Is the UFLPA Working As Intended?
Is the UFLPA Working As Intended?
A Candid Assessment, 3 Months Into Enforcement
I burned considerable energy over the last two posts searching for illustrations that are capable of conveying the abiding strangeness of the Uyghur Forced Labor Prevention Act (UFLPA). Confessions of a metaphor junkie, I guess.
How can I explain the fundamental misalignment between what CBP thinks it is doing in enforcing the law, and how that comes across to an importer? I opted for a word picture of a surreal traffic stop.
How can I help illuminate the manifold subjective dimensions inherent in “mapping” a supply chain? I tried to frame three rules of the road.
This week, I’m setting the metaphors aside, and trying to answer a question directly. Is the UFLPA working as intended? Here is the case for no.
How the UFLPA Works: A Quick Refresher
The operative section of the UFLPA is found in Section 3. This is the section establishing the rebuttable presumption on goods manufactured wholly or in part in Xinjiang or by a UFLPA Listed Entity. More specifically, Section 3(a) imposes the presumption on all such goods, and Section 3(b) lays out the pathway for rebutting the presumption. This is how the UFLPA is designed.
By intention, CBP will stop shipments produced wholly or in part in Xinjiang or by a UFLPA Listed Entity. UFLPA Sec. 3(a). Then, such goods will be denied entry, unless the importer can (1) demonstrate full compliance with published importer guidance, (2) completely and substantively respond to all questions from CBP, and (3) demonstrate by clear and convincing evidence that—even though the detained goods were produced wholly or in part in Xinjiang or by a UFLPA Listed Entity—the goods were not produced with forced labor. UFLPA Sec. 3(b).
Longtime readers will know that the path set forth in Sec. 3(b) is effectively impossible to satisfy. That is because Congress very much intended for the UFLPA to serve as a ban on goods made in Xinjiang or by forced Uyghur labor. Congress did not warm to the idea of a ban that could be riddled with exceptions during enforcement. So, it created a ban for which exceptions are strictly theoretical.
Where the UFLPA Goes Wrong
But the UFLPA fails to contemplate that it might be hard (or impossible) for CBP to identify shipments that are made wholly or in part in Xinjiang or by a UFLPA Listed Entity. The law does not acknowledgement this elementary truth. And so, it provides no defined pathway whereby an importer could argue that its detained shipment was not made in Xinjiang or by a UFLPA Listed Entity. There is no statutory mechanism for such a showing. The applicable burden of proof is not specified in the law. It is overlooked entirely.
In fact, during the 6-month ramp up UFLPA enactment to UFLPA enforcement, it was not even clear that CBP (or the Forced Labor Enforcement Taskforce, FLETF) recognized this elementary truth. Public presentations on the UFLPA by CBP officials, and materials published by CBP, spoke only of the rebuttable presumption and clear and convincing evidentiary standard of Sec. 3(b). This content erroneously assumes—just like Congress did in the UFLPA—that CBP will always be able to identify goods made in Xinjiang or by a UFLPA Listed Entity, and therefore CBP’s detentions, exclusions and/or seizures will be justified, unless the importer can rebut the presumption by following the path of Sec. 3(b).
The Problem: When the UFLPA Does Not Apply
By the time CBP and the FLETF issued their statutorily required guidance documents at the end of June 2022, I was relieved to see that, against reasonable expectations, each document included a paragraph acknowledging that CBP might conceivably stop goods merely suspects have a supply chain link to Xinjiang or a UFLPA Listed Entity, and that an importer facing such a detention obviously has the right to contest such a detention.1
If I had to guess, I’d wager that some loyal civil servant at U.S. Customs—likely an attorney tasked with reviewing these documents prior to publication—insisted on including this language in the UFLPA Strategy and CBP Importer Guidance. And to that attorney, I say: sir or madam, I salute you. Ours truly is a nation of laws.
Of course CBP is going to stop shipments under the UFLPA that are not actually produced in Xinjiang or by a UFLPA Listed Entity, because the agency is not omniscient, and information contained in the import declaration provides virtually no indication of whether a given shipment is in or out of scope of the UFLPA. And of course an importer faced with such a detention has the right to argue that CBP stopped the wrong goods, even if the parameters for making such a showing is not explicitly included in the UFLPA. While this isn’t technically a matter of seeking an exception to the law, it is nice for this legal reality to be acknowledged in the official UFLPA guidance and strategic documentation.
And that brings us to present, almost three months into UFLPA enforcement, and the question everyone is asking:
How is UFLPA enforcement going so far?
Well, for starters, CBP has adopted some new nomenclature to characterize the two types of substantive responses an importer might submit in response to a UFLPA detention:
An “admissibility” review is CBP’s term for an importer submission that seeks to rebut the presumption of the UFLPA, by presenting clear and convincing evidence of the absence of forced labor, and otherwise following the path set out in UFLPA Sec. 3(b).
An “applicability” review is CBP’s term for an importer submission that seeks to argue that CBP stopped the wrong goods, because the detained shipment was not made wholly or in part in Xinjiang or by a UFLPA Listed Entity
Now. One might have hoped that CBP could settle on terms that weren’t BOTH six-syllable words beginning with “a” and ending with “bility”. But let’s not bicker and argue, this is an happy occasion.2 All things considered, having terminology for each type of showing is a considerable improvement.
So, how is UFLPA enforcement going? Margaret Spiegelman broke the story wide open in a piece she reported for Inside U.S. Trade on August 26. Spiegelman interviewed AnnMarie Highsmith, the Executive Assistant Commissioner of the Office of Trade for CBP. Ms. Highsmith is the senior-most U.S. Customs official with responsibility for trade. Here is the money quote:
Highsmith said the agency has yet to receive any applications from importers for what it calls “admissibility reviews” -- that is, requests to rebut the presumption that goods from Xinjiang or made by entities on a forced-labor blacklist created under the new law were made with forced labor. Such requests require that importers provide extensive documentation -- including, for example, details on wages and residency status for workers in its supply chains, as described in the enforcement strategy. If CBP were to grant an exception to the rebuttable presumption, it would be required under UFLPA to submit a public report to Congress about its determination.
The agency has processed “a number” of requests for what it calls “applicability reviews” -- claims by importers that goods detained under UFLPA have no connection to Xinjiang or entities on the blacklist, Highsmith said.
(Emphasis added.)
Two months into the UFLPA enforcement era, no importer faced with a UFLPA detention has sought to follow the path laid out in the statute. Every importer facing a UFLPA detention has either simply re-exported the detained merchandise, or sought to prove that CBP stopped the wrong goods—a showing neither contemplated by nor provided for in the UFLPA.
The bottom line is that there is therefore no indication CBP has been successful in stopping goods produced wholly or in part in Xinjiang or by the UFLPA Listed Entity. Every importer summoning the wherewithal to prepare a submission in response to a detention has argued that CBP got it wrong. Goods detained and voluntarily re-exported may or may not have been subject to the law, no one will ever know. And no importer has yet availed itself of the pathway built by the law, meaning no importer has conceded that it has ever actually imported goods with a supply chain link to Xinjiang or forced Uyghur labor.
Based on the foregoing, it is difficult to say that the UFLPA is working as intended, though it is working how it was written. That there is a mismatch between intention and result is unfortunate.
What I’m Reading
Over the upcoming weekend, I’ll be diving into the EU Commission proposal, announced this week, for a regulation prohibiting products made with forced labor on the Union Market.
Also, this trilateral statement from the U.S., EU and Japan caught my attention today, reemphasizing a commitment to end forced labor from the rules based trading system. The statement was issued following the issuance of the ILO Global Estimates of Modern Slavery: Forced Labor and Forced Marriage, also issued this week.
Last, pick up a copy of Josh Chin and Liza Lin’s new book, the Surveillance State. Impeccably researched, beautifully written. Helped me better to understand what China sees as its value proposition to the world.
As always, I hope this is helpful.
Is Forced Labor & Trade working as intended? Have I made a presumption you’d like to rebut? Please find me on LinkedIn, or shoot me an email.
See CBP Importer Guidance at 7, and UFLPA Strategy at 40. Somewhat unhelpfully, the documents characterized this type of appeal as seeking an “exception” to the UFLPA. I picked that apart previously, in my bussing metaphor post.
