Biden administration targets Xinjiang solar companies over work allegations

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On June 24, 2021, US Customs and Border Protection (CBP) issued a Withhold the release order (WRO) in accordance with 19 USC 1307 v Hashine Silicon Industry Co. Ltd., based in Xinjiang, China, and its subsidiaries (Hoshine). The WRO asks CPB staff to withhold shipments of silica products manufactured by Hoshine and its subsidiaries, including “materials and goods (such as polysilicon) derived from or manufactured using these products at silica base ”.

That same day, the US Department of Commerce’s Bureau of Industry and Safety (BIS) added Hoshine Silicon Industry (Shanshan) Co., Ltd. and four other Xinjiang-based companies to the list of entities on the basis of allegations of their participation “in the practice, acceptance or use of forced labor” in their production processes.

On June 23, 2021, the Ministry of Labor (DOL) published a notice in the Federal Register update its list of goods produced by child labor or forced labor (TVPRA list) to include polysilicon from China.

Meanwhile, the US Senate Foreign Relations Committee (SFRC) introduced a bill that, if passed, would place additional restrictions on the importation of goods from China’s Xinjiang Province.

CBP WRO

According to the CBP announcement, the WRO is “based on information reasonably indicating that Hoshine uses forced labor to make silica products.” Hoshine is a major supplier of materials used in the production of solar panels to the world.

Under a WRO, importers must either export detained shipments or submit, within three months, a certificate of origin and a detailed declaration demonstrating that the merchandise does not meet the criteria of 19 USC 1307. If CBP determines that the evidence submitted is insufficient, it will exclude the shipment. When CBP finds a “probable cause” that the goods or materials meet the criteria of 19 USC 1307, it will publish a formal “finding” in the Federal Register.

(Steptoe discussed the WRO process in more detail here.)

The latest WRO follows a series of CBP actions targeting suspected cases of forced labor, several of which involved China. In January 2021, CBP issued a WRO against cotton and tomato products produced in Xinjiang province. In December 2020, CBP issued a WRO Against Cotton Products Made by Xinjiang Production and Construction Corps, what was previously appointed as a specially designated national (SDN) by the US Treasury Department’s Office of Foreign Assets Control (OFAC) in July 2020.

List of entities

Meanwhile, the Bureau of Industry and Safety (BIS) of the US Department of Commerce added a subsidiary of Hoshine and four other Xinjiang-based companies to the list of entities on the basis of allegations of their participation “in the practice, acceptance or use of forced labor” in their production processes. The companies are:

  • Hoshine Silicon Industry (Shanshan) Co., Ltd .;
  • Xinjiang Daqo New Energy Co., Ltd. ;
  • Xinjiang East Hope Nonferrous Metals Co., Ltd .;
  • Xinjiang GCL New Energy Material Technology Co., Ltd .; and
  • Xinjiang Production and Construction Corps.

A BIS license requirement now applies to all items subject to the Export Administration Regulations (EAR) exported, re-exported, or transferred (within the country) to the five companies. BIS will apply a case-by-case review licensing policy for certain items identified under the Export Control Classification Number (ECCN) listed in the Federal Register Notice. This includes items designated as EAR 99 which are described in the note to ECCN 1A995 (items for protection against chemical or biological agents that are consumer goods, packaged for retail sale or personal use, or medical products) as well as articles that are necessary to detect, identify and treat infectious diseases. Other license applications will be considered under a deemed-refusal policy. The list of entities also makes the five companies ineligible for licensing exceptions in the AEOI that would otherwise apply to exports to China.

According to the announcement of the Ministry of Commerce, the BIS has added 53 people to the list of entities since October 2019 in relation to the Chinese province of Xinjiang.

Department of Labor and Congress

Under the Trafficking Victims Protection Reauthorization Act of 2005 (TVPRA), the DOL must compile a list of assets that it has reason to believe is produced through child labor or forced labor, as described in relevant international standards. This list is normally published every two years; the June 23 update falls outside of its regular release schedule. The TVPRA List provides a mechanism for the US government to draw attention to allegations of labor practices around the world and to help companies perform due diligence in the supply chain.

the latest TVPRA list, released in September 2020, included gloves, hair products, textiles, yarn / yarn, and tomato products made in China’s Xinjiang Province. Other products such as cotton and footwear were previously added to the TVPRA list.

Separately, the SFRC advanced by voice vote the Uyghur Forced Labor Prevention Law (art. 65). Among other things, the bill would impose a rebuttable import ban on all products from Xinjiang province and call for economic sanctions against individuals linked to forced labor.

As a result of these and other recent actions by the U.S. government, companies in affected industries may wish to review their existing compliance programs and supply chain due diligence processes, including penalties and risks of export control. Businesses inside or outside of China that could be affected by these measures may consider actions that could be taken to address the risk of supply chain disruption as a result of the most recent actions. from the US government and possibly other similar actions in the future.

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