UFLPA Needs Published Rulings, Lawyer Argues; CBP Defends Risk Modeling

Of more than 5,000 shipments stopped by CBP under the Uyghur Forced Labor Prevention Act, CBP has finished its analysis on about 4,600. And for nearly half, or 47%, importers were able to prove there was no link to Xinjiang in their supply chains, said Brian Hoxie, director of CBP's forced labor division.

If CBP is accurately ascertaining which supply chains are free from Xinjiang-related forced labor, that would suggest a great deal of over-enforcement.

Among those thousands of shipments, importers have only tried three times to contest the detention on grounds that there was a connection to Xinjiang, but the work was not forced. Hoxie said each of those was withdrawn, and the goods were reexported.

Hoxie said CBP's office of trade constantly keeps in mind that its mission is to balance facilitating compliant trade and enforcing laws against noncompliant trade, and is working to improve every day.

He also told an audience at the China Forum on Oct. 18 that CBP is using analytic modeling tools to segment risk, and that importers or brands can contract with the same service providers. Although UFLPA describes high-priority sectors such as polysilicon, Hoxie said CBP is less focused on the goods per se, but rather on entities that are involved in forced labor.

He gave the example of a chemical company identified in a report on Xinjiang links to PVC (see 2206150023). That chemical company has seven different products, not just the precursor for PVC.

John Foote, a partner at Kelly Drye, spoke on the same panel as Hoxie, and said that Xinjiang products are rarely shipped directly to the U.S., so CBP has to make an educated guess about what goods have links to Uyghur or Turkic minorities' forced labor.

"Goods made with Xinjiang content look exactly the same as admissable content," he said. "Data alone ... only gets customs so far. Informal, inferential reasoning is the only true precondition to enforcement. That is why academic research outfits, [non-governmental organizations] and the like have taken on such outsized importance in the UFLPA universe. They serve up juicy, well-documented enforcement targets for breakfast."

Louisa Greve, director of global advocacy at one of the NGOs that identified a target (see 2209060033), noted there have been 25 NGO reports since the summer of 2019 documenting goods that are imported into the U.S. that are linked to Uyghur forced labor. Greve works for the Uyghur Human Rights Project.

She acknowledged that it is difficult to untangle global supply chains to see what goods were made with forced labor, and said the most efficient way to do it would be to place a trade embargo, as the U.S. did for Nazi Germany.

Hoxie told the audience that he reads every report about Uyghur forced labor produced by academics and advocacy groups. "We are looking for every single bit of opportunity to enforce this law more strongly," he said.

Foote said that he supports the aims of UFLPA, and said, "I firmly believe customs is doing its best to enforce the law vigorously and fairly."

But, he said, the law is silent on how CBP is to determine which goods are suspected of links to Xinjiang forced labor.

"When CBP decides to bring the enforcement swarm against a particular target, it does so with great intensity. Customs will stop every shipment of goods from a given target," he said. He gave the example of a client he had who imported a product made with PVC, which came into the crosshairs because a Thai factory in the supply chain had gotten a shipment from Xinjiang in January 2022, before the UFLPA came into force. He said the factory had no ownership links to China or Xinjiang.

He presented a package that showed the source of PVC back to the raw materials, as well as every other material in the good, even though those other materials had not been identified as risky by researchers. He said the entire supply chain showed no link to Xinjiang -- but still, it was rejected.

"And I asked for an explanation," Foote said, and the response he got was that some importers of the same product included blank pages in their packets. Foote said he protested his packet had no blank papers, but was just told to reexamine the packet to see what could have fallen short.

He also gave an example of a renewable battery that had 17 different components, many of which had no allegations of Xinjiang links, but the entry was rejected "for the lack of some obscure piece of paperwork from a company in India."

"The further you get away from the high priority sectors in the law, the more untethered the traceability demands have become," he said.

"The point is not that customs is getting everything wrong, or even that it is abusing its discretion," he said, but he does want to show just how much discretion CBP has.

International Trade Today asked why subsequent shipments of the same product that CBP previously cleared as being outside the scope of UFLPA are detained.

Hoxie said that the indicator of risk that led to the first detention will remain if they use the same supply chain. "If they continue to use the same supply chain, then their best advocate for making sure that they can continue to facilitate trade efficiently is to work with their Center of Excellence [and Expertise]. And they can help decide if there [are] things we can do on our end in order to help respond more quickly, or limit the number of detentions they may receive."

Foote said it's an important question, but it seems that whatever caused an entity to get a red flag in the first place will continue to cause detentions, even when the importer previously proved the supply chain had no links to Xinjiang.

"Even an expedited review of a 600 page packet takes a bit of time," he said. "Without any guidance of when a cleared shipment should be regarded to have some sort of precedential effect," and therefore, future shipments "aren't worth the full intense treatment," it's just agency discretion on what to do.

"At the very least, [what] you expect in the administrative law context is the ability to have an intermediate sort of decisional authority," he said. If CBP says a shipment cannot enter, or it can, "that decision should be reviewable at least by one layer of review that is capable of issuing a written public decision, suitably anonymized.

"This is something that customs has done for years. Publishing rulings and decisions, applying the law that governs international trade to specific fact patterns, and it served to create an entire body of law around certain trade questions. We desperately need something like that."

However, Foote said, importers up against UFLPA can't wait 180 days or 300 days for a ruling, as is common in other customs matters.

Hoxie said importers are bifurcating supply chains and also are deciding to shift away from China because of how little transparency their supply chains have there, and they're not willing to take the risk.

Greve said UFLPA was too little, too late. She said she doesn't believe CBP has the ability to "truly police the contents" of de minimis packages sent directly to consumers, and she said that the Forced Labor Enforcement Task Force, which is tasked with identifying companies outside Xinjiang with labor transfers, is still not fully staffed. The FLETF is an interagency group, and she said not all the agencies have fluent Chinese speakers.

She also complained that when researchers published a report showing that red dates labeled as coming from XPCC, a sanctioned entity in China, were on American grocery store shelves, CBP didn't detain later shipments of the same brand of red dates for months.

She said her group hasn't been able to get a meeting with the Treasury Department to find out why the distributors of those dates were not penalized for violating sanctions. She asked: "How is it that these grocery distributors are able to somehow ... pay for goods with a sanctioned entity?"