US Bans Import Of Silica Due To Forced Labor Concerns | Dentons
The increased use by the US government of “import bans” to combat human trafficking raises questions for US businesses and endangers supply chains.
Import ban of silica
On June 24, 2021, the United States banned the importation of silica and related products from Chinese company Hoshine Silicon Industry Limited and its subsidiaries due to the use of forced labor. The Withhold Release Order (WRO), which bans silica and polysilicon products, orders the Department of Homeland Security to immediately seize shipments at points of entry. Silica-based products are used in consumer electronics, semiconductors, solar panels, and other goods.
There are several things businesses in the United States should know about these WRO import bans:
Import bans are on the rise
Although Congress created the WRO tool in 1930, it remained largely inactive until 2015. Since then, the Customs and Border Protection (CBP) has increased its use of WROs, administrations successive stages having always given priority to the fight against trafficking in human beings. Last year, CBP issued more WROs than ever before.
Import bans are on the rise
WRO’s import bans have often focused on one factory or a single fishing vessel. Recent bans have started to extend their reach. On January 11, 2021, the United States issued a “regional ban” on all cotton and tomatoes in the entire Xinjiang region. On May 26, 2021, the United States issued a âfleet-wide banâ on Dalian Ocean Fishing Co. Ltd. fish. In addition, there are nationwide bans against all cotton from Turkmenistan and all tobacco from Malawi. Bans that cover regions, fleets and entire countries make it harder for companies to know whether CBP will block any products, parts or products they try to import.
Charge transferred to the importer
When CBP decides to issue a WRO, it does not consider whether the importing company was aware of the forced labor. The focus is on whether the forced labor tainted the goods and not the intention or the knowledge of the importer. If CBP finds information that âreasonably but not conclusivelyâ indicates that the goods may be the product of forced labor, it will issue the WRO. While this standard is low, the disruption to business for a business unable to receive its scheduled shipment can be significant. Notably, once CBP issues the WRO, the onus shifts to the importing company to prove that the shipment in question was not marred by forced labor.
Bans aren’t limited to Chinese companies
Although China-related WROs have received considerable attention over the past couple of years, there are many active WROs against companies in other countries. These include the Democratic Republic of Congo (gold), India (beedi cigarettes), Japan (video games), Malawi (tobacco), Malaysia (palm oil and rubber gloves), from Mexico (furniture), Nepal (carpets), Turkmenistan (cotton) and Zimbabwe (diamonds).
The increased number and scope of WROs (along with âtransparencyâ requirements, modern slavery laws, and mandatory due diligence laws) are forcing companies to take a deep look at their supply chains. Companies should do the following:
- Determine if active WROs are impacting their current supply
- Assess the risks of human trafficking in their supply chains
- Examine their procurement process for signs of forced labor
- Create a holistic approach to policies, contracts and training
- Develop audit, due diligence and investigation protocols
- Provide precise, clear and responsive disclosure statements