Seeking CBP Ruling May Help Importers of Manufactured Goods With Supply Chains in Asia

The director of CBP's Office of Trade told an audience that importers who are considering importing a good that has a new supply chain and are concerned about running afoul of the ban on imports of goods made with forced labor can submit a request for a binding ruling that the product's supply chain is free of forced labor. CBP Executive Assistant Commissioner AnnMarie Highsmith, speaking at a webinar hosted by the University of Illinois Chicago School of Law on April 20, noted she was not presenting CBP's official position in her remarks.

Jessica Rifkin, who leads Benjamin L. England’s Customs, Trade and Litigation Team, said if a good has an established supply chain and is clearly subject to a withhold release order, it's not possible to convince CBP otherwise. It's a heavy lift to make, Rifkin said, even in cases where the good is detained because CBP suspects it has an input that is subject to a WRO, and the importer believes it doesn't.

She noted that Trina Solar announced it was the first solar panel importer to successfully prove to CBP that its modules didn't contain any inputs manufactured by Hoshine in the China Xinjiang region. That successful release of goods took 8.5 months. "So importers need to think long and hard about whether they want to go through the process, or whether it’s simply more preferable to export the goods elsewhere, possibly sell them elsewhere, or return them to the producer," she said.

Seizing goods for suspicion of forced labor is rare -- just about four times out of every 100,000 shipments into the U.S. But the Uyghur Forced Labor Prevention Act, effective June 21, could make seizures more common because any good that has a nexus to Xinjiang will be subject to seizure, and other factories in China are likely to be affected, too, as CBP is instructed to make a list of factories outside Xinjiang that transport Uyghur or other religious minority workers from Xinjiang to those sites.

"The best thing to do, if you can, is get out of buying things that have Xinjiang inputs," Rifkin said.

A listener asked Highsmith how importers can figure out who sells to their supplier, when their contractual relationship is with only the supplier, and CBP could seize goods due to suppliers' actions many steps down in the supply chain, all the way back to raw materials.

Highsmith said reasonable care is already required under law to avoid importing goods made with forced labor, and that means knowing that every input is free of forced labor. "I get it, a shipment of tomatoes from Mexico is far easier for that importer to trace than a highly manufactured product from a diffuse supply chain." But, she said, if you're importing a product that is touched by a lot of companies before it gets to your business partner, you have to learn what that supply chain is.

However, she also said that "we don't want this to be a gotcha situation," and that CBP is eager to help companies figure out if they have forced labor in their supply chains. She said webinars in the next few weeks will focus on the Uyghur Forced Labor Prevention Act.

Still, she dismissed the concerns of company officials that they cannot get visibility far enough into their supply chains to be compliant. "For importers that are concerned that I have some secret information that they don’t have, that I’m ferreting out, you know, deep, deep instances of forced labor in their supply chains, that there is information that I can get that they cannot get -- of the WROs, of the findings that I have signed since I have been in this job, every single one, you could figure out by just getting on the internet. It’s all open and notorious."

Many allegations of U.S. apparel being made with forced labor or containing Xinjiang cotton have been published either by nongovernmental organizations or by journalists in China. Highsmith said the office that investigates forced labor couldn't operate without its partnerships with NGOs.

"Bottom line, companies exploit forced labor to lower their production costs, giving them an unfair advantage over law-abiding companies," she said. While she said that the original ban on goods made with forced labor was clearly protectionist -- it was part of the notorious Smoot-Hawley Tariff Act, and exempted products not made at scale in the U.S. -- now the emphasis is on supporting human rights and making sure merchandise sold here isn't ethically compromised.