CBP's UFLPA Importer Guidance Evolves
Probing the limits of government-by-FAQ-and-pdf.
Yesterday (February 23, 2023), CBP published new importer guidance pertaining to UFLPA applicability reviews. This is the first such guidance CBP has published since the UFLPA entered into force in June 2022.
For easy reference, here are links to all of the “official” guidance documents published by the U.S. government related to the UFLPA, new items in bold.
CBP’s original importer guidance is available here (Jun. 17, 2022)
FLETF’s UFLPA Strategy is available here (Jun. 17, 2022)
CBP’s FAQ on UFLPA Enforcement is available here (Feb. 23, 2023)
CBP’s “Best Practices for Applicability Reviews” is available here (Feb. 23, 2023)
CBP’s “Guidance on Executive Summaries and Sample Tables of Contents” is available here (Feb. 23, 2023)
Taking a page out of CBP’s handbook, I’m going to answer questions about these new guidance materials in the form of my own FLT FAQ on the development.
FLT’S FAQ on CBP’S UFLPA FAQ-AND-PDF
Why is CBP publishing this new guidance?
CBP has already made certain decisions related to the enforcement of the UFLPA which now require further structure. Specifically, CBP has decided that when it detains merchandise under the UFLPA, and an importer believes that such detention is contrary to law (because the imported merchandise was not produced wholly or in part in Xinjiang or by a UFLPA Listed Entity) the path for such importer to obtain release requires the production of a complete traceability document set to prove the provenance of some raw material(s) used to produce detained goods.
These traceability document sets are frequently hundreds of pages in length, may take dozens of hours to collect, and dozens of hours for CBP to review. They are collected from multiple parties throughout the supply chain, are frequently written in languages other than English, and have no common format or structure. A different traceability document set will be required for at least every entry. Depending on the entry and goods in question, multiple document sets may be required for any single entry.
CBP is publishing this new guidance to try and create structure for a process that has quickly buried both importer and agency under burdens of unfathomable intricacy and complexity.
How consequential is this new guidance for companies trying to comply with the UFLPA?
Fairly consequential. For companies actually dealing with detentions under the UFLPA, this new guidance is the most detailed that has been published regarding not only what exactly CBP wants to see, but how it wants to see it.
For folks like me, who help companies navigate detentions day-to-day, these new documents are incredibly important. They’re a road atlas to a city we’ve been trying to explore while blindfolded.
For companies that have not actually experienced any detention activity yet, these are less consequential. The type of supply chain due diligence and traceability work that all importing companies should be investing in now is not altered by the new guidance.
How much clarity does the new guidance actually provide?
If you’re tired of dialing into UFLPA webinars only to hear so-called “experts” on the UFLPA tell you that “we’ll have to see how CBP decides to enforce it”, I have bad news for you. That said, I’m cautiously optimistic that this new guidance provides enough structure that 6 months from now, this will no longer be an acceptable answer.
One of the problems with requiring importers to produce theoretically limitless volumes of documentation in order to prove that imported merchandise isn’t subject to an import restriction is that such system is equally unsustainable for trader and border enforcer alike. What the new guidance provides is much needed clarity around how such documentation should be organized and presented to CBP.
That said, there are at least a half-dozen terms and concepts in the new guidance that are critical to its interpretation, and yet are either undefined in the guidance, ambiguous in meaning, or at the very least subject to interpretation. Ergo, we’ll have to see how CBP decides to enforce it.
What do you find surprising / disappointing / hopeful in the new guidance?
Surprising : CBP has so far resisted accepting DNA or isotopic testing as proof of the absence of Xinjiang origin cotton. The agency has previously insisted that any such scientific proof be duplicated with more onerous documentation of the actual origin of non-Xinjiang origin cotton fiber. In an apparent shift, CBP now answers the question of whether DNA traceability or isotopic testing can be used as evidence the original cotton fiber was not from the XUAR with a resounding, one-word “Yes”, plus some reasonable conditions. Will be interesting to watch if this testing is accepted as dispositive, or merely a nice accessory to a traceability document set.
Disappointing : One of the FAQs asks if CBP will publish a list of bad actors so that importers know which manufacturers to avoid in order to ensure the goods they import weren’t made with forced labor. CBP points to the UFLPA Entity List, published by the Forced Labor Enforcement Task Force. Clever! The real question is whether CBP will announce which companies it is including on its Shadow List—that is, the foreign manufacturers CBP is actually targeting with detentions, since that list differs from the UFLPA Entity List. CBP declined the invitation to transparency.
Also disappointing : When asked what kind of information CBP provides to an importer when it issues a detention under the UFLPA, CBP says that it “takes due process seriously and is following the requirements outlined in its regulations.” While technically true, this misses the point. CBP’s UFLPA detention notices probably do satisfy minimum due process requirements, and are compliant with existing regulation. But when issued, these notices only identify the reason for detention as “UFLPA”. In other words, CBP’s answer to the question of why it stopped a given shipment under the UFLPA is “because of the UFLPA”. This is circular, and useless. In crafting the UFLPA, Congress required FLETF to create lists of entities against which the law was to be enforced. If CBP wants to enforce the law against other entities based on information known only to CBP, the very least it could do would be to disclose that information to affected importers on a confidential basis.
Hopeful : CBP promises that after it has reviewed and released an entry under an applicability review, it can review and release shipments with “identical” supply chains on a timetable of 10 to 14 days. This is a little like discovering your crockpot can also make microwave popcorn. Promising! And sure to come in handy down the line. To quote a Twitterism: “Big, if true.”
Why is CBP publishing FAQs-and-PDFs rather than promulgating new notice-and-comment regulations?
This is a question I’d be eager to have a political scientist weigh in on. In American legal history, the evolution of the administrative state—that is, the body of law created by unelected administrative agencies—has invited innumerable scholarly opinions, as well as hard looks from the Supreme Court. But for at least a generation, the body of law that was created by the administrative state has had an internal structure defined by the Code of Federal Regulations, and was subject to some degree of judicial oversight as a result of the Administrative Procedure Act.
Yes, federal agencies have always had the ability to set internal policies and priorities by memoranda, sometimes unpublished or unavailable to the public. But is there any precedent for so much substantive regulation of private commercial activity being rolled out without notice or the solicitation of input, and without conforming to the standardized and binding nature of regulatory law? Does the FDA regulate drug approvals with the help of online checklists? Does the Federal Railroad Administration ensure rail safety by posting .pdfs with tips for railcar maintenance? Honest question. CBP’s approach strikes me as anomalous, but I lack broadest perspective.
To be clear, I don’t fault CBP for the approach. In the UFLPA, Congress crafted one of the most trade-affecting pieces of legislation ever . . . that is not trade legislation. It isn’t codified in Title 19 because it isn’t a customs law. It didn’t emanate from the committees of relevant jurisdiction over trade. And yet it’s charging down the tracks, funded at mind-bending levels, carrying all the moral freight of complicity in genocide and modern slavery.
If you’re CBP, you don’t have time for a three year notice-and-comment rulemaking. But that’s not the real obstacle, because you’re not even sure what rules would be helpful anyway, until you start learning from the experience of processing detentions. The UFLPA provides you zero guidance on your entire enforcement challenge, because the UFLPA failed to contemplate that identifying imports with supply chain links to Xinjiang or UFLPA Listed Entities is easier said than done. As a result, all of the billions of dollars of targeted goods are being sorted through a mechanism not provided under the law (i.e., “applicability reviews”). If you’re CBP, you have to bring some structure to the chaos in short order. So FAQs and PDFs are the order of the day.
And honestly, I’m not mad about it. I’m grateful for the guidance, though a little concerned about the implications for the Republic. There is a better way.
Any chance I can get a copy of this FAQ in PDF form?
Don’t tempt me, wise guy.
As a reminder, if you work in the private sector, are in the greater Washington metropolitan area, and free on the evening of March 14, don’t forget to RSVP for a happy hour meet-and-greet with Kelley Drye’s Forced Labor Trade Enforcement Practice.
We scheduled the event to coincide with CBP’s Forced Labor Technical Expo, which I have recently heard is fully subscribed. Attendance at the Expo is not a requirement for joining us, so if you’ll be in town, please plan to stop by!
As always, thank you for reading.
Spot on!