Testimony of Eric Choy, Executive Director, Trade Remedy Law Enforcement Directorate, Office of Trade
A written statement for a hearing before the U.S. House of Representatives, Committee on Homeland Security, Subcommittee on Oversight, Investigation, and Accountability titled, “Exploitation and Enforcement Part II: Improving Enforcement in Countering Uyghur Forced Labor.”
January 11, 2024, Washington, DC
Introduction
Chairman Bishop, Ranking Member Ivey, and Members of the Subcommittee, thank you for the opportunity to discuss U.S. Customs and Border Protection’s (CBP) role in enforcing the forced labor laws and regulations of the United States, including the Uyghur Forced Labor Prevention Act (UFLPA) and Section 307 of the Tariff Act of 1930.[1] I am honored to represent the dedicated men and women of CBP who work tirelessly to uphold our nation’s laws and facilitate legitimate trade to protect our nation’s economy to ensure consumer safety and create a level playing field for American businesses.
Forced labor is an abhorrent abuse of human rights and an unfair trade practice. CBP is committed to eliminating forced labor practices in U.S. supply chains and promoting accountability for the ongoing genocide and crimes against humanity afflicting Uyghurs and other religious and ethnic minority groups in the Xinjiang Uyghur Autonomous Region (XUAR) of the People’s Republic of China (PRC) through its enforcement of the UFLPA rebuttable presumption.
CBP’s Forced Labor Enforcement Activities
Playing a key role in the Department of Homeland Security (DHS)-led Forced Labor Enforcement Task Force (FLETF), CBP is responsible for enforcing the UFLPA and preventing entry of products made with forced labor into U.S. commerce.
As described in the FLETF’s Strategy to Prevent the Importation of Goods Mined, Produced, or Manufactured with Forced Labor in the People’s Republic of China,[2] the UFLPA charges CBP with enforcement of a rebuttable presumption that importation of goods mined, produced, or manufactured wholly or in part in Xinjiang, or produced by entities identified in the UFLPA Entity List,[3] are prohibited under Section 307 of the Tariff Act of 1930, as amended (19 U.S.C. § 1307) and not entitled to entry to the United States. Using resources provided by Congress, CBP leverages all available tools to enforce the UFLPA by applying a sophisticated, risk-based approach utilizing dynamic intelligence, analysis, and data-driven targeting to identify shipments that warrant further scrutiny while facilitating legitimate trade and support of human rights.
Since the UFLPA’s rebuttable presumption took effect in June 2022, CBP has stopped more than 6,000 shipments of goods valued at more than $2 billion for UFLPA-related enforcement action review.[4] CBP made a final entry decision on 5,062 of these shipments, including 2,598 shipments, or 51 percent, which were denied entry to the United States. To date, CBP has received five requests for an exception to the rebuttable presumption, which the Commissioner of CBP may grant if, among other requirements, CBP determines the importer has provided clear and convincing evidence that the goods subject to the rebuttable presumption were not produced wholly or in part by forced labor. In each case, importers have withdrawn their request for an exception prior to CBP making its final determination.
Separately from the UFLPA, when CBP investigates forced labor allegations and has reasonable suspicion of the use of forced labor in the manufacturing or production of goods entering the United States, it issues a Withhold Release Order (WRO) that allows CBP to detain the goods in question at all U.S. ports of entry (POEs) until or unless importers can prove the absence of forced labor in their supply chain. In addition, CBP issues a Finding when the agency determines, based upon probable cause, that forced labor was used in the manufacturing or production of goods, which allows CBP to seize and forfeit the goods in question at all POEs and prevent the merchandise from being imported into the United States.[5]
In addition, once a WRO or Finding is issued, an impacted entity may file a modification petition to provide evidence to CBP that the forced labor conditions are fully addressed and resolved. CBP will evaluate this evidence and may choose to modify a WRO or Finding, as appropriate. CBP considers issuance of a modification to be a successful outcome in the effort to eradicate forced labor from supply chains.
In Fiscal Year (FY) 2023, CBP issued one WRO and modified one Finding and three WROs. Over the past four years, CBP’s forced labor enforcement efforts resulted in the improvement of living and working conditions for tens of thousands of workers including repayment of more than $62 million in withheld wages and recruitment fees trapping workers in debt bondage.
Industry-Specific Enforcement
CBP employs a dynamic, risk-based approach to enforcement that prioritizes action against the highest-risk goods based on current data and intelligence to prevent prohibited goods from entering the United States. CBP enforcement efforts safeguard all industries from unfair trade practices. However, some industries, such as solar and textiles, have seen increased scrutiny due to open-source reporting on the use of forced labor in the production of raw materials used in their supply chains.
The domestic textile industry is critical to the U.S. economy, employing more than half-a-million people in this country. Because imported textiles typically carry a higher duty rate compared to other U.S. imports, with some as high as 32 percent, violators try to lower costs through unlawful practices. For example, violators use forced labor to lower manufacturing costs or misrepresent the country of origin and mislabel and undervalue shipments to circumvent trade duties. These types of activities, which undermine legitimate trade, can be the result of human rights abuses, and threaten U.S. jobs, are a continuous focus for CBP enforcement.
Regarding forced labor enforcement, nearly 17 percent of all shipments stopped by CBP for UFLPA review since June 2022 were textiles, including apparel and footwear. Of these shipments, CBP released 29 percent after a thorough review process by our Apparel, Footwear, and Textiles Center of Excellence and Expertise to confirm the supply chains for those shipments were free of any materials produced in XUAR or by companies on the UFLPA Entity List. Of all the shipments reviewed by CBP for UFLPA compliance, approximately 63 percent were denied entry based on the importer’s failure to determine the shipments were free of any materials produced in XUAR or by companies on the UFLPA Entity List.
In addition to UFLPA enforcement actions, in FY 2023, CBP seized more than 5,000 textile shipments valued at more than $129 million, issued approximately $19.3 million in commercial fraud penalties, and conducted audits that identified over $2 million in additional duty owed to CBP.[6] Additionally, CBP conducted laboratory analysis on 323 shipments, 42 percent of which were found to be mis-declared or mis-described when arriving in the United States. CBP also conducted 57 factory verification visits around the world through its Textile Production Verification Team program resulting in approximately $340,000 in duties recovered and potential further enforcement action. CBP continues to strengthen targeting and enforcement activities within this industry to prevent and penalize individuals and entities violating or circumventing textile tariffs and trade laws – including forced labor – thus ensuring fair competition and economic security for U.S. domestic industry.
Industry Compliance and Due Diligence Support
In conjunction with our enforcement activities, DHS and CBP are committed to supporting industry’s forced labor compliance and due diligence efforts. Recognizing the value of predictability to our trade partners, CBP is committed to providing consistent processing and uniformity of practices across all POEs through our Centers of Excellence and Expertise (Centers)[7] – including forced labor enforcement. Centers include subject matter experts that are focused on industry-specific areas to increase facilitation and maximize trade enforcement nationwide. They are an essential part of our forced labor enforcement efforts, providing timely, efficient reviews of shipments from law-abiding importers and good faith trade actors and releasing legitimate shipments into U.S. commerce in as quickly as 7-14 days, on average. CBP invested in, and continues to provide, training to its officers nationwide who inspect shipments subject to the UFLPA, to Center import specialists who review supply chain documentation for connections to the XUAR, and to its regulatory auditors who review supply chain tracing information during audits of high-risk companies for forced labor.
CBP continues to engage with industry and importers to remind them to exercise reasonable care and take all necessary and appropriate steps to ensure goods entering the United States comply with all laws and regulations. Companies have the most extensive insight into their supply chains and a responsibility to proactively monitor their supply chains to mitigate the risk of importing goods into the United States that were produced with forced labor. CBP encourages companies to conduct thorough independent, third-party audits, risk assessments, and increased supply chain transparency, in addition to other acts of due diligence, including isotopic testing to determine geographic origins of materials such as cotton.
CBP acknowledges that many in the trade community may not have sufficient resources, expertise, or mechanisms to identify indicators of forced labor in their supply chains. To support our trade partners, in March 2023, CBP held a Forced Labor Technical Expo to provide private industry the opportunity to highlight tools and technologies that promote due diligence by enhancing transparency and verifying provenance of goods. We also issued guidance on best practices for importers to demonstrate their merchandise is not subject to the UFLPA based on lessons learned to date, including documentation that trace a given product through the entire supply chain.[8] Additionally, CBP developed an interactive Dashboard with statistics on UFLPA enforcement that provides insight for the public on stopped entries by industry sector and country of export.[9] As part of our commitment to transparency and accountability, we continue to assess what additional data we can publicly report.
Private sector engagement is a vital part of ensuring CBP is enforcing forced labor laws while facilitating ethical trade. CBP routinely engages with civil society organizations, private industry, and interagency stakeholders on matters related to forced labor enforcement. In FY 2023, CBP conducted more than 500 such engagements, including coordination with industry on forced labor issues through the Commercial Customs Operations Advisory Committee and Forced Labor Working Group, resulting in improved trade facilitation for compliant importers while helping to ensure products entering the United States are free of forced labor. Collaboration with stakeholders is a critical component of all of CBP’s trade enforcement efforts, and we are committed to continuing our high level of engagement with the trade community, including on matters specific to forced labor enforcement and compliance.
Additionally, through CBP’s 21st Century Customs Framework strategic initiative, we are also engaging with our stakeholders on ways to refine CBP’s regulatory and statutory framework to enhance and streamline forced labor enforcement efforts. We welcome the opportunity to work with Congress to address these challenges, and advance these initiatives, together.
Enforcement Challenges and Initiatives
CBP’s forced labor enforcement efforts are robust and effective, but we do face challenges. For example, 19 U.S.C. 1321(a)(2)(C) provides for duty- and tax-free admission of a shipment of merchandise with an aggregate fair retail value in the country of shipment of $800 or less, imported by one person in one day. These low-value, de minimis shipments could contain articles made with forced labor. Presently there are fewer data elements collected on de minimis shipments, but CBP and the Treasury Department are considering regulatory changes to increase the data available for review. This would help address risks these shipments present, including in the forced labor context. De minimis status does not exempt shipments from CBP review and interdiction for violations of law, and there is no exception for de minimis shipments under the UFLPA. CBP is firmly committed to meeting challenges in the de minimis context implicating forced labor, including undertaking initiatives to increase information availability and assess risk.
Using the resources provided by Congress, CBP is strengthening our forced labor enforcement efforts by investing in personnel, training, outreach, technology, and laboratory science capabilities. The agency is using technology to map supply chains and research high-risk commodities to ensure supply chains are free of forced labor and XUAR inputs. Using funding provided by Congress, CBP is increasing its analytical and threat detection capabilities.
CBP developed and operationalized analytic models that identify entities operating in XUAR, their affiliates, entities with whom they share traits or characteristics, and indicators of evasion activities (e.g., illegal transshipment) to help further our analysis and enforcement efforts related to UFLPA. Due to the success of utilizing these tools for UFLPA enforcement, CBP analysts adopted similar methodologies to identify routes by which fentanyl and pill presses were entering the United States.
Conclusion
Forced labor is a detestable violation and abuse of human rights and an unfair trade practice; eradicating its existence is an irrefutable moral imperative. CBP is committed to – and proud of – our role in combatting forced labor, upholding the rule of law, promoting respect for human rights, and promoting free and fair trade. CBP will continue enforcing the UFLPA through implementing the UFLPA rebuttable presumption and supporting our government and industry partners.
CBP appreciates the continued support of Congress to execute the full range of our trade enforcement and facilitation mission. We will continue to combat fraudulent trade practices and penalize violators, while promoting lawful trade and protecting domestic industry.
Thank you for the opportunity to testify today. I look forward to your questions.
[2] See the CBP UFLPA Strategy
[3] The UFLPA Entity list is developed from recommendations submitted by FLETF member agencies based on the examination of information from a wide variety of sources, including trade data, reports from civil society organizations, news reports, and other public and non-public information. The decision to add an entity to the UFLPA Entity List is determined by majority vote of FLETF member agencies.
[4] See CBP Uyghur Forced Labor Prevention Act Statistics.
[5] See Current CBP WROs.
[6] See CBP textile enforcement statistics.
[7] See CBP Centers of Excellence and Expertise information.
[8] See CBP Factsheets “Due Diligence in Supply Chains,” “Forced Labor – Importer Due Diligence,” and Informed Compliance Publication, “What Every Member of the Trade Community Should Know: Reasonable Care.”
[9] See CBP Uyghur Forced Labor Prevention Act Statistics.