Uyghur Forced Labor Act Puts PVC Importers in Precarious Position

Eric Linxwiler | May 30, 2023

US Customs and Border Protection is scrutinizing PVC imports like never before. In February, the agency gave notice that it had started detaining PVC shipments under the Uyghur Forced Labor Prevention Act (UFLPA), the law enacted last year that bans the importation of goods made in whole or in part in China's Xinjiang region under the presumption they were produced with forced labor. Nongovernmental organizations had been calling for action for a long time: An estimated 10% of the world's PVC originates from the Xinjiang region, and all of Xinjiang's PVC facilities have documented ties to the region's labor transfer programs.

Customs’ PVC crackdown has sent ripples through vinyl tile flooring companies, in particular, and has already created some flooring shortages. Some flooring retailers report that they’ve ceased business with Chinese companies, but that alone won't be enough to ensure compliance with the UFLPA. Since the law applies to shipments from any country of origin, it's not adequate for retailers to merely demonstrate to Customs that their shipments came from outside China. They need full traceability to show that no forced labor was involved at any stage of the creation of any material components. That requires being able to trace originating chemicals like chlorine, ethylene, and carbon.According to expanded UFLPA guidance Customs shared this winter, to rebut the law's presumption of forced labor, importers must provide documentation detailing "the order, purchase, manufacture, and transportation of inputs throughout their supply chain." Examples include records substantiating the parties involved in the sourcing and manufacturing of goods; documentation of payments for and transportation of raw materials (including invoices, contracts, purchase orders, and other proofs of payment); and transaction and supply chain records (including packing lists, bills of lading, and manifests).

The exact documentation required will vary on a case-by-case basis, but, in short, businesses must now have full records of all their suppliers, from raw materials to finished goods, and they need to document and provide to authorities the full chain of custody of materials. That poses a challenge for brands and retailers, since most lack proper systems to document the full provenance of their products and centralize supplier information, especially beyond the first and second tier.

Businesses need to adopt a supply chain management platform that can provide the transparency they need to make the most responsible sourcing decisions and to map their supplier networks to the nth tier. Especially for brands and retailers with increasingly complex supply chains supporting vast supplier networks, that traceability is almost impossible without an advanced multi-enterprise platform.A multi-enterprise platform helps businesses collect and organize the chain of custody documentation they need to adhere to UFLPA guidelines. In response to demand from our customers, my company TradeBeyond recently introduced a comprehensive chain of custody management suite. The platform introduces a simple process for compiling this documentation during order creation and for determining whether an order has fulfilled the chain of custody obligations of the UFLPA and other new global due diligence laws. To mitigate risk, the system creates alerts, flagging orders that have unmet chain of custody requirements.We expect this technology will increasingly become standard as businesses continue to adjust to the UFLPA's new normal, especially as reports mount about long and extremely costly detainment delays under the law. Of all the shipments detained so far under the UFLPA, more than half are still awaiting a decision from Customs, according to the agency's latest data.

While managing orders properly can help avoid lengthy detainments, another key preventive measure plastics importers and flooring retailers can take is selecting carefully vetted supply chain partners in the first place. Here, too, multi-enterprise platforms can be invaluable. Supplier relationship management tools allow supply chain managers to vet and monitor vendor compliance, enforce their company's ESG expectations, and easily and quickly on-board responsible suppliers based on their location and accreditation. This allows companies to strategically cut high-risk vendors and regions out of their supply chain, which is precisely what lawmakers set out to accomplish with the UFLPA.A multi-enterprise platform grants plastics importers a full understanding of their social and environmental footprint. In addition to facilitating visibility, it exposes vulnerabilities that businesses can quickly act to correct. This due diligence is no longer just a best practice — it's key to staying ahead of tightening ESG regulations like the UFLPA.About the author

Eric Linxwiler is senior vice president of TradeBeyond. He has more than 30 years of experience in enterprise software and cloud-based platform companies with a specialty in supply chain optimization and workflow management. Contact him at [email protected].

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