Let’s imagine a scenario. You are a company that imports garments from a manufacturer in India, and right now there is something of a boom for your particular kind of garment. Someone famous wore one at a televised event, and now whatever it is you are making is the talk of the town. So, you ramp up production and begin importing them on a large scale from a factory that makes them in India.

Suddenly, and for reasons that you don’t fully grasp, your garments are being refused by Customs and Border Protection (CBP) under the Uyghur Forced Labor Prevention Act (UFLPA). You are confused because, notably, you don’t import garments from China; you import them from India, so how it is that they are being refused by an act that specifically targets forced labor in the Xinjiang Uyghur Autonomous Region of China is causing you no small amount of consternation.

It isn’t until some time and research later that you learn that your manufacturer was using cotton sourced from that region, and while it was manufactured in India, your goods are still being flagged under UFLPA. Now, you are out a few million dollars, and potentially, your company has missed out on its opportunity to partake in a larger cultural moment.

This scenario is not just a frightening possibility but very nearly the exact thing facing the Indian solar panel industry since 2022, and there is a lot we can learn from it as importers.

Polysilicon Valley

Over the last two years, CBP has been on the lookout for goods that contain components from China’s Xinjiang region - most prolifically electronics with a special focus on solar panels. This is of particular note because the US is keenly interested in solar panels, perhaps more than at any other time in history. Which makes the fact that CBP has detained nearly $43 million worth of electronics from India since 2022 all the more jarring, and they are only beginning to ramp up their efforts.

While the panels themselves are likely fine, the polysilicon components of solar cells are sourced from areas of China prohibited by the UFLA, and while the whole may be manufactured in India, components from prohibited zones make the product a candidate for seizure in the eyes of CBP.

Of course, to what extent these Indian companies knowingly source their solar cells from forced labor is impossible to know, but it does offer an opportunity as an importer to be more diligent in your processes and take a more forward-facing view when it comes to your supply chain.

What is the UFLA?

The Uyghur Forced Labor Prevention Act came into effect in 2022 and is one of the latest in the US’s ongoing battle against not only the immoral act of forced labor but also the unfair landscape it creates in the global economy. This act is enforced by CBP and essentially makes the assumption that any goods from the Xinjiang Uyghur Autonomous Region of China have been produced under forced labor and are therefore prohibited from entering the commerce of the US.

This is part of a larger global strategy of combating businesses that put these kinds of tactics to work, but where it becomes complicated and relevant to the average importer is the interconnected nature of the global supply chain.

Know Before You Go

On its face, this is relatively straightforward. A business unintentionally imported items that were prohibited under UFLP, but there is something to be learned here as an importer, and it’s this - your supply chain is the backbone of your business, and where things are coming from and how they are getting there is as important as any of the other elements of your business.

Customs is only getting more capable of enforcing a wide range of constantly evolving regulations, and as it gets more complicated, the more valuable a trade advisor is going to be. Viewing your supply chain through the lens of trade management can help your business avoid pitfalls like this because we know the regulations associated with every part of your product’s journey. In the end, a good Supply Chain Audit from one of our tenured experts with an eye toward sourcing will go a long way towards ensuring that your goods stay on the right side of international law now and into the future.

Of course, that’s just where it begins when you work with the team at PCB. Not only do we have the expertise to recognize this kind of regulatory predicament before it happens, but we can help even if it has already started. Our team can work with you during audit or enforcement action to ensure that you land on your feet and that you are prepared for the next time that it happens.

For more information about UFLP or what we can do to help your business and its supply chain avoid confrontations with Customs, get in touch with our Trade Advisory Team today. We’ll help you get set up for success now and into the future.

UPDATE: As of September 16, 2024, CBP has offered additional options for importers who are members in good standing of the Customs Trade Partnership Against Terrorism (CTPAT) initiative. For full details on these options, please visit our Regulation Update Page. For further information on becoming a CTPAT member, contact our Trade Advisory Team today.