President Biden Signs Uyghur Forced Labor Prevention Act
On December 23, President Biden signed a new law into effect that will ban imports of all goods made in whole or in part from any good from the Xinjiang Uyghur Autonomous Region in China, effective June 21, 2022. Specifically, the new law creates a rebuttable presumption that any product mined, produced, or manufactured in Xinjiang was made using forced labor. The bill, which passed both houses with almost unanimous support, illustrates the Government, and by extension CBP’s, willingness to use the provisions of 19 U.S.C 1307 to crack down on forced labor violators.
The passage of this bill highlights the importance for Importers to conduct constant due diligence and supplier vetting of all suppliers in China, not just tier-one suppliers. Our thoughts on the bill can be found below.
Forced Labor is a China Wide Issue
While the instant bill creates a rebuttable presumption that any product from Xinjiang was made using forced labor, the passage of this bill poses a China-wide issue because Uyghur populations, and other persecuted groups, in Xinjiang do not only face forced labor conditions within Xinjiang: They also work under similar conditions at locations elsewhere in China and abroad.
The instant bill takes note of this by also prohibiting the importation of goods made by entities that work with the Xinjiang government “to recruit, transport, transfer, harbor or receive forced labor of Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups.” This means that a company that brings Xinjiang laborers to work at a facility elsewhere in China will be treated as if it was making its products in Xinjiang.
Along with the requirement to trace the source of a company’s labor force, Importers must also be able to trace the source of raw materials, inputs, and subassemblies to ensure that no goods, wares, articles, or other merchandise were mined, produced, or manufactured wholly or in part in Xinjiang.
Importers should take heed of this note to realize that supplier vetting should not be limited just to Xinjiang. Instead, a comprehensive, full-scale review of all tiers of an Importer’s supply chain should actively be conducted.
An “Irrebuttable” Rebuttable Presumption?
The bill states that Importers can rebut the presumption if CBP determines “by clear and convincing evidence” that the product was not made using forced labor. While this creates an “out” for Importers by informing the Trade Community what legal standard will be applied, the question remains “what constitutes clear and convincing evidence?”
The simple answer is “time will tell.” One thing however is certain: Importers with good compliance programs, compliance practices, and detailed records, that can walk a CBP Audit team through their records, will be well situated to respond.
Evidentiary considerations include the fact that CBP does not place much weight on written assurance and certifications from Chinese companies, especially in light of the fact that the Government of China, and to that degree Chinese companies, outright deny the existence of forced labor conditions in China. As recent Customs Rulings have shown, CBP is not particularly inclined to take an Importer’s word on the matter and instead requires significant evidence that every step in the production process is free of forced labor, including verified and confirmed production records, transportation documents, and supporting documents such as time cards, wage payment receipts, daily process reports, etc.
In sum, establishing “clear and convincing evidence” that a product was not made using forced labor may end up an evidentiary burden that is simply too high for Importers who are not prepared with an air-tight and thorough compliance program and associated due-diligence reports.
Based on this bill, Givens & Johnston stresses the importance for Importers to conduct constant due diligence and supplier vetting of all suppliers in China, not just tier-one suppliers. This bill should not be viewed as a Xinjiang issue, but a China-wide issue that creates a heavy evidentiary burden on Importers doing business in China. Givens & Johnston strongly recommends that all Importers assess their Compliance Programs for Forced Labor guidance and to reach out to an attorney with any questions arising from the same.