Trade Compliance Flash: The Latest UFLPA Guidance from CBP
CBP Prepares to Expand to New Companies and Products and Sheds Light on How to "Win" Your Admissibility Reviews
Last week, the Forced Labor Enforcement Task Force (FLETF), the U.S. government inter-agency group responsible for designing the enforcement strategy for the Uyghur Forced Labor Prevention Act (UFLPA), held its first biannual public meeting to discuss UFLPA enforcement. During the meeting, top enforcement officials from U.S. Customs and Border Protection (CBP) and the Department of Homeland Security (DHS) revealed key information regarding current and planned changes to enforcement in the coming months. The public meeting came on the heels of CBP's February 23, 2023 release of three new guidance documents: FAQs on UFLPA Enforcement (CBP FAQs), Best Practices for Applicability Reviews (Best Practices), and Guidance on Executive Summaries and Sample Tables of Contents (Admissibility Package Guidance).
Taken together, the FLETF meeting and new guidance materials signal that CBP is routinizing its UFLPA enforcement, has no plans to ease enforcement against sectors under existing scrutiny, and will formally expand enforcement in the coming months by naming new companies to the UFLPA Entity List and by designating new high-priority products or sectors.
Need-to-Know Information for Importers, Suppliers, and U.S.-based Customers
UFLPA enforcement has extended beyond the original "high-priority sectors," including to PVC and aluminum, and additional high-priority sectors are likely forthcoming. In January, we reported that CBP had likely begun detentions of aluminum products. In the FLETF meeting last week, DHS Under Secretary for Policy and FLETF Chair Robert Silvers confirmed that CBP is enforcing the UFLPA beyond the "high-priority sectors" named in the law or in the Enforcement Strategy (i.e., cotton, polysilicon, and tomatoes). The FLETF will formally update the list of high-priority products for enforcement by June, when the FLETF issues its first annual update to the UFLPA Enforcement Strategy.
Takeaway: If your company operates in a sector that has been discussed in a non-governmental organization (NGO), the media, or an academic report as having supply chain exposure to the Xinjiang Uyghur Autonomous Region (XUAR), do not wait until CBP/DHS publicly states that enforcement will expand to that sector. Companies trading in aluminum, steel, automotive parts, and PVC should prepare for detentions of their high-risk products.
CBP is not backing off existing high-priority sectors; in fact, it will continue to detain shipments from some supply lines that have already cleared UFLPA review. CBP confirmed during the FLETF meeting that it will continue to detain shipments of goods made by manufacturers with "known or suspected ties to the XUAR," even if CBP has vetted and released shipments from the same supply line. Although CBP's familiarity with a specific supply line will "streamline" admissibility reviews for additional detained shipments from that line, importers will still experience detentions. When asked if CBP was considering an "off ramp" for importers whose goods had been cleared multiple times, officials stated that – at least for now – manufacturers previously targeted by CBP will remain on the agency's radar as "high risk" until CBP has confirmed that the "supply chain relationships" back to the XUAR are no longer present.
Takeaway: One successful UFLPA admissibility package likely will not clear up CBP's concerns. If you or your suppliers have alleged connections to the XUAR – historical or present – be prepared for repeated detentions. It is unclear whether CBP will also target certain supply lines due to non- supply chain connections to the XUAR, such as corporate affiliations.
The FLETF will expand the UFLPA Entity List by June. The FLETF's UFLPA Entity List subcommittee, co-chaired by DHS and Department of Labor (DOL) officials, is working on additions to the Entity List as a matter of "top priority." Additional names will be added by this June when the FLETF issues its first annual update to the UFLPA Enforcement Strategy.
Takeaway: CBP has previously indicated that the Entity List would likely expand from its initial June 2022 version. FLETF has established channels for importers to communicate with them regarding Entity List additions. Consider taking advantage of these channels if you are concerned that your company may be eligible for addition to the List based on media allegations.
If your goods are detained, CBP will not tell you the reason for the detention; however, you should be able to find out based on open-source due diligence. CBP targets shipments of products made by companies on the Entity List, but it also targets goods made by numerous other companies with suspected supply chain exposure to the XUAR. CBP confirmed that it will not disclose the non-Entity List companies on its unofficial list which trigger UFLPA detentions, nor will it tell importers the specific concern(s) CBP has about a detained shipment. However, CBP confirmed during the FLETF meeting that targeting is based entirely on public, open-source information. CBP made this statement in response to a request for more visibility into their targeting decisions, implying that while they will not disclose its reasons for targeting a given supply line, importers should be able to anticipate whether their goods will be detained based on media and other open-source due diligence. Note that CBP's new Best Practices document also encourages companies to monitor academic, civil society, and news reports "for signs that suppliers may be high risk."
Takeaway: First, if an NGO, the media, or an academic organization releases a report discussing XUAR supply chain exposures in your industry, you should be on alert that CBP may begin detaining goods in your sector. If you or one of your suppliers are mentioned in the report, even if the allegations are outdated or inaccurate, conduct heightened due diligence immediately in preparation for detentions. If your due diligence finds that the public information is inaccurate, consider seeking ways to correct the record publicly or private with CBP. Miller & Chevalier can assist with this. Finally, it is critical that you use a due diligence provider with search methodologies calibrated to the specific risks under the UFLPA for which CBP is screening. If you're not sure whether your due diligence provider fully understands CBP's criteria for targeting under the UFLPA, consider looping in counsel to ensure your due diligence provides you with sufficient coverage.
CBP is releasing a UFLPA Dashboard with detailed statistics on enforcement, and the Dashboard can be used to inform your due diligence. According to the FLETF, the Dashboard will go live in a matter of weeks and will contain UFLPA enforcement statistics that can be filtered by dollar value, Country of Origin, tariff chapter, commodity, and timing of detention (quarter).
Takeaway: We expect that the UFLPA Dashboard will assist with proactive UFLPA risk assessment/compliance. For example, based on the description, a company will be able to search for data on enforcement against products under a specific Harmonized Tariff Schedule (HTS) code manufactured in a particular country (e.g., auto parts manufactured in Vietnam). CBP is also signaling that importers should not limit their UFLPA risk assessment to suppliers located in China. In the Best Practices document, CBP instructs companies to identify "manufacturers in regions and third world countries with a high risk of XUAR inputs." The UFLPA Dashboard may help companies assess risks associated with suppliers outside of China.
CBP will not provide an authoritative list of documentation and information needed to clear a shipment under the UFLPA, but its new guidelines for admissibility packages should help more importers prepare successful submissions. In its FAQs, CBP says that it will consider the "totality of the information" provided by an importer and "maintain flexibility" when determining whether to release detained shipments. The FAQs further iterate the importance of clear, organized, and complete admissibility packages. The Admissibility Package Guidance gives importers a recommended structure for organizing their submissions. CBP has also given an estimated timeline for admissibility reviews: two to three weeks. Note that this timeline applies to "complete" packages and there is often extended back-and-forth and collection of additional traceability documentation before CBP deems the submission complete.
Takeaway: The flexible approach to admissibility reviews discussed in the FAQs is consistent with CBP's past practice. Importers may find this information frustrating, but we view it as confirmation that CBP will take a reasonable approach to admissibility reviews, particularly where the company has been forthright with CBP, conducted robust due diligence, and taken the effort to organize traceability materials in a manner that makes CBP's review as easy as possible. CBP indicates elsewhere in the FAQs that they will work with importers – and as necessary, directly with their suppliers – to facilitate submissions which meet CBP's expectations. For example, suppliers can submit materials directly to CBP if they have concerns about business confidentiality. By formalizing this process in the FAQs, CBP is demonstrating its willingness to share its own lessons from early enforcement with the broader trade community.
Although CBP's new materials relate primarily to the detention and admissibility process, we found the information most helpful to companies seeking to avoid UFLPA enforcement through due diligence and proactive compliance. Embedded in CBP's FAQs is a discussion of the types of goods and suppliers on which CBP is focused: "goods imported into the United States by entities that, although not located in the XUAR, are related to an entity in the XUAR (whether as a parent, subsidiary, or affiliate)." This confirmation regarding CBP's targeting methodologies, along with information we expect to see in the forthcoming UFLPA Dashboard, should inform importers' UFLPA due diligence.
Miller & Chevalier has deep experience in both proactive UFLPA compliance strategies to prevent detentions as well as interfacing with CBP to secure the release of detained goods. Our team is led by a former CBP attorney and includes attorneys with Mandarin language skills and experience living and working in China. We frequently work with companies' existing (or new) due diligence providers to design the UFLPA due diligence strategy and with procurement personnel to understand existing supply chains and enhance supplier onboarding procedures. We provide practical and actionable advice to help companies address their UFLPA risks efficiently and with minimal business disruption.
Please contact us if you have any questions.
Virginia S. Newman*
*Former Miller & Chevalier attorney
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