Recent News in Customs & Trade Facilitation

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  UFLPA: Overview of compliance challenges, best practices

  This article originally appeared in CEP Magazine. View the full article here: https://bit.ly/45PC9s1 Copyright 2023 CEP Magazine, a publication of the Society of Corporate Compliance and Ethics (SCCE). by Evelyn Suarez and Thad McBride of Bass, Berry Passing Congress with broad bipartisan support and signed into law on December 23, 2021, the Uyghur Forced Labor Prevention Act (UFLPA) continues a trend by Congress to strengthen US laws to fight against forced labor.[1] Specifically, the UFLPA targets goods coming from China’s Xinjiang Uyghur Autonomous Region (XUAR), imposing a “rebuttable presumption” that goods having a nexus to XUAR are made with forced labor. The UFLPA itself identifies three products—cotton, tomatoes, and polysilicon—for extra scrutiny. U.S. Customs and Border Protection (CBP) subsequently targeted apparel and silica-based products, such as the raw materials used to make aluminum alloys, silicones, and polysilicon. More recently, the automotive industry has been under the microscope, and CBP is under pressure to scrutinize imports of automotive parts, steel, and aluminum.[2] CBP has made clear that forced labor is a “top tier” enforcement priority. Since enactment of the UFLPA, CBP has detained over $1.4 billion in goods.[3] Initially, solar panel products were hit hard, and apparel, footwear, textiles, and manufacturing materials have also been detained. Additionally, CBP’s Dashboard shows goods being stopped from other countries, such as Malaysia and Vietnam. View the rest of the article online or view the PDF here: UFLPA Overview from CEP Magazine.

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  Evelyn Suarez and Dentons Beijing Present on the UFLPA

  Evelyn Suarez joined with Li Li, Partner at Dentons Beijing to present: How Chinese Exporters Respond to the U.S. Investigation on Forced Labor, Taking UFLPA as an Example. The presentation took place on April 17, 2023.

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  How to Prepare for a CBP UFLPA Detention

  Under the Uyghur Forced Labor Prevention Act (UFLPA), goods made wholly or in part in the Xinjian Uyghur Autonomous Region (XUAR) or by entities identified on the UFLPA Entity List are subject to a Rebuttable Presumption that the goods are made with forced labor and will be stopped at the border unless the importer can prove by clear and convincing evidence that the product was not made with forced labor. This applies to goods that may be produced in third countries that have constituent materials coming from Xinjiang. CBP has instituted enhanced early warning mechanism through its automated system that might indicate the goods are made in XUAR or by a UFLPA Entity. This paper describes how a company can provide information and documentation to its customer who might be an importer or another company in the supply chain for goods destined to the U.S. The law specifies that cotton, tomatoes and polysilicon are to receive extra scrutiny and CBP has identified apparel and silica-based products, such as raw materials used to make aluminum alloys, silicones and polysilicon. Recently, CBP has sent notices to automotive-related companies that they suspect have ties to forced labor in XUAR. CBP states that aluminum sourced from XUAR may become a high priority material for UFLPA enforcement by CBP. CBP will provide notice of enforcement action which might be in the form of a detention notice, exclusion notice or notice of seizure for flagged shipments. According to U.S. Customs and Border Protection Operational Guidance for Importers, issued on June 13, 2022, importers must provide CBP substantiation of the absence of inputs subject to the UFLPA by presenting the following type of documentation, as further detailed within the guidance: Due diligence system information Supply chain tracing information Information on supply chain management measures Evidence goods were not mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region Evidence goods originating in China were not mined, produced, or manufactured wholly or in part by forced labor Ultimately, to rebut the presumption, an importer must provide “clear and convincing” evidence that the goods are not the product of forced labor for CBP to determine that the goods are beyond the scope of UFLPA and to release the shipment. Companies might want to use available products and technology for: mapping, visibility and traceability; DNA or isotopic testing (approved by CBP for cotton); and even third-party testing. However, these products do not provide a silver bullet and the supplier must be prepared to provide the information and documentation described in this paper. In order to minimize UFLPA enforcement risk, CBP recommends the following best practices to importers: Establish and maintain a customs due diligence program Carefully assess and mitigate XUAR-related supply chain risks Be prepared to demonstrate compliance with documented due diligence that includes supply chain tracing and supply chain management measures Be prepared to respond to CBP inquiries to demonstrate that goods are not mined, produced, or manufactured wholly, or in part, in XUAR or by a UFLPA Entity Cotton Provide sufficient documentation, including any records that may be kept in the ordinary course of business (e.g., purchase orders, payment records, etc.), to show the entire supply chain, from the origin of the cotton at the bale level to the final production of the finished product. Provide a flow chart of the production process and maps of the region where the production processes occur.  Number each step along the production process and number any additional supporting documents associated with each step of the process. Identify all the entities involved in each step of the production process, with citations denoting the business records used to identify each upstream entity with whom the importer did not directly transact. Polysilicon Importers need to provide complete records of transactions and supply chain documentation that demonstrate all entities involved in the manufacture, manipulation, or export of a particular good, and the country of origin of each material used in the production of the products going back to the suspected source of forced labor, i.e., production in Xinjiang or by an entity on the UFLPA Strategy entities lists. Provide a flow chart mapping each step in the procurement and production of all materials and identify the region where each material in the production originated (e.g., from location of the quartzite used to make polysilicon, to the location of manufacturing facilities producing polysilicon, to the location of facilities producing downstream goods used to make the imported good). Provide a list of all entities associated with each step of the production process, with citations denoting the business records used to identify each upstream party with whom the importer did not directly transact. Importers should be aware that imports of goods from factories that source polysilicon both from within Xinjiang and outside of Xinjiang risk being subject to detention, as it may be harder to verify that the supply chain is using only non-Xinjiang polysilicon and that the materials have not been replaced by or co-mingled with Xinjiang polysilicon at any point in the manufacturing process. Tomatoes Provide supply chain traceability documents (e.g., lot codes assigned based on the commodity, variety, location, and harvest date) demonstrating the point of origin of the tomato seeds, tomatoes, or tomato products. Identify the tomato processing facility, including both the parent company and the estate that sourced the tomato seeds and/or tomatoes. Records for the tomato seeds, tomatoes, and/or tomato products that identify all steps in the production process, from seed to finished product, from the farm to shipping to the United States. Provide a list of all entities associated with each step of the production process, with citations denoting the business records used to identify each upstream party with whom the importer did not directly transact. We can assist your company to put together a package for your customers to address CBP’s concerns about forced labor in the supply chain and to be responsive to CBP’s requests. This is the only way a product identified as […]