On April 5, the Department of Homeland Security (DHS) announced a plan to crack down on illicit trade in the textile industry. The announcement comes as DHS has been urged, especially by the textile industry, to more proactively and fully enforce the Uyghur Forced Labor Prevention Act (UFLPA), including adding parties to the UFLPA Entity List.

Products imported from parties on the UFLPA Entity List are presumed to be made in whole or in part with forced labor and thus are blocked from entering the United States unless the importer can rebut the presumption with clear and convincing evidence.

In making its announcement, DHS emphasized that “[t]he plan will serve as a blueprint for future strengthened enforcement efforts through intensified targeting of small package shipments; joint trade special operations; increased customs audits and foreign verifications; and the expansion of the [UFLPA] Entity List.” The announcement comes as companies continue to challenge DHS’s application of the UFLPA. As described below, a Chinese company is only the most recent company to bring suit against DHS under the U.S. Administrative Procedures Act (APA).

DHS Plan Focused on Additional Screening, Inspections, Audits

While it remains to be seen how the DHS plan is implemented, it will reportedly include several elements, including the following:

  • Increased scrutiny of small package shipments. DHS wants to improve the screening of packages claiming the Section 321 de minimis exemption through expanded targeting, laboratory and isotopic testing, and focused enforcement operations.
  • Conducting joint U.S. Customs and Border Protection (CBP)-Homeland Security Investigations (HSI) special operations to ensure cargo compliance. This includes physical inspections; country-of-origin, isotopic, and composition testing; and in-depth reviews of documentation.
  • More customs audits. DHS personnel will conduct comprehensive audits and textile production verification team visits to high-risk foreign facilities that produce textiles to ensure their products qualify under certain U.S. foreign trade agreements.
  • Expanding the UFLPA Entity List. DHS will identify malign suppliers through more intensive review of additional entities, including in the high-priority textile sector, for including on the UFLPA Entity List.

DHS Has Begun to Implement the Plan

As part of the announcement, DHS explained the steps it has already taken under the auspices of the plan, including the following:

  • Launching 15 Trade Special Operations (TSOs) focusing on physical inspection of small packages.
  • Initiating trade audits on more than $10.5 billion in textile imports.
  • Completing Textile Production Verification Team (TPVT) visits to 44 factories and five raw material providers across Honduras and Mexico.
  • Adding 10 entities from the textile sector to the UFLPA Entity List.

Potential Blueprint for Future Enforcement

The DHS plan may create a blueprint for future enforcement efforts outside the textile sector. Even if that does not happen immediately, the plan is still instructive guidance for importers generally. For one thing, the intention to conduct foreign verifications is notable, even if it appears that audits are currently targeting free trade agreement partners such as Honduras and Mexico. It remains to be see whether future audits will target suppliers in higher-risk jurisdictions such as Malaysia, Vietnam, or – especially – China.

In addition, the plan constitutes an attempt to address an influx of illicit trade imported using small, low-value packages. Companies utilizing the de minimis threshold to import products should be ready for a more rigorous enforcement process. Traditional importers of large volumes may not notice an increase.

Another Chinese Company Challenges UFLPA

On February 20, Hoshine (Jia Xing) Silicon Industry Co., Ltd. filed a complaint contesting a 2021 withhold release order (WRO) in which CBP instructed U.S. Customs personnel to “immediately begin to detain shipments containing silica-based products made by [Jia Xing] and its subsidiaries.” WROs direct CBP Port Directors to detain a particular shipment of goods because the agency has reason to believe the goods or their inputs were made using forced labor, forced child labor, or prison labor. As a result of the WRO, Jia Xing was added to the CBP WRO List.

In its complaint, Jia Xing argues that CBP violated the APA because the decision to issue a WRO lacked evidentiary support and CBP failed to provide an adequate explanation or evidentiary basis for placing Jia Xing on the WRO list. (Among other things, the complaint notes that the WRO erroneously asserts that Jia Xing is based in the Xinjiang Uyghur Autonomous Region; Jia Xing in fact is headquartered in Zhejiang Province.)

If this case is allowed to proceed and the court decides it on the merits, it will offer important insights into how courts will view current CBP enforcement efforts around forced labor. With the U.S. government increasingly using trade to police corporate activities in faraway places, the decision could have widespread consequences.

Bass, Berry & Sims regularly supports clients with their most challenging customs concerns. If you have any questions on the new DHS announcement or UFLPA compliance in general, please contact the author.

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Photo of Thad McBride Thad McBride

Thad McBride advises public and private companies on the legal considerations essential to successful business operations in a global marketplace. He focuses his practice on counseling clients on compliance with U.S. export regulations (ITAR and EAR), economic sanctions and embargoes, import controls (CBP)…

Thad McBride advises public and private companies on the legal considerations essential to successful business operations in a global marketplace. He focuses his practice on counseling clients on compliance with U.S. export regulations (ITAR and EAR), economic sanctions and embargoes, import controls (CBP), and the Foreign Corrupt Practices Act (FCPA). He also advises clients on anti-boycott controls, and assists companies with matters involving the Committee on Foreign Investment in the United States (CFIUS). Thad supports international companies across a range of industries, including aviation, automotive, defense, energy, financial services, manufacturing, medical devices, oilfield services, professional services, research and development, retail, and technology. Beyond advising on day-to-day compliance matters, Thad regularly assists clients in investigations and enforcement actions brought by government agencies, including the U.S. Department of Justice (DOJ), the U.S. Treasury Department Office of Foreign Assets Control (OFAC), the U.S. State Department Directorate of Defense Trade Controls (DDTC), Customs and Border Protection (CBP), the U.S. Commerce Department Bureau of Industry & Security (BIS), and the Securities & Exchange Commission.