US government continues to fight forced labor in imported goods

The past week has seen a number of actions by the US government to tackle the importation of goods produced through forced labor. On July 13, the Departments of State, Treasury, Commerce, Homeland Security, Labor, and USTR released the Xinjiang Supply Chain Forced Labor Business Consulting. The advisory is aimed at companies with operations, supply chains or workers in China’s Xinjiang region and states that they “should be aware of the significant reputational, economic and justice risks associated with involvement with entities or individuals in or related to Xinjiang who engage in the defense of human rights abuses, including, but not limited to, forced labor and intrusive surveillance The interagency advisory warns companies that purchasing Xinjiang inputs or goods “could pose a high risk of violating US law.”

The notice includes an “illustrative” list of industries using forced labor in Xinjiang:

  • Agriculture (including raw cotton, hami melons, Korla pears, tomato products and garlic)

  • Extracted products (including coal, copper, hydrocarbons, petroleum, uranium and zinc)

  • Renewable energy (polysilicon, ingots, wafers, crystalline silicon solar cells, crystalline silicon photovoltaic solar modules)

  • Textiles (including clothing, bedding, rugs, wool and viscose)

The next day, the US Senate unanimously adopted the Uyghur Forced Labor Prevention Law (S.65), which bans imports into the United States of goods manufactured in the Xinjiang Uyghur Autonomous Region (XUAR) of China. The bill creates a “rebuttable presumption” that goods from the XUAR region are produced through forced labor, unless importers provide evidence to the contrary. The bill also requires the Treasury, Homeland Security, State and Labor “to develop a strategy to prevent the importation into the United States of goods extracted, produced or manufactured in whole or in part with forced labor in People’s Republic of China “.

The wording “in whole or in part” reflects 19 USC §1307, which grants U.S. Customs and Border Protection (“Customs”) the power to prohibit not only finished goods made with forced labor, but also “Products… in part”. Therefore, US importers should be aware that the application also covers inputs. The House also passed similar legislation with bipartisan support; however, the standard is “clear and convincing evidence” that forced labor was not used in the production of the imported goods. While it appears that Congress will pass a law in 2021, the exact wording of the law and its precise requirements are unclear at this time as the House and Senate must reconcile the different languages ​​of their respective bills in a final bill.

In the meantime, customs have already significantly tightened the enforcement of the ban on importing goods from forced labor, including issuing withholding orders (WROs) on the import of specific products. In 2020, Customs issued 13 WROs, which are enacted when Customs has reason to believe that imported products are made with forced labor. So far in 2021, Customs has issued four WROs, including in June for silica-based products manufactured by Hoshine Silicon Industry Co., Ltd., a company located in Xinjiang. This WRO, which is specific to Hoshine, foreshadows that a regional WRO on silicon-based products could also be coming.

The multi-agency advisory, pending legislation from Congress, and customs’ vigorous use of WROs should warn importers that new measures may be imposed on additional goods and that goods may be detained. Importers need to review supply chains and global operations. To protect their brands, importers must tackle the problem of forced labor, review internal controls and visibility of supply chains, and ensure that all suppliers adhere to an effective code of conduct that includes provisions on the forced labor and modification of customer agreements to protect against delays or missed deliveries. . Finally, importers should prepare for the eventuality that Customs in fact determine that the importer has not proven the negative – that the goods were not manufactured with forced labor and thus deny entry into the country. merchandise in the United States.

© 2021 Greenberg Traurig, LLP. All rights reserved. National Law Review, Volume XI, Number 202

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