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CBP DENIES APPAREL IMPORTER PROTEST CHALLENGING THE EXCLUSION OF GOODS UNDER XPCC COTTON WITHHOLD RELEASE ORDER

In a May 10, 2021 decision, CBP denied an apparel importer’s protest challenging the exclusion of goods pursuant to a Withhold Release Order (“WRO”) covering Cotton and Cotton Products from Xinjiang Production and Construction Corporation (“XPCC”) and its subordinate and affiliated entities.

CBP at the port and CEE levels determined that the importer had not submitted sufficient proof of admissibility and the goods were ultimately excluded. In the ruling, CBP acknowledged that the importer provided evidence that the raw cotton used to produce the garments was sourced from entities located in the U.S., Australia and Brazil.  However, CBP concluded that the importer did not provide substantial evidence to establish that entities that processed the cotton into the subject goods did so without forced labor.

Thus, CBP’s decision hinged on  the fact that adequate production records were not provided for each stage of the production (e.g., spinning, weaving / dyeing, garment make-up) to further negate the use of forced labor.  Proof of the non-China source of the raw cotton was not enough. Significantly, CBP Headquarters denied the importer’s request for release without affirmatively finding that the goods were made with forced labor.

This ruling is indicative of the latest trend on the part of CBP in connection with its reviews of proof of admissibility provided in response to detentions under WROs.  CBP officials have recently indicated that they are changing their review parameters. In the case of WROs on cotton and cotton products, CBP officials have suggested that the burden is on importers to not simply demonstrate the provenance of the cotton and track it through the various processors but to affirmatively demonstrate the absence of forced labor anywhere in the supply chain.

In light of the escalating position of CBP and the associated developments on the political and legislative fronts on the issue of forced labor, importers should examine their supply chains and consider whether they will be able to secure the requisite supporting records in the event that their goods are detained as the result of a forced labor allegation. .

Please do not hesitate to contact one of our attorneys to discuss further.

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