UFLPA Oversight Hearing Focuses on de Minimis, Entity List, Textiles

Witness Peter Mattis, a former staff director at the Congressional-Executive Commission on China, where he worked on the UFLPA, told the House Homeland Security Oversight Subcommittee that the UFLPA had to include labor transfers to facilities outside of Xinjiang, because if not, Congress would have inadvertently given China an incentive to move workers out of Xinjiang.

"The lion’s share of this burden was handed to FLETF," the interagency Forced Labor Enforcement Task Force, he said Oct. 19. Only 27 entities have been put on the UFLPA list, and Uyghur forced labor researchers from Sheffield Hallam University estimate that 55,000 entities could be on the list (see 2304200041).

"It’s possible there’s too much of a process in the FLETF," he said, and he suggests the task force be told that any firm should be added when a FLETF member suggests it, unless convincing evidence to refute the allegation is brought forward within 14 days. He said firms proposed by outside parties should be dealt with within 60 days.

Oversight Subcommittee ranking member Rep.Glenn Ivey, D-Md., also raised concerns about FLETF in his opening statement.

"We’re hearing that there might be too many cooks in the kitchen," he said. "Doing this by a committee of seven might be a little large." He said he asked the administration why more businesses haven't been added to the list.

"What I’m told one of the concerns is, if you start putting businesses moving forward and you start losing these [cases], you set a precedent," he said. Chinese printer cartridge manufacturer Ninestar Corp. sued in the Court of International Trade over its placement on the UFLPA list (see 2308230016).

Subcommittee Chairman Rep. Dan Bishop, R-N.C., in his opening remarks, also noted how slow the entity list additions have come, saying that DHS "needs to take a more proactive approach to enforcing the UFLPA."

Bishop focused on the garment industry in his opening remarks and in his questions -- North Carolina has more textile manufacturing than any state, with 39,000 workers in the field, according to a North Carolina economic development organization. That's about 8% of North Carolina's manufacturing workforce, according to the National Association of Manufacturers.

Bishop noted there were $153.2 billion in textile and apparel imports in 2022, and CBP detained only $39 million worth from June 2022 until now, under UFLPA.

National Council of Textile Organizations CEO Kimberly Glas told Bishop that 80% of the yarn spun in North Carolina is sent to Central America to be made into apparel, and she said those factories are running only at 50% capacity, which she said "exacerbates our migration crisis."

Her voice full of emotion, she said," We ‘re asking this committee, please help our industry. This is an immediate crisis."

In her written testimony, she argued: "U.S. Customs and Border Protection (CBP) enforcement for UFLPA within our sector has been anemic and clearly not a priority. CBP has detained a mere $14 million in goods so far this year based on the data available through August -- that is a decrease from last year. These statistics are published on the CBP website -- advertising to those who want to skirt the rules that the United States government is inspecting this trade at such a minimal level that you can import these products with virtually zero risk of detection."

After the hearing, Bishop said he decided to organize the hearing after becoming aware of a Reuters article that showed that 15% of 86 textile items that underwent isotopic testing had Xinjiang-grown cotton in them (see 2309010038). He asked Glas why such little isotopic testing was being done.

She said CBP was given $101 million for UFLPA enforcement, and the agency has only spent $1.3 million on isotopic testing. She told Ivey the testing can take three to four weeks.

"Textile and apparel is one of the primary forced labor products coming out of Xinjiang," Glas said.

She also questioned why CBP hasn't purchased its own isotopic testing equipment. She said her group "just briefed certain agents -- they weren’t even aware isotopic testing existed."

Rep. Dale Strong, R-Ala., asked Glas about how production under the Dominican Republic-Central America Free Trade Agreement is affected by China's forced labor in cotton, and Glas said China is shipping its cotton to those countries, even though they are supposed to use American cotton to qualify for benefits.

She complained that CBP enforcement of free trade agreement rules of origin has declined since 2018. "Forty percent of the duties are collected on our industry, so people want to cheat the system," she said. "We need immediate help."

Bishop said after the hearing that the hearing was organized too quickly for DHS to provide a staffer as a witness, but he's anticipating follow-up with CBP, "and in fact, based on the content of the hearing, I think there's an opportunity to make that bipartisan request." He said the chairman of the DHS Committee would need to clear follow-up, however.

Coalition for a Prosperous America CEO Michael Stumo focused on de minimis in his testimony, telling members that CBP should return to its pre-1994 policy, whereby all commercial importers used customs brokers. He also said no apparel should be allowed in under de minimis, as, he said, it is a "very risky" good for forced labor content, and he said "very risky countries like China" should also be ineligible for de minimis. He noted that there are several bills that have been introduced that would eliminate Chinese eligibility for de minimis or radically reduce the dollar amount for Chinese exports qualifying for de minimis.

He said de minimis should not "be a major commercial channel."

Glas told the committee to ask the administration to begin a rulemaking process to change de minimis eligibility. "You could divorce all e-commerce shipments from receiving de minimis overnight," she said.

Uyghur Human Rights Project's Louisa Greve also pointed to de minimis as an UFLPA enforcement weakness, and cited International Trade Today's reporting in her criticisms in her written testimony.

Stumo said in his opening statement: "De minimis has been weaponized by our adversaries abroad." He said express shippers and e-commerce platforms are its primary defenders. "The de minimis loophole makes a mockery of the act," he said, referring to UFLPA.

Ivey asked Stumo if his proposals would require additional CBP staff, and he said he couldn't say they wouldn't.

Both Greve and Mattis also complained that DHS has not hired the kinds of Mandarin-proficient officials they need to do investigations. Mattis said it's not surprising it's taking time to ramp up -- before UFLPA, CBP had only 30 forced labor investigators -- and Greve said she's concerned appropriations will not continue. She said she heard that the $70 million jump in spending for UFLPA may not be continued in FY 2024, which she said would mean enforcement will "go completely backward."

Bishop said after the hearing that he was not familiar with the de minimis legislation that had been introduced, but wanted to look into it after what he'd heard.

He also said he thinks facilitating legitimate trade "needs to be balanced" with the need to keep goods made with Uyghur forced labor out of the country, but when told that roughly half of the goods that CBP detained under suspicion of Uyghur forced labor later proved they had no Xinjiang content, he said that ratio "sounds about right."

"If 50% weren't tied to Xinjiang, you'd love them to be free of the burden of inspection and so forth, but half the time they are tied, and if you want a law to be effective, you have to interdict," he said. He said if 90% of what CBP stopped was found to be linked to Xinjiang, "you're obviously missing a lot of stuff."