Compliance with legislation can be one of the trickiest issues big brands face when holding their globe-trotting supply chains up to regulatory scrutiny.
The dust still hasn’t quite settled from the implementation of the Uyghur Forced Labor Prevention Act (UFLPA), which assumes that anything made fully or partially in the China’s Xinjiang Uyghur Autonomous Region, where minority abuses are described as genocide, is the fruit of forced labor and banned from U.S. shores.
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More than 16 months since the landmark law took effect, companies still struggle to understand what’s required of them without clear, concrete guidance from U.S. Customs and Border Protection (CBP).
But new recommendations and regulatory partnerships with other nations could be coming down the pike, according to Robert Silvers, the Department of Homeland Security‘s under secretary of strategy, policy and plans, speaking at Altana‘s Directions Summit in New York on Wednesday.
During a panel titled Prosperity Through Compliance, Silvers shared his perspective with Evan Smith, CEO of Altana, the New York-based startup whose artificial intelligence platform builds maps of supply chain networks, about the UFLPA, supply chain resiliency and intermingling between the public and private sectors.
Though the UFLPA is helping to make important strides against forced labor, Silvers said, it also gives companies further insight into their supply chain, which could be useful as supply chain issues persist.
“You need to know your supply chain. That’s not for a compliance purpose; that’s for a business survival purpose,” he said.
Silvers said he understands that the UFLPA is a complicated law and acknowledged that it can be difficult for importers and brands to fully grasp.
“In my experience, the overwhelming majority of American companies want to do the right thing. It’s not that they’re, for the most part, trying to pull one over on us—it’s just they don’t know what to do. They don’t know what document they need to get. They don’t know how deep in the supply chain they are able to go, given the realities of where they stand in the supply chain.”
Companies have repeatedly complained that CBP doesn’t provide enough insight into UFLPA-related detainment decisions. In a breakout session, attendees voiced that they had not received any guidance from CBP when their companies requested further information about why the compliance documents they submitted did not meet the agency’s UFLPA standards.
Silvers said he expects that the DHS will be making “some announcements in short order” related to a set of recommendations it put forth earlier this year related to supply chain resiliency and security.
To that effect, Silvers said, the private sector should work closer with government agencies to share confusion around legislation like the UFLPA.
“We need the industry to be willing to have those kinds of discussions with us—not in our capacity as a regulator that is going to enforce or punish or point to a rulebook and [say they’re] not following it, but rather, [to] help us understand what the concerns are, so that we can use our tools, which are considerable, by the way… to address those for you,” Silvers said.
And though many believe the government lacks the ability to innovate quickly, Ana Hinojosa, the former CBP executive director and an advisor for cotton tester Oritain, echoed Silvers’ sentiment on a different panel.
“I think that that the trade community, the private sector, underestimates the willingness of the U.S. government to innovate. And I do think that there’s a really important initiative that needs to come where we speak about the stakeholder engagements to the U.S. government being more multi-sectoral,” she said.
But global companies also worry about complying with the regulations set out by each country or region they operate. So far, countries have not agreed upon a uniform compliance procedure for imports.
The DHS plans to change that next year.
“One of our priorities for 2024 is going to be to try to see if we can get a degree of international harmonization around the enforcement and information sharing approaches to this issue, because it really doesn’t make any sense to [have] 175 different ways of doing this business. It all comes down to the same facts [and] concerns about human rights,” Silvers said.
As companies struggle to grasp the full scope of the UFLPA, many have turned to traceability and supply chain technologies to help them map and track their raw materials, components and finished goods.
Altana offers one such solution.
The technology enables customers and partners, like CBP, to better understand key risk factors that could impact supply chains—that includes forced labor violations, natural disasters and more—by using a bottom-up map.
Amy Morgan, the vice president, head of trade compliance at Altana, said that technology allows companies to gain real-time insights rather than using the static, expensive process of manual supply chain mapping.
“Mapping, in a traditional sense, is yesterday’s old-school solution. There’s always the old method of sending out surveys and questionnaires… but the reality is, in that scenario, not only is it crazy expensive… it’s [also] time intensive, because it takes forever just to collect the data. It’s obsolete by the time you’re done,” she said.
Alternatively, the Maersk partner enables real-time with AI-powered insights. And, per Morgan, the AI is “always on” to detect new risks as they crop up.
Altana has several customers in the fashion and apparel space, but Morgan declined to disclose who those clients were. UPS is among its partners.
She said integration with blockchain-based traceability solutions could be on the horizon for the startup which raised $100 million last year.
“Our whole philosophy or strategy really is the ability to power other technologies,” Morgan told Sourcing Journal. “I’m excited for the day that we actually bring some of those connectors to life, because that’s where we’ll have the greatest impact—and frankly, that’s where we’ll be able to do the greatest good when it comes to small and midsize businesses.”