CBP Releases Uyghur Forced Labor Prevention Act (UFLPA) Operational Guidance

US Customs and Border Protection (CBP) UFLPA Operational Guidance for Importers (CBP Guidance) was published on June 13, 2022 to assist importers in preparing for the UFLPA rebuttable presumption that goes into effect on June 21, 2022. This guidance should be reviewed in conjunction with the Department of Homeland Security (DHS) UFLPA Strategy that will be published on June 21, 2022.
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Executive Summary

  • US Customs and Border Protection (CBP) UFLPA Operational Guidance for Importers (CBP Guidance) was published on June 13, 2022 to assist importers in preparing for the UFLPA rebuttable presumption that goes into effect on June 21, 2022. This guidance should be reviewed in conjunction with the Department of Homeland Security (DHS) UFLPA Strategy that will be published on June 21, 2022.
  • If an importer is able to provide documentation evidencing that imported goods and their inputs are sourced completely from outside the Xinjiang Uyghur Autonomous Region (XUAR) and have no connection to the entities identified on the UFLPA Entity List, the importer will not need to obtain an exception to the UFLPA (which requires a public report to Congress). In order to secure release, specific evidence including supply chain tracing documentation, is required to demonstrate that merchandise is outside the scope of the UFLPA.
  • Importers requesting an exception to the rebuttable presumption may present evidence of the due diligence systems the importer has in place, thorough supply chain tracing documentation from raw materials to the imported goods, and information regarding supply chain management measures. Additional requirements apply to goods originating in China.
  • CBP has identified specific documentation for companies that import products with a high-risk of forced labor, including cotton, polysilicon, and tomatoes.
  • On Monday, June 27, 2022 from 2PM-3PM, Angela M. Santos and Christine Hintze will be presenting a webinar regarding UFLPA implementation and how companies can prepare. Register here to join the discussion.

Background

The Uyghur Forced Labor Prevention Act (UFLPA) was signed into law on December 23, 2021, which applies a rebuttable presumption that all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (XUAR) of China, or by entities identified on the UFLPA Entity List, are presumed to be made with forced labor and are prohibited from entry into the United States effective June 21, 2022. A background and summary of the UFLPA and the rebuttable presumption may be found in a previous alert that we published when the UFLPA was signed into law.

Enforcement of UFLPA 

CBP will target shipments for detention under the UFLPA through a variety of sources, including the UFLPA Entity List. As discussed in our previous alert, CBP has five business days following the date that merchandise is presented to CBP to decide whether to release or detain the shipment. If merchandise is not released during that time period, it is considered detained. Upon detention, CBP will issue a detention notice, which will provide the reason for detention (i.e., UFLPA), the anticipated length of the detention, as well as instructions to the importer regarding how to rebut the UFLPA presumption.

The importer has the following options to respond to the detention of a shipment:

  1. Present an Immediate Export in-bond and request permission from the port director to export the shipment any time before an exclusion or seizure determination is made; or
  2. Submit evidence to CBP to demonstrate that the merchandise is outside the scope of the UFLPA (i.e., that the imported merchandise and its inputs are sourced completely from outside of XUAR or from an entity identified on the UFLPA Entity List); 
  3. Request an exception to the UFLPA rebuttable presumption. This request can be made during a detention, after an exclusion, or during the seizure process, and are subject to the corresponding administrative procedures. CBP will attempt to prioritize review of submissions made by Customs Trade Partnership Against Terrorism (CTPAT) Trade Compliance members in good standing. 

CBP published a list of documentation to help demonstrate that merchandise is outside the scope of the UFLPA or to request an exception to the rebuttable presumption. This list is not exhaustive and is intended to provide importers with flexibility in accordance with individual business practices. Documents and information listed must be submitted in English and should be well-organized to facilitate CBP’s review.

If applicable, the importer may also identify shipments that have identical supply chains to those that have been previously reviewed and considered admissible by CBP. 

In the event that CBP determines that the shipment violates the UFLPA, an exclusion notice will be issued. Importers may protest the exclusion determination within 180 days. CBP must make a decision regarding the protest within 30 days after the protest is submitted, or the protest is deemed denied. Pursuant to 19 U.S.C. § 1595a; 19 C.F.R. Part 171, CBP may issue a Notice of Seizure to importers of shipments determined to be in violation of the UFLPA and refer the matter to the Fines, Penalties and Forfeitures (FPFO) officer at the port of entry. The importer may submit a petition to overcome the rebuttable presumption.   

Documentation and Information to Prove Merchandise Outside the Scope of the UFLPA

Release of detained goods will be more likely when an importer can establish that the goods were not produced in whole or part in XUAR and have no connection to the UFLPA Entity List. CBP suggested the following documentation that will be required for importers to demonstrate that merchandise is outside the scope of the UFLPA:

Supply Chain Tracing Information

Evidence Pertaining to Overall Supply Chain
  • Detailed description of supply chain including imported merchandise and components thereof, including all stages of mining, production, or manufacture
  • The role(s) of the entities in the supply chain, including shippers and exporters: for example, CBP will need to determine whether a supplier is also a manufacturer;
  • For entities in the supply chain, identify any relationships in accordance with 19 C.F.R. § 152.102(g)
  • A list of suppliers associated with each step of the production process, including names and contact information (addresses, email addresses, and phone number)
  • Affidavits from each company or entity involved in the production process
Evidence Pertaining to Merchandise or any Component Thereof
  • Purchase orders
  • Invoice for all suppliers and sub-suppliers
  • Packing list
  • Bill of materials
  • Certificates of origin
  • Payment records
  • Seller’s inventory records, including dock/warehouse receipts
  • Shipping records, including manifests, bills of lading (e.g., airway/vessel/trucking)
  • Buyer’s inventory records, dock/warehouse receipts
  • Invoices and receipts for all suppliers and sub-suppliers
  • Import/export records


Evidence Pertaining to Miner, Producer, or Manufacturer
  • Evidence listed above pertaining to merchandise or any component thereof for raw materials. See below for specific examples related to high-risk commodities, such as cotton, polysilicon, and tomatoes.
  • Mining, production, or manufacturing records
  • Documents should allow CBP to trace raw materials to merchandise mined, produced, or manufactured
    • Production orders
    • Reports on factory production capacity for the merchandise
    • Reports on factory site visits by the importer, a downstream supplier sourcing from this factory, or a third party
    • Evidence that the volume of inputs of component materials matches the volume of output for the merchandise produced
  • Any other evidence to demonstrate that a good was not mined, produced, or manufactured wholly or in part by forced labor

Documentation and Information to Request an Exception to the Rebuttable Presumption

In the event that an importer cannot prove that imported merchandise does not have a nexus to XUAR or the XUAR Entity List, an exception to the UFLPA rebuttable presumption may be requested. The burden to meet the “clear and convincing” standard to obtain an exception is high.

  • Due Diligence System Information: Engagement with suppliers and stakeholders on forced labor, mapping supply chain, written supplier code of conduct (and monitoring compliance therewith), training employees, remediation of forced labor conditions, independent verification of the implementation and effectiveness of due diligence system, as well as reporting performance and engagement.
  • Supply Chain Tracing Information: Tracing documentation (listed above) that evidences no nexus to XUAR or a UFLPA Entity List, or to show that imports are free of forced labor and in compliance with the UFLPA.  
  • Supply Chain Management Measures: Documentation demonstrating the internal controls to prevent or mitigate forced labor risk and remediate any use of forced labor identified, as well as evidence that documents provided are part of an operating system or an accounting system that includes audited financial statements.

Goods Originating in China

An importer of goods originating in China that requests an exception to the rebuttable presumption should provide the following documentation, in addition to the other documentation discussed above:

  • Supply chain map identifying all entities involved in production of the goods;
  • Information regarding workers at each entity involved in the production of the goods in China, such as wage payment and production output per worker;
  • Information on worker recruitment and internal controls to ensure that all workers in China were recruited and are working voluntarily; and
  • Credible audits to identify forced labor indicators and remediation of these if applicable.

Commodity-Specific Supply Chain Tracing Documentation

The CBP Guidance also provides a non-exhaustive list of “supply chain documentation that importers may consider submitting for commodities with a high-risk of forced labor,” outlined below: 

High-Risk Commodity Commodity-Specific Supply Chain Tracing Documentation
Cotton
  • Sufficient documentation to show the entire supply chain (beginning at the bale level)
  • Flow chart of the production process and maps of where each process occurs
  • Identify entities involved in each step of the production process, citing business records used to identify each upstream entity with whom the importer indirectly transacted

Polysilicon
  • Complete records of transactions and supply chain documentation demonstrating all entities involved in the manufacture, manipulation, or export of a good, and the country of origin of each material used in the production of the products going back to the suspected source of forced labor
  • Flow chart mapping each step in the procurement and production of all materials and identifying the region where each material in the production originated
  • A list of all entities associated with each step of the production process (see above)
  • Note that imports of goods from factories that source polysilicon from within XUAR and outside XUAR are at higher risk for detention, as it is difficult to verify that a supply chain is using only non-XUAR sourced polysilicon and that the materials have not been replaced by or co-mingled with XUAR polysilicon at any point in the manufacturing process
Tomatoes
  • Supply chain traceability documents that demonstrate the point of origin of the tomato seeds, tomatoes, or tomato products
  • Identification of the tomato processing facility (both the parent company and estate that sourced the tomato seeds and/or tomatoes)
  • Records for the tomato seeds, tomatoes, and/or tomato products identifying all steps in the production process (seed to finished product, farm to shipping to the United States)
  • A list of all entities associated with each step of the production process (see above)

ArentFox Schiff Forced Labor Task Force Can Help You Prepare

Our Forced Labor Task Force Team was formed to help companies navigate the rules relating to the UFLPA and related forced labor enforcement initiatives. Considering the stringent requirements outlined in CBP’s guidance, as well as the DHS enforcement guidance that is scheduled to be published next week, importers should immediately prepare for the new UFLPA restrictions. We can assist companies to prepare documentation and assess supply chains to determine whether products, subassemblies or raw materials have a nexus to XUAR. For additional updates regarding the UFLPA, please visit the ArentFox Schiff Forced Labor Task Force UFLPA website.  

On Monday, June 27, 2022 from 2PM-3PM, Angela M. Santos and Christine Hintze will be presenting a webinar regarding UFLPA implementation and how companies can prepare. Register here to join the discussion.

For more information, please contact Angela M. Santos, Sylvia Costelloe, Christine E. Hintze, or the ArentFox Schiff attorney you regularly work with.

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