At a congressional hearing last Tuesday, experts called for urgent action to improve the effectiveness of a key law to combat forced labor in China's Xinjiang Uyghur Autonomous Region (Uyghur Region). The Uyghur Forced Labor Prevention Act (UFLPA) bans all imports from the Uyghur region unless the importer can provide "clear and convincing evidence" that forced labor was not used in the manufacturing process.
The law, in effect since June 2022, is the strongest ban on forced labo r imports in the world and a model for other countries considering similar measures but requires more consistent enforcement. Agencies charged with implementing the UFLPA should strengthen their enforcement efforts with respect to imports from third countries, develop a comprehensive entity list, and address de minimis shipments.
Law enforcement agencies are under increasing pressure from Congress to strengthen enforcement of the UFLPA. Lawmakers are trying to close existing loopholes such as the "deminimis loophole," which exempts shipments valued at less than $800 from customs inspections. There has also been a push to expand UFLPA enforcement to all modes of transportation, not just maritime, which would mean a significant increase in potential arrests and seizures under the law.
The hearing also addressed new product categories for UFLPA enforcement, including minerals used in batteries for electric vehicles. As a reminder, the Inflation Reduction Act, which Democrats passed last year to combat climate change and promote domestic manufacturing, among other things, includes incentives for the domestic production of electric vehicles.
How Does This Affect Business?
Many global industries source raw materials or components from the Sin-kiang Uyghur Autonomous Region. Some of the most common materials sourced from the region include polysilicon for solar panels and about one-fifth of the world's cotton.
Under the UFLPA, US Customs and Border Protection (CBP) has the right to seize goods from any company whose products or raw materials have links to China's Xinjiang region. These companies must demonstrate that they have fully complied with the Forced Labor Control Task Force guidance and respond to all CBP inquiries to demonstrate that there are no forced labor offenses within their supply chain.
CBP also has the right to seize shipments with goods appearing on the UFLPA Entity List. The U.S. government presumes that all items on the Entity List are produced with forced or indentured child labor; therefore, they are prohibited from entry into the United States. The UFLPA Entity List is expected to grow over time.
Sourcing Traceable Cotton
There is a growing demand for traceable cotton, as stakeholders around the world seek more clarity on the social and environmental challenges associated with the cotton supply chain, and legislators increasingly demand that companies demonstrate greater transparency.
The Better Cotton Initiative is one of the global programs for improving cotton production. Better Cotton works with suppliers, non-governmental organizations (NGOs), and cotton supply chain experts to increase the traceability of the cotton supply chain.
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