The Rules-Based International Order and the UFLPA

Better Know A Human Rights Law

The Uyghur Forced Labor Prevention Act (UFLPA) is a paradox. A crowning achievement of human rights legislation—arguably the most consequential law ever to address the intersection of business and human rights—it is simultaneously a technical catastrophe.

I use the term advisedly, and in the most French sense possible. By night (late nights . . . early mornings . . . ) I deliberately select my vocabulary for these pages. But by day, I work as an attorney counseling clients on compliance with the rules governing international trade. Accordingly, I have a lot of reference points to try and contextualize the UFLPA. The incongruity between this law and all other rules governing international trade is a point of both fascination and concern to me, and I return to it again this week.

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“Rules-based” is the favorite description of the system of laws and international commitments that have defined the landscape of global trade for the last 75 years. Here are the last five U.S. presidents discussing the importance of the U.S. role in establishing or enforcing the rules of global trade. The last five U.S. Trade Representatives concur.

The U.S. has “benefitted tremendously from . . . rules-based trade” (Amb. Ron Kirk), and no country can “be fully integrated into the global economy unless you operate a system of rules, of controls” (Amb. Susan Schwab). “[M]uch of what we take for granted in the United States – in terms of fair rules, the free flow of information, transparency in regulation – are actually under threat by other countries that do not share our interests or our values” (Amb. Michael Froman).

Even USTRs disenchanted with the rules-based system as it presently exists argue that current trade rules should be “revamped” to target “gray areas” exploited by China (Amb. Katherine Tai). Or, we need “new rules to stop the economic distortions that flow from China’s state capitalism” (Amb. Robert Lighthizer).

But for all this talk of using rules preserve democracy and the free world and to combat China, it is clear to me that the UFLPA is on the struggle bus.

In my previous post, I noted the UFLPA authors’ letter asking CBP to disregard the text of the statute they wrote and report out to Congress every time that an “applicability review” turns up dry and detained goods are released into the U.S. Last week, I was heartened to hear CBP Executive Assistant Commissioner Highsmith disagreed with the CECC request in public remarks at a CBP forum in Boston. Well done!

And yet, maybe hearing a legal blogger crow over ‘the rules’ and how misfit the UFLPA is isn’t all that persuasive to folks who sit a bit further from this law than I do on a day to day basis. So within these pages, I intend to keep unpacking this incongruity with the help of a new recurring segment I’m calling:

UFLPA, OH UFLPA, TO WHAT SHALL I COMPARE THEE

Section 337 Edition

Consider for a moment how the U.S. implements import prohibitions authorized by another statute, found mere pages away from the forced labor import ban in the United States Code. I speak of Section 337 of the Tariff Act of 1930, which authorizes investigations into and bans against importing products that infringe a U.S. patent.

The comparison is illuminating. Not because Section 337 is a model for forced labor enforcement, but because it constitutes a legal regime that takes complicated factual and legal questions in a trade context, and treats them with analytic rigor and commercial sensitivity they warrant. In other words, it’s fair and efficient.

Here’s what you need to know about how it works. When someone thinks that a foreign product being imported into the United States infringes on a U.S. patent, that party can file a complaint at the U.S. International Trade Commission, serve it on the alleged infringer, and have the matter assigned to an administrative law judge (ALJ). The ALJ will issue decisions on all of the contested factual and legal questions presented by the case, including, most importantly, whether the imported product infringes on a U.S. patent.

There are rules, and procedures. It takes some effort, but at the end of the process, there’s a decision based on facts and law. The decision is subject to review by the full USITC. And then the USITC decides whether to issue an import ban (here termed an “exclusion order”). Though the process takes time and effort, it is considered a vastly streamlined process for obtaining relief from patent infringement by litigating in federal district court.

Now, if you think I’m going to argue that UFLPA enforcement should be more like Section 337, guess again. But there are some excellent principles at play in the 337 context, and the thought experiment I’d invite you to consider is what if Section 337 were enforced like the UFLPA.

*insert swirly dream montage*

Imagine a party is absolutely certain that a foreign competitor is making products that infringe on their U.S. patent, and shopping those products to the U.S. But instead of filing a formal written complaint, in this universe, the alleger is encouraged to submit allegations to the government via a strictly confidential email address. No notice to other parties is permitted, let alone required, though the alleger is encouraged to publicize the allegation of this notorious patent infringement by publishing an allegation, hopefully to be picked up by the Times.

Then, imagine that instead of copying the carefully defined product scope from a complaint to begin the enforcement process, it was left to a bureaucrat to draw up an exclusion order, and guess which imported goods and foreign producers should be subject to it.

Suppose those foreign producers (notorious ‘patent infringers’ that they are) will never be notified directly. In fact, U.S. importers of the allegedly infringing product won’t even be notified until their goods arrive in port. The importers will ask the government: “Can you please tell us you intend to enforce against our goods, say, before we start shipping? Or while the goods are on the water? So we can prepare?” And the government will shake his head slowly. Sternly. Brow furrowed.

The government will keep the enforcement decision a secret until goods arrive in port. And then, in a gotcha moment for the ages—honestly, the screenplay is basically writing itself at this point—the importer is handed a pink slip labeled DETENTION in gothic font. The goods are moved to a bonded warehouse. And then, ONLY then, would the importer would get notice of the patent infringement allegation and be asked to prove the absence of patent infringement.

BUT—and here’s the twist—rather than being presented with the patent infringement allegation, the drawings and diagrams and actual patents at issue, the importer has to guess.

“Guess? What do you mean guess?” says the shady foreign producer, talking into a landline from a smoke filled room in Asia, while the importer—bottom half of the split screen—fumbles in her pocket to feed more quarters into the pay phone.

“I don’t know,” the importer replies, as a car plows through a puddle by the curb, soaking the importer and the phone booth. “They said we have to guess which patents you might have infringed. They said we should know.”

Cut to the government bureau. As eerie music begins to play, we do not see a single well-trained administrative law judge tasked with making a single determination on the complex factual and legal assessment of whether the imported products infringe upon the patent to apply to multiple future shipments. Instead, we see rows and rows of well-meaning bureaucrats, sitting at desks and being asked to make the determination over and over again. As every shipment that arrives. In perpetuity.

As the credits roll, and the camera pans out, you can just spy the complex factual and legal questions being meted out on the desks on the basis of ill-defined sets of documents that have been harvested on an ad hoc basis from a slew of parties around the world.

Nary a judge in sight, administrative or otherwise.

And scene!

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I can hear boosters of the UFLPA glowering at me through the fiberoptic cables and WiFi signals, but this description is merely colorful, not hyperbolic. This is—actually—how the marquis piece of human rights trade legislation is enforced. Considering it in context of a far more mature legal regime only serves to illustrate the incongruity.

C’est la catastrophe. C'est la tragédie.