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June 21, 2022 – On June 13 and 17, 2022, U.S. Customs and Border Protection (“CBP”) released guidance for importers to help the trade community prepare for the implementation of the Uyghur Forced Labor Prevention Act (“UFLPA”), which comes into effect on June 21, 2022. In particular, on June 13, 2022, CBP issued its Operational Guidance for Importers (“Operational Guidance”) and, on June 17, 2022, released its Strategy to Prevent the Importation of Goods Extracted, Produced, or Manufactured with Forced Labor in the People’s Republic of China (“UFLPA Strategy”).
The UFLPA entered into force on December 23, 2021. The UFLPA establishes a rebuttable presumption that the importation of goods, commodities, articles and commodities extracted, produced or manufactured in whole or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China (“Xinjiang”), or produced by certain entities, is prohibited by Section 307 of the Tariff Act of 1930 and that such goods, commodities, articles and commodities are not permitted to enter the United States. United. CBP may detain these goods and either exclude them from entry or subject them to seizure or forfeiture. The presumption applies unless the CBP Commissioner determines, based on “clear and convincing” evidence provided by the importer, that the goods, merchandise, articles or commodities were not produced by forced labor. CBP has held in previous decisions that “clear and convincing” evidence is a higher threshold than a preponderance of evidence.
This rebuttable presumption goes into effect June 21, 2022. Among other things, the operational guidelines detail the information importers must provide if their goods are detained by CBP:
- Importer due diligence information, such as supply chain mapping records, a supplier code of conduct prohibiting the use of forced labor and related monitoring, and independent verification of implementation and the effectiveness of the due diligence system;
- Supply chain traceability information showing that the goods were not produced using forced labor or in Xinjiang, including identification of all supply chain entities and relational information to support (eg purchase orders, invoices, bills of materials);
- Information on supply chain management measures, such as internal controls to prevent risks of forced labor and audited accounting and financial statements; and
- Documentation indicating that the goods were not produced in Xinjiang or using forced labor, including supply chain mapping of each entity involved in the production process, information on the workers of each entity, information on the recruitment of workers and credible independent audits to identify indications of forced labour.
The Operational Guidelines provide further specific examples of documentation for cotton, tomato, and polysilicon products, which are among the highest priorities for CBP enforcement under UFLPA.
The UFLPA also requires that the Interagency Task Force on Forced Labor Law Enforcement, chaired by the Secretary of Homeland Security and in consultation with the Secretary of Commerce and the Director of National Intelligence, develop and submit to the Congress a strategy to support CBP’s enforcement of Section 307 of the Tariff Act of 1930 regarding goods, commodities, articles, and commodities produced by forced labor in the People’s Republic of China. The task force submitted the UFLPA strategy to Congress on June 17, 2022.
The UFLPA strategy is intended to support the enforcement of Section 307 of the Tariff Act of 1930, as amended (19 USC § 1307), to prevent the importation into the United States of goods mined, produced, or manufactured in whole or partly with forced labor in the People’s Republic of China. Among other things, the UFLPA provides guidance to US importers on UFLPA compliance. Specifically, the UFLPA strategy recommends that importers develop due diligence, effective supply chain monitoring, and supply chain management measures, specifically citing the U.S. Department of Labor’s Comply Chain tool as guide. The UFLPA also provides guidance on the evidence required to demonstrate either that a good has not been produced using forced labor (indicating, among other things, the identification of the workers involved and their supporting documents) or has not not been produced in Xinjiang (indicating, among other things, DNA tracing or isotopic testing to show the origin of a particular good). Finally, the UFLPA Strategy Document includes the preliminary list of UFLPA entities, including a number of companies previously designated on the Entity List or subject to a withholding order of release for alleged use of forced labor.
These UFLPA developments underscore the need for companies engaged in U.S.-China trade to examine their supply chain and address risks stemming from UFLPA-related detentions.
The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.
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