Uyghur Forced Labor Prevention Act: How Retail & Others Can Use TPRM to Manage Risk Exposure

How Does UFLPA Compliance Affect a Third-Party Vendor Management Program?

All U.S. importers and manufacturers must comply with UFLPA. A robust third-party vendor management program is essential to your company’s survival if you are sourcing your products globally. Your organization will need to focus some additional effort on supply chain transparency to determine exactly who your suppliers are and what they provide. You’ll also need to know who their suppliers are and how their goods are manufactured. Understanding your supply chain is vital to avoiding supply chain disruptions and the seizure of your imported goods.

To provide compliance guidance, the Department of Homeland Security (DHS) published the Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People's Republic of China. The CBP has also published a supplement to the DHS publication called, Operational Guidance for Importers.

To comply with the UFLPA, importers and manufacturers should:

1. Review their entire supply chain entities against the UFLPA Entity List
2. Conduct supply chain due diligence that includes
   • Supply chain tracing
   • Supply chain management measures

Due Diligence

The CBP guidance recommends that importers and suppliers implement and administer a due diligence system to ensure they don’t import any goods mined, produced, or manufactured wholly or in part with forced labor. The DHS Strategy publication defines the following as key steps to creating effective supply chain due diligence:

• Engage stakeholders and partners
• Assess risks and impacts
• Develop a code of conduct
• Communicate and train across the supply chain
• Monitor compliance
• Remediate violations
• Conduct independent review
• Report
• Performance and engagement

Supply Chain Tracing

Map the entire supply chain up to raw materials suppliers as follows:

• Supplement information on the supplier entities with information on the workers and their working conditions
• Demonstrate the chain of custody from downstream to the finished product
• Trace each product input separately

Supply Chain Management

• Vet potential suppliers for forced labor concerns.
• Require corrective action by the supplier if forced labor is detected
• Specify the consequences of the supplier failing to take corrective action, including contract termination
• Manage and regularly update supply chain data

How to Get UFLPA Compliant

Consider taking a phased approach to UFLPA compliance:

Phase 1: Conduct a gap analysis of the organization’s current supply chain due diligence.

Phase 2: Take incremental steps to close any gaps. Develop a compliance playbook to document supply chain due diligence, supply chain traceability, and supply chain management.

Phase 3: Work with suppliers to map the supply chain of goods from raw materials to finished products and establish the chain of custody from the beginning to the buyer of the finished product.

Companies whose goods are detained at the U.S. borders will have 30 days to give the government “clear and convincing evidence” that their products don’t violate the law. Mapping your supply chain will help your organization avoid the seizure of your imports by purchasing only from suppliers that comply with the UFLPA. Meanwhile, creating supply chain transparency and investing in a robust TPRM program may also help your organization make a case against seizure and prove your goods are indeed compliant.