U.S. Customs and Border Protection (CBP) has issued five Frequently Asked Questions (FAQs) relating to its June 23, 2021 Withhold Release Order (WRO) requiring U.S. ports to detain shipments of silica-based products and materials as well as goods derived from those products manufactured by Hoshine Silicon Industry Co., Ltd. and its subsidiaries (“Hoshine”). Hoshine operates in Xinjiang, China and is considered to be engaged in forced labor. Section 307 of the Tariff Act of 1930, 19 U.S.C. § 1307, prohibits the import of merchandise produced in whole or in part with forced labor. While the language of the WRO was broad, the White House Fact Sheet and the CBP Press Release issued in relation to the WRO indicated the U.S. government was targeting the polysilicon industry.
The WRO defined “silica” as a “raw material that is used to make components for solar panels, electronics, and other goods.” The first FAQ provides a non-exhaustive list of examples of the types of component materials, intermediate goods and finished goods CBP considers to be “silica-based products” and materials and goods derived from those products covered by the WRO:
- Component Materials – silicon, including metallurgic grade silicon, silicon oxide and certain silicones in primary forms;
- Intermediate Goods – semiconductor devices, integrated circuits, additives for aluminum alloys and concrete; and
- Finished Goods – photovoltaic cells, solar generators, solar panels, electronics, adhesives, and lubricants.
The component materials cover silicon, silicon oxide and silicones found in various intermediate and finished products not only in the polysilicon industry but also other major industries like construction and electronics. This FAQ also expands on the recently updated Xinjiang Supply Chain Business Advisory (“Advisory”) at Annex II, which listed both the metallurgical grade silicon and polysilicon industries as separate industries using forced labor in Xinjiang. For more information on the Advisory, see our Update of July 27, 2021.
The second FAQ provides that CBP might consider certain products to contain de minimis input from forced labor and therefore be outside the scope of the WRO. Specifically, “if the contribution of prohibited labor to the whole product is insignificant (both from a quantitative and a qualitative perspective), CBP may consider the product outside the scope of the statute.” As an example, “if prohibited labor is used to manufacture a single part in the engine of a car, the contribution of prohibited labor to the final product (the car) may be considered ‘de minimis’ for purposes of Section 1307. But, if the part is an essential part of the engine or the manufacture of the part comprises a substantial portion of the total labor, CBP may deem the car to be within the scope of Section 1307.”
The third and fourth FAQs confirm that, respectively: silica-based products not derived from Hoshine are not subject to the WRO; and that the WRO is based on CBP’s findings of two International Labour Organisation’s forced labor indicators, threats and restriction of movement, with respect to Hoshine.
Finally, the fifth FAQ provides the types of evidence that CBP will find acceptable in order to release any merchandise seized pursuant to the WRO. The list of documentation needed to respond to a detention notice is extensive:
- A Certificate of Origin in the format described in 19 C.F.R. § 12.43(a). The statement required by 19 C.F.R. § 12.43(b) should be submitted by the importer, not the seller. The importer’s statement should be sufficiently detailed and include proof that the goods were not produced, wholly or in part, with forced labor.
- Additional Information:
- 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.
- 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 the list of entities that supplied inputs for the silica containing products being imported.