As Chinese lawyers engaged in international trade for many years, we have introduced the basic content of UFLPA in the “UFLPA – Hot Issue Concerning China-US Trade”. We consider it essential for the companies concerned to stay tuned to the updates of the UFLPA Entity List. The companies concerned here should include the US importers, Chinese exporters and third country traders that purchase materials from China and export the products made thereby to the United States. We will analyze the impacts of UFLPA on these companies in this article.

First, purchase from China and exportation by third countries of goods purchased from China to the US are a major concern of CBP and subject to scrutiny by CBP. Once a Chinese supplier is listed on the UFLPA Entity List, all the products related to this supplier to be exported to the United States (regardless of whether they are produced in Xinjiang or not) will be examined strictly by CBP. Under rebuttable presumption, all goods mined, produced, or manufactured wholly or in part in Xinjiang, or by entities on the UFLPA Entity List are prohibited from entry into the United States on the presumption that such goods are produced with the so-called forced labor. Exception will be granted only when the US importers can provide relevant evidence required by UFLPA. Otherwise, the goods in question may be detained, excluded or forfeited.

Second, intentional evasion of regulatory measures may lead to escalation of legal risks. For example, if the companies concerned colluded to avoid CBP importation regulation by reporting false information or concealing true information, they may be investigated or even criminally liable.

Third, failed importation into the United States may lead to more disputes. Because of the difficulty in obtaining the relevant evidence required by UFLPA, combined with the great discretion enjoyed by CBP, it is very likely that the goods will be detained or forfeited due to lack of evidence. Such detention, for instance, will lead to disputes over payments of the goods or hinder the next transaction within the United States.

Some measures to mitigate the risks caused by UFLPA will be introduced in the next article. If you have any queries concerning China-US trade on this issue, please contact us via administrator@legalandwise.com.

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