Forced Labor Update — Possible Complete XUAR Import Ban – Corporate/Commercial Law

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United States:

Forced Labor Update – Possible full XUAR import ban

December 14, 2021

Foley & Lardner

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On December 8th, the US House of Representatives passed the Uighur Law to Prevent Forced Labor almost unanimously. The House of Representatives bill would create a “rebuttable presumption” that all goods from the Xinjiang Uyghur Autonomous Region (XUAR) were made using forced labor. The House version of the Uyghur Forced Labor Prevention Act also requires importers that all goods imported from the XUAR have not been made using forced labor. In practice, this means that the US Customs and Border Protection (CBP) would be obliged to block shipments from XUAR if there is no evidence from the registered importer that the goods being shipped are free of forced labor. The House bill also requires CBP to report to Congress and the public any broadcast it allows it to enter the United States. The House bill does not include a provision to allow shipments currently being carried by XUAR to the United States, and does not provide a way for companies to update their supply chain tracking logs.

The House of Representatives bill also includes a provision requiring the President to identify and sanction individuals and entities that enable forced labor. The House Bill also requires that securities issuers who file with the Securities Exchange Commission disclose whether they were knowingly (1) involved in activities with an entity helping to establish mass surveillance systems in Xinjiang ) was involved in activities with an institution that operates or builds detention facilities for Muslim minority groups in Xinjiang, or (3) has engaged in a transaction with a person sanctioned for the detention or abuse of Uyghurs or other Muslim minority groups in Xinjiang . Under the House of Representatives Bill, the President must decide whether to investigate and prosecute sanctions or criminal charges.

The Senate passed a similar measure last year. Given the overwhelming bipartisan political support for the move and mounting diplomatic pressure on China from the Biden government, including the recent announcement of a diplomatic boycott of the 2022 Olympics, there is a high likelihood that Congress will pass and the President sign a version of it will invoice. The current and previous governments have sanctioned companies operating in XUAR (discussed in this post on Foley’s blog Renewable Energy Outlook), and the Biden government has already taken executive action to ban the import of silica and silica-based products Which are manufactured by Hoshine Silicon Industry Prevent Co. Ltd. to the US (discussed in this post on Foley’s Renewable Energy Outlook, Dashboard Insights, and Manufacturing Industry Advisor blogs).

US companies that purchase products from XUAR should review their supply contracts for changes in law, force majeure, and other compliance provisions. Companies should also review their commercial project contracts to determine the impact of delays in the supply chain and to determine compliance with relevant termination requirements. Companies importing any type of XUAR product should check that they have sufficient traceability information to ensure compliance with a full import ban. Companies must also review their China-based contracts for compliance with Chinese law and familiarize themselves with any Chinese countermeasures. When this bill goes into effect, CBP will be on the lookout for possible reloading attempts by Chinese companies. If your company acts as a registered importer, it will be held responsible for any such attempt, which underscores the importance of full due diligence in the supply chain.

The content of this article is intended to provide general guidance on the subject. Expert advice should be sought regarding your specific circumstances.

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