Consultant’s Insight: US steps up prevention of forced labor

Findings from a U.S. Senate Finance Committee investigation found that several automobile manufacturers are among the many importers in varying industries that have violated the Uyghur Forced Labor Prevention Act. [caption id="attachment_76185" align="alignright" width="298"] Cathy Roberson, Cargo Facts Consulting senior consultant and Air Cargo Next columnist[/caption] Goods mined, produced or manufactured wholly or partially in the Xinjiang autonomous region of China or by a company on the UFLPA Entity List are prohibited from U.S. importation, since the act (UFLPA) went into effect June 21, 2022. More than $3.3 billion in goods were seized by U.S. Customs and Border Patrol (CBP) in violation of UFLPA between June 2022 and April 2024, and more than 780 shipments have been detained and reviewed. By industry, the CBP has flagged electronics, apparel, footwear, textiles, and industrial and manufacturing materials for the most UFLPA-related violations. “The Finance Committee’s oversight staff uncovered what multibillion-dollar companies apparently could not: that BMW imported cars, Jaguar Land Rover imported parts and VW AG manufactured cars that all included components made by a supplier banned for using Uyghur forced labor,” Senate Finance Committee Chair Ron Wyden said in the May 20 report “Insufficient Diligence: Car Makers Complicit With CCP [Chinese Communist Party] Forced Labor.” One reason automobile manufacturers and others violate the UFLPA is that visibility into supply chains is either insufficient or wholly absent. The CBP presumes guilt when identifying and seizing shipments for UFLPA enforcement: If the CBP has reason to suspect goods are tied to Xinjiang, it’s up to the importer to prove otherwise. However, U.S. importers might need help providing the required proof. Goods may be manufactured in Malaysia, Vietnam or another country outside of China, but may still use inputs from China. This lack of deeper visibility into supply chains beyond Tier 1 and Tier 2 suppliers could prove costly for importers in terms of fines and delivery delays. Technology solutions Several technology providers offer solutions for addressing UFLPA. E2o pen , for example, offers a platform that includes multitier supply chain mapping with: Graphical, relational views; Automatic screening of suppliers and trading partners against the UFLPA Entity List; and A centralized collection of transactional data, including sourcing, purchase orders, invoices, logistics and sales records. Other providers, such as Descartes Systems Group and Assent , offer similar solutions. Regardless of the technology solution, the importer remains responsible for proof, so it is important to partner with the right tech provider. CBP requirements The CBP provides a best practices document on its website that directs importers to provide, in English: Records showing all parties involved in sourcing, manufacturing, manipulating, transporting and/or exporting a particular good; Documents showing the origin of the raw materials and records showing that business transactions related to the payment and transport of inputs have occurred, including financial documents substantiating the transaction and documents demonstrating that the goods were physically transferred from one entity to another; and Full records of transactions and supply chain documentation demonstrating the country of origin of the imported good and its components, including records such as packing lists, bills of lading and manifests. CBP tightens inspections In April, the Department of Homeland Security announced that the CBP will step up its enforcement of UFLPA by: Issuing civil penalties; Conducting criminal investigations; Expanding its use of country-of-origin information to flag shipments; Testing imports; and Focusing on de minimis package shipments. De minimis shipments are an avenue companies have significantly exploited to avoid UFLPA compliance, according to the U.S. House of Representatives Select Committee on the Strategic Competition Between the United States and the Chinese Communist Party. The cost of globalization is becoming more expensive for U.S. importers. China makes up 31.6% of global manufacturing, according to the 2024 World Population Review. But, even if U.S. importers change suppliers in Asian countries, reduce the number of those suppliers or add suppliers from other countries outside Asia , the importers will still need to be mindful of UFPLA. Air Cargo Next has launched a business directory listing cargo carriers, service providers and technology companies. Each category has sub-categories, allowing users to find the right business to meet their needs. Users can also add their businesses to the directory and claim existing entries. Visit the Air Cargo Next Directory here.

Consultant’s Insight: US steps up prevention of forced labor

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