The Department of Commerce investigation into allegations of dumping by a handful of Chinese solar module manufacturers is not the only trade issue bedeviling the U.S. solar industry.
U.S. Customs and Border Protection (CPB) action related to its June 2021 Withhold Release Order (WRO) likely will heat up in the coming weeks as enforcement action commences, aimed at allegations of forced labor in solar supply chains.
CBP sent letters that suggest enforcement could begin as early as June 21. Richard Mojica, a customs and international trade attorney, said in a LinkedIn post that while CBP has already detained shipments of solar modules and prevented others from entering the U.S., it has not yet issued penalties.
(Read “Auxin Solar tariff case: Two paths are possible.”)
The letters, from Thomas Overacker, executive director of CBP’s Cargo and Conveyance Security office, put importers on notice that they “are expected to review their supply chains thoroughly and institute reliable measures to ensure imported goods are not produced wholly or in part with convict labor, forced labor, and/or indentured labor.”
Late last year Congress passed, and President Biden signed into law, the Uyghur Forced Labor Prevention Act. The Act established a rebuttable presumption that any “goods, wares, articles, and merchandise mined, produced, or manufactured” wholly or in part in the Xinjiang Uyghur Autonomous Region of the People’s Republic of China may not be brought into the U.S.
The Act expanded a WRO that Customs and Border Protection officials issued in late June. It was based on credible evidence that forced labor may be used in supply chains for a variety of products, including some solar modules. The action was taken in line with U.S. laws that date from the 1930s and that are aimed at addressing forced labor that may be used to produce imported goods.
In a series of actions on June 24, the Biden administration ordered a ban on U.S. imports from Chinese-based Hoshine Silicon Industry Co. over forced labor allegations. Commerce separately restricted exports to Hoshine, three other Chinese companies, and what it said was the paramilitary Xinjiang Production and Construction Corps (.
The three companies added to the U.S. economic list included Xinjiang Daqo New Energy Co, a unit of Daqo New Energy Corp.; Xinjiang East Hope Nonferrous Metals Co, a unit of Shanghai-based manufacturer East Hope Group; and Xinjiang GCL New Energy Material Co., part of GCL New Energy Holdings Ltd.
Hoshine is estimated to be the source of around two-thirds of the world’s metallurgical grade silicon, which is used in the solar industry. The silicon provides feedstock used in the polysilicon refining process. In August, reports began to emerge that CBP was detaining solar modules that they suspected contained material subject to the WRO.
Officials in Beijing have denied that forced labor exists within China. A series of laws carry penalties on Chinese companies that cooperate with foreign efforts to trace allegations of forced labor. That puts some solar manufacturers and importers in a bind. The WRO places the burden of proof on importers to provide documentation that no forced labor exists anywhere in their supply chain, even as far upstream as the mines that are used to extract source material. Lacking even grudging cooperation from Beijing, however, complete documentation may be difficult to produce.
The letter from Overacker said that “As your company has previously imported merchandise from locations or entities potentially subject to the Act, you are being notified that subsequent entries of such merchandise may result in, among other things, suspension or removal from the Customs Trade Partnership Against Terrorism (CTPAT) program, seizure, forfeiture and/or penalties, or other appropriate action under the customs laws.” He cautioned that the letter itself “may serve as an aggravating factor should CBP take enforcement action upon determining future violations of the Act.”
Overacker said an implementation strategy and guidance for the trade community will be forthcoming. He said that CBP is “urging importers to be proactive and closely review their supply chains” to ensure any goods or materials are not sourced from China’s Xinjiang region in violation of the Act.
“It is incumbent upon you as an importer to apply due diligence, effective supply chain tracing, and supply chain management measures to ensure that such imports are free from any goods mined, produced, or manufactured wholly or in part with forced labor from the People’s Republic of China.”
