Ensuring Compliance: CBP's Evolving Approach to Forced Labor Imports

A recent ruling by US Customs and Border Protection (CBP) has caught the attention of importers as it suggests a potential expansion in the enforcement of the prohibition on imports made with forced labor. In simpler terms, CBP may be cracking down on goods that are suspected of being produced with forced labor or imposing stricter requirements for proving their compliance with the law. 

Let’s Break It Down 

Section 307 of the Tariff Act of 1930 prohibits importing any product mined, produced, or manufactured wholly or in part by forced labor. CBP can issue a withhold release order (WRO) and then detain imported goods that they reasonably believe, but not conclusively, are in violation of the law. Importers of Record (IOR) contesting the shipment’s denial must submit a Certificate of Origin signed by the foreign seller as required by 19 C.F.R. 12.43(a), and a detailed statement by the IOR, as outlined in 19 C.F.R. 12.43(b). 

In January 2021, CBP issued a WRO specifically targeting cotton, tomatoes, and downstream products produced from China's Xinjiang Uyghur Autonomous Region (XUAR). This action was taken because CBP had credible information indicating the presence of forced labor in the supply chains of these products and region.  

CBP expanded the scope and requirements after the WRO was issued. On December 23, 2021, President Biden signed into law UFLPA (Uyghur Forced Labor Prevention Act). UFLPA includes cotton, tomatoes, and polysilicon as priority sectors. UFLPA established rebuttable presumption that any goods, materials, wares, and merchandise that is mined, produced, or manufactured wholly or in part in the XUAR is prohibited. 

'Reputable presumption' places the onus on the IOR to prove to CBP, by convincing evidence, that the goods, wares, articles, or merchandise were not produced using forced labor. IOR can seek the release of these goods if they can provide satisfactory evidence that the products are excluded from the scope of UFLPA. Additionally, UFLPA is a higher standard of proof to achieve than previously issued WRO's. UFLPA’s ‘rebuttable presumption’ went into effect on June 21, 2022. 

An importation containing pullovers from Cambodia entered the port of Newark, New Jersey on April 17, 2022. CBP detained the shipment on April 21, 2022, due to suspicions that the importation was subject to the WRO that was issued in January 2021. The IOR, to secure the release of the goods, provided various documents such as Certificates of Origin, sales contracts, invoices, and more. These documents aimed to demonstrate that the cotton used in the pullovers originated from India, was processed in China (outside of the XUAR), and then further manufactured into clothing in Cambodia. The IOR submitted an Application for Further Review. In response, CBP issued a ruling (HQ H330077) involving the shipment of pullovers imported from Cambodia. CBP, however, deemed this evidence insufficient to establish that the goods were not produced, either wholly or in part, with forced labor, or that the supply chain was not connected to the XUAR. It is worth noting that CBP cited internal documents indicating a link between one of the companies in the supply chain and the XUAR, although specific details were redacted from the ruling. 

What it Means to You 

This recent ruling by CBP suggests a potential shift in its approach to enforcing the prohibition on imports made with forced labor. IOR will need to carefully navigate these evolving requirements and provide robust evidence to ensure compliance with the law. 

CBP has posted a dashboard containing the following shipment milestones: "shipments denied", "shipments pending" (exam), and "shipments released". To provide additional perspective to assess the monetary impact of goods suspected to be produced with forced labor from the XUAR, as of May 16, 2023, goods valued at (in millions) $541.71 are pending examination and $27.82 have been denied entry. You can review the dashboard by visiting the following link to obtain additional information and analysis: Uyghur Forced Labor Prevention Act Statistics | U.S. Customs and Border Protection (cbp.gov)  

Our Recommendation 

Juno Customs Solutions highly recommends that importers should begin to gather convincing evidence substantiating that your supply chain does not contain forced labor. Some examples of documentation required should include the following: proof of factory visits, audit reports (including pictures), Certificates of Origin, employee wage payments and outputs, information outlining worker recruitment, invoices, purchase orders, proof of payments for the raw materials and transportation, packing lists, bills of lading, contracts, flow charts containing the entire supply chain, and evidence of policies protecting human rights. Importers only have thirty days to submit convincing evidence to rebut the presumption. Therefore, if importers wait until they receive a detention notice, it may be too late.

If you would like to obtain additional information, Juno Customs Solutions' Licensed Customs Brokers are here to assist.