What You Missed at CBP's 2023 Forced Labor Technical Expo

The purpose of forced labor trade laws, fixing the UFLPA statistics portal, and . . . you just have to read to the end.

CBP pulled off an impressive feat this week, convening a first-in-class trade expo on breathtakingly short order. From formal announcement to event, CBP had less than 30 days to make arrangements for hosting hundreds in person, organizing several dozen presenters, and convening over 8,000 observers of the livestream.

At the event, I ran into many friends of FLT, including the analytics and due diligence providers that are active in this space, and technology-enhanced supply chain traceability providers on hand to present their services. Many of these companies are well known within industry, but several others are brand new to this space. If you have traceability needs (and who doesn’t), reach out to me. I’d be delighted to make introductions to tools and companies that I think are well suited to your needs.

We also had a marvelous time at Kelley Drye’s Forced Labor Trade Enforcement reception (certain to be a “first annual”). I was joined by my colleagues Paul Rosenthal and Jennifer McCadney, as well as the rest of our forced labor trade enforcement team. I had high hopes for the event, and they were exceeded. After a full day of mostly canned presentations, it was a delight to have free-wheeling conversation and Q&A. The benefit of any event like the expo is always far more in the conversations you’re able to have on the sidelines, and that proved true yet again.

If you weren’t able to join in person—or even if you were—a few comments on what you missed.

What CBP Does, and Why

I’m fascinated by the interplay of what we do, why we do it, and why we think we do what we do. In the legal context, I’m similarly fascinated by the interplay between what laws require, what lawmakers intend to achieve, and the conduct that laws actually incentivize. For this annoying trait, I blame having spent too many of my early adult years in epistemology classes.

It’s easy to listen to formal remarks by government officials and have your eyes (and ears) glaze over. These aren’t typically forums for breaking news. But if you have ears to hear, folks will tell you what really animates them.

Thea Lee, Deputy Undersecretary at the U.S. Department of Labor, took a swing for the headlines (successfully!) with her pronouncement that “the UFLPA is supposed to be scary”, and that companies “no longer have the luxury of ignorance.” But another quote stood out to me even more:

The point of the UFLPA is not to stop goods from coming into the United States, it is to end the practice of forced labor.

-Deputy Undersecretary Thea Lee, CBP Forced Labor Technical Expo

This was neither an isolated comment nor a unique point of view. CBP Executive Assistant Commissioner AnnMarie Highsmith made a similar point in her opening remarks:

The purpose of our law is not to prohibit merchandise from entering the United States. Indeed if we are enforcing that law, those laws, at the ports of entry, it is too late. The purpose of our legal structure is to prevent merchandise from being made with forced labor in the first place.

-Executive Assistant Commissioner AnnMarie Highsmith, CBP Forced Labor Technical Expo

I hear these remarks as multifaceted. They are first and foremost, I think, an expression of personal motivation—which I share!—and am grateful to know that my government leaders possess. Surely what the world needs is not a monstrous forced labor trade enforcement machine on every border, but rather, as Ms. Highsmith put it, “that we work ourselves out of business because we don’t have to stop merchandise made with forced labor at the ports of entry if that merchandise is not being made in the first place.”

I could not agree more.

What I also heard Ms. Lee and Ms. Highsmith expressing in these (and similar) remarks is a view of what lawmakers probably intended to achieve in ending the consumptive demand exception to Section 307, and enacting the Uyghur Forced Labor Prevention Act. That goal is not to create a monstrous barrier to trade, but rather, as USCIRF Chairman Nury Turkel poignantly shared, to put pressure on China to end its horrific abuses of the Uyghur people.

Here again, I concur. This is clearly the legislative dream. But notwithstanding those points of agreement, I also thought the above-quoted remarks evidenced a risk of overlooking what the law actually says and is actually doing in practice.

What a law is capable of achieving is embedded in its language. That is part of the beauty (and challenge) of living in a society subject to the rule of law. Words matter. Statutory words especially matter. The Affordable Care Act would have been a dead letter without the individual mandate. No one would care a lick about forced labor in the deep recesses of the supply chain, without Section 307’s “wholly or in part.”

It makes me nervous when government officials emphasize the intended outcome of the law, over against what the law actually says and requires. In other words, when I hear that the purpose and point of the law is not to ban goods from the United States.

Regardless of our hopes and dreams for what might be achieved on some ancillary or superior scale, at the end of the day, these laws are—in text—nothing more than a prohibition on importing a specific type of merchandise (that made wholly or in part with forced labor) and a presumption that certain merchandise (from Xinjiang or UFLPA Listed Entities) is so made.

And so, I’ll offer a notable and quotable of my own:

The purpose of the U.S. forced labor import ban and the UFLPA is—and can be nothing more than—to prevent certain specific merchandise from entering the United States.

If CBP, through the law, is capable of delineating between goods subject to the provision and not subject to the provision, the notion of commercial pressure to end the practice of forced Uyghur labor is not a pipe dream.

But to imagine that these laws, as currently drafted, will somehow eliminate forced labor in the world is a hope and dream. It is an aspiration not built on a credible theory of how the law can shape corporate behavior, and by extension, bring to bear the economic leverage of the United States to achieve its foreign policy and human rights objectives. Someday I hope and dream my yacht has a yacht. That doesn’t mean I have a credible plan to make it happen.

The UFLPA Detention Statistics Portal

Part of the gulf in perspective that exists about the UFLPA, certainly between industry and activists, and to some extent, between industry and CBP, I think derives from the mixed results from Section 307 enforcement and from UFLPA enforcement.

The folks at CBP seem cheered by the successes they have found in using this tool to “improv[e] working and living conditions for thousands of workers around the world” as CBP Commissioner Troy Miller put it. And rightfully so! Information on the outcomes of withhold release order activity isn’t always easy to come by, but CBP has had notable successes in using Section 307 (and WROs) to target specific bad actors. So, credit where credit is due!

But what is far more difficult to make successful—at least under current approach—is targeting the deep-in-the-supply-chain links to forced labor that Congress and CBP are eager to target with the UFLPA. This was true when CBP was trying to enforce the WRO against Xinjiang origin cotton (and I wrote about it in 2021), and it is still true now.

What is this approach? To what shall I compare it? The current approach is like a net that was cast into the water, for the purpose of catching fish. But with every cast of the net, what is drawn up from the depths is almost entirely bycatch, by more than a 2.5-to-1 margin. That is, the net catches mostly dolphins and sea turtles. The current approach is: Catch the fish, come what may! No dolphin or sea turtle shall be spared.

Do you think this an unfair characterization? Consider the new UFLPA detention statistics portal, announced at the FLT Expo.

Snappy! Transparent! Thankful! Here’s a screenshot:

To date, 424 shipments have been denied entry, and 1,090 have—on careful review and examination by CBP—been determined to have no supply chain link to Xinjiang, forced Uyghur labor, or a UFLPA Listed Entity. At a cost of untold tens of thousands of hours of preparation of supply chain materials and hundreds of millions of dollars of lost profits, and conservatively tens of millions in legal fees.

I propose an updated version of the chart:

To be clear, none of this is CBP’s fault. CBP is, I continue to believe, doing its level best to try and enforce a law that severely impacts trade, but is not a trade law. Give them a better tool, and they will wield it to better outcome.

Finally - one concluding thought on the (apparently intentional?) “scariness” of the UFLPA. At the expo, I had the opportunity for an uplifting chat with one of the better-informed and more ethically-conscious small businesses I’ve ever met. The company has experienced ~5-fold growth in just a few years, but would still meet the size designation of a small business. The gentleman I spoke with is the sole individual responsible for all procurement and supply chain management. He has (somehow!) managed to stay aware of what is happening in Washington with respect to the UFLPA. He said he wanted to come to the Expo in order to just hear what bigger companies are doing to manage this impossible task. He just wanted to watch, listen and learn.

What a citizen! And yet, what could I tell him? Should he download and use the Comply Chain app, or educate himself with the Sweat and Toil app, or download the Better Trade Tool app? If he learns more, will have achieved anything to help ensure his company a better outcome against potential enforcement ? Can his company afford to hire and train a researcher to conduct enhanced supply chain due diligence, and afford the tens of thousands of dollars required to gain access to the relevant tools?

The UFLPA does not need to exist in a manner that cannot be tamed by any compliance program. There are a lot of good companies moving aggressively to avoid “the luxury of ignorance”. There are a number of shifty companies, happy to get targeted goods in the country with a snap of their fingers. By misclassification. It is a shame the law cannot distinguish between the two.

Forced Labor in Unexpected Places

One of the joys of writing a newsletter like this (and what pulls me through laaaaaate Thursday nights and eeeearly Friday mornings) is the dialogue I get to have with all of you. After my piece last week on forced child labor in the United States, a loyal reader and friend of FLT wrote to say I should educate myself further on UNICOR, which is the trade name for Federal Prison Industries in the United States.

As I suspect is true for many of you, I don’t know a whole lot about UNICOR or prison labor in the United States, and so I set about educating myself. I did notice straight away that there are two endorsements for UNICOR, in a scrolling chyron at the bottom of the website—one from a private company, and another from . . . CBP.

Interesting, I thought to myself. I wonder what sorts of things CBP buys from UNICOR, I thought. But I’m more interested in the ethics of how prison labor is carried out in the United States than in which federal agencies procure from UNICOR (answer: I believe, all of them).

But there I was, on Tuesday morning, checking in to CBP’s Forced Labor Technical Expo, retrieving my badge from a pile of others on the table, and a particular logo caught my eye:

As Jon Stewart would say: your moment of Zen.