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US President Joe Biden has signed into law the Uyghur Forced Labor Prevention Act (UFLPA), preventing businesses importing goods into the US from China’s Xinjiang region, unless they can prove products were not made with forced labour.

The UFLPA signed on December 23, presumes that “all goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in Xinjiang… shall not be entitled to entry at any of the ports of the United States”. Only businesses providing “clear and convincing evidence” that goods from the region were not made with forced labour may import from Xinjiang.

The US has previously used other methods, including export controls, withhold release orders (WROs) and an updated business advisory on Xinjiang, to put pressure on China over the alleged forced labour of Uyghur Muslims, an ethnic minority.

In the past few years, fears of abuse against Uyghurs have been growing as reports surfaced about their alleged treatment in so-called training camps and involvement in forced labour in factories connected to global supply chains. World leaders have condemned the purported abuse and corporates have stopped sourcing materials from Xinjiang.

Last year, the UK, EU, US and Canada imposed sanctions on four senior state officials and one entity in China over human rights issues. Shortly after, Beijing imposed sanctions on the Western alliance.

Virginia Newman, counsel at law firm Miller & Chevalier, tells GTR: “The UFLPA sets forth an ambitious target: preventing companies from importing into the US any goods made in whole or in part in Xinjiang. This is less a signal from the administration, and more a signal from US Congress, which has debated several different versions of the bill over the past two years.”

Beijing continues to fiercely deny any allegations of forced labour in Xinjiang. In response to the law, China’s foreign ministry spokesperson Zhao Lijian said in a regular briefing: “The US acts totally violate market principles and commercial ethics. Such moves will only undermine the stability of global industrial and supply chains, disrupt international trade order and hurt the US’ own interests and credibility. The rock they are lifting will end up dropping on their own feet.”

 

“Caught flat-footed”

For US importers now subject to restrictions, the law is not good news. The UFLPA “may result in detentions of shipments for which they are ill prepared”, says Newman. If firms wait to implement anti-forced labour due diligence until US Customs and Border Protection (CBP) have provided more clarity on the law’s execution, companies may be “caught flat-footed and will face an uphill battle to demonstrate the admissibility of their goods, should they be detained”.

Last year, the US targeted specific industries over the forced labour claims. In January, CBP issued a WRO for tomato and cotton products from Xinjiang. These orders allow customs to detain imports based on suspicions of forced labour involvement.

Six months later, the agency issued a WRO against Hoshine Silicon Industry Co Ltd, a Xinjiang-based company. The order meant that shipments from Hoshine containing silica-based products, used to make parts of solar panels, would be immediately detained upon entering the US.

Beijing is a leader in the solar industry. The vast majority of solar panels rely on one primary material, solar-grade polysilicon, according to a report by Sheffield Hallam University titled In Broad Daylight. Manufacturers in China account for approximately 75% of the world’s solar-grade polysilicon supply, with much of the market (45%) in Xinjiang.

The tough rules and market dominance of China in solar have made it difficult for US importers. “The delta between CBP’s expectations regarding traceability documentation and importers’ actual ability to gather such documentation has resulted in significant supply chain disruptions in certain industries, namely solar and apparel,” says Newman.

She adds that fresh guidance may help businesses navigate their supply chain woes. “The UFLPA’s provision requiring that the strategy include ‘guidance to importers’ regarding how to effectively conduct diligence and trace their supply chains may actually offer relief to companies in industries already subject to enforcement by CBP pursuant to existing WROs.”