The significance of origin is not new. If a vineyard can pass off its sparkling wine as Champagne, it can add another zero to the price. Knowing the origin of goods has always been highly prized, with products like Champagne, Guatemalan coffee, and Stilton cheese deriving their value from their specific provenance.  Today, proving the origin of raw materials used in the foods we eat, the clothes we wear and the cars we drive has become increasingly crucial in today’s global trade markets.  Understanding and proving the geographic origins of goods not only has commercial value but customer appeal. Increasingly, isotopic testing and origin technologies have ethical and regulatory significance. 

The Uyghur Forced Labor Prevention Act (UFLPA) in force since June 2022, bans all imports into the US from Xinjiang Uyghur Autonomous Region (XUAR) of China unless importers can prove that goods produced wholly or part in the region were not made with forced labour. With an estimated 28 million people in forced labour globally, these measures represent an important step to root out this practice from US supply chains. The EU is also developing similar legislation which would see two of the world’s largest markets compelling importers to provide a new standard of proof of origins for goods entering these markets.

The UFLPA places the burden on importers to provide proof that their goods have not been produced by forced labour. Historically, this has not been easy with intrinsically complex supply chains. Importers have tried to audit and map their supply chains, but this practice alone has gaps.

From chilli peppers to electronics, textiles to solar panels, the XUAR region is a mainstay of manufacturing for multiple sectors. Given the legislation, even the most proactive importers who source targeted goods from regions outside the XUAR must prove that they have not been produced wholly or in part with forced labour. How can a business producing paprika spice, for example, prove definitively that their peppers came from India rather than Northwest China? For many importers this issue has proved insurmountable.

More than 9000 shipments, worth nearly USD4B, have been detained on suspicion of being produced with forced labour by US Customs and Border Protection since the UFLPA was enacted.  For about half of these detained shipments, importers have been unable to find a means to establish the provenance of their goods. For the other half that can provide evidence deemed to be sufficient, the cost of the legal process, storage and other costs, before their goods are released and allowed to reach the US market can be as much as USD400k. For low margin goods such as foodstuffs or textiles, these costs can be crippling.

Fortunately, now there are innovative and timely solutions. Earlier this year, Tokio Marine Kiln and FloraTrace launched a new product, Rezylient Trade Disruption Insurance, which provides financial protection against disruptions to supply chains, alongside a suite of isotopic testing and next-generation geographic origin - risk management tools. This product is in partnership with FloraTrace, Inc. an innovative company helping importers secure their supply chains and protect their brands using forensic technologies.

The benefits are clear. Businesses looking to avoid lengthy and costly delays at US borders, can demonstrate that they are not engaging in unethical practices and importing goods made with forced labour.  They ensure compliance with the UFLPA and can now point to a unique origin fingerprint that can verify the origin of every component of their product. While developed with the Uyghur Forced Labor Prevention Act in mind, the applications and potential impact are much wider. Businesses which point to their ethical credentials can now remove the  uncertainty which has hung over extended supply chains.

Importers, who, despite making efforts to ensure their procurement is ethical, can now point to Reyzilient and FloraTrace risk management tools as a standard to help bridge the gaps of human rights due diligence in supply chains.

The US legislation is just the latest in a trend which appears to only be going in one direction – to the benefit of consumers and those threatened by workplace slavery. We are proud to work with Rezylient Insurance Agency and Floratrace to bring a new level of certainty to supply chains and further the efforts to eradicate unethical practices of forced labour and modern slavery in supply chains.