Understanding what it is, its impact, and ways to comply
The Uyghur Forced Labor Prevention Act (UFLPA) is a United States federal law that prohibits importing goods made with forced labor in the Xinjiang region of China or any other part of China involving Uyghurs or other minorities.
The UFLPA is a direct response to reports of forced labor and human rights abuses in the Xinjiang region of China, where the majority of Uyghur Muslims are located. Specifically relevant to fashion and retail brands, the abuses include instances of imprisonment in "transformation" camps and forced labor in factories.
Under the act, the U.S. Customs and Border Protection (CBP) issued a withhold release order (WRO) that can detain cotton, tomatoes, and polysilicon at the point of entry into the U.S. if suspected of exploiting Uyghur labor or other forms of human rights abuses.
CBP operational guidance for importers
On June 13, 2022, CBP issued its operational guidance to assist importers in preparing for the implementation of the UFLPA.
In the event goods are held at the port, an importer will have the following options:
- Respond to detained goods by exporting the shipment or proving no connection to the Xinjiang Uyghur Autonomous Region (XUAR).
- To prove no connection with XUAR, the importer must provide supply chain tracing documentation.
- They can request an exception to the UFLPA's rebuttable presumption if the merchandise is connected to XUAR or an entity on the UFLPA Entity List by presenting due diligence system information.
Some of the documents that may be used to prove no connection to XUAR include:
- Commercial invoices and proof of payment
- Bills of lading
- Purchase orders
- Business licenses, certificates, or contracts
- Shipping documentation
- Production records
- Inventory records related to production
- Transportation documents
- Reports on daily manufacturing processes
- Chain of custody evidence
What this means for fashion and apparel companies
The UFLPA has major implications for fashion and apparel companies, as well as retailers.
Around 20% of the world’s cotton comes from China, and 84% of that is sourced from the Xinjiang region alone.
Many popular brands that had previously used cotton or yarn from Xinjiang announced they are severing ties with suppliers in the region. However, tracing materials back to Xinjiang can be difficult, as independent auditors have limited access to facilities in the region. This means some brands are at risk of having forced labor in their supply chains without their knowledge, or otherwise have no means to prove they are compliant with the UFLPA.
Companies that are unable to prove their supply chain is free of force labor face hefty penalties, and the added cost of lost goods at the border that don’t make it to the market.
In order to reduce these risks and maintain a responsible supply chain, brands should perform rigorous due diligence, review suppliers’ practices, and invest in supply chain traceability to ensure their production processes are free from forced labor.
How to comply with the UFLPA Law
The UFLPA law requires companies to conduct due diligence in their supply chains and provide detailed reports to the relevant government agencies. Here are some steps companies can take to ensure that their supply chains comply with the law:
- Track suppliers: Track all tiers of the supply chain, down to the raw materials, if possible, to create a high level of visibility.
- Develop responsible policies and procedures: Implement responsible policies and procedures such as supplier codes of conduct, independent audits, and third-party review.
- Invest in supply chain traceability: Invest in technology and resources to track the origin of materials, components, and products.
- Educate employees: Train employees and subcontractors to ensure they are aware of the law and its implications.
- Audit suppliers: Regularly audit suppliers to make sure that they are living up to the standards set by the UFLPA.
How to implement supply chain traceability and due diligence for UFLPA with Inspectorio
The UFLPA law requires companies to engage in due diligence, identify risk, and document efforts to prevent the importation of goods made with forced labor.
Companies need to consider multi-tier and scalable product traceability to identify any and all sources of forced labor in their supply chain. If they don't, they could face costly fines or even be barred from supplying goods to the U.S. market.
Inspectorio helps fashion and apparel companies, and retailers, meet their due diligence requirements and trace their products from the source. By collecting data on labor practices, working conditions, and ethical compliance in factories across the globe, companies can detect potential risks in their supply chains and take action.
Ready to choose a solution to stay compliant with UFLPA?
Book a demo and we'll show you how Inspectorio can help you create a responsible and transparent supply chain. With our AI-driven technology, you'll have the visibility and control you need to make sure all your suppliers are up-to-date and compliant with UFLPA standards.