FY24 Forced Labor Trade Enforcement Funding
It's like competitive eating, but for FLT enforcement.
Over the last six years, the volume of U.S. trade that has been targeted for forced labor enforcement has swelled from $218,000 (in FY 2018) to approximately $1.6 billion (in FY 2023). This is—it goes without saying—a prodigious rate of growth. Every year, the volume of targeted trade has been a multiple of the prior year, typically between 2x and 9x of the preceding year (with a low of 1.6x and a high of 41.2x). At some point, we’ll hit an upper limit. But rapid year-over-year growth is likely to continue at least through the next couple years.
Back in 2021, while the Uyghur Forced Labor Prevention Act was still being debated in Congress, CBP managed to detain almost a half billion dollars of trade for purposes of forced labor trade enforcement. What was noteworthy about this level of enforcement is that it was achieved without any dedicated funding. At that time, CBP was only really enforcing one forced labor trade law (the “forced labor import ban”) alongside the myriad other trade laws also enforced by CBP in the ordinary course of business. It did this by judiciously deploying existing staff (from the Office of Trade and Office of Field Operations) against the challenge of supply chain links to forced labor.
It’s worth remembering that this was the state of affairs a mere two years ago, because after the UFLPA was enacted, someone on Capitol Hill had the idea of funding forced labor trade enforcement directly, triggering, if not an arms race, then certainly a Nathan’s Hot Dog Eating Contest for forced labor funding. On its own initiative, after passing the UFLPA, Congress allocated $37.5M to CBP in FY 22 for forced labor trade enforcement. The Biden administration returned volley with a budget request for FY 23 of just over $70 M, which Congress countered with a FY 23 funding allocation of right around $101 M.
I’ve written about forced labor trade enforcement funding numerous times on FLT, and continue to monitor it, because it’s hugely consequential. Forced labor trade enforcement used to be something CBP didn’t do. Then, it was something folks at CBP seemed eager to do as a component of their enforcement portfolio. Today, you could fill a medium-size fleet of school busses with CBP personnel whose sole job—all day, every day—is to work on forced labor trade enforcement: conducting investigations, targeting shipments, reviewing traceability packages, making admissibility decisions.
If you’ll forgive me, I need to take a brief victory lap here. In March of last year, when FLT was still just an email newsletter, I saw the initial dedicated funding and told everyone who would listen that this is A Very Big Deal. (After launching FLT on Substack, I reposted the email newsletter here.) I donned a Newsie cap and lifted a font from the New York Times to proclaim that:
I even engaged in some back of the napkin math to project that at $37.5M in dedicated funding, CBP could hire 120-140 FTEs for forced labor trade enforcement. And while some of my readers took the admonition to heart, at least a few questioned my calculations as unfairly aggressive. $37.5 M wouldn’t go that far, they said. A lot of that funding would go to software and such, and not necessarily translate to an enforcement impact.
Well, now we know the answer, no hype. From the President’s FY 24 budget, here is the actual headcount and actual expenditure on such headcount, exclusively dedicated to combatting forced labor:
If you’re counting along at home, that’s just over 7 full school busses.
To be honest, when you consider that CBP managed almost a half billion dollars of detention value in 2021 without any dedicated funding, the fact that we’re on pace for $1.6 billion in FY 2023 seems like pretty meager growth. I try not go be too Chicken Little about it, but if you wonder why I still think we could see a multiplier in year-over-year growth over the next couple years, this is why.
We’re two weeks from the end of FY 2023, and Washington is abuzz with the usual uncertainty around whether the federal government will be funded for FY 2024, let alone at what levels. But nevertheless, the Biden administration and the appropriations committees have traded salvos on the proposed budget, and the title of The Joey Chestnut of Forced Labor Trade Enforcement Funding goes to . . . Congress.
The Biden Administration proposed two program changes that would impact CBP’s forced labor trade enforcement for FY 24, in a surprising direction.
In one change (“Program Change 42”)1, the administration proposed to “non-recur” a “congressional enhancement from the FY 2022 enacted appropriation” of $10 M. In other words, Congress voluntarily allocated $10 M for forced labor enforcement back in FY 22 that the administration hadn’t asked for, and the administration is trying to return to sender. Come to think of it, my children enact many “enhancements” around my house that I’d like to non-recur. This is my new favorite euphemism.
The President’s other proposed change (“Program Change 15”)2 is also to “correct the imbalance between prior President’s Budget requests and enacted appropriations” by “ceas[ing] hiring and backfill of” a school bus worth of full time equivalents (i.e., 38 “positions” / 51 FTEs). In other words, the administration only wanted $70 M last year, and it was given a lot more than that. It would prefer to pause the hiring spree where we are today.
When the President proposes to reduce existing funding, I infer that there must be a coordinate obligation to describe the impact that the proposed funding change will have. Because I’m sure if the President could just say: “look, this is truly just excess capital, and don’t worry, we already spent $64.5M hiring 338 FTEs(!) just to combat forced labor, and they’ve got it buttoned down”, he would.
Instead, the administration explains that eliminating these 38 positions will require it to delay and defer forced labor trade enforcement objectives. It will have to “postpone the schedule to multiple UFLPA enforcement efforts”, triggering delays in “increased supply chain country of origin tracing capabilities”, as well as delays in rolling out “targeting tools and services”. Among those targeting tools are technology that will help identify “entities, facilities, products, and shipments that highlight at scale where product supply chains have links to the Xinjiang Uyghur Autonomous Region (XUAR) and forced labor more broadly.” According to the President, by dropping these 38 positions, adoption of those targeting tools “will be delayed”.
CBP - OS - 39.
Well, if that explanation was intended to sell Congress on the resilience of the already-constructed forced labor trade enforcement apparatus, it did not succeed.
The Committee Report on the DHS Appropriations Bill from the Republican-controlled House Appropriations Committee went ahead and bumped CBP’s Office of Trade “an increase of $14,601,000, to restore proposed cuts to CBP’s combating forced labor efforts.” (p. 27). A month later, the Committee Report on the DHS Appropriations Bill from the Democrat-controlled Senate Appropriations Committee followed suit:
The Committee recommendation rejects the proposed $10,000,000 reduction to CBP’s forced labor enforcement capabilities and continues to support implementation of the Uyghur Forced Labor Prevention Act and supports additional personnel, technological capability, training, and other activities to faithfully implement the law and protect U.S. consumers from products tainted by forced labor, and reduce unintended impacts on supply chains. The Committee strongly urges CBP to combat forced labor through additional enforcement personnel, technology, training, strategy, and outreach.
p. 43 (emphasis added).
We’ll have to wait until the dust settles to see where the funding levels land for FY 2024, but the takeaway is clear. Congress is the king of Coney Island this year.
Which brings me to my final point. If I had $10 million . . . I’d probably retire. But if I had to spend $10 million, as the Earl of Forced Labor Enforcement at CBP, and if I had the authority to hire international trade specialists, attorneys, automation experts and the like, and was charged with a dual Congressional mandate to “protect U.S. consumers from products tainted by forced labor” and “reduce unintended impacts on supply chains,” I can tell you exactly what I’d do.
First, I’d stand up an ad hoc group in the Forced Labor Division at the Office of Trade, and staff it with some really smart attorneys and supply chain experts, and give them the authority to mediate disputes that importers might get into with the hundreds of forced labor trade enforcement officials scattered throughout the Centers for Excellence and Expertise and seated at ports around the country.
The detention review process is unbelievably decentralized, and releasing (or rejecting) detained shipments is complicated stuff. There could be almost no better use of resources than to establish an actual brain trust to answer questions, and issue quick—QUICK—written decisions, in 21 days or less. I’d hire 40 FTEs for this, with a short hierarchy, and would publish all decisions, redacted of company names, to train the importing public on how decisions are being made in real time.
Then, I’d hire another 10 experts on technology and supply chain traceability, and charge them with reviewing and approving traceability technologies as sufficient to solve the traceability challenge for purposes of forced labor trade enforcement. There are a lot of incredible traceability technologies out there that don’t need to be purchased by CBP, but which really need to be confirmed by CBP as adequate to prove what needs to be proven in the context of a forced labor enforcement action.
The question of when traceability technology can replace paper-based documentation of the supply chain is a tough question to answer, and one that is possible to get wrong. But it’s also a question that is possible to get right, and is worth pursuing. We’re about to enter the second quarter of the 21st century. It’s time to put the paper chase to rest.
See p. 112 of the Budget Request.
See p. 87 of the Budget Request.