Attorney: VW Alerted CBP to UFLPA Problem, Voluntarily Sequestered Thousands of Cars
Kelley Drye customs attorney John Foote, in analyzing the news that some Porsches, Audis and Bentleys couldn't enter the U.S. because of a part connected to Uyghur forced labor, (see 2402150026), said the story is an example of thorough supply chain tracing and ethical compliance action from Volkswagen, the company that made the cars.
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He wrote that The Financial Times, which first broke the news, suggested that it was VW that realized it had an indirect supplier that was on the UFLPA's entity list. He said an electrical component in a control unit was from the entity list firm, and quoted the Financial Times story: "VW notified US authorities as soon as it was made aware of the part’s origin."
He said he didn't know if the firm was added to the entity list after the cars were loaded on ships for export, but added: "If there had been any way to avoid having this component assembled into the affected control module (or to prevent the control modules from having been installed in the vehicles), surely that would have been done. Alternatively, if there had been any way to discreetly replace the affected units before the goods were loaded on vessel to the United States, that too would have been the path taken."
"This component likely cost much less than 0.1% of the value of the finished automobiles. Nevertheless, by operation of law, the inclusion of the component made the finished goods presumptively inadmissible into the United States," Foote wrote on his blog.
Since neither could be done, he said that VW offered to voluntarily sequester the merchandise in a bonded area, and that the control units will be replaced. Those replacements are supposed to be done by late March.
Foote said he confirmed with VW that the cars were not detained.
He said that VW's actions are a lesson for other exporters. "Overnight, a single UFLPA Entity Listing can blow a hole in $150 million of goods. And that might just be goods on the water. Facing that reality, Volkswagen improvised a solution. Could your team? When the UFLPA Entity List hits its rapid expansion phase (rumored later this quarter or next), this question might no longer be hypothetical."