Human rights
One year of UFLPA: What impact is the law having?
The Uyghur Forced Labor Prevention Act (UFLPA) took effect just over a year ago. Which measures have already been implemented, and what does this US law mean for you?
21.07.2023
What is the UFLPA?
The Uyghur Forced Labor Prevention Act (UFLPA) came into effect just over a year ago – on June 21, 2022.
The United States passed the UFLPA with the aim of preventing companies from profiting from products manufactured using forced labor from the Xinjiang-Uyghur Autonomous Region in China. The law pursues this objective by prohibiting the importation into the US of goods with ties to forced Uyghur labor.
The US agency responsible for the UFLPA is the Department of Homeland Security, while Customs and Border Protection (CBP) is tasked with carrying out US import controls and implementing additional measures.
As part of the UFLPA rollout, US authorities also introduced a new restricted party list: The UFLPA Entity List contains the names of companies in Xinjiang-Uyghur that mine, produce, or manufacture goods, wares, articles, or merchandise wholly or in part using forced labor. Changes are published in the US Federal Register. The initial entries in the UFLPA Entity List came into force on June 21, 2022.
Other official information on the UFLPA and a good overview of the US Department of Homeland Security can be found here.
Which shipments are currently impacted by the UFLPA?
CBP introduced a UFLPA statistics dashboard in March 2023 to let companies track the latest statistics on such metrics as the number of denied shipments and the industries and countries of origin impacted by the UFLPA.
According to these statistics, CBP has already currently held back more than 4,600 shipments with a total value of over US$1.6 billion since the UFLPA took effect. The three industries most heavily impacted by detained shipments are:
- Electronics
- Apparel, footwear, and textiles
- Industrial and manufacturing materials
Aluminum – a key component for the global automotive industry – plays a big role here. Next up in terms of impact are the industries of agriculture and prepared products; consumer products and mass merchandising; and pharmaceuticals, health, and chemicals.
Among the shipment currently affected, CBP has denied almost 19% and released nearly 40%. The status of all the remaining shipments is still pending – and experts estimate that decisions could take 3 months on average.
The storage costs of all detained shipments are billed to the US importer, and cleared shipments are not released until payment has been rendered.
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Who is affected, and what does it mean for supply chains?
While about 13% of the shipments so far detained in the US are from China, over 80% originate in Malaysia or Vietnam. Other countries of origin for the goods in detained shipments include Thailand and Sri Lanka.
Although the UFLPA targets China’s Xinjiang-Uyghur region, statistics published by CBP make it clear that other countries often act as intermediaries, using raw materials from Xinjiang-Uyghur.
For this reason, it is recommended that companies – US-based importers, manufacturers in Asia, and those with supply chain partners in the affected countries – expand their due diligence processes beyond just Chinese suppliers and business partners. As with all business partner checks, it is important here as well to keep good records of all due diligence operations and have documentation ready for compliance audits.
For every player in affected supply chains, these latest developments with the UFLPA are a renewed call to carefully examine supply chains and ensure there is no involvement with human rights abuses.
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