U.S. Customs and Border Protection Withhold Release Orders: Avoid and Prepare

Written by: John Parkerson, Esq. and Fanny Chac

The U.S. Customs and Border Protection (“CBP”) has a responsibility to encourage importers to comply with U.S. laws and regulations and to help protect American consumers from harmful products.[1]  On July 15, 2020, CBP imposed a Withhold Release Order (“WRO”) on the subsidiaries of the world’s largest medical glove maker, Malaysian Top Glove Corp. Bhd due to suspected forced labor.[2]  This action has special current relevance:  the WRO comes when the need for medical gloves and protective gear has increased due to the COVID-19 pandemic.[3]

U.S. Protections Against Importation of Products Made Using Forced Labor

In the last 90 years, the Tariff Act of 1930 has prohibited the import of goods mined, produced, or manufactured in a foreign country by forced or indentured labor.[4]  U.S. statutes made an exception for importing merchandise made with forced labor where the consumption of the goods in the U.S. exceeded the domestic production capacity.[5]  Then in 2016, the Trade Facilitation and Trade Enforcement Act prohibited the import of products made from forced labor, regardless of domestic needs and enhanced CBP’s ability to prevent products made with forced labor from being imported into the U.S.[6]

Detainment of foreign merchandise starts when CBP receives allegations through information provided from news reports, tips from the public or trade community, or other third parties.[7]  CBP then determines if there is enough evidence to support a reasonable suspicion to issue a WRO.[8]  Then, if the CBP Commissioner approves, CBP detains the merchandise at the port of entry.[9]  Pursuant to 19 C.F.R. § 133.21(b), CBP is required to notify an importer, in writing, that the goods are being detained within five days of the detention.[10]  The importer is granted seven days to respond to CBP and offer evidence showing that the merchandise may be admitted.[11]  CBP then determines whether to exclude the merchandise or release it for importation.[12]  If there is sufficient evidence that the merchandise was not made with forced labor, CBP will revoke the WRO.[13]

How Importers Can Avoid WROs

Unfortunately, CBP does not provide a method of notification to importers that it plans to impose a WRO order on the merchandise; thus the duty lies on the importer to have procedures in place to ensure the merchandise is not produced using forced labor.[14]  To remove the risk of forced labor, importers should apply due diligence in establishing reliable procedures and regularly examining and monitoring manufacturers and suppliers.[15]  Additionally, importers should also establish a procedure to conduct periodic internal audits to check for forced labor and vet new suppliers for forced labor risks.[16]  Any contracts with suppliers should include terms that prohibit forced labor.[17]

Useful resources are provided on CBP’s “Forced Labor” webpage and the Department of Labor’s “Comply Chain” webpage.[18]  Additionally, the Department of Labor has a “List of Goods Produced by Child Labor or Forced Labor” and the International Labour Organization has an “Indicators of Forced Labour” booklet available for review.[19]

Hall Booth Smith’s international business and trade attorneys routinely provide advice and prepare transactional documents for U.S. and foreign companies engaging in cross-border business.  A special thanks goes to summer associate Fanny Chac for her assistance in preparing this blog.

---

[1] Basic Importing and Exporting, U.S. Customs & Border Protection, https://www.cbp.gov/trade/basic-import-export.

[2] Liz Lee, Amid Virus Crisis, U.S. Bars Imports of Malaysia’s Top Glove Over Labour Issues, Reuters (July 16, 2020), https://www.reuters.com/article/us-top-glove-usa/amid-virus-crisis-u-s-bars-imports-of-malaysias-top-glove-over-labour-issues-idUSKCN24H0K2.

[3] Id.

[4] Forced Labor, U.S. Customs & Border Protection, https://www.cbp.gov/trade/programs-administration/forced-labor (last modified July 2, 2020).

[5] Id.

[6] Trade Facilitation and Trade Enforcement Act of 2015: Repeal of the Consumptive Demand Clause, U.S. Customs & Border Protection (Feb. 28, 2020), https://www.cbp.gov/sites/default/files/assets/documents/2020-Feb/Fact%20Sheet%20-%20Repeal%20of%20the%20Consumptive%20Demand%20Clause.pdf.

[7]Forced Labor Process, U.S. Customs & Border Protection (Aug. 25, 2017), https://www.cbp.gov/sites/default/files/assets/documents/2019-Feb/Forced_Labor_Process_Map_PBRB.pdf.

Reports for suspected violations are filed on the CBP website. https://eallegations.cbp.gov/Home/Index2.

[8] Id.

[9] Id.

[10] 19 C.F.R. § 133.21.

[11] Id.

[12] Id.  See 19 C.F.R. § 151.16.

[13] Id.

[14]Forced Labor Process, U.S. Customs & Border Protection (Aug. 25, 2017), https://www.cbp.gov/sites/default/files/assets/documents/2019-Feb/Forced_Labor_Process_Map_PBRB.pdf.

Reports for suspected violations are filed on the CBP website. https://eallegations.cbp.gov/Home/Index2.

[15] Id.

[16] Id.

[17] Id.

[18] Forced Labor, U.S. Customs & Border Protection, https://www.cbp.gov/trade/programs-administration/forced-labor (last modified July 2, 2020); Comply Chain, Dep’t of Labor, https://www.dol.gov/ilab/complychain/.

[19] List of Goods Produced by Child Labor or Forced Labor, U.S. Dep’t of Labor, https://www.dol.gov/agencies/ilab/reports/child-labor/list-of-goods; ILO Indicators of Forced Labour, Int’l Labour Org., https://www.ilo.org/global/topics/forced-labour/publications/WCMS_203832/lang–en/index.htm#:~:text=This%20booklet%20presents%20an%20introduction%20to%20the%20ILO,labour%20situation%2C%20and%20who%20may%20require%20urgent%20assistance.