high-priority sectors found to have a nexus to producers in Xinjiang, and where necessary, prosecute those found to be complicit in violating 18 U.S.C. Section 1589—a general forced labor prohibition that criminalizes the act of providing or obtaining labor or services of a person by means of force, serious harm, threatened abuse of law or legal process, or other scheme, plan or pattern. As such, organizations with potential ties to the Xinjiang region should exercise increased discretion and perform enhanced due diligence on all existing and prospective business partners for potential ties to forced labor practices. While it is likely that PRC-based entities will be reluctant to comply with increased vigilance measures adopted by U.S. importers, it is imperative that organizations relying on raw material or product outputs from the Xinjiang region prioritize forced labor as a material risk factor.