UFLPA content and impacts of this Act on the companies concerned have been introduced in the “UFLPA—Hot Issue Concerning China-US Trade” and the “Impacts of UFLPA Entity List on Companies Concerned” respectively. As Chinese lawyers engaged in international trade, we will provide some coping strategies in this article.
- Be prepared for supply-chain tracing, supply-chain management measures and other due diligence requirements. Although these requirements are to be fulfilled by the US importers, the information and materials required are from the Chinese suppliers. Therefore, we suggest that the Chinese suppliers collect evidence materials that demonstrate that the goods were not made wholly or in part with so-called forced labor. While collecting evidence, please ensure compliance with the type, nature and extent of evidence required by the Strategy and the UFLPA Operational Guidance for Importers, and at the same time, avoid risks of violating Chinese laws regarding national security and data security.
- Establish an emergency response system among Chinese suppliers, third country traders (if any) and US importers (hereinafter collectively referred to as “Companies Concerned”). When the applicability of UFLPA to certain imports is under CBP review, it will issue a notice to US importers, requiring evidence submission within prescribed time. Given this time limit, we will advise Companies Concerned to establish an emergency response system to communicate relevant information promptly, avoiding the consequences of erroneous or late submission.
- Establish a collaboration mechanism for CBP investigation. CBP will determine whether there is clear and convincing evidence that the goods were not produced with so-called forced labor based on the evidence submitted by US importers. On such basis, it will then decide to release, exclude or forfeit such goods. In the investigation, although US importers are the direct respondent, Chinese suppliers and third country traders (if any) are directly affected by the results of such investigation. Hence, it is advisable for Chinese suppliers, third country traders (if any) to reach an agreement with US importers in advance, requiring US importers to report the progress of CBP investigation at all times and to allow Chinese suppliers or related third country traders (if any) to hire professional lawyers to assist with the investigation, when necessary.
- Update the trading contracts with Chinese suppliers in a timely manner. Adapting to the enforcement of UFLPA, US importers and related third country traders (if any) should update its trading contracts with Chinese suppliers in a timely manner. For example, provisions may be added about risk bearing under the circumstance where the goods are detained or forfeited by the U.S. Customs due to lack of evidence for the origin of goods.
Apparently, the enforcement action under UFLPA against importation will pose challenges to supply chain compliance involved in China-US trade, and to the many other aspects of businesses. If you are engaging in China-US trade and have any queries in this regard, please feel free to contact us via email@example.com.