Expeditors International of Washington, Inc. (EXPD) Earnings Call Transcript & Summary

Good morning, everyone. We are getting close to the top of the hour here. So we are going to get started in just a few minutes. We appreciate you all joining us for the U.S. Enforcement of Forced Labor Imports Update Webinar. So again, hopefully, everyone's calendar alerts are letting them know that it's right at time to join this webinar today. We have almost 200 of you already joining us. So we are going to switch over to look at a couple of housekeeping items. And that way, we can be respectful of everybody's time. We have plenty of content to cover today, so we want to get right to it. As always, if you've joined one of these webinars with Expeditors before, we do have about 45 minutes of content and then we will have a Q&A to follow. We do ask that you submit your questions in the Q&A window that you will see on your controls and specifically not the chat that will help us keep everything organized. Everyone always wants to know, of course, especially with our customs webinars, if they will be able to receive the slides and how they get those -- we will send you a short survey that we just ask you to provide some feedback for us so that we can make sure we're making these webinars as valuable for you as possible. And at the end of that survey completion, it's going to open up a new landing page for you, and that landing page will have a link to the presentation slides as well as the recording and the recording pass code. So by all means, please do fill out that survey; a, it helps us make sure that we're always improving what we do here with these webinars and b, gets that material to you. And then finally, here on this last QR code, -- if you have just recently started to receive webinar invites, maybe somebody forwarded you the information for this particular event, but you'd like to join in future, you can get our webinar invites automatically by subscribing here at this QR code. And this will also provide you access to global market updates as well. So now to introduce our speakers. Today, we have, as always, a wealth of knowledge from our customs team with us. So we have Madeleine Veigel. She is our Senior Director of Customs for the Americas. And Ted Henderson, who is our senior adviser for customs for the Americas as well. And then we're fortunate today to have a special guest with us. We also have Jeffrey Franz. He is our international trade analyst with the U.S. Customs Border Protection, specifically their Forced Labor Division. So Jeffrey, we really appreciate you joining us today. Madeleine and Ted will cover the bulk of the content and then Jeffrey is going to join at the end for the special Q&A section. So Madeleine, I will turn it over to you.

Okay. Thank you so much, Samantha, and thank you so much, everyone, for joining our webinar. We really appreciate it. This is what Ted and I and Jeffrey will be reviewing today. I'll be going over a forced labor overview very quickly and then jumping into the U.S. statutes and CBP's enforcement actions. We'll then get into the Uyghur Forced Labor Prevention Act and go through that as well as a process flow showing what the process is when you do receive a detention notice, whether it's a UFLPA detention or WRO detention notice. And then we'll share some updated information from CBP based on the most recent trade summit in Philadelphia. And then just some guidance on what all of you can do in order to prepare and really make sure that you are -- that your supply chain is clean of forced labor. And then we have the great opportunity here to -- for you to ask questions to Jeffrey Franz, who we're fortunate enough to have with us here on the webinar, and he will answer any questions. So we'll try and leave the last 15 minutes for your questions to Jeffrey. So anyway, we can go to the next slide, please. Yes. So just as a very broad overview, for those of you who are newer to the Forced Labor topic, forced labor is really an issue globally. This is not -- Forced labor is not specifically related to any 1 country. We talk about -- a lot about China and certain countries, but really Forced Labor is a global issue. And based on the International Labor Organization, ILO, some of their stats in 2022, it shows there were over 27.5 million people that were estimated in forced labor around the world. And they have the stats broken out by private sector for sexual exploitation and state-managed economy. So you kind of see the breakout there. But this is definitely a global issue, not specific to one certain country. And some of the indicators that the ILO has provided, you'll see there on the right-hand side of the screen. I mean some of these are talked about quite a bit. Many times, you'll see that anyway that some of the indicators relate to restriction of movement of folks withholding of wages, retention of identity documents. Oftentimes, these are all indicators that maybe the folks within that company are being subjected to forced labor. So anyway, all of this is made public by the ILO. But we will really jump into what's going on here, specifically in the U.S. And one of the interesting things, too, is Forced Labor is not a new -- something new on the books, in terms of statutes and regulations here in the United States. It may seem like it's new because there's been a lot of discussion about it and a lot of focus on it the last few years, but actually Forced Labor dates back to the Tariff Act of 1930. So as part of '19. U.S. Customs Code of Federal Regulations 1307 and that being part of the Tariff Act of 1930, that's when Forced Labor was really prohibited or it was stated that all goods or articles and merchandise, mine produced or manufactured wholly or in part in any foreign country by any forced labor is not permitted into the United States. So it really was the Tariff Act of 1930 that said, "Hey, we can't import any product that was produced, again, wholly or in part by forced labor into the U.S. " There was actually restrictions or on -- in terms of importing goods with forced labor prior to the Tariff Act of 1930. Actually, prior to the Tariff Act of 1930, any goods that were manufactured by convict labor was not permitted into the U.S., but that expanded in the Tariff Act of 1930 in terms of being any goods produced in full or in part by any type of forced labor is not permitted here into the United States. So -- but the big thing about the Forced Labor statute is that there was a loophole. So there was -- you could actually up until 2016, you could import some goods manufactured by forced labor if there wasn't any U.S. domestic production of those goods. And that loophole was closed with the Trade Facilitation Trade Enforcement Act, which was signed by President Obama on February 24, 2016. But once that loophole closed, basically, the U.S. stated, "hey, nothing, absolutely nothing can be imported that was manufactured by some type of forced labor in the United States." So that's when we really began to see enforcement begin to ramp up. And forced labor can be any type of slave labor, prison or convict labor, forced child labor and indentured labor, meaning someone working for under contract for any period of time without wages. So as of now, nothing , of course, nothing can be entered into the U.S. manufactured by wholly or in part by forced labor. And it is not only the Tariff Act of 1930, but there's multiple statutes, in which forced labor is addressed. And one of the most -- the biggest probably is the U.S.-Mexico-Canada agreement where, again, forced labor is prohibited, and you'll see several other different acts and statutes listed there on the right-hand side where forced labor is addressed. And you can even see that in -- as we look at today's administration as they look at free trade agreements, a lot of it is focused now around the worker and protecting the workers. So -- that is the general direction. So how does U.S. Customs and Border Protection, how do they enforce forced labor? And they really do this in 2 ways. The first are through what's called Withhold Release Orders or WROs. So Withhold Release Order comes about when someone makes an allegation to CBP. CBP will conduct an investigation and then ultimately, the commissioner will decide if a Withhold Release Order will be issued to all the CBP port directors. And basically, that means, "hey, for this merchandise coming from this particular company in this particular country will not allow -- will not be allowed into the United States because based on our investigation, there is a high likelihood that forced labor exists within that particular company, in that particular country." So Withhold Release Orders are usually issued against companies, though there are a few out there that are issued against fishing vessels, but most of them are issued against a particular company in a particular country. All of the withhold release orders that are issued are posted on CBP's website. So you can go to their website, you can see all of the Withhold Release Orders that have been issued thus far. But when a Withhold Release Order is issued and you happen to import product from that particular company in that particular country, your cargo will be held when it arrives at the port of entry here in the United States. And you only have really a few options at that point. If you have enough documentation showing that your product was not manufactured by forced labor, and you have a certificate that was signed up by the foreign seller and you have all of the backup and proof showing, "hey, my product and the raw components of the product were not manufactured by forced labor." You can put an admissibility packet together. And this admissibility packet is very similar to the UFLPA admissibility packet, which Ted will actually talk about when he covers UFLPA. So you can put a packet together. But if you don't have all the backup documentation showing that your goods are -- were not manufactured by forced labor, then you can either reexport those goods or you can destroy them. So then there is also -- so that's a Withhold Release Order. Again, Customs has done an Investigation. They find a high likelihood that forced labor was or is involved in that particular company in that particular country, then there also are what's called forced labor findings. There are far fewer forced labor findings than there are Withhold Release Orders. But it's similar where an allegation is made, Customs does an investigation, but under a finding, they actually do find actual hardcore proof that forced labor is being conducted in that particular company in that particular country. So if you import a good, again, from that company and in that country, then the goods will be seized upon arrival here in the United States. The findings are also all listed and made public on CBP's website, so you can see them, see who -- which ones are out there. But there is one -- and you can also put a packet together if you have hardcore proof that your goods were not manufactured in that particular company by forced labor, you can put it in admissibility packet together, but it will be very, very difficult, obviously, to prove. The other difference with the finding is you can't reexport the goods. So basically, you could just destroy the goods at that point, is really your only option unless you've got some very, very, very good proof. So those are the 2 main enforcement mechanisms. This is just a quick snapshot. This is also on CBP's website. This particular picture here was from -- or snapshot was taken from their website dated April 2. And you will see all of the active Withhold Release Orders. There's currently 51 active Withhold Release Orders and 8 finding. The Withhold Release Orders are the yellow circles and the findings are the green blue squares. So you see those far fewer findings than there are Withhold Release Orders. In the Americas, there's only 2 Withhold Release Orders currently. One in Mexico, one of the Dominican Republic and there are 2 findings in Mexico. But as you move across the globe, you'll see that predominantly Withhold Release Orders are against companies and even a couple of fishing vessels. In China, there's 35 Withhold Release Orders and 5 findings. So that's definitely where the majority of the forced labor WROs and findings are currently active. So Speaking of China, I will now pass the baton to my colleague, Ted, to talk about the Uyghur Forced Labor Prevention Act.

All right. Thank you, Madeleine. So based on that proceeding slide from -- that was covered by Madeleine, you can see that China has been the main focus of the legacy forced labor enforcement by CBP. So this is how CBP, again, as Madeleine pointed out, has been going after shipments that have been associated somehow with forced labor. They've used this WRO or finding process that's associated with the statute. Really, over time, over the last several years, there's become a major area of concern within China, and that's the Xinjiang Uyghur Autonomous Region. And that's based on allegations that China -- of how China is treating really the largely Muslim population in that region, several nongovernment organizations, academics, civil society organizations have been producing quite a bit of information over the last several years about alleged forced labor actions by the Chinese Communist Party in Xinjiang. Over time based on that growing body of allegations, is the U.S. Department of State Treasury, Commerce and Homeland Security issued several versions of a Xinjiang supply chain business advisory. Congress really caught on to this. There are several members in Congress that are very committed to stamping out forced labor around the world and have really taken up action. And from that Congress passed legislation to really build on that existing 19 USC 1307 part, the Tariff Act of 1930 that speaks to forced labor and it was to strengthen it. The action was the Uyghur Forced Labor Prevention Act. President Biden signed that and it became effective on June of 2022. So we're almost -- we're coming up on to 2 years on the Act. The key about this act is, to be clear, this is a very different standard in the statute as compared to legacy 1307 forced labor deals that Madeleine was talking about. So a couple of things I'll say. You'll hear different pronunciations of the Uyghur Forced Labor Prevention Act, either UFLPA or [ UFLTPA or UFLIPA ] or any other clever combinations. We're all talking about the same thing. And this is private sector and government. It's a long thing to say to go through all 5 words, so we tend to trying to abbreviate that down into some clever acronym. But really, the key parts of the UFLPA is that it puts a very specific ban on any imports that are mined produced, manufactured in whole or in part in the Xinjiang Uyghur Autonomous Region or made with forced labor from the Xinjiang region, either those -- that forced labor is in the region itself or they've been transferred elsewhere, and they're working in another factory in China, for example. This act really assumes that any goods connected with Xinjiang and the labor of Xinjiang are made with forced labor. It's referred to as a rebuttable presumption that the government will -- can stop goods, remotely connect and not remotely, but directly connected to the Xinjiang Uyghur autonomous region in whole or in part. So I'll use the easy example, a cotton T-shirt, if there is a determination that the cotton is connected originally, was grown in the Xinjiang Uyghur autonomous region, then that is sufficient evidence for the government to detain a shipment under the Act. This is very different than what Madeleine described under the WRO scenario. The WRO scenario, it's more about goods being stopped under suspicion. In this, there is an automatic assumption that if goods are connected to Xinjiang Uyghur autonomous region or labor from that region, then they are indeed related to forced labor and will be detained. So the thing to understand is really this is a very different standard. And this rebuttable presumption is a significant challenge for importers to overcome. There are some other things that the act does; it directs government agencies, primarily Department of Homeland Security through the Forced Labor Enforcement Task Force to develop a strategy. That strategy has been rolled out. There's an annual update of the strategy. So we will see a new version of the strategy this June. There are a number of other things the Act requires of the government. One another thing is to create a list of entities that are connected to the Xinjiang Uyghur autonomous region that produce goods through forced labor. One of the notable criticisms from the private sector is that list is relatively small. And again, we're coming up under 2 years. There really has been a lot of ask from the private sector to -- of the government to say, "Hey, could you give us a little bit more clarity of who the bad guys are, so to speak. " Can we expand that list of entities beyond where it is. And we've seen some recent commitments from folks at Department of Homeland Security that there will be more action on the entity list in this area. There's also an obligation to create a list of goods that are mined or produced by those entities. And there's also a requirement to identify high priority sectors for enforcement. And right now, those 3 sectors are cotton, tomatoes and polysilicon. But it's pretty obvious that we're going to see some new sectors added throughout the course of this year as the government continues to get their feet underneath them and have the resources to implement on the act. Besides the obligation of Department of Homeland Security and the Forced Labor Enforcement Task Force to develop all of the things of the Act, CBP has also issued their own operational guidance related to the act. For those of you who've been on our webinars before, you know that we always provide a list of resources at the end of our presentations. You'll be receiving a copy of this presentation, as Samantha pointed out at the beginning of this discussion. And all of this information is available on the resources. The key about that Act is you don't -- you have a little bit of recourse if goods are detained under the Act. Specifically, the Act states that an importer can request an exception if their goods are detained. If that exception is granted, then CBP has to publicly notify Congress and all of us, as this is a matter of public information. And there's also a second alternative that I'll dig into a little bit more on the next slide here. So -- but I'll stay with the exceptions first. If you actually try to take the route, you have goods detained and you go -- want to go to CBP and ask for an exception in your -- what you are stating is that, okay, yes, the goods may indeed be connected to the Xinjiang Uyghur Autonomous Region, but they weren't produced by forced labor in any way, shape or form. So then this one is a tough one because, again, remember the Law states, there's a rebuttable presumption that the goods are connected to forced labor. So if you want to follow this path, that's the big hurdle is providing the clear and convincing evidence that shows goods are not produced. There are a couple of other things you need to do. You have to show you fully complied with the due diligence and evidentiary guidance required by CBP, you've got to have completely responded to their inquiries. But really, the hurdle is providing that clear and convincing evidence that shows goods were not produced in any way, shape or form with forced labor, regardless of the fact the goods are coming from the Xinjiang Uyghur Autonomous Region or from a factory with workers from the Xinjiang region. Again, if customs grants, if the commissioner of customs ultimately grants that exception, they have to notify Congress within 30 days, name the goods and the evidence, which made it acceptable, and then that's available to the public as well. A couple of points here, and we're going to really spend time on this other alternative. There is apparently only a handful of folks according to CBP have tried to take the route of requesting exception for goods that were detained. Of those, none of them have been successful in securing a release of their goods under the exception process. CBP did state that one company came close, but really, when it came down to it, the company backed off because they did not want to have their name and the product and all of that as part of that public record. So again, this is the tough way to go. The alternative is that you can also file documentation in support of a request of an applicability review. So this is not an exception request. This is an applicability review. And in applicability, you're asking CBP to review the evidence you're going to provide to prove that really the goods are not subject to the UFLPA. They're not connected in any way, shape or form to the Xinjiang region. So this is a subtle difference. If you're going for the exception, you're acknowledging that the goods indeed had some connection to the Xinjiang region, but were not connected to forced labor. In the applicability review, your argument is that no, these goods that were detained, have no connection to the Xinjiang Uyghur Autonomous Region, no connection to workers, anything along that line. So this is a very different deal than an exception request, and it does not require a notification to Congress. So by and large, this is the route that folks are going if their goods are detained. We'll dig into that a little bit more in a minute, but I want to pause for a second and kind of take a quick look at this process flow that we put together. So this is not a CBP document. This is an Expeditors document. We put this together to kind of help guide our customers through the key steps of the process and understand the checkpoints. As you'll see, there's 3 [ swim ] lines here. At the base, you have CBP in red, in the middle that would be the importer in blue and then your customs broker in gray at the top, and hopefully, that is us as your customs broker. But really, the point starts, of course, with customs targets, high-risk commodities and decides to issue a detention notice. And this is the same whether we're looking at retention under the legacy WRO process under the statute or whether we're looking at UFLPA detentions. So you'll get that notice. We typically get it as the broker as well, but please make sure your broker does have it. And the next key point is where we have the blue box where we clocked down on the bottom. This decision point is really absolutely critical for you to understand because the goods have been detained, we're going to work with CBP to try to move the freight to a certain location. But -- they're still -- those goods are still sitting in a container by and large. You're paying for detention to merge on those as time is ticking away as you're moving through the clock of whether or not you're going to destroy or contest the goods. Really on any -- you should be looking at goods that somehow might in your overall supply chain, your value chain goods that might somehow have a connection to the Xinjiang Uyghur Autonomous Region to China or to anything subject to a WRO, palm oil, for example, or something like that. And you need to be thinking about what would you do if those goods were detained. So you hit this point of the decision point and goods are detained. Are they seasonal items, are that really are not going to have any value in a couple of months anyway, are they low value relative to other goods that you import? If the answer is yes to that, it might make sense to just turn the goods around and export them right away. Don't bother dealing with trying to fight the fight. It's going to be an expensive battle. It's going to take time and the goods are going to sit for a while and you may or may not win the battle. So the goal again is to try to avoid having shipments sit for weeks and days while you're trying to figure out what to do, time is money, I mean bottom-line on this. But if the item is essential in your U.S. production process or it's a high-value finished product, then it might make sense to contest the detention. So hopefully, you've done some homework in advance and you're thinking about that for your goods. And then you move through the process of submitting your packet to contest the detention and as you're moving through and customs will review that and then ultimately make decisions about whether or not they're going to choose to release the goods as it goes. So let's get back on track and think about really what you want to do if you are having goods detained under UFLPA and you do want to go ahead and move forward on that applicability review and where you're going to go. So customs to their credit has tried to put the -- or has put together a couple of documents to help you contest a detention and where you should go. I would say certainly, you're going to be doing a lot of the work to put the information together. I always recommend that people reach out to experience customs legal counsel. There are a number of folks who in the legal business, who have experience in dealing with these applicability reviews or even the exceptions or the WRO reviews. This is something that you really want to take some time and have some expertise as you do put together your packets. But customs has put together some basic guidance and issued that. Last year, they issued 2 key documents; one, the best practices for applicability reviews and then the guidance on executive summaries. The best practice for applicability reviews gives you some insight on how to prepare that packet and how to prepare to contest your detention. They also have some other key points that they think are best practices and folks should be doing right now. So if you haven't seen this, make sure and take a look just for general awareness and then in the unlikely amenable wander landing, if you do actually have to do a detention -- contest the detention, this will help you. The executive summary, I think, is really important because -- and I will say this also as a former Customs Officer from years back, oftentimes, importers tend to gather up a whole bunch of information, put it in a pile and ship it off to customs, thinking somebody can figure out all of the various documents that have been submitted. Really customs has made it very clear. And part of the reason they've done this executive summary, they've also made a lot of public statement about this. Don't just grab everything. You've got to put it in a pile and send it off to customs and hope they can figure it out. Make sure that you can make it very clear to customs as to what your argument is to why your detention is not appropriate. You make it so that they can efficiently, effectively review your applicability review packet, make sure it's ordered, make sure it contains a road map. It tells the story. It guides someone through the various documents and their relevance to that detention. So that's part of what this guidance provides. But really, that's an absolutely critical part of your overall detention packet. Remember, somebody who really is not familiar with your company, your value chain, your overall supply chain, they're trying to understand whether or not there is a connection to the Xinjiang Uyghur Autonomous Region or people from that region. And so it's really critical for you to go through the multiple tiers of what it takes to make a particular product that might be 5, 10 tiers unfortunately, but explain the linkage and guide them through that discussion. Another great thing that CBP recently posted on their website is their attachment to the notice of detention. So any time customs holds freight, they are obligated to issue a detention notice, whether that's under the WRO or the UFLPA. For UFLPA, they've actually created an addendum to try to help you understand what CBP wants in the case of the detention. So this is a great document in and of itself. The other good thing about the document is it speaks to the goods that CBP is detaining. So right now, the current addendum speaks to the following goods: aluminum products, batteries, cotton products, polysilicon products, PVC products, steel products, tires for autos and trucks and tomato products. So that tells you right there that CBP is detaining or planning to detain goods in that area because they're telling you what they want to see if goods are detained, all right? So again, that's on the website. It's also on our resources, and it's important that you take a look at this. Customs, CBP on Monday issued a new Federal Register notice for public comment on a new portal Forced Labor Case Management System that they will be rolling out. This is a good thing that they're doing. Right now, there are multiple avenues that we in the trade have to use to either submit allegations of forced labor, submit modification requests or if you're doing a detention, you might be submitting to any of the 10 Centers of Excellence for certain ports, et cetera. The whole point of this is customs has put together a central point as opposed to the old e-allegation site and some other things, the multiple venues that they have for communication for the trade to communicate. Really, the point of this public comment is really related more to obligations of the Paperwork Reduction Act, but great thing that they're putting this out. Again, CBP continues along with Department of Homeland Security to really get their feet underneath them in executing against the UFLPA and the legacy 1307 forced labor statutes. So we're continuing to see more tools and things that are available to the trade as this goes. So on the idea of more tools and things available to the trade, Madeleine, how about the statistics dashboard?

Okay. Thank you, Ted. Yes. So hopefully, many of you have seen this dashboard already. CBP put this out back in 2022, and this will at least -- this at least gives you statistics on what types of shipments customs is detaining inward specifically for UFLPA. So this does not include WRO or findings. You can find more information about other trade-related data and statistics at their public data portal, and we provide a link here in the -- on the slide, but this is specific to UFLPA. And this was a snapshot that includes its updated monthly this data. And this is a snapshot that goes through February of this year. So it covers and again, customs fiscal year starts in the beginning of October. But you'll see, altogether, they have targeted 7,566 shipments. They've denied 3,000, a little over 3,000 and released a little over 3,000. So a pretty even split, and what's -- I guess, something to bear in mind is if you think of all the shipments that come into the United States on a monthly basis, on an annual basis, the total here of 7,566 is really still relatively small. So that -- I mean, -- and we see that too amongst our customer base. We're not seeing just tons and tons luckily of detention notices around -- or through all ports of entry. But anyway, this gives you an idea of what's being turned and you'll see it broken out by industry sector. So electronics is the largest sector, followed by apparel, footwear and textiles. From our customer base, we probably see a little bit more in the apparel, footwear and textile category, though we're beginning to see a few more shipments detained in electronics. But anyway, you'll see the breakdown there in industry from the industry segment standpoint. And then at the bottom, it's interesting because it shows shipments detained based on the country of origin. And many times, everyone -- folks think, "hey, it should be China probably being the first country of origin or with the largest number," but it's actually Malaysia, followed by Vietnam and Thailand and then China and then Mexico last. And so again, it shows that CBP is concerned about even though the product may be manufactured, let's say, the T-shirt in Malaysia that the cotton may still be sourced out of the Uyghur region of China. So again, this is interesting to look at on a regular basis to see what's being targeted to look at the number of shipments that are being denied and released. So it's a helpful tool. And when we do recommend that you take a look at to see what's happening with the UFLPA detentions. And the holds, of course. So -- anyway, recently, we were also -- and some of you here may also have been at the Trade Facilitation Cargo Security Summit, which was held by CBP Headquarters in Philadelphia, so 1.5 weeks ago, and forced labor, of course, was a big topic. There was a main session dedicated to forced labor, which was quite interesting, and then CBP had breakout sessions at the Summit, specifically on forced labor. So we highlighted here some of the points that were interesting that we learned from the forced labor breakout sessions. One of the first and probably one of the most important points is just making sure that you're providing a complete and very cohesive and organized document packet. So Ted talked about the applicability review packets that you can put together. It's very important that those are extremely organized and clear and that someone can easily follow the information that you have put together. And usually, and I think, I have recommended this too, it's good to use an outside party, maybe outside legal counsel or internal legal counsel, but helpful to use some -- to get some help in putting that packet together to make sure it includes everything that's needed as well as that it's logically put in a readable and comprehensible packet. And we have heard from CBP too that when you do submit those applicability review packets, to the center that it's good to schedule a call with the center and walk through it, actually walk through the packet and show them exactly what you have put together. And this is very helpful as well from a CBP perspective. So again, that point was reiterated. The other point that was made is that, hey, if you have a shipment that is detained, you put an applicability review packet together, and the shipment is released, that does not mean that the same commodity coming from that same company from that same country of origin, if that comes in again, it may still be detained. So it doesn't mean that if you got a release on the first shipment that the second shipment, which is identical, may still be detained. CBP looks at each shipment as being -- they look at each shipment individually. So just because the first one got released doesn't mean the second one is just automatically just going to be released and not held up. If it is held up again, the review process should be quicker, but that's something to bear in mind. Also to bear in mind that there's a lot more funding that's been allocated. Many of you may have heard that there was originally $128.5 million dedicated to DHS for and to CBP for UFLPA enforcement. There was recently an additional enforcement funding provided of $20 million to DHS. So again, with this additional money coming in, enforcement for CBP and for the government in general, can expand and be strengthened with the additional funding that has been received. Then also CBP is investing in isotopic testing labs for cotton goods. So they're predicting that there will be one operational in Savannah by this summer, and they've got -- there will be a total of 3 isotopic labs throughout the -- total of 3 in the U.S. So this will be additional, this will be an additional tool used by CBP at least on cotton goods to figure out whether the cotton was actually sourced from the Uyghur Region as they can tell that through the isotopic testing. And then we did hear that at least 10-plus entities are going to be added to the entity list. But even though we know more entities are going to be added, the message was loud and clear that you should be reviewing all of the entities within your supply chain, don't wait for an entity to be added to the entity list. There is public information out there. And one of the resources that we do provide is a link to Sheffield Hallam University, which is in the U.K. They've put out a lot of briefs and different papers, specifically on forced labor, including spreadsheets of companies that potentially could have forced labor happening within their organization. So use that information. Again, we mention it because we know CBP also reviews that information very carefully. Again, demonstrating the importance of knowing your supply chain and what's in the raw components that comprise the many different items perhaps within an article that you're importing into the United States. Recently, there was an detention of over 2,000 vehicles. Many of you may have heard that. And the 2,000 vehicles were valued at $150 million. There was a component within those vehicles that was tied to an entity on the entity list. The company -- the automotive company came forward and actually provided that information to CBP and then they were given the opportunity to remove that component from all the automobiles. But obviously, it took a lot of time and money. So the importance of, again, looking at your supply chain and where products are being sourced. And then CBP is not just focused on UFLPA anymore. They did make that comment at the Trade Summit. They said that they will -- they are going to be focusing on WROs. We haven't seen any new WRO since the UFLPA has been implemented. So this is something that's coming. We should see more activity in terms of Withhold Release Orders this year. So then what can you do as the importer. And again, I think probably the most important thing is prioritizing, looking at those products that are most critical to your supply chain and starting with those, putting a team together, really looking at where are all those components being sourced from. It's no longer -- you have to go beyond the seller of the goods. And I think many of you, of course, know that. You can't just rely on the sellers. You have to look at the suppliers, your first, second, third, fourth, fifth tier supplier. So it's very important that you kind of prioritize, look at those products that are most critical to your supply chain and really understand where those raw components are being sourced from. In addition, education, obviously, of your suppliers, looking at language, putting language in regards to forced labor in your contracts and purchase orders, establishing an audit trail of traceability documents, purchase order, the invoice to payment, the audit, the production, retaining all of those documents at all levels. Basically, many of you have a really solid compliance monitoring program for customs declaration purposes, but you have to take that beyond the declaration. You have to take that through your entire supply chain. Now it's so important to look at the very origin at the traceability of all of your products and the entities themselves. There are some very interesting software providers out there that are providing some very interesting software that can help isolate and help you prioritize. But nothing is the silver bullet. There's no system that's the silver bullet at least that we have found. You really have to do this in combination. And again, making sure that you've got all your backup documentation. So in case you have a product that's held up, you will have the documentation in order to put forward an applicability review or admissibility packet to customs. So biggest thing is start your work now. It's better to start than not do anything, of course, and prioritize those items that are most critical to your supply chain. And there's lots of resources and tools, and we will be providing a slide of all the different resources as part of this presentation. So we'll probably go to the next, just very quickly, Ted, the next. Yes, and these are just some frequently asked questions. I would just say in summary that, again, don't wait for an entity to be put on the entity list. Do not wait for a priority sector to be added to the list, so to speak. You really have to look at all entities and all commodities in your supply chain. That is the way CBP is looking at it, and they provided that message at the Trade Summit. So really, you need to look at everything and you need to do it -- like I said, you need to be doing that now. Will trusted traders be provided more leniency? That is also somewhat unlikely. However, CBP is looking at trusted trader benefits, and they're working with the COAC, Commercial Operations Advisory Committee on that and getting feedback from the trade. They're open to hearing from the trade on that on benefits. And then lastly, forced labor is expanding beyond the U.S. Mexico and Canada have implemented forced labor bans as well as the EU. So this is something that's not just an issue in the United States. It's becoming a very big issue globally. And so this is the world we live in today. So anyway, I will now pass the baton to Jeffrey to help us answer some of your questions. And I think there's quite a few questions in the Q&A box.

So all right. Thank you, Madeleine. Jeffrey, again, thank you. It's nice to have somebody from CBP participating. I appreciate you being a part of this. I'll start with one and maybe you can answer that. Have any importers submitted their supply chain and process to CBP in advance for a ruling? We know there's the ruling process that's out there. Are you aware if anyone who has submitted to that the ruling request program?

Thanks Ted. And before I answer the question, I just want to say hello and thank you guys for having me. I am Jeff Franz, I'm International Trade Analyst for CBP Forced Labor Division, and I really appreciate you guys having me on here today. This is a hugely important thing that we're doing, just talking about the legislation and enforcement surrounding forced labor. So thank you, for one. Surrounding kind of advanced rulings, CBP is not going to review, do UFLPA reviews, WRO reviews in advance. That is something that you could submit in terms of binding ruling request from the office of regulation and rulings. I can't speak to whether any have actually been submitted or approved for that matter. But it's not typically something that we do.

All right. Thank you. This is actually a common question that we hear. I mean again, the bottom line interest of CBP is to keep goods that are connected to forced labor, to keep them out of the U.S. That's the whole point of your actions and other government agencies is -- the goal is not to just keep detaining goods or goods to stop at the first place. But are there any implication for an importer that does import goods, they're detained under forced labor, the importer didn't realize it, and they just destroy, export the goods and move on. So from a CBP perspective, is that a black mark on their record, has it ruined the credibility and trust and some -- a -- is there some negative impact because they inadvertently imported something unknowingly?

Sure. Yes. Fair question. And I can't speak to the port level or region the centers of excellence. But I would say CBP is subjective -- objective, sorry. In these cases, of course, trade information is protected by the Trade Secrets Act, so again, I can't speak to this specifically because I'm not working at the port level, at the center of excellence level, where they're actually reviewing documentation. But I would say CBP tries to stay as objective as possible in this regard. And I would say, importers shouldn't have to worry about if you're exporting goods, destroying them that we're going to look not as highly on you as an importer. Yes. Trying to stay objective is my answer to that one.

All right. Yes, I would say, in general, the point is to keep goods from coming into the U.S. It's not to go after importers. I think CBP has stated that before. The goal is just to stop the goods and educate public and get people to do their due diligence, so it isn't happening. Madeleine talked about the forced labor statistics dashboard and customs, the way customs groups through vertical industries that are related really more to the centers of excellence. Is there going to be an effort to take that deeper to be more finite to maybe identify detentions by HTS codes or specific products or anything like that? Or should we anticipate that we're going to look at it by the vertical sector level?

It's probably going to stay at the vertical sector level. There's only so much information that we can share to the public. I alluded to the Trade Secret Act earlier. So again, there's only a certain amount of data that we can share. So it's probably going to stay at that level in terms of electronics, industrial manufacturing materials, apparel, that sort of thing. If you are curious or you don't quite understand the HTS codes associated with those higher-level categories, you can always dive into the data dictionary that's associated with the UFLPA dashboard. But yes, I don't know anything in terms of if we're going to dive into more specifics. Everything I've seen is that we're not. We have to keep that information, that data at more of a higher level, not so granular and just for folks' edification as well. So of course, the dashboard that we're speaking to right now is the UFLPA 0dashboard, so that deals with UFLPA detention. We are looking into developing a WRO and finding dashboard, which would effectively just be a more interactive tool to locate those WROs and findings across the world. As Madeleine mentioned earlier, you can always find that on our website right now. It's just kind of a static map, but we should be developing kind of a more interactive dashboard for that in the coming months as well.

All right. Fantastic. So I think really, there was -- this is really -- there was a question of as their list of HTS codes, no, there is not, and we shouldn't anticipate one for goods being detained. Again, think in terms of the high priority sectors that we've talked about, look at the information on the statistics dashboard and then specific to the WROs. Those do name companies and finished goods as it goes. There's a question related to solar goods and categories goods. Hopefully, that answered your question as well. I will tell you, anecdotally, you'll see a high degree of detentions related and reviews related to electronic goods and by and large, those are related to solar good, solar panels. So they're definitely -- that's an area that CBP is looking at if you're not aware of that. All right. Let's see here. What else do we have here? Okay, we've got an answer on that. Is there -- and I'll -- I know the answer, I'll let you go with this one, Jeffrey. Is there a forced labor form or a template that's available from CBP that could be used to send to a supplier prior to shipping. Do you have any sort of template that you put out that the trade can use in this area?

So are we going back to -- is this more of the advanced ruling question or?

No. So I'm a supplier, and I'm an importer, and I'm looking at a supplier in China. And so I'm doing the due diligence that Madeleine talked about in the preceding area. And I'm asking for contractual information. I'm sending a document to them stating that some sort of requesting a certification that the goods aren't connected with forced labor. Do you have any templates or anything specific that an importer might use?

It's kind of a business level decision as to how you're going to find that information. So yes, we do get asked a go amount or asked about it at the trade facilitation, trade -- sorry, I'm forgetting the name the TFTS, I was actually there. I was at the booth, the forced labor booth. And my colleague, our Executive Director, Eric Choi was asked this question as well. And it's kind of on the company as to how you're going to go about that as a business decision in terms of asking your suppliers that sort of information. But importantly, it's something that you do need to find, as Madeleine stated earlier, this is -- forced labor, these laws. It's not just the U.S. now, it's in other countries, the U.K., it's Australia, EU really getting on board as well. So we really need to be able to find your suppliers, see what's going on all the way to the back to the bottom of the supply chain, if you will, to the original source of cotton -- sorry, I'm kind of answering around your question. There's no absolute template. Again, it's kind of a business decision.

Yes, absolutely. I mean just in general, CBP, any government agency tries not to prescribe to business how they should run their business. That's up to us, how we run our businesses. It's really more a matter as CBP gets involved in decisions that are within their wheelhouse, within their statutory guidelines and directions, it really isn't something that CBP has an option to deal with. I want to point out something very quickly. We -- I don't think we touched on this to the point of doing your due diligence and perhaps trying to get documents from your suppliers related to forced labor. Please understand that China absolutely denies that there is any forced labor activity in Xinjiang or any other region in China. I read the People's Daily, which is the official newspaper of the Chinese Communist party regularly. In fact, there are 2 articles highlighting Xinjiang; one about a runner who apparently has an incredible 400-meter time frame. And then another one talking about some relics and very important cultural relics in the Xinjiang region today or last night when I read it. But my point is custom -- or China is very clear that all is well in the Xinjiang region from their perspective that there's no forced labor on that line. So because of that, there's no real opportunity for you to really effectively do validations in China. You might -- you have more success in other countries in doing that. But the key is if we don't recommend generally that you send a document to a supplier in China asking them to certify that they have no connection to the UFLPA or whatever because China has implemented laws, specific law that imposes consequences on individuals or organizations that directly or indirectly participate in implementing foreign sanctions against Chinese citizens. So really, what I'm saying is that China will take action on suppliers if they find that they are making statements about UFLPA. So you have to be cautious in how you pursue and if you're thinking about sending documents under requesting certifications, think about it in the overall view of due diligence and managing a compliance supply chain. But if you -- you need to be careful that you also are not putting your suppliers in a situation where China government will take action against them because of their efforts to comply with your document request. So be careful on that as it goes.

There's a question on Jump teams, Ted.

Thank you. Yes. So let me ask that. So Jeffrey and I, back in the good days, when I was with customs and in fact, CBP is still doing this. sending in jump teams, primarily for textile verifications to confirm things are going on appropriately. So CBP would actually send a team of folks to a location to validate that the factory can produce like it's supposed to produce or whatever. Is there any intention from CBP to take that jump team concept that is still being used for textile validation verification? Is there any intention to take that over and use that in the forced labor world and I would say probably not for China, but maybe for -- I think that activity happens in the WRO world, perhaps. I think there's something like that.

You learn something every day. And jump team, a term that I have not heard, I'm relatively new to CBP, 2 years or so. So I'll get back to you on that. I don't know. I imagine that would be incredibly tough in China. To your point earlier, it's really hard to get in there, that is impossible, really, in terms of audits and that sort of thing. But I don't quite know, so I'll get back to you on that.

All right. Thank you. Let's see here. So they're -- we are up on time. I didn't realize. I have people jumping up and down and waving that we're out of time here. I'm sorry. All right. So we'll pause now. I'll close things out real quickly and be respectful of everyone's time on the call. So again, we talked about we do have a resource document. So if you go through the process that Samantha described, you'll get a copy of this as it goes. And we'll -- you'll be able to get more links. Hopefully you can use this information to do your own due diligence. Again, you may want to use third parties to try to help you tech solutions, things along that line. but there is a fair amount of due diligence if you use some of the tools like Madeleine talked about, the Sheffield Hallam tools, things along that line. And again, we have links to that as part of this. So final thing I will say -- we do have this webinar accredited by the NCBFA Educational Institute. So it is good for one CCS credit. And again, the code is here, and you'll get this as part of the presentation packet. Do keep in mind, this doesn't work for our -- for those of us who are licensed customs brokers. So our continuing education requirement, we still have to wait for CBP to put that information out and be finalized, coming later this year, but this is certainly valuable for your own CCS work. And with that, I'll turn it back to Samantha to close this out. And thank you again, Jeffrey, sir. Appreciate it.

Yes. Thank you.

Very good. Well, thank you to all 3 of our speakers today. We appreciate all the wealth of knowledge and thank you to all of you, our customers, potential customers that joined today. We hope you found a lot of value in this. We will work to look through the questions that were not answered and try to get answers back to those of you where possible. Again, you will receive an e-mail here in just about an hour with the link for the survey we ask that you fill out and from that, when you complete it, you will get access to the materials. So thank you again for hanging on with us. Just 2 minutes over here. We appreciate you all, and hope you have a great day.

Thank you again, everyone.

Thank you.

Bye.