A Recipe for Compliance

For the average consumer, there’s the cookbook and the shopping list that comes with following those instructions. Particularly now with the Fourth of July holiday this weekend, we’re probably all digging out those hand-written, handed-down books laden with summertime barbecue and boat favorites.

With grocery shelves having some gaping holes or old reliable ingredients no longer available, the need for clever last-minute substitutions and improvisation is quickly becoming the norm rather than the exception. If you’re good, you can ingredient swap without people even noticing the difference.

For buyers of finished goods, the quality and efficacy of the end product they receive has traditionally been sufficient. Needing to know not just the country of origin but the manufacturer, the source of the earliest precursor components and even the name and location of a farm are now all part of an importer’s responsibility. If Customs or a participating government agency like FDA or the EPA wants to know, not having an answer is not an option.

Years ago, CBP was focused on the country of origin of merchandise for both evasion of quotas (limitations on the quantity and type of a product which could be imported) and because USDA laws may permit the import of a product from one country but not another because of the risk to American agriculture. There are no shortage of invasive species which have now become ubiquitous such as the Longhorn Beetle or Asian Carp which threaten to destroy ecosystems.

Moving past quotas, CBP has been focused on the issue of forced and child labor, with an entire page devoted to products, manufacturers and countries from which items are prohibited entry ranging from latex gloves to peeled garlic and electric fans. These goods are tracked on a page with Withhold Release Orders maintained by the agency.

This month, the Uyghur Forced Labor Protection Act (UFLPA) came into law, and unlike any other mechanism preceding this statute, the presumption of innocence came first. Under UFLPA, the term being used is “rebuttable presumption”. As we wrote about in our last entry, CBP is looking not just to where a good was finished, but where any underlying component was sourced for a direct line to the affected region. The agency is using both public data sources and their own intelligence and targeting to identify shipments which may contain violative material from the Xinjiang Uyghur Autonomous Region, or XUAR.

What does this mean for US importers? Three well-known exports from Xinjiang are cotton, tomatoes and polysilicate (a precursor to solar cells).

For a textile or footwear importer, does any part of the garment or shoe contain cotton that was grown in Xinjiang?
For a food importer, does any part of the ingredient list contain tomatoes and can they go back to the manufacturer to provide verifiable records showing the source of the fruit?
For an importer of solar-powered lawn and garden lights, do the solar cells contain raw materials or components that could cause the shipment to be detained?

The level of detail that importers are required to maintain to remain in compliance has increased as governments have wanted to know more. A condition of importing, these agencies contend, is complying with a bevy of laws increasingly designed to follow a product from its earliest identifiable components, both to enforce trade laws and to protect consumers from fraudulent or harmful food, drugs or ineffective or dangerous medical devices.

Future Forwarding has been in the business of helping importers keep compliance for decades and our senior customs and compliance leaders have watched the evolution of these agencies and the granular level of detail they now require. Knowing what’s in a product isn’t just an importer’s legal responsibility, but can also open doors to classification changes that reduce or eliminate duties or provide information to support drawback claims at the time of export.

Let Future Forwarding help ensure your supply chain meets the requisite levels of transparency and compliance to prevent delays and provide savings opportunities. Contact us today.

UFLPA Guidance from CBP

In late December, a nearly unanimous House and Senate passed the Uyghur Forced Labor Protection Act (UFLPA) and sent the bill to President Biden for his signature. He did so, beginning the 180-day clock to the day it would become law.

That day is June 21, 2022, and importers and government agencies and task forces have been working furiously towards that deadline. UFLPA is slightly different from the agency’s traditional Withhold Release Order (WRO) where it has researched and determined that a particular country, region or manufacturer is guilty of using forced labor. UFLPA supersedes existing WROs for the Xinjiang region.

UFLPA’s “rebuttable presumption” presumes guilt and places the burden of proof of innocence (read: no forced labor was used) on the importer. How do they plan to enforce this, and how are importers expected to affirmatively demonstrate that no forced labor was used? Since the law’s passage, the agency has been communicating with affected importers, a pool drawn from the entry data submitted for cargo release.

They began with Known Importer Letters in April, with the key paragraph of obligation in that letter reading:

“The Act requires CBP to apply the rebuttable presumption unless the importer can overcome the presumption of forced labor by establishing, by clear and convincing evidence, that the good, ware, article, or merchandise was not mined, produced, or manufactured wholly or in part by forced labor. This elevated standard will require the importer to not only use due diligence in evaluation of its supply chain, but also to respond completely and substantively to CBP requests for information regarding entries it may review.”

For companies who are members of CTPAT, the agency went further – informing them of their potential suspension or removal from the program for non-compliance.

“As your company has previously imported merchandise from locations or entities potentially subject to the Act, you are being notified that subsequent entries of such merchandise may result in, among other things, suspension or removal from the Customs-Trade Partnership Against Terrorism (CTPAT) program, seizure, forfeiture and/or penalties, or other appropriate action under the customs laws. Please note that this notice may serve as an aggravating factor should CBP take enforcement action upon determining future violations of the Act.”

Within the guidance document VIEWABLE HERE, the agency lays out what will happen with regards to the holding of an entry, remanding for an examination, their time frame to review, and methods of disposition if the goods are found to either be excepted from, or included in, the detention and prohibited entry. If excepted, as per the law, the exemption will be reported by the Commissioner of Customs to Congress.

In reviewing this guidance document, the agency remains silent on many things. Importers should expect that once enforcement begins that the time to release goods being held for UFLPA proof may rise and along with that, applicable storage, detention and demurrage documents.

CBP provides instructions on administrative relief when importers cannot provide sufficient proof at time of entry to protest a prohibited entry order. They have also provided a not insubstantial list of places that companies can go across multiple government agencies to determine compliance and actions to take with suppliers.

Finally, they have also grouped into three key areas of product export from the region – cotton, tomatoes and polysilicon – what specific action companies can take.

The beginnings of this process for importers whose supply chains run through the affected region will be bumpy, but Future Forwarding’s customs brokerage team is committed to working with our clients to quickly and readily respond to holds and inquiries from the agency. We encourage our customers with affected goods to carefully read this document and if you have not already done so, begin assembling proof to submit for entries which are held or detained. Together, we can work through these challenges with as minimal delays and additional costs as possible.

Month: June 2022

A Recipe for Compliance

UFLPA Guidance from CBP

U.S. Head Office

U.S. Legal

U.K. Head Office

U.K. Legal