What's the UFLPA for U.S. imports?

One of the most significant changes in international trade includes regulations designed to curb imports created by forced labor. Companies must comply with the Uyghur Forced Labor Prevention Act (UFLPA) to avoid penalties enforced by the U.S. Customs and Border Protection (CBP).

Importers, customs brokers, and freight forwarders need to know how to navigate regulations that prioritize human rights, including labor, cultural, and environmental rights. Trade regulations like the UFLPA are poised to become more common, especially in trading blocs across North America and the European Union.

What is the Uyghur Forced Labor Prevention Act (UFLPA)?

The Uyghur Forced Labor Prevention Act (UFLPA) is a U.S. trade regulation that targets reports of forced labor in the Xinjiang region. These reports prompted calls for action from many in the international community, leading to President Joe Biden signing the UFLPA into law on December 23, 2021.

Inspired by previous legislation, such as the Magnitsky Act, the UFLPA focuses on forced labor in Xinjiang. Goods that originate from the Xinjiang region are presumed to be created by forced labor. As a result, importers need to provide conclusive evidence that goods from that region aren’t produced using forced labor to import them into the U.S.

Companies that fail to comply with the UFLPA face CBP fines and penalties, including the potential of complete business disruption.

How does the UFLPA impact importers?

Importers bringing goods into the U.S. manage a variety of customs rules enforced by the CBP. When the UFLPA was signed into law, businesses had to adjust to an additional layer of regulation for their imports, increasing the complexity of compliance. Some of the significant impacts of the UFLPA on imports include:

1. Strict due diligence

Goods suspected to originate from the Xinjiang region will require documentation and evidence that proves the goods are free of forced labor. This includes everything from raw materials to finished products. Paperwork such as a certificate of origin, a supply chain audit, or third-party verification may be required.

2. Operational requirements and costs

Complying with the UFLPA, and Canadian laws that fight against forced labor, increases the operational requirements for importers and exporters. Companies must invest in people, systems, and processes to efficiently comply with the UFLPA, increasing the cost of doing business. Additional audits and third-party verifications can also raise the costs of compliance.

3. Risk reduction and supply chain planning

It’s essential for businesses to avoid CBP penalties and legal action for non-compliance with the UFLPA. Importers at risk of non-compliance need to plan for alternative sourcing options, risk reduction, and the potential for supply chain disruptions. For example, if the U.S. expands their enforcement of the UFLPA to include a company that’s somehow attached to the supply chain of your local supplier, you’ll need to act fast to ensure your own compliance.

How can I ensure compliance with the UFLPA?

You can’t predict how trade regulations will change, or the companies that land on the UFLPA entity list of banned businesses, but you can take steps to reduce risk and ensure your own compliance.

1. Conduct a supply chain audit

Identify and map each link in your supply chain from raw materials to the final product. An audit should include all intermediaries, suppliers, and sub-suppliers involved in the creation of your imports.

2. Shore up documentation and record-keeping

Collect, organize, and prepare documentation related to UFLPA compliance. This includes paperwork such as certificates of origin, labor practices certifications, and other relevant documents from your suppliers. Ensure these documents are up-to-date and verifiable for quick reference.

3. Put together a compliance plan

Create a policy that outlines the steps required to ensure compliance with the UFLPA. It’s important to regularly review and update your plan to adapt to regulatory changes and new risks that arise on the supply chain.

Adapt to a rapidly changing global compliance landscape

Supply chains are likely to become more scrutinized as trends move towards greater social responsibility and more ethical sourcing practices. Companies that seamlessly manage regulatory requirements, such as the UFLPA, can ensure compliance, reduce operating costs, and improve their reputation on the market.

Custom brokers play a key role in helping importers achieve seamless compliance for trade laws and regulations. Cole has more than a half century of experience working with companies operating in the U.S. and Canada. Reach out and connect with one of our customs leaders today. 

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