Breaking Down the Uyghur Forced Labor Prevention Act for U.S. Importers

President Joe Biden signed the Uyghur Forced Labor Prevention Act (the Act) into law on Dec. 23, 2021. The Act requires the U.S. government to rapidly develop a new enforcement strategy to strengthen the prohibition of the importation of goods made through forced labor into the United States. In particular, the Act creates a rebuttable presumption – entering into force on June 21, 2022 – that "any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part" in the Xinjiang Uyghur Autonomous Region (XUAR) of China, or by certain entities within the region, are produced with forced labor and therefore prohibited from importation.¹ The rebuttable presumption will apply, and U.S. Customs and Border Protection (CBP) will ban imports unless an importer can demonstrate that it:

1. fully complied with the Forced Labor Enforcement Task Force's (FLETF) guidance (described in more detail below) and any corresponding regulations
2. completely and substantively responded to all of CBP's inquiries regarding the goods
3. established by clear and convincing evidence that the goods were not mined, produced or manufactured wholly or in part from forced labor²

Public Engagement on Development of Enforcement Strategy

Implicitly recognizing that CBP to date has provided limited direction to importers on the type of evidence it must receive to rebut forced labor allegations, the Act requires the FLETF to seek input, through the solicitation of public comments and a public hearing, on the development of guidance for importers as part of a new forced labor enforcement strategy. CBP issued a request for public comment on Jan. 24, 2022, which will be open until March 10, 2022. The request seeks public input 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, including by Uyghurs, Kazakhs, Kyrgyz, Tibetans, and members of other persecuted groups in the People's Republic of China, and especially in the Xinjiang Uyghur Autonomous Region, are not imported into the United States." By April 24, 2022, the FLETF must hold a public hearing on the use of forced labor in China and measures to prevent the importation of goods made with forced labor. This public engagement mandated by the Act provides an excellent opportunity for importers, either directly or through associations, to influence the development of guidance and the government's overall enforcement strategy.

The FLETF Enforcement Strategy and Guidance to Importers

The FLETF must work with the U.S. secretary of commerce and director of national intelligence (DNI) to write the enforcement strategy, which must include the following elements:

• an assessment of the risk that goods produced with forced labor in the XUAR are imported into the United States and measures to take to address the risk
• an evaluation of schemes – such as "pairing assistance" and "poverty alleviation" – used by the Chinese government to reinforce forced labor practices
• a list of entities working with the government of the XUAR to recruit, transport or harbor forced labor or members of persecuted groups
• a list of products mined, produced or manufactured wholly or in part by the entities listed above
• a list of entities that exported the products listed above
• a list of facilities and entities 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 or involuntary labor
• an enforcement plan for each such entity, which may include issuing withhold release orders (WROs) to support such enforcement
• a list of high-priority sectors for enforcement, which includes cotton, tomatoes and polysilicon, and an enforcement plan for each such high-priority sector³

As noted above, the report must also include guidance for importers regarding importation due diligence, supply chain tracing and supply chain management.

The guidance will extend to what type of evidence an importer can use to show that their China-originating goods were not produced with forced labor, as required to overcome CBP's new rebuttable presumption. However, this report is due on June 21, 2022 – the same day CBP will begin to enforce the rebuttable presumption – precluding time for importers to prepare due diligence based on the guidance in the report.

The Act's New Sanctions Authority

Finally, the Act mandates that the president prepare a report identifying any foreign person, including Chinese government officials, that the president determines is "responsible for serious human rights abuses in connection with forced labor with respect to Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups, or other persons in [the XUAR]."⁴ The president has until June 21, 2022, to prepare and submit this report. Following submission, the president must impose sanctions, under the Uyghur Human Rights Policy Act of 2020, on each person identified in the report.

Takeaways

There are a few major takeaways for businesses and organizations that import into the United States:

• These government actions create significant risk for those importing from China writ large and beyond. While the Act prohibits goods produced in whole or in part in the XUAR, it is expected that CBP will increase scrutiny of the importer's entire supply chain. It is crucial that importers understand that downstream products produced outside the XUAR that incorporate inputs from the XUAR (g., cotton inputs for apparel and textiles or polysilicon inputs for electronics and solar products) are subject to the presumption of use of forced labor.
• It is recommended that importers immediately initiate a deep dive into their supply chains to address any blind spots and vet suppliers in order to eliminate any links to the XUAR and thoroughly document compliance along the supply chain. Time is of the essence, given that the Act becomes enforceable the same day the FLETF provides its guidance to importers.
• The public engagement process required by the Act is a critical opportunity to impact CBP's new enforcement strategy.
• Forced labor enforcement actions are expected to increase in the U.S. and globally. Importers will be well-served by any diligence conducted now in preparation for implementation of the Act.

For assistance understanding the Act, conducting supply chain due diligence or addressing other importation concerns, reach out to the authors or another member of Holland & Knight's International Trade Group.

Notes

¹ Act of Dec. 23, 2021, Pub. L. No. 117–78, § 3(a), 135 Stat. 1529.

² Id. at § 3(b).

³ Id. at § 2(d).

⁴ Id. at § 5(c).

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.