FLETF Updates the UFLPA "Strategy" for 2023
Is is strategic? Hard to say. But it is illuminating.
On August 1, the Department of Homeland Security Office of Strategy, Policy, and Plans (it’s 2023, so I’ll go ahead and address them by their preferred acronym, “PLCY”) published the first annual update to the so-called UFLPA strategy (“2023 Strategy Update”). The UFLPA strategy is a report that must be published, per the UFLPA, in order to “support enforcement of [the U.S. forced labor import ban] to prevent the importation into the United States of goods mined, produced, or manufactured wholly or in part with forced labor in the People’s Republic of China.”1
If someone asked you to write a strategy to prevent the importation of goods made with forced labor in China, what would you do? Other than politely decline. How would you attack that challenge?
It’s kind of an interesting thought experiment. I mean, what a difficult task! A Gordian knot if ever there was one, what with the complexity of global supply chains and such.
But the body of trade law, as a whole, is extraordinarily well-suited to simplifying complex realities into something that can be reasonably and transparently enforced at the border. Why should this challenge be any different?
If you were crafting such a strategy, you’d no doubt start by defining how you intend to identify the existence (or probable existence) of forced labor out there in the real world. Like, what are you fundamentally concerned about? Is it the treatment of workers? Or participation by companies in a certain type of social program? Or ownership affiliations to a particular geographic region? Maybe all of those are pertinent. If you were writing a strategy, I bet the first thing you’d do is lay out for the record—strategically, of course—a taxonomy of what matters.
Then, and, admittedly, I’m just guessing here, but you’d probably prioritize explaining how the USG is going to collect information about supply chains, and when, in the absence of such information, it is going to draw inferences about them. Those are pretty strategically important questions! Especially given that this law brings an unprecedented amount of foreign conduct (e.g., all purchasing, manufacture, and sale throughout entire supply chains, for Pete’s sake) into the scope of U.S. trade enforcement.
And if I know you at all (and reader, I feel as though I do!), I’m sure you’d have a single coherent structure for prioritizing enforcement resources against different products and sectors. You surely wouldn’t craft three vaguely overlapping, poorly defined, semi-secretive, theoretically complementary but practically contradictory regimes of product & sector risk prioritization. Right? And no doubt you’d wrap up your strategy by just telling the poor importers what the rules are: what you’re going to require when you detain their goods, and how you’re going to evaluate what you get.
Alas, the UFLPA Strategy isn’t that. But I like where you were going with it!
Nevertheless, it is a statutorily required document, published by the chair of the Forced Labor Enforcement Task Force (i.e., PLCY), it has to be updated once a year, and this year’s update contains some interesting information.
In keeping with my commitment in these pages to tell you all the Forced Labor Trade news that’s fit to print, we went through the UFLPA Strategy Update very carefully, and identified five (5) important takeaways. In this post, I’m going to tell you about three (3) of them.
The fourth and fifth notable updates—which include forecasting clues about where the enforcement storm is headed next, and important guidance on how companies should be conducting due diligence for UFLPA purposes—I’m saving for clients and prospective clients. If that describes you, and you’re interested, shoot me an email.
1. Entity Listing: ILAB & DHS Take the Wheel
We finally have a better view into the UFLPA Entity Listing process! We already knew from the notice published in the Federal Register last year that companies can be added to the Entity List only upon the recommendation of one of the FLETF member agencies. In other words, if you’re the type of person (or activist or company or trade association) that wants to see another company listed, you have to find a sympathetic audience among FLETF members, that is willing to champion your cause.
Per the 2023 Strategy Update, FLETF has established a UFLPA Entity List Subcommittee that is “co-chaired” by the Department of Homeland Security (specifically, by PLCY) and the Department of Labor (specifically, by the Bureau of International Labor Affairs, or “ILAB”). There are a total of seven member agencies of FLETF (plus “observer agencies”), and no word on whether, or to what extent, the other member agencies (USTR, State, Treasury, Justice, and Commerce) are participants in the Subcommittee. Nevertheless, the fact that PLCY and ILAB are now serving as a “coordinating body for management of the UFLPA Entity List” and to “facilitate discussion related to potential additions, removals, and modifications to the UFLPA Entity List”.
This might just sound like a swirling bowl of alphabet soup, but I think it’s good news for anyone who cares about the Entity List. If anyone on FLETF can be trusted to sweat the details of the Entity List, it’s PLCY and ILAB. PLCY, because, as the chair of FLETF, they’re the most accountable for action one way or another. ILAB, because they’re probably the only member of FLETF that can plausibly claim to have pre-existing knowledge as to what constitutes forced labor. If anyone can shepherd the Entity Listing process into an evidence-based, dynamic, responsive law enforcement mechanism, it’s these folks. We’ll be watching.
2. How FLETF Interprets the Entity Lists
I dedicated an entire post last month to analyzing the first true entity listings in the UFLPA era, trying to infer how FLETF reads the entity lists, and to reverse engineer what factual information they found actionable. As is my custom, I dedicated a fair amount of airtime to kvetching about how the UFLPA entity lists are not a model of statutory drafting.
I guess that’s why an obscure paragraph in the 2023 Strategy Update caught my eye. In the context of describing the role that the Department of State plays on FLETF (i.e., “provid[ing] guidance to U.S. embassies and consulates abroad following the identification of prospective new entities in Xinjiang and elsewhere in the PRC” that could be listed), the 2023 Strategy Update then recites a quick-and-dirty summary of the bases for entity listing. It reads very much like an informal interpretation of the entity lists, and I submit, is a pretty decent synopses of how FLETF appears to be interpreting its statutory listing authority.
The paragraph in question is on page 8 of the 2023 Strategy Update, but I’ll reproduce it here, along with annotations in brackets indicating which list each clause appears to interpret:
that produce or source goods with forced labor [this sounds like list (i)];
entities that work with the Xinjiang government to recruit, transport, transfer, harbor, receive, or otherwise facilitate forced labor or labor transfer of members of persecuted groups [list (ii)];
entities that export certain products from certain listed entities [list (iv)]; and
entities that source material from Xinjiang or from persons working with the Xinjiang government or XPCC for purposes of any government-labor scheme [a much simplified interpretation of list (v); emphasis added].
The most notable of these quick summaries is the last one. I’ll spare you a detailed analysis, but suffice it to say that if the only requirement for inclusion on list (v) is having sourced material from Xinjiang—and that is what it looks like—that list could get out of hand pretty quickly.
Unfortunately, I can’t say that that’s a fundamentally unreasonable interpretation of the statutory language, but it sure is the broadest one. A better interpretation of list (v) would be: sourcing from Xinjiang, plus participation in a government-labor scheme. Alas, legal bloggers don’t get Chevron deference. Don’t say I didn’t warn you . . . .
3. FLETF to Congress: Mo’ Money, Less Problems
By statute, the UFLPA Strategy is required to cover a few different topics. One of those is a description of “additional resources necessary to ensure no goods made with forced labor enter at U.S. ports.” PLCY happily obliged that instruction, with a lengthy disquisition I can summarize as follows:
Specifically, they explained that if Congress wants an Entity List, Congress is going to have to pay for one!
They also noted that CBP hired 65 new positions in FY22, including “CBP officers, import specialists, trade analysts, auditors, intelligence analysts, investigators, attorneys, and support staff”. This extensive hiring, they said, has allowed them to tailor UFLPA enforcement commensurate with the scale of forced labor believed to be occurring in China.
Kidding, of course. The hiring has resulted in an “increased enforcement scope of the UFLPA” which, in turn, “has highlighted resource gaps for CBP to sustain consistent UFLPA operations across the 328 ports of entry, ten Centers of Excellence and Expertise, field offices, and headquarters.” See the snowball roll down the mountain!
Reached for comment, the relevant congressional committees expressed concern that over-funding a poorly-designed trade law could contribute to unintended consequences contrary to U.S. policy toward China and have an adverse impact on the U.S. economy. Kidding again, we’ll have to see what the response is. But if you ask me to wager what FY24 UFLPA funding will be relative to FY23’s $100M, I’m taking the over.
That’s all for this week’s FLT post, but that’s not not all the important insights in the 2023 Strategy Update.
As noted, the 2023 Strategy Update also includes valuable information indicating where the UFLPA enforcement storm is headed next, and contains important guidance about how companies should be conducting due diligence for UFLPA purposes. I’m saving my commentary on these for clients and prospective clients. If that describes you, and you’re interested, you know where to find me!
Pub. L. 117-78, Sec. 2(c).