On December 8, the Department of Homeland Security (“DHS”) announced the addition of three People’s Republic of China (“PRC”)-based companies to the Uyghur Forced Labor Prevention Act (“UFLPA”) Entity List as part of the ongoing effort to eliminate forced labor practices in U.S. supply chains. The addition of these three entities—COFCO Sugar Holding Co. Ltd, Sichuan Jingweida Technology Group Co., Ltd., and Anhui Xinya New Materials Co., Ltd.—comes after a vote by the interagency Forced Labor Enforcement Task Force (“FLETF”) in accordance with its mandate to maintain a list of entities operating in or associated with the Xinjiang Uyghur Autonomous Region (“XUAR”), which utilize forced labor of persecuted ethnic minority groups in the region. As only one of the three companies added to the list is based in Xinjiang, these additions signal greater vigilance on the part of DHS and FLETF regarding practices of labor transfer, or the “[recruitment], transport, transfer, harbor or [receipt] of forced labor” from the XUAR to other Chinese provinces. The prohibition of imports into the U.S. from these entities enters into force on December 11.
The addition of these three entities to the UFLPA Entity List come after a review by the FLETF, which determined that the companies met the criteria for addition to Section 2(d)(2)(B)(ii) of the UFLPA Entity List. Section 2(d)(2)(B)(ii) of the list identifies “entities working with the government of the [XUAR] to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz, or members of other persecuted groups out of the [XUAR].”
The FLETF is an interagency task force established under the United States-Mexico-Canada Agreement (“USMCA”) with the purpose of monitoring U.S. enforcement of Section 307 of the Trade Act of 1930, which prohibits the import of any goods produced using forced labor. The FLETF comprises seven member agencies headed by the U.S. Department of Homeland Security, and has continuously strengthened oversight and expanded the scope of forced labor investigations to include every step in the supply chains of various goods.
In light of increasing domestic and international scrutiny of forced labor in China—more specifically, allegations of human rights abuses against ethnic minority groups taking place in the XUAR—the UFLPA was signed into law in December 2021. This act strengthened the Task Force’s mandate to investigate and penalize the use of forced and coerced labor in China, while also implementing a rebuttable presumption (enforced primarily by U.S. Customs and Border Protection) that goods manufactured, in whole or in part, in the XUAR are subject to Section 307 prohibition.
With the addition of COFCO Sugar Holding Co. Ltd, Sichuan Jingweida Technology Group Co., Ltd., and Anhui Xinya New Materials Co., Ltd., the UFLPA Entity List now stands at exactly thirty firms whose products have been banned for import into the United States due to forced labor concerns. The list’s continued expansion is a strong signal that concerns over forced labor in manufacturing supply chains—and thus costs of compliance with Section 307—will only continue to grow. DHS Under Secretary for Policy Robert Silvers underscored FLETF’s commitment to its mission, stating that “[w]e have shown again through today’s enforcement actions that the United States will not tolerate forced labor in the goods that come into this country. Companies must conduct due diligence and know their supply chains.”
Read the Federal Register notice here.
Crowell & Moring, LLP continue to monitor this development and the potential impact to businesses and consumers moving forward.