CBP Issues Operational Guidance to Importers for the Uyghur Forced Labor Prevention Act

U.S. Customs and Border Protection (CBP) released long-awaited Operational Guidance for Importers (Operational Guidance) on June 13, 2022, to assist importers in preparing for the implementation of the Uyghur Forced Labor Prevention Act (UFLPA), which goes into effect on June 21, 2022.

The Operational Guidance aims to provide transparency into CBP's operational approach to enforcing the UFLPA and complement the wider Forced Labor Enforcement Task Force (FLETF) Strategy set to be published by the U.S. Department of Homeland Security (DHS), in its role as the chair of the FLETF, on June 21, 2022. The FLETF Strategy will set out guidance to importers on due diligence, supply chain tracing and management and the requisite evidence to demonstrate goods were not mined, produced or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (XUAR) of China or by forced labor. The FLETF Strategy also will also include a list of entities known to be using forced labor in XUAR to be called the "UFLPA Entity List."

The Uyghur Forced Labor Prevention Act: An Overview

Signed into law by President Joe Biden in December 2021 – and discussed in greater detail in a previous Holland & Knight alert, "Breaking Down the Uyghur Forced Labor Prevention Act for U.S. Importers" – the UFLPA creates a rebuttable presumption that "any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part" in the XUAR or by certain entities within the region are produced with forced labor and therefore prohibited from importation. Therefore, any goods imported into the United States from the XUAR on or after June 21, 2022, will immediately be detained, excluded or seized, and the burden will fall on importers to demonstrate to CBP that they:

1. fully complied with guidance in the FLTEF enforcement strategy 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 labor

The presumption also applies to goods made in or shipped through other regions in China and other countries that include components produced in the XUAR.

CBP Operational Guidance for Importers

The CBP Operational Guidance is intended to complement the UFLPA Strategy's guidance to importers and will serve as the operative document for any operational questions about CBP's enforcement of the UFLPA. The Operational Guidance describes how, based on the identified risk of the shipment, CBP will process detentions, exclusions and seizures of imported goods under the UFLPA. CBP will review each shipment for UFLPA applicability, and the appropriate action to be taken on a case-by-case basis. Shipments will be identified through a variety of sources, including from the UFLPA Entity List. Importantly, the UFLPA enforcement process will vary from CBP practices under withhold release orders (WROs), and the UFLPA will supersede current WROs related to the XUAR for goods imported on or after June 21, 2022.

The Operational Guidance includes a list of existing U.S. government and international resources that can be utilized by importers in developing their strategies to conduct supply chain due diligence, tracing and management. CBP has previously referred importers to these sources such as the U.S. Department of State's Responsible Sourcing Tool, the U.S. Department of Labor's List of Goods Produced by Child Labor or Forced Labor and the United Nations' Guiding Principles on Business and Human Rights, among others.

Overcoming the Rebuttable Presumption

The Operational Guidance provides information for importers on how to request an exception to UFLPA rebuttable presumption. Importers may request an exception to the rebuttable presumption from CBP during a detention, after an exclusion or during the seizure process. In each of these situations, to request an exception, importers must clearly state that the importer is seeking an exception to the UFLPA presumption and provide appropriate supporting documentation substantiating the request. CBP expects that importers will respond comprehensively to all CBP requests for information and may require the following information from importers:

• documentation showing a due diligence system or process
• documentation tracing the supply chain from raw materials to the imported goods
• documentation on supply chain management measures, which may include internal controls to prevent or mitigate forced labor risk and remediate any use of forced labor identified
• evidence that goods were not mined, produced or manufactured wholly or in part in XUAR, including documentation that traces the supply chain for the imported goods
• evidence that goods originating in China were not mined, produced or manufactured wholly or in part by forced labor

Various examples of the documentation that may satisfy the above requirements are included within the Operational Guidance. However, it is important to note that CBP may consider evidence other than what is provided by the importer in determining whether there is clear and convincing evidence – the applicable standard of review. Additionally, CBP provides specific guidance for supply chain documentation relevant to commodities with a high risk of forced labor – namely cotton, polysilicon and tomatoes. These materials are currently covered by existing Xinjiang-related WROs under 19 U.S.C. § 1307. Any exception to the rebuttable presumption that is granted by CBP will be disclosed publicly to Congress as mandated by the UFLPA.

Takeaways

The high bar established by the UFLPA – and the attending documentary and supply chain management requirements – will no doubt place new burdens on imports from China and beyond. The Operational Guidance makes clear that CBP expects the heightened due diligence and supply chain tracing measures required by the UFLPA to extend through the importer's entire supply chain, to include goods that may be shipped from other regions in China and to third countries for further processing. Because CBP may also consider evidence other than that provided by the importer in determining whether there is clear and convincing evidence, importers should continually sharpen and reassess supply chain processes and documentation requirements, implement robust due diligence procedures to keep pace with the evolving cross-border regulatory landscape and be prepared to overcome the presumption of forced labor. 

There are a range of other insights set forth in the Operational Guidance that could drive new import practices, but that should be analyzed and assessed based on the facts of individual businesses.

With less than a week until the UFLPA effective date, many businesses are already in the process of buttressing and supplementing their due diligence systems and supply chain tracing methodology. If you seek assistance in understanding the CBP Operational Guidance, preparing your business for the enforcement of the UFLPA or addressing other importation concerns, reach out to the authors or another member of Holland & Knight's International Trade Group.

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.