Businesses are scrutinizing -- and in some cases moving -- their supply chains in response to a new ban on goods made with forced labor that went into effect earlier this summer, according to U.S. Customs and Border Protection trade chief AnnMarie Highsmith, who credits the agency’s outreach efforts with helping to drive that change.
"As a result of our efforts, we are seeing supply chains shift,” said Highsmith, the executive assistant commissioner of the Office of Trade at CBP, in an interview with Inside U.S. Trade about the agency’s early efforts to enforce of the Uyghur Forced Labor Prevention Act.
Under UFLPA, CBP was required to presume, beginning on June 21, that any goods made in whole or in part in China’s Xinjiang region are banned under Section 307 of the Tariff Act of 1930, which prohibits the import of goods made with forced labor; importers can rebut the presumption with “clear and convincing evidence,” as stated in the law.
CBP has been a target of criticism from some importers who contend the agency should have provided more detail in advance about its strategy for enforcing the new law and adopted certain industry recommendations as part of that strategy.
Highsmith, however, said the agency has been engaged in “a lot of education and training and support for our domestic industries” as well as other agencies and non-governmental organizations to “amplify” CBP’s efforts to counter forced labor -- and that those efforts were proving successful.
The agency’s “meticulous planning, including analysis of U.S. imports impacted by UFLPA, letters to importers advising them of risk, educational events for both trade stakeholders and CBP employees helped ensure the smooth implementation of the UFLPA,” she added.
She contends that “corporate citizens who are trying to get this right” were making necessary changes to comply with the law, including by enacting social compliance policies, learning more about their supply chains and “demand[ing] changes and shifts.”
“They’re demanding proof that the merchandise they are importing into the United States is free of forced labor,” she said. “We are seeing those shifts in large measure.”
According to a survey of U.S. fashion companies released last month by the United States Fashion Industry Association, 95 percent of respondents said they expected UFLPA’s implementation to impact their sourcing, with more than 85 percent saying they planned to reduce cotton apparel imports from China. Cotton, along with tomatoes and silica-based products, such as solar panels, are deemed a “high-priority” sector in the administration’s strategy for enforcing the new law; each of those sectors already had been impacted by withhold-release orders because of forced-labor concerns before UFLPA went into effect.
Highsmith said eliminating forced labor in supply chains -- not detainments at the border -- is the true indicator of UFLPA’s success, though she noted that seizures also have increased in the fiscal year to-date compared to the prior year.
Since Oct. 1 of last year -- the beginning of CBP’s 2022 fiscal year -- the agency has detained more than 2,000 shipments, valued at $393.6 million, over forced-labor concerns, including detainments made under UFLPA, she said.
In the previous fiscal year, CBP detained a total of 1,469 shipments, valued at approximately $486 million, because of concerns about forced labor, according to its website.
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.
According to Highsmith, the implementation of the new law has gone as the agency anticipated and “has not created port congestion, negative effects on ports of entry, or unexpected supply chain disruptions.”
She described the agency’s approach to enforcement as “dynamic” and “risk-based,” saying CBP was prioritizing actions against “the highest-risk goods based on current data and intelligence.”
UFLPA directs the Forced Labor Enforcement Task Force, chaired by the Homeland Security Department, to regularly update its enforcement strategy, including via revisions to the entity list -- a process set out by DHS in a Federal Register notice published earlier this month. According to the strategy issued in June, the task force intends to update the list “multiple times per year.”
A trade lawyer told Inside U.S. Trade after the strategy was released that the entity list was a “very small subset” of companies known by CBP to have links to Xinjiang.
Some Democratic lawmakers, meanwhile, have pressed CBP about why certain Chinese solar companies with reported links to forced labor were not included on the list.
Nonetheless, reports about early enforcement efforts have suggested that CBP was setting a higher bar in its enforcement of the UFLPA than it had under a previous withhold-release order for solar products.
Highsmith said the entity list was “not so much designed for CBP’s enforcement efforts or to compel me to do my work.” Rather, she said, “it’s more to put our trade partners on notice and to help them see that if they buy from one of these entities, they’re going to have a problem.”
She said the agency also was “continually” interacting with NGOs and others to identify forced labor in U.S. supply chains. She contended that CBP’s efforts have translated to shifts not only by U.S. importers but manufacturers “around the world.”
“This includes increased appreciation for the efforts of workers and unions and the constructive role of non-governmental organizations in preventing and remediating forced labor,” Highsmith said.
She noted, for example, that the agency was reviewing information, including worker testimonies, recently provided by an NGO about “remediation of forced labor conditions” at an apparel manufacturer subject to a WRO.
Highsmith said she was also committed to continued engagement with industry.
“If you’re trying to get it right, I’m here: Call me. We’re not going to seize our way out of this problem,” she said.
According to a CBP official, the agency has not yet implemented the new law “to our fullest” and efforts still are “on the up-ramp.”
“Many” of the goods detained for forced labor this fiscal year have been in the high-priority sectors for which CBP already had issued WROs, the official added.
The official also said CBP, along with other agencies, was “working through” its thinking about the expansion of the forced-labor entity list.
“Up until June 21, we were just working to get all the policies and procedures in place,” the official said. “And so now we're turning our attention as a team to this next piece … and expand the entities list.” -- Margaret Spiegelman (firstname.lastname@example.org)