On October 20, 2020, U.S. Customs and Border Protection (CBP) issued its first forced labor Finding since 1996, prohibiting certain imports of stevia extracts and derivatives from China that it determined were being made with forced labor. 1 The Finding instructs all U.S. port directors to seize the merchandise in question and to commence forfeiture proceedings.
The Finding was issued against Inner Mongolia Hengzheng Group Baoanzhaoa Agriculture, Industry, and Trade Co., Ltd. (Baoanzhao), a Chinese manufacturer. CBP had already issued a Withhold Release Order (WRO) against Baoanzhao in May 2016. A WRO requires only a reasonable suspicion of forced labor rather than conclusive evidence to authorize CBP to detain the goods at issue. The goods must be exported or destroyed, unless the importer submits evidence that the goods were not produced with forced labor.2 By contrast, a Finding is a conclusive determination that triggers seizure and forfeiture proceedings, unless the importer submits evidence demonstrating that the goods were not produced with forced labor.3 Baoanzhao was also the manufacturer involved in a recent civil penalty that CBP issued against a U.S. importer of stevia products in August 2020.4
CBP's WROs and Findings are issued under the authority of 19 U.S.C. § 1307 (Section 1307), which permits CBP to prohibit importation of goods produced using forced labor. CBP has increased its Section 1307 enforcement substantially beginning in 2016 and has had a particular focus on China, with numerous WROs in the last 12 months. A CBP Finding, with its elevated standard of a conclusive determination, is rare compared with WROs. The six earlier Findings are all from the 1990s; they too were against Chinese manufacturers.5
There are currently 46 active WROs, some of which have been partially modified to remove certain parties or products from the scope, with the majority issued against Chinese manufacturers. Of these, six recent WROs are specifically against manufacturers in Xinjiang.6 With the U.S. government's efforts to pressure China over the treatment of Uyghurs in Xinjiang,7 including, apparently, active consideration of a broad regional wide ban on imports of goods made in Xinjiang, it seems very possible that this CBP Finding will not prove to be an anomaly in terms of CBP enforcement going forward.
Given CBP's enhanced focus on the Section 1307 prohibition, importers should carefully review their supply chains, including inputs, and develop clear policies. It is critical that the policies do not exist only on paper but rather are sufficiently implemented throughout the supply chain.
*Grace A. Kim contributed to this Advisory. Ms. Kim is a graduate of Brooklyn Law School and is employed at Arnold & Porter's Washington, DC office. Ms. Kim is admitted only in New York and California. She is not admitted to the practice of law in Washington, DC.
1. Notice of Finding That Certain Stevia Extracts and Derivatives Produced in the People's Republic of China With the Use of Convict, Forced or Indentured Labor Are Being, or Are Likely To Be, Imported Into the United States, 85 Fed. Reg. 66574, October 20, 2020.
2. 19 C.F.R. § 12.44(a).
3. 19 C.F.R. § 12.44(b).
4. U.S. Customs and Border Protection, Media Release, CBP Collects $575,000 from Pure Circle U.S.A. for Stevia Imports Made with Forced Labor (August 13, 2020).
5. Two Findings against socks and tea from China have been revoked. See U.S. Customs and Border Protection, Withhold Release Orders and Findings.
6. Our previous Advisory published on September 16, 2020 provides an overview of the recent WROs issued against manufacturers in Xinjiang and the potential for broad impact.
7. Our previous Advisory published on July 7, 2020 provides an overview of the Xinjiang Supply Chain Business Advisory issued by the U.S. Department of State, along with the U.S. Department of the Treasury, the U.S. Department of Commerce, and the U.S. Department of Homeland Security. See also Uyghur Forced Labor Prevention Act, H.R. 6210, 116th Cong. (2020) and Uyghur Forced Labor Disclosure Act of 2020, H.R. 6279, 116th Cong. (2020).
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.