On 13 June 2022, the United States (US) Customs and Border Protection (CBP) released operational guidance for importers to comply with the Uyghur Forced Labor Prevention Act (UFLPA), which goes into effect 21 June 2022. The UFLPA applies a rebuttable presumption to all imports that have been mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (XUAR) of the People’s Republic of China (PRC) or entities associated with forced labor on the Entity List. Goods falling under the purview of the UFLPA will be prohibited from entry into the US.
CBP’s guidance provides information on the importation process and enforcement of the UFLPA, which includes detention, release, exclusion, and seizure or forfeiture of goods. The guidance also details how companies can request an exception to the rebuttable presumption, find resources to conduct supply chain due diligence, and learn about the types of information authorities may require.
The Department of Homeland Security (DHS), as Chair of the Forced Labor Enforcement Task Force (FLETF), will publish the Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China (UFLPA Strategy) on 21 June 2022 with specific importer guidance.1 The UFLPA supports the enforcement of Section 307 of the Tariff Act of 1930, which prohibits the importation of all “…goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions.”2
When enforcing the UFLPA, CBP will detain and/or exclude or seize goods from the XUAR or entities involved in forced labor on the Entity List under a rebuttable presumption. As required, importers will receive notice when CBP takes an enforcement action on goods. Importers will be able to exercise one of the two following options to respond to a detention, seizure or exclusion notice from CBP:
Request an exception to the UFLPA’s rebuttable presumption.
If an importer believes that some of its goods do not fall under the UFLPA, the importer must provide clear and convincing evidence that there is no connection to XUAR or entities on the Entity List.
Importers will also have the opportunity to identify goods that CBP has previously reviewed and deemed admissible. To overcome the rebuttable presumption, importers must provide documentation that clearly demonstrates that their goods were not mined, produced, or manufactured wholly or in part by forced labor. Documentation falls under five categories:
Due diligence system information: Supply chain mapping, written supplier code of conduct, training, monitoring the supplier’s code of conduct, remediation of any forced labor conditions as well as independent verification and reporting on the performance of its due diligence system.
Supply chain tracing information: Evidence pertaining to the overall supply chain, evidence pertaining to merchandise or any component thereof, and evidence pertaining to the miner, producer, or manufacturer.3
Information on supply chain management measures: Internal controls preventing or mitigating the use of forced labor in the manufacturing process as well as providing CBP with applicable documents that are part of an operating or accounting system that includes audited financial statements.
Evidence that goods were not mined, produced, or manufactured wholly or in part in XUAR: Documentation must trace the supply chain of the goods.
Evidence that goods originating in China were not mined, produced, or manufactured wholly or in part by forced labor: Includes, but is not limited to, supply chain mapping, information on workers such as wage payment and production output at entities involved in the production process, information about the worker recruitment process and internal controls that document how employees are working voluntarily as well as credible audits identifying forced labor indicators and if applicable, remediation.
Imports that request exceptions to the UFLPA should refer to categories 1-3 and 5. Importers who contend that their imports are not within the scope of UFLPA will provide information related to categories 2 and 4.
CBP’s operational guidance also includes a non-exhaustive list of US government and international resources to assist importers in conducting their supply chain due diligence, tracing, and management, as well as a non-exhaustive list of the types of documents that may be required for commodities such as cotton, polysilicon, and tomatoes. This includes records kept in the ordinary course of business, flow charts and maps of regions documenting the production process as well as entities associated with the production process.
Actions for businesses
With the arrival of the key date, 21 June 2022, importers should proactively map their supply chain, test their ability to collect chain of custody documentation, and keep abreast of CBP and DHS guidance. They should also communicate their policy addressing forced labor to supply chain partners. Companies will have to be proactive in screening their exposure and ongoing monitoring for potential changes in their supply chain.
For additional information with respect to this Alert, please contact the following:
Ernst & Young LLP (United States), Global Trade
- Michael Leightman, Houston
- Lynlee Brown, San Diego
- Michael Heldebrand, San Jose
- Nathan Gollaher, Chicago
- Justin Shafer, Cincinnati
- Sergio Fontenelle, New York
- Bill Methenitis, Dallas
- Doug Bell, Washington DC
- Armando Beteta, Dallas
- Bryan Schillinger, Houston
- Prentice Wells, San Jose
- Anand Raghavendran, Irvine
- Nesia Warner, Austin
- Jay Bezek, Charlotte
- Helen Xiao, Chicago
- Sharon Martin, Chicago
- Oleksii Manuilov, New York
- Parag Agarwal, New York
- James Lessard-Templin, Portland
- Sundar Markandan, Irvine
- Rodney Appling, Austin
- Jack Harvey, Cincinnati
- Alexa Reed, Cleveland
- Tammy Dang, San Francisco
- Renata Natalino, San Francisco
For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.
CBP Publication No. 1793-0522: U.S. Customs and Border Protection Operational Guidance for Importers, Jun. 13, 2022 at 4.
Id. at 4.
Id. at 14-15.