Analyst: Randomized Audits and Forensic Testing Are Best Ways to Catch UFLPA Violators
A policy analyst with Washington think tank Information Technology and Innovation Foundation argues that CBP should conduct randomized audits using forensic testing technology to ensure that goods imported from Chinese e-commerce platforms, such as Temu, are abiding by federal regulations aimed at preventing the use of forced labor from the Uyghur Autonomous Region in China.
Sign up for a free preview to unlock the rest of this article
If your job depends on informed compliance, you need International Trade Today. Delivered every business day and available any time online, only International Trade Today helps you stay current on the increasingly complex international trade regulatory environment.
Eli Clemens, who focuses on e-commerce and retail technology policy at ITIF’s Center for Data Innovation, said in a Jan. 8 post on ITIF's website that techniques such as isotope testing can "reveal attributes that indicate whether materials originated in Xinjiang. CBP should deploy these methods through randomized audits or targeted investigations of platforms suspected of [Uyghur Forced Labor Prevention Act] violation."
After CBP has conducted such an audit, it should publicly disclose the results, while DHS allows companies an opportunity to address the alleged violations. Persistent violations could result in blanket inclusion under the UFLPA, Clemens said. But a CBP auditing program that adopts forensic testing "would not only strengthen enforcement but also drive innovation in supply chain verification technologies and systems," he said.
While Clemens viewed a random CBP audit using forensic testing as the "most promising" option that the incoming White House administration under President-elect Donald Trump should consider pursuing, he discussed three other options to ensure UFLPA compliance among Chinese e-commerce companies: self-certification, third-party certification and a "blanket inclusion of Chinese e-commerce platforms under the UFLPA."
However, these other three options have their shortcomings, according to Clemens, and so randomized audits of sellers and forensic testing of products to identify non-compliance is the most effective method, he said.
Self-certification, which Temu vendors use, "is inadequate for ensuring UFLPA compliance because it puts too much trust in the company responsible for adhering to the law," Clemens said. Government reports from the U.S. House Select Committee on China and the U.K. House of Commons support this view, he said, although some companies, such as Amazon, may be better at internal oversight than others.
A second option, third-party certification, in which an independent party verifies UFLPA compliance would, according to Clemens, allow "visibility into Chinese e-commerce platforms but would likely fail to catch all UFLPA violations." While third-party certification may be required to comply with product safety regulations, Temu vendors are not required under UFLPA to use such certification. Chinese vendors already use a Chinese third-party certification company accredited by the U.S. government agency overseeing product safety for safety compliance, but these companies may not be set up to also catch UFLPA violations, Clemens said.
The third option, the "blanket inclusion," Clemens said, is allowed under a section of UFLPA that allows for DHS to designate a platform for this option, which would presume that all goods violate the UFLPA unless CBP determines otherwise. However, this could cause retaliation by Chinese companies, and probably overwhelm CBP with the need to verify "hundreds of thousands of vendor supply chain certifications."
Clemens concluded his post by saying: "Policymakers should aim for a balanced approach to UFLPA compliance regulation -- ensuring that platforms transparent about their supply chains are not overburdened, while also preventing bad actors from exploiting the system. By implementing a verification regime using randomized audits and forensic testing technology, policymakers can strike the right balance."