On Thursday, December 23, 2021, President Biden signed the Uyghur Forced Labor Prevention Act (the
“Act”) into law. The Act aims to “ensure that goods
made with forced labor in the Xinjiang Uyghur Autonomous Region of
the People’s Republic of China do not enter the United States
market.” It does so by targeting forced labor from China
through multiple means, including by mandating broad prohibitions
on the importation of all goods from Xinjiang. It is now more
critical than ever for companies to know and document every step of
their supply chains to ensure that they do not involve forced labor
at any point.
I. Presumption Prohibiting Entry of All Items from
Xinjiang
Of greatest significance for companies importing goods into the
United States, Section 3 of the Act requires that the Commissioner
of US Customs and Border Protection (“CBP”) “apply a
presumption that … any goods, wares, articles, and merchandise
mined, produced, or manufactured wholly or in part” in
Xinjiang or produced by Xinjiang entities to be identified by the
Forced Labor Enforcement Task Force
(established under the US-Mexico-Canada Agreement Implementation
Act) (“Task Force”), are prohibited from importation
under Section 307 of the Tariff Act of 1930
(“Tariff Act”). In short, upon implementation,
importers of record must be prepared to prove, by clear and
convincing evidence, that their supply chains do not involve
Xinjiang forced labor.
While section 307 of the Tariff Act prohibits importing any
product that was mined, produced, or manufactured wholly or in part
by forced labor, CBP has historically implemented this provision
through the identification of company-specific Withhold Release
Orders (“WROs”) or Findings of forced labor. Recent
exceptions to this targeted practice have been the issuance of a
broad WRO in January 2021 applicable to all cotton, tomatoes and
downstream products manufactured in whole or in part in Xinjiang,
as well as the presumption of forced labor for all North Korea
labor under section 321(b) of the Countering America’s
Adversaries Through Sanctions Act (“CAATSA”). Now, the
newly-enacted Act essentially serves to broaden the presumption
currently applicable to Xinjiang cotton and tomato products to all
products from Xinjiang. Unlike the CAATSA-based North Korea
presumption, however, which prohibits all items produced by North Korean
nationals or citizens regardless of whether they are made in
North Korea or not, the Act’s Xinjiang-based presumption is
geographically limited to goods from Xinjiang and to certain
Xinjiang entities.
II. Overcoming the Presumption of Xinjiang Forced
Labor
As with other WROs, the Act allows importers to overcome the
presumption of forced labor applicable to items from Xinjiang if
they can prove by “clear and convincing evidence” that
the item in question was not the product of forced labor.
Specifically, the Act allows an exception to the presumption of
forced labor upon the CBP Commissioner’s determination by
“clear and convincing evidence that the good, ware, article,
or merchandise was not minded, produced, or manufactured wholly or
in party by forced labor”, and that the importer of record
has:
- Fully complied with all guidance regarding diligence, goods,
and evidence issued by the Task Force; and - Responded to all inquiries for information regarding whether
the item is the product of forced labor.
Whenever the CBP Commissioner makes such an exception to the
Act’s presumption of inadmissibility, the Commissioner must,
within 30 days, submit a report to certain congressional committees
and the public that identifies both the good excepted and the
evidence relied-upon. Once implemented, such reports may provide
helpful insights to importers seeking to overcome the Act’s
Xinjiang forced labor presumption.
III. Additional Steps to Prevent Entry of Items Produced
from Forced Labor in China
Several other provisions of the Act further aim to ensure that
items produced as a result of forced labor in the People’s
Republic of China do not enter the United States. Under Section Two
of the Act, the Task Force will take a number of steps towards this
end:
- Within 30 days after the Act’s enactment, the Task Force
will solicit public comment on how to ensure items
produced as a result of forced labor anywhere within the
People’s Republic of China are not imported into the United
States. Businesses will have the opportunity to provide input into
this process. - Within 45 days after the close of the above comment period, the
Task Force will conduct a public hearing and
invite witnesses to testify regarding the use of forced labor in
the People’s Republic of China and potential measures to
prevent the importation of items resulting from such forced labor
into the United States;
Following the public comment period and hearing noted above, the
Task Force will, in consultation with the Secretary of Commerce and
the Director of National Intelligence, develop a
strategy to prevent items produced using forced labor in
the People’s Republic of China from being imported into the
United States. This strategy will provide important insights into
forced labor practices and steps companies should take to ensure
that their supply chains are free of such labor. The strategy will
include:
- An assessment of the risk of importing goods resulting from
forced labor, including threats that could lead to the importation
of such goods via third countries; - A description and evaluation of various government labor
schemes in which certain persecuted groups non-voluntarily provide
work or services, and identifying “a list of high-priority
sectors for enforcement,” which will include cotton, tomatoes,
and polysilicon (all industries with existing WROs); - A recommendation of steps that can be taken to ensure goods
made in Xinjiang that enter into the United States are accurately
identified and traced; - A description of legal and other steps, including pilot
programs, that CBP can use to ensure that no goods wrongfully enter
US ports, along with a description of additional resources that are
needed for this purpose; - Issuance of guidance to importers covering several topics,
including due diligence, effective supply chain tracing, and supply
chain management measures; and - A plan for coordinating and collaborating with appropriate
nongovernmental organizations and private sector entities.
The foregoing steps will take place in the context of a
multilateral diplomatic strategy for addressing forced labor in
Xinjiang, as mandated in Section 4 of the Act. This strategy is
consistent with the approach the US is already taking in
conjunction with its partners and allies to encourage other
countries to impose similar prohibitions on the importation of
goods made with Xinjiang forced labor.
IV. Prepare Now
The broad Xinjiang forced labor presumption takes effect on June
21, 2022 – 180 days following enactment of the Act. Taking
steps now to ensure due diligence and to document supply chains
is especially important for businesses in sectors the US
Government has identified in its revised Xinjiang Supply Chain Business Advisory as
industries using forced labor (i.e., agriculture, cell phones,
cleaning supplies, construction, cotton, electronics assembly,
extractives such as copper and hydrocarbons, hair products, food
processing, footwear, gloves, hospitality, metallurgical grade
silicon, noodles, printing products, renewable energy, stevia,
sugar, textiles, and toys). To this end, as detailed in our prior
alert, Six Best Practices for Excising Xinjiang Forced
Labor from Supply Chains, until CBP and the Task Force issue
specific guidance implementing the Act, engaging in human rights
due diligence and applying lessons learned from CBP’s
implementation of the North Korea presumption and the Xinjiang
cotton and tomato WROs will help companies to ensure that they
remove Xinjiang forced labor from supply chains and appropriately
document every step of their supply chains so that they are
prepared to overcome a future presumption of Xinjiang forced
labor.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
