Uyghur Forced Labor Prevention Act Impact

On December 23rd, President Biden signed into law the Uyghur Forced Labor Protection Act. The legislation passed Congress by huge margins in the House and Senate and seems to be one of the few places that both sides of the aisle can find common ground – China’s human rights record.

It becomes law 180 days from the date of signing so on June 21, 2022, all products of the Xinjiang Uyghur Autonomous Region, or XUAR, will be prohibited entry into the United States based on the supposition and grounds that the goods were “mined, produced or manufactured” using forced labor.

 

The United States has consistently been focused on this issue across multiple previous administrations with presidents from both parties. CBP has notably been taking steps to issue Withhold Release Orders for companies and entire product groups from this province in western China and the Act is a strong, codified step that requires importers to take a closer look at their entire supply chain to determine whether any part of it runs through Xinjiang.

The Act can be read here, but in brief, a Forced Labor Task Force will be charged with soliciting comments and receiving public testimony. They will then adjudicate those comments and, in consultation with State, Commerce, DHS (CBP) and the Director of National Intelligence (DNI), develop the policy framework of how the law is to be implemented. 

While many of the details are yet to be worked out, there is language in the Act which provides a means by which companies can present evidence to the government to be reviewed and, if deemed conclusively not produced with foreign labor, will be exempted and this exemption will be published no later than 30 days after the exemption determination is reached.

Importers will need to focus on three key things in the coming weeks and months.

1. A wholesale review of supply chains and components to determine whether or not ANYTHING on a product’s bill of materials, no matter how low, originates in Xinjiang.
2. If exposure to the law exists, speak with Future Forwarding to help submit comments or testimony, or refer to legal counsel to request an exclusion when the details are released.
3. Expand the Xinjiang component search to countries outside China because goods could still be denied entry if further manufacturing or assembly happened in a third country and it is determined the item contains XUAR-originating components.

 

Like everything else that companies have dealt with through 2020 and 2021, this is just another challenge in the new year. Fortunately, Future Forwarding and our team of compliance experts and outside counsel are ready to help clients conduct the necessary reviews and be ready for June 21, 2022.