Companies already struggling with complex global supply chain issues will soon be facing additional challenges once provisions of the Uyghur Forced Labor Prevention Act come into effect on June 21.
As detailed here, the law will broadly prohibit imports of products from China’s Xinjiang Uyghur Autonomous Region, along with additional companies determined to be related to supply from that region.
Considering that the import ban combines priorities of the Biden administration in regard to both China and labor issues, companies should expect a “rigorous” and “whole-of-government effort” to back its enforcement, even “for industries that support other important administration goals, such as renewable energy,” according to Tim Brightbill, a partner at the law Wiley Rein, during a webinar the law firm hosted last week.
Brightbill noted that China currently produces about 80% of the world’s polysilicon—a key input for solar energy products—and upwards of 90% of the world’s solar wafers and cells; a “good portion” of which runs through the Xinjiang province, he said.
Given its broad scope, the law “has the potential to impact a range of high- and low-tech sectors with supply chain links to China, no matter how remote those links are, no matter how upstream and no matter if the good is ultimately further manufactured in third countries,” said Nazak Nikakhtar, a former International Trade Administration official. Companies will have to meet a “high threshold” to overcome the presumption that goods from the region were made with forced labor, she added.
The lawyers noted that the UFLPA also requires that the U.S. work internationally to address forced labor and, in particular, to coordinate with Mexico and Canada to effectively implement the prohibition on forced labor in the United States-Mexico-Canada Agreement, including those goods mined, produced, or manufactured wholly or in part in the XUAR. The importance of this key obligation was underscored at a recent trilateral meeting of senior trade officials.
Click here to register for free access to a recorded version of the webinar.
Public Comments ‘Vital’ to Enforcement Process
In a Federal Register notice set to be published early next week, the Forced Labor Enforcement Task Force—an interagency body created by the USMCA to serve as the central hub for the U.S. government’s enforcement of the prohibition on imports made through forced labor—is soliciting public comments to help inform the development of a prevention and enforcement strategy in this regard.
The Task Force states that input from stakeholders “will be vital to robust implementation of the UFLPA” and will ensure it accounts for “a diverse and wide range of perspectives” as it moves ahead. That said, as noted recently by the National Law Review, “[g]iven the bipartisan political support for this law, comments suggesting a weakened or delayed enforcement mechanism are not likely to generate much interest.”
The comment period will last for at least 45 days after publication and will be followed by a public hearing to hear testimony on potential prevention and enforcement measures.