The change is part of an ongoing trend of requesting additional data on the merchandise’s country of origin and its exporters.
China’s weight in foreign trade is undeniable and the country is likely to become even more influential. According to estimates from the International Monetary Fund (IMF), the Asian nation’s economy is expected to grow three times as fast as the US economy, reinforcing a trend reported in research from Statista, which pointed out that China is the world’s largest manufacturing and exporting economy.
Data on the trade relationship between both countries can also be quite telling. According to the US Census Bureau, Chinese exports to the US reached $536.7 billion in value in 2022, a 6.3% year-on-year increase. This is because the US, the world’s largest importer of goods, has found in China its main supplier. According to the World Trade Organization (WTO), this is due to the American trade policy with China, a key factor considering both countries’ sizable trade influence on other economies.
China’s rise as a trade superpower plays a part in the changes in regulations recently implemented by the US for shipments of manufactured products from China.
What Changed
From March 18th, every shipment containing manufactured products from China must submit the factory’s ZIP code to enter the US. The U.S. Customs and Border Protection (CBP) is responsible for validating imports to ensure inbound goods have not been manufactured in the Xinjiang Uygur Autonomous Region (XUAR).
Francisco Ricci, International Logistics Research and Development Director at Aerodoc, explains that this is likely to be replicated by other customs throughout the globe, as part of an ongoing trend to request additional data about the merchandise’s exporters and country of origin.
“Traditionally, for customs, exporters were rather irrelevant,” Ricci says. “They would focus on importers and goods. Currently, due to policies implemented to fight against forced labor, import customs are becoming more interested in knowing who exports products and where these are manufactured.”
This approach seeks to restrict access to products manufactured in regions where factories allegedly or effectively use forced labor.
Therefore, Ricci says, it is important to seek advice from experts up to date with the latest legislations and procedures. “Nowadays, international trade is a fully professional industry, where mistakes are very costly, which is why I strongly recommend consulting with experts and avoiding improvisation.”
The Fight Against Forced Labor
The US’ Uyghur Forced Labor Prevention Act (UFLPA) bars goods partially or fully produced, manufactured, or extracted in Xinjiang from entering the country, as well as any merchandise manufactured, produced, or extracted by entities included in UFLPA’s Entity List.
From March 18th, every Chinese entry into the CBP’s Automated Commercial Environment (ACE) system, used to collect data from imports entering the US, will go through the validations below:
- ZIP codes will be mandatory. China uses a six-digit code, with two digits for the province, a third one for the postal area within the province, a fourth one for the postal office within the prefectures or cities, and two more for the delivery’s specific postal area.
- Users will see an error message if the ZIP code they supplied is not a valid Chinese ZIP code.
- Users will see a warning message if the ZIP code they supplied is associated to the XUAR.
The ACE system will trigger this additional validation process when:
- The manufacturer’s country of origin in an entry is the People’s Republic of China (CN).
- China is selected as the manufacturer’s country of origin when a Manufacturer Identification (MID) code is created.
- A MID with CN is updated.
“Everyone has to do their due diligence and know their supply chain. This includes knowing where a shipment comes from, with the manufacturer’s name and address, including the ZIP code,” says Katie Woodson, from CBP’s Forced Labor Division.
What You Need to Know
According to Ricci, this change in regulation requires operators to know the origin of the products being purchased. “They must check that the factory manufacturing the merchandise is not located in an area or region banned from importing due to the use of forced labor; if that is the case, they need to check with CBP to verify the import’s status and confirm its feasibility.”
In these cases, the know-how of IOR companies such as Aerodoc is a big plus. “I’d recommend them to contact us before making the purchase to check that issue,” Ricci says.
Cecilia Sandoval, US Operations & IT Solutions Team Leader at Aerodoc, adds that ZIP codes from the XUAR start with 83 and 84. “You must also ensure that the ZIP code is correct and matches that of the manufacturer, otherwise your shipment will be stopped, delaying the import process until importer data is validated.”
“If for any reason the shipment comes from the XUAR,” Sandoval adds, “you must provide exhaustive proof that forced labor has not been employed to manufacture or ship the products.”
To ensure a fluid import process, avoid delays and cost overruns, the entire value chain must have full transparency. Steps must be taken to ensure the collection and validation of every shipment’s point of origin.
Aerodoc, a company with over 25 years’ experience, is the perfect ally to meet this new demand, as it has been helping customers adapt to changes in regulations and legislations for years, creating tailor-made services and balancing each customer’s needs with the context.
If you have questions about the new regulation in the US, feel free to contact us to get adequate advice. Our team will provide feedback based on your company’s individual situation.
