Uyghur Forced Labor Prevention Act (UFLPA) Due Diligence and Procedures

What is Uyghur Forced Labor Prevention Act (UFLPA) Due Diligence and Procedures?

Effective June 21, 2022, the Uyghur Forced Labor Prevention Act (UFLPA), prohibits the importation into the U.S. of goods produced wholly or in part with forced labor from China’s Xinjiang Uyghur Autonomous Region (XUAR).  Under the UFLPA, U.S. Customs and Border Protection (CBP) operates with a rebuttable presumption that goods from the XUAR or involving entities listed on the UFLPA Entity List under 19 U.S.C. § 1307 were made with forced labor.  Importers must conduct due diligence and provide clear and convincing evidence to refute this presumption to enter their goods into the U.S.  The inability to prove the negative – namely, that the goods were not made with forced labor – easily results in the prohibition of entry under Section 307 of the Tariff Act of 1930.  The UFLPA applies to a broad range of products, such as apparel, textiles, electronics, solar panels (polysilicon), and agricultural products (e,g., cotton and tomatoes).

 

How does UFLPA Due Diligence and Procedures impact businesses?

The UFLPA presents significant challenges for businesses with complex supply chains linked to the XUAR.  These supply chains, which are often multi-tiered and relatively complex, may at some level contain goods produced with forced labor.  Any forced labor is against the policy of the United States and the World Trade Organization (WTO).

 

The U.S. Department of Homeland Security has established a Forced Labor Enforcement Task Force (FLETF) and developed a comprehensive UFLPA strategy that includes the publication of the UFLPA Entity List and importer guidance.  Key risk areas include lack of supply chain transparency, the commingling of XUAR materials with legitimate goods, unlawful circumvention by business partners, and the targeting of vulnerable populations both inside and outside China.  

 

To overcome CBP’s rebuttable presumption of culpability, companies are exploring new ways to trace the origin of goods and document that forced labor was not used in any part of the supply chain.  This burden of proof often necessitates thorough due diligence of supplier audits, chain of custody records, and third-party certifications.  Additionally, certain industries – such as apparel, textiles, solar energy, and agriculture – are especially vulnerable to UFLPA scrutiny due to the prevalence of forced labor in these sectors.

 

Non-compliance with the UFLPA can lead to severe consequences, including, for example, the detention or seizure of goods, significant monetary penalties, reputational damage (especially if businesses are publicly identified as violating U.S. laws related to forced labor), and import bans.

 

How can Schulz Trade Law PLLC (STL) help clients with UFLPA Due Diligence and Procedures?

Schulz Trade Law PLLC (STL) supports businesses by offering expert guidance and useful tools to navigate the complex UFLPA requirements.  Our trade attorneys and advisors help clients with due diligence by examining their supply chains, ensuring better traceability of goods to mitigate forced labor risks. Additionally, we provide importers with practical avenues to rebut CBP’s forced labor presumption where possible, including supplier declarations, automated search tools, and insightful chain of custody records.  STL also works with businesses to develop and implement UFLPA compliance programs, which include mapping and vetting suppliers, improving transparency, and conducting better due diligence on high-risk product lines.  In cases where CBP detains goods under the UFLPA, STL offers experienced legal representation and advocacy.  Our law firm helps importers identify the necessary evidence to challenge detentions and represents clients in negotiations or appeals to release detained goods.  By partnering with STL, businesses can help ensure compliance with U.S. and foreign forced labor laws, avoid supply chain disruptions, and protect compliance in a global market that increasingly values ethical trade practices.