A Year Later: Continued Focus by CBP and Congress to Combat Forced Labor

June 27, 2023
A Year Later: Continued Focus by CBP and Congress to Combat Forced Labor

The Uyghur Forced Labor Prevention Act (“UFLPA”) went into effect June 21, 2022, and established a rebuttable presumption that all merchandise coming from the Xinjiang region of China (“XUAR”) is a product of forced labor. The UFLPA captures all upstream and downstream merchandise coming from the XUAR and established a UFLPA Entity List. A year later, Customs and Border Protection (“CBP”) continues to broaden their enforcement efforts and Congress appears to be looking for ways to strengthen enforcement opportunities.

CBP’s Expansion of the Entity List

On June 12, 2023, CBP expanded the UFLPA Entity List, adding two entities and eight subsidiaries to section 2(d)(2)(B)(ii) of the list. These entities, Xinjiang Zhongtai Chemical Co. Ltd. and Ninestar Corporation, are manufacturers in the chemical and printing and imagining industries. The addition of these two entities to the UFLPA entity list reflects a larger effort by CBP to extend beyond the “high-priority sectors” of tomatoes, cotton, and polysilicon. It appears that CBP is now targeting other products of interest including aluminum and polyvinyl chloride.

Automotive Enforcement and Congressional Interest

The Uyghur Forced Labor Statistics Database reveals that, starting in February 2023, CBP began to report detentions under a new industry category, “Automotive and Aerospace.” So far, CBP has detained 22 shipments, worth $900,000, of automotive and aerospace goods. Of these 22 shipments, four shipments have been denied entry, one has been released, and 17 shipments are pending. Since June 2021, the UFLPA has detained a total of 4,269 shipments, worth $1.396 billion. CBP’s detention of these products from the XUAR coincides with a report released by Britain’s Sheffield Hallam University in December 2022. The publication reported that 96 mining, processing, or manufacturing companies relevant to the automotive sector are operating in the Uyghur Region, including at least 38 that have documented engagement in state-sponsored labor transfer programs. According to the report, Xinjiang produces over 10% of the world’s aluminum, which is more than every major aluminum producing country outside of China. Reportedly 18% of the world’s aluminum is used in automobile manufacturing, as it is the second most common material used in the automotive sector. Currently, the Senate Finance Committee is investigating domestic and foreign auto manufacturers for ties to forced labor practices in XUAR.

Textiles and Section 321 of the Tariff Act

According to the UFLPA Statistics Dashboard, the industry that experiences the highest number of shipments detained from China is “Apparel, Footwear, and Textiles.” But this may be underreported. On June 22, 2023, the Select Committee on the Chinese Communist Party released their interim findings on Uyghur forced labor in fast fashion supply chains. The interim findings, published three months after the Select Committee’s hearing on “The Chinese Communist Party’s Ongoing Uyghur Genocide,” conclude that certain Chinese entities avoid additional forced labor screening measures by importing under the de minimis provision. Specifically, the Select Committee’s investigation is looking at alleged forced labor concerns within the supply chains of major global brands as well as popular online retailers. Implicit in the interim report is that the de minimis provision, whereby goods valued under $800 USD do not need to be declared to CBP, may be obscuring forced labor in certain supply chains.

The Takeaway

Often, trade policy and trade enforcement ebb and flow, but the enforcement of the UFLPA is only expanding and evolving. As CBP and Congress continue to examine the problem of forced labor in the supply chain, U.S. importers should continue to conduct due diligence within their supply chains and evaluate whether supply chain mapping may be appropriate. For compliance with the UFLPA, CBP recommends that importers achieve end-to-end supply chain transparency.

Please contact CLK’s customs/supply chain compliance team if you have questions or require assistance.