UFLPA Compliance Audits Would Require Proof of Independence

Social compliance audits meant to show to CBP the lack of Xinjiang forced labor for imports suspected to be subject to the Uyghur Forced Labor Prevention Act would require additional proof that the auditors weren't interfered with by the government or the company involved, said Thomas Kendrick, CBP assistant director of the Petroleum and Natural Gas Center of Excellence and Expertise. Kendrick and other CBP officials discussed UFLPA compliance on June 7 during the second of three webinars on the subject (see 2206010034).

Asked whether the government's position on supply chain audits from the region has changed since a State Department advisory about Xinjiang said such audits were unreliable (see 2007010040), Kendrick said due diligence isn't really possible and "that's one of the reasons that we have a rebuttable presumption." That means "if you provide a social consultant compliance audit, you would also need to be able to demonstrate to CBP how it was independent, how it wasn't interfered with, how there wasn't government interference," and how the workers were able to "respond to questions without fear of retribution from either the company or the government," he said. It is a "tall order," but "there would need to be additional information to show what was contained in the audit is also reliable," he said.

Kendrick also again referenced a 2021 CBP ruling as being potentially instructive (see 2103300047). In that ruling, CBP found an audit didn't amount to "clear and convincing evidence" that North Korean forced labor wasn't involved in the supply chain of imported garments.

Don't expect CBP to "be just casting a wide net and then sorting things out from there," Kendrick said. The agency will instead use a "targeted approach and hold shipments that" some information suggests are connected to Xinjiang or an entity on the coming entity lists. The entity list will be released on June 21, when the rebuttable presumption takes effect, along with the rest of the enforcement strategy.

Section 321 low value goods found to be subject to the UFLPA would face the CBP process for other entries, said Elva Muneton, CBP acting executive director for the UFLPA Implementation Task Force. "The UFLPA applies to everything in anything" and "there is no de minimis" exemption for low value goods, she said. If CBP finds a Section 321 shipment that comes from an entity on the Entity List or from the Xinjiang region, "it would be detained and it would go through the same process," she said.