China - Custom WRO Prohibits All Imports Of Cotton And Tomato Products From Xinjiang.
Legal News & Analysis - Asia Pacific - China - Regulatory & Compliance - Labour & Employment
25 January 2021
On 13 January 2021, U.S. Customs and Border Protection issued a region-wide Withhold Release Order (WRO) prohibiting all imports of cotton and tomato products from the Xinjiang Uyghur Autonomous Region (Xinjiang) in response to forced labor concerns. This WRO, which is effective immediately, also extends to imports containing cotton and tomato products from Xinjiang. As a result, this WRO will have a wide-reaching impact affecting imports such as apparel, textiles, tomato seeds, canned tomatoes, and tomato sauce. This is indicative of the increased enforcement of forced labor law provisions impacting a range of products, including palm oil from Malaysia and Indonesia and seafood from certain fishing vessels.
As discussed in previous Hogan Lovells alerts, this WRO is part of a broader Trump Administration policy to increase pressure on the Chinese Communist Party for its reported widespread human rights abuses against Uyghurs and other Muslim minorities in Xinjiang.
Section 307 of the Tariff Act of 1930, as amended (19 U.S.C. § 1307) prohibits the importation of merchandise “mined, produced, or manufactured wholly or in part” in a foreign country by forced, indentured, or convict labor. CBP is authorized to enforce this policy by issuing WROs directed either to individual products and manufacturers or blanket orders such those covering entire regions. CBP issued thirteen WROs in fiscal year 2020, eight of which targeted goods from China. This new 13 January WRO is the fourth CBP has issued in fiscal year 2021, and the second of which targets imports from Xinjiang.
The 13 January WRO will have a wide-reaching impact on the U.S. supply chain, particularly for the apparel and food sectors. First, like all WROs, this WRO not only applies to imports of cotton and tomatoes from Xinjiang, but also to any products that might incorporate those goods. Second, this cotton and tomato WRO is noteworthy because it applies regionally to Xinjiang, as opposed to a specific manufacturer. CBP has previously claimed that the agency acts on information concerning specific manufacturers/exporters and specific merchandise but “does not generally target entire product lines or industries in problematic countries or regions.”
CBP will detain any imports suspected of violating this WRO. In order to obtain release of the goods, importers will have to demonstrate to CBP that the goods were not produced with forced labor. CBP requires a high evidentiary standard, which is challenging to meet.
Importers are responsible for ensuring their imports do not violate Section 307 of the Tariff Act of 1930 at any point in the supply chain. Thus, importers are advised to conduct a thorough risk analysis of their supply chains to determine whether any of their imports contain cotton or tomato products from Xinjiang. Imports from any country that are suspected of potentially containing cotton or tomato products from China are at risk of detention by CBP.
It is also important to remember that the Forced Labor restrictions apply to any product mined, produced, or manufactured wholly or in part in a foreign country by forced, indentured, or convict labor. Accordingly, supply chain risk analysis should extend to any product produced in any country that contains any component, material, or ingredient produced in Xinjiang or otherwise suspected of being produced by forced, indentured, or convict labor.
Chandri Navarro , Partner, Hogan Lovells