On December 23, 2021 President Biden signed H.R. 6256, wide-reaching legislation aimed at preventing the importation of goods “mined, produced or manufactured wholly or in part with forced labor” from China, in particular the Xinjiang Uyghur Autonomous Region (the “XUAR”). See Text – H.R.6256 – 117th Congress (2021-2022): To ensure that goods made with forced labor in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China do not enter the United States market, and for other purposes. | Congress.gov | Library of Congress. The bill specifically references cotton, tomatoes and polysilicon, but in fact covers all types of products as well as manufacturers and even companies involved in the recruitment and transport of workers.
The bill sets forth a number of deadlines for notice, comment and hearings in order to develop a strategy to “prevent the importation into the United States of goods mined, produced, or manufactured wholly or in part with forced labor in [China].” The anticipated strategy is also required to provide guidance to importers concerning due diligence, supply chain tracing and similar efforts to ensure against violative goods.
We anticipate that this strategy will be developed within the next 4 to 6 months.
The “Rebuttable Presumption”: The bill creates a “presumption” that goods manufactured wholly or in part in the XUAR or produced by an entity on a number of lists to be produced, will be denied entry into the United States under statutory provisions prohibiting forced labor. See 19 U.S.C. § 1307. The lists to be produced will involve entities in the XUAR; entities inside or outside the XUAR involved in the manufacture or production of prohibited goods; entities exporting such goods to the U.S.; entities working with the XUAR government to recruit, transport, transfer, harbor or receive forced labor or Uyghurs, Kazakhs, Kyrgyz or other members of persecuted groups out of the XUAR; and facilities and entities sourcing material from the XUAR or from various XUAR or XUAR-related government officials.
The legislation does not state an evidentiary standard required for the evidence used to list an entity or facility subject to the above presumption. Nor does the bill identify a procedure for an entity or facility to be delisted if the evidence is subsequently determined to be in error.
The “presumption” raised above may be rebutted by a determination by the Commissioner of Customs and Border Protection (i.e., the Forced Labor Branch at CBP Headquarters) that an “exception” applies. Exceptions may be granted if:
- The importer of record has fully complied with certain “guidance” to be provided by CBP as well as any implementing regulations that may be identified;
- The importer has provided complete and substantive responses to all related inquiries from CBP; and
- Customs has received clear and convincing evidence that the goods in question were not mined, produced, or manufactured wholly or in part by forced labor.
In the event of an exception then Customs is required to submit a public report to Congress identifying the goods and the evidence considered.
The “rebuttable presumption” identified in the bill becomes effective June 21, 2022.
Additional measures: The bill requires consultation with other government agencies within Homeland Security as well as Treasury and Commerce in order to produce a report to Congress containing a U.S. strategy to promote and enhance awareness of XUAR labor practices and concerns. The report will also identify entities in China or their affiliates and agents using or benefitting from forced labor in the XUAR. It also anticipates bilateral and multilateral action with U.S. partners and allies. Significantly, the bill contains a sunset provision: 8 years after the date of enactment or the date on which the President submits to Congress a determination that China has ended human rights violations in the XUAR.
What can importers do now: The most important action that importers can take right now is to map their supply chains and remove any producers, goods or materials linked to manufacture or production in the XUAR. This includes not only the finished goods, but any inputs provided to manufacturers or producers inside or outside of China.
Husch Blackwell will continue to monitor developments including the anticipated reports, lists and implementing regulations. For additional guidance please contact Robert Stang or other members of Husch Blackwell’s International Supply Chain team.