U.S. Customs and Border Protection recently issued a guidance document on the June 23 withhold release order that requires the detention at all U.S. ports of entry of shipments containing silica-based products made by Hoshine Silicon Industry Co. Ltd., a company located in China’s Xinjiang Uygur Autonomous Region, as well as subject products made by Hoshine’s subsidiaries.
The WRO applies to 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, regardless of where the materials and final goods are produced. The guidance document provides the following examples of such materials and finished goods, although this list is not exhaustive.
• Component materials – silicon, including metallurgic grade silicon, silicon oxide, and certain silicones in primary forms
• Intermediate goods – semiconductor devices, integrated circuits, and additives for aluminum alloys and concrete
• Finished goods – photovoltaic cells, solar generators, solar panels, electronics, adhesives, and lubricants
The guidance document also introduces the concept of de minimis content as it may relate to the enforcement of WROs. Specifically, CBP indicates that if the contribution of prohibited labor to the whole product is insignificant – both from a quantitative and a qualitative perspective – it may consider the product to be outside the scope of the statute.
To illustrate, CBP states that if a single part in the engine of a car is manufactured using prohibited labor, the contribution of prohibited labor to the final product may be considered de minimis for purposes of Section 1307. On the other hand, CBP may consider the car to be within the scope of Section 1307 if the part in question is an essential part of the engine or if the manufacture of the part represents a substantial share of the total labor.
In addition, CBP’s guidance discusses the types of documents that importers may be required to submit to demonstrate that merchandise detained under 19 CFR 12.42(a) was not produced with forced labor, including:
- a certificate of origin signed by the foreign seller in the format specified in 19 CFR 12.43(a), which may be submitted in electronic form
- a detailed statement from the importer, as outlined in 19 CFR 12.43(b)
- an affidavit from the provider of the silica and its initially processed forms (i.e., silicon metal, metallurgical grade silicon, chemical-grade silicon, silicon, etc.) and identification of the source of the silica and its initially processed forms that identifies where the silica and its initially processed forms were sourced
- purchase orders, invoices, and proof of payment for the silica and its initially processed forms and/or silica containing components
- a list of production steps and production records from the imported merchandise back through the supply chain to the unprocessed silica and its initially processed forms
- transportation documents from raw silica source (quarry or other) through silica’s initially processed forms to the imported merchandise
- daily process reports that relate to the unprocessed silica and its initially processed forms sold to the downstream producer(s) and list of entities that supplied inputs for the silica containing products being imported
Sandler, Travis & Rosenberg offers a comprehensive suite of services to help companies address forced labor concerns, including supply chain reviews, due diligence strategies, and proactive remediation. For more information, please contact Amanda Levitt (at (212) 549-0148 or via email), David Olave (at (202) 730-4960 or via email), or Nicole Bivens Collinson (at (202) 730-4956 or via email). You can also click here for ST&R’s forced labor resources page.
Copyright © 2022 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.