UFLPA Compliance: A Guide for Importers and Supply Chain Companies
The Uyghur Forced Labor Prevention Act (UFLPA) presumes that all goods "mined, produced, or manufactured wholly or in part in Xinjiang or by an entity on the UFLPA Entity List '' are automatically barred from entry due to illegal production practices. Importers who wish for an exception from the Commissioner of US Customs and Border Protection (CBP) must provide ample evidence that the products they handle were produced without illegal labor. According to the UFLPA enforcement strategy, importers must:
Demonstrate by clear and convincing evidence that the goods in question were not produced wholly or in part by forced labor,
Fully respond to all CBP requests for information about goods under CBP review and,
Demonstrate that they have fully complied with the guidance outlined in the Forced Labor Enforcement Task Force's (FLETF) Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People's Republic of China.
The UFLPA significantly burdens importers, especially those in targeted sectors including apparel, cotton and cotton products, silica-based products and agricultural products, to prove that their products are not associated with forced labor. UFLPA compliance requires consistent monitoring of partner entities in Xinjiang to ensure compliance with FLETF standards and updates to the UFLPA Entity List.
What is the UFLPA Entity List and Why Does It Matter?
The UFLPA Entity List prevents the entry of goods made with forced labor in the Xinjiang region of China to the US Compiled by the Forced Labor Enforcement Task Force (FLETF), it automatically bars any goods mined, produced, or manufactured in Xinjiang from importation. The import ban also applies to goods manufactured by entities on the UFLPA Entity List, even when manufactured outside of Xinjiang.
The UFLPA Entity List prevents the entry of goods made with forced labor in the Xinjiang region of China to the US Compiled by the Forced Labor Enforcement Task Force (FLETF), it automatically bars any goods mined, produced, or manufactured in Xinjiang from importation. The import ban also applies to goods manufactured by entities on the UFLPA Entity List, even when manufactured outside of Xinjiang.
What Brought About the UFLPA?
The UFLPA was signed into law on December 23, 2021, and enforcement began on June 21, 2022. Uyghurs are an ethnic minority of roughly 12 million people primarily located in Xinjiang, and most Uyghurs are Muslims who speak a language more like Turkish than Mandarin. Reports indicate that the CCP has detained over 1 million Uyghurs and other members of Muslim minority groups in re-education camps. US federal law defines forced labor as:
"all work or service which is exacted from any person under the menace of any penalty for its nonperformance and for which the worker does not offer work or service voluntarily. Indentured labor is defined as work or service performed pursuant to a contract, the enforcement of which can be accomplished by process or penalties. This includes forced or indentured child labor.”
In its 2021 Country Reports on Human Rights Practices, the US Department of State (DOS) has alleged that the Chinese government is responsible for multiple crimes, including: arbitrary imprisonment; forced sterilization; coerced abortions; rape; torture; forced labor; and restrictions on freedom of religion, expression and movement. The United States characterizes the Uyghur crisis as a genocide and a crime against humanity, and in a 2022 report, the Department of State asserted that state-sponsored forced labor continues in the region.
The International Labor Organization (ILO) estimates that 24.9 million people are subject to human trafficking, of which the US Department of Commerce asserts 81% of human trafficking victims are subject to forced labor. In 2021, the Biden Administration released an updated National Action Plan to Combat Human Trafficking, focusing on ending all forms of human trafficking, including forced labor in global supply chains.
Global awareness of human rights violations and intensified scrutiny of forced labor in supply chains has created a massive challenge for importers who do not want to be complicit in human rights abuse because, as shown in the data, the US imports significant amounts of goods from Xinjiang.
Castellum.AI provides screening solutions that automatically standardize and enrich data from over 1,000 lists, including the UFLPA. Leverage Castellum.AI to automate UFLPA trade compliance.
UFLPA Enforcement: Agencies and Mechanisms
Two US government agencies are responsible for maintaining and enforcing the UFLPA Entity List: the Forced Labor Enforcement Task Force (FLEFT) and the US Customs and Border Protection. These agencies oversee compliance and actively intervene to prevent violations.
Forced Labor Enforcement Task Force (FLEFT)
The FLETF is responsible for maintaining and updating the UFLPA Entity List and developing strategies to support its enforcement.
The Under Secretary for Strategy, Policy, and Plans from the Department of Homeland Security leads the FLEFT, which consists of representatives from seven different governmental agencies. Moreover, there are observer agencies that actively contribute to the operations and objectives of the task force. DHS outlines the task force's scope as "dedicated to monitoring the enforcement of the prohibition on importing goods made wholly or in part with forced labor into the United States."
US Customs and Border Control (CBP)
Since the UFLPA passed into law, over 5,000 shipments valued at over $1.7 billion have been flagged and withheld by CBP. The CBP stops products manufactured through forced labor from entering the US marketplace by investigating forced labor claims in supply chains. Using Withhold Release Orders (WRO) and other determinations, the CBP blocks the import of goods partially or wholly produced with forced labor in foreign countries. CBP automatically detains goods suspected to be associated with companies on the UFLPA entity list from Xinjiang.
What is on the UFLPA Entity List?
The UFLPA Entity List sorts entities across four sections.
Castellum.AI automatically searches across the UFLPA and other watchlists. Search "Hefei Bitland Information Technology" to see that the company is on the UFLPA Entity List, subject to export controls, and a US Withhold Release Order.
Since its enforcement began, the list has been updated three times on June 12, 2023, August 2, 2023 and September 27, 2023. Updates to the UFLPA Entity List demonstrate an apparent tightening of enforcement and a willingness to expand the list as authorities identify new companies using forced labor.
The June 12 update added two primary entities—Xinjiang Zhongtai Chemical Co. Ltd. and Ninestar Corporation—along with Ninestar's eight Zhuhai-based subsidiaries, included for their collaboration with the Xinjiang government in forced labor practices affecting persecuted ethnic groups such as Uyghurs, Kazakhs, and Kyrgyz (Federal Register, June 12, 2023).
The August 2 update added Camel Group Co., Ltd. to the list for similar reasons. It also included Chenguang Biotech Group Co., Ltd. and its subsidiary for sourcing material from Xinjiang for programs purportedly aimed at "poverty alleviation" or "pairing-assistance," believed to exploit forced labor (Federal Register, August 2, 2023).
The September 27 update added three companies involved in the textile trade — Xinjiang Tianmian Foundation Textile Co., Ltd., Xinjiang Tianshan Wool Textile Co. Ltd. and Xinjiang Zhongtai Group Co. Ltd. These companies were added to the UFLPA Entity list for receiving forced labor or facilitating the transfer of members of persecuted ethnic groups out of Xinjiang (Federal Register, September 27, 2023).
These updates suggest an increasing rigor in US enforcement against forced labor, underlining the importance of the UFLPA in US foreign and domestic policy. Including additional entities indicates an ongoing investigation process and sends a strong signal to companies and nations that the US is committed to curbing forced labor and human rights abuses.
H2: How does UFLPA Impact US Businesses and Supply Chains?
China is one of the United States' most important trading partners. The top 3 import categories in 2020, accounting for over half of all imports by value that year, were electrical machinery ($111b), machinery ($97b), and toys and sports equipment ($26b). In June 2022, the US imported over $48b from China; a year later, in June 2023, that figure fell to just over $34b.
The current UFLPA Entity List targets includes apparel, cotton and cotton products, silica-based products, and agricultural products as high priority sectors. Apparel imports regularly account for well over half of the total imports by value among the four priority categories. Since UFLPA enforcement began, over 800 apparel shipments have been flagged by CBP and 47% of US-bound apparel shipments have been denied entry.
Note: In the months following the implementation of UFLPA, the local government in Xinjiang halted the release of public trade data, including information on exported products and shipment destinations.
UFLPA and Compliance in International Supply Chains
The international community has shown increasing awareness and willingness to tackle the issue of forced labor and human rights abuses, and legislation like the UFLPA serves as a framework for similar legislation.
U.N. Highlights Human Rights Violations in Xinjiang
In August 2022, The United Nations Human Rights Agency released a comprehensive report, aligning itself with Western governments, human rights groups, and media by detailing mass abuses in Xinjiang, stating that China may have committed crimes against humanity in the region. The report mirrors the UFLPA's concerns and strengthens the international condemnation of human rights abuses in the region. It adds credence to the US's policy measures, such as import bans and sanctions on Chinese officials.
E.U. Proposes Ban Modeled on UFLPA
Inspired by the US, the European Union has proposed a comprehensive ban on selling goods made with forced labor. While the E.U.'s legislation is still in its infancy, its implementation could bring rigorous due diligence requirements for companies selling into the world's largest market. The European proposal differs from the UFLPA by placing the burden of proof on enforcement authorities rather than companies.
Individual EU member states are also taking action to eliminate forced labor from supply chains. As of 1 January 2023, Germany’s Supply Chain Due Diligence Act (SCDDA) came into force and requires German companies with 3,000 or more employees and foreign companies with German affiliates to conduct human-rights related due diligence on their supply chain. SCDDA will apply to companies with 1,000 employees starting in 2024. Companies are required to set up risk management systems and report on their compliance efforts. Non-compliance could result in fines up to 8 million euros or 2% of global annual turnover for larger companies, and possible exclusion from public contracts. The SCDDA is part of Germany’s broader National Action Plan on Business and Human Rights (NAP).
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Methodology
Statistics concerning US imports from the People's Republic of China were sourced from the United States Census Bureau's country and product trade data. Statistics concerning import categories by value were sourced from the Office of the United States Trade Representative. Statistics concerning Xinjiang Uyghur Autonomous Province exports to the U.S. were sourced from the China General Administration of Customs. The count of entries in the UFLPA list was compiled from data collected by Castellum.A.I.
Castellum.AI obtains global sanctions information from primary sources and then standardizes, cleans, and enriches the data, extracting critical information like I.D.s and addresses from unstructured text. Castellum.AI enriches as many as fifteen separate items per entry. This analysis is based on the enriched primary source data that populate our database. The database consists of over 1,000 watchlists, covering over 200 countries and eight categories (sanctions, export control, law enforcement most wanted, contract debarment, politically exposed persons, regulatory enforcement, delisted, and elevated risk). Castellum.AI checks for watchlist updates every five minutes directly from issuing authorities.
Originally published: 22 August 2022
Last Updated: 27 September 2023
