FAQ: Uyghur Forced Labor Prevention Act & Your Business

by Source Intelligence

on June 23, 2022

A Comprehensive Guide to the Most Frequently Asked Questions About the Uyghur Forced Labor Prevention Act (UFLPA)

 

U.S. efforts to target forced labor in supply chains and prevent importing goods mined, produced, or manufactured wholly or in part with forced labor in the People’s Republic of China have officially begun.

The act can be confusing, and with such a broad scope to which the UFLPA extends, we developed this FAQ to address commonly-asked questions about the Uyghur Forced Labor Prevention Act.

 

What is the Uyghur Forced Labor Prevention Act (UFLPA)?

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.

 

Is there a human rights problem?

Human rights violations are a global issue affecting men, women, and children worldwide and increasing daily.
  • In 2016, 40.9 million people were in modern slavery worldwide
  • 1 in 4 victims are children
  • 24.9 million are in forced labor (16 million of which are in the private sector)
  • Modern slavery, human trafficking, and forced labor (including child labor) are all types of human rights abuses.
  • The right to life and liberty, freedom from slavery and torture, freedom of opinion and expression, the right to work and education, etc., without discrimination, should all be protected.

What are the human rights that businesses can impact?

The following are examples of human rights violations that exist in the workplace. Although some of these are quite pronounced, others are more subtle:

  • Human trafficking
  • Forced labor
  • Child labor
  • Debt bondage (example: working for many years to pay off recruitment fees or inherited obligations)
  • Sex trafficking
  • Unsafe work conditions (example: no PPE, dangerous conditions)
  • Unhealthy working and living environments
  • Sexual harassment
  • Unfair wages
  • Excessive work hours
  • Property and privacy rights abuses (example: withholding passports, restricting movement or personal space)
  • Inability to pose grievances without reprisal
  • Discrimination based on any of the following criteria
    • Gender
    • LGBTQI+
    • Indigenous people
    • Religion
    • Age

Is there a reporting deadline for the Uyghur Forced Labor Prevention Act, or any of the global human rights regulations?

None of the regulations have specific deadlines. Regulations worldwide require disclosure of due diligence activities with a company's suppliers (what have they done, what are the findings, and how are they addressing those issues) every year (like the SEC). The timeframe for those varies per country, but the due diligence and disclosure requirements remain the same.

 

Can a CTPAT certification or a letter fulfill the UFLPA requirements?

No; it is one document that can help with Customs requirements, but by itself does not meet requirements. CTPAT (Customs and Trade Partnership Against Terrorism) is a letter that shows a company agrees to support anti-terrorism efforts. Sometimes companies get a certification for this.  However, this is a trade document and has many limitations. Like the onsite audits, it only looks at a specific company. It does not trace the supply chain, nor can it verify adherence to regulations or letter content.

Requests for CTPAT partners in good standing will be prioritized for seizures, detainments, and exclusions.

 

What is required to prevent a shipment from being detained for the UFLPA by U.S. Customs and Border Patrol?

While the Forced Labor Enforcement Task Force has not yet issued specific requirements, it is recommended to follow the current WRO (Withhold Release Order) Hoshine Guidance.

 

What documents are required for a Withhold Release Order (WRO)?

According to the Hoshine WRO Guidance, here is a list of the documents, but this is not comprehensive:

  • Certificates of origin, as specified in 19 CFR 12.43(a)
  • Purchase orders, invoices, and proof of payment
  • Packing lists
  • Payment records
  • Bills of lading
  • Shipping records
  • Production records
  • Inventory records supporting production
  • List of production steps and chain of custody records for the imported merchandise
  • Transportation documents
  • Daily manufacturing process reports
  • Any other relevant information that the importer believes may show that the shipments are not in violation of 19 U.S.C. 1307

Due diligence requires supply chain tracing (down to material sources) and verification suppliers (including services and logistics) do not have ties to forced labor.

 

If my products are detained by CPB and documentation is provided, what is the processing time?

CBP can take 2-3 weeks for a decision, but processing times are generally longer, resulting in shipping delays and supply chain disruptions.

 

What penalties could be imposed if found non-compliant with the UFLPA?

The U.S. government is authorized to impose visa and financial sanctions, export restrictions, and import controls on companies found to violate the Uyghur Forced Labor Prevention Act. While the UFLPA bans the import of goods from the Xinjiang Uyghur Autonomous Region (XUAR) of China, the act also authorizes the U.S. government to impose sanctions on enterprises not involved in exporting products to the U.S., so long as Uyghur forced labor is found in their supply chains. The act also implicates tertiary sectors, including the service and hospitality industries, that are not involved in the export of goods into the U.S. but may be identified as using Uyghur forced labor in their operations.

 

How does the UFLPA apply to electronics?

For the electronics industry, goods with gold (there is a big smelter in the Xinjiang area) and polysilicon (since 80% of this commodity comes from the XUAR) are targeted products for seizure by US Customs and Border Patrol. It requires companies to implement a human rights due diligence process to trace their supply chain (down to material source), including services suppliers, and identify areas where there are affiliations (either through company name or location) with Xinjiang and forced labor.

 

Which suppliers need to be included in the Direct Supplier List?

The regulations state due diligence must be performed on ALL suppliers, down to material source; therefore, the entire supply chain should be mapped. Per regulatory guidance, suppliers, even if they do not directly contact the product, are still subject to the requirements and must be included in the supply chain map. This means logistics and services providers, including financial institutions or investment firms, are part of a client’s supply chain. Financial institutions are called out in violations of human rights publications, and the potential for forced labor is greatest in service environments.

A direct supplier is one that is consistently used, and a purchase order or invoice is directly issued.

For example, if a computer repair company is used once every 3 years to fix broken equipment, they are out of scope.  However, if the computer repair company is called every few months to perform maintenance on servers and laptops, they should be included in the direct supplier list.
In cases where the office building is leased, the custodial and security staff are generally shared with all occupants. The office management would be a direct supplier. We would determine the custodial and security staff by surveying office management for their list of direct suppliers.

 

How does the Source Intelligence Human Rights Assessment Solution satisfy all global human rights regulations due diligence requirements?

The Human Rights Assessment, like most human rights regulations, aims to protect people. The solution satisfies the following global human rights regulation due diligence requirements:

  • Transparency: California Supply Chain Transparency Act and Australia Modern Slavery Act 2018 – The HRA checks if the suppliers are publicly disclosing human rights protection activities. Additionally, the client can use the information gathered in the survey in their CSR reports as well as progress updates to stakeholders.
  • Regions / Countries: UFLPA and EU Conflict Minerals – Through the Region Alerts, the client can see if their suppliers (regardless of tier) operate within high-risk or conflict-affected areas such as Xinjiang in China and the DRC. They can use this data to determine where the potential for products stopped at the border is highest and implement mitigation strategies.
  • Supply Chain Due Diligence: France Duty of Vigilance Law and German Supply Chain Transparency Act – The regulations require companies to know who is part of their supply chain and correct any infringements of human rights. The HRA allows companies to trace their supply chain (down to sources) and the activity is part of a robust Human Rights Due Diligence process.
  • Child Labor: Netherlands Child Labor Due Diligence Law – One of the questions in the survey checks if the supplier has policies against using child labor. The score is negatively affected if they do not. This claim should be supported by the attached documents.
  • Human Trafficking: UK Modern Slavery Act 2015 and Singapore Prevention of Human Trafficking Act – The questions in the survey help identify where there is potential for forced labor, human trafficking, and modern slavery. The client can use the survey scores and questionnaire to help suppliers create more robust policies and procedures for identifying and preventing these human rights abuses.

What lists does the Human Rights Assessment vet the data against?

Survey questions and scores are based on universal principles from United Nations Universal Declaration of Human Rights, OHCHR Guiding Principles for Business and Human Rights, Sustainable Development Goals, OECD Guidelines for Responsible Business Conduct, International Labor Organization (ILO) Declaration on Fundamental Principles and Rights at Work, Fair Labor Association Code of Conduct. UNODC Global Report on Trafficking in Persons, Global Organized Crime Index, US Trafficking in Persons Report, Cities at Risk Index, ILO Stat, Amnesty International Report, HIIK, current events, and others helped inform the country scores and region alerts. Country sanctions lists like OFAC will be used for the company name alert.

 

Which regulations are covered by the Human Rights Assessment?

We designed the Human Rights Assessment to be a holistic solution. It covers universal principles and incorporates and can meet most parts of global regulations related to human rights. These regulations include but are not limited to the USMCA Trade Agreement, US Tariff Act of 1930, Japan Labor Standards Act, UK Modern Slavery Act, Netherlands Child Labour Due Diligence Law, Singapore Prevention of Human Trafficking Act, Botswana Anti Human Trafficking Act, Australia Modern Slavery Act, France Corporate Duty of Vigilance Law, German Supply Chain Transparency Act, California Supply Chain Transparency Act, and the Uyghur Forced Labor Prevention Act.

 

How can I get a demonstration of the Source Intelligence Human Rights Assessment?

If you are interested in learning more about how our solution can help your business comply with the Uyghur Forced Labor Prevention Act and other global human rights regulations, please contact us to request a demo.

Request a Demo

 

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