What is this about?

The United States has intensified regulations on the import of goods from the Xinjiang region of China officially called the Xinjiang Uyghur Autonomous Region (XUAR). US officials had repeatedly stated that the Chinese detained members of the minority community, Uyghur for forced labour. Due to the human rights violation, the US banned the import of goods like tomatoes and cotton from the Xinjiang region by January 2021 during the Trumps administration. The ban also applied to raw fibres, clothing made from Xinjiang-grown cotton and tomato products from the region even if they were processed in other countries. However, China denied all allegations concerning the violations at Uyghur and possibly genocide in the north-western regions of Xinjiang.

United States with the intent to prevent the breach of human rights in the global supply chain, enforced the Uyghur Forced Labor Prevention Act (UFLPA) which was signed by the US President Mr Joe Biden in December 2021. This established an assumption that any goods, articles, merchandise mined, produced, or manufactured wholly or in part in XUAR is banned from the US unless proven otherwise.

The Customs and Border Protection (CBP) would determine if the importer of goods and materials into the US from the XUAR region has complied with the required conditions and if they have provided adequate evidence to prove that there has not been any forced labour. This criterion will ensure that humans are not negatively impacted in the global supply chain. The UFLPA has been in effect since June 21, 2022, and the CBP released the importer operational guidance to assist the trade community in the effective implementation of UFLPA.

How is the regulation being enforced?

To enforce the Uyghur Forced Labor Prevention Act (UFLPA), the Customs and Border Protection (CBP) will take specific actions based on the details involved in each import of any shipment that comes under its radar.

1. The actions on applicable shipments include:

• Identifying - CBP will identify shipments from sources including the UFLPA Entity List published in the Federal Register. Those identified by the US government in the entity list are presumed to be made with forced labour.
• Detaining – If the shipment is under UFLPA, the goods from the importer will be detained by the CBP and a detention notice issued requesting the importer to provide information to refute the assumption.
• AND/OR Excluding – CBP may exclude shipments violating UFLPA and importers may protest this exclusion.
• OR Seizing Shipments – Shipments can also be seized by CBP and referred for fines, Penalties or Forfeitures (FPFO) officer at the port entry. The FPFO will provide further information to the importer on how to provide data to the CBP for review and the deadline for the petition to FPFO.

2. UFLPA Region Alert Enhancement

Notably, as another part of the enforcement strategy, the CBP adopted the Uyghur Forced Labor Prevention Act (UFLPA) Region Alert Enhancement to the Automated Commercial Environment (ACE) on March 18, 2023. This is the primary tool for the submission of Electronic Export Information (EEI) to the US Automated Export System (AES). When an importer submits their EEI, AES will process the information and, if accepted, generate an Internal Transaction Number (ITN). The Region Alert in the ACE tool will now provide prior notification to importers and those who represent their products about goods that may have been manufactured in XUAR (Xinjiang Uyghur Autonomous Region) and importation into the U.S. is banned.

Changes made to the Automated Commercial Environment for Region Alert:

UFLPA Region has 3 new verifications to Automated Commercial Environment (ACE) applications. ACE is the U.S. electronic Single Window platform for all trade processing, Cargo Release, Post-release, Export and Partner Government Agency (PGA) data.

• The postal code field is required.
• Invalid Chinese postal code will show an alert to the user.
• Warning messages will be displayed for any postal code from the XUAR region.

Interactive Trade Statistics Dashboard for viewing enforcement actions

The CBP launched the UFLPA Statistics Dashboard during the Forced Labor Technical Expo, on 14th March 2023 with the intent to provide a single source of data on UFLPA enforcement actions. This allows greater transparency while protecting sensitive trade information. The dashboard allows users to view details on the shipments that have been held by the US Customs and Border Protection (CBP) under the UFLPA. You can visit this link to view more information on the Interactive Dashboard.

Dashboard Image Source US CBP

What should businesses do to be exempted from the UFLPA?

An importer/business who requires an exemption from the UFLPA that their cargo may be accepted within the US must demonstrate to the CBP that their goods have not been produced in the XUAR region of China or by any company in the UFLPA entity list, or that the goods were not produced by forced labour. This would require the business to:

1. Present evidence that the goods/materials being imported were sourced outside of the XUAR region. This would require that businesses have Supplier Due Diligence (SDD) in place, where the suppliers are reviewed to ensure that they comply with business standards and regulations. This would eventually lead to businesses tracing the supply chain back to where the goods/materials were produced. This record must be presented to the CBP. Hence evidence that Goods Were Not Mined, Produced, or Manufactured Wholly or In Part in the Xinjiang Uyghur Autonomous Region, in this case, is required.
2. If the goods or materials have come from the XUAR region, businesses must present evidential data that there has been no form of forced labour in accordance with ILO Indicators of Forced Labour

How to move forward?

The best step moving forward is to shift focus on complying with the UFLPA, by ensuring Global Supplier Chain Due Diligence. Getting to know who is producing the goods, from where it is being sourced, and how they are sourced can help businesses identify and assess risks. If not, the consequence could be expensive penalties, fines or worse detention of cargo which can be a major stumbling block for any business to continue further operations.

Here is how we can help you!

With more than 2 decades of compliance expertise, we can help you establish supplier due diligence, for the global supply chain so that you can meet the UFLPA requirements through our software tool and services:

• Supplier Assessment and Identification
• Supplier Risk Management.
• Audits to expose any human and environmental risk factors in the supply chain.
• Supplier Intelligence data for informed and effective decisions.

Reach out to our regulation experts on product regulatory compliances