CBP Issues WRO on Cotton, Tomato, & Downstream Products Made in Xinjiang

Originally published on Diaz Trade Law Blog

The United States has been increasing its efforts to combat forced labor around the world. During the Trump Administration’s final weeks, the United States not only banned the importation of Chinese Cotton, Tomatoes, among other products, but also explicitly recognized the situation in Xinjiang as a Genocide.

Importers not adequately auditing their supply chains for use of forced labor are at risk of administrative and criminal enforcement. Imported merchandise produced with forced labor is subject to the Department of Homeland Security (DHS) enforcement. Such enforcement includes U.S. Customs and Border Protection’s (CBP) right to detain, exclude, and/or seize imported goods and Homeland Security Investigation’s potential criminal investigation. China is not only the United States’ number one trading partner but also happens to be the world’s biggest forced labor violator.

Background

In May 2014, China initiated the campaign “Strike Hard against Violent Extremism”, claiming to combat the “three evils” of “ethnic separatism, religious extremism, and violent terrorism.” The Chinese Communist Party (CCP) used this justification to impose restrictions on members of the ethnic minority communities of the Xinjiang Uighur Autonomous Region. These efforts dramatically increased in August 2016, when Communist Party Secretary Chen Quanguo, known as the architect of China’s Muslim camps, assumed leadership of Xinjiang. According to Human Rights Watch:

• Xinjiang authorities conduct a compulsory mass collection of biometric data, such as voice samples and DNA, and use artificial intelligence and big data to identify, profile, and track everyone in Xinjiang. The authorities have envisioned these systems as a series of “filters,” picking out people with certain behavior or characteristics that they believe indicate a threat to the Communist Party’s rule in Xinjiang.

This dystopian system has progressed into the rapid establishment of “re-education” camps. In these camps, guards force the Muslim detainees to break Halal, mandating they drink alcohol, and only serving pork at meals. China reportedly takes DNA samples from Uighur camp prisoners and uses them as human test subjects in gang rapes and medical experiments.

Since 2014, the situation in Xinjiang, China has progressed from the simple collecting of Biometric data from a subsect of the population, to full-blown extrajudicial internment, re-education camps, forced sterilization, and organ harvesting. According to a 2015 report, China’s illegal organ transplant industry is valued at over $1 billion each year. The labor from these camps is the life-blood of the campaign. The interred individuals are essentially paying for their treatment in that they generate revenue that the government subsequently pumps back into the system of abuse.

Dr. Adrian Zenz, a Senior Fellow in China Studies at the Victims of Communism Memorial Foundation in Washington has authored various books regarding China’s policies towards ethnic minorities, and has played a leading role in the analysis of leaked Chinese government documents, including the “China Cables” and the “Karakax List.” Dr. Zenz has been integral in enlightening the world on the situation in China. In a recent Washington International Trade Association (WITA) webinar regarding the scope and scale of forced labor in Xinjiang, Dr. Zenz stated that the current crisis is worse than anything we have witnessed since the Holocaust. According to Dr. Zenz, whereas the Nazis sent Jews to concentration camps and death camps; the Chinese send Uighurs to concentration camps, re-education camps, or demoralization camps, instead. Despite the differences, the systematic nature and end goal of the Chinese government’s policy towards the Uighurs is emblematic of the Nazi’s policy towards the Jew’s: forced assimilation and or eradication of the culture and prevention of its proliferation.

• “[T]he Chinese government has placed vast numbers of Turkic minorities into internment camps, which it refers to as “reeducation camps,”… it claimed that these supposed students would gradually be released into work placements. Data such as this supports this claim, but not in the way that the government is trying to sell it. Rather, it is part of a rapidly growing set of evidence for how Beijing’s long-term strategy to subdue its northwestern minorities is predicated upon a perverse and intrusive combination of coercive labor, intergenerational separation, and complete social control.” Dr. Zenz, Xinjiang’s New Slavery

Dr. Zenz explicitly stated that while the Chinese are not (yet) committing mass extermination, the abuses against its Uighur population definitively constitutes a genocide. From religious oppression, to forced sterilization, to internment, to forced labor or slavery, to re-education — the CCP has been deliberate in its attempt to eliminate the Uighur ethnicity. Dr. Zenz articulated that the Chinese are engaging in a slow-rolling genocide, also known as an “ethnocide”.

Despite the overwhelming evidence supporting claims of systematic abuses such as coercive population control through forced abortion, forced sterilization, and involuntary implantation of birth control; Chinese officials continue to defend the supposedly legitimate purpose of these camps.

Combating Chinese Concentration Camps — Forced labor Angle

In its 2019 Annual Report, the Congressional-Executive Commission on China found that products reportedly produced with forced labor by current and former mass internment camp detainees included textiles, electronics, food products, shoes, tea, and handicrafts.

Since the publication of the September 2018 Human Rights Watch report, news of these concentration camps started garnering international recognition. Congress began introducing bills, like the UIGHUR Act of 2019, which aimed at addressing the “human rights violations and abuses, including gross violations of human rights, by the People’s Republic of China’s mass surveillance and internment of [Millions of] Uighurs and other predominantly Turkic Muslim ethnic minorities in China’s Xinjiang Uighur Autonomous Region.”.

These efforts increased when President Trump signed the Uyghur Human Rights Policy Act of 2020 into law on June 17, 2020. Under the UHRA, the President may impose property-blocking or visa-blocking sanctions on the identified foreign individuals and entities responsible for human rights abuses in China’s Xinjiang Uyghur Autonomous Region. The UHRPA also requires the Executive branch to periodically report to Congress a list identifying foreign individuals and entities responsible for such human rights abuses. Furthermore, although it has not yet been signed into law, bills such as the Uyghur Forced Labor Prevention Act, which was introduced on March 12, 2020, signify that Congress understands the gravity of the situation. Some of the key findings included in the Bill are as follows:

• There is a very high risk that many factories and other suppliers in the Xinjiang Uyghur Autonomous Region are exploiting forced labor, according to reports from researchers, media, and civil society groups. Audits to vet products and supply chains in the Xinjiang Uyghur Autonomous Region are not possible because of the extent to which forced labor has contaminated the regional economy, the mixing of involuntary labor with voluntary labor, the inability of witnesses to speak freely about working conditions given heavy government surveillance and coercion, and the strong incentive of government officials to conceal government-sponsored forced labor.
• In its June 2019 Trafficking in Persons Report, the Department of State found, Authorities offer subsidies incentivizing Chinese companies to open factories in close proximity to the internment camps, and local governments receive additional funds for each inmate forced to work in these sites at a fraction of minimum wage or without any compensation.
• According to public reports, companies that are or have been suspected of directly employing forced labor or sourcing from suppliers that are suspected of using forced labor include (among others):

-Adidas,

-Calvin Klein,

-the Campbell Soup Company,

-the Coca-Cola Company,

-Costco,

-Esprit,

-H&M,

-the Kraft Heinz Company,

-Nike, Inc.,

-Patagonia, Inc.,

-Tommy Hilfiger.

Whether out of ignorance or neglect, American and European dollars have helped facilitate the use of forced labor, if not slavery; which pursuant to 19 U.S.C. 1307 is prohibited.

Active Measures

In line with sanctioning individuals and entities is the strategic use of Withhold Release Orders (WROs). A WRO directs CBP Officers at all ports of entry to withhold release of goods originating from a listed company or country. These targeted sanctions have been especially effective at identifying certain nations, industries, and companies that employ forced labor in any way. CBP provides the public with a list of all WROs and the findings of the investigations. Right now, the majority of active WROs are focused on items produced in China. In fact, the majority of WROs the USTR implemented since 2016, are directed at China. Below is a list of each WRO implemented against China since 2016:

Following the imposition of a WRO on hair products originating from the Lop County Meixin hair product company on June 17, 2020, CBP has implemented additional WROs on other industries in the region. The impositions of WROs against China saw a recent uptick on July 1, 2020 as a result of another seizure of hair products made in China. Following this seizure, CBP issued a Xinjiang Supply Chain Business Advisory, which highlights that the Federal Government recognizes the harsh repression and illicit practices of the Chinese regime, and cautions US stakeholders– businesses, individuals, academic institutions, research service providers, and investors — that continue to operate business with entities in Xinjiang.

Specifically, the advisory states that these companies

should be aware of reputational, economic, and, in certain instances, legal, risks associated with certain types of involvement with entities that engage in human rights abuses, which could include Withhold Release Orders (WROs), civil or criminal investigations, and export controls.

Xinjiang Cotton Ban

During the last week of the Trump Administration, on January 13, 2021, the United states issued a Region-Wide Withhold Release Order on Products Made by Slave Labor in Xinjiang Specifically, CBP imposed a WRO on all Cotton, Tomatoes and Downstream Products originating in the Xinjiang Uyghur Autonomous Region (XUAR). CBP issued the WRO after identifying various forced labor indicators including debt bondage, restriction of movement, isolation, intimidation and threats, withholding of wages, and abusive living and working conditions.

According to CBP, on December 2, 2020, CBP announced the issuance of a WRO on cotton and cotton products originating from the Xinjiang Production and Construction Corps, an economic and paramilitary organization subordinate to the Chinese Communist Party. The region-wide WRO is the fourth WRO that CBP has issued since the beginning of Fiscal Year 2021, and the second on products originating in Xinjiang. All WROs are publicly available and listed by country on CBP’s Forced Labor WROs and Findings webpage.

The decision to ban cotton products marks the most substantial action. Out of the estimated three million detained Uighurs, over 500,000 have been forced to work in cotton fields. Moreover, cotton from the Xinjiang region accounts for 85% of China’s cotton production, and more than 20% of the world’s cotton.

Biden on Forced Labor

The Biden Administration has committed to maintaining a strident approach towards China. On January 20, 2021 upon being sworn in as Secretary of State, Anthony Blinken stated:

On the Uighurs I think we’re very much in agreement. And the forcing of men, women and children into concentration camps, trying to, in effect, re-educate them to be adherents to the ideology of the Chinese Communist Party, all of that speaks to an effort to commit genocide.

Practitioner Tips

According to CBP, importers must exercise reasonable care and due diligence to ensure that forced labor is not included in any aspect of their supply chain. In order to effectively mitigate their risk, importers must understand the timely and costly detention process and know the importance of using CBP’s reasonable care checklist and implementing best practices. Additionally, importers should conduct a robust internal risk assessment, and audit their supply chain and import history. Further, importers should be aware of their ability to contest a WRO or argue for the release of detained shipments.

For more information regarding CBP’s current enforcement environment in targeting and combatting the use of forced labor, as well as top tips on how to avoid forced labor to in your supply chain — reference our Bloomberg Law article titled “U.S. Customs Targets Forced Labor” co-authored by Jennifer Diaz, and Denise Calle of Diaz Trade Law with support from Zachary Kaufman.

Conclusion

For assistance with importer due diligence in relation to forced labor requirements; or for assistance re-exporting your detained merchandise, in submitting documents to dispute the use of forced labor, or for assistance with the revocation request process, contact our Customs and International Law attorneys at info@diaztradelaw.com or 305–456–3830.