Sourcemap: More UFLPA Detentions Possible in Consumer Electronics, Autos

Sourcemap, an international firm that offers supply chain tracing and mapping services, said its government sources are saying that more companies will be added to the Uyghur Forced Labor Prevention Act Entity List before the end of the year -- and that automotive companies and consumer electronics are in the Forced Labor Enforcement Task Force's crosshairs.

Marissa Brock, director of policy and government affairs, said during a Sourcemap webinar last week that the Forced Labor Enforcement Task Force, which names companies for the list, is doing research to add entities in those sectors. "We may see increased detentions in those industries as the summer progresses," she said.

The addition of a Chinese automotive supplier to the list in December led to millions of dollars' worth of cars being delayed at port after a self-report from Volkswagen; the Senate Finance Committee later learned that Jaguar Land Rover imported spare parts and that BMW imported cars that contained the same component from the listed company. That Chinese company was a third tier supplier to the carmakers.

Brock said some industries have believed they are not targets, as detentions of solar panels, apparel, PVC flooring and food items have dominated the news.

Sourcemap CEO Leonardo Bonnani said that enforcement of forced labor laws is accelerating. Brock said there were more UFLPA detentions from January through June than in all of 2023. "Mapping and tracing is definitely changing how those laws are being enforced … and what makes companies competitive," Bonnani said.

He acknowledged that consumer electronics and car companies have hurdles to tracing, because their products contain so many components -- a garment is much simpler. The deeper you go into the supply chain, the less motivated a company may be to provide the information you need for tracing -- and the less likely they are to have a compliance staff, he said. You or your first tier supplier may need to help them with business processes, or with technology.

However, he said, suppliers are more willing and able to share information with their customers regularly. Where mapping might have been done once a year, for a sustainability report, companies are moving toward mapping product by product.

"As traceability technology has matured, so has CBP's ability to digest that information," Bonnani said. He said that CBP is doing a series of pilots for ACE 2.0, with an eye to being able to absorb chain of custody information at the shipment level.

"The new European deforestation law very closely mirrors this development," he said. Rather than stopping shipments of cocoa, palm oil or soybeans that regulators suspect were grown on deforested land, companies will have to upload a supply chain map for each container of the commodities covered by the law.

The EU "is not going to allow any in-scope products to enter the economy unless they come with a map," he said, starting on the last day of the year.

Although the Sourcemap officials said they don't see the EU forced labor law as being as strict as the U.S. law, it carries more of a reputational risk, because the EU will maintain a public portal with each investigation, the target company, and the findings of the investigation.

Brock contrasted that with the CBP UFLPA dashboard, which discloses only broad categories, such as "electronics," which covers solar panels, and "industrial and manufacturing materials," which could cover paper, plastics, rubber, wood, stone and glass products that aren't considered consumer goods or automotive or aerospace parts.

Brock warned that importers should not try to guess if there have been many detentions in their industry, and, if not, figure they are at low risk. Moreover, importing directly from China is not an indicator of higher risk -- the majority of detentions by value have come from Southeast Asia.

She said that when an importer receives a detention notice because CBP alleges there is Uyghur labor in their goods, they can contest that detention by trying to prove there is no connection to Uyghur labor; they can reexport the goods to the country of origin; or they can abandon the goods. She said that if an importer reexports or abandons the goods, those detentions are not included in the "denied" section of the dashboard.

In April, the director of the Forced Labor Directorate said he didn't have the numbers at his fingertips of how many of the "denied" shipments were failed challenges or voluntary reexports, and CBP didn't clarify after repeated questions (see 2404010059).

CBP didn't immediately comment.