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.
U.S. Customs and Border Protection, Media Release, CBP Collects $575,000 from Pure Circle U.S.A. for Stevia Imports Made with Forced Labor (August 13, 2020).
U.S. Customs and Border Protection, Media Release, CBP Issues Detention Order on Garments Manufactured with Prison Labor in China (August 11, 2020).
Our previous Advisory, "US Authorities Increase Enforcement of Ban on Importing Goods Made with Forced Labor" (June 17, 2020), provides an overview of previous enforcement efforts, as well as the history of Section 1307.
"Forced labor" is defined in the statute as "all work or service which is exacted from any person under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily." The statute also notes that the term "forced labor or/and indentured labor" includes forced or indentured child labor. 19 U.S.C. § 1307(b).
Public Law 114-125. The Trade Facilitation and Trade Enforcement Act of 2015 greatly expanded the scope of CBP's enforcement authority in connection with forced labor by eliminating a "consumptive demand" exception in Section 1307 that allowed goods into the United States, despite their production by forced labor, if the domestically produced supply of the goods was not sufficient to meet domestic demand for the goods.
In addition to the two recent actions relating to China highlighted in this Advisory, CBP also recently took action to disposable gloves from Malaysia produced by Top Glove Sdn Bhd and TG Medical Sdn Bhd (July 15, 2020) and seafood harvested by the Da Wang, a Vanuatu-flagged, Taiwan-owned distant water fishing vessel (August 18, 2020). Withhold Release Orders and Findings, U.S. Customs and Border Protection; Amid virus crisis, U.S. bars imports of Malaysia's Top Glove over labour issues, Reuters, July 15, 2020; U.S. Customs and Border Protection, Media Release, CBP Issues Detention Order on Seafood Harvested with Forced Labor (August 18, 2020).