Experts: UFLPA Enforcement Changing as CBP Tested by Tariffs Changes

Luke Tillman, a former CBP enforcement attorney who now serves as general counsel for Chinese solar panel giant LONGi, said that since the beginning of the year, the Electronics Center of Excellence and Expertise has not been granting extensions of time to get document packages in after a UFLPA detention.

"They want to make an admissibility decision in 30 days," Tillman said. His goal has been to get documents submitted to the government within two weeks; in some instances, LONGi has been able to submit them within seven days and gotten a release within seven days, as CBP agreed there was no nexus to Xinjiang.

Tillman was speaking on an Aug. 21 webinar for compliance officials on transshipment tariffs and UFLPA compliance, hosted by Zeus Trade.

Too much documentation is as bad as not enough documentation when it comes to UFLPA applicability reviews, Tillman said, either because it becomes confusing, or it's just too much to get through for CBP in the 30-day timeline.

Tillman said, "For those companies that have been detained quite frequently, they have built the muscle" of putting together the right documents -- and having command of what upstream suppliers' documentation means.

If you don't understand what you've given CBP, "it’s challenging for Customs to trust you," Tillman said. CBP's position is to be skeptical by nature, he said.

"Ultimately, the idea for me of safe suppliers is a misnomer," he said, when it comes to ensuring there are no Uyghur-transferred workers or raw materials coming from the Xinjiang region of China. "I think there are safe documentation standards."

Tillman said when a supplier is three, or even two tiers away from the end product manufacturer, the import compliance requirements are "more nebulous" to them.

It's hard for that company to understand why a delivery note for a certain material has to have a date and quantity on it, he said, and sometimes that cannot be communicated over a virtual meeting or email.

He said the government's view is that "it's your responsibility to take those obligations and move them upstream."

Crowell & Moring partner David Stepp said the number of inputs in a finished good makes it easier or much harder to prove there's no connection to Xinjiang. Cotton in apparel is relatively easy; but an engine has steel, has aluminum, and has hundreds of parts.

"We use screening tools" on those complex manufactured goods, to see if a sub-tier supplier that the importer knows about is on an UFLPA Entity List, for example. He said compliance teams should "start with the highest risk and run them to ground."

Stepp noted that last week, the government issued 407 new derivative products, and importers will have to determine where the steel in those was melted and poured, where the aluminum was smelted and cast, the value of the metals in the products, the weight of the metals in those products, and what percentage of the value those metals represent (see 2508150063).

He called these tasks, which require information that may not all reside with the tier 1 supplier or end manufacturer, "very, very difficult."

"Customs has provided very little guidance on the value calculation," he said, "but it’s something that has to be done."

If it's not done, a 50% tariff will apply to the entire value of the good.

The webinar speakers speculated on how the increased demands on Customs, with the plethora of Section 232 actions and emergency tariff actions, could affect UFLPA enforcement.

Tillman said, "Having spoken with a number of my former colleagues there," sometimes they are seeing news about tariff changes for the first time on social media, just as importers are.

He said the last eight months have been "an incredible workflow for them," and said, "they’re asked to be dynamic, to be able to adapt quickly to changes. That’s not the way that Customs operates."

He said some senior attorneys have left the agency. "Customs, their resources are being stretched. They’re not going to say that publicly," he said.

Tillman said that while that may reduce the number of detentions, it also could result in targeting big-name suppliers in a priority sector who have lots of shipments.

Or, he said, it could result in another questionnaire as was sent to solar importers in early 2024 (see 2403140057).

Tillman said that questionnaire "was, without a doubt, the best enforcement tool I have ever seen from the government" in terms of effectiveness compared to the drain on CBP resources.

"It created change immediately with regard to upstream suppliers," he said. He added that some companies couldn't provide some of the information on the questionnaires, and they had shipments detained. Those companies "spent much of last year struggling to get goods released after that."

He said that, in talking to CBP workers, they emphasize "they could reissue that questionnaire at any point."

But, he said, with the loss of talent at CBP this year, and the increased demands for enforcing so many different traceability and tariff designations, he worries that there will be growing pains, similar to what importers say in early UFLPA enforcement.

"There’s probably going to be some amount of errors and mistakes" from CBP, he said, but added: "You bear the burden of showing where the agency made the mistake."