On June 13, 2022, US Customs and Border Protection (CBP) issued CBP Publication No. 1793-0522, its UFLPA Operational Guidance for Importers (Operational Guidance). The Operational Guidance was issued by CBP to assist the trade community with its preparation for the UFLPA rebuttable presumption, which is set to go into effect next week on June 21, 2022. The Operational Guidance is meant to provide transparency into CBP’s operational approach; however, it is not the forthcoming 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 (UFLPA Strategy) which is set to be published on the UFLPA’s effective date – June 21, 2022 and is required by the UFLPA. CBP has indicated that importers will need to consult the UFLPA Strategy for specific importer guidance as required by the UFLPA.
As previously discussed in this blog, the rebuttable presumption established by the UFLPA requires the CBP Commissioner to apply a presumption that imports of all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (XUAR) of the People’s Republic of China (PRC), or by entities identified by the U.S. government on the UFLPA Entity List, are presumed to be made with forced labor and are prohibited from entry into the United States. The Operational Guidance notes that to overcome the rebuttable presumption, importers will need to respond to all CBP requests for information regarding merchandise under review and demonstrate by clear and convincing evidence that the merchandise was not mined, produced, or manufactured wholly or in part by forced labor.
Enforcement Process of the UFLPA
Following June 21, 2022, the UFLPA will supersede all current Withhold Release Orders (WROs) related to the XUAR. CBP will enforce the UFLPA by identifying, detaining, and/or excluding, or seizing shipments that are subject to the Act’s rebuttable presumption. These shipments will be reviewed and acted upon on a case-by-case basis and will be identified by CBP through the UFLPA Entity List (required by the UFLPA) and published in the Federal Register.
Importers will be notified by CBP when any enforcement actions are taken. The Operational Guidance notes that importers will have the ability to provide information to CBP to request an exception to the rebuttable presumption as well as to “identify additional shipments that have identical supply chains to those that have been reviewed previously and determined to be admissible by CBP, to facilitate the faster release of identical shipments.” In circumstances where an importer believes that the merchandise is outside the scope of the UFLPA after an enforcement action has been taken, an importer may provide information to show that the merchandise and inputs are completely sourced outside of the XUAR and have no connection to entities on the UFLPA Entity List. Similarly, an importer may contend that the UFLPA does not apply to its imports and may provide documentation to show that the merchandise and inputs are completely sourced outside of the XUAR and have no connection to entities on the UFLPA Entity List.
The guidance outlines that CBP may detain and either release, exclude, or seize detained merchandise. The process for each is the following:
- Detention: When merchandise is detained by CBP, an importer will receive a detention notice providing the reason (i.e. UFLPA) and anticipated length of detention. This detention will include instructions to the importer for submitting information to CBP to rebut the UFLPA presumption. CBP will have 5 days (excluding weekends and holidays) to determine whether to release the goods or not. If within the 5-day period CBP chooses to detain the merchandise or fails to release the merchandise, the merchandise is considered detained.
- Release: Should there be clear and convincing evidence that the goods were not made with forced labor, the Commissioner will determine that an exception to the presumption is warranted and the merchandise will be released. Notably, when an exception is granted, CBP must submit to Congress and the public a report identifying the goods and the evidence considered to reach the determination.
- Exclusion: CBP may determine to exclude shipments that it finds to be in violation of the UFLPA. Importers may protest this determination, which would need to be routed to the appropriate Center of Excellence and Expertise.
- Seizure/Forfeiture: CBP may also seize importations determined to be in violation of the Act. Once CBP determines that the shipment will be seized, the case will be referred to the Fines, Penalties and Forfeitures (FPFO) officer at the appropriate port of entry.
Exception Requests to the Rebuttable Presumption
In order to to rebut the UFLPA presumption, importers will need to show that they have complied with specified conditions, and by clear and convincing evidence, that the goods, wares, articles, or merchandise were not mined, produced, or manufactured wholly or in part by forced labor. CBP’s guidance states that importers may request an exception to the rebuttable presumption “during detention, after an exclusion, or during the seizure process.” The process for each is as follows:
- Detention Notice: Importers may respond to the detention notice within 30 days from the date the merchandise is presented for examination to CBP to request an exception to the rebuttable presumption.
- Exclusion Notice: Importers who receive an exclusion notice may file an administrative protest to request an exception to the rebuttable presumption
- Seizure Notice: Importers who receive a seizure notice may utilize the petition process outlined in 19 C.F.R 171 to request an exception to the rebuttable presumption
Additionally, as noted above, if CBP has already taken an enforcement action under the UFLPA, importers may also contend that the imported merchandise is outside the scope of the UFLPA. Importers in these specific circumstances will need to provide information showing that the merchandise and its inputs are sourced completely outside of the XUAR and have no connection to the UFLPA Entity List. CBP will need to present granted exceptions to the rebuttable presumption to Congress and the public, no later than 30 days after a decision is made.
Type and Nature of Information that May Be Required by CBP
The guidance presents a non-exhaustive list of the documentation and information CBP may require when an importer requests an exception to the UFLPA’s presumption. The list may apply when an importer contends that their importers are not within the purview of the UFLPA or is requesting an exception to the UFLPA’s presumption. It includes the following:
- Due Diligence System Information: Documentation showing a due diligence system or process. This may include:
- Engagement with suppliers to assess and address forced labor risk;
- Supply chain mapping and forced labor risk assessment along the supply chain from raw material to final production;
- Training on forced labor risks for employees and agents that interact with suppliers.
- Supply Chain Tracing Information: Documentation tracing the supply chain from raw material to the imported merchandise. This may include:
- Evidence for the overall supply chain
- Description of the supply chain, including merchandise components and all stages of mining, production, or manufacture;
- Role(s) of entities in the supply chain and a list of suppliers associated in each step of the production process
- Affidavits regarding raw material or process from each company or entity involved in the supply chain.
- Evidence pertaining to merchandise or components thereof
- Purchase orders, suppliers’ and sub-suppliers’ invoices, packing lists, bill of materials, certificate of origin, and importer/export records.
- Evidence pertaining to miner, producer, or manufacturer
- Production orders, reports on factor production capacity for the merchandise, and reports on factory site visits by the importer.
- Evidence for the overall supply chain
- Information on Supply Chain Management Measures: Documentation on supply chain management measures. This may include:
- Internal controls to prevent or mitigate forced labor risk and remediate the identified use of forced labor.
- Demonstration that documents provided are part of an operating system or an accounting system that includes audited financial statements
- Evidence Goods Were Not Mined, Produced, or Manufactured in the XUAR: Documentation that traces the supply chain for the goods (refer to Supply Chain Tracing Information).
- Evidence Goods Originating in China Were Not Mined, Produced, or Manufactured Wholly or In Part by Forced Labor: Documentation may include:
- Supply chain map identifying all entities in the production process
- Information on workers at each entity involved in the production of the goods in China, such as wage payments and production output per worker
- Credible audits to identify forced labor indicators and remediation, if applicable
For more information on CBP and actions addressing human rights and forced labor abuses, contact our team and see previous posts below.