What has happened with the Uyghur Forced Labor Prevention Act?

This issue falls between the S-Social and G-Governance in Corporate ESG, and it impacts #supplychain.

The Uyghur Forced Labor Prevention Act (UFLPA) was passed by the U.S. congress on December 23, 2021, with a June 21, 2022, effective date. From then on, the assumption is that all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China, or produced by a certain list of entities, cannot enter the U.S. due to egregious human rights violations.

Only if U.S. Customs and Border Protection (CBP) determines, through “clear and convincing” evidence, that the goods were NOT produced using forced labor or that UFLPA does not apply to the goods can they enter. It is the importer of record that bears the burden of proof.

Is the UFLPA being enforced?

Yes! In 2023, through July, there were 3,529 shipments stopped at the border worth $1.276B. After review, 977 or 28% were denied, 1,445 or 41% were released and the remaining 31% remain pending.?

The top 3 industries held were electronics (34%), industrial and manufacturing materials (25%) and apparel, footwear and textiles (19%).?

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Malaysia was the country with the highest shipment value held.

The above data is from the CBP database which provides statistics on UFLPA shipment reviews and enforcement actions.?

UFLPA Entity List

Another useful tool is the UFLPA Entity List. Goods that were touched by an entity on this list will be blocked from entry. When I viewed the list on 9/18/23, there were 35 entities on the list.? What entities get included?

1. entities in XUAR that mine, produce, or manufacture wholly or in part any goods, wares, articles, and merchandise with forced labor;
2. entities working with the government of XUAR to recruit, transport, transfer, harbor, or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of XUAR;
3. entities that exported products made by entities in lists 1 and 2 from the People’s Republic of China into the United States; and
4. facilities and entities, including the Xinjiang Production and Construction Corps, that source material from XUAR or from persons working with the government of XUAR or the Xinjiang 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 full list and the date the entity was added can be viewed at CBP here.

What evidence do importers have to provide to prove their shipments are not subject to holding?

To demonstrate that the import is not sourced wholly or in part from the XUAR or an entity on the UFLPA Entity List, the importer of record must provide:

• Transaction and Supply Chain Records: full records of transactions and supply chain documentation that demonstrate the country of origin and its components (e.g., packing list, bill of lading, manifest);
• Documents Demonstrating the Parties Participating in the Transaction: all parties involved in the manufacture, manipulation, or export of a particular good (e.g., summarize the roles of parties involved as substantiated by other supporting documents, flow chart of supply chain);
• Documentation Relating to the Payment and Transportation of Raw Materials: the origin of the raw materials, and documentation showing that these business transactions (e.g., invoices, contracts, purchase orders) have occurred financially (e.g., proof of payments) and physically (e.g., documents to support goods were transferred from one entity to another.)

Resources for importers

In addition to the statistics dashboard, the CBP has numerous resources to assist importers navigate the law including: CBP's Operational Guidance for Importers, Best Practices for Reviews, and a Frequently Asked Questions document, to name just a few.

Bottom line

Since passage of the UFLPA, U.S. Customs Border Protection has implemented several tools to help U.S. importers navigate the law that congress passed nearly unanimously in December 2021. The law was enacted to use economic penalties to stop egregious human rights violations. ?

According the CBP UFLPA database, in 2023, through July, there were over 3,500 shipments stopped at the border worth over $1B. The top 3 industries held were electronics, industrial and manufacturing materials, and apparel, footwear and textiles.?

The process to prove that merchandise was not touched in any way by the Xinjiang Uyghur Autonomous Region of the People’s Republic of China is rigorous. U.S. supply chain managers must be intimately familiar with their supply chains and have quality data readily available to avoid delays, fines and possible brand reputation damage. The law is being enforced and will continue to increase its effectiveness with time.

H/T to Donna Mullins who connected me to experts. Thanks Ralph De La Rosa for sharing your time and information and also Shannon Whitt .

Sources & further reading:

US Customs & Border Protection UFLPA site: https://www.cbp.gov/trade/forced-labor/UFLPA

CBP UFLPA 13-pg data dictionary: https://www.cbp.gov/sites/default/files/assets/documents/2023-Jun/forced-labor-data-dictionary.pdf

Elba’s original July 2022 issue explaining why this law was enacted: https://www.dhirubhai.net/pulse/human-rights-supply-chain-transparency-collide-uflpa-elba/?published=t&trackingId=CqUfynPVRF2xk%2BUM0P8OeQ%3D%3D