As policies go, that one seems kind of clumsy. Assuming for the sake of argument that Uighurs are being used for forced labor in China (which I'm inclined to believe), then isn't "workers in Xinjiang region are forced labor, workers outside of Xinjiang are not" a bit of an oversimplification? Presumably there is also non-forced labor happening in Xinjiang, and probably some amount of forced labor happening outside Xinjiang.
I suppose sometimes simple heuristics can work well enough to get the job done and more complicated supply chain audits might be too hard. (One obvious alternative is to just stop trading with China at all, but that's a policy that's unlikely to be enacted by the U.S. or other large nations for equally obvious reasons.)