US Uyghur Forced Labor Prevention Act of 2021 (UFLPA)

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Consumers are increasingly aware of how products are made. A simple cotton shirt, for example, passes through many hands and travels thousands of miles before reaching a store and, eventually, a closet. The role of Traceability and transparency in supply chains is becoming more critical than ever before. Not simply just for the environmental and corporate governance, but also for the social impact. Having proper traceability allows us to hold those accountable for failing to observe human rights.

Many don't realise that this journey might start in a labour camp far away. In 2021, it was estimated that over 1 million Uyghurs were forced into labour in Xinjiang, China, producing goods for global markets (United States, Department of Homeland Security, Office of Strategy, Policy, and Plans, 2022). This is not an isolated case. According to the International Labour Organization, there are over 50 million victims of forced labour worldwide, many of whom are hidden deep within the supply chains of everyday products (International Labour Organization, 2022). The Uyghur Forced Labor Prevention Act (UFLPA) is a critical step in addressing this hidden atrocity. Canada has similar legislation in place, under Canada’s Modern Slavery Act S211

Since 2017, the Chinese government has made amendments and revisions to their “Sinicization” of religions agenda (Maizland, 2022). According to Human Rights Watch (2024, these are to tighten controls over the Muslim major population in Xinjiang, China and to forcibly reshape religious practices to align with Chinese Communist Party ideals: prison for those who fail to comply. Such actions have caught the world's attention resulting in the passage of the US Uyghur Forced Labor Prevention Act (UFLPA). This act was brought into effect to support the United States’ commitment to ending forced labour in all and any imported goods into the United States. Bilateral conversations with foreign governments are preventing the shipping rerouting of forced labour tainted goods into intermediary countries (United States, Department of Homeland Security, Office of Strategy, Policy, and Plans, 2022). This highlights the human rights aspect to the importance of having detailed and accurate supply chain management, along with proper and adequate due diligence beyond first tier suppliers. This act, Canada’s S211, and the EU’s Corporate Social Responsibility Directive and Corporate Sustainability Due Diligence Directive encourage foreign governments to pursue complementary actions to denounce human rights violations and hold entities accountable to prevent importation of goods produced with forced labour.

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The Importance of Knowing your Sources

The UFLPA act was passed in December 2021. Despite sanctions, some companies exploit loopholes by using third-country supply chains, with many vetting first-tier suppliers only, allowing forced labour practices to persist in deeper supply chain tiers. 

But the purpose of this act was to strengthen existing bans against the importation of goods made either in part or entirely with forced labour. This act focuses on strategies that include but are not limited to the production, recruitment, transportation, and receiving of forced labour.  

Supply-chain management is a critical aspect of due diligence aimed at preventing and addressing forced labour risks. Key practices involve:

• Vetting potential suppliers for forced labour before contracts are signed through every tier of a product’s supply chain.
• Mandating corrective actions in supplier contracts if forced labour is detected.
• Specifying consequences, such as contract termination, if corrective measures are not implemented.
• Ensuring access to relevant documentation, personnel, and workers to verify the absence of forced labour, including during recruitment.

Importers need to maintain a system to manage and frequently update supply chain data, including mapping and risk assessments. Having this data supports risk prevention and mitigation, which is essential when importing and presenting documentation to the U.S. Customs and Border Protection (CBP) upon arrival at the borders.

‍UFLPA Compliance

The purpose of this act is not meant to hurt importing companies but rather to keep goods tainted with forced labour out of the supply chain and advocate free and fair trade, respect for human dignity and unfair competition from international manufacturers (U.S. Department of Homeland Security, 2024).

‍Supply chain tracing should document the flow of goods from raw materials to the final product. Required information includes detailed descriptions of the supply chain, roles of entities, supplier lists, and evidence such as purchase orders, invoices, packing lists, and shipping records. Additionally, documentation should show internal controls and include audited financial statements to demonstrate robust management systems (U.S. Dept of Homeland Security, U.S. Customs & Border Protection, 2022).

The impact of UFLPA and enforcement of this act has seen positive outcomes in the US economy in various industries such as (U.S. Department of Homeland Security, 2024):

• Solar: High demand for forced labour-free solar supply chains, the U.S. polysilicon producers have secured over $7 billion in long-term sales agreements and invested $575 million in expanding domestic production. This expansion in capacity is accelerating the U.S.'s progress toward climate goals, exceeding expectations prior to the UFLPA's implementation.
• Textiles and Apparel: Importers are moving supply chains away from China, which grows over 20% of the world’s cotton, due to U.S. enforcement efforts. Over 95% of U.S. companies have improved supply chain due diligence using technology. DHS is expanding its Textile Enforcement Plan to address risks from Xinjiang-sourced cotton and protect clean Free Trade Agreement supply chains.
• Automotive: Forced labour is a known issue in automotive supply chains. In response to the UFLPA, automakers are ramping up due diligence to identify and manage these risks. Companies are now ensuring that imports are free from forced labour, particularly from Xinjiang or entities listed under the UFLPA.
• Polyvinyl Chloride (PVC) in Flooring: Xinjiang region produces 10% of the world's PVC, mainly used for vinyl flooring. Over the past year, U.S. imports of PVC products fell by 48% as importers moved away from Xinjiang-sourced PVC. This shift has led to increased PVC and flooring production in the U.S., Mexico, India, and Vietnam.

(U.S. Department of Homeland Security, 2024)

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Peer Ledger for UFLPA compliance and supplier risk management

Making sure that there is accurate and detailed due diligence being performed can be very hectic and become very complex, very quickly. Making sure that the essential documents that show adequate due diligence include but are not limited to (U.S. Dept of Homeland Security, U.S. Customs & Border Protection, 2022):

• Supplier engagement to address forced labour risks
• Supply chain mapping and risk assessment
• Supplier codes of conduct against forced labour
• Employee training on forced labour risks
• Monitoring and remediation of forced labour issues
• Independent verification of due diligence
• Public reporting on due diligence efforts

Peer Ledger’s Digital Product Passport Platform provides a versatile, multi-industry system to meet the country's emphasis on preventing textiles, chemicals, and agricultural products made from Uyghur exploited regions and other forced labour regions from entering the United States.
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‍Core Features:

1. Near Real-Time Data Collection: Implement continuous, near real-time, and scalable data collection processes that avoid supplier survey fatigue and minimize risks of AI-related supplier misidentification. 

2. Geo-fencing: Peer Ledger’s solution creates virtual boundaries around specific geographic areas. By setting up geo-fences around known conflict zones or regions with labour exploitation, companies can be alerted if a product or material crosses these boundaries. If a product is sourced from or passes through these restricted areas, the system can flag it for further investigation or halt its progress in the supply chain.

3. Geo-locating: Our solution is capable of tracking the exact location of products throughout the supply chain. By continuously monitoring the movement of goods, companies can verify that materials are sourced from approved, ethical locations. If a product's location history shows it has originated from or passed through a high-risk area, companies can take immediate action to prevent those goods from entering the market.

4. Multi-tier Supplier Document Management: Documents from suppliers throughout the supply chain are managed. Document timestamps, record of who uploaded documents or did edits, document ownership and authentication controls, and confidential document sharing helps to organise manufacturers’ compliance work.   

5. Targeted Stakeholder Communication: Utilise one QR code and a product passport to deliver customized information to different stakeholders.

6. Unified Platform: Leverages a single platform to manage due diligence, traceability and transparency across all sustainability efforts.

7. Digital Product Passports: Tailored for micro, small, mid-sized, and large companies, ensuring comprehensive ESG reporting.

8. Robust Security: Ensures data integrity and security with ISO 27001 certification and immutable blockchain controls.

9. Adaptive Supply Chain Management: Supports elastic supply chains with comprehensive tracking capabilities.

10. Granular Visibility: Gain item-level, SKU-level, lot-level, and bulk-level visibility across your supply chain

11. Multiple Interfaces: Operates as a standalone mobile and portal SaaS solution that can integrate effortlessly with ERPs, PLMs, SCMs, and other systems when required.

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The Road Ahead: Ensuring Compliance and Ethical Practices

It's no longer a matter of economics, but morals and ethics. Importing products that are tainted with human rights violations goes against the values of free and fair trade and respect for human dignity (U.S. Department of Homeland Security, 2024).  

Supply-chain management is crucial for preventing and addressing forced labour risks. Key measures include vetting suppliers before contracting, enforcing corrective actions if forced labour is found, and outlining consequences for non-compliance. Effective management also involves verifying the absence of forced labour through documentation, personnel, and worker access.  Making sure that importing companies have systems like Peer Ledger’s traceability and transparency products, allows for the continuation of combatting and eliminating the forced labour and embraces respect for all humans. Together, geo-fencing and geo-locating provide real-time oversight and ensure that products are ethically sourced in audited organizations, helping companies avoid materials that come from conflict zones or exploitative labour practices. Integrating these solutions into the supply chain would also make product recalls swift and efficient, as every step of a product’s journey of transfer and transformation is thoroughly documented.

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Sources: 

1. China: Religious regulations tighten for Uyghurs. (2024, January 31). Human Rights Watch. https://www.hrw.org/news/2024/01/31/china-religious-regulations-tighten-uyghurs

2. International Labour Organization. (2022). Global estimates of modern slavery: Forced labour and forced marriage. https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---ipec/documents/publication/wcms_854733.pdf 

3. Maizland, L. (2022, September 22). China’s repression of Uyghurs in Xinjiang. Council on Foreign Relations. https://www.cfr.org/backgrounder/china-xinjiang-uyghurs-muslims-repression-genocide-human-rights 

4. U.S. Department of Homeland Security (2024, July 9). Fact Sheet: In just two years, Forced Labor Enforcement Task Force and the Uyghur Forced Labor Prevention Act have significantly enhanced our ability to keep forced labor out of U.S. supply chains [Fact sheet]. https://www.dhs.gov/news/2024/07/09/fact-sheet-just-two-years-forced-labor-enforcement-task-force-and-uyghur-forced

5. U.S. Department of Homeland Security, U.S. Customs & Border Protection. (June, 2022). Uyghur forced labor prevention act: U.S. customs and border protection operational guidance for importers [CBP Publication]. Retrieved from https://www.aiag.org/docs/default-source/corporate-responsibility/forced-labor/uyghur-forced-labor-prevention-act-2022.pdf 

6. United States, Department of Homeland Security, Office of Strategy, Policy, and Plans. (June 2022). Strategy to prevent the importation of goods mined, produced, or manufactured with forced labor in the People’s Republic of China [Report to congress]. https://www.dhs.gov/sites/default/files/2022-06/22_0617_fletf_uflpa-strategy.pdf 

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