The United States Customs and Border Protection agency (CBP) deployed the Uyghur Forced Labor Preventing Act (UFLPA) Region Alert and Postal Code Requirements on March 18th, 2023. The New validation measures in ACE were to be initially deployed in November 2022 but due to concerns raised, the deployment was postponed to March 2023.
The new validation is a component of the Automated Commercial Environment (ACE). Under the new rules, importers will need to report valid postal codes for cargo releases in any instance in which the country of origin of the manufacturer is in China. Once importers report the postal code, they will get a warning message if the cargo was produced in the Xinjiang Uyghur Autonomous Region (XUAR) and an error message if the postal code is not valid.
According to CBP, the new measures are intended to offer an early notification to importers and their representatives when goods may have been produced in XUAR and could be at risk of being excluded from importation under the new UFLPA’s rules.
What Changes to Expect
The UFLPA Region Alert will include three new validations that importers will need to abide by in ACE. Some of the validations importers will be required to provide are:
- Postal Codes are now a required field
- Users will get a warning message if they provide a XUAR region postal code
- Users will get an error message if they provide an invalid Chinese postal code
Specific applications that will be impacted by the new regulations are:
The Cargo Release (SE) application – In instances when the reported country in the SE56 and SE36 record is the People’s Republic of China and only for the Manufacturer Party.
Manufacturer Identification Code Application – When users are updating or creating a Manufacturer Identification Code with a City in the People’s Republic of China. This will make it possible to update existing Manufacturer identifiers with postal codes.
Who is Considered a Manufacturer?
A manufacturer is any entity that grows, produces, and manufactures the commodity to be imported into the United States. These include entities that grow or produce raw materials or by skill, art or labor transform raw materials into some form of a finished article of trade or product. The transformation of the raw material may for instance include the processing and production or assembly of goods into finished products.
How to Update a Manufacturer ID (MID)
If you have already created a MID record and it is not possible to update the MID record in your ABI system, then it is recommended to contact your ACE ABI vendor who will assist with whether the postal codes may be updated.
It is recommended that importers use city-level or street-level postal codes when submitting Chinese addresses. In case there are no postal codes at street levels importers are allowed to enter city-level postal codes.
Using Invoice Party or Third-Party Seller as the MID
The invoicing party or third-party seller can be used as the manufacturer identifier except when the product being imported has other agency requirements that need a declaration of the manufacturer at the port of entry or if the product imported is textiles.
Using Invoice Party or Third-Party Seller as the MID
If a user receives a warning message, they are required to notify the importer that there is a presumption that they have run afoul of the validation rules of the UFLPA.
Nonetheless, importers have the chance to ask for an exception to the presumption of running afoul of CBP rules after an exclusion, during detention, or when the goods are in the process of being seized. Importers can also submit information to show that the goods seized, excluded, or detained do not fall under the ambit of the new UFLPA rules.
Note that there will be no warning messages or flags if the manufacturer ID (address and name) is not located in China.
Transmission of Postal Codes for Manufacturers (MID)
Since postal codes are a required field, they have to be transmitted to the CBP when Chinese manufacturers are involved. In case a user fails to transmit a postal code and the system flags the submission the record will be rejected by the Cargo release system.
In the instance where erroneous postal codes are transmitted, the CBP allows filers to transmit a replacement as long as this is done before the shipment arrives at the port of entry. A “C” record means that the record will be reviewed and corrective action may be taken by the personnel of the CBP while an “R” record means the record is automatically corrected in the ACE system.
What do Businesses Need to do to Prepare?
It is important to note that the CBP will not be furnishing users and importers with a list of Chinese postal codes that they can use to determine if manufacturers they are dealing with are subject to UFLPA.
It is up to importers to do their due diligence on their supply chains. They have to ensure that they understand and have information on everything in their supply chain including the addresses and names of each of their manufacturers.
Nonetheless, the CBP provides a UFLPA Entity List which importers may use to query Xinjiang postal codes. The CBP also provides Operational Importer Guidelines where importers and users may find more information on validation rules and how to go about importing from XUAR without running afoul of the UFLPA.
The CBP will also be providing a support call after the deployment where there will be a brief status update hosted by the Trade Transformation office where importers and users will have the opportunity to get any of their questions answered.
If you need more information or assistance on how to navigate the UFLPA and other related requirements, reach out to the Customs City Global Solutions team and we will help you out.