Uyghur Forced Labor Prevention Act Affects on Chinese Imports
Does this mean more nearshoring?
As the United States and China remain at odds with one another on a raft of issues including trade, intellectual property rights, Hong Kong and Taiwan sovereignty and human rights, the President last week signed into a law the Uyghur Forced Labor Prevention Act, sure to further rankle relations between the two countries.
The concern by global human rights NGO’s and nations over China’s alleged treatment of the minority Uyghur population in the far western province of Xinjiang has been an issue that multiple US administrations have raised diplomatically over the years. Now, an overwhelmingly bipartisan piece of legislation has been enacted and when it takes effect next June, effectively bans imports of products “mined, produced or manufactured” without explicit proof that forced labor was not used.
CBP has issued a number of Withhold Release Orders for products from the Xinjiang Uyghur Autonomous Region, or XUAR. A quick scan of CBP’s website highlights WRO’s for cotton, tomatoes, human hair and other products that have been implemented over the past several years. The new law will ban imports of anything from Xinjiang and also reaches into supply chains which have underlying components from the province as well that may be manufactured in countries other than China.
Importers will need to work very closely with their suppliers to ensure compliance and not unlike a CBP audit of production records to determine bilateral or multilateral trade agreement eligibility, so should importers be ready, either themselves or with retained counsel, to prove they should be permitted an exemption as the regulations are developed and put forth for notice and comment in the coming months.
For BIG’s customers, as the issue of eligibility and admissibility half a world away introduce challenges, so can BIG’s network and footprint in neighboring Mexico offer nearshoring solutions that remove transit time and growing uncertainty that surround supply chains that go through Xinjiang province. The International Business Times recently highlighted Mexican opportunities to alleviate the semiconductor chip shortages plaguing consumer electronics and automobile industries.
At a time when trade remedy duties are being imposed that add double, or sometimes triple-digit duties to components or finished goods, sourcing the right combination of components and adding the requisite amount of value to meet USMCA origin requirements will prove beneficial to companies both seeking to shorten their time to market, but to be thousands of miles closer to their customers as well.
BIG Logistics can help.
Our experience along the southern border and our reputation in El Paso means that we’re positioned to take advantage of these nearshoring trends that McKinsey estimates could take advantage of a forecasted $4.6 trillion in global trade flows over the next five years.
