New Customs Enforcement Action on Seafood From China
U.S. Customs and Border Protection (CBP) issued a new withhold release order (WRO) on seafood from China. The WRO on seafood covers tuna, swordfish, and other seafood products harvested by vessels owned or operated by Dalian Ocean Fishing Co., Ltd. The WRO is based on information that reasonably indicates the use of forced labor in Dalian’s fishing fleet.
The United States is taking increasingly aggressive actions to prohibit imports from China that may have been produced by forced labor. Since Sept. 2020, CBP has issued multiple enforcement actions against imports of products into the United States by certain entities that operate in the Xinjiang Uyghur Autonomous Region (Xinjiang or XUAR). Previously, these have covered imports of cotton and tomatoes.
Through the WROs, CBP can withhold release of such goods when information “reasonably but not conclusively” indicates that the merchandise was produced using forced labor. Forced labor is defined as “all work or service which is exacted from any person under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily” as well as forced child labor or indentured child labor.
19 U.S.C § 1307 prohibits the importation of merchandise made using forced labor. While this is not a new law, CBP has increased its enforcement powers in this area through WROs and has interpreted the law to prohibit importation of merchandise even if only parts of the merchandise are produced by forced labor, which can include downstream products made in third countries that incorporate XUAR inputs.
The WROs not only impact the designated entities and their products but more broadly companies within the supply chain that rely on those goods (including third country processors and U.S. importers). The WROs are unique in that they do not ban specific products, but rather focus on the labor used to make those products, and bans all products made with that labor. Such products can be detained by CBP at the U.S. port of entry.
As with other recent WROs, CBP will enforce the seafood WRO through increased inspection and detention of shipments from China. It is likely that CBP will presume that seafood products from China are subject to the WRO. To enter the merchandise into the United States, importers must prove that the seafood was not harvested by the Dalian Ocean Fishing fleet.
WROs prohibit the subject goods from entering the United States. The WROs also apply to goods entered into a foreign trade zone (FTZ) or bonded warehouse. Importers of these products can: 1) export the shipments out of the United States, or 2) submit information showing that the goods were not made with forced labor.
For the latter option, the importer must provide evidence within 3 months of importation and submit a certificate of origin signed by the foreign seller, as well as a detailed statement by the importer demonstrating that the subject merchandise was not produced with forced labor (for example, a supply chain audit). The supporting documentation should trace the supply chain from the point of origin of the goods to the production and processing of downstream products, to the merchandise imported into the United States. The documentation can include affidavits from entities within the supply chain on the point of origin of the inputs.
Potential WRO on Polysilicon Used in Solar Panels
Congress is also pressing CBP to take similar action on imports of polysilicon products from XUAR. Polysilicon is used in solar panels. CBP indicated that it was going to take such action in February but has not yet done so. Democrats on the House Ways and Means Committee have sent a letter to CBP expressing frustration with the delay.
To prevent the risks of forced labor in their supply chains, producers and importers should work together and have a comprehensive and transparent social compliance system in place.
If you have any questions regarding the content of this alert, please contact Kevin Williams (email@example.com; 312-985-5907), Mark Ludwikowski (firstname.lastname@example.org; 202-640-6680), William Sjoberg (email@example.com; 202-772-0924), Matt Goldstein (firstname.lastname@example.org; 202-550-0400), Courtney Gayle Taylor (email@example.com; 202-552-2350); Dennis Devaney (firstname.lastname@example.org); or another member of Clark Hill’s International Trade Business Unit.
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