DHS Lists More Chinese Cotton Traders

The Department of Homeland Security (DHS) announced the addition of 26 textile companies based in the People’s Republic of China (PRC) to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List.

Effective May 17, 2024, goods produced by the named 26 entities will be restricted from entering the United States.

By focusing on cotton manufacturers based outside of the Xinjiang Uyghur Autonomous Region (XUAR) that source cotton from the XUAR; their designation will increase transparency and ensure responsible companies can conduct due diligence on their supply chains to ensure they do not include goods made with forced labor.  

In a note to clients, Kelley Drye's Trade Group notes:

"Supply chains that are compliant today—even supply chains already reviewed and approved by CBP—could become non-compliant overnight, simply because a Chinese party in the supply chain has received shipments from Xinjiang, even if that company is not transacting in Chinese material in the context of that specific supply chain.

"While isotopic testing and certificates of origin have never been able to secure the release of detentions on their own, this expansion of Entity List scope to include cotton purchasers further underscores that such certification is not sufficient proof of a supply chain devoid of forced labor."

Background

The Forced Labor Enforcement Task Force (FLETF), chaired by DHS, is taking these steps as part of the United States’ commitment to eliminating the use of forced labor in the U.S. supply chain and promoting accountability for the ongoing genocide and crimes against humanity against Uyghurs and other religious and ethnic minority groups in the XUAR."

“The Department of Homeland Security will not tolerate forced labor in our nation’s supply chains,” said Secretary of Homeland Security Alejandro N. Mayorkas. “Today's announcement strengthens our enforcement of the UFLPA and helps responsible companies conduct due diligence so that, together, we can keep the products of forced labor out of our country. We will continue to execute on our textile enforcement strategy and hold the PRC accountable for their exploitation and abuse of the Uyghur people.”

Since the UFLPA was signed into law in December 2021, the FLETF has added 65 entities to the UFLPA Entity List. These entities reach into the apparel, agriculture, polysilicon, plastics, chemicals, batteries, household appliances, electronics, and food additives sectors, among others. The interagency FLETF – which also includes the Office of the U.S. Trade Representative and the U.S. Departments of Commerce, Justice, Labor, State, and the Treasury – voted to add the 26 companies to the UFLPA Entity List. Today’s announcement represents the largest ever one-time expansion to the UFLPA Entity List.

“Today we add 26 additional companies to the UFLPA Entity List,” said DHS Under Secretary for Policy Robert Silvers, who serves as Chair of the FLETF. “We have shown again through today’s enforcement actions that the United States is taking action to prevent forced labor in U.S. supply chains. Companies must conduct due diligence and know where their products are coming from. The Forced Labor Enforcement Task Force will continue to designate entities known to violate our laws, and U.S. Customs and Border Protection will continue its vigilant enforcement at our ports.”

Adding these entities to the UFLPA Entity List advances DHS’ Textile Enforcement Plan, which prioritizes examination and review of entities in the textile sector for possible inclusion on the UFLPA Entity List. The FLETF will continue to consider future designations to the UFLPA Entity List as part of DHS’ broader forced labor enforcement efforts.

The 26 entities added to the UFLPA Entity List include cotton traders and warehouse facilities within China, the majority of which operate outside of the XUAR. Adding these entities to the UFLPA Entity List will make it easier for responsible companies to ensure that they are not purchasing cotton from entities who are sourcing cotton from the XUAR. By identifying these additional entities in the textile sector, U.S. importers have more information to conduct due diligence and examine their supply chains for risks of forced labor to ensure compliance with the UFLPA. The FLETF determined that 21 of the entities source and sell cotton from the XUAR on the wholesale market. The FLETF also determined that five additional entities also source cotton from the XUAR.

Since January 2021, prior to the implementation of the UFLPA, cotton from the XUAR was subject to a U.S. Customs and Border Protection Withhold Release Order. In addition, cotton and cotton products were also designated as a high priority sector under the Strategy to Prevent Importation of Goods Mined, Produced or Manufactured with Forced Labor in the People’s Republic of China, issued in June 2022. Before these new additions, the UFLPA Entity List included 10 textile entities.

The bipartisan UFLPA, signed into law by President Biden in December 2021, mandates that CBP apply a rebuttable presumption that goods that are mined, produced or manufactured in the XUAR, or produced by entities identified on the UFLPA Entity List, are prohibited from importation into the United States unless the Commissioner of CBP determines, by clear and convincing evidence, that the goods were not produced with forced labor.

CBP began enforcing the UFLPA in June 2022. Since then, CBP has reviewed more than 8,000 shipments valued at more than $3 billion under the UFLPA. Additionally, Homeland Security Investigations, through the DHS Center for Countering Human Trafficking, supports investigations and outreach to secure international cooperation in investigating human rights abuses and forced labor in XUAR.

More about the FLETF at: www.dhs.gov/uflpa.