Skirting the Law: UFLPA Compliance and Subsidiaries

May 22, 2025
By: Hannah B. Kreinik

Kharon, a supply chain mapping company, is warning importers of forced labor risks associated with Xinjiang companies’ creating subsidiaries to avoid UFLPA enforcement (see our article on UFLPA here). UFLPA creates a rebuttable presumption that goods from the Xinjiang region of China were produced with forced labor (read more about forced labor enforcement here and here).

Kharon’s research has found that a new trend in Xinjiang has begun, evinced by Xinjiang-based businesses launching subsidiaries outside of Xinjiang to avoid forced labor enforcement. For example, Kharon’s case study shows that Xinjiang Joinworld Co. Ltd. created its subsidiary, Guangxi Hongtai New Materials Co. Ltd., just two months after the parent company was listed on the UFLPA Entity List (the list identifies firms utilizing forced labor). Joinworld is an aluminum goods manufacturer, as is the new Guangxi Hongtai located in the Guangxi region of China.

Customs and Congress have repeatedly made clear that forced labor compliance is a top priority (please see here and here). Importers must keep an eye out, as forced labor crackdowns persist in several industries, including textiles, automotive goods, and energy products (see our articles on the industries here, here, and here). In addition, UFLPA has been expanded to cover more than the Xinjiang forced labor, now encompassing North Korean forced labor via 22 U.S.C. § 9241a, and may continue to grow in the future (please see our issue on the topic here). In addition, imports actually made using forced labor from anywhere in the world are prohibited from entry into the United States. Importers must adapt to the growing presence of forced labor violators and prepare supply chain tracing or mapping for their goods to ensure compliance with U.S. law. Goods subject to UFLPA’s rebuttable presumption, must demonstrate through clear and convincing evidence that the goods were not produced using forced labor.

Please reach out to a Barnes, Richardson & Colburn attorney soon to assess your company’s forced labor risks and compliance issues.