CBP Targets Products Already Cleared in Previous UFLPA Holds, AAFA Says

Moving manufacturing from China to another Asian country is not the way to "get ahead of the game" in avoiding forced labor detentions, said Amanda Levitt, a Sandler Travis lawyer, while speaking during a virtual Sourcemap conference on supply chain transparency. Levitt said that tracing falls apart for most firms at the Tier 2 level, and that's not enough. Many of the items identified by nongovernmental organizations as being produced with Uyghur forced labor -- cotton, aluminum, PVC -- are raw materials much deeper than tier 2.

So, she said, buyers need to nominate -- or designate -- who their suppliers will contract with, down to tier 3, such as a fabric mill, or a PVC producer, and those subcontractors should be asked to sign agreements on what will happen in the event of a detention.

Levitt said your own sense of your risk of forced labor in your supply chain doesn't matter -- it's the government's suspicion of that risk.

Nate Herman, senior vice president for policy at the American Apparel and Footwear Association, agreed. "CBP seems to have a secret list." He said some of his members source from a company that has factories in several countries, and even multiple factories in the same country, and each shipment from one factory is detained, but none of the others are.

He said he's seen this pattern at four different companies.

CBP doesn't tell the importers anything about why that factory is suspect -- is it the factory itself, is it a supplier further back in the chain? He said they should be required to tell importers the evidence, so they could possibly refute it.

He said he knows one AAFA member "who went through this 15 times with the same exact product, same exact supply chain," and 14 times, CBP acknowledged that the supply chain had no ties to Xinjiang and released the goods. After the 15th time, he said, the company decided to drop that supplier.

"None of us want any sort of forced labor in our supply chain," he said, but he believes the Uyghur Forced Labor Prevention Act's implementation has been poorly done. He said, "The targeting is way off," and pointed to two facts to back up that assertion -- overall, 40% of the textile and apparel detentions have led to releases, which means there was clear and convincing evidence that the supply chain did not run through Xinjiang.

The other point he made was that CBP selected a small number of cotton garments for isotope testing, and only 15% of them had cotton grown in Xinjiang. CBP only tests cotton when there are allegations that it comes from Xinjiang (see 2309010038).

"That means their targeting is way off," Herman said Sept. 28.

When bulk shipments are detained under suspicion of forced labor, it generally takes six to eight weeks to convince CBP that they were wrongly detained, he said.

"If you hold the shipment we intended for the summer and it’s not released until fall, that shipment is worthless," he said.

Panelist Cindy De Leon, from De Leon Trade, warned firms that if their industry is one where detentions are happening, they need to get their entire trade compliance program in order. She said one of her clients is under investigation for forced labor, and at the same time, CBP is asking questions about AD/CVD evasion, classification and valuation.

She said clients recognize their visibility into their supply chains is inadequate, but the idea of mapping the supply chains for everything they import is overwhelming. "Don’t let the herculean task prevent you from getting started," she said. She suggested doing a risk assessment to decide what commodity is highest risk and start with one product that contains that commodity.

Moderator Marissa Brock, senior director of policy & government affairs at Sourcemap, asked Herman what countries the garments are exported from that are targeted by CBP.

He said China accounts for a bare majority, so exiting China is certainly not enough to avoid the risk, even if you could completely exit China.

He said more than a third were Vietnamese, and there have been detentions of garments made in Cambodia and Bangladesh, too.

"And we've even seen some shipments detained from Nicaragua, which has surprised us," he said.

Brock asked Levitt if the Royal Brush case (see 2307270038) would require CBP to be more forthcoming with the trade on why it is detaining specific goods.

Levitt said she didn't think so, because that case had to do with the Enforce and Protect Act (EAPA). She said someone affected by UFLPA detentions would have to go to court and sue, citing Royal Brush.

She also doesn't think that it would affect how the Forced Labor Enforcement Task Force adds firms to its entity list. She said the FLETF is being criticized for not doing enough, so they're not going to become more conservative about adding names.

Levitt noted that Ninestar is suing over its addition to the FLETF entity list (see 2308230016) on the grounds that it's a violation of the Administrative Procedure Act, saying the decision was arbitrary and capricious. Levitt said she expects the government to move to dismiss on jursidictional grounds, since the importer bypassed the administrative process.

"That might be fatal to the action," she said. But, she also said if it's not, she thinks Ninestar "can ultimately prevail." She said there's even a chance they could win a preliminary injunction.

If they do win, though, she said, that doesn't mean they automatically come off the list. "What is going to equate to relief? It could go many ways," she said. The court could order FLETF to remove Ninestar and its subsidiaries from the list, or it could just remand the issue back to the agencies, and require a better explanation for why Ninestar was added.

Even if Ninestar wins and is removed, she doesn't think that changes much about detentions under UFLPA. "The vast majority of the enforcement activity that CBP is doing for detention of shipments, the vendors involved and the suppliers involved are not on any public list."