Industry News

Uyghur Forced Labor Prevention Act (UFLPA) Compliance and China's Anti-Foreign Sanctions Law (AFSL)

Jun. 7, 2022

As discussed here, the Uyghur Forced Labor Prevention Act (UFLPA) June 21, 2022 effective date is quickly approaching. In addition to the UFLPA requirement that importers comply with the yet-to-be-published guidance on “due diligence, effective supply chain tracing, and supply chain management measures,” importers should also be aware that China has in place laws, such as the Anti-Foreign Sanctions Law (AFSL), enacted in June 2021, that may conflict with the UFLPA.

The AFSL permits the Chinese government and private individuals and entities to take countermeasures if a foreign country institutes “discriminatory restrictive” foreign sanctions. These countermeasures include a private right of action to sue a non-Chinese party in Chinese courts. Under the AFSL, the Chinese government may also blacklist non-Chinese parties, seize assets, and deny visas.

The UFLPA establishes a rebuttable presumption that the importation of any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China, or produced by certain entities, is prohibited by Section 307 of the Tariff Act of 1930 and, therefore, such goods, wares, articles, and merchandise are not entitled to entry to the United States.

U.S. companies previously sourcing from the Xinjiang region that shift away from Xinjiang sourcing as part of UFLPA compliance, could be subject to the AFSL Chinese sanctions. China has strongly opposed the UFLPA since the law was signed and it continues to object to the regulations. China’s Foreign Ministry spokesman Zhao Lijian recently made several comments about the UFLPA implementation including that “If the act is implemented, it will severely disrupt normal cooperation between China and the US, and global industrial and production chains,” and that "China will take robust measures to uphold its own rights and interests as well as its dignity.”

Companies need to strategically review any conflicts between the UFLPA and the Chinese AFSL and look for opportunities to mitigate risk. Potential strategies focus on the specific language used in contracts and other business communications and documenting other legitimate business reasons, besides UFLPA compliance, to justify terminating transactions or business relationships. Depending on the situation other strategies might be appropriate.

As we have said before, every importer and industry will face unique challenges with forced labor compliance and supply chain mapping. The implications of Chinese laws like AFSL further complicate these issues. Do not hesitate to contact any attorney at Barnes, Richardson & Colburn, LLP if you have any questions about forced labor issues, complying with the UFLPA, or any other import or export question.