DHS Adds 37 Entities to Uyghur Forced Labor Prevention Act Entity List

Client Alert

On January 14, 2025, the Department of Homeland Security (DHS) announced the addition of 37 entities based in the People’s Republic of China (PRC) to the Uyghur Forced Labor Prevention Act (UFLPA) Entity List.

The newest additions to the list will impact industries sourcing critical minerals, cotton, and polysilicon used in solar modules from the Xinjiang Uyghur Autonomous Region (XUAR) of China. Companies that heavily depend on these materials, such as those in renewable energy and textile manufacturing, face heightened risks of supply chain disruptions and rising costs.

Background

The UFLPA mandates that goods produced wholly or partially with forced labor in the XUAR or by entities linked to forced labor are prohibited from entry into the United States. Any goods made with any inputs from the XUAR, even from Tier 3 or Tier 4 suppliers and beyond, are presumed to be made with forced labor under UFLPA. The DHS’s expansion of the UFLPA Entity List, now totalling 144 entities, reflects continued efforts to combat forced labor and human rights abuses. Comparable past actions, such as the initial enactment of the UFLPA and previous list expansions, have disrupted global supply chains, resulting in compliance challenges, shipment detentions, and financial penalties for noncompliance.

According to US Customs and Border Protection (CBP), since June 2022, UFLPA enforcement has impacted 12,666 shipments valued at more than 3.68 billion USD. The same source indicated that the electronics, automotive, aerospace, apparel, footwear, and textiles industries were the most significantly impacted by UFPLA enforcement.

Shipping Overview

Exiger identified 13.1 million shipments involving the newly added UFLPA entities or their direct or indirect subsidiaries since the start of 2024:

# OF SHIPMENTS

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# OF UNIQUE SHIPPERS

# OF UNIQUE CONSIGNEES

BUSINESS RELATIONSHIPS

Identified Consignee Industries by Number of Shipments (Source: DDIQ Analytics)

Identified Shipper Industries by Number of Shipments (Source: DDIQ Analytics)

Of these, the top three consignee industries are Construction and Engineering, Specialty Retailers, or Distributors. The top three shipper industries are: 1) Textiles, Apparel, and Luxury Goods; 2) Electronic Equipment, Instruments, and Components; and 3) Metals and Mining.

Thirty-six percent of the shipments were shipped by entitles based in Vietnam. Consignees for the shipments are mostly based in India (30 percent), Taiwan (18 percent), and Vietnam (18 percent), accounting for 66 percent of total shipments:

Breakdown of shipper country — Breakdown of Shipper Country (Source: DDIQ Analytics)

Breakdown of Consignee Country (Source: DDIQ Analytics)

Haufus direct and indirect ownership — A Snapshot of Haufu's Direct and Indirect Ownership Network (Source: Exiger)

As part of the 37 entities newly added to the UFLPA Entity List, the Forced Labor Enforcement Task Force (FLETF) included Huafu Fashion Co. Ltd. (Huafu) and 25 Huafu subsidiaries engaged in the production and sale of cotton and cotton products.

Exiger analyzed direct and indirect subsidiaries up to 10 levels removed from Huafu and identified a network involving at least 65 entities. Exiger added the
additional Huafu subsidiaries to the Proactive Intelligence Watchlist due to their ties to entities included on the UFLPA Entity List.

Anticipated Disruptions

Stakeholders should prepare for:

Delays: Increased CBP inspections of goods suspected of ties to listed entities.
Shortages: Potential scarcity of products or raw materials originating from PRC-based suppliers.
Strained Logistics Networks: Redirection of goods to alternative suppliers or regions.
Cost Impacts: Increased expenses due to rerouted logistics and compliance measures.

Recommendations for Stakeholders

To mitigate risk, stakeholders should:

Conduct Immediate Supply Chain Audits: Assess suppliers for potential ties to entities on the UFLPA list.
Enhance Due Diligence Measures: Strengthen supplier vetting, contract terms, and documentation to comply with UFLPA standards.
Engage Alternative Sources: Identify and secure new suppliers outside of high-risk regions or entities.
Inform Key Partners: Communicate potential delays or changes to stakeholders and customers.
Monitor Updates: Stay informed about ongoing regulatory developments and CBP enforcement trends.