CBP Details How to Get a UFLPA Release, Warns DNA Testing Not Enough

BOSTON -- In breakout sessions on operational perspectives on the Uyghur Forced Labor Prevention Act and the technology that can help importers do UFLPA due diligence, CBP officials acknowledged that it's hard to provide the sort of evidence required to clear an applicability review after goods are detained.

Maya Kumar, acting deputy executive director of the Trade Remedy Law Enforcement Directorate, acknowledged at the CBP Trade Facilitation and Cargo Security Summit that enforcing UFLPA is hard for CBP, too, and that they know the level of tracing they're asking importers to provide is way deeper than anything that was needed before. She said hundreds of people work on UFLPA, between the trade office and the operations office.

At the technology panel, Amy Morgan, a former trade compliance corporate officer who now is head of trade compliance at Altana AI, noted that a McKinsey survey last year found 45% of companies have no visibility past their Tier 1 suppliers, and less than 5% said they have "strong visibility" past Tier 1. "You never had to know" in the past what was way up in your value chain, she said.

Kumar noted that an audience member at a previous UFLPA session (see 2304170067) asked: "How am I supposed to prove a negative?" She asked the operations panel to try to answer that question.

Panelist Bruce Coulliette, who said he's responsible for implementing forced labor efforts in the field as branch chief of the Trade Admissibility Branch, said trying to prove admissibility under UFLPA "is probably the highest bar there is."

Coulliette said it's not simple like it was when a withhold release order targeted a specific manufacturer, and imports from that business stopped. He said that CBP is not seeing imports directly from companies on the UFLPA entity list nor from Xinjiang addresses. Rather, CBP looks for "known entities that were operating in the Xinjiang region, that once our enforcement actions went into place, those entities have dried up, disappeared, started circumventing, transshipping their goods elsewhere ... . We look to see where we can identify that they are entering the supply chains that are coming into the U.S., and those are going to be in other markets, other countries, Malaysia, Vietnam etc.

"So when we detain your merchandise, what we're asking for is a complete mapping of your supply chain to show us that there are no inputs from the Xinjiang region. That means we need to be able to map it out, all the way through from the point of origin of the raw material all the way to the finished product."

Panelists from both sessions acknowledged it's probably not feasible to do so for every product imported. Kumar said: "Start with the one that's going to give you the biggest headache."

Blake Harden, vice president at the Retail Industry Leaders Association, who spoke at the UFLPA technology breakout session, echoed that advice. "It's not an impossible task, but it's not an easy task at all," she said. "If everything's a priority, nothing's a priority."

Cotton-containing apparel is a priority sector under UFLPA, and Eric Batt, center director for the Apparel, Footwear and Textiles Center of Excellence and Expertise, gave granular detail on the kind of package that can convince officials to release your goods, because they have no nexus to Xinjiang.

Batt said, "My advice: don't wait for your shipment to get detained by us. Contact your center [of expertise]," he said, and ask officials there, "What kind of documents pass that [evidentiary] bar? And that bar is high." Batt said it takes his office more than 30 hours to review one package. "We've gotten submissions up to 1,000 pages," he said. "Be as complete and thorough as possible." Batt said it's not a negative when importers and the center experts go back and forth with requests for more information or questions as the review is underway.

It's common for importers with detained goods to ask for at least one extension past 30 days to get documents in order, he said. Two extensions are allowed. "If you can avoid it at all, don't piecemeal packages."

Batt says there have been cases where the importer thought they could show the cotton for garments made in Vietnam came from Australia and Turkey, but then discovered the fabric mill had a stream of cotton from China, too.

Stephen Cassata, a senior science officer at CBP laboratories, told International Trade Today that in cases where a garment has polyester as well as cotton from multiple countries, CBP's ability to determine definitively whether there is Xinjiang cotton is on a "case by case basis. We've got a lot of capabilities and expertise, but it also comes out to the sampling." He said it's easy to tell where raw cotton was grown. With a finished garment, it's more complicated, and with commingled cotton from several countries -- well, Cassata said, it is possible to isolate a Xinjiang source even then, but he joked, "Anybody got the lottery numbers?"

Importers sometimes complain that even after they make a massive effort to prove the goods don't touch Xinjiang, the review's result goes against them, and they don't know why.

Coulliette said, "We often hear from the trade community: 'We spend weeks putting this package together, and all we get back is: Denied.' If you feel you submitted a good package, I highly recommend you reach out to the center and ask where the deficiencies are." Then, he said, you can file a protest with additional information.

Batt said, "Sometimes it is better to export it, sell it somewhere else." He said under the cotton WRO, there were about 30 protests of denials, with half granted, half denied. Under UFLPA, there has only been one protest, and it was denied.

He said a perfect package, from CBP's perspective, to clear detained cotton or cotton-blend garments, would disclose a lot number for each cotton container, based on seal numbers and the bill of lading used at the mill for this run of fabric. The line number of the garment "was used to trace the specific pattern through its inventory, allowing the yarn lots to be tied to specific catalogues from which it was spun. And, then, using the lot number, the [apparel] center could trace the cotton throughout the production of the garments."

He recommended separating yarn documentation from cotton receiving records, "down to the packing list, the transport to the next level. Where do you produce the fabric? Maybe it's a different country," he said. There should be proof of payment for that step. "And lastly, the finished garment, where was it finished? So we're looking for maybe a bill of materials there, commercial invoices, purchase orders ... ."

Maps are helpful, and flow charts are "very useful," he said.

Panelist Sasha McNickle, assistant director for operations in the Forced Labor Division, added: "Don't do a disorganized document dump." She said a table of contents and summary will help your review.

A member of the audience asked, if an importer previously had a shipment detained and then barred for entry, would future shipments face more scrutiny?

Coulliette said, "We are not targeting importers." He said they are looking for manufacturers that they believe have inputs from the Uyghur region. "It is a continual game of whack-it-ball," he said, giving an example of a company that used to operate in Xinjiang that did business with the manufacturer you are buying from, and now that company's leader says it is operating in Mongolia. "And we say, well, wait a minute, [that company] can't do what he's planning to do in Mongolia, because that doesn't exist, right?" So then CBP continues targeting that firm that claims to be in Mongolia, and supply chains that include that firm.

Coulliette said that at the recent CBP forced labor tech expo, companies talked like they had products that are ready to solve the problem for importers, and he said CBP has not embraced any technology or combination of technologies as a way to get out from under detention. He said if an outside vendor's DNA testing shows your garment made in Vietnam had all its cotton from Australia, "we'll take that into consideration, but we still have to see all the documents."

He said, for instance, CBP cannot be sure that the cotton that was tested by the company is the cotton that was used in the garments. "There are a lot of trust issues," he said.

McNickle was asked to predict what sectors could be on the UFLPA high priority list next, joining cotton, polysilicon and tomato paste. She did not point to civil society reports that have identified PVC and luxury vinyl tile, aluminum and steel and auto parts, but rather said everyone needs to know all their inputs, and where they're coming from.

She also noted that even with all the emphasis on UFLPA, and the shift in the burden of proof away from CBP under that law, the agency has not abandoned its traditional forced labor enforcement under the Tariff Act of 1930. She said that more than 50 allegations are under review now for withhold release orders that are not linked to Uyghurs. "That's still CBP's responsibility to investigate forced labor across the world. We do take in allegations, we investigate every one of them."

In the technology panel, it was revealed that CBP may introduce data regimes that could help with detailed supply chain mapping.

CBP is working on using the blockchain to have all participants in a supply chain identified, and Vinnie Annunziata, the architect of ACE, said that once this comes together, it should take some pressure off importers in documenting complete supply chains. He said the agency knows outsourcing manufacturing partners don't want to disclose their suppliers to the buyer, and so there will be a way for deeper tiers to send their information directly to CBP.

"We will be testing this year, steel and pipeline pieces," he said.

On that same panel, Harden said hiring supply chain mapping companies is burdensome from a cost perspective, but it's possible that this demand for complete supply chain information will spread past forced labor.

Morgan agreed, saying that once exporters or importers have to calculate carbon intensity in their goods, or exposure to critical minerals from problematic sources in their goods, these tools will serve multiple purposes. She added, "The cost will come down as the technology matures."