The CBP Forced Labor Expo: Spotlight on Forced Labor Compliance
U.S. Customs and Border Protection (CBP) held The Forced Labor Technical Expo: Tools for Supply Chain Transparency from March 14-15, 2023, which involved members of the U.S. importing community, partner government agencies, and non-governmental organizations. The public session presentations focused on forced labor compliance and awareness. Free courtesy videos provided by CBP may be found here: https://www.dvidshub.net/tags/video/cbp-forced-labor-technical-expo/page/1. Here are the key takeaways from that CBP-hosted Expo.
UFLPA Enforcement Statistics
CBP is maintaining its Forced labor Enforcement Statistics Dashboard along with its UFLPA Data Dictionary, both which can be found here: https://www.cbp.gov/newsroom/stats/trade/uyghur-forced-labor-prevention-act-statistics. The dashboard statistics do not include data on other forced labor areas enforced by CBP, such as withhold release orders or findings under to 19 U.S.C. § 1307 and 19 C.F.R Part 12 or Countering America’s Adversaries Through Sanctions Act (CAATSA) pursuant to 22 U.S.C § 9241a. The dataset for the statistical dashboard begins June 21, 2022, and CBP has pledged to update the dashboard quarterly. See Figures 1 and 2 below, provided by CBP.
The top three industries impacted by UFLPA enforcement actions in FY 2023 (FYTD) were Electronics, Apparel, Footwear, and Textiles, and Industrial and Manufacturing Materials industries. The top five countries of origin impacted by UFLPA enforcement actions were Malaysia, Vietnam, China, Thailand, and Sri Lanka. Malaysia contained the most detained shipments for forced labor, which was roughly 51 percent of forced labor enforcement on the detainment level, and 38% from Vietnam, with 9% from China. It is important to understand that these numbers come largely from enforcement of forced labor regarding solar panels, which may have been transshipped from China.
The data dictionary further provides that:
“CBP employs a dynamic, risk-based approach to enforcement that prioritizes actions against the highest-risk entities based on an ever-changing data and intelligence environment to prevent goods made, wholly or in part, with forced labor from entering U.S. commerce. CBP’s ability to focus on high-risk shipments enables the agency to continue to facilitate legitimate trade and enforce the UFLPA . . . CBP approaches UFLPA enforcement based on high-risk entities basis, rather than industry or commodity basis.”
Based on this release, CBP is targeting individual companies, not the entirety of an industry or line of commodity, although there are high-risk industries and products, such as cotton, tomatoes, silica, palm oil, rubber gloves, and electronics. However, it is difficult to pinpoint where and why CBP will target, making forced labor compliance crucial for all companies that are importing into the United States.
Forced Labor Compliance Services
Importers must be evaluating their current compliance landscape and should bolster their compliance programs both in human resources but also in technology and innovative strategies. Compliance managers need the technical capabilities of supply chain mapping and tracing to effectively comply with the US’ enforcement of forced labor laws. CBP was clear that importers are required to review beyond their first or second tier of suppliers in their supply chain, as all raw materials, component parts, and inputs must be free of forced labor. Importers will likely need the assistance of third-party service providers, including outside trade counsel, to evaluate their forced labor compliance needs.
Those that provide forced labor auditing and tracing software and services offer diversely unique assistance. There is no “one stop shop.” Deciding which software and tracing service providers will meet your needs will largely depend on your industry and the types of merchandise that you import. Companies should be evaluating whether they need supplier screening and risk assessments, if they need more in-depth services such as supplier communications, mapping, and DNA and lab testing. In the face of integrating these new forced labor compliance practices into your company’s compliance program will probably require additional training, drafting manual procedures, and meeting with senior management to effectively implement those forced labor procedures.
Who should your company choose to guide you to a supply chain free of forced labor? That depends on the complexity of your company and your industry. Dr. Laura Murphy at Sheffield Hallam University and her team are developing a supply chain tracing tool for forced labor that will be made available for free sometime late this year. However, depending on the needs of your company, you may require further services, or something immediately available from potentially multiple providers, to become 100% compliant with the UFLPA and other U.S. forced labor laws.
Forced Labor and CTPAT
Customs Trade Partnership Against Terrorism (CTPAT) program members must meet minimum security requirements regarding forced labor in the supply chain, and in turn, members utilize the benefits of the CTPAT in regard to clearance. Starting in January 2023, CTPAT security partners are required to have a written program that addresses how that partner makes sure that merchandise entered was not made using forced labor. Starting August 1, 2023, CTPAT trade compliance partners must conduct risk-based mapping that outlines their supply chain in its entirety, a written code of conduct concerning forced labor, documenting evidence (such as audits of high risk areas), provide training and education to suppliers, a remediation plan for forced labor inclusion in the supply chain, and share the partner’s best practices with CBP. In return for compliance, CTPAT members enjoy the program’s benefits of front-of-the-line admissibility review against other shipments detained due to forced labor concerns, CBP will allow compliant members to hold merchandise at their facility in lieu of redelivery to CBP’s facilities for inspection, and shipments detained under a Withhold Release Order (WRO) are moved to bonded facilities to remain intact during the detainment process.
Looking forward, there could be a disclosure process for CTPAT members for forced labor errors. As indicated by CBP Director CTPAT Program Manny Garza in a CTPAT-Forced Labor Trade Webinar on January 27, 2023, CBP is developing a program that would allow CTPAT members to disclose that they made forced labor related errors without triggering detainment or other enforcement actions.
Forced labor is a growing area of enforcement for CBP, and has continued to shift into the spotlight of import compliance with growing Congressional and agency action. Importers will find difficulty avoiding the inevitable implementation and integration of forced labor compliance practices into current compliance measures. Forced labor laws can result in detainment and seizure, exclusion of merchandise, penalties, additional withhold release orders, future targeting by CBP, and revocation of import privileges (e.g., CTPAT). Compliance with U.S. forced labor laws have become layered and complex, and often requires the assistance of outside trade counsel when the merchandise or its raw materials, components, or inputs originate from China or Southeast Asia.
Do not wait to start your forced labor compliance program until your merchandise is detained or excluded at the border – because then it will be too late.
For details, consult CBP’s CTPAT Trade Compliance Handbook, revised on February 10, 2023. The CTPAT handbook can be found here: https://www.cbp.gov/document/guidance/ctpat-trade-compliance-handbook.