Many UFLPA Questions Remain Unanswered as Implementation Looms

He said importers don't know what the standard to detain will be, what the clear and convincing evidence will be to release goods, whether withhold release orders related to Xinjiang will be subsumed into this enforcement process or how CBP will be able to manage far more admissibility reviews -- especially given they have only 30 days, not three months, to do them. He also said an important unanswered question is what the scope of the entity list will be, and whether it will be made public.

However, John Leonard, CBP Office of Trade deputy executive assistant commissioner, said earlier this month that CBP won't have ready a list of factories that accept Uyghur workers through labor transfers by June 21 (see 2205110055), so that does somewhat answer the scope of the entity list. Still, it's suggested that companies hire someone to monitor Chinese-language media so that they can learn if a company they buy from participates in labor transfers.

"Importers are really clamoring for more guidance," Mojica said during a Miller & Chevalier webinar May 31. He said he is assuming the guidance to importers that CBP has not yet released won't be specific enough for companies to design a due diligence plan around it.

He said companies need to put their effort into identifying what suppliers they might have that CBP would see as having a link to Uyghur forced labor before their goods are detained, because he expects it will be next to impossible to overcome the rebuttable presumption.

But if there is a detention, he said he wonders if CBP would tell an importer why the merchandise was detained. "In the past they have not," he said. He also wonders if CBP would address why an effort wasn't enough if an importer attempted and failed to rebut the presumption.

Virginia Newman, another lawyer at Miller & Chevalier, used to live in Hong Kong and speaks and reads Chinese. She said companies can choose to prioritize their due diligence in a number of ways -- based on supplier location in China; whether they have a supplier who has been named in a nongovernmental report on Uyghur issues; if they have high-risk inputs such as rayon, calcium carbide or cotton; or whether a supplier's goods represent more than a certain amount of revenue for the company. She also noted that since these NGO reports continue to come out, companies will need to constantly monitor for that.

She said the firm has seen many times situations in which if companies ahead of time don't identify suppliers that could be caught in CBP's forced labor net, the likelihood is very low of being able to do supply chain mapping that would satisfy the agency after a detention.

Newman and Mojica said many judgment calls won't be as clear as ending a purchasing relationship with a factory in Xinjiang province. For instance, if you buy from a vendor, and that vendor's parent operates in Xinjiang, do you have to cut off that vendor?

Isaac Stone Fish, who runs a consultancy firm that helps companies identify Xinjiang human rights risks, said companies will be in the crosshairs if they do business with a company that has either Xinjiang or a city in Xinjiang in its name. "Do you cut them off immediately? Do you stop importing from them to the United States, but try using them elsewhere," he asked. "From a regulatory perspective, you should be fine," he said, but it could create damaging public relations.

Mojica said that even if you do find that a supplier has been in a newspaper or NGO report on Uyghur issues, you may think that those reports are inaccurate. In that situation, he suggested, the company may want to reach out to CBP to make that argument. He said companies also could request binding rulings on UFLPA status.

One webinar listener asked how effective UFLPA would be in reducing Americans' consumption of goods made with forced labor if Xinjiang factories send their goods to other parts of China, with document trails then falsified to make it appear that those goods were produced in other parts of China. Stone Fish replied, "The goal of the UFLPA is less to prevent the goods made with forced labor" from entering into U.S. commerce "and more to reduce the exposure of U.S. businesses to China and Xinjiang. I think [viewed] on that lens, it will be very successful."