Background

The Uyghur Forced Labor Prevention Act effectively bans imports of all goods mined, produced, or manufactured in China’s Xinjiang Uyghur Autonomous Region, and the Department of Homeland Security recently issued its strategy for enforcing this prohibition. While this strategy leaves many questions unanswered, there are some points worth noting as businesses whose supply chains include Chinese materials begin to incorporate it into their planning and operations.

Lists. The strategy includes several lists of entities subject to enforcement. All of the entities on these lists were previously identified in withhold release orders, forced labor findings, or related sanctions lists, although entities may be added to or removed from the lists in the future.

Industries. The strategy identifies the following sectors where enforcement efforts will likely be focused initially: apparel, cotton and cotton products, silica-based products (including polysilicon), and tomatoes and downstream products. However, these too were all previously identified as such. (On this topic it’s worth noting that polyvinyl chloride (PVC), which is used in a wide variety of products, could come under higher scrutiny as well.)

Evidence. The UFLPA requires “clear and convincing evidence” that goods are not made wholly or in part with forced labor for an exception to be granted. The strategy discusses the effect of various scenarios on the ability to meet this standard, including commingling of goods from the XUAR and other locations and shipping materials to third countries for processing. Companies should be prepared to demonstrate sufficient inventory controls in these situations.

In addition, the strategy includes the first formal mention of DNA traceability and isotope testing as potential evidence.

Exceptions. Companies can request exceptions from UFLPA enforcement (when products are known to have content from the XUAR or a named entity but the company believes they were not made with forced labor), though these are expected to be rare. Companies can also seek determinations that their goods are not covered by the UFLPA because neither the XUAR nor a named entity is connected with their production. In both cases companies will have to provide extensive amounts of information from throughout their supply chains.

Proactive due diligence can go a long way toward helping companies comply with the UFLPA and avoid undue scrutiny from U.S. Customs and Border Protection. Sandler, Travis & Rosenberg offers a comprehensive suite of services to help companies address forced labor concerns in China and elsewhere, including supply chain reviews, due diligence strategies, and proactive remediation. ST&R also maintains a frequently updated web page offering a broad range of information on forced labor-related efforts in the U.S. and around the world. For more information, please contact ST&R at supplychainvisibility@strtrade.com.

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