Trade Compliance Flash: Federal Register Notice Provides New Information on the UFLPA Entity List
On August 4, 2022, the U.S. Department of Homeland Security (DHS) published a Federal Register Notice which announces entities added to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List, outlines a process for the addition of further entities to the List, and sets forth how entities may petition for removal from the List.
The UFLPA requires the Forced Labor Enforcement Task Force (FLETF), of which DHS is the Chair, to develop and maintain a list of entities that produce goods using forced labor in the Xinjiang Uyghur Autonomous Region (XUAR) or are otherwise connected to forced labor in the XUAR. U.S. Customs and Border Protection (CBP) will apply a rebuttable presumption that all goods made in whole or in part by entities on the UFLPA Entity List are prohibited from entry into the U.S.
The first iteration of the UFLPA Entity List was published by DHS on June 17, 2022 as part of the FLETF's Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People's Republic of China (Enforcement Strategy). Last week's Federal Register Notice does not name any additional entities to the List beyond those identified in the Enforcement Strategy, but it does provide key insight into UFLPA enforcement which can be used to inform importers' and manufacturers' UFLPA due diligence strategies.
1. The Federal Register Notice confirms that additions to the UFLPA Entity List are forthcoming and lays out the process for future additions to the list.
CBP has informally indicated that the Entity List will expand in the coming weeks and months. Without providing any timeline for the next round of additions, the Notice confirms that future additions are likely. DHS has laid out the following process for the addition of entities to the current Entity List:
- Any FLETF member agency may submit recommendations for additions to the Entity List. The FLETF member agencies (DHS, the Office of the U.S. Trade Representative (USTR), and the Departments of Labor, State, Justice, the Treasury, and Commerce) will review and vote on the recommended addition. The entity will be added the UFLPA Entity List by majority vote of the FLETF member agencies.
- The entity should meet the one of the below criteria, which are set for in Section 2(d)(2)(B) of the UFLPA:
- Entities in the XUAR that mine, produce, or manufacture wholly or in part any goods, wares, articles, and merchandise with forced labor
- Entities working with the government of the XUAR to recruit, transport, transfer, harbor, or receive forced labor or Uyghurs or members of other persecuted groups out of the XUAR
- Entities that export products mined, produced, or manufactured wholly or in party by the entities listed in (1) and (2)
- Facilities and entities that source material from the XUAR or from persons working with the government of the XUAR or the Xinjiang Production and Construction Corps (XPCC) for purposes of the "poverty alleviation" or "pairing assistance" program or similar government programs
- Signaling that the FLETF is likely to expand the Entity List – but giving no indication as to the timeline for doing so – DHS noted that the FLETF is "continu[ing] to investigate and gather information about additional entities" that meet the criteria for addition to the UFLPA Entity List. DHS also referred to the June 17, 2022 version published with the Enforcement Strategy as the "initial UFLPA Entity List," said that the current version "should not be interpreted as an exhaustive list of entities" that meet the criteria for inclusion, and specifically acknowledged potential "future additions" to the Entity List.
- Any such revisions to the UFLPA Entity List will be published on DHS's website and in future Federal Register notices.
2. DHS provides listed entities with a formal process for petitioning for removal from the Entity List.
In the Notice, DHS addresses how entities may qualify for removal from the Entity List. DHS's Enforcement Strategy alluded to a removal process, and the Notice now provides specific details:
- Any entity on the Entity List may submit a request to the FLETF to be removed from the List, demonstrating how it does not meet the criteria set forth in Section 2(d)(B) of the UFLPA. The Federal Register Notice specifically states that entities on the Entity List may make requests for removals but does not specify whether other companies doing business with those entities may also submit requests. Note that FLETF member agencies may also submit recommendations for removing or making technical corrections to the Entity List.
- The FLETF Chair or its representative may contact requesters to ask for additional information or pose follow up questions on the request.
- Entities may request a meeting with the FLETF after submitting their formal request. Requests may or may not be accepted. Once again, the Federal Register Notice does not specify whether other companies not on the Entity List may also submit requests for meetings with FLETF to discuss revisions to the List.
- The FLETF will vote on recommended revisions.
- The FLETF Chair will send written notifications to requesters on whether their removal request has been granted.
- FLETF's decisions may not be appealed, but requesters are free to submit additional requests with new information.
3. As of now, DHS has not named any new entities to the original June 17, 2022 version of the Entity List.
The Notice includes the names of all the entities previously identified on DHS's initial June 17, 2022 UFLPA Entity List. As previously reported, that version of the List includes a small number of entities. The Notice recognizes that none of the names on the List are new to U.S. enforcement, noting that all the listed entities were either identified through CBP Withhold Release Orders (WROs) or are entities added to the Department of Commerce's Bureau of Industry and Security (BIS) Entity List for their alleged implication in human rights violations and other abuses in connection with forced labor involving minority groups in the XUAR. The Federal Register Notice does not include any new entities in addition to the ones published on DHS's website on June 17.
4. Companies should ensure that their UFLPA due diligence continues to review for risks of exposure to the XUAR - not just direct sourcing from the XUAR - which may indicate a supplier is eligible for addition to the UFLPA Entity List.
DHS has made clear that the current Entity List is not all-inclusive and that additions are likely forthcoming. Importers would be well advised to account for this possibility when conducting their UFLPA due diligence. As companies who have already experienced enforcement can attest, once CBP starts targeting goods under the UFLPA, the timeframe allotted for responding to CBP detentions (30 days) provides little cushion to conduct meaningful due diligence on suppliers. CBP has acknowledged in public statements that the due diligence required to secure the release of detained shipments likely cannot be completed within 30 days. Anticipating potential CBP enforcement, including through supplier due diligence, is therefore critical to preparing a successful petition to CBP for release of detained shipments. Given the brevity of the UFLPA Entity List when it was first released in June, the trade community devoted its immediate attention to the UFLPA's practical ban on the use of XUAR inputs throughout the supply chain. While reviewing supply chains for potential inputs from the XUAR remains the primary concern for most companies, importers should continue to monitor media and nongovernmental organization (NGO) reports for indications that a supplier may be at risk of addition to the UFLPA Entity List.
CBP has been actively and aggressively detaining goods under the UFLPA. Early enforcement indicates that CBP's documentation requirements under the UFLPA will be more extensive and burdensome than the WRO framework because CBP views the UFLPA as mandating adherence to certain new documentation requirements which WROs technically did not.
Miller & Chevalier has extensive experience advising companies on the UFLPA. We help companies develop tailored and workable UFLPA due diligence strategies to meet each company's needs based on their specific business and risk profile which leverage the company's existing compliance infrastructure and institutional knowledge. We work with global and U.S. companies in a range of sectors on developing compliance initiatives to identify risks in supply chains and to prevent or mitigate against potential risks of enforcement. We also frequently assist companies in responding to CBP detentions of merchandise based on suspicions of forced labor and understand how to conduct due diligence in a manner that meaningfully prepares companies for potential CBP enforcement.
We will continue to monitor for updates to the UFLPA Entity List.
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