21 Jun 2023 -
 General

Bite of UFLPA labor law will change the supply chain

supply-chain

The Uyghur Forced Labor Prevention Act (UFLPA) is a United States law that prohibits companies from importing goods that are produced in or sourced from the Xinjiang region of China. The law is meant to stop goods from being produced through forced labor or human rights abuses. The law has had a ripple effect, prompting companies to review their supply chains for any connections to Xinjiang.

Since its passage in 2020, the UFLPA has served to raise awareness of human rights abuses in Xinjiang, and has created incentives for companies to investigate their sourcing origin in the region. Companies must review and audit existing suppliers to ensure that they are not engaging in prohibited activities and that their sourcing practices are in compliance with the law. If suppliers are found to be in violation, companies must terminate contracts and look for alternative suppliers.

These measures are having a real and tangible impact on companies’ supply chains. Companies wanting to remain in compliance with the UFLPA must discontinue relationships with any suppliers found to be drawing labor from or sourcing products or materials from Xinjiang. This implies that companies must reevaluate their global supply chain management practices through due diligence, close monitoring, and analytics to ensure compliance.

Analysts have noted the UFLPA is different from prior human rights initiatives, however, in its broader scope and its strict legal and enforcement requirements. In contrast to prior initiatives, which focused primarily on public condemnation and economic sanctions, the UFLPA has teeth in the form of prohibitions on imports and penalties for non-compliance. This makes it a much more powerful tool for ensuring that human rights abuses in Xinjiang are not supported by American and global consumption of goods.

According to EPS News, what’s unique about UFLPA enforcement is that CBP utilizes a presumption of guilt in the identification and seizure of shipments. If CPB has reason to suspect goods are tied to Xinjiang, it’s up to the importer to prove otherwise.

The UFLPA is more than an isolated law or policy. It is a significant step in the fight against human rights violations and is part of a broader effort to ensure human rights are respected in global trade. In its current form, the UFLPA has the potential to significantly reshape the global supply chain, as companies and countries respond to its mandate and consider alternate sourcing practices.

The electronics industry is no stranger to measures scrutinizing the supply chain, argues EPS News. “The U.S. and EU have passed conflict minerals regulations to discourage sourcing from areas that practice slavery and child labor. California’s Transparency in Supply Chains Act requires manufacturers of a certain size to report on their efforts to eradicate slavery and human trafficking in their supply chains.”

Jurisdictions around the world are becoming more prescriptive and precise regarding regulatory expectations for global supply chains, Jackson Wood, Descartes director of industry strategy, told EPS News, pointing to Germany’s Supply Chain Due Diligence Act. This has coincided with the rise of environmental, social and governance (ESG) initiatives adopted by businesses.

“If we think about ESG as sort of a North Star, we are talking about creating a new paradigm for global organizations to think about their footprint, not only from a supply chain standpoint but from a broader operations perspective,” Wood told EPS News. “Rather than having something that organizations should do, it’s now something that organizations must do.”

To avoid electronics supply-chain disruptions, you may also wish to consult an expert in electronics component supply. With more than three decades of supply-chain expertise, Astute Electronics is ideally placed to work with you on your daily component requirements.

For more help with looking at supply chain options, contact Astute Electronics

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