U.S. companies importing certain products from China may be facing additional supply chain challenges in the near future. On July 14, 2021, the Uyghur Forced Labor Prevention Act (“UFLPA”) was passed unanimously by the U.S. Senate. It now moves to the House, where it is expected to pass easily—a previous version of the bill passed 406-3 in September 2020. The UFLPA sets a new standard for goods produced in Xinjiang, banning all goods unless Customs and Border Protection (CBP) can firmly establish that the goods were not made using forced labor. The UFLPA reverses the previously-applied burden of proof, creating a presumption that goods produced in Xinjiang involve forced labor.
Well, that took no time at all. On May 19, 2021, the first class action was filed against the owners of the Colonial Pipeline by a putative class of customers, based on alleged elevated fuel prices as a result of the cyberattack. Consumers are obviously the end-point of this and almost any supply chain, but there are bound to be B2B lawsuits as well, by entities at both ends of this critical supply chain point. We’ll be tracking these, so stay tuned!
Read the full article here.
Please join us on Tuesday, May 25 at noon EDT for Colonial Pipeline Hack – Understanding cyber-attacks, supply chain breaks and data breach litigation issues.
Over the last week, Americans have been riveted by scenes of panic buying at the pump after a ransomware attack shut down the Colonial Pipeline, a critical source of fuel for the entire East Coast. For the first time, many are reflecting on the supply chain and national security implications of cybersecurity attacks on everyday life.
Please join us for a case study on the Colonial Pipeline ransomware attack, where our experts will discuss the cybersecurity, supply chain and litigation considerations companies need to know to mitigate their risks arising from cyber incidents.
This program is pending 1.0 hour of CLE in AZ, CA, LA, NJ, NY and OH. If you require another jurisdiction please contact Robin Hallagan.
If you would you like to attend, please register here.
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.
With increased global supply chain awareness and monitoring, there has been a parallel increase in border actions prohibiting or suspending the importation of goods made with forced or child labor. Accordingly, Squire Patton Boggs’ supply chain team has published an article in Inside Supply Management Magazine entitled, “Strategies for Responding to Withhold Release Orders,” discussing these issues.
Read the full article here.
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.
Recent modifications to regulations and federal government acquisition policies portend big change for contractors across the US, and their suppliers around the world. Breaking away from traditional political positions, former President Donald Trump and newly-inaugurated President Joe Biden each took steps in January 2021 to revise Buy American Act (BAA) requirements, which could have significant impacts on companies doing business with the US government.
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
Continuing the trend toward increased oversight of forced labor in supply chains (see our post from last week on groundbreaking German legislation in this space), on March 18, 2021, the US Senate Finance Committee will hold a hearing on “fighting forced labor.” Specifically, the hearing will focus on “[c]losing the loopholes and improving customs enforcement to mandate clean supply chains and protect workers.” This may signal a continued trend in the US to combat forced labor in the supply chains of domestically imported products.
This trend began in February 2016, when President Obama signed the Trade Facilitation and Trade Enforcement Act (TFTA) of 2015. This law repealed the “consumptive demand” loophole in the Tariff Act of 1930, which allowed the importation of certain forced labor-produced goods if the goods were not produced “in such quantities in the United States as to meet the consumptive demands of the United States.”
Earlier this month, the German government resolved to approve a new supply chain law that would impose unprecedented obligations on German companies to control labor and control practices – not only of their own operations, but within their supplier as well. Determining that “voluntary compliance” supply chain laws, which require companies to monitor and report but not control or correct labor and environmental abuses in their supply chains, are not effective, Germany’s new law (Lieferkettensgesetz, in German) promises to impose substantial fines on companies whose suppliers engage in pernicious labor or environmental practices.
To date, no other country has imposed such a law, which is expected to be formally approved in the coming months, and to come into force in 2023.