UFLPA Needs to ‘Aggressively Step Up’ Enforcement, Lawmakers Say
The heads of a bipartisan congressional group have identified several factors that it says are “undermining” the Biden administration’s crackdown on goods linked to forced labor in China, including a skeletal blacklist of complicit entities, the transshipment of products through third countries and a de minimis provision in trade law that allows low-value packages from overseas e-tailers like Shein and Temu to creep through customs with limited data.
“While we appreciate steps the Department of Homeland Security has taken to stem the flow of these goods into our market, we remain deeply concerned that products tied to the Chinese Communist Party’s ongoing genocide against Uyghurs and other minorities in the Xinjiang Uyghur Autonomous Region continue to find their way into American households,” wrote Representatives Mike Gallagher, a Republican from Wisconsin, and Raja Krishnamoorthi, a Democrat from Illinois, in a letter to Homeland Security Secretary Alejandro Mayorkas in a letter dated Jan. 17.
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Both the Department of Homeland Security (DHS) and Customs and Border Protection (CBP) have flagged the same issues as challenges to enforcing the Uyghur Forced Labor Prevention Act, or UFLPA, a two-year-old law that imposes a rebuttable presumption that all goods made in whole or in part in Xinjiang are the products of modern slavery and therefore verboten in the United States—much to the disconcertion of the Chinese government, which has denounced allegations of human rights abuse as Western fallacies designed to thwart its economic competitiveness.
At a House Committee on Homeland Security hearing earlier this month, Christa Brzozowski, assistant secretary for trade and economic security at DHS, admitted that the 30-name-strong UFLPA Entity List “might not reflect” the scale of the problem the legislation seeks to address, but that the department has done a “very impressive job” setting up a “robust methodology” that is “going to stand not only the test of time but legal scrutiny.”
Gallagher and Krishnamoorthi, chair and ranking member, respectively, of the Select Committee on the Chinese Communist Party, wrote that there is an “urgent need” to expand the list to include entities outside Xinjiang with affiliations to companies in the region, especially those involved in seafood, gold and critical minerals industries—categories that are less scrutinized than cotton, tomatoes or photovoltaic parts.
“The committee is concerned about reports that PRC companies that have participated in government-sponsored labor transfer programs have not yet been added to the UFLPA Entity List,” the congressmen said, using an acronym for the People’s Republic of China. “As explicitly stated in the UFLPA, the Forced Labor Enforcement Task Force’s enforcement strategy should include a list of entities that work to ‘recruit, transport, transfer, harbor or receive forced labor.’”
To make its point about transshipment, the letter noted that Vietnam has to date outstripped China for products detained under the UFLPA in terms of value: $10 million versus the latter’s $2 million. It cited the U.S. International Trade Commission, which wrote in a 2022 trade briefing that third-country exporters are likely to be a “significant channel” through which Xinjiang cotton enters American markets.
Even America’s free trade agreement partnerships, such as the Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) and the United States-Mexico-Canada Agreement (USMCA), present potential pitfalls. In July, for instance, CBP detained six shipments from Nicaragua for testing positive for Xinjiang cotton, months after the Central American nation inked its own free trade agreement with China that included “raw materials for textiles.”
Gallagher and Krishnamoorthi criticized CBP for detaining an “anemic” $43 million in fashion-related freight between June 2022 and September 2023 despite the United States logging $184 billion in such imports in 2022 and DHS pegging cotton as a UFLPA enforcement priority.
“Given the massive volume of imports in a sector flagged for priority enforcement, we would expect to see regular large-scale detentions of these products,” they wrote. “Instead, CBP’s average UFLPA reviews per month for textile and apparel goods actually dropped in 2023 compared to 2022.”
These numbers, the lawmakers added, also exclude potential textile and other forced labor products shipped through the de minimis channel, a classification “not recorded by CBP, and a serious concern highlighted in the committee’s “Fast Fashion and the Uyghur Genocide: Interim Findings’ report.” That report, published in June, estimated that Temu and Shein are likely responsible for more than 30 percent of all packages shipped to the United States under the under-$800 exception, amounting to some 600,000 per day or ??210 million a year. Both companies have been accused of selling products linked with Xinjiang, though Shein has said that it has “zero tolerance” for forced labor and that far from profiting from the so-called “loophole,” as its detractors insist, is pushing for its reform.
De minimis adds complications, Eric Choy, CBP’s executive director for trade remedy and law enforcement, said at the January hearing, not least because of the massive volume of shipments that qualify for duty-free privileges—685 million in 2022 alone, a 67 uptick from 2018—though it’s a misconception that they don’t come under the purview of the UFLPA. They do, but their reduced labeling requirements make it harder to ascertain risk.
“The agency is working closely with DHS to develop strategies to address these challenges and include regulatory changes to increase data collection and technology enhancements to improve risk management and targeting,” he said.
Gallagher and Krishnamoorthi say that the Biden administration needs to “aggressively step up” enforcement of potential UFLPA violations, whether directly from China or indirectly through third countries.
“These measures should include adding companies outside the PRC that profit from the use of Uyghur forced labor to the UFLPA Entity List; exponentially increasing testing of goods at ports of entry for UFLPA violations, including by expanding the use of isotopic and other testing; and better publicizing CBP’s enforcement activities to deter would-be violators,” they said. “CBP should also increase its on-site inspections of production sites in CAFTA-DR and USMCA countries to conduct rule of origin verification investigations, which have plummeted in recent years despite a massive influx of yarns and fabrics from the PRC into the region.”
The letter also called for “substantially expanded national-level collaboration” between DHS, the Department of Justice and DOJ and other interagency partners that can assist with prosecuting international trade crimes. Without the “deterrent effect of substantially increased levels of legal actions” against perpetrators of trade crime, the congressmen said, companies will “continue violating the UFLPA at will.”
“Nevertheless, we view this as only a first step and urge DHS to use this center to significantly enhance cooperation with DOJ’s Trade Fraud Task Force and other interagency partners to increase criminal prosecutions against persons profiting off the use of Uyghur forced labor, including in all UFLPA priority sectors as well as in the critical minerals and seafood industries,” they added.
In a statement of support released Monday, National Council of Textile Organizations president and CEO Kim Glas urged Secretary Mayorkas to take “immediate action to strengthen enforcement of the UFLPA and aggressively confront predatory trade practices employed by China that are undermining U.S. manufacturers and endangering American citizens.”
“The government’s failure to fully enforce the UFLPA and the de minimis loophole is devastating U.S. textile and apparel manufacturers,” she said. “Today, this vital domestic manufacturing industry is facing unparalleled demand destruction as a direct result of market forces that have been exacerbated by anemic customs and trade law enforcement. Chinese cotton from Xinjiang is flooding the global marketplace, making its way to our doorsteps and into our closets. As a result, we need a comprehensive and aggressive solution from the administration to confront these practices head-on.”
Paul Scott, president of the Alliance for American Manufacturing, declared his support for the letter, as well, saying that Gallagher and Krishnamoorthi “rightly point out” the “near impossibility” of monitoring shipments by the likes of Shein and Temu under the de minimis provision. He also believes that the rebuttable presumption standard is “too weak” and that efforts to curtail the circumvention of the law through transshipments and other strategies are “falling short.”
“The [UFLPA’s] premise was straightforward: No American consumer should unwittingly aid these atrocities, and no American business should be made to compete with forced labor overseas,” he said. “Importers are actively seeking loopholes in enforcement of the law, and they unfortunately are succeeding,” he said. “The Alliance for American Manufacturing supports the Select Committee’s efforts to hold CBP accountable and push for stronger enforcement.
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