Preparing for CBP’s enforcement of the Uyghur Forced Labor Prevention Act’s rebuttable presumption

On 21 June 2021, U.S. Customs and Border Protection (“CBP”) began enforcing the Uyghur Forced Labor Prevention Act’s (“UFLPA”) “rebuttable presumption” that imports mined, produced, or manufactured wholly or in part in China’s Xinjiang Uyghur Autonomous Region, or in connection with an entity on the new UFLPA Entity List, are made with forced labor and thus are prohibited from being imported to the United States pursuant to Section 307 of the Tariff Act of 1930.  CBP has already detained a shipment of solar panels from a major manufacturer indicating that CBP may aggressively enforce UFLPA.  Thus, importers should be prepared for full enforcement.

If CBP detains goods pursuant to the UFLPA, importers have two options to obtain the goods’ release.  First, importers can provide evidence that the goods fall outside of the UFLPA’s scope—i.e., the goods were neither produced wholly or in part in Xinjiang, nor were the goods made in connection with an entity on the UFLPA Entity List.  Second, importers can request an “exception” to the rebuttable presumption by (a) providing CBP with “clear and convincing” evidence that the goods were not made with forced labor, (b) complying with any CBP requests for information, and (c) complying with the Strategy to Prevent the Importation of Goods Minded, Produced, or Manufactured with Forced Labor in the People’s Republic of China issued by the Forced Labor Enforcement Task Force’s (the “Task Force’s Strategy”). 

The 17 June 2022 Task Force’s Strategy addresses public comments received in writing and at the Task Force’s subsequent public hearing.  Additionally, on 13 June 2022, CBP issued additional operational guidance for importers (“CBP’s Guidance”).  Both the Task Force’s Strategy and CBP’s Guidance provide insights into how CBP will enforce the UFLPA’s rebuttable presumption, but they also leave important questions unanswered. Any firm that is planning to import high-risk goods or agricultural products from China should consider taking steps in advance to minimize the risk of detention.   

Below are certain key takeaways from the Task Force’s Strategy and CBP’s Guidance.  For additional background on the UFLPA, please see our earlier client alert.

UFLPA’s Entity List

The Task Force released the UFLPA Entity List, which includes:

• Entities in Xinjiang that produce goods using forced labor;
• Entities that work with the Xinjiang government to recruit, transport, transfer, harbor, or receive forced labor;
• Entities that export products produced by the aforementioned entities from China to the United States; and

Entities and facilities that source material from Xinjiang or from persons working with the Xinjiang government or the Xinjiang Production and Construction Corps for purposes of any government-labor scheme that uses forced labor.

The identified entities are subject to the presumption that their products are made with forced labor and thus prohibited from entry into the United States.  The current UFLPA Entity List only includes firms already identified on CBP’s existing withhold release orders (“WROs”) and the U.S. Department of Commerce’s BIS Entity List.  The Task Force may update the Entity List through Federal Register notices.

High-Priority Sectors for Enforcement

The Task Force identified the following high-priority sectors for enforcement, as required by the UFLPA:

• Apparel
• Cotton and cotton products
• Silica-based products (including polysilicon)
• Tomatoes and downstream products

These sectors each have a specific enforcement plan. For example, the polysilicon-specific guidance still requires information on metallurgical‑grade silicon suppliers (as the Hoshine WRO did).  In addition, it requires that U.S. importers identify from where their quartzite was sourced.

More generally, CBP cautions U.S. importers against relying on suppliers which maintain two separate supply chains—one sourcing from Xinjiang, and one sourcing from elsewhere.  CBP’s observes that that such suppliers may be commingling goods sourced from Xinjiang with other goods. 

Evidence Required to Show Goods are Outside the Scope of the UFLPA

As discussed above, in order to demonstrate that its goods are outside the UFLPA’s scope, an importer must prove to CBP that (1) the goods were not made wholly or in part in Xinjiang, and (2) the goods are not connected to a company on the UFLPA Entity List.

Traceability documentation must be provided to CBP pertaining to the entire supply chain. The required documentation is generally comparable to the documentation required when submitting an exclusion request to overcome the UFLPA’s rebuttable presumption, described below. For example, CBP expects U.S. importers to be able to trace the supply chain from raw materials to imported goods.

Notwithstanding, the evidence required to prove that the goods are outside the scope of the UFLPA is overall less burdensome than the evidence required when requesting an exception to the UFLPA.  For example, to request an exception, in addition to the traceability documentation mentioned above, importers may be required to provide a list of all workers at an entity subject to the rebuttable presumption including evidence of how and to whom wages are paid. Additional evidence may include demonstrating that the output in China is consistent with the documented workers (e.g., providing the number of workers in each job category and the total volume of material or goods input, and total volume of outputs of materials or goods).

Evidence Required to Overcome the Rebuttable Presumption

As discussed above, if merchandise falls within the scope of the UFLPA, an U.S. importer must apply for an “exception” to have its goods allowed into the United States.  To be eligible, an importer must (a) show “clear and convincing evidence” that the goods were not produced by forced labor, (b) fully respond to all CBP requests for information, and (c) demonstrate full compliance with the guidance set forth in the Task Force Strategy.

U.S. importers seeking to overcome the rebuttable should provide the following categories of “clear and convincing” evidence: (1) a due diligence system (e.g., supplier engagement, training and monitoring); (2) supply chain tracing information (e.g., purchase orders, shipment documentation, production records); and (3) documentation showing if the goods were produced in China, they were not produced with forced labor (e.g., information on workers at each entity and credible audits, where applicable). CBP heavily emphasizes full supply chain mapping and traceability, complete production records for each stage, and labor audits, where applicable

The due diligence system includes “assessing, preventing, and mitigating forced labor risk,” and is in part based on the U.S. Department of Labor’s Comply Chain.  The due diligence should be largely focused on supply-chain tracing such that an importer knows every input and source.  U.S. importers must engage with stakeholders and partners so as to be able to assess different risks and impacts. They should also develop a code of conduct, provide clear communications and trainings across their supply chai, and, subsequently, monitor their suppliers’ compliance with the code of conduct.

CBP may grant an exception if the three requirements are met and thus allow the goods into the United States. CBP subsequently has thirty (30) days to submit a report listing the goods admitted and the evidence considered to the Congress and the public.

CBP’s Enforcement Mechanisms: Detentions, Exclusions, and Seizures

There are three mechanisms through which CBP will enforce the UFLPA:

• CBP may issue a detention notice and detain the goods.  CBP has five (5) days after the good are presented for examination to determine whether to detain them.  If CBP does not release the goods within those five (5) days, the goods are considered to be detained.  
• U.S. importers will have 30 days from the date on which the goods are presented for examination to provide CBP with evidence that the goods are not subject to the UFLPA or request an exclusion.
• CBP may issue an exclusion notice, and exclude shipments determined to be in violation of the UFLPA.  Importers may protest an exclusion.
• CBP may issue a seizure notice for the shipments and refer the case to the Fines, Penalties, and Forfeitures (“FP&F”) officer at the port of entry.  U.S. importers may petition for the release of the goods.  On a June 16 public webinar, CBP stated that it will only seize goods if there is an egregious omission of known facts (e.g., imports are declared to be from Europe, but the products are labelled “Made in Xinjiang”).

Importers may seek permission from the Port Director to export detained shipments at any point prior to exclusion or seizure.  CBP “will attempt” to prioritize requests of Customs Trade Partnership Against Terrorism (“CTPAT”) Trade Compliance members.

The Effect of UFLPA on Xinjiang-Related WROs

Shipments imported prior to 21 June 2022 will be adjudicated through the Xinjiang-related WRO process.  Shipments imported on or after 21 June 2022 will be subject to the UFLPA.

The general categories of documentation being requested by CBP under the UFLPA—either to overcome the rebuttal presumption or to prove that the goods are outside the UFLPA’s scope—are similar to those requested pursuant to relevant WROs.  The UFLPA may at times require more evidence to meet the “clear and convincing” standard.  

Additional Clarification from CBP and the Task Force

Companies may address any questions about CBP’s guidance to [email protected]. Moreover, CBP may revise its regulations, in part, to provide importers with clear guidance. 

In the meantime, the Task Force plans to host additional joint-interagency meetings with NGOs and the private sector to discuss UFLPA enforcement. Additionally, at least biannually, the Task Force will host recurring working-level meetings with NGOs and the private sector.  Companies may inquire about participating by emailing [email protected].

Next Steps

CBP clearly stated on its June 16 webinar that the UFLPA’s rebuttable presumption will be fully enforced on June 21.  The plain language of the CBP’s Guidance and the Task Force’s Strategy, including no de minimis exception, indicates that the UFLPA could significantly disrupt supply chains.  Consequently, importers should be prepared for the UFLPA to be fully enforced and thus to provide the required documentation to CBP.  

In practice, CBP’s enforcement priorities likely will be circumscribed by resource constraints  (e.g., CBP has indicated it needs to hire an addition 300 employees to fully enforce the UFLPA), potentially limiting the scope of the UFLPA’s disruption to supply chains.

The Task Force has provided certain insights into the risk-based approach CBP will employ to enforce the UFLPA and the high-priority sectors.  Specifically, CBP will “prioritize[] the highest-risk goods based on current data and intelligence.” The current highest‑risk goods include those:

• Imported directly from Xinjiang;
• Imported from entities on the UFLPA Entity List;
• Illegally transshipped with inputs from Xinjiang; and
• Imported by entities outside of Xinjiang but related to a Xinjiang entity (e.g., parent, subsidiary, affiliate).  

For further information or assistance, please contact any of the Hogan Lovells lawyers identified below.

Authored by Jonathan Stoel, Craig Lewis, Warren Maruyama, and Molly Newell.