U.S. Customs and Border Protection (CBP) is stepping up enforcement of U.S. laws prohibiting the importation of goods made with forced, indentured, or prison labor.  While existing regulations provide importers with recourse to seek release of improperly detained shipments, these procedures can be challenging to navigate and may require legal action.

On April 15, Virtus Nutrition LLC (“Virtus”) filed a complaint at the U.S. Court of International Trade (CIT), challenging the detention of a shipment of “palm oil distillates and palm stearin.” CBP detained the shipment pursuant to an Withhold Release Order covering palm oil and products containing palm oil produced by Sime Darby Plantation Berhad and its subsidiaries, joint ventures, and affiliated entities in Malaysia.  Virtus states that it provided CBP with “extensive information concerning the manufacture of the merchandise in the subject cargo, including records concerning the growth and harvesting of palm fruit bunches, the extraction of oils from that fruit, and the refining of the oils into the products contained in the subject entry.”  CBP confirmed receipt of the information.  About one month later, CBP notified Virtus that it had decided to exclude the shipment from entry into the United States, saying “[t]he petition that you submitted…requesting that CBP either revoke or modify the [WRO] provided insufficient information to deem the merchandise admissible.” Virtus timely filed a protest, which was also denied, on the grounds that Virtus was “unable to trace production back to the harvesting of the palm kernel/seed as required by the [WRO]” – a fact Virtus challenges, as it claims to have submitted that information to CBP.

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Recent developments in Congress and now unprecedented action by U.S. Customs and Border Protection (CBP) likely signal increased supply chain enforcement may be coming – and US importers should take notice.

As discussed in our previous blog entry, on March 18, 2021, the Senate Finance Committee held a hearing titled, “Fighting Forced Labor: Closing Loopholes and Improving Customs Enforcement to Mandate Clean Supply Chains and Protect Workers.”  In his opening remarks, Chairman Ron Wyden (D-OR) unequivocally stated that forced labor, which is “modern day slavery”, occurs in countries that are part of the American supply chain and that the US should use its economic muscle to defeat forced labor around the globe.

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As almost every industry has discovered, the COVID-19 pandemic has highlighted weaknesses in American supply chains.  The sudden and severe lock-down on international shipping and materials and components shortages have made it clear how dependent United States consumers are on other countries.  A number of U.S. Senators therefore have introduced bipartisan legislation seeking to directly address these weak points.  Senators Marco Rubio (R-FL), Chris Coons (D-DE), Maggie Hassan (D-NH), and John Cornyn (R-TX) announced this week that they are co-sponsoring the National Manufacturing Guard Act of 2021, which would create federal resources focused on the security of U.S. supply chains. Continue Reading