CBP Not Inclined to Release List of Suppliers Using Forced Labor Under Regional WROs

CBP doesn't like the idea of publicly listing the foreign suppliers known to use forced labor as part of withhold release orders that don't target specific entities, said Therese Randazzo, director of the forced labor division in the trade remedy and law enforcement directorate at CBP. Such a list would result in obfuscation by those companies and U.S. importers are required to use reasonable care, said Randazzo, who spoke June 16 during a panel on forced labor hosted by Arent Fox and the New York State Bar Association. Unlike other WROs, regional WROs, such as the one on cotton and tomato products from China’s Xinjiang region (see 2101130053), don't name specific companies subject to the order.

“We actually don't publish a list of companies because this is what happens,” Randazzo said. “If we publish and say 'OK, these are the companies that are using forced labor,' then we just don't see those companies anymore. They change their names and become someone else. So, a list would constantly be out of date and so then you could say, 'Well, I used a company that wasn't on the list.' Well, that could be the company that yesterday was on the list, now it has a new name and it's on the list again.”

It is also up to importers “to exercise reasonable care to ensure that imports that are coming into the United States are not in violation of U.S. law,” she said. “That extends to forced labor. So importers have an obligation to police their own supply chains” to make sure forced labor isn't involved. “We don't believe that the publication of a list would materially help that” because the companies would change names and end up “back in the supply chain,” she said.

Asked whether a WRO might lead to a full audit of the importer, Randazzo said that “WROs do not target importers.” The WROs and any subsequent findings “always target foreign producers,” she said. While an involved importer may be audited for other reasons, the WRO itself usually won't lead to an audit of an importer, she said.

CBP knows that some of its documentation requests around cotton harvests and other pieces can be “cumbersome,” so the agency is “looking at how we might streamline the documentation requirements” for supply chain traceability, she said. “Merely demonstrating that the cotton originated outside of China is not sufficient in the case of the Xinjiang WRO because there is a practice in China of commingling cotton in the production processes, so you would need to show that the, say Indian, cotton that you shipped to China was actually the cotton that was used in the production of the goods and that it was not commingled with the Xinjiang cotton.”

Asked how a company might be able to sufficiently prove that commingling didn't occur, Randazzo said that “there are companies that have managed to do it” through “documentation that traces that cotton.” That includes tracing the cotton “from your foreign supplier to China to the ginning and milling process and on to the production of the fabric and into the final product,” she said. “You need to be able to reasonably demonstrate that this is the cotton that was used in the production of your imported product.”

Arent Fox lawyer Angela Santos, who heads the firm's new forced labor team (see 2105130029), recommended companies “trace raw materials on a batch-by-batch basis.” Such information should be kept for at least five years, so that the company can respond if a shipment is stopped within the three-month period allowed to show a product isn't subject to a WRO, she said. Companies should also add language to purchase agreements that say the suppliers are liable for any goods that are found to be made using forced labor, she said.

CBP is hosting forced labor enforcement industry days June 28 and 29, during which vendors of supply chain tracing technology will provide the agency an overview of “what technologies are out there,” she said. “We will look at any documentation that an importer provides,” whether the agency is familiar with the technology or not, she said. The industry days aren't open to the public, she said.