Yesterday, the U.S. government's Forced Labor Enforcement Task Force (FLETF) announced the addition of 26 new entities to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List. The newly listed entities are cotton traders or warehouse facilities that the U.S. government has "reasonable cause to believe, based on specific and articulable information, source cotton from" the Xinjiang Uyghur Autonomous Region (XUAR) in China. The FLETF references, as an example of that specific and articulable information, "an online wholesale platform that, as recently as April of 2024, marketed cotton sourced from [the XUAR] for sale by twenty-one of the listed entities, as well as corporate documents, websites, or media reports indicating that five other listed entities source cotton from [the XUAR]." Effective May 17, 2024, the newly listed entities are subject to the UFLPA's rebuttable presumption that products they source, wholly or in part, are prohibited from entry into the U.S. under 19 U.S.C. 1307. With this addition, the number of entities on the UFLPA Entity List nearly doubles to 65 total entities. The listing comes just one month before the Department of Homeland Security (DHS) is statutorily required to update Congress on its UFLPA enforcement.

Key Takeaways

• The additions respond to calls from the DHS Secretary and industry for increased UFLPA enforcement in the textiles sector. Although cotton-based textile products were an early focus of UFLPA enforcement (and are still the second-most detained commodity), the number of detentions by value have largely remained steady and not grown over time as initially anticipated. In a letter to the DHS Secretary from January, the Select Committee on the Chinese Communist Party called U.S. Customs and Border Protection's (CBP) detention of textile imports "anemic," adding that "[g]iven the massive volume of imports in a sector flagged for priority enforcement, we would expect to see regular large-scale detentions of these products. Instead, CBP's average UFLPA reviews per month for textile and apparel goods actually dropped in 2023 compared to 2022."After meeting with the National Council of Textile Organizations (NCTO), DHS Secretary Alejandro Mayorkas directed CBP and other agencies in DHS to "provide him with a comprehensive enforcement action plan in 30 days, including a determination whether current trade law provides adequate authorities to solve the core issues," including the UFLPA. In a press release, Secretary Mayorkas said, "DHS will use all the tools at its disposal, including identifying suspicious transshipment practices, publicly identifying bad actors, isotopic testing, random parcel inspections, and other law enforcement efforts, in order to protect the integrity of our markets, hold perpetrators accountable, and safeguard the American textile industry." The new additions to the UFLPA Entity List are a part of that effort, as is the recent Withhold Release Order (WRO) on work gloves from Shanghai Select Safety Products Company, Limited, and its two subsidiaries in China, the first WRO issued in a year and a half.
• The UFLPA Entity List now includes different types of entities: traders and warehouses. To date, entities that had been previously listed were primarily accused of (1) operating in the XUAR or (2) participating in state-sponsored labor transfer programs. Conversely, the recent additions are trading companies and warehouses accused of sourcing cotton or cotton products from the XUAR. Notably, whether these entities – especially the warehouses – technically "source" products is debatable (and could be the source of legal challenges in the future). Nevertheless, their addition signals that the FLETF is taking an expansive view of the type of entities that can be added to the Entity List. Are transportation companies next?
• The additions underscore the need to conduct due diligence on traders and other entities that take possession of the goods, such as warehouses. Companies focused exclusively on mapping their suppliers may miss entities in their supply chain that CBP is targeting. The listings are a clear indication that the FLETF is interpreting any entity that takes possession of a product as "sourcing" that product. In addition to screenings, companies may want to conduct mock detentions, wherein the company collects the product-specific tracing documentation that CBP would request in the event of a detention. This mock detention exercise would allow companies to proactively test for the presence of traders and warehouses in their textile supply chains.

Miller & Chevalier has deep experience counseling companies on UFLPA compliance. For more information, please contact:

Richard A. Mojica, rmojica@milchev.com, 202-626-1571

Mary H. Mikhaeel, mmikhaeel@milchev.com, 202-626-5909

Brittany Huamani, bhuamani@milchev.com, 202-626-5911

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