U.S. Customs and Border Protection (CBP) on June 24, 2021, issued a Withhold Release Order (WRO) on silica-based products produced by Hoshine Silicon Industry Co. Ltd. (Hoshine) and its subsidiaries.1 Hoshine makes metallurgical silicon, which is processed into polysilicon and used in the production of solar panels. The WRO instructs CBP personnel at all U.S. ports of entry to immediately begin to detain shipments containing silica-based products made by Hoshine and its subsidiaries. Hoshine is located in the Xinjiang Uyghur Autonomous Region (XUAR) of China, which has been under intense international scrutiny because of the People's Republic of China's use of forced labor against Muslim minority groups in the region. The WRO is based on information that CBP asserts reasonably indicates that Hoshine used forced labor to manufacture its silica-based products.
In two separate announcements last week, the U.S. Department of Labor (Labor) added polysilicon from China to its list of goods produced with forced labor (Labor List),2 and the U.S. Department of Commerce (Commerce) added Hoshine and four other Chinese entities to the Entity List for participating in China's campaign of forced labor against Muslims in the XUAR.3 Polysilicon from China is the first out-of-cycle addition to the Labor List since it was established in 2005. This list is typically updated biannually, but Labor indicated that the extraordinary measure was taken as part of the broader U.S. government effort to address China's state-sponsored forced labor and human rights abuses against Uyghurs and other minority groups in the XUAR. Inclusion on this list does not impact trade in a product, but does provide an important warning to businesses to take extra caution to ensure that their supply chains are free of such products made with forced labor. The Commerce action targets the entities' ability to access commodities, software and technology subject to the Export Administration Regulations (EAR), and supplements other Entity List designations made in October 2019, June 2020 and July 2020 based on human rights abuses of ethnic minorities from the XUAR.
The announcements last week came after months of speculation that CBP would announce a regionwide WRO on polysilicon from the XUAR. In January, CBP announced a regionwide WRO on all cotton and tomatoes from the XUAR after issuing company-specific WROs covering cotton in 2020. CBP has not indicated whether a broader, regionwide WRO may be forthcoming, but the addition of polysilicon from China to the Labor List should serve as notice for businesses to exercise care to ensure that their supply chains are free of polysilicon made with forced labor.
What Is a Withhold Release Order?
Section 307 of the Tariff Act of 1930 forbids the importation of goods mined, produced or manufactured, wholly or in part, in any foreign country by convict labor and/or forced or indentured labor, including forced child labor.4 CBP updated its regulations and increased its enforcement of imported goods made with forced labor after the implementation of the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), which eliminated an exemption in Section 307 permitting the importation of necessary quantities of goods made with forced labor to meet the "consumptive demands" of the United States.5 President Barack Obama signed the TFTEA into law on Feb. 24, 2016. Since then, CBP has issued more than 20 WROs.
If the CBP Commissioner, pursuant either to a self-initiated investigation or stakeholder petition, finds that information available "reasonably but not conclusively indicates that merchandise within the purview of Section 307 is being, or is likely to be, imported," the Commissioner will order port directors to withhold release of any such merchandise to its ultimate destination in the United States.6 If an importer's merchandise is held, the importer will have an opportunity to demonstrate to CBP, by producing documentation and evidence within three months, that its merchandise was not produced with forced labor.7 If CBP is satisfied, based on the documentation and evidence presented, that the goods are admissible, the goods will be released upon compliance with usual entry requirements.8 If CBP is not satisfied, the goods are subject to seizure and forfeiture, unless the importer files a protest.9 The importer does have the option to export the goods at any time prior to seizure and forfeiture.10
How Can Importers Be Prepared?
For importers of products that contain silica-based components, preparation for questions from CBP is imperative given the short time frame in which to respond. Reaching back up the supply chain at the time of purchase is highly recommended. This is more productive than trying to get a certification from your supplier's supplier when your goods are detained at the port. The most diligent supply chain managers are already working on requesting a tracing package, with certifications, as they purchase components for their manufacturing process.
1 Withhold Release Orders and Findings, U.S. Customs and Border Protection
2 U.S. Department of Labor Adds Polysilicon from China to 'List of Goods Produced by Child Labor or Forced Labor', U.S. Department of Labor, June 24, 2021
3 Commerce Department Adds Five Chinese Entities to the Entity List for Participating in China's Campaign of Forced Labor Against Muslims in Xinjiang, U.S. Commerce Department, June 24, 2021
4 19 U.S.C. 1307
5 See Section 910 of the Trade Facilitation and Trade Enforcement Act of 2015, Pub.L.114-125 (Feb. 24, 2016)
6 19 CFR 12.42(e)
7 19 CFR 12.43(a)-(b)
8 19 CFR 12.43(c)
9 19 CFR 12.44(b)
10 19 CFR 12.44(a)