Navigating UFLPA Compliance: Effective Strategies for Manufacturers

Originally enacted in December 2021 and entered into force the following June, the Uyghur Forced Labor Prevention Act (UFLPA) is a set of import restrictions intended to prevent goods produced using Chinese state-sponsored forced labor from entering U.S. supply chains. 

The UFLPA seeks to strengthen enforcement of Section 307 of the Tariff Act of 1930—which prohibits the import of goods made in a foreign country by forced labor, convict labor, or indentured labor—by establishing a rebuttable presumption that all goods manufactured in whole or part in the Xinjiang Uyghur Autonomous Region (XUAR) were made using forced labor. 

Why Was The Uyghur Forced Labor Prevention Act Created?

The UFLPA serves several interrelated purposes. First, it seeks to hold the Chinese Communist Party (CCP) accountable for its sweeping campaign of coercion, oppression, and imprisonment of Uyghurs and other ethnic and religious minorities by cutting off complicit Chinese businesses from U.S. customers and restricting their access to the vast American market. In carrying out these prohibitions, the U.S. hopes to pressure the CCP into reforming its treatment of Uyghurs and other minority groups in Xinjiang. At the same time, the controls were implemented to aggressively dissuade U.S. manufacturers and importers from maintaining supply chains that go through the XUAR, where the Chinese Communist Party’s forced-labor programs are most heavily focused. 

The law’s implementation and overall strategy is overseen by the Forced Labor Enforcement Task Force (FLETF), an interagency group housed in the Department of Homeland Security. Customs and Border Protection (CBP), meanwhile, is responsible for UFLPA enforcement, with the agency’s teams, officials, and agents on the ground flagging shipments and executing detainments. 

UFLPA Enforcement Trends in 2024

A cursory glance at the number of detainments under the law since its inception in June 2022 reveals the expanding scope and frequency of enforcement. 

In the first six months of the 2024 fiscal year, CBP has already detained $1.3 billion worth of shipments.

In the first six months of the 2024 fiscal year, CBP has already detained $1.3 billion worth of shipments. That figure is just shy of the total value of goods detained by the agency over the entirety of 2023. This past March saw the highest total value of detainments for any month since the UFLPA entered into force, too, with February representing a close second. And given the persistent, fervent calls from Congress and human rights organizations to strengthen the restrictions and hold more companies responsible for dealing—wittingly or otherwise—in forced labor, it’s a good bet that detainments are only going to ramp up in the latter half of the year and into 2025. 

When a shipment is detained by CBP, importers may challenge the detainment. They can do this in one of two ways. If the shipment was made in whole or part in Xinjiang, or by a company on the UFLPA Entity List, importers can make what’s called an exclusion request. Exclusion requests require importers to demonstrate clear and convincing evidence that the goods were not made with forced labor. The second pathway for a UFLPA challenge is called an applicability review, and it requires importers to show that the goods were not made in Xinjiang or by any company on the Entity List. 

For companies concerned that their supply chains may be tainted by state-sponsored forced labor in Xinjiang, though, the prospect of issuing either type of challenge is forbidding.

For companies concerned that their supply chains may be tainted by state-sponsored forced labor in Xinjiang, though, the prospect of issuing either type of challenge is forbidding. For one thing, as a partner at a law firm that puts together UFLPA applicability packages told International Trade Today, winning such a challenge is “likely to take months.” And the myriad costs associated with bringing on lawyers and consultants and storing detained goods can add up very fast. 

Instead of hoping to win a protracted, resource-draining challenge against CBP, manufacturers and importers who think they may be at risk of exposure to forced labor should start incorporating compliance strategies now. 

Supply Chain Onboarding Questionnaires Are Not Enough 

In response to the UFLPA’s increase in detainments in recent months and the law’s generally growing purview, many companies are starting to update their supplier onboarding questionnaires. In addition to addressing issues like bribery, corruption, and fraud, Lindsay Bernsen Wardlaw, a former international trade attorney and current consultant at Amalie Trade Compliance Consulting, is seeing companies use these vendor questionnaires to help them manage risks directly related to forced labor and human rights. “They will now include, if they didn’t already, questions on forced labor, and that includes less obvious forms of forced labor like underpayment, inappropriately long working hours, as well as more obvious forms of forced labor like internment camps and child labor concerns,” said Wardlaw. 

These questionnaires provide a host of benefits, including establishing a strong corporate culture and serving as a valuable training framework for vendors.

These questionnaires provide a host of benefits, including establishing a strong corporate culture and serving as a valuable training framework for vendors. Incorporating forced-labor issues into them is a humane, worthwhile step in any larger project aimed at setting expectations with suppliers. 

But importers should not mistake an expanded questionnaire that addresses forced labor for substantive documentation or exculpatory evidence that can be used in the event of a UFLPA detainment. “It is a great practice, but it is not legally sufficient to convince CBP to release your goods,” Wardlaw warned. “You can spend a lot of money asking people to fill out questionnaires infinitely through the raw material, and have done nothing meaningful for your ability to make your case with CBP.”

For many importers, though, those questionnaires currently represent their chief UFLPA risk management measure. “For most of those companies, it’s really hard to figure out what to do after that.”

Due Diligence Is a Moving Target For UFLPA Compliance 

Due diligence is the bedrock of any robust risk management process, and companies committed to staying in regulatory compliance usually have sound internal infrastructure for conducting it. It should come as no surprise, then, that due diligence practices are a critical pathway to achieving UFLPA compliance. The Department of Homeland Security’s specific guidelines for utilizing due diligence to meet UFLPA requirements include engaging with suppliers, drafting and communicating a strict code of conduct that forbids forced labor, and codifying a corrective action plan in the event that a supply chain stakeholder is found to be engaging in forced-labor practices.

While these measures make a meaningful difference in addressing the risks associated with the UFLPA, the evolving nature of the situation in Xinjiang can complicate even the most thorough, rigorous due diligence efforts. The problem is one of perpetual flux: while companies may successfully purge their supply chains of manufacturers with connections to Xinjiang or China’s forced-labor programs today, that doesn’t mean their suppliers and their sub-tiers are going to be untainted six months from now. “There are academic reports coming out every month now, identifying new parties engaged in forced labor,” Wardlaw said. “So you may have thought you were dealing with a clean party, only to find out that, in fact, they had some connection to Xinjiang that you weren’t aware of.” 

“There are academic reports coming out every month now, identifying new parties engaged in forced labor,” Wardlaw said. “So you may have thought you were dealing with a clean party, only to find out that, in fact, they had some connection to Xinjiang that you weren’t aware of.” 

As investigations and reporting continue to uncover new threads in the global supply chain linking manufacturers to Xinjiang, the breadth of companies and industries found to be complicit in forced labor practices is only going to grow. Due diligence, in other words, is a moving target, and creating risk mitigation processes to address such an unstable, fluctuating landscape can feel like an endless responsibility. 

The intricate dynamics of global manufacturing, meanwhile, can further compromise an organization’s work establishing a clean and compliant supply chain. Depending on the industry and the level of complexity and specialization within the assembly process, direct suppliers may change their own suppliers on a regular basis (and in some cases without notifying their customers). As Wardlaw put it, “all of those mid-tier suppliers that are being used by your first tier supplier, they could change in the background week-to-week, and you may have no idea.”

This underlying fluidity creates a mutable, revolving-door of sub-tiers that may spontaneously fall out of UFLPA compliance, nullifying the intensive work an importer may have carried out to follow the regulation’s due diligence requirements. When it comes to the supply chain albatross of forced labor in Xinjiang, nothing is fixed or conclusive. The consequence for U.S. manufacturers in high-priority industries is a position of near-chronic susceptibility, one in which there are many ways to combat tainted suppliers but precious few to expel them permanently. 

Strategies Manufacturers Can and Should Be Employing for UFLPA Compliance

Despite this thorny array of challenges—and the paralyzing dilemma forced labor in China represents for companies operating along the global supply chain—there are several strategies organizations can implement to make a measurable difference in their UFLPA risk management protocols.

Start With A Comprehensive Audit

The first is carrying out a comprehensive audit. Businesses that conduct a thorough audit can give themselves a reasonably accurate understanding of whether their products could be connected to forced labor in Xinjiang, and thus in the crosshairs of CBP officials. 

Businesses that conduct a thorough audit can give themselves a reasonably accurate understanding of whether their products could be connected to forced labor in Xinjiang, and thus in the crosshairs of CBP officials. 

To do this, Wardlaw advises companies to search their import data within CBP’s Automated Commercial Environment portal for imports of items that have Harmonized Tariff Schedule (HTS) codes associated with currently designated high-priority items and products that may incorporate high-priority items. Companies should also consider HTS codes for items that have unofficially become the target of the agency’s UFLPA detainments, as noted on recent CBP detention notices (aluminum, steel, etc.). This type of audit is a useful starting point for many importers, and should give them a valuable framework for understanding their level of risk relative to historic imports. 

Add A Forced Labor Clause To Your Supplier Contracts

Next, U.S. manufacturers may want to revise their contracts with suppliers. Allowing termination for cause if their suppliers are found to be using forced labor gives companies a quick out—and one without any onerous strings attached. The goal should be to have “robust contractual provisions that would let you turn on a dime and pick a new supplier,” Wardlaw said. On the other end of the supply chain, importers should endeavor to update their contracts with customers to minimize penalties for delays if they discover that their suppliers are out of UFLPA compliance and they need to find alternative sourcing. “That helps to give some coverage and flexibility on either side,” she added.  

Allowing termination for cause if their suppliers are found to be using forced labor gives companies a quick out—and one without any onerous strings attached.

Expand Your Network of Suppliers

Companies familiar with effective supply chain management and risk mitigation practices should instantly recognize the third measure: diversifying your supply chain. Dual sourcing is a core tenet of strong strategic sourcing and procurement programs. Recent trends like “de-risking” and China Plus One have emphasized the virtues of practicing multisourcing and minimizing dependencies on high-risk chokepoints. If a shipment from a specific supplier gets stopped by CBP, organizations able to draw on dual sourcing processes can simply re-export the goods and swiftly reach out to a different supplier. This is vastly preferable to the scenario importers could find themselves in if they have a critical shipment without alternative sourcing detained by CBP. Under such circumstances, the company would be forced into the financial and logistical morass of having to store their goods indefinitely and pay a range of costly professionals to put together an applicability review. When dealing with the UFLPA and the prospect of detainment, cultivating operational agility is crucial. 

If a shipment from a specific supplier gets stopped by CBP, organizations able to draw on dual sourcing processes can simply re-export the goods and swiftly reach out to a different supplier.

It’s important to remember, though, that audits, contractual provisions, and supply chain diversification only go so far. These measures can help companies assess overall risk, as well as respond quickly if a specific manufacturer is suddenly flagged for noncompliance. What they’re not capable of doing, however, is helping importers identify a specific actor within their supply chain participating in China’s systematic forced labor programs. For Wardlaw, the question many businesses face is whether they can go beyond mitigating worst-case scenarios and actually isolate forced labor in their supply chain. “And I think that’s a deeper and harder question to answer, and that’s when you have to start looking at tools,” she said. 

Supply chain risk management tools can help businesses reach farther into their supply chain and gain deeper levels of visibility, including through supply chain mapping and actionable insights into sub-tier suppliers. As Wardlaw pointed out, “It’s really hard to get visibility into what the next tiers of the supply chain are doing.” Whether it’s in an organization’s best interest to pay for a tool to vault them beyond direct suppliers and give them access to those otherwise opaque, walled-off tiers “really depends on how much risk it feels it has.” Companies in sectors coming under increasing scrutiny by the CBP—and the researchers and organizations feeding the agency forced-labor data—should at least be considering these platforms as a way to take a more strategic, proactive stance against UFLPA compliance risks. 

Recognizing Risk and Implementing Preventative Measures

If there’s one clear point in the dynamic landscape of UFLPA enforcement and the dense maze of global suppliers and sub-tiers that the law is attempting to regulate, it’s that importers do not want to be facing a CBP detainment with no contingency plan. Applicability reviews are expensive, time-consuming ordeals, and the inescapable costs make winning a challenge all but guaranteed to be a Pyrrhic victory. 

Despite the range of obstacles, conducting some level of due diligence is still a worthwhile investment for companies whose industries rely on supply chains that run through Xinjiang. Moreover, there are a number of straightforward steps manufacturers can take to protect themselves from the multifaceted fallout that can occur if one of their suppliers is exposed for participating in forced labor. But they require going beyond bolstering vendor questionnaires, and entail taking deliberate, targeted steps to establish greater leverage and control within supplier networks and chains of production.