Washington

To Combat Forced Labor, Congress Must Modernize CBP’s Enforcement Tools

Most Americans understand that the men and women of the U.S. Customs and Border Protection are on the front lines of an unprecedented humanitarian crisis on the southern border. The public, however, is far less aware of CBP’s responsibilities for trade enforcement with respect to another humanitarian crisis – forced labor. An estimated 25 million people are trapped in the scourge of forced labor globally and of that 4.1 million are held in state-sponsored forced labor.

CBP has unique authority under Section 307 of the 1930 Tariff Act to prevent all goods made wholly or in part from forced labor from entering the United States. Initially passed by Congress to protect domestic products from having to compete with forced labor, Section 307 has now become a powerful tool in combating human rights abuses around the globe.

This statute — independent of any CBP enforcement action — is an unequivocal ban on the import of goods that importers cannot prove do not have even a modicum of forced labor content. The regulations, which date back to the Kennedy administration, provide that when CBP determines merchandise is within the purview of Section 307, the commissioner promptly notify port directors to withhold the release. These notifications are commonly referred to as withhold release orders.

Recently, more than 20 members of the Ways and Means Committee sent a letter to the acting commissioner of CBP calling for immediate and “aggressive enforcement actions regarding polysilicon products entering the United States from Xinjiang, China” for which they claim overwhelming evidence of the use of forced labor.

CBP responded by issuing a WRO on “silica-based products made by Hoshine and its subsidiaries as well as to materials and goods derived from or produced using those silica-based products.” Silica is one of the most common elements on the planet and can be found in finished goods, including virtually all consumer and industrial electronics goods, as well as products from airline, auto, construction, telecommunication and computer industries.

CBP had already taken several actions related to China over the systemic forced labor of ethnic Uighurs in Xinjiang. The Trump administration contemplated a regional WRO with respect to all Xinjiang raw materials and products used in finished goods. After much interagency deliberation, however, CBP issued a narrower region-wide WRO on imports of all cotton and tomato products from Xinjiang.

Congress is pressing for the more action with respect to Xinjiang. The Senate just passed Sen. Marco Rubio’s (R-Fla.) Uyghur Forced Labor Prevention Act, which would create a rebuttable presumption – a de facto legislative WRO – on all goods produced in Xinjiang that are made with forced labor, unless CBP determines otherwise.

Enforcement of these WROs, whether legislative or administrative, has not been without challenges. For example, Japanese retail giant Uniqlo recently had a shipment of shirts detained at the port of Long Beach. While the company was able to demonstrate the cotton was not from China — and was not manufactured in Xinjiang — CBP still rejected the request to release goods, claiming that Uniqlo failed to prove the shirts were not made with forced labor.

Therein lies the problem: The statutory and regulatory requirements to issue a WRO of “reasonable but not conclusive” is seemingly lower than the standard of evidence CBP requires to have the detention lifted. This paradox is antithetical to due process and the rule of law enshrined in more than two centuries of U.S. jurisprudence.

The Government Accountability Office recently released a report noting that CBP has not published a description of its WRO revocation and modification process with the same specificity compared to its issuance process. The GAO ultimately recommended that CBP make descriptions publicly available to ensure stakeholder transparency in the process.

The Hoshine WRO could prove to be even more of an enforcement challenge for CBP given silica is so far upstream in the supply chain. Ironically, North American manufacturers of electronics and solar panels could be at greater risk when importing component parts than their vertically integrated competitors as they have less visibility into their supply chain and are many more steps removed from the source material. Canadian Solar Inc. was one of the first solar manufacturers to confirm CBP had detained its products, even though the company has no business relationship with Hoshine.

Congress has often created more responsibilities for CBP while failing to provide CBP with the tools to efficiently and effectively enforce Section 307.  To its credit, CBP is working diligently to better understand supply chains and has enlisted the help of the private sector, but importers need to know the evidentiary standards. Fortunately, the Senate-passed UFLPA requires such an evidentiary rulemaking that will apply to all WROs, not just in Xinjiang.

For now, if the Biden administration is serious about combating forced labor, the White House should expedite the regulatory re-write of Section 307 and put House Speaker Nancy Pelosi (D-Calif.) on notice that she needs to put the Senate-passed UFLPA up for a vote.

If you wish to report allegations of forced labor violations, please submit them to CBP at the following address: https://eallegations.cbp.gov/Home/Index2

 

Surya Gunasekara, senior advisor at the U.S. Asia Institute, previously served as executive director of policy for the U.S. Customs and Border Protection.

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