On June 12, 2023, the U.S. Department of Homeland security added a number of Chinese enterprises to the Entity List of the Xinjiang related Act (UFLPA). According to the Notice on New Entities in the Entity List of the Uighur Forced Labor Prevention Act (the "Notice") issued by the United States Department of Homeland Security on August 5, 2022, [1] enterprises listed as border related entities can apply to the U.S. government for removal. The following describes the specific application procedures and evidence requirements.

Remove Process

After being included in the list of Entity List related to Xinjiang, Chinese enterprises can submit an application for removal (e-mail: FLETF.UFLPA. EntityList hq. dhs. gov) to the U.S. Forced Labor Enforcement Working Group (FLETF). Enterprises should submit relevant supporting evidence and information in the application form to prove that the entity no longer meets the recognition criteria for category 4 Xinjiang related entities. In addition, companies can apply to FLETF for a meeting to clarify the doubts raised by FLETF member institutions.

The FLETF Chairman will submit the removal request and supporting information to the FLETF member institutions. After receiving the removal request, FLETF can contact Chinese companies regarding the issues involved in the removal request and may request further information. After the removal request is reviewed by the FLETF member institutions, a vote will be taken. If a majority of votes are obtained to support the removal, then FLETF will remove the Chinese company that has applied from the list of entities involved in Xinjiang. On the other hand, if FLETF refuses to remove it, the decision cannot be appealed. Enterprises can only submit a removal application again after obtaining new information and evidence.

Enterprise self inspection

When applying for removal from the list of Entity List related to Xinjiang, Chinese enterprises should first check whether they have exported directly or indirectly to the United States in the past year? Is there any connection between the enterprise and the Xinjiang related products detained by the US? If available, evidence can be prepared by referring to the "Importer Operations Guidelines" issued by the US government (see below: Evidence Requirements for Products Involving Xinjiang by the US government). If there is no connection with Xinjiang related products and enterprises, enterprises should contact FLETF as soon as possible to understand the reasons for being included in the list of Entity List related to Xinjiang.

Evidence requirements of the US government for products related to Xinjiang

According to the Xinjiang Related Act and the accompanying Operational Guidelines for Importers, after the relevant goods are detained by US customs, US importers/Chinese exporters must submit evidence of due diligence and supply chain management, supply chain traceability, and no forced labor in order for the goods to be released. On the contrary, if the importer fails to provide clear and convincing evidence to overturn the presumption of US customs, the relevant goods will be refused entry. At that time, the importer must arrange for the re export of the relevant goods within the specified time limit, otherwise the goods will be destroyed by US customs.

Specifically, the evidence that US importers/Chinese exporters need to submit includes the following aspects:

1. Evidence of due diligence and compliance management, proving that the importer has conducted supply chain due diligence and compliance management of Xinjiang related factors, such as:

The risk of forced labor has been jointly verified or evaluated by the enterprise, suppliers, and relevant trading parties

The enterprise has evaluated whether there is a risk of forced labor in the supply chain from raw materials to commodity production

Enterprises require suppliers to sign a supplier code of conduct and prohibit the use of forced labor

Provide necessary training to employees who select or coordinate with suppliers within the company to prevent the risk of forced labor

● Enterprises take effective measures to supervise suppliers' compliance with the code of conduct

If any situation of forced labor is discovered, the enterprise shall immediately remedy it or terminate its partnership with the supplier in the event that it cannot remedy it

The company has evaluated the implementation and effectiveness of the due diligence system

The company has periodically summarized the performance and participation of the due diligence system

2. Supply chain evidence: proving that the goods are not produced in Xinjiang or enterprises in the list of Entity List related to Xinjiang, such as:

(1) Evidence related to the entire supply chain, including:

The production process and supply chain map of relevant goods and components must cover all entities on the supply chain

Name, contact information, role, and factory address of each entity in the supply chain

● Affidavit without forced labor issued by each entity in the supply chain

(2) Evidence related to the product or component, including:

● Procurement documents, such as orders, contracts, invoices, Certificate of origin, and payment vouchers

● Transportation documents, such as bills of lading, freight invoices

● Enterprise inbound and outbound documents

● Import and export customs clearance documents

● Evidence related to production, including production records, raw material procurement vouchers, documents that can prove equipment capacity, factory inspection reports, and evidence that the input and output of raw materials match

3. No evidence of forced labor: proof that the goods were not produced by forced labor, such as:

The production of related goods did not use forced labor. Such evidence must cover the labor usage of various entities involved in different stages of the supply chain, including: a complete list of workers; The salary payment status of the workers on the list; The origin and residential status of the workers; Evidence that workers match production.

● Workers involved in product production are not recruited, transported, transferred, harboured or accepted with the participation of the local government, Xinjiang Production and Construction Corps or enterprises on the list of Xinjiang related entities.

The measures taken by various entities in the supply chain to ensure that all workers are voluntarily recruited. Evidence in this regard includes employee recruitment documents; Enterprise internal control work documents; Documents indicating the company's support for religious beliefs and language freedom; Third party independent audit work report, etc.

The above list of evidence is not exhaustive, and US Customs can also raise other questions and requirements specifically based on the importer's specific products and business. It can be seen that the principle of Presumption of guilt under the Frontier related Act gives the US Customs great discretion, and imposes an excessive burden of proof on importers and Chinese enterprises, which is extremely difficult to prove. If a company does not establish a comprehensive compliance system related to Xinjiang in its daily operations, it will be difficult to meet the evidence requirements of the US government within the prescribed time frame.

For the removal of entities involved in Xinjiang and the release of detained products, if you need legal support, please feel free to contact us at any time.

References and annotations:

[1] https://www.federalregister.gov/documents/2022/08/04/2022-16754/notice-on-the-addition-of-entities-to-the-uyghur-forced-labor-prevention-act-entity-list
[2] Please refer to legal comments on how Chinese enterprises should respond to the continuous expansion of the implementation of the Xinjiang Related Act, as contained in: https://mp.weixin.qq.com/s/wBXHdOfJt3nLnpDSQ58Tew
[3] The four types of Xinjiang related entities recognized by the US government include:
(i) List of entities in the Xinjiang that use forced labor in whole or in part to mine, produce or manufacture any goods, commodities, articles and commodities;
(ii) List of entities that recruit, transport, transfer, shelter or accept forced labor or members of Uighur, Kazakhs, Kyrgyz or other persecuted groups outside the Xinjiang in cooperation with the Xinjiang government;
(iv) Entity List exporting products mined, produced or manufactured by the aforementioned entities from China to the United States;
(v) List of facilities and Entity List that purchase materials from the Xinjiang or personnel cooperating with the Xinjiang government or the Xinjiang Production and Construction Corps, including the Xinjiang Production and Construction Corps. The "Poverty Alleviation ^ ^ Plan" or "Paired Assistance" plan or any other government labor plan that uses forced labor;
[4] U.S. Customs and Border Protection Operational Guidance for Importers, June 132022, available from: https://www.cbp.gov/sites/default/files/assets/documents/2022-Jun/CBP_Guidance_for_Importers_for_UFLPA_13_June_2022.pdf