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08 January 2021
On 2 December 2020 the Department of Homeland Security (DHS) blocked imports of cotton products from a major Chinese state-owned firm in the Xinjiang Uighur Autonomous Region (XUAR), saying that the company uses forced labour of ethnic Uighur Muslims.
In blocking allegedly forced labour imports, the DHS has joined the Trump administration's efforts to punish human rights abuses in the region. The administration has also issued questionnaires to importers to gather more information on cotton imports from the region.
This article examines this and other recent enforcement actions in the forced labour area, as well as what they mean for apparel importers.
Specifically, US Customs and Border Protection (CBP) issued a withhold release order (WRO) on all cotton products made by the Xinjiang Production and Construction Corps (XPCC). Although the WRO was announced on 2 December 2020, it was backdated to take effect on 30 November 2020. This move was not entirely unexpected (for further details please see "Sanctions on Chinese apparel companies for forced labour hit retail supply chains").
According to a CBP news release:
[t]he WRO applies to all cotton and cotton products produced by the XPCC and its subordinate and affiliated entities as well as any products that are made in whole or in part with or derived from that cotton, such as apparel, garments, and textiles.
The authority for the action is provided in 19 US Code Section 1307, which prohibits the import of merchandise mined, produced or manufactured, wholly or in part, in any foreign country by forced or indentured labour, including forced child labour. Merchandise is subject to detention and rejection through CBP WROs.
According to CBP, XPCC employs 12% of the Xinjiang population and produces 17% of its cotton products; the agency says that this action could potentially affect "billions" in imports.
Effectively, the move acts as an import ban on the named items.
The WRO stops short of a region-wide order on all cotton products from Xinjiang, which produces 85% of China's cotton. The DHS views this measure as having the practical effect of a regional ban but being easier to enforce because it is taken against a single manufacturer and its affiliates. In announcing the measure, CBP indicated that it is still considering a full regional WRO once it has determined practical steps to implement such an order.
In recent months, there has been increasing pressure from labour and human rights groups, as well as members of Congress, to halt imports of cotton and agricultural products from Xinjiang.
The House recently passed legislation similar to the new WRO that would require companies to provide "clear and convincing evidence" that any products imported or sourced from Xinjiang are not made with forced labour, thereby placing the burden of proof on the importer. The bill is currently in the Senate, but no actions are yet scheduled.
In the days leading up to the WRO, CBP also sent a lengthy questionnaire to a number of US apparel importers to gather information on supply chains in Xinjiang. The questionnaires include 36 in-depth questions on supply chains in Xinjiang – covering topics from farming and raw materials to export. These questionnaires would help CBP to assess risk among importers but may also herald future enforcement action by the agency.
Fashion and luxury goods companies must be concerned about these actions, the pending legislation, other recent sanctionings of Chinese companies in Xinjiang by the US Departments of Treasury and Commerce and other CBP developments relating to importing products that contain fabric made with prison or forced labour.(1)
For further information on this topic please contact Anthony V Lupo, David Salkeld or Natan Tubman at Arent Fox LLP by telephone (+1 202 857 6000) or email (email@example.com, firstname.lastname@example.org or email@example.com). The Arent Fox LLP website can be accessed at www.arentfox.com.
(1) For information on steps which importers can take to review their supply chains and other compliance steps – as well as an overview of a recent CBP enforcement case in which it imposed $575,000 in penalties – please see "CBP gets tough on forced labour: turning supply chain risks into advantages".
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