An Incredible Rate of Success
An Incredible Rate of Success
Examining CBP's Claims on UFLPA Enforcement
Sometimes I like to use these pages to break news. Other times, I take the news as it comes, and use this space to break it down. With apologies to Jimmy Fallon, consider this week’s update a slow jam of FLT developments.
Two weeks ago, I wrote about CBP’s embrace of the term “applicability review” for importer arguments that CBP has stopped a shipment under the UFLPA even though the shipment lacks a supply chain link to Xinjiang or to a UFLPA Listed Entity, and so is not subject to the law.
This week, applicability reviews are back in the news, along with an astonishing additional fact. Through one full quarter of enforcement, no importer has successfully obtained release of merchandise by requesting such a review.
Therein lies an incredible claim by CBP—namely, that every time the agency has targeted a shipment for enforcement, the agency has been 100% successful in identifying shipments containing Xinjiang content or otherwise tainted by forced Uyghur labor.
It’s an assertion worth careful examination, especially as official China export statistics, also published this week, indicate a spike in direct shipments from Xinjiang to the United States.
Writing this week for The Dispatch, Haley Byrd Wilt interviewed Eric Choy, the acting executive director for CBP’s Trade Remedy Law Enforcement Directorate (which houses CBP’s forced labor division). According to Choy, through one full quarter of UFLPA enforcement, every importer challenging UFLPA enforcement has argued their shipments are outside the scope of the law, but no shipments detained under the law have been released into the U.S. market. In other words, CBP is batting 1.000. It has never stopped the wrong goods.
This is a remarkable claim, given the volume of goods at issue. DHS undersecretary Robert Silvers1 came to an interview with the WSJ this week equipped with UFLPA-only enforcement data, so now we have clear UFLPA enforcement numbers, no arithmetic required.2
According to Undersecretary Silver’s tally, CBP has “targeted 1,452 cargo entries valued at $429 million” under the UFLPA through September 20. That’s a lot of trade. All of it manufactured wholly or in part in Xinjiang or by a UFLPA Listed Entity . . . or so CBP claims.
Such are the only goods subject to the UFLPA: those manufactured wholly or in part in Xinjiang or by a UFLPA Listed Entity.3 CBP has detained nearly 1500 shipments and countenanced hundreds of arguments that it made a mistake (in the form of “applicability reviews”), and found all such arguments to be lacking. It has never conceded that, after considering the contrary evidence, a detained shipment lacked the requisite supply chain links to bring it in scope. Per CBP, all $429 million the agency targeted for UFLPA enforcement was in fact subject to the UFLPA. CBP has made no mistakes. Incredible.
As it stands, there is no publicly (or privately) available data that would support such a claim. The companies that sought to import that $429 million—and especially those that examined their supply chains and found no supply chain links to Xinjiang or listed entities—are left to speculate as to what basis CBP had for its detention decision. If only importers could understand the depth that CBP looks at within supply chains to make a detention determination!
But as CBP’s Choy explained to Byrd Wilt: “A lot of times [importers] just don’t understand the depth that we look at within supply chains.”
I know, Jimmy. I know.
The importing community would be delighted to understand how CBP is looking deep into supply chains, when it lacks any data from import declarations that would enable it to do so. Is CBP buying data? Does it subscribe to intelligence feeds published by private firms? How does it link such data or intelligence to individual shipments? Does it commit random acts of detention against shipments that meet certain predefined criteria (e.g., cotton-containing goods from China)? How can it be confident that all $429 million targeted for UFLPA enforcement is in scope, particularly when hundreds of importer are putting forth evidence to the contrary?
My wife is correct nearly 100% of the time, an indication of just how rare that level of accuracy is in the natural world. These statistics do not credibly reflect a fact-intensive law enforcement operation confronting the inherent opacity of the global supply chain. They are literally incredible.
My eyebrows were further raised this week to see Ji Siqi and Jake Frommer writing for the South China Morning Post that official China export statistics of direct shipments from Xinjiang to the United States increased almost 100% from July 2022 to August 2022, after the UFLPA took effect.4 The $56.8 million direct shipped from Xinjiang to the United States in August 2022 was the second highest value in the last 21 months!
Now, maybe there are reasons China’s Xinjiang export stats shouldn’t be taken at face value. Can I imagine a world where China cooks some Xinjiang export data to own the Americans? Can you?
On the other hand, perhaps the stats are correct, but CBP managed to detain and exclude all $56.8 million of direct shipments from Xinjiang to the U.S. in August (as well as the $23.3 million of direct shipments from Xinjiang to the U.S. in July). After all, CBP’s aggregate UFLPA targeting volume is substantially in excess of that combined $80.1 million.
But at the very least, the official Xinjiang export data is worth monitoring closely. It isn’t trending in the right direction. Moreover, we already know that sometimes CBP has failed to detain goods plainly originating in Xinjiang. Last month, jujube dates bearing the name of the XPCC were spotted on American grocery store shelves.
Keep in mind—for CBP, stopping direct shipments from Xinjiang should be the low-hanging fruit. Low-hanging dates, as it were. CBP has a range of information directly at its fingertips, in the form of both cargo and entry data, that *should* allow it to identify and detain all direct shipments from Xinjiang. It’s the indirect shipments where the factual questions really begin to get spicy, CBP’s 100% “successful identification” rate notwithstanding.
If the Xinjiang-to-U.S. direct export numbers don’t stabilize at or around zero in coming months, that would strongly suggest that CBP is not successfully stopping direct shipments, and further call into question CBP’s “perfect” track record of identifying in-scope shipments.
If direct shipments from Xinjiang are passing ports without detention, how are we to believe that CBP has mastered the complex art of spotting shipments indirectly tainted by Xinjiang content or forced Uyghur labor, amid a sea of legitimate trade?
I make no accusation saltier than that CBP seems to be misinterpreting its authority under the UFLPA. With the law’s strong rebuttable presumption, and stiff evidentiary standard having been messaged so strongly, it is perhaps not surprising that the agency has concluded it should presume certain shipments originate in Xinjiang, and hold the line unless an importer can produce a contrary supply chain map befitting the gods.
As I have tried to explain on these pages, that is not how the UFLPA is written. In the absence of any provision of the UFLPA that speaks to these questions, CBP is constrained to making fact based detention determinations, and to rigorously considering contrary evidence from importers.
While there are a number of problems associated with U.S. enforcement of the forced labor trade laws that will require new regulations or even a new statutory structure to cure, the solution to this problem is quite simple.
Neither statute nor regulation prohibits CBP from disclosing to an importer the actual rationale behind a detention decision (specifically, a rationale that goes beyond “UFLPA”).
If CBP is serious about helping firms “understand the depth that we look at within supply chains”, as Choy put it, that is well within its power to do. And it would be an incredible success, in the conventional sense.
As always, I hope this is helpful. Send unsolicited commentary on my success rate via LinkedIn or email.
Undersecretary Silvers chairs the Forced Labor Enforcement Taskforce (FLETF), the interagency committee that developed and published the UFLPA Strategy
CBP still does not publish UFLPA-specific stats for public consumption.
Pub. L. 117-78, Sec. 3(a), codified at 22 U.S.C. § 6901, note.
For context, the SCMP also reported this week that direct shipments from Xinjiang to the EU similarly spiked over the same period.