Forced Labor Update – Possible Complete Ban on XUAR Imports – Corporate / Commercial Law

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United States: Forced Labor Update – Possible Complete Ban on XUAR Imports

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On December 8, the United States House of Representatives passed the Uyghur Forced Labor Prevention Act almost unanimously. The House bill would create a “rebuttable presumption” that all products in the Xinjiang Uyghur Autonomous Region (XUAR) were made with forced labor. The in-house version of the Uyghur forced labor prevention law would also require importers to affirmatively demonstrate that not all goods imported from XUAR were made with forced labor. In practice, this means that U.S. Customs and Border Protection (CBP) would be required to block XUAR shipments, in the absence of documentary evidence from the importer of record that the goods being shipped are free from forced labor. . The House bill also requires CBP to report every shipment it authorizes to the United States, Congress, and the public. The House bill does not contain any provision authorizing shipments currently en route from XUAR to the United States, and it does not provide any window for companies to update their supply chain tracing protocols.

The House bill also contains a provision requiring the president to identify and sanction individuals and entities who facilitate forced labor. The House bill further requires securities issuers who file with the United States Securities Exchange Commission to disclose whether they have knowingly (1) engaged in business with an entity that helps create supervisory systems. in Xinjiang, (2) engaged in activity with an entity operating or constructing detention centers for Muslim minority groups in Xinjiang, or (3) carried out a transaction with any person sanctioned for the detention or abuse of Uyghurs or other Muslim minority groups in Xinjiang. Under the House bill, the Speaker is required to determine whether he should investigate and prosecute any criminal penalties or charges.

The Senate passed a similar measure last year. Given the overwhelming bipartisan political support for the measure and the growing diplomatic pressure from the Biden administration on China, including the recent announcement of a diplomatic boycott of the 2022 Olympics, it is highly likely that Congress will be adopted and that the President sign a version. Invoice. The current and previous administrations have imposed sanctions on companies operating in XUAR (discussed in this Foley’s Renewable Energy Outlook blog post), and the Biden administration has already taken executive action to prevent imports of silica and products made from it. silica manufactured by Hoshine Silicon Industry. Co. Ltd. in the United States (discussed in this article in the blogs Foley’s Renewable Energy Outlook, Dashboard Insights, and Manufacturing Industry Advisor).

US companies that source products from XUAR should review their supply contracts for changes in law, force majeure, and other compliance provisions. Companies should also review their commercial project contracts to determine the impact of supply chain delays and determine compliance with relevant notification provisions. Companies importing products of any kind from XUAR should assess whether they have sufficient tracing information to ensure compliance with a comprehensive import ban. Companies should also verify that their China-based contracts comply with Chinese law and become familiar with Chinese countermeasures. If this bill becomes law, CBP will monitor potential transshipment attempts by Chinese companies. If your company acts as the importer of record, it will be held accountable for such an attempt, underscoring the importance of broad spectrum supply chain due diligence.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

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