USFIA Lawyers Say Documentation Demands on Apparel and Xinjiang Cotton Stringent
Concerns about apparel shipments being detained due to a withhold release order were the biggest worry for U.S. Fashion Industry Association Virtual Washington Trade Symposium attendees, and USFIA customs counsel John Pellegrini told them he had no news to allay their fears.
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Pellegrini, who spoke at the conference July 13, said that Customs has a very low threshold -- “reasonable indication” -- and that to establish that there is no connection to forced labor, Customs looks for such things as yarn production documentation, weaving and dyeing documentation, cutting and sewing documentation, time cards and wage payment receipts. “There is no end to the number of documents they want to see,” he said.
If a document is not signed, if the legibility is marred, if the dating is a little wrong, it's going to be rejected, he said. “Customs expects close to perfection,” he said.
Pellegrini said importers need to watch reports on Xinjiang forced labor from nongovernmental organizations such as the Australian Strategic Institute. Customs “will expect you will avoid those companies” that show up in reports.
Pellegrini said in one case, a company whose apparel was detained established that the cotton came from India or Brazil, and is arguing it didn't buy from either of the two companies targeted by a WRO. The case is in court, and Pellegrini predicted it will take significant litigation to establish a path for companies to prove the goods were not made with forced labor.
“In the short term, it means you can’t deal in this region,” he said. “And I think many companies have already made that decision.”
If the regionwide WRO on Xinjiang cotton becomes a finding, Pellegrini said, “you're not going to be able to do anything in that region.” Theoretically, that would mean Vietnam also is not a place to source cotton clothing because factories buy from China there, but Pellegrini is not yet predicting enforcement will be that broad.
The Uyghur Forced Labor Prevention Act would increase the odds that imports made in Xinjiang are detained, USFIA Washington counsel David Spooner said. The Senate version cleared the Senate Foreign Affairs Committee June 24. He said drafters took to heart some of the trade's concerns about administration. He said the bill says that importers can overcome the presumption of forced labor by “fully and completely complying” with government regulations and by fully responding to CBP's requests for information, but only if CBP then says it does not believe forced labor was indicated in the supply chain.
USFIA President Julia Hughes said she thought the legislation would have passed both chambers by now, given its widespread support. She wondered if some questions about committee jurisdiction on the House side are slowing the process. A vote could come at any time, she said, but “some are thinking if it doesn’t happen in the next few weeks,” it may have to wait until October or November, because Congress will be consumed with appropriations in September.
More than a third of attendees ranked the trade war with China as the top concern. Spooner said the trade amendment that passed the Senate would give the U.S. trade representative “plenty of wiggle room” even as it says she must re-establish an exclusion process. The amendment “contains kind of squishy criteria” on what products should qualify, he said, including that the tariffs “unreasonably raise prices” for consumers. Spooner asked, “Well, what does that mean?” If the exclusions are granted, they would last 18 months under this legislation.
House Democrats have not said they want to require exclusions through legislation (see 2106170040).
Spooner said that USTR Katherine Tai has said a decision on product exclusions will wait until the China review is completed.
The audience asked some questions about trade sanctions. Spooner said Myanmar will certainly be excluded from the Generalized System of Preferences benefits program if GSP is renewed, due to the political crackdown there. “I think there is a high chance we will go back to the pre-2010 regime where folks couldn’t even source from Myanmar,” he said.
Nicaragua's government is also engaged in a political crackdown, but Spooner said he hasn't heard any rumblings about trade-related sanctions for that country. “If we see any activity, I would bet it’s similar to what we’ve seen against Myanmar so far,” he said.