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Home | BakerHostetler

Erika Vela Presents to Analytics Class at The University of Texas at Austin Graduate School

Peter Roskam Speaks at 2024 Annual CPDA Meeting

More PFAS Definitions, More Problems — Using PFAS Definitions to Avoid Pitfalls in Compliance, Contracting, Insurance Coverage and Permitting

DOJ Withdraws 1995 Bank Merger Guidelines as FDIC, OCC Make Regulatory Changes

<p><strong>Introduction</strong></p>  <p>The Uyghur Forced Labor Prevention Act (UFLPA), signed into law on December 23, 2021, furthers the United States’ policy of prohibiting the importation of goods made with forced labor.<a href="#_ftn1" name="_ftnref1" title="">[1]</a> The UFLPA requires Customs and Border Protection (CBP) to presume that all imported goods, wares, articles and merchandise mined, produced or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region (XUAR) of China, <em>or</em> by entities identified by the U.S. government on the UFLPA Entity List<a href="#_ftn2" name="_ftnref2" title="">[2]</a>, are made with forced labor and are prohibited from entry into the United States.<a href="#_ftn3" name="_ftnref3" title="">[3]</a> According to CBP, the presumption applies to all goods manufactured in or transported through China and other countries that include inputs made in the XUAR.<a href="#_ftn4" name="_ftnref4" title="">[4]</a></p>  <p>On June 13, CBP released its operational guidance for importers, broadly outlining how the UFLPA will be enforced and how the presumption will be applied, and specifying the types of information and documentation importers can provide to show “clear and convincing evidence” to successfully rebut the presumption.<a href="#_ftn5" name="_ftnref5" title="">[5]</a> The UFLPA enforcement and rebuttable presumption will apply to merchandise imported on or after June 21.<a href="#_ftn6" name="_ftnref6" title="">[6]</a> Shipments within the scope of the UFLPA will be presumed to violate Section 307 of the Tariff Act of 1930.<a href="#_ftn7" name="_ftnref7" title="">[7]</a> Accordingly, CBP will have the authority to detain, exclude, or seize and forfeit such shipments.<a href="#_ftn8" name="_ftnref8" title="">[8]</a> Starting June 21, shipments that previously would have been subject to the XUAR Withhold Release Order (WRO) process will be processed under UFLPA procedures.<a href="#_ftn9" name="_ftnref9" title="">[9]</a></p>  <p>The Department of Homeland Security (DHS), as chair of the Forced Labor Enforcement Task Force (FLETF), will release the “Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China” (UFLPA Strategy) on June 21, 2022.<a href="#_ftn10" name="_ftnref10" title="">[10]</a> The UFLPA Strategy will provide additional guidance to importers about due diligence, effective supply chain tracing, supply chain management measures, and the type, nature and extent of evidence required to demonstrate that goods were not produced using forced labor.<a href="#_ftn11" name="_ftnref11" title="">[11]</a></p>  <p>Under Section 3(b) of the UFLPA, to rebut the presumption that merchandise produced in the XUAR or made in connection with any entity on the UFLPA Entity List violates Section 307, importers must:</p>  <ol> 	<li>fully comply with the guidance provided in the UFLPA Strategy and any implementing regulations;</li> 	<li>completely and substantively respond to all CBP inquiries regarding whether the good was produced with forced labor; and</li> 	<li>demonstrate by clear and convincing evidence that the good was not mined, produced or manufactured wholly or in part by forced labor.<a href="#_ftn12" name="_ftnref12" title="">[12]</a></li> </ol>  <p>Because importers must comply with the guidance in the UFLPA Strategy, they are required to demonstrate due diligence, effective supply chain tracing and supply chain management measures to ensure that they do not import goods made by forced labor, especially from the XUAR.<a href="#_ftn13" name="_ftnref13" title="">[13]</a> Importantly, this requirement extends throughout the entire supply chain to include goods shipped from elsewhere in China or to other countries for further processing.<a href="#_ftn14" name="_ftnref14" title="">[14]</a> Importers should be prepared to undertake increased due diligence of their supply chains to identify potential exposure to companies operating in the XUAR, companies linked to the XUAR (for example, through China’s “pairing program” or XUAR supply chain inputs) or companies that use Uyghur or other Muslim-minority laborers from the XUAR.<a href="#_ftn15" name="_ftnref15" title="">[15]</a></p>  <p><strong>Importation Process and Enforcement of the UFLPA</strong></p>  <p>CBP will review each shipment, determine the UFLPA’s applicability and decide appropriate actions on a case-by-case basis by considering a variety of sources, including the UFLPA Entity List published by the FLETF.<a href="#_ftn16" name="_ftnref16" title="">[16]</a> CBP may inspect, examine and detain imported merchandise to enforce the UFLPA.<a href="#_ftn17" name="_ftnref17" title="">[17]</a> In the event that CBP detains, excludes or seizes a shipment, it will provide the importer with a notice. In response to an enforcement notice under the UFLPA, importers may provide information that the imported merchandise is outside the scope of the UFLPA or request an exception to the UFLPA’s rebuttable presumption. In addition, to facilitate faster release of identical shipments, importers may identify additional shipments that have matching supply chains to those CBP has previously reviewed and determined to be admissible.<a href="#_ftn18" name="_ftnref18" title="">[18]</a></p>  <p>If CBP detains, excludes or seizes merchandise that the importer believes is outside the scope of the UFLPA, the importer may provide information to CBP demonstrating that the imported goods and their inputs have no connection to the XUAR or to entities on the UFLPA Entity List.<a href="#_ftn19" name="_ftnref19" title="">[19]</a> If CBP determines the information demonstrates that the importer’s supply chain lacks a connection to the XUAR or to an entity on the UFLPA Entity List, CBP will release the shipments without the importer having to obtain an exception to the presumption.<a href="#_ftn20" name="_ftnref20" title="">[20]</a></p>  <p><strong>Requesting an Exception to the Rebuttable Presumption</strong></p>  <p>If an importer cannot demonstrate that an import lacks any connection to the XUAR or to entities on the UFLPA Entity List (i.e., the importation is properly outside the scope of the UFLPA), then it may request an exception. An exception is a decision that, notwithstanding the presumption, clear and convincing evidence has been shown that the product was not made with forced labor. Exceptions may be requested during a detention, after an exclusion or during the seizure process. The presumption applies unless the Commissioner of CBP determines that the importer has (1) fully complied with the guidance set forth in Section 2(d)(6) of the UFLPA Strategy and any implementing regulations; (2) responded completely and substantially to all requests for information submitted to ascertain the admissibility of the goods; and (3) demonstrated by clear and convincing evidence that the goods were not mined, produced or manufactured in whole or in part by forced labor.<a href="#_ftn21" name="_ftnref21" title="">[21]</a></p>  <ul> 	<li>Importers that receive a detention notice generally have 30 days from the date the merchandise is presented for examination pursuant to 19 C.F.R. Part 151 to request an exception to the UFLPA rebuttable presumption.</li> 	<li>Importers that receive an exclusion notice may file an administrative protest within the applicable time frame set forth in 19 C.F.R. Part 174 to request an exception to the UFLPA rebuttable presumption.</li> 	<li>Importers that receive a seizure notice may use the petition process delineated in 19 C.F.R. Part 171 to request an exception to the UFLPA rebuttable presumption.</li> </ul>  <p>In every case, importers must clearly state that they are seeking an exception to the UFLPA presumption and provide suitable supporting documentation substantiating the request.<a href="#_ftn22" name="_ftnref22" title="">[22]</a> CBP says it will attempt to prioritize requests of Customs Trade Partnership Against Terrorism (CTPAT) Trade Compliance members when reviewing requests for exceptions.<a href="#_ftn23" name="_ftnref23" title="">[23]</a></p>  <p><strong>Penalties for Violating the UFLPA</strong></p>  <p>Beyond having their merchandise detained, excluded and/or seized, importers who violate the UFLPA may also be subject to civil penalties under 19 U.S.C. Section 1592 for fraudulently or negligently entering or attempting to enter any merchandise either by providing information that is material and false or by omitting information that is material.<a href="#_ftn24" name="_ftnref24" title="">[24]</a> CBP’s FY 2023 budget includes an increase of over $70 million to support the legislative requirements of the UFLPA.</p>  <p><strong>Conclusion</strong></p>  <p>In addition to becoming familiar with the provisions of the UFLPA, CBP’s Operational Guidance for Importers and the forthcoming UFLPA Strategy document, it is essential that importers immediately review their sourcing and supply chain to verify that their imports are outside the scope of the UFLPA or that none of their products are mined, produced or manufactured in whole or in part by forced labor. It is also vital that importers possess and are in a position to provide CBP with documents (translated into English) and well-organized submissions to support scope arguments or exclusion requests. If you have questions regarding the UFLPA or related issues, please contact a member of our experienced International Trade Compliance team.</p>  <p><em>Authorship credit: Matt Caligur and Michael Palmer</em></p>  <div> <hr /> <div id="ftn1"> <p><a href="#_ftnref1" name="_ftn1" title="">[1]</a> 19 U.S.C. § 1307 (prohibiting the importation of all “goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions”).</p> </div>  <div id="ftn2"> <p><a href="#_ftnref2" name="_ftn2" title="">[2]</a> CBP has not yet published the UFLPA Entity list, but its release is imminent.</p> </div>  <div id="ftn3"> <p><a href="#_ftnref3" name="_ftn3" title="">[3]</a> Uyghur Forced Labor Prevention Act, Pub. L. No. 117-78, § 3(a), 135 Stat. 1525, 1529 (2021).</p> </div>  <div id="ftn4"> <p><a href="#_ftnref4" name="_ftn4" title="">[4]</a> CBP, Operational Guidance for Importers, Release No. 1793-0522 (June 13, 2022), <a href="https://www.cbp.gov/sites/default/files/assets/documents/2022-Jun/CBP_Guidance_for_Importers_for_UFLPA_13_June_2022.pdf">https://www.cbp.gov/sites/default/files/assets/documents/2022-Jun/CBP_Guidance_for_Importers_for_UFLPA_13_June_2022.pdf</a>.</p> </div>  <div id="ftn5"> <p><a href="#_ftnref5" name="_ftn5" title="">[5]</a> Id. at 4.</p> </div>  <div id="ftn6"> <p><a href="#_ftnref6" name="_ftn6" title="">[6]</a> Id. at 5.</p> </div>  <div id="ftn7"> <p><a href="#_ftnref7" name="_ftn7" title="">[7]</a> Id.</p> </div>  <div id="ftn8"> <p><a href="#_ftnref8" name="_ftn8" title="">[8]</a> Id.</p> </div>  <div id="ftn9"> <p><a href="#_ftnref9" name="_ftn9" title="">[9]</a> Id. Shipments imported prior to June 21 will continue to be adjudged through the WRO process.</p> </div>  <div id="ftn10"> <p><a href="#_ftnref10" name="_ftn10" title="">[10]</a> See Uyghur Forced Labor Prevention Act, Pub. L. No. 117-78, §§ 2(c), (d)(6), 135 Stat. 1525, 1526-28 (2021) (requiring the FLETF to develop a strategy to implement the UFLPA, which includes specific guidance to importers).</p> </div>  <div id="ftn11"> <p><a href="#_ftnref11" name="_ftn11" title="">[11]</a> Uyghur Forced Labor Prevention Act, Pub. L. No. 117-78, § 2(d)(6), 135 Stat. 1525, 1528 (2021); CBP, Operational Guidance for Importers, at 4, Release No. 1793-0522 (June 13, 2022) (confirming June 21, 2022, as the date the strategy will be published).</p> </div>  <div id="ftn12"> <p><a href="#_ftnref12" name="_ftn12" title="">[12]</a> Uyghur Forced Labor Prevention Act, Pub. L. No. 117-78, § 3(b), 135 Stat. 1525, 1529 (2021).</p> </div>  <div id="ftn13"> <p><a href="#_ftnref13" name="_ftn13" title="">[13]</a> Uyghur Forced Labor Prevention Act, Pub. L. No. 117-78, § 2(d)(6), 135 Stat. 1525, 1528 (2021).</p> </div>  <div id="ftn14"> <p><a href="#_ftnref14" name="_ftn14" title="">[14]</a> CBP, Operational Guidance for Importers, at 4, Release No. 1793-0522 (June 13, 2022).</p> </div>  <div id="ftn15"> <p><a href="#_ftnref15" name="_ftn15" title="">[15]</a> CBP, Operational Guidance for Importers, at 4-5, Release No. 1793-0522 (June 13, 2022).</p> </div>  <div id="ftn16"> <p><a href="#_ftnref16" name="_ftn16" title="">[16]</a> Id. at 7; see Uyghur Forced Labor Prevention Act, Pub. L. No. 117-78, § 2(d)(2)(B), 135 Stat. 1525, 1527-28 (2021).</p> </div>  <div id="ftn17"> <p><a href="#_ftnref17" name="_ftn17" title="">[17]</a> 19 U.S.C. § 1499.</p> </div>  <div id="ftn18"> <p><a href="#_ftnref18" name="_ftn18" title="">[18]</a> CBP, Operational Guidance for Importers, at 7, Release No. 1793-0522 (June 13, 2022).</p> </div>  <div id="ftn19"> <p><a href="#_ftnref19" name="_ftn19" title="">[19]</a> Id.</p> </div>  <div id="ftn20"> <p><a href="#_ftnref20" name="_ftn20" title="">[20]</a> Id.</p> </div>  <div id="ftn21"> <p><a href="#_ftnref21" name="_ftn21" title="">[21]</a> Id.</p> </div>  <div id="ftn22"> <p><a href="#_ftnref22" name="_ftn22" title="">[22]</a> Id. at 10.</p> </div>  <div id="ftn23"> <p><a href="#_ftnref23" name="_ftn23" title="">[23]</a> Id. at 9-10.</p> </div>  <div id="ftn24"> <p><a href="#_ftnref24" name="_ftn24" title="">[24]</a> 19 U.S.C. § 1592(a). For maximum penalties, see § 1592(c)(1) (fraud), § 1592(c)(2) (gross negligence) or § 1592(c)(3) (negligence).</p> </div> </div>




CBP Releases Operational Guidance to Importers Regarding UFLPA Enforcement

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