Forced Labor Compliance: Your Chance to Be Heard

On December 23 of last year, President Biden signed into law the Uyghur Forced Labor Prevention Act (UFLPA). The new law’s most salient feature is the establishment of a rebuttable presumption that any product made in Xinjiang violates the forced labor statute (19 U.S.C. § 1307). This will have a major impact for all importers of products from China. Fortunately they have a chance to be heard on the issue of forced labor compliance.

1. Rebutting the Forced Labor Presumption

In order to rebut the presumption, importers must establish by “clear and convincing evidence” that the products were not in fact made using forced labor. This will pose a challenge to most importers, to put it mildly. Many suppliers in China are not that cooperative in the first place when it comes to their clients’ compliance with foreign laws. In the specific context of forced labor, additional difficulties are present: Even if cooperation does not run afoul of Chinese law (which it might), bending over backwards to help foreign companies might not be seen positively by the authorities and even regular consumers. Moreover, staff at Chinese companies might take umbrage at the mere suggestion that their country allows forced labor or, alternatively, that there is anything wrong with the government’s Xinjiang policy.

To the extent that some cooperation can be garnered, there will still be evidentiary problems. In some cases, there may be legitimate knowledge gaps regarding the supply chain. Documentation provided by the supplier and their suppliers is likely to be of little or no value in the eyes of U.S. Customs and Border Protection (CBP). Audit companies may, at best, be unable to certify the absence of forced labor at a particular facility. The USG itself, in a Xinjiang Supply Chain Business Advisory, noted that “several audit companies will not conduct audits of labor practices in this region in light of the challenges of obtaining objective assessments and threats to auditors.”

Importers are better placed than CBP to identify the obstacles when it comes to forced labor compliance, and for this reason it is important that they have a chance to be heard.

2. Why Forced Labor Compliance Matters to U.S. Companies

Each U.S. company sourcing Chinese products is of course differently situated, but for many there will be clear risks with ignoring forced labor compliance. As these are identified, companies may find that it is not easy at all to mitigate those risks, at least not without significant changes to their existing supply chain. Even where companies are, based on actual evidence, reasonably confident as to the forced labor-free nature of their supply chain, demonstrating this in “clear and convincing evidence” will still be difficult, and in some cases unfeasible.

The issue of forced labor compliance is not going to go away, but U.S. businesses should do what they can for their concerns to be heard as the U.S. government (USG) formulates its policies. And the chance to be heard is now.

3. Public Comments Required by UFPLA: Your Chance to Be Heard

The UFLPA requires the Forced Labor Enforcement Task Force to solicit public comments “on how best to ensure that goods … manufactured wholly or in part with forced labor in the People’s Republic of China … are not imported into the United States.” Under the new law, a notice must be published in the Federal Register to this effect no later than January 22, 2022. The comment period will last for 45 days, after which public hearings will be held by the Task Force.

Companies impacted by the UFLPA (and other China-related forced labor compliance/enforcement) should consider submitting comments, to help policymakers better understand the challenges faced by the business community. Needless to say, the idea is not to lobby the government to stop caring about forced labor. Rather, the purpose should be to help facilitate the issuance of clear guidelines by CBP and other government agencies, as well as help ensure that requirements are in line with what is possible in the real world.

Full transparency regarding this issue will not be available in the foreseeable future. The USG will need to strike a balance, guided by how much tolerance it can have for goods made using forced labor entering the United States, and by what it can realistically expect from the business community. The more that U.S. businesses take advantage of their chance to be heard, the more data points the USG will have as it faces a thankless task.