Uyghur Forced Labor Prevention Act Creates Higher Hurdle for Certain Imports into the United States

After extensive discussion over many months, the House and Senate both passed a compromise version of the Uyghur Forced Labor Protection Act (the Act) earlier this month and President Biden signed it into law on Thursday, December 23. The law will create new norms and Congressional oversight related to forced labor issues in China, but as a practical matter, its greatest impact may be to increase the challenges in importing goods linked to China’s Xinjiang Uyghur Autonomous Region (XUAR).

Rebuttable Presumption that Goods Linked to the XUAR Are Produced with Forced Labor

The Act will subject a vast number of goods connected to the XUAR to a presumption that they are made with forced labor and cannot be admitted into the United States. Importers will have to provide extensive evidence to overcome the presumption and gain permission to import these goods.

The new presumption will take effect on June 21, 2022, 180 days after President Biden signed the bill into law on December 23, 2021. As of June 21, 2022, Customs and Border Protection (CBP) must apply a new rule to all imported goods mined, produced, or manufactured wholly or in part in the XUAR—or by any entities to be identified by the US government’s inter-agency Forced Labor Enforcement Task Force.¹ CBP must make a rebuttable presumption that such goods are made with forced labor and accordingly are inadmissible.² In order to rebut the presumption, an importer seeking to have such goods admitted into the United States must provide “clear and convincing evidence” that the goods were not made with forced labor. The importer must also show that it has fully complied with all due diligence requirements identified by the Task Force and that it has fully responded to all CBP inquiries regarding the potential imports. The goods will be admitted only if CBP determines that the importer has met all of these requirements. The Act also requires CBP to report to Congress whenever it finds that the presumption has been rebutted.

This new presumption proactively exposes a far greater range of goods and activities related to the XUAR to import bans than previous CBP enforcement actions have covered. Prior to this legislation, CBP had to obtain affirmative evidence that forced labor was an issue for specific goods or that a specific entity was engaged in forced labor practices before acting to bar imports. Now, however, CBP only has to identify a link with the XUAR or with a listed entity to presumptively ban the goods and put the importer in the position of proving the negative. In addition to the presumptive bar on imports, the Act also contains several other components aimed at addressing concerns about forced labor in the XUAR, including i) an enforcement strategy to be developed by the US government’s Forced Labor Enforcement Task Force; ii) a diplomatic strategy to be developed and implemented by the US Secretary of State; and iii) the imposition of specified sanctions, including against persons determined by the President to knowingly engage in, be responsible for, or facilitate “the forced labor of Uyghurs, Kazakhs, Kyrgyz, and members of other Muslim minority groups in the [XUAR].” In this Advisory, we discuss the US government’s enforcement of the presumptive bar on imports and not the diplomatic strategy or sanctions.

Enforcement Strategy

The enforcement strategy is to be developed by the US government’s inter-agency Forced Labor Enforcement Task Force after a 45-day comment period, and submitted to selected congressional committees no later than 180 days after the bill is signed into law (again, June 21, 2022).

The enforcement strategy must have several key elements, including:

• (i) A risk assessment regarding imports made with forced labor in the XUAR or with Uyghur or certain other minority labor in other parts of China and recommended measures that can reduce risk (such as supply chain tracing);
• (ii) A description and assessment of the programs in China that lead to the use of forced labor;
• (iii) Recommendations for enhanced CBP enforcement of the US forced labor laws as they apply to imports from the XUAR;
• (iv) Importantly for future shipments, guidance to importers on effective due diligence and supply chain tracing and management measures, guidance on what evidence CBP will require to demonstrate that goods were not made in XUAR and/or were not made with forced labor;
• (v) Identification of high-priority sectors for enforcement, to include cotton, tomatoes, and polysilicon sectors, with sector-specific enforcement plans for each high-priority sector; and
• (vi) A plan for collaboration with other government agencies, NGOs, and the private sector to implement the enforcement strategy.

Anticipated Impact on Importers

Because the Act applies to all goods mined, produced, or manufactured wholly or in part in the XUAR, and also to entities to be identified in the future by the Forced Labor Enforcement Task Force, the Act will have broad impact on importers across sectors.

In terms of timing and preparations for compliance, unfortunately, the Task Force’s enforcement strategy, which will include guidance to importers on effective due diligence and supply chain tracing and management measures, is due the same day the Act will go into effect—180 days from the date of the Act’s enactment. That of course means that importers will not have the benefit of the Task Force’s guidance as they plan how to deal with the Act’s significant new requirements. Importers will not want to delay this planning, since gathering information to prove the absence of forced labor from the supply chain could be challenging. Recent Withhold Release Orders (WROs) may offer some basic guidance. For example, CBP has emphasized the importance of the ILO Forced Labor Indicators to identify forced labor in the supply chain.³ Importers could prepare evidence demonstrating the absence of these kinds of indicators in their supply chains as a step toward demonstrating that their goods were not made with forced labor.

The Act also requires the Task Force to solicit public comments regarding how best to ensure that goods made with forced labor in China, and in the XUAR in particular, are not imported into the United States. The public comment period must be opened within 30 days of the date of the bill’s enactment and will be open for at least 45 days. Importers and other members of the public should consider submitting comments during the comment period, including with regard to suggestions for the guidance to be published by the Task Force on due diligence and supply chain tracing and management measures, as well as guidance on the type, nature and extent of evidence that will be required to rebut the presumption of forced labor in goods from the XUAR.

Conclusion

The Uyghur Forced Labor Prevention Act, adopted by near consensus in the US Congress, is the culmination of increased attention by US authorities regarding the longstanding allegations of forced labor in the XUAR. It puts the US importing community on a potentially difficult road, given the challenges of rebutting a presumption against imports in so many circumstances. Importers will want to work strategically on this challenge, carefully considering their supply chains and what practical avenues are available to help deal with these new import restrictions.

Our experienced team is available to assist companies with questions concerning the content of the Uyghur Forced Labor Prevention Act and its potential impacts on supply chains and importing into the United States.

© Arnold & Porter Kaye Scholer LLP 2021 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.