Customs Clearance and the Uyghur Forced Labor Prevention Act

In all of 2021, U.S. Customs and Border Protection (CBP) detained 1,469 shipments suspected of forced labor, worth an estimated $468 million. In the first six months of this year, CBP has already detained 2,010 shipments—will yours be next? When goods are shipped from foreign countries for entry to the United States, such goods require customs clearance. During this process, the shipper provides customs officials with paperwork that identifies the goods and determines the associated duties and taxes. Provided the shipper has paid the applicable duties, supplied the correct documentation, and the cargo passes inspection, the shipment is cleared to cross the border. 

For a shipper, clearing customs involves understanding the required paperwork, classifications, product valuations, and legislation that could affect their shipments. The most recent and potentially most sweeping new law is the Uyghur Forced Labor Prevention Act (UFLPA), which came into effect on June 21, 2022.

The UFLPA creates a rebuttable presumption that all goods, components, or sub-parts from the Xinjiang Uyghur Autonomous Region are made using forced labor and are thus prohibited from entering the United States.

Shippers can overcome this presumption but must be familiar with the complexities of the customs clearance process to avoid running into issues with their shipments, from cargo seizures to penalty fees. 

Below, we’ll dive deeper into the customs process and explain how shippers can better chart their own supply chains to avoid running aground on this new law.  

Customs Clearance Process
Global trade involves the import and export of goods across international borders. In the United States, the U.S. Customs and Border Protection (CBP) oversees this process to ensure every shipment into the country complies with the specific applicable laws and regulations that pertain to each type of good being transported.  

To do so, customs officials inspect cargos and review documents provided by the shipper. Some of the required shipping documents may include:

• Shipper’s Letter of Instruction
• Bill of Lading
• Commercial Invoice
• Purchase Order
• Certificate of Origin
• Packing List
• Insurance Certificate 

This paperwork provides essential information about the cargo, such as what the shipment contains, who owns it, and where the goods were manufactured. These details help identify the goods' value and Harmonized Commodity Description and Coding System, along with any trade agreements between the sending and receiving countries, which ultimately determine what import duties and taxes the shipper must pay. 

Furthermore, these documents may also raise red flags indicating the cargo may be in violation of a regulation. If, for instance, the shipment contained illegal goods, or was created in a restricted location, shippers could face fines, penalties, and additional expenses not covered by insurance. 

Uyghur Forced Labor Prevention Act (UFLPA)
The UFLPA is new legislation that went into effect in June 2021. This law cracks down on goods associated with forced labor in the People's Republic of China, particularly in the Xinjiang Uyghur Autonomous Region. The legislation prevents the U.S. from importing any goods produced or manufactured in that region and gives customs officials the authority to detain or seize these shipments. 

How New Legislation Impacts Shippers
So, how does this new law affect shippers? Most importantly, shippers must document and remain vigilant of where their cargo originates.

If CBP suspects the goods, components, or sub-parts are from the Xinjiang Region, the burden falls on the shipper that forced labor was not involved in their production. 

Firstly, the shipper must show due diligence in compliance with newly issued guidance and regulations regarding the importation of goods (see links below). Secondly, the shipper must respond to all requests for information regarding the goods or merchandise by CBP. Lastly, the shipper must show with clear and convincing evidence “that the good, ware, article, or merchandise was not mined, produced, or manufactured wholly or in part by forced labor.” Shippers who fail any part of these three requirements will not overcome the presumption and will have their goods or merchandise be deemed unlawful under Section 307 of the Tariff Act and subject to related penalties and fines.

“Clear and convincing” evidence (sometimes also described as “reasonably certain”) is the highest standard of evidence required in civil actions, which typically only require a preponderance of the evidence (sometimes referred to as “fifty-percent, plus a feather”). In known non-compliance cases, customs officials may also direct shippers to the Department of Homeland Security’s Center for Countering Human Trafficking for further investigation. 

The UFLPA is just one of many important pieces of legislation guiding customs clearance. Though it can feel like there’s a lot of red tape when it comes to proper compliance, it’s essential that shippers learn to navigate this process to avoid incurring fees and losing cargo to seizures. 

For official guidance on navigating the UFLPA and new regulations regarding forced labor see:

Uyghur Forced Labor Prevention Act U.S. Customs and Border Protection Operational Guidance for Importers (cbp.gov)

Strategy to Prevent the Importation of Good Mined, Produced, or Manufactured with Forced Labor in the People's Republic of China (dhs.gov)