The Uyghur Forced Labor Prevention Act Goes into Effect
In December 2021, Congress overwhelmingly adopted the Uyghur Forced Labor Prevention Act (UFLPA) with strong bipartisan support, passing the House 428–1 and adopted in the Senate by unanimous consent. It was signed into law by President Biden on December 23. The UFLPA requires the administration to take significant new action to prevent goods produced in the Xinjiang Uyghur Autonomous Region (XUAR) of China, where state-sponsored forced labor is widespread, from entering U.S. markets.
The UFLPA overhauls the current U.S. regime to tackle imports made with forced labor in two critical ways. First, it makes a determination that “any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part” in the XUAR should be assumed to be the product of forced labor unless proven otherwise by “clear and convincing evidence.” This “rebuttable presumption” means that all such goods are barred from entry into the United States under Section 307 of the Tariff Act of 1930. Though U.S. Customs and Border Protection (CBP), which enforces Section 307, had already reached this conclusion with respect to a few specific products from the XUAR, Congress took this much further by expanding the determination to all goods from the region.
Second, the UFLPA required the U.S. interagency Forced Labor Enforcement Task Force (FLETF), established by the United States-Mexico-Canada Free Trade Agreement (USMCA), to develop a strategy to prevent the import of goods made with forced labor from the XUAR, and issue guidance for importers. Importantly, that guidance and the U.S. government strategy provides detailed instructions to companies on how to conduct human rights due diligence and supply chain tracing sufficient to prove that either goods were not sourced, in whole or in part, from the XUAR, or, if they are from the XUAR, that they were not produced with forced labor. While the U.S. government has previously provided information to businesses on human rights risks in the XUAR through the Xinjiang Supply Chain Business Advisory, these new documents go further, requiring certain companies to implement due diligence and supply chain tracing practices in order to overcome the rebuttable presumption of forced labor, or prove that the UFLPA is not applicable to their shipment.
Q1: What will enforcement of the UFLPA’s ban on goods from the XUAR look like in practice?
A1: Only about 0.01 percent of total goods imported into the United States come directly from the XUAR (as of 2019, imports totaled about $300 million), although these volumes have been rising in the past few years. However, raw materials and components from the region are integrated into dozens of categories of products finished in other parts of China or transshipped via other countries before being exported to the United States. About one-fifth of the world’s cotton is produced in the XUAR, much of which is incorporated into finished products outside the XUAR, as is about half the world’s polysilicon, used in solar panels manufactured in multiple countries. They are among more than a dozen other sectors that source significant quantities of raw or component materials from the XUAR. As a result, effective enforcement of the UFLPA will ultimately require U.S. Customs and Border Protection (CBP) to assess a wide variety of products entering the United States, including applying human rights due diligence and supply chain traceability requirements to those shipments.
However, initially the Department of Homeland Security (DHS) has indicated it will adopt a relatively narrow enforcement focus, targeting four high-risk sectors (apparel, cotton, tomatoes, and polysilicon), and within those sectors, shipments imported directly from Xinjiang, or associated with 20 companies found by DHS to have produced goods with forced labor, recruited or received workers subjected to forced labor, or that are affiliated with the “poverty alleviation” program in Xinjiang (“UFLPA Entity List”). Three of the four high-risk sectors (cotton, tomatoes, and polysilicon) were mandated by Congress in the UFLPA and are wholly or partially covered by existing CBP withhold release orders (WRO) barring entry. Eleven of the 20 companies on the UFLPA Entity List likewise are specifically covered by 11 existing WROs related to Xinjiang, as are many of the products produced by the other companies, either because their products fall under the sector-wide cotton WRO, or because they likely contain components from companies subject to WROs. Other goods produced in Xinjiang that are likely to enter global markets—including paprika, wind turbines, and polyvinyl chloride (PVC, or vinyl flooring)—may therefore not initially be subject to the same scrutiny, although DHS has indicated it will respond to evidence that a particular shipment, product, or company is associated with production in Xinjiang and target credible such reports for enforcement.
Importers whose shipments are flagged for potential association with listed companies or high-risk sectors will be expected to demonstrate either that their products are not sourced in whole or in part from the XUAR, or that their goods, although sourced from the XUAR, were not produced with forced labor. The burden of proof for either scenario is high. To demonstrate a good was not produced with forced labor, DHS has adapted existing U.S. government guidance to require companies to conduct human rights due diligence, carry out effective supply chain tracing, and implement supply chain management measures to prevent and mitigate identified human rights risks. These steps build upon the expectations previously laid out of importers to comply with the Countering America’s Adversaries Through Sanctions Act (CAATSA), which similarly prohibits the entry of goods produced wholly or in part by North Korean nationals anywhere in the world, unless clear and convincing evidence proves the goods are not a product of forced labor. The same “clear and convincing” standard applies to goods sourced from the XUAR. When applied to goods produced by North Koreans, that standard has proven to be a high bar.
In order to prove a product was not sourced, in whole or in part, from the XUAR, companies must provide to CBP a comprehensive supply chain mapping, a complete list of all workers at an entity subject to the rebuttable presumption in the production of the imported good, and proof that workers were not subject to conditions typical of forced labor practices and are there voluntarily. This is consistent with the approach CBP has taken to clearing goods suspected of being subject to WROs.
Q2: What impacts will the UFLPA have on U.S. supply chains?
A2: As described above, products from the XUAR are found in dozens of supply chains across the manufacturing, agriculture, apparel, energy, healthcare, and chemicals sectors. At a time of unprecedented supply chain disruption, companies have expressed concern that implementation of the UFLPA will cause further tightening of the market for goods in high demand in the United States.
Much of this concern has been focused on the renewable energy industry, and particularly solar panels, given the significant volume of polysilicon, a critical solar panel component, that is produced in Xinjiang. China as a whole exports more than 90 percent of the world’s polysilicon, and 45 percent of all polysilicon originates from XUAR, where forced labor in factories is widespread. While specific estimates of how much XUAR-sourced polysilicon ends up in solar panels bound for the United States are not available, multiple reports have identified the extensive reach of XUAR-based raw materials and intermediate processing companies in global solar panel production, including those headed to U.S. markets. S&P Global found that in the fourth quarter of 2020, four of the largest U.S. solar panel suppliers sourced raw materials or components from the XUAR. In 2021, CBP issued a withhold release order (WRO) barring entry to the U.S. of solar panels produced by Hoshine Silicon Industry Co. Ltd. and its subsidiaries, which are estimated to be involved in 50 to 55 percent of polysilicon production worldwide, and in August 2021 CBP detained at least three shipments of solar panels from three different companies containing components produced in XUAR. Although Hoshine appears by some estimates to be tied to a relatively small percentage of U.S. solar panel imports, the UFLPA now expands the ban to any solar panels containing components from the XUAR. That only three additional solar industry companies have specifically been added to the entity list has led to some hope in the solar industry that the impacts of the UFLPA on U.S. imports will be limited, though it is not clear that CBP will restrict its solar industry focus to those companies. Industry analysts estimate that non-XUAR sourced supplies of polysilicon are adequate to meet U.S. solar panel demand, and that intermediate manufacturers in the solar panel supply chain will be able to separate out XUAR-sourced raw materials rather than blending them into finished products, reserving “clean” products for shipments destined to the United States. More significant disruption may take place if other countries follow the U.S. lead and adopt similar prohibitions on goods from the XUAR.
The XUAR region is also a key source of agricultural products. Much of the XUAR’s food production is destined for domestic Chinese consumption, however, so the UFLPA should have minimal impact on already severely disrupted global food supplies. China exports a little less than a quarter of the world's cotton and 40 percent of the world’s tomato paste. Of these exports, 84 percent of cotton and 70 percent of total tomato global output originates from XUAR. Responding to evidence of widespread forced labor in these industries, in January 2021, CBP issued sector-wide WROs for all cotton and tomatoes produced in XUAR. At least one shipment of clothing has been seized under this WRO, and many clothing brands have indicated they have ceased sourcing from the XUAR. The additional impact of the UFLPA on these supply chains is therefore likely to be minimal. Other main agricultural products, including paprika, walnuts, and melons, are imported to the United States, as noted above, but suppliers had already begun to shift sourcing away from China in light of previous WROs and in advance of the UFLPA going into effect, including in some cases increasing production in the United States.
Less clear will be the impacts of the UFLPA on other supply chains, particularly consumer products such as vinyl flooring, and chemical components such as calcium carbide and beryllium. In the first quarter of 2021, the XUAR’s top exports to the United States were chemical ingredients used in cancer drugs and amino acids. While none of these sectors have been identified as high priority by CBP, public reporting on forced labor in these industries may force CBP’s hand to focus enforcement on shipments in these sectors.
Q3: How will the UFLPA impact forced labor in Xinjiang?
A3: More than one million Uyghurs and other Muslim ethnic and religious minorities have been detained in “reeducation camps” in XUAR. The Department of Labor estimates that 100,000 Uyghurs and other ethnic minority ex-detainees may be working in forced labor conditions in China. As the world’s largest overall importer, U.S. restrictions on imports can have a significant market impact across many sectors. CBP’s previous WROs have also resulted in specific action by companies to address forced labor in their supply chains. For example, in December 2021, the United States banned the import of rubber gloves from Malaysian manufacturers as a result of credible indicators of forced labor in manufacturing facilities. As a result, the manufacturers in Malaysia and the subsequent companies importing their products implemented migrant worker policies and began conducting comprehensive investigations into their supply chains.
Efforts to end forced labor in the XUAR is made more complicated by its state-sponsored nature, as well as the breadth of exports from the region and their destinations. Although the United States is a destination for many products from the XUAR (including goods whose components originate in the XUAR, but are finished in third countries), there are other markets for these goods as well, including significant domestic markets within China. Central Asian countries and Russia make up the top five destinations for XUAR products, with over half of shipments from the XUAR going to Kazakhstan. Germany, Poland, the Netherlands, France, and Hungary all significantly increased their trade with the XUAR in 2021. Without parallel import bans in other importing countries, the impact of the U.S. ban will be significantly reduced.
For this reason, it is important that this law’s implementation is accompanied by an effective diplomatic strategy that encourages other countries to initiate similar restrictions. In September 2021, European Commission president Ursula von der Leyen called for an import ban of products made with forced labor, and earlier this month the European Parliament formally adopted a resolution calling for such an import ban. Lawmakers recommended that the ban allow for regionally specific import restrictions in cases of state-sponsored forced labor. G7 members have committed to take action to prevent forced labor in global supply chains, but stopped short of committing to parallel import bans; the upcoming G7 Summit provides an opportunity to take these discussions further. In Canada, a bill is in its second reading in the Senate that would place an import ban on goods manufactured in XUAR. Both Mexico and Canada are bound under the USMCA to adopt laws prohibiting goods made with forced labor from entering their markets. Broader outreach, including within central Asia, would make such collective prohibitions even more impactful.
Marti Flacks is the Khosravi Chair in Principled Internationalism and director of the Human Rights Initiative at the Center for Strategic and International Studies (CSIS) in Washington, D.C. Madeleine Songy is an intern with the CSIS Human Rights Initiative.
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