UFLPA Two Years Later: Managing Supply Chain Risks Amid Increasing Enforcement

The US Department of Homeland Security (DHS) has revealed a revised strategy to enhance enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) as it marks the act’s two-year anniversary. With ongoing additions to the UFLPA Entity List and enforcement efforts expected to expand globally, importers must understand their supply chains to reduce detention risks.

The DHS, as chair of the Forced Labor Enforcement Task Force (FLETF), has been active in the public eye as it marks the two-year anniversary of the Uyghur Forced Labor Prevention Act (UFLPA). On June 12, 2024, DHS Under Secretary for Strategy, Policy, and Plans, and designated FLETF Chair Robert Silvers participated in a fireside chat with Ethan Wooley of global risk analytics company Kharon, during which Under Secretary Silvers discussed the evolution of the tools used by US Customs and Border Protection (CBP) and reaffirmed the agency’s commitment to UFLPA enforcement. DHS issued a press release on July 9, 2024 highlighting the key updates to the UFLPA Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China, which emphasized developments alluded to in Under Secretary Silvers’ fireside chat. The fireside chat and press release together highlight key developments in UFLPA enforcement and provide insight into the internal processes that have progressed over the last two years.

UFLPA Entity List

DHS added 26 cotton-related companies to the UFLPA Entity List in May 2024, an additional three companies in the seafood, aluminum, and footwear sectors in June 2024, and five more companies in the metals, mining, and construction sectors in August 2024, bringing the total number of companies on the list to 73 from the original 20. Under Secretary Silvers shed some light on the process involved in identifying and adding companies to the list during his fireside chat. Any of the seven designated agencies (DHS, the US Trade Representative, or the US Departments of Justice, State, Commerce, the Treasury, or Labor) can nominate a company for consideration to be added to the UFLPA Entity List. The nominating agency prepares a package with the DHS team, which is circulated to every agency for review. The agencies may ask questions, closely examine the evidence, and engage in discussions and deliberations. Finally, each agency casts a vote on the referrals, and the majority vote prevails. If the majority votes in favor, then the entity will be prepared for designation on the UFLPA Entity List, including publication of Federal Register notices and notification to the trade community.

Updated UFLPA Strategy

As noted above, DHS and FLETF issued an updated strategy document for the enforcement of the UFLPA. The most significant update was the addition of three sectors to the high-priority list for enforcement. Aluminum, polyvinyl chloride (PVC), and seafood are now among the targeted sectors identified in the strategy, joining apparel, cotton and cotton products, silica-based products including polysilicon, and tomatoes and downstream products. Under Secretary Silvers specifically called out seafood as a likely additional priority sector during the fireside chat, and included in the June Entity List additions were a seafood and an aluminum company. Two of those three additions to the Entity List—seafood and aluminum—align with the expanded list of priority sectors.

The solar industry has been and remains an industry of concern, supported by CBP’s provision of expansive questionnaires to solar cell and module importers. US Congressional attention on batteries and the automotive industry also piqued CBP’s interest in those sectors, which are also targets of forced labor reviews. Lithium-ion batteries, tires, and iron and steel materials used in automobiles are increasingly subject to forced labor reviews and border detentions.

Expanded Collaboration

Collaboration across stakeholders is key to successful enforcement, as emphasized in both the fireside chat and press release. Primary initiatives of the FLETF include strong CBP enforcement, expansion of the UFLPA Entity List, designation of high-priority sectors, and greater collaboration with stakeholders. Stakeholders here include various enforcement agencies, the trade community, non-governmental organizations, and trade agencies in partner countries. While collaboration among the various constituencies is critical to strong UFLPA enforcement, Under Secretary Silvers and DHS are clear that accountability remains squarely with the importer.

For more information on CBP enforcement through issuance of supply chain questionnaires, see our Power & Pipes blog post.

Considerations

As we enter the third year of UFLPA enforcement, detentions have surpassed 9,000 and are approaching $3.5 billion in value. According to Under Secretary Silvers, enforcement of the UFLPA has not caused the disruption to lawful commerce predicted by many in the trade community. He confirmed that enforcement efforts are going to increase and become more global as other countries develop their own regimes for addressing forced labor in their supply chains. We are already seeing this in Europe, as detailed in this LawFlash regarding the EU Forced Labor Regulation that would ban imports of goods made with forced labor.

The UFLPA puts the onus on the importer to know the provenance of the materials and goods they procure. Both CBP and the trade community are learning and developing more effective processes as detentions occur, but it remains a resource-intense and challenging process. Companies should review their existing agreements to determine who bears the risk and responsibility for engaging with CBP on any forced labor detention. Parties may also use the framework CBP has published in the UFLPA Strategy to plan a response to a future detention by gathering information and documentation needed to establish that merchandise was not produced using forced labor.