Experts Say UFLPA Enforcement Picking Up; AD/CVD Changes May Come

Between increased enforcement of the Uyghur Forced Labor Prevention Act and a proposed EU bill banning the sale of goods made with forced labor, Wiley lawyers predict supply chains will shift away from China and other forced labor hot spots.

Nazak Nikakhtar, a partner at Wiley Rein and one of the speakers on a Sept. 29 webinar, advised importers to keep an eye on government lists such as the Commerce Department's list of companies that do surveillance of minorities, as those lists could inform a future UFLPA entity list. Nikakhtar was an acting head of the Bureau of Industry and Security during the Trump administration, which manages those lists.

She said there are more than 10,000 companies in Xinjiang, in sectors such as solar energy, mining, aluminum, smart phone components "... the list goes on and on."

Products from any company in Xinjiang are considered tainted with forced labor and effectively cannot enter the U.S.

Wiley partner Robert DeFrancesco, who also spoke during the webinar, said 20% to 25% of primary aluminum production in China is done in Xinjiang, even though the consuming industries for aluminum are primarily on the coast, more than 2,000 miles away.

"Not something you would normally do from an economic perspective," he said drily. He said China put smelters there to pacify the population.

Nikakhtar said of UFLPA: "We are at the nascent stages of enforcement. But it is picking up, and supply chains will be disrupted as supply chains move out of China and other places with forced labor."

Timothy Brightbill spoke about the links of Xinjiang polysilicon to finished solar panels from Asia. He said that at least 500 containers of solar panels have been detained under suspicion of forced labor inputs.

"There has to be a high level of traceability … across your entire supply chain," he said, with as many documents as possible to prove that the supply chain does not run through Xinjiang.

He said if you have goods that are detained, check to see if other shipments are on the water, or are scheduled to leave soon. He said companies should have a plan in place for turning goods around or holding shipments, because CBP will not resolve the detention quickly.

"It looks like the administration is willing to enforce this [polysilicon ban] even if it has an impact on supply and pricing" of solar panels, he said.

"Ultimately, companies are going to have to think about making their supply chains more domestic or regional if possible," he said.

The panel also touched on changes to U.S. law that have been proposed, but have not gotten votes yet, such as the Leveling the Playing Field Act, a bill that would change antidumping and countervailing duty laws to make them more favorable to petitioners.

Nova Daly, a senior public policy adviser at Wiley, said the bill has "very broad-based and bipartisan support," even though it did not make it into the CHIPS package. He said it has 17 co-sponsors in the Senate and comparable support in the House.

He said the bill would more directly address circumvention of AD/CVD orders and transshipment, and would allow CVD cases to consider subsidies such as those from China when a Chinese company is operating in Vietnam or Malaysia.

He called the proposal still "in play," though it is not expected to get a vote this year.