U.S. Customs & Border Protection Issues an Unprecedented Five Withhold Release Orders

U.S. Customs & Border Protection Issues an Unprecedented Five Withhold Release Orders

On September 30, U.S. Customs and Border Protection (CBP) issued five Withhold Release Orders (WROs) against manufacturers and raw materials providers suspected of using forced labor. These WROs allow border agents to halt the import of the following products:

  1. Bone black from Brazil.
  2. Garments from China.
  3. Gold from the Democratic Republic of the Congo. 
  4. Disposable rubber gloves from Malaysia. 
  5. Artisanal rough cut diamonds from Zimbabwe. 

Issuing five simultaneous WROs is unprecedented for CBP since the Trade Facilitation and Trade Enforcement Act of 2015 closed a loophole stemming from a consumptive demand exception. Only one other WRO was issued in 2019, a total of two were issued in 2018 and none were issued in 2017. This underscores the ever-present risk of significant market disruptions for companies that work with suppliers that have not taken robust measures to safeguard their operations and supply chains from forced labor.  

The Standard WRO Procedure 

Under U.S. law, it is illegal to import goods into the U.S. that are made, even in part, using forced labor. The legal definition of forced labor includes convict labor, indentured labor, and forced or indentured child labor. If CBP suspects that certain products were produced using forced labor, they can take action to stop the product from reaching U.S. shelves. 

When sufficient evidence is collected indicating the use of illegal labor to produce products, CBP will issue a WRO, as is the case on September 30. Once a WRO is issued, importers have two options. They can either re-export their products, or collect and submit documentation demonstrating that the goods are not in violation of U.S. customs law. 

Customs and Border Protection also employs other, less-visible procedures to halt shipments suspected of containing merchandise made with forced labor from reaching the U.S. market. This was the case in 2017, when CBP used customs detention procedures to detain 11 shipments of seafood believed to have been processed by companies in China using the labor of North Korean nationals. 

Allegations of forced labor come from a variety of sources, including the general public. Customs and Border Protection provides a platform for people to submit detailed accounts of alleged illicit trade activity. The decision to detain disposable rubber gloves, for instance, resulted from well-documented cases of forced labor, with an estimated $79.5 million worth of product imported by WRP — a rubber glove manufacturer subject to the most recent WRO — from Malaysia into the U.S. last year alone. 

The Impact of the Action

While it is too early to determine how these WROs will impact manufacturers and importers, past WROs give some indication of what these companies can expect. 

In 2016, CBP issued a WRO affecting PureCircle, a Malaysian company selling stevia products in the U.S. Customs and Border Protection obtained information indicating a manufacturer believed to be providing goods to PureCircle — Inner Mongolia Hengzheng Group Baoanzhao Agricultural and Trade LLC — were using convict labor to produce their products. 

As a result, PureCircle’s shipments were denied access to the U.S. market, effectively eliminating a third of its revenue for that year. PureCircle saw a 13.4 percent decrease in sales as a direct consequence of the CBP action, costing the company around $15 million. Customs and Border Protection eventually released PureCircle’s shipments after the company provided substantial and detailed information confirming its products are not produced by Inner Mongolia. 

Companies that rely on goods imported into the U.S. can face significant business disruptions if they lack reliable procedures to ensure their suppliers do not violate U.S. law. This is an additional burden on top of a growing list of costs and penalties facing organizations that haven’t adequately responded to the business imperative for forced labor supply chain due diligence. 

The five WROs released at the end of September may be a signal of what is to with further enforcement, with firm commitments from CBP to ramp up enforcement of the labor ban. Recent examples of this commitment in 2019 include: 

  • U.S. Immigration and Customs Enforcement entered a first-of-its-kind partnership with the non-governmental organization Liberty Shared to support criminal prosecutions of companies that have forced labor in their supply chains.
  • Activists launched a legal fund for on-the-ground investigations linking forced labor to U.S. companies. 
  • During a panel presentation at the Annual Trade Symposium, CBP readied the business community for ongoing government engagement on forced labor.

The current forced labor import ban exposes over $144 billion worth of high-risk annual imports to detention and seizure at the U.S. border. According to a list compiled by the U.S. Department of Labor, more than 50 goods are known to be produced with forced labor, including electronics, granite, rubber and tin ore — an indication of where CBP may take action next. 

Assent’s Human Trafficking and Slavery solution can help you ensure your suppliers are not providing materials produced with forced labor, helping you protect your company from disruptions associated with WROs. To learn more, contact us at info@assentcompliance.com