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 goods imported by specific businesses that are known to engage in forced labor practices.
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, in an attempt to further strengthen the UFLPA, the Department of Homeland Security has made regular updates to the legislation 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. And, even if you don’t operate within these industries, it’s worth taking some time to review the UFLPA’s yearly updates, as your business may be impacted through your supply chain activities.
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, especially 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 following the worldwide examination into China’s treatment of Uyghurs and other ethnic minorities in the Xinjiang region. Businesses must proactively prove compliance to the UFLPA, demonstrating a that no part of their supply chain output was produced using 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.
The impact of the UFLPA has been felt worldwide, and has led companies to seek out suppliers that they can trust are compliant.