Choy: Expect a WRO Outside UFLPA Before October

PHILADELPHIA -- CBP has not issued any withhold release orders for goods unrelated to Uyghur forced labor since the Uyghur Forced Labor Prevention Act passed in late 2021. Eric Choy, the CBP official whose office oversees the ban on goods made with forced labor, said that targeting forced labor abuses outside of China "is something that we're definitely reprioritizing resources [for], to focus in on those efforts." Choy, who is executive director of Trade Remedy Law Enforcement Directorate, said in an interview during the CBP Trade Facilitation and Cargo Security Summit last week that he expects there will be a WRO announced before October.

During the nearly two years UFLPA has been in force, decisions on challenges to detentions have come quicker, Choy said, but outside the solar panel segment, importers haven't become more successful in showing their goods didn't touch Xinjiang than they were at the start.

Nearly $2.9 billion worth of goods has been detained in the year and nine months UFLPA has been in effect. Only about $330 million worth of goods had Chinese country of origin.

China has offshored a lot of its manufacturing, Choy said, so it makes sense that more than two-thirds of the goods stopped under UFLPA were manufactured outside of China.

"I think from our perspective, where we identify risks specific to the UFLPA, where things may originate from the [Xinjiang Uygur Autonomous Region], we have fairly good visibility on that," he said, and inputs that come from Xinjiang go into downstream manufacturing outside Xinjiang, or outside China.

Among the 2,480 shipments from China, 1,103 were released by CBP after the agency decided they had no connection to Xinjiang or Uyghur transferred labor, a slightly higher success rate than the shipments from the rest of the world, where CBP was convinced just under 40% of the time. The rest of the world accounted for 5,132 shipments and $2.54 billion in value.

CBP doesn't disclose in its public dashboard what proportion of the goods were barred entry because the importer failed to prove to the agency that the supply chain didn't touch Xinjiang, and what proportion were exported without a challenge to the detention. CBP didn't respond to repeated questions about that breakdown.

Choy said that when the agency has more enforcement data, it may be able to report specific tariff numbers that have been affected by enforcement. Currently, only broad categories like "electronics" are disclosed.

In the not-quite six months of reports from the current fiscal year, $360 million worth of goods were released after detentions, and about $54.5 million worth were denied -- in terms of shipments, twice as many have been admitted as denied, however the number of shipments pending review is almost as big as the other two categories combined in terms of individual detentions, and is larger than their combined value.

Apparel, which can contain Xinjiang cotton, one of the "high priority sectors" listed in the law, has accounted for 670 detentions since UFLPA went into force.

"We did have a running start" with the priority sectors, which had previously been identified through WROs, Choy said.

Cotton is one of the inputs that can be scientifically proven to be in -- or not in -- a certain finished good, through isotopic testing. Choy said that CBP is validating the new machines at the Savannah port, and hiring and training staff to run the lab. Choy said it should be operational by summer.

When UFLPA passed, CBP was given $27.5 million to implement it, and for fiscal year 2023, it received another $101 million in funding. Choy said about two-thirds of the money dedicated to forced labor enforcement has been obligated. FY 2024 appropriations, which passed a few weeks before this interview, provided another $20 million.

Choy said it would be a challenge to obligate that much money before the end of September, when this fiscal year ends. "Staffing is not easy," he said, and CBP is looking to hire officers, attorneys, import specialists and public affairs professionals. "Everyone now, across the agency, really touches the forced labor mission."

Choy said the Forced Labor Enforcement Task Force, which is under DHS, also is staffing up with the funding provided by Congress, both for UFLPA and for general forced labor enforcement.

But even once CBP has its own isotopic testing labs -- it's working on opening three -- Choy said it wouldn't be feasible to test every shipment that contains cotton. The agency might eventually test all detained goods that contain cotton, but one test wouldn't be enough to clear the shipment, because CBP may be concerned about not just the cotton itself, but certain companies it believes are in a garment's supply chain.

"The whole supply chain tracing is really the only way at this point to have full transparency and confidence in the supply chain," Choy said.

CBP also will be testing garments it cleared from detention, to audit its own decision-making, and it may do intermittent testing. The agency will be able to test more products with isotopic testing once it's in house, Choy said.

The domestic textile industry has zeroed in on de minimis shipments as a "superhighway" for the entry of clothing made with Uyghur forced labor. The vast majority of de minimis shipments arrive via air -- Choy said CBP doesn't track what percentage of the goods stopped under UFLPA arrive by sea, land or air.

Importers complain that even once they have demonstrated to CBP's satisfaction that a piece of merchandise didn't have any ties to Uyghur forced labor, the agency continues to detain the same product in future shipments.

When asked if that cleared shipment has any precedential effect, Choy replied, "No, not at this time." He said each shipment has to be judged independently because supply chains change so often and are so complex. An input that is widely sourced from Xinjiang can also come from other places, he said. "I don't know that we can create precedents where we have 100% confidence of knowing that one importation is always the same as the next importation."

However, Choy said, "They can continue to demonstrate the admissibility" with the subsequent shipments, but if a yarn mill or a fabric mill buys Xinjiang cotton destined for other markets or other customers, it's still going to be flagged, even if you've proven controls that show the cotton that goes into your goods was segregated from the Xinjiang cotton.

He said subsequent document packages take less time to clear. On a first review, it could take four weeks, or even longer, depending on how long it takes importers to get all the information they need from their suppliers, Choy said. But after an initial clearance, he said, "I think they've been able to get through the reviews in seven to 14 days."

He said CBP is trying to clear the Centers of Excellence and Expertise reviews faster to aid with trade facilitation.

Choy said working with the trade, the Uyghur diaspora, the media, Congress and other agencies "has helped us get through these two years, understand the issues, be able to adjust our operational approach, understand how to adjust methods in our implementation. It's an evolution. The way supply chains are reacting to enforcement is dynamic, and the only way to stay ... with it is working together with all the different stakeholders to stay on top of the issues."

Among the highest-value shipments unable to immediately enter U.S. commerce due to UFLPA was one of thousands of Audis, a few hundred Bentleys and 1,000 Porsches, estimated at $150 million in goods by customs attorney John Foote.

In that case, Volkswagen Group identified that a supplier of an electrical component was on the UFLPA's Entity List (see 2402230082), and VW disclosed that to CBP after the cars were on the water. The company worked to replace that part on the cars once the shipment arrived in port.

"I think this is a great case that shows that companies are doing due diligence, and this is what the agency really does support," Choy said.