Senate Finance Committee Leaders Push McAleenan for Forced Labor Clarity

CBP should update its regulations to give more details about the processing of forced labor allegations under the Trade Facilitation and Trade Enforcement Act (TFTEA), Senate Finance Committee Chairman Orrin Hatch, R-Utah, said in an opening statement at an Oct. 24 hearing on the nomination of Kevin McAleenan for CBP commissioner. The Committee's ranking member Ron Wyden, D-Ore., also sought clarity on the forced labor regulations. McAleenan said "we want to make sure we are able to apply all effective enforcement tools in the most precise and appropriate manner to this priority mission."

As an example of CBP's zeal for enforcement, McAleenan pointed to its response to reports of North Korean labor used in processing seafood in China (see 1710060011). CBP quickly put six shipments "on hold" and is now working with the Centers of Excellence and Expertise to "evaluate all commodities and manufactories in the region that's affected to see if we can identify elements of North Korean labor in those supply chains as well." The agency used its standard seizure authority to stop the shipments, rather than its withhold release authority, in the interest of speed, he said.

Sen. Sherrod Brown, D-Ohio, pressed McAleenan about the dearth of withhold release orders (WROs) over the last 10 months. "I've been frustrated that CBP's unwilling to initiate investigations into forced labor in the private sector despite readily available detailed information." McAleenan said the stopped shipments related to North Korean labor should be seen as forced labor enforcement and committed to using WROs when the legal standard is met. The lack of WROs isn't due to a lack of internal effort, he said.

The agency must "inform stakeholders about the type of information necessary to make a proper allegation against an import and to provide necessary guidance for stakeholders to address such allegations," Hatch said. CBP should "ensure that its regulations clearly outline the rights and responsibilities of stakeholders." Hatch noted that "some allegations about the use of prohibited labor over this past year have proven to be false" and inquired how CBP can "establish a clear process for importers to address" such allegations. CBP must "aggressively enforce" the forced labor provisions, but in a "balanced way" and "make sure when we do issue a withhold release order on a product it's appropriate, that we know what's happening in the supply chain" with "a lot of research up front," he said. CBP removed a stevia producer from a WRO in January (see 1701300029).

CBP is in the process of allowing for more disclosure related to intellectual property rights violations as part of a March executive order that touched on the subject (see 1704030033). "CBP is working on a regulation that would enable us to provide not only the general information on the shipment but also the parties involved when we have either seized or abandoned goods that have violated intellectual property rights," he said.

Asked by Hatch about progress on completing ACE, including TFTEA-related drawback changes, McAleenan said that on Feb. 24, 2018, "we intend to have our final ACE release in production and that would include the drawback capabilities." Hatch said he hopes "we can process Mr. McAleenan's nomination in short order."

Wyden complained in his opening statement that trade enforcement under President Donald Trump has been so far lackluster. "When I look at the administration’s plans for CBP, once again it seems trade enforcement is an afterthought," he said. "The White House seems a lot more focused on throwing money at a border patrol army and prototypes for a border wall that may never get built. Trade enforcement is going to fall by the wayside and jobs will disappear if the administration stays on this course." After McAleenan is approved, Wyden will "not support moving from the committee any additional trade nominees" due to transparency concerns with NAFTA renegotiations, the lawmaker said. "Contrary to federal law, the American people are in the dark about what their government is asking for in NAFTA," Wyden said.

Sen. Charles Grassley, R-Iowa, asked McAleenan about domestic honey producers and the antidumping and countervailing duty disbursements under the Byrd amendment and the inclusion of interest as required in Section 605 of TFTEA. During recent meetings of McAleenan, Grassley and members of the committee staff, "a concern was raised that we were not interpreting Section 605 correctly to provide all due interest from surety payments to manufacturers in the United States," McAleenan said. The agency "re-evaluated our legal interpretation and were able to expand our analysis of those payments" and "absolutely are moving toward that reimbursement this year" for honey producers, he said.

The committee approved the nominations of Jason Kearns for the International Trade Commission, and Gregory Doud for chief agricultural negotiator in the Office of the U.S. Trade Representative. The nomination of Jeffrey Gerrish, for deputy U.S. Trade Representative for Asia, Europe, the Middle East, and Industrial Competitiveness also went forward despite some continued controversy related to a vote he cast in Virginia during the 2016 general election after moving to Maryland (see 1710050036).