Customs Attorney: MID Gaps Make UFLPA Enforcement Harder

Failures in import compliance were revealed in the Senate Finance Committee's report on two auto companies' imports of parts or cars containing parts made by a company on the Uyghur Forced Labor Prevention Act entity list (see 2405200009). But the report also exposed a weakness in CBP's ability to detect goods that should be detained under UFLPA, finding that Jaguar Land Rover imported spare parts that included LAN transformers made by a Chinese company on the entity list and only one manufacturer removed from the finished product.

The Chinese company, Sichuan Jingweida Technology Group (JWD), was technically two tiers down from the end manufacturer, because it was contract manufacturer for Bourns, which sold to Lear Corp.

Kelley Drye lawyer John Foote, who speaks and writes extensively on UFLPA, said this isn't a failure at CBP but rather a failure that the import system hasn't been designed for this level of enforcement.

He noted that only textile importers are obligated to give CBP a Manufacturing Identification Code for the manufacturer; other importers can submit a MID for the shipper or seller instead of the manufacturer, so even if supply chain mapping showed a link among Lear, Bourns and JWD, it might not have mattered if Lear hadn't been on the entry.

Moreover, CBP knows that MIDs are unreliable -- for instance, companies that forget what MID they have been assigned simply sign up for another one. The agency has been working on replacing the MID with a Global Business Identifier (see 2304240042 and 2402090011), but that work has been slow-going. A high-quality code to identify companies is necessary to fulfill CBP's vision that future customs data will include information about suppliers to end manufacturers.

"I have had my eye on that line of work," Foote said, saying it would be highly significant for forced labor enforcement, and "something that would be very significant and very consequential to strengthening the quality and caliber of enforcement in general."

Foote said that because shippers and sellers are appropriate MID entries, CBP missed the import of red dates that had "Bingtuan" written right on the box (see 2209060033). Bingtuan, another name for the Xinjiang Production and Construction Corps, is also on the UFLPA entity list.

"It’s hard to articulate a coherent theory of the UFLPA when CBP does not have specific manufacturing information," Foote said. He said after stopping goods shipped directly from Xinjiang, this is the next lowest of the low-hanging fruit.

Eric Choy, who leads the CBP group responsible for detecting forced labor, praised Volkswagen for its prompt self-report after it was notified by Bourns, but it was clear the Senate Finance Committee didn't see that action as sufficient, Foote said.

"I think my takeaway from the report is that the expectation of the committee is that there should not be any such thing as a surprise in the supply chain," he said. In other words, BMW, VW and Jaguar Land Rover should have known that their first tier supplier, Lear Corp., bought a LAN transformer from Bourns, and that Bourns contracted with JWD. Then Lear should have, at a minimum, monitored the entity list additions, and seen that a supplier in their supply chains had been added.

"That’s a particular view of how a supply chain should operate, which I think is different from how most supply chains do operate," Foote said.

In Foote's view, reacting to the entity list, because you know the companies you buy from, not relying on a notification from a supplier, is bronze medal level compliance. Silver medal level compliance is knowing that a company you buy from has been identified in nongovernmental organization reports, as JWD had been in 2020 and 2022, and changing your supply chain then, instead of waiting for a possible addition. He said gold medal level compliance would be to hire a company that has its own Mandarin language speakers trying to do the same sort of research that Sheffield Hallam does -- looking for a digital bread crumb trail that suggests labor transfers -- and asking that company to investigate critical suppliers in China. He said his law firm is doing such research. The Senate Finance Committee report follows a report from Sheffield Hallam University on forced labor in the supply chain.

"The Senate Finance committee is a highly influential force," he said, both with the executive branch and in the business community, and he thinks the well-documented, deeply researched report will cause changes in operations.

The committee told CBP that its vague reporting on what is detained over suspicion of links to Uyghur forced labor -- for instance, only saying "electronics," or "automotive and aerospace" -- makes it difficult to track how effective UFLPA implementation has been.

Foote agrees.

He said he doesn't find CBP's explanation persuasive that it can't provide more specific information about what is detained, because it would reveal confidential business information, or undermine law enforcement. He noted that FDA import alerts, which also trigger a detention, identify the foreign producer that is subject to the alert, as well as the specific product.

Customs should be releasing Harmonized Tariff Schedule codes of what is detained, and who sent the goods, he said, saying everyone with a stake in UFLPA implementation -- activists, Congress, importers, journalists -- wants "more visibility into how it’s enforced," and he hopes CBP will listen.

However, Foote strongly disagreed with the report's request that CBP establish a process for reporting on voluntary self-disclosures that prohibited goods are in products you imported, or in goods on the water.

"I can’t think of anything that would have more of a chilling effect on voluntary self-disclosure than knowing your voluntary self-disclosure is to Congress and to the entire world," he said. Foote said agencies that encourage self-disclosure are hoping that companies will clear up their missteps rather than hide them, and publicizing who has come forward is "wholly inappropriate" for that goal.