Xinjiang Uighur Autonomous Region (XUAR) Withhold Release Order Requirements On Cotton And Tomato Products, Detailed

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On January 13, 2021 U.S. Customs and Border Protection (CBP) issued a Withhold Release Order regarding cotton products and tomato products produced in China’s Xinjiang Uyghur Autonomous Region (XUAR) effective February 13, 2021. The agency stated that: “CBP issued a Withhold Release Order (WRO) against cotton products and tomato products produced in Xinjiang based on information that reasonably indicates the use of detainee or prison labor and situations of forced labor.” CBP identified the following International Labor Organization forced labor indicators as a result of its investigation: “debt bondage, restriction of movement, isolation, intimidation and threats, withholding of wages, and abusive living and working conditions.”

This finding effectively shifts the burden to an importer to prove that a product produced in the XUAR containing cotton or tomato goods was not produced using any forced labor indicators. Moreover, CBP’s WRO makes clear that products are covered if they use such cotton or tomato inputs “in whole or in part,” with no de minimis exception provided. By placing the burden on the importer to prove that the product it is importing is not produced in whole or in part from such XUAR merchandise, CBP is creating a major hurdle. Detailed information will be required, in our experience, to meet CBP internal evidentiary standards. The Frequently Asked Questions (FAQ) provided by CBP provide some useful examples of the level of detail required in any response:

For cotton products: Affidavit from yarn producer and the source of raw cotton that identifies where the raw cotton was sourced. Purchase Order, Invoice, and Proof of Payment for the yarn and raw cotton. List of production steps and production record for the yarn, including records that identify the cotton and cotton producer of the raw cotton. Transportation documents from cotton grower to yarn maker. Supporting documents related to employee’s that picked the cotton, time cards or the like, wage payment receipts, and daily process reports that relate to the raw cotton sold to the yarn producer.

For tomato products: Provide supply chain traceability documents pointing to the point of origin of the tomato seeds, tomatoes, or tomato products. Affidavit from the tomato processing facility that identifies both the parent company and the estate that sourced the tomato seeds and or tomatoes. Purchase Order, Invoice, and Proof of Payment for the tomato seeds, tomatoes, or tomato products, from the processing facility and the estate that sourced the raw materials. All production records for the tomato seeds, tomatoes, and/or tomato products that identify all steps, from seed to finished product, from the farm to shipping to the United States.

The above requirements will be difficult to meet, particularly since they may require importers to go back to supplying companies and upstream vendors for information on inputs, when the importer has no relationship with such upstream suppliers. There likely will be great difficulty in obtaining an adequate response from those companies.

While the current WRO applies only to the cotton and tomato sectors, it is also possible that similar WROs could be extended to other merchandise originating in the XUAR. Furthermore, CBP recommends the following in its FAQs: “To combat the risks of forced labor in supply chains, importers should have a comprehensive and transparent social compliance system in place.”

Importers concerned with this or future WROs should consider their options regarding traceability of their products, including implementation of a social compliance system meeting CBP standards. For questions on this or other WROs companies, should consult with their attorneys or consultants specializing in this area.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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