UFLPA Entity List Significantly Expanded – Last Salvo of the Biden Administration or a Foreshadowing of Things to Come?

On Friday, the U.S. Department of Homeland Security, on behalf of the Forced Labor Enforcement Task Force, announced the addition of 29 companies based in China to the Uyghur Forced Labor Prevention Act Entity List. This brings the total number of entities on the UFLPA Entity List to 107.

The UFLPA established a presumption (rebuttable) that goods that are mined, produced or manufactured in the Xinjiang Uyghur Autonomous Region of China, or produced by entities on the UFLPA Entity List, are produced with forced labor and therefore prohibited from importation into the United States under Section 307 of the Tariff Act. The UFLPA, as well as compliance guidance published by the U.S. government, are discussed in detail in our earlier Alerts here and here.  

Effective today, U.S. Customs and Border Protection will apply the rebuttable presumption to goods produced by these entities. The entities were added to the Entity List because the FLETF concluded that the entities were either sourcing materials from the XUAR or they are working with the XUAR government to recruit, transport, transfer, harbor or receive Uyghurs, Kazakhs, Kyrgyz or members of other groups out of the XUAR that are considered to be persecuted by the U.S. government.

Most of the entities, 23 in total, are in the agricultural sector. The entities are engaged in the production and sale of agricultural products, including tomato paste and tomato products, walnuts, red dates, raisins and other products. The remaining entities are from the metals and mining sector. The entities are listed in CBP’s press release.

This is the second big addition in 2024 to the Entity List. On May 16, 26 China-based textile companies were added to the list, as discussed in this Ropes & Gray post.

CBP began enforcing the UFLPA in June 2022. Since then, CBP has reviewed more than 10,000 shipments valued at more than $3.6 billion under the UFLPA. Detention statistics by industry and country are available on CPB’s UFLPA dashboard.

Recent CBP guidance on isotopic testing

Earlier this month, CBP also published guidance on isotopic testing. The guidance addresses the use of light stable isotopic analysis to verify the growing region of certain commodities or products, particularly cotton. Isotopic testing has emerged as a potential tool for companies seeking to determine the geographic origin of materials used in their products. CBP supports its use in supply chain tracing for managing overall trade fraud risks.

Isotopic testing is a scientific method that identifies the atomic structure of naturally occurring materials, or a “fingerprint” of the material, affected by local environmental conditions. For example, in the case of cotton, it is the environmental conditions experienced by the plant during growth, not the seed’s origin, that determine the isotopic fingerprint of the cotton fiber. When that fingerprint is compared to a library of like materials from various geographic areas, the test can determine that the raw material is consistent with the claimed geographic origin.

In the guidance, CBP encourages the inclusion of testing early in an importer’s due diligence program. CBP encourages the trade community to use origin verification testing, which includes isotopic testing, to demonstrate due diligence. However, the guidance indicates that relying entirely on isotopic testing is neither feasible nor effective and that testing should be considered one component of an importer and manufacturer’s supply chain tracing and risk management program. Isotopic testing reports are just one consideration that CBP may evaluate during reviews of supply chain documentation, but they are generally not sufficient to obtain release of detained cargo without other information. 

Although CBP does not recommend specific isotopic test providers in the guidance, it provides suggested considerations for choosing a test provider. The guidance indicates that, at a minimum, isotopic test reports provided to CBP should meet all reporting requirements listed in ISO/IEC 17025. In addition to all data elements specified by the standard, the report should contain:

• A complete description of the product tested;
• The sample’s claimed geographic origin(s);
• Analytical results for the product tested
• The specific method used by the laboratory and the statistical testing uncertainty, confidence interval of determination or similar statistical value demonstrating the analytical confidence associated with the origin determination; and
• A unique identifier to enable CBP to contact the test provider to verify the contents and authenticity of the report. 

In addition, CBP leverages isotopic testing to determine risk in suspect supply chains and to inform agency screening efforts on high-risk cargo, such as shipments from the XUAR. In the guidance, CBP notes that it is enhancing isotopic testing capabilities at three of its laboratories. This will enable CBP to conduct more tests and obtain results more quickly.

Looking ahead – How might Trump 2.0 enforce the UFLPA? Other developments around the world

The UFLPA is one of the rare recent pieces of U.S. legislation with overwhelming bi-partisan support. Sponsored in the Senate by Secretary of State nominee Marco Rubio, the UFLPA was unanimously approved in the Senate and had near unanimous support in the House of Representatives. And this was in late 2021. In the intervening three years, constituencies on both sides of the U.S. political aisle have taken an even stronger stance on China, often in part on human rights grounds. The focus has not been limited to Chinese entities. U.S.-based entities across a number of sectors also have been in the cross-hairs. In that regard, see some of the initiatives over the last couple of years of the bi-partisan House Select Committee on the Chinese Communist Party.  

UFLPA enforcement in the next administration is expected to be significantly influenced by broader U.S. government policy towards China, including on trade. This New York Times article from Friday provides a good overview of some of the considerations that could swing U.S. policy in a tougher or more conciliatory direction. However, at this time, the tone suggests continuing vigorous enforcement of the UFLPA will be aligned with broader U.S. China policy. 

In addition, last week the European Council voted for adoption of the EU’s forced labor ban. Also, earlier this month, the Canadian government concluded its public consultation on measures to strengthen Canada’s forced labor import ban.

For these and other reasons, we expect the focus on forced labor by regulators and commercial counterparties to continue to increase. As applicable, businesses should ensure they have appropriate risk-based due diligence processes to assess and address forced labor risks in their supply chains that meet regulatory requirements and commercial expectations. 

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