CBP: Full Traceability Not Enough to Win UFLPA Challenge

Carrie Azurin, acting associate executive director of Trade Regulatory Audit at CBP, advised importers to look at their packages with an auditor's skeptical eye.

If you have information about what quantity of raw materials from a certain source was sold to a vendor to start making the product, ask yourself "if that amount really makes sense in producing the final finished good," she said.

In addition to looking at invoices, auditors may look at bank statements to see if the payments were made to who you said you paid.

"We're trying to identify where it doesn't make sense at each level of the organization," she said.

The Industrial and Manufactured Material Center has flagged 40% of the UFLPA detentions. Bob Bekalarski, assistant center director for enforcement at that Center of Excellence and Expertise, advised importers to provide a guide to the documents, like an index in a book. "We want you to tell us a story" of how the product was made, from start to end, he said. "Everything should link together. There should be a logical progression to this."

"There is no one document or piece of information" that makes CBP examiners say, "Oh, this is an automatic release," Bekalarski said. "It's the totality of the evidence."

He advised importers to provide translated documents. They can rely on CBP to translate, but that will take longer, and he said if it's not translated, that makes him ask: "Do you know what it says?"

Redactions in documents should be limited. "I have seen documents that were 80 to 90 percent black lined," he said, which poses more questions to import specialists than it provides answers.

The Grunfeld Desiderio law firm has submitted more than 60 UFLPA applicability packages. Heather Litman, a partner at the firm's Los Angeles office, quipped that pronouncing UFLPA as "uffel-puh" makes it sound like a German drinking game. "I say U-flip-uh, because you should be flipping out," she said.

Litman said that when a firm gets a detention notice, the first things to look at are whether the import is a one-off, or if the goods are critical to the business' ongoing operations. Are the goods perishable, or seasonal? If they are not critical, or if they will no longer be salable in several months, it's better to avoid the applicability review, which is expensive in terms of professionals' time, is costly in paying to store the goods while the review is pending, and could be costly in paying outside professionals like lawyers or consultants. But if the goods that are detained are mission-critical, or worse yet, they are the first in a group of shipments from the same supply chain on the water, it will be worth it to challenge the detention.

She said, "I don't think the system as it exists is sustainable," she said. "We're all exhausted from the fear, the repetitiveness."

She added: "You might have to submit 30 times for the same supply chain."

An attendee at the CBP Trade Facilitation and Cargo Security Summit asked Bekalarski if a supply chain is found not to touch Uyghur labor once, if that will prevent a detention for the same product in a future shipment?

He responded that it doesn't, but said as the same supply chain is presented again and again, the center's examiners develop "a comfort level," and instead of a heavily detailed package, may "ask for very specific pieces of information."

But he said that wouldn't happen after the second shipment, saying it would be "maybe 9 or 10 where we get to that point."

There's no time limit on the number of extensions an importer can apply for as he or she is working to get together a documents package to challenge the applicability of UFLPA -- it depends on the number of tiers in the supply chain and the complexity of the product.

Litman emphasized that winning an UFLPA challenge is likely to take months. She said at first, just getting this volume of data to CBP was challenging, because the Document Image System (DIS) doesn't have enough capacity, and you can't send a USB stick to CBP. CBP then came up with a way to upload a link to a sharepoint drive, but she warned that not all import specialists are aware of this method.

Ann Marie Paul, acting director of trade operations, said the agency is working on developing a case management system. She also said that as the agency has gained experience, some reviews only take a week or two.

She also told the audience bluntly: "I would approach it as: expect to have a detention."

Litman said that with that expectation in mind, importers should think about who their most important vendors are, and see how far back in the supply chain they can trace for goods from those vendors. She also advised that contracts be written in such a way that if goods can't enter into the U.S., the producers have financial responsibility for that failure.

An attendee asked Bekalarski if a challenge was not successful, would he tell them why it was rejected?

Bekalarski said first the period of time for a protest would have to elapse, and the specialist is "not going to go page by page and comment," but will give some direction "if you ask."

He said information gaps are often identified in their analyses, and they'll share what gaps they noted.

The attendee asked if it would be something actionable, such as saying the quantities produced at one stage don't match what you're buying?

He replied, "We'll point out contradictions in the paperwork," such as that one.

Eric Choy, executive director of the Trade Remedy Law Enforcement Division that oversees the efforts to stop the import of goods made with forced labor, said importers often ask for CBP to post more detailed data about what is stopped under UFLPA beyond broad categories like "electronics." He said that the agency can't do that, because it runs the risk of identifying specific companies, and that would make the public assume that the goods contain forced labor. The U.S. cannot prove that goods detained due to UFLPA have inputs made with forced labor in most cases -- the presumption of forced labor in Xinjiang means they don't have to.

However, Choy said maybe two, four or 10 years from now, there will be enough data to release particular tariff lines that are being stopped without exposing which shipments were stopped.

Choy said there have been multiple attempts by importers to overcome the presumption of forced labor, not just prove that the product had no link to Uyghur labor. But none have progressed to CBP admitting the goods. He said the importers and CBP either came to an impasse on what the evidence showed, or the importer decided it was better to sever the relationship with the Xinjiang supplier. In at least one case, Choy said, the company could have cleared the hurdle, but because that would have triggered a public report to Congress, they didn't want that kind of disclosure, and withdrew the request.

An apparel importer asked the panel if another input is listed as a high priority factor in June, will CBP start enforcing that the next day?

Choy, who had accidentally listed synthetics as a high priority sector in his opening remarks, said there would be no phase-in, because already, enforcement is not limited to high-priority commodities.