Recent Trade & Tariff Perspectives

June 29, 2022  |  Monica DeMars  Senior Manager Compliance

  aerial view of containers waiting to be loaded 

Importer Guidance—the Uyghur Forced Labor Prevention Act

Over the last few years, the industry has seen a significant rise in the enforcement of forced labor rules for importing to the United States. Currently U.S. Customs and Border Protection (CBP) has enforcement actions including 54 Withhold Release Orders (WRO's) and 9 Findings. According to this report, CBP detained 912 shipments because of suspected forced labor between October 1, 2021, and December 31, 2021.

On December 23, 2021, President Biden signed into law the Uyghur Forced Labor Prevention Act (UFLPA), which took effect on June 21, 2022. UFLPA establishes a rebuttable presumption that the importation of any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of China, or produced by certain entities on the Forced Labor Enforcement Task Force (FLETF) Entity List, is prohibited for import into the United States.

The Department of Homeland Security (DHS) has recently issued a report to Congress which outlines their Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in China. This strategy outlines the assessment, the evaluation and description of forced labor schemes, the UFLPA Entity List, recommendations for opportunities to identify and trace goods, as well as guidance to importers.

What should importers be doing? Where do you start?

CBP will employ a risk-based approach to the enforcement of ULFPA.  Importers should be reviewing their supply chain against these resources for possible risks. CBP will also prioritize high-risk goods and banned entities in its enforcement. Importers should be thoroughly reviewing their goods and suppliers at all levels of their supply chain against potential risks of forced labor, transshipment, and other targeted areas.

Importers should review CBP’s Operational Guidance for Importers and DHS Strategy document as well as UFLPA Entity list as a first step in the preliminary review. CBP will initially be targeting shipments that are:

  • High Priority Sectors (cotton and cotton products, tomatoes, and silica-based products including polysilicon)
  • Illegally transshipped goods with inputs from Xingang
  • Goods imported from entities, not located in Xingang, that are a parent, subsidiary, or affiliate, related to an entity in Xingang and likely to contain inputs from that region.

It is strongly recommended that importers start as soon as possible to conduct a supply chain mapping exercise tracing the origin of each input to the product to confirm the entity and who produced it, that it was not made with forced labor, and be able to provide supporting documentation.

The most effective way to do this is to develop a questionnaire, based on the International Labor Organization forced labor indicators, and outline the process for how your product is produced. If you catch any red flags through this process, discuss with your supplier how they will rectify the situation. You can also use the U.S. Department of Labor’s Comply Chain website.

The guidance and strategy published outlines:

  • The types of evidence that may demonstrate a good is out of scope and what documentation needs to be provided
  • What documentation is clear and convincing evidence to obtain an exception to UFLPA
  • Outlines due diligence, effective supply chain tracing, supply chain management measures and other resources

The process

CBP has outlined a general process they will follow when screening and detaining potentially violative cargo under the ULFPA.

CBP risk assessment and enforcement: Potential violative cargo will have a risk assessment conducted and will be detained, seized, or flagged for an exam by CBP according to the current detention process. CBP will issue a detention notice that will cite the forced labor UFLPA requirements. The detention is for 30 days after which the goods will be seized.

Importer actions: Importers can choose to rebut the presumption of the forced labor finding. However, they must be able to prove that they have fully complied with the law and have implemented a strong due diligence and management process over the potential forced labor incorporated in their supply chains. If an importer is unsure of their supply chain or it cannot be verified, there is an option to export the goods.

If an importer wishes to petition CBP, the importer must provide all the potential evidence outlined in CBP’s strategy—making sure the evidence is clear and convincing, and ensuring the documentation presented to them, if it is in English, allows CBP to conduct a more efficient review.

  • Petition shipment outside the of scope of UFLPA: The importer can petition CBP if they can provide documentation proving that the importer’s merchandise is sourced completely outside of Xinjiang and none of the entities are connected to the UFLPA entity list. The importer will need to provide clear and convincing evidence that their goods are excluded or not applicable to UFLPA.
  • Request an exception: This option is applicable for the importation of goods within the scope of ULFPA, where the entity or XUAR product is within the supply chain of the product being imported. This evidence and support are good for one specific shipment unless the importer can prove and supply documentation to CBP that additional identical shipments previously determined to be admissible are from the same supply chain. Only the Commissioner of CBP can grant an exception. If an exception is approved, CBP will need to notify Congress and the public within 30 days.

    To apply for an exception, the importer must:
    • Present clear and convincing evidence, the goods were not mined, produced, or manufactured wholly or in part with forced labor
    • Respond completely and substantively to all CBP requests for information
    • Comply with all guidance, strategy, and regulations under UFLPA
  • Final decision: If the evidence is not found to be clear and convincing by CBP, the importer is entitled to continue to protest the decision. However, the importer is responsible for all storage and other fees while the cargo is detained.

This rebuttable presumption will apply to all products, whether already subject to a WRO within these high-priority sectors produced in Xingang or by entities on the UFLPA Entity List. If your goods are covered by a WRO, this will significantly change the timeframe from 90 days to 30 days for importers to present their case to CBP.

Next steps

The high standard of enforcement of UFLPA has changed the requirements and diligence needed for shippers to import certain commodities to the United States. Shippers may need to change contracts and purchase orders to include requirements against forced labor in their supply chain and will need to conduct third party audits of their supply chain.

Reviewing if being a Customs Trade Partnership Against Terrorism (CTPAT) partner with CBP is more important than ever. CTPAT partners have been given priority review for UFLPA exception requests. CBP is holding the 2022 Trade Facilitation and Cargo Security Summit in Anaheim, California, July 18–19. Be sure to register today to attend in person or virtually, to learn more about forced labor, CTPAT benefits and other CBP initiatives and priorities. Connect with one of our trade policy experts to learn more.

Resources

 

Our information is compiled from a number of sources that to the best of our knowledge are accurate and correct. It is always the intent of our company to present accurate information. C.H. Robinson accepts no liability or responsibility for the information published herein.

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