UFLPA Poses Compliance Challenges For Retailers
The United States is serious about enforcing the Uyghur Forced Labor Prevention Act. That was the takeaway from a Wall Street Journal interview last month with U.S. Forced Labor Enforcement Task Force chairman Robert Silvers, who declared that forced labor is now a “top-tier compliance issue.”
The sweeping new law, also known as the UFLPA, bans the importation of goods or materials mined or manufactured wholly or in part from the Xinjiang region under the presumption they were made with forced labor. U.S. Customs & Border Protection has the power to detain and seize goods and impose fines unless retailers can produce “clear and convincing evidence” that no forced labor at any point in the supply chain was involved in producing any goods.
The impact on the supply chain is enormous. Brands, retailers, and merchandisers are now responsible for providing maps of their supply chains beyond their immediate, tier-1 suppliers to prove the provenance of all imported merchandise. “In my 20 years of doing this, I’ve never seen a law that’s required companies to do so much,” said Assent Trade and Compliance Attorney Travis Miller on a recent podcast. “There’s never been anything like it.”
Businesses had been bracing for the law, ahead of its implementation in June. In a survey of U.S. fashion companies this summer, 95% said they expected the UFLPA to impact their sourcing. But until recently questions remained about how diligently the law would be enforced.
Now, four months after the law went into effect, we have a clearer picture. In August, U.S. Customs targeted 838 imports valued at more than $266 for suspected use of forced labor, according to an agency report, though customs did not specify the items detained or their country of origin.
Speaking to the Wall Street Journal, Robert Silvers said about $429 million worth of goods had been targeted under the law during its first three months, a number that seems likely to increase as U.S. Customs allocates more money toward enforcement.
For its 2023 fiscal budget, U.S. Customs has requested funds to hire 300 additional workers to help enforce the UFLPA.
Related article: What Canada’s Proposed Supply Chain Diligence Law Means for Retailers
Which Goods Are Targeted Under UFLPA?
Any merchandise, stemming from any country of origin, is subject to the rules imposed by the UFLPA. U.S. Customs has outlined three especially high-risk categories: chemicals, agricultural goods, and apparel, since the Xinjiang region produces roughly one-fifth of the world’s cotton. The law specifically singles out tomatoes, cotton, and polysilicon-based products (including solar panels), but Robert Silvers told the Wall Street Journal that his department – U.S. Forced Labor Enforcement Task Force – speaks “regularly with human rights and other advocacy groups that track the use of forced labor in Xinjiang and other places to hear their views on what product categories we ought to be looking at.” As a result, the scope of enforcement is likely to change over time.
How Can Importers Stay in Compliance with UFLPA?
In a fact sheet on the Uyghur Forced Labor Prevention Act, U.S. Customs outlined five steps importers can take to stay in compliance:
* Establish/maintain a due diligence program.
* Carefully assess Xinjiang Uyghur Autonomous Region and related supply chain risks.
* Mitigate exposure to forced labor risks.
* Be prepared to demonstrate compliance with the enforcement strategy’s due diligence, supply chain tracing, and supply chain management measures.
* Be prepared to respond to CBP inquiries and to demonstrate that goods are not mined, produced, or manufactured wholly or in part with forced labor.
U.S. Customs has also shared more extensive operational guidelines for importers.
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