The Uyghur Forced Labor Prevention Act (UFLPA) is here, and many large importers of cotton products to the United States will be affected. Learn more about the latest requirements, what this means for the industry and what companies can do about it.
📣Important Updates for Fashion Compliance and Cotton Supply Chains; Traceability
🔴 On Tuesday, June 21st, The Uyghur Forced Labor Prevention Act (UFLPA) comes into effect. The law addressed concerns about using forced labor in the Xinjiang Uyghur Autonomous Region of Western China.
🔴 Starting June 21st, products imported directly from Xinjiang or products which have inputs that are suspected to be from the region will be prohibited and presumed as having been made with forced labor.
🔴 This act, which was signed into law on Dec 23, 2021, follows up on the WRO issued by the US government targeting specific companies and products such as cotton and tomatoes from that region, following numerous reporting about forced labor. The new law widens the scope of products and companies targeted and makes official the stance of the US Govt, as well as provides guidance for importers.
🔴 According to official US Customs and Border Patrol (CBP) documents, in order to overcome the presumption, “importers must… respond to all CBP requests for information about merchandise under CBP review and demonstrate by clear and convincing evidence that the (products) was not mined, produced, or manufactured wholly or in part by forced labor” (emphasis added)
❓Why is it notable for the Fashion industry?
▶ This will have a significant impact on the world's biggest fashion and textile companies that sell products in the United States. Around 80% of all cotton produced in China comes from the Xinjiang region.
▶ Companies will need to adapt fast. Some companies will likely cut ties with certain suppliers in the short term or will try to sell their products elsewhere. However, in the long term, they will need a better solution, as:
- Making sudden changes to supply chains is not easy for large companies;
- Many cotton-input products will already be at some stage of production and;
- Abandoning the US market is not a viable business option
▶ Scalable Traceability will be a must-have to ensure proper due diligence and risk mitigation. Companies will need to be able to provide proof that their cotton is not being made with forced labor. This means they will need to implement advanced traceability solutions into their overall sourcing setup and strategy. Companies will need to work with their production partners to better understand how their products are made, and by whom. Efficient data collection, management, and reporting will be needed to prove cotton provenance and meet the regulation requirements
▶ Outlook: Times are changing! The fast-fashion business model will be outdated. Companies won’t be able to get away with offering massive new collections at the lowest prices - especially at the expense of low-cost and opaque supply chains which allow for this to happen. From a sustainable business strategy perspective, companies will need to take a more proactive long-term social and environmental compliance and transparency strategies together with their supplier network.
Fashion supply chain strategies have already been under review for a while. The latest US regulations will accelerate this for many companies. Traceability, transparency, compliance management, supplier due diligence, and collaboration will be some of the pressing topics moving forward. Stay tuned for more updates on the topic
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