U.S. Textile Industry Figures Prominently in Congressional Hearing Exploring the Implications of the Lack of Enforcement of UFLPA
A bipartisan congressional panel questioned three administration officials Thursday over concerns related to their enforcement efforts to staunch the massive flow of products made with forced labor, which has adversely impacted the U.S. textile industry and other key sectors of the U.S. economy.
The House Homeland Security Subcommittee on Oversight, Investigations and Accountability held the hearing to evaluate the Department of Homeland Security’s (DHS) efforts to counter China’s predatory practices and abuse of the Uyghur people, particularly through forced labor.
At the hearing, titled “Exploitation and Enforcement: Part II Evaluating the Department of Homeland Security’s Efforts to Counter Uyghur Forced Labor,” several committee members discussed the U.S. textile industry and the implications of the lack of enforcement of forced labor goods, our free trade agreement origin rules, and millions of imports coming in through the de minimis loophole.
Lawmakers raised serious questions and concerns about DHS and U.S. Customs and Border Protection (CBP) activities to enforce the Uyghur Forced Labor Prevention Act (UFLPA), which effectively bans any products—including apparel containing forced labor cotton from Xinjiang, China—from entering the United States.
Notably, administration officials acknowledged the severe challenges their agencies face and identified areas where significant improvement is needed, including: the need for more isotopic testing of products suspected of being produced with forced labor; better data collection technologies related to de minimis shipments; and an expansion of the UFLPA Entities list, which bars companies and subsidiaries barred from exporting goods to the U.S. market due to use of forced labor.
They also outlined efforts they have undertaken to confront the massive influx of imports coming in through the de minimis loophole and targeting imports suspected of being produced with forced labor.
In his opening statement, Chairman Dan Bishop (R-NC), focused a large portion of his remarks on the threat China’s predatory trade practices and a lack of customs enforcement have on vital economic sectors.
“Unfortunately, China’s use of forced labor in global supply chains continues to pose a significant enforcement challenge across a wide range of economic sectors including textiles, minerals and seafood,” Bishop said. “For example, the overwhelming majority of cotton used in Chinese textile products is grown in Xinjiang province, which the ULFPA specifically singles out as a focal point of China’s state-sponsored forced labor regime.”
See Rep. Bishop’s remarks here:
“Any cotton grown in the province is presumptively linked to forced labor under the UFLPA, yet CBP’s isotopic testing of clothing samples still found items shipped to the U.S., made with cotton from Xinjiang. CBP detained $46 million worth of textile and clothing imports for suspected UFLPA violations since June 2022. Yet, CBP’s detention rate is just a sliver of the billions of dollars of textile products the U.S. imports annually from China, emphasizing the continuing challenge in effectively enforcing the UFLPA,” Bishop said.
“Furthermore, those who seek to profit off goods tainted with forced labor use a wide range of tactics to obscure forced labor in the supply chain, such as shipping products through other countries to disguise country of origin, mixing inputs produced with forced labor with clean inputs and misrepresenting the origin of products in question,” he added.
Bishop stressed the importance of isotopic testing, noting such testing can help identify inputs traced to a geographic area, such as cotton grown in Xinjiang. He said it is “not clear how widely or routinely such forensic testing technologies are being used.”
Ranking Member Glenn Ivey (D-MD) said in his opening remarks the task force charged with adding companies and other entities to the UFLPA Entity List of companies and subsidiaries barred from exporting goods to the U.S., should be reviewed, noting bureaucratic red tape may be slowing the process down because there are “too many cooks in the kitchen.”
Ivey also expressed concerns that customs seizures of goods suspected of being made with forced labor are being released back to the importer who then is able to sell them in other foreign markets and make a profit.
“I’m concerned about how that actually punishes entities. I call it a snafu. We don’t want to allow them to continue profiting” from forced labor products, he said. “I don’t think that is the right way to go.”
Administration officials later addressed questions from lawmakers around isotopic testing.
Bishop also noted that the first hearing in October featured several witnesses who “pointed to the rapid increase in de minimis shipments as an avenue for prohibited goods to enter the U.S.”
De minimis shipments have more than doubled over the last five years, due to the explosion of e-commerce, with more than 1 billion de minimis shipments entering the U.S. in FY 2023.
“As you would expect, an increase in shipments, increases the chance of contraband getting through,” Bishop said, noting the majority of de minimis shipments originate in China.
Exploring the Role the De Minimis Loophole Plays in Undermining Enforcement of UFLPA
Bishop asked Acting Assistant Secretary of Homeland Security for Trade and Economic Security Policy Christa Brzozowski to comment on whether e-commerce platforms are a driver of “this massive expansion of the exploitation o the de minimis exemptions?
“Some suspect that it is a huge source of evasion of the interdiction of forced labor produced goods,” Bishop said.
Brzozowski acknowledged the challenging environment or agents targeting an exponential rise in de minimis shipments over the few years.
“We are enforcing our forced labor laws in this particular channel, but it is more challenging because of the limited amount of data we get, which drives our targeting capabilities and decision making,” she said.
See the exchange here:
Rep. Dale Strong (R-AL) also posed questions about the explosive growth of de minimis shipments and their impact on UFLPA enforcement.
Strong pointed to testimony at the committee’s pervious hearing on UFLPA enforcement, which included testimony from NCTO President and CEO Kim Glas, at which some witnesses said increased de minimis shipments from China undermined the ability of CBP to detect forced labor products or contraband.
“How concerned are you that Chinese company can take advantage of de minimis shipments to ship goods potentially made with forced labor to the Unites States?” Strong asked the witnesses.
Brzozowski said she shared the congressman’s concern and acknowledged the challenge associated with data collection.
“As my CBP colleagues mentioned, there is a difference in the data we get from these types of shipment and that can complicate enforcement,” she said. “Also given the volume of these shipments, it’s a complex environment. I do want to make clear that targeting and laws do apply in this environment. We do our best with the information that we do have.”
In the short term CBP is looking into enhancing the targeting of de minimis shipments “to do better,” using software and other technologies, she said.
See the full exchange here:
In another exchange with a witness, Strong asked Eric Choy, executive director of trade remedy law enforcement at CBP’s Office of Trade, how much visibility “we have regarding the scale of potential ULPA violations related to de minimis shipments.”
Choy acknowledged the challenges the agency faces due to the “lack of information we gather as compared to traditional shipments that come through the ports of entry.” He said the agency is facing a “record level” of de minimis shipments.
Choy cited two data-related pilot programs the agency launched to access more data that would allow it to review de minimis shipments more closely.
“We’ve come to the culmination of both of those data pilots and we’re working together with the department in a regulatory effort to introduce different ways to file entries for de minimis shipments and then also what data elements we would require for de minimis shipments,” he said. “We feel that with that kind of expanded information and data for each of the shipments that comes in would give us greater flexibility and greater access for our targeting systems to be able to identify risk factors and be able to stop specific shipments coming into our ports of entry.”
Expanding the ULPA Entity List
Under UFLPA, Congress directed DHS to chair a task force to establish an “entity list” of companies and subsidiaries barred from exporting goods to the U.S. market due to the use of forced labor.
Lawmakers and industry groups, including NCTO, have called on the administration to robustly expand that list to help easily identify entities and block their goods from entering the U.S.
Concerns were raised about the list at the hearing.
“China is a massive economic actor, and a big market and I hear that 85% of cotton is sourced in Xinjiang. Why were so few people even on the initial entity list? Why wasn’t it hundreds or thousands of entities?” he asked.
Brzozowski agreed with lawmakers that the entity list should be expanded.
“The team has done very impressive work since a relatively short time of enactment of the law, setting up not only framework but robust methodology that is going to stand not only the test of time but legal scrutiny,” she said, adding that the task force will continue to leverage its resources to ultimately add more bad actors to the list.
CBP’s implementation of isotopic testing was also a key issue addressed at the hearing.
At the previous hearing, NCTO’s Kim Glas pushed for more robust isotopic testing which the industry believes will help CBP better identify goods made with tainted Xinjiang cotton and slow the influx of de minimis packages arriving from China.
Choy said the agency has opened a lab testing facility in Savannah, GA, and has plans to open up two more, in New York and Los Angeles, in six to eight months. “That will increase our capacity and we anticipate that we’ll be doing more isotopic testing and we’ll leverage that isotopic testing to investigate where we see allegations of risk or use of forced labor,” he said.
Rep. Ivey noted he had met with representatives of the U.S. textile industry, who were pushing for an expansion of isotopic testing and said he was open to looking into it.
Bishop later asked Choy to quantify the testing these labs will do.
See their exchange here:
Forced Labor Leaking into Third-Country Imports and FTA Partner Countries
Strong said a significant percentage of U.S. textile and apparel imports come from Central and South American countries, with which the U.S. has free trade agreements. “I can think back just a matter of years ago and Alabama was home to Russell Athletic and Champion Apparel. We were known in one area of Alabama as the ‘sock capital of the world’ but that has gone away,” Strong said.
“These agreements require firms to show that the goods they are shipping to the U.S. were produced in the region to qualify for duty-free status. What actions has DHS and CBP taken to determine whether this system is being abused to allow goods made with Uyghur forced labor to enter the U.S.?” Strong asked.
Choy noted that textiles is a priority trade area mandated by statute that requires CBP to focus its resources in this area, including targeting candidates, audits, verification visits and inspections and cargo inspections at the port of entry and post-release.
Strong followed up, asking what action CBP takes if it detects specific products made with forced labor being diverted to third party countries.
“If there are illegal transshipments through third countries, that is something we would stop, detain shipments, then issue duty requirements to make the government whole or if there is recidivism, issue penalties,” he said.
To view the full hearing, please visit the link here.