Writing with a brief out-of-cycle update to share some breaking news.
U.S. Customs and Border Protection (CBP) released its August 2022 Monthly Operational Update yesterday, and for the first time this year1, included statistics from CBP’s enforcement of forced labor laws, including the UFLPA.
While CBP has been maintaining an occasionally-updated tally of forced labor enforcement on its trade statistics website for the last couple years, this is the first time that single month forced labor enforcement statistics have been published with the Monthly Operational Update.
According to the news release from CBP:
In August 2022, CBP targeted 838 entries valued at more than $266.5 million for suspected use of forced labor in the production of imported goods, including goods subject to the Uyghur Forced Labor Prevention Act and Withhold Release Orders.2
A few comments for context:
Calendars and Math
According to CBP’s official tally of forced labor enforcement trade statistics, in Fiscal Year 2022 (which began October 1, 2021), and measuring as of June 30, 2022, CBP had detained 2,010 shipments valued at $357.8 million through all of the agency’s forced labor enforcement.
As UFLPA enforcement officially began on June 21, 2022, those figures include, at most, 9 days of UFLPA enforcement.
Assuming that less than a fortnight of UFLPA enforcement had a negligible impact on the forced labor detention stats for the first 9 months of FY22, this means that CBP was averaging ~223 detentions, and ~$39.8 million per month prior to the implementation of the UFLPA.
With the news release yesterday, we now have the first month of forced labor enforcement statistics from the UFLPA enforcement era (because July 2022 statistics were not independently reported). Thus, while the August 2022 statistics don’t distinguish between UFLPA and non-UFLPA enforcement, we may deduce that UFLPA detentions may account for ~615 of the 838 August detentions, and ~$318M of the $357.8M in targeted entry value.
Thus, depending on whether you measure from the number of detentions, or the value of detained goods, the UFLPA appears to have increased the overall pace of forced labor enforcement by somewhere between 3x and 7x.3
Additionally, unless CBP was targeting uncommonly high value shipments in August 2022, this first-ever monthly report suggests CBP has set a pace to detain in excess of $3 billion in import value over the coming year.
Take these numbers with a grain of salt . . .
. . . for two reasons.
First, while CBP has worked hard at modernization over the last couple decades, you would be surprised at the number of customs processes that are still paper-based. Most notably, this includes the issuance of notices of detention used for forced labor enforcement. Importers are frequently surprised that upon receiving a detention notice from CBP for the enforcement of this marquis human-rights trade law, they have an opportunity to review the penmanship of the customs officer that instructed the detention.
In an interview with Vox last year, the former director of forced labor enforcement for CBP explained that even maintaining separate counts of shipments detained on suspicion of Xinjiang cotton vs. other types of forced labor detentions would be “very difficult”. No doubt, this is in large part due to the absence of electronic data on detentions.
Given the manual nature of this tally, there is always a risk of human error in early-reported statistics. We’ll be watching to see if these numbers shift perceptibly in other updates to the annual forced labor enforcement statistics.
Second, it’s possible that, since we only have 10 Shopping Days left until the Fiscal New Year (2023), these end-of-year stats might not be replicated on an annualized basis.
Some of my oldest subscribers will recall that last year (before I moved the newsletter to Substack), I made the intrepid prediction that non-UFLPA enforcement could reach $1B in detentions in FY 2022. That was based on a similar extrapolation from a publicly reported narrow window from the end-of-FY21.
Yet even if the August 2022 detention stats released yesterday were once again goosed for end-of-year reporting purposes, even a more conservative prognostication—say $2B in annual enforcement—represents continued exponential growth relative to annual enforcement numbers from the last 4 fiscal years:
$218 thousand (FY 2018)
$1.2 million (FY 2019)
$49.8 million (FY 2020)
$486 million (FY 2021).
H/T to my associate Matt Pereira for spotting the news release from CBP before it was reported anywhere. Matt is another reason why our team at Kelley Drye is so very well positioned to help companies trying to navigate UFLPA and forced labor enforcement. Have a question? Let us know how we can help.
As always, thanks for reading, sharing & subscribing. More soon.
and, I believe, ever
https://www.cbp.gov/newsroom/national-media-release/cbp-releases-august-2022-monthly-operational-update
$266.5 M / $39.8M = 6.69; 838 / 223 = 3.75