I Can't Believe It's Not From Xinjiang
How the UFLPA Answers the Five Fundamental Questions of Forced Labor & Trade
I’m pretty hung up on the quartz demand.
That’s my answer to the top FAQ I’ve received over the last few weeks: What do you think of CBP’s enforcement of the UFLPA so far?
It has been reported that a few of the early solar panel detentions under the UFLPA have included a demand from CBP that the importer produce documentation around the procurement of quartz. The fact that the provenance of quartz is at issue suggests that the detention is not already otherwise Xinjiang-linked. (If it were a Xinjiang-linked shipment, many other and more difficult demands would have been forthcoming from CBP, as described below.)
Ostensibly, when quartz appears in the supply chain of a solar panel, it is a deep-in-the-supply-chain commodity. Quartz sand is a source of silicon that, when purified, melted, formed into ingots, converted into monocrystalline cells, cut into wafers, coated with anti-reflective coating, coated with phosphorous, covered with a thin glass casing, and applied to a durable polymer back sheet solar panel production, framed in aluminum and bound with ethylene-vinyl acetate constitutes a component of solar panels.
CBP’s initial take on the UFLPA appears to be that it authorizes solar panels to be denied entry into the United States if an importer can’t prove the quartz sand used in production didn’t come from Xinjiang. Call it the I Can’t Believe It’s Not Butter School of Trade Enforcement.
To help you appreciate just how aggressive an interpretive posture this is, I have to take you back, at least for a minute, to the beginning. There are five fundamental questions to forced labor enforcement, and the UFLPA answers precisely three of them. The other two, left to discretion of CBP, are enormously important. The quartz demand is a telling, and somewhat disconcerting, indication of how CBP is choosing to wield its discretion.
Five Fundamental Questions
If you want to use a trade law like Section 307—a forced labor import ban, containing a rebuttable presumption mechanism—to stop imports linked to forced labor, there are at least five fundamental questions have to be answered.
Where is forced labor occurring?
Which trade is in scope of enforcement?
When is a detention of a particular shipment warranted?
How could an importer prove detention is unwarranted?
How could an importer rebut the allegation of forced labor?
Now, this isn’t the only way to structure an import ban. A ban on importing Russian oil, for example, is much more straightforward. In the forced labor context, conceptually, you could do away with an importer’s right to rebut anything, and shrink the the five questions down to three or four. But Section 307 wasn’t created in a lab, it’s a law with history. And since at least 1963, the U.S. forced labor import ban has been embedded with the notion of a rebuttable presumption. Thus, for all intents and purposes, forced labor trade enforcement inheres in the answers to these 5 fundamental questions.
Someone has to decide where forced labor is or may be occurring. Someone has to decide which trade will be in scope of enforcement. Someone has to put the scope determination into practice by flagging individual shipments for detention. Someone has to consider arguments that the detention caught the wrong goods. Then finally, if the detention is merited, someone has to review the information proffered to rebut the taint of forced labor. Five questions. All of them fraught.
The UFLPA has made an indelible impact on how all five of these questions are answered, though in somewhat unexpected ways. The UFLPA only answers three of the five questions directly, but the way in which it answers those questions has shifted the meaning and significance of the other two. It also illuminates why the quartz demand has me—and should have everyone—concerned.
I’ll start by illustrating the UFLPA’s three direct answers to the fundamental questions:
Where is forced labor occurring?
Which trade is in scope of enforcement?
When is a detention of a particular shipment warranted?
How could an importer prove detention is unwarranted?
How could an importer rebut the allegation of forced labor?
On question 1, Congress has taken legislative notice of the widespread practice of forced labor in and outside of Xinjiang as a component of certain state-orchestrated social programming in China. Via the UFLPA, Congress has supplanted the need for anyone to “find the existence” of forced labor in this region, or as a result of these programs. So far, so good.
On question 2, Congress crafted a very clear definition of what trade would be in scope of the UFLPA: “any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region of the People's Republic of China or produced by an entity on a list [compiled by the Forced Labor Enforcement Task Force].”1 Admirably succinct. And as far as boundary drawing is concerned, it’s difficult to assail this choice.
On questions 5, after great effort on the part of industry, an “evidentiary threshold” has finally arrived. It’s often referred to as a “clear and convincing” evidence standard, which . . . if only.
Over the early years of the modern era of forced labor enforcement (i.e., since 2016, when the U.S. forced labor import ban was amended to close a longstanding loophole), it became an an article of confession within the importing community that what this law needed was an evidentiary standard. This took on particular urgency by early 2021 as CBP started wielding Section 307 in ways it never had before.
As mentioned above, the rebuttable presumption has been a feature of U.S. forced labor trade enforcement for decades. When faced with a forced labor detention, importers have long had the right to rebut the detention and try to prove the admissibility of goods by making a showing of the condition of labor actually used in production. But as one importer after another began to discover, it’s difficult to prove this negative (or any negative). The fact that CBP was not bound to apply any particular evidentiary standard stuck out as a real problem. In early importer guidance issued after CBP took a forced labor enforcement action against 17% of the global supply of cotton, CBP suggested that importers hoping to rebut the presumption should produce “time cards” for cotton pickers, if they wanted to prove that an import containing cotton had not been made, wholly or in part, with forced labor. ‘Can Customs do this?’ we wondered. Without a clear evidentiary standard circumscribing the exercise of CBP’s discretion, it was hard to push back against the demand.
So, when the UFLPA rolled into being, replete with *an evidentiary standard*, industry didn’t hesitate to climb back out of the dugout, and doff its cap to the chorus of huzzahs. And . . . okay, credit where credit is due. We needed an evidentiary standard. Now we have one.
But there are a few issues. Not only is it a high evidentiary standard (“clear and convincing evidence”), its an evidentiary standard plus a series of hoops to jump through. Flaming hoops. Suspended from impossible heights.
If an importer wants to contest a detention on a shipment of goods that does have a supply chain link to Xinjiang or a listed entity, it must prove by clear and convincing evidence that, notwithstanding the nexus to Xinjiang or the listed entity, no forced labor was involved in the supply chain.
But then also a hoop. The importer must have “fully complied” with the “guidance to importers” contained within the UFLPA strategy. That “guidance to importers” consists of 12 pages of detailed instructions, that are openly touted as being potentially impossible to satisfy:
Barriers to performing due diligence, to supply-chain tracing, and supply-chain management, and to obtaining evidence to demonstrate that goods were not made wholly or in part in Xinjiang or by an entity on the UFLPA Entity List, may make it difficult for importers to fully comply with this guidance. Such barriers may prevent an importer from qualifying for an exception to the rebuttable presumption. Goods that do not qualify for an exception are subject to exclusion, or seizure and forfeiture.2
And then another hoop. Even if an importer can marshal clear and convincing evidence, and comply with pages and pages of detailed guidance, the importer must also “completely and substantively respond[] to all inquiries for information” from CBP. CBP can ask any question, and is imbued with all discretion to decide whether any question has been “completely and substantively responded to”.
Then finally, the death knell. Under the UFLPA, if you find yourself in the territory of Question 5, and can answer every question from CBP, have compiled clear and convincing evidence, and complied with every due diligence instruction, CBP still has to:
submit to the appropriate congressional committees and make available to the public, not later than 30 days after [agreeing the presumption has been rebutted], a report identifying the good and the evidence considered[.]I’ve written previously that there is no reason to think this is achievable. In the circus of enforcement, you leap for the flaming hoops, only to have the metaphor bend in mid-air, and land in a house of mirrors from which there is no escape.
The UFLPA has presumed the existence of forced labor, defined broadly (if not unfairly) the scope of goods subject to enforcement, and then disfigured and entombed the rebuttable presumption while nominally consenting to a sorely needed evidentiary threshold.
Of Quartz & Margarine
If you ask the drafters of the UFLPA if this is what they intended, I think they’d smile and nod. In fairness, I understand where they’re coming from. The goal of the UFLPA was to end supply chain links to forced Uyghur labor, not to facilitate a lax enforcement regime riddled with exceptions.
But the silence of the UFLPA on the third and fourth fundamental questions means that these are subject to the discretion of CBP. And CBP’s demand for quartz provenance documentation is a disconcerting indication of how that discretion is being wielded.
Because the rebuttable presumption has been reduced to rubble, the real battle in UFLPA enforcement is on the question of how to handle trade where neither CBP nor the importing community possess information that would definitively demonstrate (or disprove) a supply chain nexus to Xinjiang or a listed entity. It’s one thing to impose a undefeatable ban on goods geographically linked to a region of severe human rights abuses. It’s another entirely to sweep up and ban the importation of goods in the absence of any such link whatsoever.
When I was in college, I had a running joke with a buddy. He’d retrieve a peel-top thimble of margarine from the dining hall, and tell me, head shaking with disbelief that . . . he couldn’t believe it wasn’t butter. Just couldn’t get on board with that idea. I’d take a taste and argue back in violent agreement. Dude, taste it. This stuff is definitely butter, or so I believe.
Now, in my defense, we were nineteen, and philosophy majors. But this is essentially how CBP is exercising its discretion over the 3rd and 4th fundamental questions of forced labor enforcement. CBP is surveying the flow of global trade and identifying shipments where it thinks I can believe this is linked to Xinjiang. Then, by demanding a boil-the-ocean compliance solution to clear the cloud of suspicion—requiring an importer to produce proof of . . . the geospatial quadrant on the the beach where the quartz sand was first scooped? The social security numbers of the front-loader operator who dug it up?—CBP is promising to look at virtually any traceability data presented in response to a detention and conclude I can’t believe it’s not linked to Xinjiang. Prophecy, self-fulfilled.
To make matters worse, CBP won’t disclose the basis for a detention decision, other than to say it has been triggered by the UFLPA. And with that, the circle of presumption is complete. The U.S. has presumed forced labor exists in Xinjiang. It presumes that all goods from Xinjiang are tainted by it. CBP can presume that any shipment it wants is linked to Xinjiang. And presented with proof that there is no such link , CBP remains at liberty to presume that the evidence presented is incomplete. Lest any importer hope against hope that, armed with an evidentiary standard, it will be able to clear the detention? I would not presume that is the case.
Steady Now
The right path forward is clear enough. Just because an act is discretionary does not mean that such discretion will or must be abused. Enforcement is still young enough that CBP could yet decide to share transparent standards on the question of how it goes about answering Question 3—how it decides which shipments to detain.
Or, barring that, CBP could at least agree to provide importers with the basis for any individual detention decision. Why did CBP think that this particular shipment was subject to detention under the UFLPA? Where is the theoretical link? There is little reason to believe that such an approach would undermine the agency’s goal of vigorous enforcement in any way.
At the very least, CBP should be extraordinarily disciplined about the level of proof it will demand on Question 4, and should appreciate that for any business, traceability is very much a flywheel-type exercise. It increases momentum slowly over time, but should eventually be capable of reaching a pretty impressive clip. Any decision by CBP to demand, accept or reject certain proof as sufficient to clear a shipment as outside the scope of the UFLPA need to governed by objective standards. These decisions should be explained, and consistently applied. They may require flexibility, and would do well to remain cognizant of the arc and trajectory of competency in traceability.
I appreciate that, for CBP, the UFLPA still has that new car smell. But don’t think it comes with a warranty (i.e., it can be broken). For that reason alone, I think care is warranted, particularly when rendering decisions like these that are vulnerable to legal challenge.
Pub L. 117-78, Sec. 3(a).
UFLPA Strategy at 41, available at: https://www.dhs.gov/sites/default/files/2022-06/22_0617_fletf_uflpa-strategy.pdf (Emphasis added.)