On December 23, 2021, and following strong bipartisan support in Congress, President Biden signed the Uyghur Forced Labor Prevention Act (“UFLPA” or “Act”) into law. P.L. 117-78 (2021). The UFLPA builds on previous congressional and executive branch actions aimed at responding to allegations of forced labor and other human rights concerns in China’s Xinjiang Uyghur Autonomous Region (“XUAR”). In particular, the UFLPA introduces a rebuttal presumption that “any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in” the XUAR were made with forced labor and are therefore ineligible for entry into the United States. In addition, the UFLPA details Congressional expectations for a whole of government enforcement strategy with respect to allegations of XUAR-related forced labor and expands economic sanctions introduced under the Uyghur Human Rights Policy Act of 2020 to cover “{s}erious human rights abuses in connection with forced labor” in the XUAR.

In recognition of the compliance challenges related to the above-described rebuttable presumption, the Forced Labor Enforcement Task Force (“FLETF”) is soliciting comments on how best to ensure that “goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part with forced labor in the People’s Republic of China are not imported into the United States.” These comments are due no later than March 10, 2022. As discussed further below, importers should consider submitting comments to the FLETF concerning this set of issues, which will ultimately inform the enforcement strategy employed by U.S. Customs and Border Protection (“CBP”) at the border. Additionally, importers should begin top-to-bottom reviews of their supply chains to ensure compliance with the newly-introduced rebuttable presumption prior to its implementation in June of this year.

Background

The UFLPA builds on several years of increased congressional and executive branch activity aimed at responding to the allegations of forced labor and other human rights concerns in the XUAR. Beginning in 2019, and pursuant its authority under Section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307), CBP started to issue withhold release orders (“WROs”) covering certain products originating from the XUAR. Under a WRO, port directors are authorized to withhold the release of imported goods when information reasonably but not conclusively indicates that the goods were produced by forced, indentured, or convict labor (collectively “forced labor”). In such circumstances, importers must either export the withheld shipments or submit, within three months, a certificate of origin and detailed statement demonstrating that the goods at issue were not produced with forced labor. To date, CBP has issued eleven WROs targeting certain goods from the XUAR. These include a 2021 WRO on all cotton and tomato products originating in the XUAR and a 2021 WRO on all silica-based products made by XUAR-based Hoshine Silicon Industry Co. Ltd (“Hoshine”).

In addition to these actions by CBP, other executive branch agencies have taken steps to address alleged forced labor in the XUAR. In 2020, the U.S. Departments of State, Treasury, Commerce, and Homeland Security issued a joint business advisory warning of the potential legal, reputational, and economic risks associated with supply chain exposure in the region. In 2021, an updated advisory (now including the Department of Labor and the Office of the U.S. Trade Representative) was released to further emphasize risks under U.S. law of supply chain exposure to XUAR or XUAR-related products. The U.S. Department of Commerce has, in addition, added more than fifty Chinese entities to the Bureau of Industry and Security’s “Entity List” in response to reported human rights abuses in the XUAR, resulting in U.S. export restrictions to these entities. And, the U.S. Department of the Treasury has designated individuals for economic sanctions in relation to their alleged involvement with human rights abuses in the XUAR.

In addition to these executive branch actions, Congress has also been involved in the response to allegations of forced labor and other human rights concerns in the XUAR. In 2020, Congress passed the Uyghur Human Rights Policy Act of 2020 (P.L. 116-145), which mandates the imposition of economic sanctions on foreign persons, including Chinese officials, that are determined to be connected to human rights concerns in the XUAR. The legislation also instructs executive branch agencies to draft reports covering the aforementioned concerns as well as the potential U.S. economic and security risks of China’s policies in the XUAR.

The Uyghur Forced Labor Prevention Act

Provisions on Trade

In this latest legislative action to address widespread reporting of forced labor and other human rights concerns in the XUAR, Congress has set out to “ensure that goods made with forced labor in the {XUAR} do not enter the United States market, and for other purposes.” P.L. 117-78 § 1. The primary vehicle for obtaining this policy objective is the establishment of a rebuttable presumption that “any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in” the XUAR were made with forced labor and are therefore ineligible for entry into the United States. P.L. 117-78 (2021) § 3(a). The rebuttable presumption extends also to goods, wares, articles, and merchandise produced by certain kinds of entities identified by the Act. Id. These are:

  • (1) Entities in the XUAR that mine, produce, or manufacture wholly or in part any goods, wares, articles and merchandise with forced labor;
  • (2) Entities working with the government of the XUAR to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the XUAR;
  • (3) Entities that exported products mined, produced, or manufactured wholly or in part by entities in (1) or (2) from China to the United States; and
  • (4) Facilities and entities, including the Xinjiang Production and Construction Corps, that source material from the XUAR or from persons working with the government of the XUAR or the Xinjiang Production and Construction Corps for purposes of the “poverty alleviation” program or the “pairing-assistance” program or any other government labor scheme that uses forced labor.

As discussed further below, a list of entities that the U.S. government believes meet the above descriptions will be published in a report to be developed by the FLETF and submitted to Congress on June 21, 2022. P.L. 117-78 § 2(d)(2)(B). This is the same day that the rebuttable presumption will itself go into effect. P.L. 117-78 § 3(e).

The Act specifies that the above-described presumption will be overcome if CBP determines: (1) that the importer of record (a) fully complied with all due diligence and evidentiary guidance established by the FLETF pursuant to the Act, along with any associated implementing regulations and (b) completely and substantively responded to all CBP inquiries seeking to ascertain whether the goods were mined, produced, or manufactured wholly or in part with forced labor; and (2) by clear and convincing evidence, that the good, ware, article, or merchandise was not mined, produced, or manufactured wholly or in part by forced labor. P.L. 117-78 (2021) § 3(b). The Act dictates that each time CBP determines that the presumption has been overcome through above criteria, the agency must submit a publicly-available report to Congress within 30 days that identifies the goods at issue and the evidence upon which the determination was based. P.L. 117-78 (2021) § 3(c).

In addition, the UFLPA instructs the FLETF to identify in its forthcoming report to Congress a list of high-priority sectors for enforcement and a sector-specific enforcement plan for each of these high-priority sectors. P.L. 117-78 § 2(d)(2)(B)(viii)-(ix). The Act itself has identified cotton, tomatoes, and polysilicon as high-priority sectors for purposes of CBP enforcement.

Provisions on Economic Sanctions

The UFLPA amends the Uyghur Human Rights Policy Act (2020) to provide that economic sanctions may be imposed in response to “{s}erious human rights abuses in connection with forced labor” in the XUAR. P.L. 117-78 § 5(a). Such sanctions include asset blocking as well as the revocation or denial of visas to enter the United States. P.L. 116-145 § 6(c).

The Act requires the President to submit an initial report to Congress identifying non-U.S. persons engaged in such activities within 180 days of enactment. Under the Uyghur Human Rights Policy Act (2020), the President is required to submit on an annual basis reports to Congress identifying non-U.S. persons responsible for various human rights violations in the XUAR. P.L. 116-145 § 6(a)(1).

As is the case with the rebuttable presumption discussed above, these economic sanctions will sunset eight years after the enactment of the UFLPA or “the date on which the President submits to the appropriate congressional committees a determination that the Government of the People’s Republic of China has ended mass internment, forced labor, and any other gross violations of human rights experienced by Uyghurs, Kazakhs, Kyrgyz, Tibetans, and members of other persecuted groups in the Xinjiang Uyghur Autonomous Region.” P.L. 117-78 § 6.

Provisions on Procedure

The UFLPA establishes a number of procedural deadlines related to the above substantive legal changes. Of note, these procedural deadlines include those for public comment on the above-discussed provisions.

  • Consistent with the Act (L. 117-78 § 2(a)), on January 24, 2022, the U.S. Department of Homeland Security, on behalf of the Forced Labor Enforcement Task Force, published notice of opportunity for comment on “how best to ensure that goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part with forced labor in the People’s Republic of China are not imported into the United States.” Comments are due no later than March 10, 2022. The Federal Register notice lists 18 distinct questions for consideration by commenters.
  • No later than April 24, 2022, the FLETF will hold a public hearing, inviting witnesses to testify regarding the use of forced labor in China and potential measures to prevent the importation into the United States of goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part with forced labor in China. L. 117-78 § 2(b).
  • By June 21, 2022, the FLETF, in consultation with the Secretary of Commerce and the Director of National Intelligence, must submit a report to Congress containing a strategy for supporting CBP’s enforcement against goods, wares, articles, and merchandise it believes are mined, produced, or manufactured wholly or in part with forced labor in China. The strategy must include, inter alia, recommendations on initiatives, tools, and technologies to be adopted by CBP with respect to identifying and tracing goods made in the XUAR at U.S. ports of entry, and guidance to importers with respect to “due diligence, effective supply chain tracing, and supply chain management measures” and “the type, nature, and extent of evidence that demonstrates that goods originating in the People’s Republic of China were not mined, produced, or manufactured wholly or in part in the {XUAR}.” L. 117-78 § 2(d). It also mandates a description of China’s “pairing assistance” and “poverty alleviation” programs and the creation of the aforementioned lists of entities with a XUAR-nexus. Updates to this report will be made by the FLETF to Congress on an annual basis.

Compliance Takeaways

The FLETF’s notice of opportunity to comment presents importers with an opportunity to make their views regarding this set of issues known. The FLETF has not yet formed its enforcement framework, and is turning to stakeholders to provide feedback that will ultimately inform its approach. Businesses that may be impacted by the new rebuttable presumption concerning forced labor in the XUAR, e.g., those in the retail and clean energy sectors, are uniquely positioned to educate the FLETF on their industries and the potential compliance challenges related to the rebuttable presumption and its enforcement. Such businesses should review the questions listed in Part III of the Federal Register notice and consider submitting comments to the FLETF prior to March 10, 2022.

In addition to participating in the FLETF’s public comment process, businesses can begin preparing for eventual enforcement by reviewing existing supply chains. Proactive action offers two main benefits: (1) a head-start on considering and implementing compliance steps with respect to suppliers and/or goods potentially covered by the UFLPA’s rebuttable presumption and (2) the opportunity to build an evidentiary record substantiating future claims that goods (and their inputs) do not run afoul of the import ban on merchandise produced with forced labor. On this second point, although the FLETF has not yet established what kind of information constitutes “clear and convincing” evidence that products were not produced using forced labor, existing CBP regulations and related guidance may provide some initial indication of future approaches, and thus permit businesses to begin compiling such evidence. For example, pursuant to 19 C.F.R. § 12.43, importers may submit certificates of origin attesting to a foreign vendor’s identity, the dates and places of shipment, and the vendor’s attestation that prohibited labor practices were not involved in the production, manufacturing, or mining of the imported good. Other CBP guidance documents recommend collecting manufacturers’ affidavits and/or identification codes (for textile products in particular) and maintaining documents related to each stage of the product’s manufacturing and importation (from raw materials procurement to finished products), including records establishing the existence of and compliance with anti-forced labor protocols, attempts to monitor and substantiate downstream supplier claims, and reports of any actual or suspected violations and steps taken to address each.

The “clear and convincing evidence” standard is generally viewed as establishing a higher burden of proof. (See, for example, Colorado v. New Mexico, 467 U.S. 310 (1984), as cited in a recent CBP ruling articulating the “clear and convincing” evidence standard in relation to an analogous rebuttable presumption on North Korean forced labor in Section 321(b) of the Countering America’s Adversaries Through Sanctions Act.)

Furthermore, to the extent the rebuttable presumption operates like a statutory WRO, past CBO guidance regarding WRO evidentiary standards may be instructive. The Hoshine FAQs in particular advise that, in addition to the Certificate of Origin and detailed statement per 19 C.F.R. § 12.43(b), helpful documentation could include:

  • Affidavit from the provider of the silica-based product about the origin and components of the silica-based product.
  • Other business documentation that can support the origin of the materials, such as but not limited to:
  • purchase orders, invoices, and proof of payment;
  • a list of production steps and records for the imported merchandise;
  • transportation documents;
  • daily manufacturing process reports;
  • a list of entities that supplied inputs for the silica-containing products being imported;
  • any other relevant information that the importer believes may show that the shipments are not subject to the WRO.
  • Evidence regarding the importer’s anti-forced labor compliance program.

In addition to these CBP sources, numerous existing guidelines issued by reputable international organizations can assist with structuring due diligence efforts, including the UN Guiding Principles on Businesses and Human Rights, the OECD Guidelines on Multinational Enterprises, the handbook on “Combating Forced Labour” published by the International Labor Organization, and the Office of the High Commissioner for Human Rights guide on “The Corporate Responsibility to Respect Human Rights,” (OHCHR guide). Each of these materials was previously endorsed by the U.S. Department of the Treasury as best practices on conducing high-risk human rights due diligence investigations.

By acting now, businesses can help shape the enforcement regime ultimately adopted by CBP at the border and prepare for the upcoming implementation of the new rebuttable presumption on alleged forced labor in the XUAR this June.