CBP Expands Enforcement Against Forced Labor From China With Civil Penalty and Continues Detentions of Imports

On August 13, 2020, US Customs and Border Protection (CBP) issued its first civil penalty in recent years under the US statute banning imports made using forced labor. The penalty was issued against an importer that allegedly violated a prior withhold release order (WRO) on importation of stevia from China made with prison labor.¹ Two days earlier, in a different case, CBP prevented certain other products made in China from entering the United States, because CBP believed they were made with prison labor.²

These two actions in the past week signal yet another escalation of CBP's use of its broad enforcement authority under 19 U.S.C. § 1307 (Section 1307) to stop imports of merchandise allegedly made using forced labor or prison labor in China. These recent decisions build on CBP's prior enforcement actions against imports from China, with a recent emphasis on imports from the Xinjiang Uyghur Autonomous Region (Xinjiang).³

Section 1307 states in relevant part:

All goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor or/and indentured labor under penal sanctions shall not be entitled to entry at any of the ports of the United States, and the importation thereof is hereby prohibited[.]⁴

The civil penalty of $575,000 was levied against an importer that imported stevia from a Chinese manufacturer whom CBP suspected of using forced labor. This is the first civil penalty relating to forced labor that CBP has issued since the repeal of the "consumptive demand" exception by the Trade Facilitation and Trade Enforcement Act of 2015.⁵ CBP had already issued a WRO in May 2016 against this importer and the Chinese manufacturer. CBP conducted subsequent investigations following the WRO, during which CBP discovered that the importer had imported twenty shipments of stevia powder and derivatives from stevia leaves that were processed in China with prison labor.

It bears noting that these two most recent enforcement actions relating to Chinese imports go beyond the issues of forced labor in Xinjiang that have received such attention from US authorities in recent months, leading to sanctions, visa restrictions and four WROs.⁶ By its actions in the last week, CBP made clear that it will continue targeting forced labor in China in Xinjiang and beyond. US importers from China can reasonably expect broad enforcement of the forced labor ban.

When considering the scope of CBP authority, it also bears noting that Section 1307 includes the possibility of enforcement actions for goods made "wholly or in part" by forced labor or convict labor. Section 1307 thus provides CBP with flexibility to detain, seize, or levy civil penalties on goods that incorporate inputs produced with forced labor. This possibility of enforcement actions based on inputs enhances the need for importers to conduct rigorous due diligence on their supply chains.

Given CBP's active enforcement initiative and the broad scope of its authority, importers should review their supply chains, including inputs to their imported products, and implement clear policies and practices to mitigate risks from enforcement of this ban.

© Arnold & Porter Kaye Scholer LLP 2020 All Rights Reserved. This Advisory is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.