Mercado Labs | Article | A brief overview of the Uyghur Forced Labor Prevention Act (UFLPA)

A brief overview of the Uyghur Forced Labor Prevention Act (UFLPA)

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A brief overview of the Uyghur Forced Labor Prevention Act (UFLPA) and what it means for importers.

The U.S Government is set to enforce a novel statute that will restrict certain imports from China called the Uyghur Forced Labor Prevention Act (UFLPA). The new regulation is expected to affect thousands of importers across the country—and may affect your business without you even knowing. We’re here to shed some light on what this legislation means and how companies can best prepare for it.
[Disclaimer] This article has been created for informative purposes only and should not be construed as legal advice. Companies should seek assistance from the appropriate legal representatives to understand the direct implications for their business and to make necessary next steps. Mercado takes no responsibility for any legal issues faced.
A brief background to the Act

The UFLPA is a new act focused on an ethnic minority group called Uyghurs. Typically identifiable by their Islamic religion, cultural heritage, traditional clothing, diet, language, and appearance, Uyghurs primarily reside in the Xinjiang Uyghur Autonomous Region (XUAR) of northwestern China.

China is one of the global leaders for cotton and polysilicon exports (World's Top Exports)[1], with Xinjiang producing approximately 85% of China’s cotton (Sheffield Hallam University)[2] and 50% of the global polysilicon output (Solar Energy Industries Association)[3]. The Chinese Government is suspected of committing numerous human rights breaches against Uyghurs and other ethnic minorities in the region, including forced labor under the guise of "re-education camps."


What is the Uyghur Forced Labor Prevention Act (UFLPA)?

In December 2021, the U.S Government passed a new bill through Congress called the Uyghur Forced Labor Prevention Act (UFLPA) which is designed to protect the minority groups being persecuted in China.

The act prevents brands from purchasing and importing goods into the U.S from known regions including the XUAR, that benefit from such persecution, and is an effort to ensure American organizations are no longer financially supporting the forced labor being enforced upon ethnic minorities in China.


When will the act come into force?

The law—which was passed by Congress last year—was signed by President Biden in December 2021 and will become effective as of June 21st, 2022.

This means at the time of writing, companies have only a few weeks to get their operations in place to ensure that they meet the legal requirements set out in the regulations, and to avoid being found in breach of any articles within it.

You can find a full outline of the legal requirements on the U.S Government website here.


How will the act affect businesses?

When the act comes into force, U.S businesses will be prohibited from importing goods that are mined, produced, or manufactured in the Xinjiang region through forced labor.

The Customs and Border Protection (CBP) will automatically presume that all goods from the XUAR and from entities listed pursuant to the UFLPA, are made with forced labor unless proven otherwise.


What businesses will be impacted?

Every U.S business that imports goods must comply with the UFLPA. However, it’s likely that not every business will have a relationship with the Xinjiang region or Uyghur forced labor.

To try and give an idea of industries that are most likely to be impacted, in 2020 the Australian Strategic Policy Institute (ASPI) published a report (Australian Strategic Policy Institute)[4] which identified 83 major brands as either directly or indirectly benefiting from the use of Uyghur forced labor. Out of the 83 brands identified, a vast majority of them were retail, apparel, fashion or electrical brands, and included household names such as Amazon, Nike, North Face, Adidas, Apple, BMW, and Puma (Business & Human Rights Resource Centre)[5].

In terms of products, the UFLPA has identified cotton, tomatoes and polysilicon as high priority goods for the purposes of enforcement (Reed Smith)[6]. Industries that rely on these raw materials have been extensively linked with Uyghur forced labor and the XUAR in the past, meaning that they’ll likely be top targets for law enforcement. However other products and industries will likely also be affected.


What should companies do?

Importers will first have to extensively scrutinize their supply chain to make sure that none of the products or raw materials used to make goods are sourced or made from within the prohibited region.

Companies will be required to have records showing that they have complied with the Forced Labor Enforcement Task Force (FLETF) guidance to importers, including applicable regulations, and have responded to all inquiries for information requested by customs (JDSUPRA)[7].

Although the exact penalties have not yet been made readily publicly available, it is likely that businesses who violate the law will face heavy fines and potentially criminal consequences (JDSUPRA)[7].

It has been confirmed that any importers who are found to be in breach of the act by customers will be submitted to congress and the information made available to the public within 30 days (JDSUPRA)[7].


What should I do now?

Companies who think they may be affected by the UFLPA should look out for the official guidance when it is made publicly available by the FLETF. Once the guidelines have been released, companies should seek appropriate legal counsel and advice on what their next steps should be.
Updated from the CBP
June 14th, 2022
U.S Customs and Border Protection (CBP) has released importer guidance to assist the trade community in preparing for the implementation of the UFLPA rebuttable presumption that goes into effect on June 21, 2022. Please be aware that this CBP guidance document is intended to provide operational guidance to trade stakeholders and complements the UFLPA strategy guidance. Importer must comply with the importer guidance within UFLPA strategy. UFLPA, Section 3(b).
[1] World's Top Exports. 2021. “Cotton Exports by Country 2020.” World's Top Exports. https://www.worldstopexports.com/cotton-exports-by-country/

[2] Sheffield Hallam University. 2022. “Laundering Cotton.” Sheffield Hallam University. https://www.shu.ac.uk/helena-kennedy-centre-international-justice/research-and-projects/all-projects/laundered-cotton

[3] BBC. 2021. “M&S signs call to action over Uighur forced labour.” BBC. https://www.bbc.co.uk/news/business-55555270

[4] Australian Strategic Policy Institute. “Uyghurs for sale.” Australian Strategic Policy Institute, 28 February 2020. https://www.aspi.org.au/report/uyghurs-sale

[5] Business & Human Rights Resource Centre. 2020. “China: 83 major brands implicated in report on forced labour of ethnic minorities from Xinjiang assigned to factories across provinces; Includes company responses.” Business & Human Rights Resource Centre. https://www.business-humanrights.org/en/latest-news/china-83-major-brands-implicated-in-report-on-forced-labour-of-ethnic-minorities-from-xinjiang-assigned-to-factories-across-provinces-includes-company-responses/

[6] Reed Smith. 2022. “Uyghur Forced Labor Prevention Act becomes law | Perspectives.” Reed Smith LLP. https://www.reedsmith.com/en/perspectives/2022/01/uyghur-forced-labor-prevention-act-becomes-law

JDSUPRA. 2021. “What Companies Need to Know: Uyghur Forced Labor Act Signed Into Law.” JD Supra. https://www.jdsupra.com/legalnews/what-companies-need-to-know-uyghur-6882523/
Rob Garrison, Mercado CEO

About the Author

A highly accomplished Global Supply Chain executive with 25 years of experience, Rob Garrison has provided strategic vision and leadership to Fortune 500 companies. Rob has an impressive history of building agile, technology-enabled supply chains, and he has an established track record of forging high-growth partnerships, positioning organizations for success and launching innovative technology solutions that significantly improve end-to-end supply chain efficiencies. Rob is currently CEO and founder of Mercado Labs.
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