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When the Uyghur Forced Labor Prevention Act (UFLPA) came into effect in June 2022, it was heralded as one of the most hard-hitting laws devised to tackle US imports of goods connected to forced labour — in this case from China’s Xinjiang Uyghur Autonomous Region. Almost 18 months on, experts agree that implementation has been largely successful despite challenges in enforcement and industry education.
Since implementation of the UFLPA began last June, US Customs Border Protection (CBP) has detained almost $2 billion worth of goods, ranging from electronics and manufacturing materials to apparel, footwear and textiles. Of the 982 detained fashion shipments, totalling almost $43 million, 556 were denied entry into the US for failing to provide documents showing the goods had no connection to forced labour.
“This law is so drastic, so effective in theory. If it’s enforced properly, it fills this vacuum with a boom,” says Adrian Zenz, director and senior research fellow of China Studies at the Victims of Communism Memorial Foundation. It was his research into the Chinese government’s campaign against the Uyghur population from 2017 that prompted a hearing by the Congressional-Executive Commission on China, leading to the enactment of the UFLPA.
However, researchers believe instances of forced labour in Xinjiang are on the rise, indicating that it will take more than external economic sanctions to see benefits for the estimated 100,000 Uyghurs and other Muslim minorities working in forced labour conditions. In February this year, the CBP secured a $64 million funding boost, taking its budget from $37 million in 2022 to $101 million to strengthen enforcement capabilities and close loopholes.
How is fashion responding?
The UFLPA had immediate repercussions for the fashion industry because 90 per cent of China’s cotton — and by extension 20 per cent of the global cotton supply — is produced in Xinjiang. Initially, cotton products were a key target, but the law has rapidly expanded to include all products, pushing companies to trace their supply chains in search of any link to Xinjiang.
“Even though cotton and its related products have been given higher priority, a misconception is the assumption that only cotton products are under scrutiny,” says Pauline God, policy and programme manager at traceability tech company TrusTrace, which helps fashion companies comply with forced labour laws by mapping their supply chains and collecting compliance evidence. “The truth is that goods made from all materials can be targeted if there is a potential risk of forced labour within any segment of the supply chain.”
The UFLPA has forced more fashion brands to start mapping their supply chains in search of compliance risks that could lead to entire shipments being rejected by the CBP. “To my observation, every company that I know has implemented some sort of response,” says John Foote, a trade compliance lawyer and forced labour expert from Kelley Drye & Warren law firm in Washington DC. “Companies are looking deeper into their supply chains than they have ever looked before. And, in that regard, this law has been an overwhelming success.”
Challenges ahead
The process of mapping supply chains is not without challenges — it requires significant investment in finances, time, resources and people power. Those that invest early on stand to benefit in the long run, says Ethan Woolley, account executive at Kharon, a data analytics provider that helps companies surface forced labour links in their supply chains. Recently, Kharon announced the CBP as a new client, granting its officers access to the analytics platform. “There are certainly companies that have taken [the UFLPA] seriously,” says Woolley. “Of those that have, the one common denominator that I’ve seen is some level of leadership or executive level buy-in.”
The UFLPA, among other incoming laws around due diligence, has led to an industry-wide focus on traceability. Indeed, “traceability” became the most-used keyword in apparel company filings over the past five years, according to Globaldata. However, TrusTrace’s God says digitisation remains “significantly lacking in many segments of the supply chain, rendering it challenging for brands to gather evidence, especially when dealing with handwritten documents, or sometimes even a lack thereof. I’m uncertain whether policymakers fully grasped the intricate and ever-changing nature of apparel supply chains.”
The UFLPA’s ‘guilty-until-proven-innocent’ rebuttable presumption makes the law unique among forced labour legislation globally. Lawyer Foote says that, to prove the goods were not produced wholly or in part using forced labour, importers must first answer all of the CBP’s questions, and then provide clear and convincing evidence. If they achieve these two difficult steps, the CBP is obliged to notify Congress and publish the evidence that rebuts the presumption. “It is designed to be politically influenced,” Foote says. “That is the reality of the rebuttable presumption. It’s only been attempted three times. All three times it’s been voluntarily abandoned… It’s effectively a ban.”
To skirt around the UFLPA, some importers have tried evasive tactics. “Some of the efforts include things like the word ‘Xinjiang’ being dropped from bills of lading [documents issued by a carrier to acknowledge receipt of cargo for shipment],” says Woolley. “Same company shipping, same products, but they’re pulling certain keywords off post-UFLPA.”
Kharon’s recent white paper on the first year of the UFLPA’s enforcement shows that pulling out of China is not a straightforward way to avoid forced labour implications. Kharon found that, since June 2022, the total value of detentions from Malaysia and Vietnam was six times higher than those imported from China. “It’s not just a China issue,” says Woolley. “Companies can say that they’re leaving China, but if you’re moving to source from suppliers in Vietnam, and those Vietnamese suppliers are sourcing from the same suppliers in China, there is still risk.”
Earlier this year, the CBP launched a dashboard to help companies facing UFLPA compliance understand the complexities of the law. This education phase will take some time, explains Joshua Shrager, senior vice president of Kharon. “It’s a new law… We're still in the infancy. There’s a lot for people to understand.”
Closing loopholes
While it impacts trade, the UFLPA is not a trade law. It’s the product of the Congressional-Executive Commission on China, which is primarily focused on human rights. “It is the most trade-impacting law in history that is not a trade law, it’s not even catalogued under the title for trade laws,” says Foote. With little defining structure to the law, enforcement is left to the discretion of the CBP. “As a result, it is exceedingly difficult to predict and understand both where enforcement is likely to strike, and what exactly it will take in order to successfully navigate enforcement,” Foote adds.
A major loophole is a de minimis exception on shipments, meaning that goods entering the US under the value of $800 won’t get detained by the CBP. In 2022, 685 million shipments fell under the de minimis threshold. Ultra-fast fashion companies including Shein and Temu, both producing goods in China, have been accused of exploiting this by shipping individual orders directly to customers rather than in bulk to centralised warehouses like many other brands. Both companies were investigated alongside Nike and Adidas by the Select Committee on the Chinese Communist Party this year. In June, two bipartisan bills were introduced to change this exception.
Shipments that get rejected by the CBP have a few options. If they’re not destroyed, they can be sent back to the country of origin or re-exported to regions with less strict forced labour laws. “One of the things we're seeing already is direct exports from Xinjiang to the US have plummeted, but exports to the European Union have increased significantly,” says Zenz. “A lot of Uyghurs remain in forced labour because there's [also] the Chinese domestic market as an alternative.”
A global concerted effort is needed to have a long-lasting impact on the economic drivers of forced labour, campaigners say. “Given supply chains are global and incredibly complex, it is crucial to foster increased collaboration and engagement with international stakeholders, and the global community,” says Rushan Abbas, executive director of Campaign for Uyghurs, a Washington DC-based non-profit organisation. “It is imperative that countries follow the United States’s lead and enact similar legislation to ban the import of forced labour products. We must send a clear message that forced labour has no place in our supply chains.”
While the UFLPA is having an immense impact on global trade, it is not yet directly preventing forced labour of Uyghur people. Foote says it’s too soon to judge the UFLPA’s success in this regard. “What policymakers who understand the power and potential of this law are trying to do is a much longer game, which is why it will require cooperation with Europe, Australia and Canada,” he says. “It will require cooperation among the major consumer markets of the world, includin Japan and Korea. There are a lot of jurisdictions that would have to align on the principles.”
Zenz compares this situation to the cotton supply chains in Uzbekistan, where forced and child labour was rife until 2021. “International sanctions in Uzbekistan were effective because the primary motivation was economic,” he says. “So, if you cut off the source of income, there’s no motivation left. In China, you have both, but the primary is political, meaning the situation for the Uyghurs is not going to improve very easily.”
Abbas, of Campaign for Uyghurs, believes that global pressure is crucial to improve the long-term situation for the Uyghur people in Xinjiang. “Fighting against forced labour requires a united front. It requires not only the implementation of global-scale legislation to ban slave-made goods but also calls for heightened consumer consciousness,” she says. “There is a significant risk that your favourite brand may be profiting from the suffering of Uyghurs, a fact that demands action. We all have a voice and our voice will make a difference.”
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