Today, June 21, the Uyghur Forced Labor Prevention Act ("UFLPA") comes into effect. It is the latest – and perhaps strongest – tool in the belt of U.S. regulatory and enforcement agencies to combat forced labor. The UFLPA puts the onus on importers to ensure their supply chains and merchandise are free from forced labor. This article will discuss forced labor enforcement generally, the UFLPA, and what it means for importers and how they can comply with the new regulations.
A variety of U.S. laws and regulations prohibit forced labor. Primarily, Section 307 of the Tariff Act of 1930 prohibits the importation of "all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any country by convict labor or/and forced labor or/and indentured labor," and authorizes the Department of the Treasury to regulate the enforcement thereof.1 Customs and Border Protection ("CBP" or "Customs") enforces Section 307 by investigating "allegations of the presence of forced labor indicators in the supply chain of goods being imported" to the United States2 (utilizing the International Labour Organization's ("ILO") indicators of forced labor for its decisions3) and preventing the entry of such goods into United States commerce.
Currently, CBP enforces Section 307 through the issuance of Withhold Release Orders ("WROs") and "findings." When CBP determines that information "reasonably but not conclusively" indicates the use of forced labor, it issues a WRO – which it posts publicly on its website – detaining specific merchandise it suspects is the product of forced labor, unless the importer submits evidence that the merchandise is free from forced labor.4 Detention is the temporary withholding of goods while CBP determines admissibility. CBP will issue a detention notice to the importer, providing the reason for the detention, the anticipated length of detention and information for submitting evidence to rebut the indication of forced labor.5
If the goods are not admissible because CBP finds that the merchandise may be the product of forced labor, the importer has three months to prove admissibility or do one of several things: request extension of the detention period (to gather evidence of admissibility); move the freight to a bonded warehouse and seek release of any merchandise not subject to the WRO; reexport the detained shipment out of the United States; or have the goods destroyed under government supervision. If an importer fails to prove admissibility or reexport the shipment, CBP will exclude the goods from entry, giving the importer another 60 days to reexport the shipment. If the importer does not reexport the merchandise, CBP will deem the goods abandoned and destroy them.
When CBP issues a finding – via a Notice of Seizure to the importer, which is announced in the Federal Register and posted publicly on CBP's website – that merchandise is the product of forced labor, CBP will seize the imported merchandise unless and until the importer can prove the merchandise is not the product of forced labor. Seizure is more severe than detention; importers may not reexport goods seized subject to a finding, only attempt to prove admissibility or opt for abandonment and destruction.6
At the time of this writing, there are 54 active or partially active WROs, with 35 of those from China, 6 from Malaysia, and 5 from fishing vessels.7 Notably, in January 2021, CBP issued a WRO for cotton, tomatoes, and downstream products for the entire Xinjiang Uyghur Autonomous Region of China ("XUAR"), meaning the listed products from that region are presumed to be produced with forced labor and are thus prohibited from entry into the United States. Additionally, in June 2021, CBP issued a WRO – based on 2 of the 11 ILO indicators of forced labor – for Hoshine Silicon Industry Co., Ltd for a variety of component materials, intermediate goods, and finished goods relating to solar panels. There are nine current forced labor findings, five of which are from China, two from Mexico, one from Malaysia, and one from a fishing vessel. One WRO and two findings have been issued in 2022, all on January 28.8
President Biden signed the UFLPA into law on December 23, 2021. It created a rebuttable presumption, which takes effect today, June 21, that the importation of any "goods, wares, articles, and merchandise mined, produced, or manufactured, wholly or in part," in the XUAR is prohibited under Section 307 of the Tariff Act of 1930, and is barred from entry. This rebuttable presumption may be overcome by a showing of clear and convincing evidence that the goods were not produced with forced labor.
The U.S. Government has taken several steps to prepare for the UFLPA's requirements in the 180-day period between passage and enactment. The first is that CBP has issued letters to importers it has identified as having previously imported merchandise that may be subject to the UFLPA, to give them the opportunity to address any forced labor issues in their supply chain. Notably, CBP clarified that if companies do not receive these "known importer letters," it does not mean their supply chains are necessarily free from forced labor. Additionally, the UFLPA required the Forced Labor Enforcement Task Force ("FLETF") – an interagency body chaired by the Department of Homeland Security ("DHS")9 – to develop, submit to Congress, and release to the public, a strategy for supporting CBP's enforcement of the UFLPA, which it did on June 17.
Complying with UFLPA
Even before FLETF published its enforcement strategy, CBP released UFLPA "Operational Guidance for Importers" ("Guidance") on June 13. The Guidance includes crucial, practical information for importers in complying with the new law. Under UFLPA, the detention and seizure process are the same as under CBP's broader forced labor protocols, as discussed above. But, when goods are detained, excluded, or seized under UFLPA for suspected forced labor reasons, importers can request an exception to the rebuttable presumption, with the exception procedures varying slightly based on the status of the merchandise. According to the Guidance: importers who receive a detention notice regarding their shipments may generally respond within 30 days from the date the merchandise is presented for examination to CBP, to request an exception to the UFLPA rebuttable presumption;10 importers who receive an exclusion notice may file an administrative protest to request an exception;11 and importers who receive a seizure notice may file a petition to request an exception to the rebuttable presumption under the UFLPA.12 In each situation, importers must clearly state that the importer is seeking an exception to the UFLPA presumption and provide appropriate documentation supporting the exception.
CBP will engage with importers to determine on a case-by-case basis whether the importer has made every reasonable effort to trace their supply chains and guard against forced labor.13 CBP's Guidance includes five categories of supporting information, and non-exhaustive lists of examples for each type: 1) Due Diligence System Information, such as supply chain mapping and supplier codes of conduct and training; 2) Supply Chain Tracing Information, such as the roles of entities in the supply chain, merchandise- and transportation-related documentation (purchase orders, invoices, bills of material, etc.), and mining, production or manufacturing records; 3) Information on Supply Chain Management Measures, such as internal control, operating systems, or auditing procedures; 4) Evidence the Goods Were Not Produced Wholly or In Part in the XUAR; and 5) Evidence Goods Originating in China Were Not Mined, Produced, or Manufactured Wholly or In Part by Forced Labor, such as worker, recruitment, and wage documentation. CBP determinations and potential exceptions will be fact-specific, and as such, evidence provided should be specific as well. Supporting evidence should be translated into English, when necessary, to facilitate the review. Additionally, CBP Guidance discusses documentation for specific commodities, such as cotton, polysilicon, and tomatoes, and their downstream products. CBP's Guidance which includes an extensive list of types of evidence importers may submit, can be found on CBP's website.
On June 17, DHS released to the public its report to Congress, the Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People's Republic of China ("Strategy").14 As required by the UFLPA, the lengthy Strategy details a risk assessment of importing forced labor goods from China; an evaluation of forced-labor schemes, a forced labor Entity List, and high priority sectors for enforcement; recommendations to identify and trace UFLPA-affected goods; a description of how CBP plans to prevent entry of goods at U.S. ports; a description of additional resources necessary to prevent the importation of forced labor goods; guidance to importers; and a plan to coordinate and collaborate with nongovernmental parties. While importers should familiarize themselves with the entire document, the following are the key takeaways for importers for compliance with the UFLPA.
The Strategy reiterates several aspects of the Guidance. First is the need for heightened due diligence and supply chain mapping and tracing. Particular areas of concern are transshipment and third-country or third-province processing, which are ways that suppliers may obfuscate an item's origin or processing in XUAR. When evaluating partners in any part of China, there are certain key words or phrases that may denote forced labor, such as, "mutual pairing assistance," "poverty alleviation," "land transfer," and "reemployment." Beyond these specific red flags, the Strategy refers back to the ILO's indicators as its basis for identifying forced labor conditions. The Strategy details the newly created Forced Labor Entity List, which will be maintained by DHS, and published in the Federal Register and on the FLETF website.15
Pursuant to the Strategy, shipments imported prior to June 21, 2022, will be processed through the traditional forced labor WRO/Finding mechanism; shipments after June 21 will be processed according to the UFLPA. To comply with the UFLPA's new procedures, the Strategy reiterates in part and refers to the Guidance, as well as directing importers to the Department of Labor's Comply Chain website. Lastly, the Strategy detailed how DHS and CBP will engage with the public to counter the importation of forced labor goods. CBP will conduct educational outreach via the Public Awareness Campaign: U.S. Consumers and American Producers, and both parties will work with nongovernmental organizations and private-sector entities, seeking commentary and working towards collaboration on combating forced labor.
Additional Compliance Guidance
Additional proof, beyond that mentioned in the Guidance or Strategy, that merchandise is free of forced labor, may include evidence of the importer's anti-forced labor compliance program; daily manufacturing process reports; and any other relevant information that show that the goods were not produced with forced labor.
Beyond the newly released Guidance from CBP and the FLETF Strategy, there is precedent from which businesses can take away best practices. In 2017, CBP released an Informed Compliance Publication on Reasonable Care,16 which generally recommends: 1) staying up-to-date on Customs Regulations, Customs Bulletins and Decisions, the CBP Website, and Customs Rulings; 2) having a responsible and knowledgeable individual within your organization review relevant customs filings, and retain records of such filings; 3) discussing importations with any third parties (such as brokers or outside counsel) that assist your organization in complying with customs requirements; 4) implementing a customs compliance program and conducting internal supply chain audits, and vetting new suppliers or vendors for forced labor risks; 5) establishing reliable procedures to ensure no importation of goods in violation of Section 307 of the Tariff Act; 6) reviewing Department of Labor and ILO guidance; and 7) applying for a ruling17 from CBP for any transactions that may implicate forced labor regulations.
Further, past Customs rulings on forced labor may provide insight into how to comply with UFLPA. Customs has previously issued rulings regarding issues of forced labor, one of which, regarding Dandong Huayang Textiles and Garments Co., Ltd. ("Dandong Huayang"), is particularly useful.18 In that ruling, issued May 5, 2021, CBP denied a protest claiming that certain Chinese clothing was not a product of forced labor. Section 321 of the Countering America's Adversaries through Sanctions Act ("CAATSA"), creates a rebuttable presumption, overcome by clear and convincing evidence, that products from North Korea or produced by North Korean nationals are forced-labor goods and prohibited from importation into the United States. In the matter of Dandong Huayang, the company could not overcome the presumption of forced labor – and thus could not import its goods into the United States – due to probative deficiencies in its evidence, namely: inconsistencies in an auditor's report, insufficient interviews with employees, and unverifiable documentation.19 This case demonstrates the importance of a legitimate audit trail and adequate documentation in disputing allegations of forced labor in one's supply chain.
What else can an importer, or other links in the supply chain, do? First and foremost, be proactive. If a company does not already have an adequate internal compliance program to help employees identify indicators of forced labor, it should establish and maintain one. Equally important is knowing the relevant industry: indicators of forced labor will vary between sectors (for example, mining versus garment and textiles versus agriculture). CBP's Guidance includes an extensive list of links to both U.S. Government and international resources on forced labor.20 Review, and, if necessary, conduct an audit of the entire supply chain: know the origin of each component and parties involved in production, and examine each segment of the supply chain for forced labor involvement. Educate and work with suppliers, request certifications from them that their products are free from forced labor, and include language prohibiting forced labor in contracts and purchase orders. Lastly, create an audit trail and retain all relevant records – this is generally good business practice and required under Customs regulations but is especially important in the forced labor context.
1. 19 U.S.C. § 1307. In addition are Chapter 23 (Labor) of the USMCA; the Trafficking Victims Protection Act of 2000; The Uyghur Human Rights Policy Act of 2020; the Trade Facilitation and Trade Enforcement Act; the Global Magnitsky Human Rights Accountability Act (and Executive Order 13818); and the Countering America's Adversaries Through Sanctions Act.
2. Customs and Border Protection, "CBP Combats Forced Labor," (Jan. 2021) (available at https://www.cbp.gov/sites/default/files/assets/documents/2021-Jan/CBP%20Combats%20Forced%20Labor%20Part%201%20for%20.gov_.pdf).
3. International Labour Organization, "ILO indicators of Forced Labour" (Oct. 1, 2012) (available at https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---declaration/documents/publication/wcms_203832.pdf).
4. 19 C.F.R. § 12.42(e).
 See 19 U.S.C. § 1499 and 19 C.F.R. § 151.16.
6. See 19 C.F.R. § 12.42; 19 U.S.C. § 1595a; and 19 C.F.R. Part 171.
7. The other eight are, one each, from Democratic Republic of Congo, India, Japan, Malawi, Mexico, Nepal, Turkmenistan, and Zimbabwe.
8. See "Withhold Release Orders and Findings List," U.S. Customs and Border Protection (last accessed Jun. 6, 2022) (available at https://www.cbp.gov/trade/forced-labor/withhold-release-orders-and-findings).
9. Voting members include the DHS, the U.S. Trade Representative, and the Departments of Labor, State, Treasury, Justice, and Commerce. Observers include CBP, ICE, USAID, the National Security Council, and Departments of Energy and Agriculture.
10. See generally 19 C.F.R. Part 151.
11. See 19 C.F.R. § 174.12(e) for protest filing deadlines; generally, the deadline is 180 days after relevant CBP action, such as liquidation, exaction, written notice of exclusion, or other exclusion-related action by CBP.
12. See 19 C.F.R. Part 171 for petition process.
13. 19 CFR § 12.43(b).
14. Department of Homeland Security, "Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People's Republic of China," (Jun. 17, 2022) (available at https://www.dhs.gov/sites/default/files/2022-06/22_0617_fletf_uflpa-strategy.pdf).
15. This is distinct from, but may overlap with, the Department of Commerce Bureau of Industry and Security Entity List.
16. Customs and Border Protection, "Informed Compliance Publication: Reasonable Care" (Sep. 2017) (available at https://www.cbp.gov/sites/default/files/assets/documents/2020-Feb/icprescare2017revision.pdf).
18. The other is HQ 115676, (May 24, 2002), dealt with the question of defining "manufactured" as it pertained to convicts completing the last steps of cosmetics packaging.
19. H317249, (Mar. 5, 2021).
20. "Operational Guidance for Importers," 11.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.