Background

Legislation passed Dec. 16 by the Senate and now on its way to the White House will all but ban imports connected at any point in the supply chain to from China’s Xinjiang Uyghur Autonomous Region, posing a challenge for importers of goods from anywhere in the world that may use inputs made in this region.

The Uyghur Forced Labor Prevention Act requires U.S. Customs and Border Protection to presume that all goods manufactured wholly or in part in the XUAR are made with forced labor and therefore prohibited from entry into the U.S. This presumption can be overcome if (1) the importer provides “clear and convincing evidence” to CBP that the goods were not made with forced labor and (2) the importer has fully complied with due diligence guidance and regulations to be issued by the U.S. government (see below) and responded to all related CBP inquiries. This import ban will take effect 180 days after the bill is signed into law and remain in effect for eight years.

The bill also requires a holistic government effort to develop within six months (and update annually) a strategy for preventing imports of goods manufactured in the XUAR with forced labor, including through measures such as tracing the origin of goods, offering greater supply chain transparency, and identifying third-country supply chain routes. This strategy will:

- identify ways that goods made in China by forced labor could be imported through third countries and how to reduce the risk of such imports;

- list entities in the XUAR that produce or export goods made with forced labor and what goods those are;

- list facilities and entities that source from the XUAR materials made under programs using forced labor, as well as enforcement plans for each (e.g., withhold release orders);

- list high-priority sectors for enforcement, including cotton, tomatoes, and polysilicon, and an enforcement plan for each;

- provide recommendations for how CBP can accurately identify and trace goods manufactured in the XUAR;

- describe how CBP plans to enhance its use of legal authorities and other tools to prevent imports of goods made with forced labor, including pilot programs to test the viability of technologies to assist in the examination of such goods;

- provide guidance to importers on best practices, due diligence measures, and supply chain tracing measures to prevent imports of goods made with forced labor; and

- include guidance on the type, nature, and extent of evidence that proves goods were not made in the XUAR or made with forced labor.

The final bill did not include a provision that would have required financial disclosures from U.S. publicly-traded businesses about their engagement with Chinese companies and other entities engaged in mass surveillance, mass internment, forced labor, and other serious human rights abuses in the XUAR.

Sandler, Travis & Rosenberg offers a comprehensive suite of services to help companies respond to this new law, including supply chain reviews, due diligence strategies, and proactive remediation. In addition, ST&R has launched a new web page offering a broad range of information on forced labor-related efforts in the U.S. and around the world. ST&R also has an on-demand webinar on forced labor and supply chain transparency available online. For more information on any of these initiatives, please contact Amanda Levitt (at (212) 549-0148) or via email), David Olave (at (202) 730-4960 or via email), or Nicole Bivens Collinson (at (202) 730-4956 or via email).

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