Efforts in the United States to target forced labor in supply chains and prevent the importation of goods mined, produced, or manufactured wholly or in part with forced labor in the People’s Republic of China have officially begun with the Uyghur Forced Labor Prevention Act (UFLPA).
We asked our experts to answer the most frequently asked questions about UFLPA to help businesses understand some of the act's complexities and what the compliance process looks like.
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.
The following are examples of human rights violations that exist in the workplace. Although some of these are quite pronounced, others are more subtle:
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.
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.
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.
According to the Hoshine WRO Guidance, here is a list of the documents, but this is not comprehensive:
Due diligence requires supply chain tracing (down to material sources) and verification suppliers (including services and logistics) do not have ties to forced labor.
CBP can take 2-3 weeks for a decision, but processing times are generally longer, resulting in shipping delays and supply chain disruptions.
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.
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.
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 for violations of human rights publications, and the potential for forced labor is greatest in service environments.
A direct supplier 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.
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:
Survey questions and scores are based on universal principles from the 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.
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.
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 explore our Human Rights program.