Hot Topics in International Trade – June 2022 – CBP Issues Guidance on Compliance with Uyghur Forced Labor Prevention Law | Braumiller Law Group, PLLC

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U.S. Customs and Border Protection (“CBP”) has released its first set of Uyghur Forced Labor Prevention Act (“UFLPA”) guidance, which is due to take effect on 21 June 2022. CBP guidance takes the form of a website. This is a homepage for UFLPA-related tips, FAQs, webinars, charts, and CBP contact information. This essential UFLPA homepage can be accessed at: www.cbp.gov/trade/forced-labor/UFLPA.

What is the UFLPA?

The UFLPA prohibits the import of goods made in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China (“XUAR”) based on the presumption that all goods made in the region are made with forced labor. The statute establishes a rebuttable presumption that the importation of goods, commodities, articles, and commodities mined, produced, or manufactured in whole or in part by XUAR or produced by certain entities is prohibited by 19 U.S.C. 1307 and that such goods, commodities, articles, and the goods are not allowed to enter the United States.

In addition, the UFLPA is engaging an interagency Forced Labor Law Enforcement Task Force (“FLETF”) to submit to Congress a strategy to support CBP enforcement. CBP has already requested $70.3 million for additional employees, technology and training, a fund backed by the Congressional Commission on Chinese Leadership, including Sen. Jeff Merkley, D-Ore., the Sen. Marco Rubio, R-Fla., Rep. James McGovern, D-Mass., and Rep. Christopher Smith, RN.J.

Notification letters to importers

CBP has issued guidance letters to importers who routinely import goods from XUAR that the agency is aware of. The letters contained standard language applicable to all importers and warned them that their goods might be subject to the UFLPA. There is a version for members of the Customs Trade Partnership Against Terrorism (CTPAT), which warns that members could be expelled from the program if they fail to comply with the UFLPA. In each letter, CBP warns of the consequences of non-compliance with the UFLPA, which include seizure, forfeiture, and/or penalties. With a focus on compliance, the letters also provide:

“It is your responsibility as the importer to apply due diligence, effective supply chain tracing and supply chain management measures to ensure that these imports are free of any mined goods, produced or manufactured in whole or in part by the forced labor of the People’s Republic of China, especially the XUAR.

However, the standard letter language posted on the CBP website does not include specific steps companies can take to ensure that their goods comply with the UFLPA. Although CBP has not sent a notification letter to every importer, all importers are required to comply with the UFLPA.

Detention and Seizure Procedures for Goods Coming from XUAR

Unlike the procedures for detaining goods subject to a Hold Release Order (“WRO”), which are described in 19 CFR 12.43-44, goods detained under the UFLPA follow general detention and seizure procedures. for most imported goods described in 19 CFR. 151.16. One of the main differences between the procedures is that importers only have 30 days to appeal when goods are held for non-compliance under the UFLPA (although an extension may be granted), while importers have 3 months under a WRO to challenge eligibility. In both cases, the importer has the option of exporting the goods within the applicable time limits (indicated here) rather than requesting the release of the goods. Since the burden of proof to obtain this authorization under the UFLPA rises to the level of “clear and convincing” and, if so, triggers a reporting requirement on CBP to both Congress and the public, most importers will choose to export.

Recommended Compliance Actions

Although not specifically mandated by CBP, all importers should take steps to comply with the UFLPA by ensuring that their goods, and any materials or inputs to their goods, have not been made in the XUAR. We recommend that importers take the following compliance actions in preparation for the entry into force of the UFLPA on June 21:

  1. Review upstream suppliers and supply chains by periodically auditing suppliers for the origin of their goods, changing suppliers if forced labor is used, and screening new suppliers with forced labor questionnaires. This includes conducting due diligence research and third-party audits of suppliers and contractors.
  1. Add language in procurement contracts that prohibits forced labor products and XUAR sourced products and expand language to include materials and services from sub-contractors.
  1. Conduct annual (or more frequent) audits for forced labor and XUAR sourcing. Include factory interviews with factory workers in China to confirm that they work voluntarily, without threat of punishment, and show evidence that their responses were not influenced by their employers.
  1. Adopt or amend written compliance manuals, procedures and other action-oriented written guidelines, which should include a management policy statement demonstrating the company’s commitment not to use forced labor in its supply chain. This includes hiring a trade compliance officer or team of experts and training employees and contractors regarding forced labor compliance.
  1. Trace the origin of current goods by compiling a detailed documentary trail containing commercial invoices, production documents, salary information (such as time sheets or pay slips from overseas factories), videos and/or photographic evidence of merchandise produced at the China (or overseas) factory, bills of materials, sales contracts and purchase orders, and air waybills or bills of lading for materials shipped to the factory from overseas manufacturing.

Additionally, importers should beware of the risks of industries in China using forced labor, such as the quartz, cellphone, tomato and other food, computer, cotton, silicone products, and textile industries. For updates regarding forced labor and CBP enforcement, visit: https://www.cbp.gov/trade/forced-labor.

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