CBP Issues Sweeping Enforcement Actions Against Companies in Xinjiang, China for Allegations of Forced Labor and Human Rights Abuses

On September 14, 2020, US Customs and Border Protection (CBP) announced the issuance of multiple enforcement actions against the imports of products into the US produced by certain entities that operate in the Xinjiang Uyghur Autonomous Region (Xinjiang). 19 U.S.C. § 1307 (Section 1307), a law enforced by CBP, prohibits the importation of merchandise made using forced labor.¹ This new series of enforcement actions follows the July 1, 2020 publication of the Xinjiang Supply Chain Business Advisory by multiple US government agencies that cautioned businesses about the risk of supply chain links to Chinese entities engaged in human rights abuses and forced labor, particularly in Xinjiang.²

In its latest action, CBP has issued withhold release orders (WROs) against the following products supplied or produced by the entities below. (The date in each bullet indicates when the particular WRO was made effective.)

• All products made with labor from Lop County No. 4 Vocational Skills Education and Training Center (VSETC) in Xinjiang (August 25, 2020);
• Hair products made in the Lop County Hair Product Industrial Park in Xinjiang (August 25, 2020);
• Apparel produced by Yili Zhuowan Garment Manufacturing Co., Ltd., and Baoding LYSZD Trade and Business Co., Ltd. in Xinjiang (September 3, 2020);
• Cotton produced and processed by Xinjiang Junggar Cotton and Linen Co., Ltd. in Xinjiang (September 8, 2020); and
• Computer parts made by Hefei Bitland Information Technology Co., Ltd. in Anhui, China (September 8, 2020).³

The WRO against VSETC is unusual; it is the first and only time that CBP has issued a WRO against all products made with labor supplied by an entity. According to CBP, VSETC allegedly provides prison labor to manufacturers in Xinjiang, where workers are under duress, restricted in their movements, and recruited through a highly coercive/unfree recruitment process.⁴ The WRO is unique, then, in that it does not ban a specific product, but rather focuses on the specific labor being used, and bans all products made with that labor. Given the breadth of the VSETC WRO, absent any further guidance from CBP, it appears that any product produced by workers from VSETC may be detained by CBP at the port of entry.

The cotton-related WRO or related follow up actions against cotton may also have a broad impact. Section 1307 prohibits merchandise produced "wholly or in part" by forced labor. This term has been interpreted by CBP to prohibit importation of merchandise even if only parts of the merchandise are produced by forced labor. As a result, any textiles, apparel, or other merchandise purchased by an importer may be detained by CBP if some element in the product was made from cotton processed by Xinjiang Junggar Cotton and Linen Co., Ltd. This determination can be complex, however. Cotton is a fungible commodity with a multilevel manufacturing process, making it nearly impossible to track the product down to the plant level. Furthermore, China is the second largest cotton producer in the world, with 85% of the cotton coming from Xinjiang.⁵ Perhaps in part for these reasons, the Trump Administration is reportedly considering a broader regional ban on cotton from Xinjiang.⁶ The Trump Administration could decide that a regional ban is appropriate, given its recent focus on pressuring China over the treatment of Uyghurs in Xinjiang. US importers of cotton or products made from cotton should closely scrutinize their supply chains to avoid having their goods detained by CBP.

While Section 1307 is not a new law, CBP's re-energized use of its enforcement powers in this area should lead importers to check and re-check their supply chains for possible connections to forced labor, as well as develop and implement clear policies to mitigate risks related to Section 1307 enforcement.

© 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.