To understand exactly how the UFLPA has and will continue to impact apparel and other imports into the United States, we sought the expertise of Kit Conklin, Senior Fellow at the Atlantic Council and a vice president at the research and data analytics firm, Kharon. This interview appears in the TrusTrace Traceability Roadmap, a new industry guidebook that will be published on the 27th of June, 2023.
As of June 2023, the Uyghur Forced Labor Protection Act (UFLPA) has been in effect for a year. This rollout of this unique, precedent-setting law has put the fashion industry on notice: take the rising tide of regulation seriously or face financial and reputational risks. The UFLPA has helped to catalyze the adoption of traceability solutions for compliance, but its impact on global trade and geopolitical relations is far more significant.
Kit Conklin helps lead global business development and advises clients on the use of data to augment and scale sustainability, traceability, and geopolitical risk management programs. Prior to Kharon, Conklin served in various national security positions with the US government. He has worked on China issues for over 15 years and has testified in front of Congress on the UFLPA. He regularly interacts with senior policymakers, legislators, and C-suite executives on forced labor and geopolitical risk issues.
Conklin shares his knowledge on the best-practice approach to complying with the UFLPA, how it compares to similar laws internationally, how the law will evolve in the coming year, and whether it is effectively eradicating forced labor from fashion’s supply chains.
TrusTrace: Kit, can you tell us a little about the impact that the UFLPA has had since it came into effect in June 2022?
Kit Conklin: The UFLPA took a lot of the sustainability world by surprise because it’s the most complex piece of legislation that has ever been passed globally targeting this type of issue. We have seen a huge uptick in the number of shipments that have been detained by CBP via their new UFLPA authorities — the US Customs and Border Protection (CBP) has detained hundreds of apparel shipments so far.
The CBP explicitly stated that cotton would be prioritized for enforcement, but what we’re starting to see now is other commodities being detained as well. Things like polyester, leather products, and a broader expansion of detentions targeting goods made with forced labor outside of Xinjiang. Some in the industry have continued to believe that the UFLPA only focuses on Xinjiang cotton, but the law is infinitely more complex and broad. It allows the authorities to target shipments across every industry and, sometimes, enforcement has nothing to do with the inputs themselves but rather the companies involved with the manufacturing process.
I recently had a conversation with a chief sustainability officer for one of the world’s largest brands and he raised an interesting point that I don’t think many in the industry are thinking about: commodities that aren’t fabrics. Things like metals in shoes, for example. A lot of times the due diligence on those smaller commodities may not be the same as the traceability work that’s being done for cotton. If you have inputs in your shoes that are metals made with forced labor, the CBP has the authority to detain that product, even if everything else in the shoe may not be made in Xinjiang.
TT: Brands are often told to conduct due diligence on the highest volume material as a starting point for compliance. For example, if cotton makes up 60% of your shipment, you would prioritize tracing this supply chain. But if materials that make up a small percentage of your shipment are also at risk of detainment under the UFLPA, does this advice still ring true?
KC: I think the risk-based approach to UFLPA due diligence is an appropriate response by the industry. You have to start somewhere, so starting with your high-risk commodities makes sense. Cotton, over the last three or four years, has been prioritized for enforcement, but for the last year, we’ve seen thousands of other shipments being detained for purposes that have nothing to do with cotton. You might have learnt to crawl with cotton, but now you have to figure out how to walk and then run with all your other materials.
It’s a mindset shift from an enforcement perspective. There is no other law in the US that says you’re guilty as an importer until you can prove your innocence. The rebuttable presumption (a legal principle that presumes guilt until innocence can be proven) sends a clear signal to the industry that proactive due diligence is now a legal requirement.
TT: Forced labor legislation is emerging in the UK, Europe and beyond, including The Dutch Child Labour Due Diligence Act, the UK’s Import of Products of Forced Labour from Xinjiang (Prohibition) Bill, and the European Parliament’s Proposal For a Ban on Goods Made Using Forced Labour. How do they compare to the UFLPA and does compliance with one forced labor law mean your business is compliant globally?
KC: The rebuttable presumption is a very unique part of the US regulatory regime. The reason why it was added was that many in Congress believed that was the only way that industry would comply with the law to the fullest extent. If you look at the other laws that have passed or have been proposed for forced labor bans, a rebuttable presumption is not included.
From a regulatory and compliance perspective, brands need to comply with the UFLPA if they have US business. But the UFLPA is so strenuous that it will help enable them to comply with European laws and, if the UK strengthens its modern slavery legislation, it would help with compliance with that too. The same goes for Canada, Mexico and other jurisdictions.
However, it’s not the other way around. If you’re a European or UK brand and you’re concerned about the proposed EU bans, complying with those doesn’t mean you’re in compliance with the UFLPA. The way the UFLPA works, if you collect the data, do the mapping and implement traceability, you’re going to have the majority of the regulatory documents that you need to comply with the proposed forced labor bans around the world.
“Brands need to be cognizant that this is a geopolitical issue. They have to be careful about threading that geopolitical needle to comply with the UFLPA and relevant Chinese laws that may run counter to the UFLPA due diligence.”
TT: Does the enforcement of the UFLPA set a precedent for how other pieces of US legislation concerning fashion could be implemented? Do you expect a similarly robust application of the New York State Fashion Sustainability and Social Accountability Act or The Garment Worker Protection Act?
KC: 20 years ago, if you look at the opening rounds of compliance for things like terrorism finance, sanctions compliance, and export controls, the affected industries invested in compliance because there was enforcement. With the state and local laws, enforcement will be weak because they don’t have the rebuttable presumption. There are requirements for companies registered or working in those states, but if you look at what California has done over the last few years with the enforcement of its sustainability initiatives, it’s nothing [compared to the UFLPA].
The fact that over a billion dollars worth of goods have been detained by the CBP in the last year is driving compliance with the UFLPA. It’s creating issues for the C-suites that need to be addressed strategically by all brands that operate in the US. With the New York or Californian laws, you’re not seeing a huge amount of industry demand for compliance and due diligence solutions because there are no regulatory enforcement teeth behind those laws.
TT: Many fashion businesses have been slow to react to and prepare for legislation, despite often getting a few years of advance notice. What impact has the rollout of the UFLPA had on those businesses? Would you recommend a different approach?
KC: When the UFLPA was signed into law in December 2021, a lot of brands took a ‘wait-and-see’ approach to see what the regulators would do. [In June 2022], the regulators came out at 100 miles an hour and started enforcement rapidly from day one. As a result, the businesses that took that wait-and-see approach were caught off guard and had their goods detained at the border. They went through very long, expensive applicability reviews to see if those goods could be released. There was a huge amount of risk that they would be caught flat-footed once enforcement began.
It boils down to how quickly companies recognize and appreciate that traceability can’t be achieved by flipping a switch. Implementing traceability and supply chain mapping takes time. It takes months to find that information and get it from your suppliers and their suppliers, all the way down the chain. So if you wait until the law is being enforced, you’re already months behind. You risk regulatory action and being called out publicly by NGOs, political leaders, or the media, which would pose a significant reputational risk.
“Traceability takes time to do it right, and it takes time to do it well, so brands should be thinking about this before laws are enforced.”
TT: Since its inception, the UFLPA has expanded beyond its initial remit to become much more robust and far-reaching. How do you expect the law to evolve in the coming year?
KC: It’s possible that the UFLPA or similar legislation will expand to include other provinces in China, like Tibet. There is a growing shift in supply chains to Tibet, so US lawmakers are considering expanding the legislation which would be an evolution of U.S. policy towards forced labor issues, not necessarily anything revolutionary. The US government has started to prioritize training and capacity building for forced labor protection and import bans in allied countries. That means that as CBP learns how to enforce the UFLPA, they’re starting to go overseas and help countries develop enforcement capabilities elsewhere.
We may see the CBP and U.S. government start engagement with the key areas that have been targeted by the UFLPA — Malaysia, Vietnam, and Sri Lanka — to help build new regulatory regimes that ban forced labor in those countries. What that means is that those jurisdictions could have new forced labor bans themselves. Once again, though, the overall strength of those regimes will be driven by enforcement. This will create more scrutiny on companies that move their supply chains from China to Vietnam, for example. With more regulatory scrutiny comes more compliance challenges in the future.
TT: Whilst being a geopolitical issue, we shouldn’t forget that at its core, the UFLPA should ultimately aim to eradicate forced labor of Uyghur minorities in China. A year in, is the UFLPA proving to have any tangible positive impact on reducing the occurrence of forced labor in fashion’s supply chains?
KC: Many of the people who passed the legislation and were key architects of the UFLPA are ethnic Uyghurs, so ending forced labor is front of mind. Is this solving forced labor? We don’t have enough data yet to know one way or the other. But supply chains have started to change. The UFLPA is impacting U.S.-China trade relations at a high-level and supply changes are evolving.
As a result, some companies in China that may have used inputs derived from forced labor are starting to motivate their own suppliers to ensure forced labor does not exist in the upstream supplier network.. The law is certainly elevating forced labor issues to the forefront of geopolitical and compliance risk, but whether that means that it will completely eliminate what the UN has called genocide, is yet to be determined.
For example, if you look at the CBP’s engagement with Malaysia, they have parties that have been subject to Withhold Release Orders (WRO), and they were removed from the WRO list because they cleaned up their supply chains and took care of their workers. As a result, the US government has incentivised them and they’re cleared to import into the United States. WROs do work, and the UFLPA does work, but the jury is out on just how much this will change global behaviour.
This interview appears in the TrusTrace Traceability Roadmap, a new industry guidebook that will be published on the 27th of June, 2023. Ahead of its release, read TrusTrace's first Traceability Playbook and the Glossary of Traceability Terms.
