What the 2024 UFLPA updates mean for your company

The US’ Uyghur Forced Labor Prevention Act, or UFLPA, has recently been updated to include three high-risk industries and several new entities. The legislation, which came into enforcement in 2022, establishes an automatic presumption that all goods produced in China’s Xinjiang region are made using forced labor unless proven otherwise. Additionally, the UFLPA bans specific businesses that engage in forced labor practices from importing goods.

The UFLPA is one of many global regulations that is trying to tackle forced labor and other governance issues within supply chains. In the two years the legislation has been in force, US Customs and Border Protection has inspected over 9,000 suspicious or at-risk shipments across a variety of industries at the border. And, to further strengthen the UFLPA, the Department of Homeland Security has made regular updates to the legislation. This is to minimize the risk of force labor in US value networks. 

Figure 1 – Detained imports due to UFLPA violations  

The newest update focuses on three specific industries, as well as several entities, which have been added to the Uyghur Forced Labor Prevention Act Entity List. These additions span across several seemingly unrelated industries, and including industries that produce PVC, aluminum, and seafood. If your organization imports these products, you may be newly subject to scrutiny under the UFLPA. Even if you don’t operate within these industries, you should take some time to review the UFLPA’s yearly updates. Your supply chain activities may impact your business. 

In order to comply with the UFLPA companies need to be able to prove that they either 1) don’t have any upstream supply chain links to Xinjiang, or 2) provide evidence to the CBP proving that their Xinjiang suppliers do not employ forced labor.  

UFLPA background

Increased scrutiny by consumers and governments alike into global supply chains and their environmental, sustainability, and governance bona fides has created overlapping and comprehensive regulatory conditions. Legislations such as the UFLPA require organizations to fully understand how their suppliers produce and provide commodities. This is especially so in areas that have been historically difficult to monitor and verify.   

As a result, the UFLPA was signed into effect in December 2021 and put into force in June 2022. This was as a result of the worldwide examination into China’s treatment of Uyghurs and other ethnic minorities in the Xinjiang region. Businesses must proactively prove their compliance with the UFLPA. They must demonstrate that no part of their supply chain output involved forced labor in the Xinjiang region. This requires a full understanding of an organization’s supply chain, comprehensive due diligence, and risk mitigation actions where necessary. Non-compliant companies have their goods seized at the border, and can face devastating fines.  

Companies worldwide have felt the impact of the UFLPA and have sought out suppliers they can trust to be compliant.

Industries impacted by the 2024 UFLPA updates

The UFLPA requires the Forced Labor Enforcement Task Force (FLETF) to implement an enforcement strategy. This is updated yearly to account for any global supply chain changes. This year, the FLETF added three high-risk forced labor industries to their implementation plan: polyvinyl chloride (PVC), aluminum, and seafood.This means that businesses that import these products must adhere to the guidelines within the UFLPA and perform and prove comprehensive due diligence. 

These additions follow updates to the UFLPA from previous years, when FLETF highlighted cotton, tomatoes, and polysilicon products as high-risk. Experts also consider the solar and automotive industries high-risk. The UFLPA has greatly impacted these manufacturers.

Furthermore, the FLETF added several specific entities, expanding the list from the original 20 listed in 2022 to 68 entities. The UFLPA Entity List includes organizations that partially or wholly manufacture products or supplies using forced labor in the Xinjiang region. As a result, they are banned from importing into the US. 

Next Steps

If you find that your organization is newly in-scope of the UFLPA, it’s time to cast a critical eye over your supply chain.

Visualize your end-to-end supply chain

The first step is to ensure visualization of your end-to-end supply chain, highlighting any potential forced labor risks. This is where it’s critical to use tools that automate fact-finding from a variety of trusted sources, like Everstream Discover. This will allow your supply chain management team to quickly focus on clear risks and put mitigation strategies in place. You may find you need to find a new, compliant supplier, for example, or need to put a due diligence process in place to prove that a supplier is compliant. In any case, information holds power, and companies will face punishment for ignorance.

Keep up to date with changes

If your company was already in-scope for the UFLPA, hopefully your organization has taken steps to demystify their supply chain, and to easily carry out and prove due diligence activities. That being said, supply chain compliance isn’t a one-time deal. Continuing to analyze and improve your supply chain best practices will be key to maintaining compliance to the UFLPA, especially with updates to the entity and industry list, as well as global supply chain changes.  

Monitor your suppliers

Additionally, supplier circumstances and practices may change. Therefore, it’s important to find a risk management tool that allows your company to act proactively. Everstream Reveal uses AI to constantly process data from around the world, ensuring that when a disruption or non-compliant event occurs, you’re the first to know.  

Leverage UFLPA compliance to comply with similar laws

Finally, the UFLPA is one of many global regulations concerning forced labor. Though the UFLPA specifically focuses on the Xinjiang region, its requirements overlap with other current and upcoming global forced labor legislations. Your company is likely subject to several of these regulations. Staying on top of UFLPA compliance will help you maintain compliance to regulations such as Canada’s Modern Slavery Act and the EU’s Forced Labor Regulation.   

Staying complaint to the UFLPA is an ongoing task. Its yearly updates means that more and more industries and organizations will fall into scope, impacting relationships with suppliers and global supply chains. No matter what industry your company operates in, keeping an eye on the UFLPA will not only help you stay compliant, but also ensure that you’re lessening the risk of forced labor in your supply chains.