On June 24, the Department of Homeland Security announced that U.S. Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) on imports from the Chinese company Hoshine Silicon Industry Co. Ltd. "based on information reasonably indicating that Hoshine uses forced labor to manufacture silica-based products." This WRO "instructs personnel at all U.S. ports of entry to immediately begin to detain shipments containing silica-based products made by Hoshine and its subsidiaries." Silica is a raw material that is used to make components for solar panels, electronics, and other goods, and there are significant implications for the solar industry from this action.
In terms of the specific forced labor practices at issue with Hoshine, CBP specified that, during its investigation, it identified two of the International Labour Organization’s indicators of forced labor in Hoshine’s production process: 1) intimidation and threats; and 2) restriction of movement. At a press conference describing its actions (see the end of this post for the partial transcript of this press conference), DHS/CBP emphasized that they rely in part on NGO reports on forced labor practices in these types of investigations. While they did not specify which NGO reports they had taken into account here, one such report – “In Broad Daylight: Uyghur Forced Labour and Global Solar Supply Chains,” by Murphy, L. and Elimä, N., Sheffield, UK: Sheffield Hallam University Helena Kennedy Centre for International Justice (2021) -- gave the following example of Hoshine's labor practices:
State-sponsored recruitment efforts on Xinjiang Hoshine’s behalf depend on coercive strategies that suggest non-voluntary labour. For instance, one media report depicts a married couple from rural Dikan Township who were targeted for “poverty alleviation.” They were provided a government-determined “income-increasing package,” which began with the assignment of a cadre who instructed them in Chinese language skills “to pave the way for them to leave their hometown to work.” The regional work team then assigned the couple to vocational skills training to learn to be welders in the farming off-season. The couple followed the directives of the cadre, while the regional work team still provided “encouragement and help” for them to do “pre-employment training for the surplus rural labour force,” after which they were transferred to work at Xinjiang Hoshine. Though the couple owned seven acres of grape fields that would need tending, the government “relieved the two of their worries,” by transferring their land use rights (流转) to the state. The couple was transferred to Xinjiang Hoshine, more than 50 kilometers away from home, to work as a mechanic and a product inspector in the Shanshan County Hoshine Silicon Industry factory, leaving behind their children and ill parents. Though the report indicates that the couple have a bright and spacious house in their village, the photos accompanying the story suggest that the couple now lives in a bunk house with other employees at Xinjiang Hoshine and only rarely return home.
A Washington Post article (Lily Kuo, Pei Lin Wu and Jeanne Whalen, "Solar industry’s ties to China’s Xinjiang region raise specter of forced labor," Washington Post, June 24, 2021) has additional background on these issues:
According to company reports, local propaganda and other public documents, Hoshine Silicon, also known as Hesheng, recruits and employs Uyghurs and other minorities via state labor programs that aim to place them in factories. Researchers say these programs are a form of forced labor for residents who, faced with the threat of detention or other punishment, cannot refuse.
It has been reported that nearly half of the world’s polysilicon supplies come from Xinjiang. In terms of the amount of imports affected by this WRO, at the press conference a CBP official said: "over the last two and a half years we've had somewhere around $6 million worth of imports, of direct imports from Hoshine. And over the last again same period of time, an estimate of over $150 million of imports of downstream products."
With regard to the impact of these actions on the Biden administration's climate change efforts, DSH Secretary Mayorkas emphasized that human rights concerns would take precedence: "We're going to root out force labor wherever it exists and we'll look for alternative products to achieve the environmental impacts that are a critical goal of this administration."
There had been long-standing pressure from Democrats in Congress to investigate this issue. In October of 2020, they requested that the Trump administration start an investigation, and in a letter to the Biden administration on June 10, they demanded action ("We write to respectfully request that U.S. Customs and Border Protection (CBP) immediately take aggressive enforcement actions regarding polysilicon products entering the United States from Xinjiang, China").
In related actions, the Bureau of International Labor Affairs (ILAB) announced an update to the ninth edition of the List of Goods Produced by Child Labor or Forced Labor (List), with polysilicon from China added to the list; and the Department of Commerce's Bureau of Industry and Security (BIS) added five Chinese entities to the Entity List "for accepting or utilizing forced labor in the implementation of the People’s Republic of China’s campaign of repression against Muslim minority groups in the Xinjiang Uyghur Autonomous Region (XUAR)": Hoshine Silicon Industry (Shanshan) Co., Ltd.; Xinjiang Daqo New Energy Co., Ltd.; Xinjiang East Hope Nonferrous Metals Co., Ltd.; Xinjiang GCL New Energy Material Technology Co., Ltd.; Xinjiang Production and Construction Corps (XPCC). The federal register notice for the latter is here.
For additional details, see a White House fact sheet on these issues. When asked about this fact sheet at a press conference, the response by China's Ministry of Foreign Affairs included this statement: "The US, with the issuance of Withhold Release Order, is tantamount to a bandit illegally seizing others' property." Back in April, the spokesperson of the Xinjiang Autonomous Region government denied the existence of forced labor in the region.
Since 2016, the CBP has issued nearly 30 WROs that bar imports of goods made by forced labor. Typically, the WROs are manufacturer-targeted, but there have been some industry and countrywide WROs, including a recent WRO on all cotton and tomatoes from the Xinjiang region. The Hoshine WRO was the 44th issued by CBP on Chinese goods since the first one in 1991, most of which are still active. The Biden administration has indicated that combating China’s forced labor is one of its trade priorities.
Partial Transcript from DHS/CBP June 24 press conference
Today we are announcing an important update regarding our efforts to prevent goods produced with forced labor from entering the United States. It is part of our continued commitment to protect human rights and international labor standards and promote a more fair and competitive global marketplace by fulfilling the Biden Harris administration's commitment to ending forced labor. During the 47th G7 summit this month, the United States and G7 countries committed to removing forced labor from global supply chains, and today's action is the latest in a series of actions that the United States has taken to address forced labor and other human rights abuses against the Uighur people, and other ethnic and religious minorities in China's Xinjiang province. US Customs and Border Protection has issued a withhold release order on silica based products made by the Chinese firm Hoshine Silicon Industry Company Limited, and its subsidiaries. Silica is a raw material that is used to make components for solar panels, electronics, and other goods. This order was issued because CBP has information reasonably indicating that Hoshine uses forced labor to produce its silica based products. Effective immediately, CBP personnel at all US ports of entry will detain shipments that contain silica based products made wholly or in part by Hoshine. Hoshine operates in China's Xinjiang Uighur Autonomous Region and DHS is deeply concerned by credible and growing reports of China's state sponsored use of forced labor and other human rights violations in the Xinjiang region. Chinese companies are profiting from these abuses. … Since 2016, CBP has issued more than 30 withhold release orders, including a record breaking 13 In fiscal year 2020. 8 of those 13 withhold release orders were on goods from China, including apparel, computer parts, and hair products. This fiscal year, CBP has issued four withhold release orders on goods from China, including one on all cotton products and tomato products from the Xinjiang region.
These withhold release orders have practical consequences for producers and US importers. Since October 2020, CBP has targeted more than 1200 US bound shipments that contained more than $400 million of goods suspected to be made by forced labor. CBP detained nearly $275 million of those goods in the 674 shipments that applied for entry and deterred the remainder of the targeted shipments from entering the United States. Those goods might otherwise have ended up in the United States food supply, in American households, and even on the backs of American consumers.
Acting CBP Commissioner Troy Miller:
… Today's withhold release order is the result of CBP's investigation into Hoshine Industries production processes. During the investigation, CBP obtained information reasonably indicating that Hoshine uses forced labor in its production process. Pursuant to Section 1307 of the Tariff Act, I have instructed CBP personnel at all US ports of entry to detain shipments that contain silica based products made by Hoshine and its subsidiaries. In addition, I have instructed CBP personnel to the detain shipments that contain polysilicon, or other materials that are derived from or produced using Hoshine's silica based products. These instructions are effective immediately.
Before I get into the mechanics of this investigation I want to make two things clear. First, CBP has long standing authorities under federal law to investigate and prevent goods made by forced labor from entering the United States. CBP adheres closely to its statutory authorities when taking forced labor enforcement actions. Second, CBP's forced labor investigations are guided by the international labor organization's indicators of forced labor. In this case, CBP identified two indicators of forced labor. The first was intimidation and threats, and the second was restriction of movement.
During forced labor investigations, CBP evaluates a wide range of source material, including government reports, studies by Non Governmental Organizations, investigative reporting and firsthand accounts. When CBP has information reasonably indicating that the use of forced labor has produced goods to US supply chains, the agency will issue a withhold release order. Withhold release orders instruct CBP personnel at ports of entry to detain shipments containing goods subject to the order, and to ask additional questions about how those goods were produced. Under US law importers have three months to take one of two actions. First, the importer may submit proof that the goods were not imported in violation of Section 1307 of the Tariff Act. Second, the importer may re-export the goods. If the importer does neither, then CBP will exclude their goods. If the importer does not export the excluded goods within 60 days, then CBP will consider the goods abandoned, and will take steps to destroy the shipments. I have instructed CBP personnel to follow these procedures when they encounter shipments that contain silica based products made wholly or in part by Hoshine.
CBP is proud to be a global leader in the fight against forced labor in US supply chains. This is the third withhold release order that CBP has issued this fiscal year on goods made by forced labor and China's Xinjiang region. The Xinjiang region continues to be an area of high risk for forced labor. Last year, CBP issued 13 withhold release orders. Eight of those withhold release orders were on goods made by forced labor in China. CBP routinely works in close partnership with the trade community, and we'd like to remind our partners the importance of knowing their supply chains. Under US law, employers are required to exercise reasonable care to ensure that the supply chain are free of forced labor. The US government provides ample information to help the trade community understand the risks of forced labor, and global supply chains.
Last summer DHS, with the Department of Commerce labor and state issued the Xinjiang business advisory. The advisory warns the trade community of the reputational legal and economic consequence of doing business with entities in the Xinjiang region that use forced labor. In addition, companies should review the Department of Labor's comply chain app, the Department of Labor's list of goods made by child labor/forced labor, the Department of State's Trafficking in Persons Report, and the Department of State's Country Reports on Human Rights Practices. The trade community should also continue to closely following news reports. Members of the press and experts at non governmental organizations continue to produce detailed reports of forced labor in Xinjiang and other areas of the world. Thanks in large part to their efforts, companies can no longer claim ignorance for an exercise for overlooking forced labor in their supply chains.
The public should also be aware of their responsibilities as consumers. First, shop directly with reputable retailers. Before making a purchase, visit the websites of our favorite companies and verify that they have fair trade policies and corporate responsibility programs. Second, learn about the industries and regions that are at high risk for forced labor. Read the news and review the withhold release orders cbp.gov, the Department of Labor's list of goods report, and the Department of State's Trafficking in Persons Report. Third, report violations. Anyone can report allegations of forced labor in the US supply chain, via eallegations.cbp.gov, or by calling 1-800 BE ALERT. More importantly, consumers can help raise awareness of forced labor and its human and economic consequence. Talk to your family, friends and neighbors about where the goods you buy come from, use your social media accounts to share the work that the US government, nongovernmental organizations and the media are doing to expose forced labor. Use your voice to tell companies that we will not tolerate forced labor in US supply chains.
[Q & A starts]
Can you specifically say what the import records show for this company Hoshine in recent years in dollar terms? And then also is the administration or DHS seeking any kind of additional authorities in terms of enforcing or expanding its enforcement actions going forward?
Let me answer the second part of the question and then I'm going to turn it over to the subject matter experts for the first part of your question. Right now what we are focused upon is making sure that the existing authorities that we have are used to the fullest to address the infection of forced labor into our marketplace. And I should emphasize something with respect to forced labor. That of course it has economic consequences, it has economic aspects to it. But fundamentally and primarily it is a human rights issue. It is about the treatment and care of individuals, respecting their dignity, and not divesting them of their rights and their humanity to achieve unfair economic advantage. I'll turn it over to Ana or AnneMarie for the ..
... with regards to the, the volume of importations coming into the United States from Hoshine and its subsidiaries, there are different levels of volume, some of them are related to direct importations from Hoshine and its subsidiaries, and others are downstream products that we've identified that contain products produced in whole or in part with Hoshine silica based products. The numbers not totally ... they're an evolving number as we continue to investigate, but roughly over the last two and a half years we've had somewhere around $6 million worth of imports, of direct imports from Hoshine. And over the last again same period of time, an estimate of over $150 million of imports of downstream products. There are certainly more products that are produced, we are continuing our review of the connections between importers and end products to determine what additional targeting we need to incorporate.
My first question is, in last February, the Australian Strategic Policy Institute issued a big report called Uighurs For Sale. In the report, they stated that from 2017 to 2019, the Chinese government forcibly transferred 80,000 Uighurs to nine Chinese provinces, and there are 27 different factories in the rest of China, it's not located in the Xinjiang Uighur autonomous region. And also, more than 82 global brands, including Apple, Nike Amazon, GM, HP, all of them are implicated one way or another. So my first question is, is the CPB planning to issue withhold release order on the products made by the Uighur forced labor in companies in the rest of China, not just in the Xinjiang Uighur autonomous region? And also the second one is, besides the business advisory issue last year to American companies that advising them be careful with the potential implication of the weaker forced labor, what other measures are you planning to take to prevent American companies from using weaker forced labor?
So let me say the following, if I may. First, we're not in a position of course to answer the questions about ongoing investigations, or where our investigations are may lead, number one. Number two, and fundamentally and quite critically, we're going to root out force labor wherever it exists. And three, we're working very closely with the private sector, it's a public private partnership to achieve a shared objective, a shared goal, and a shared imperative of rooting out forced labor, wherever it might exist.
Does this WRO will apply to any solar panel made from Hoshine raw materials, and if so, do you know roughly what percentage?
There's been some movement away from this particular manufacturer so we, in looking at our, the number of importations of goods coming in, connected to Hoshine, they seem to have declined somewhat in the last year. We don't have an exact number to share with you today.
And of course you know we are focused on solar panels because of their advantages with respect to environmental impacts. But and this is very important. We're going to root out force labor wherever it exists and we'll look for alternative products to achieve the environmental impacts that are a critical goal of this administration.
Have you had any reactions from the Chinese on this series of WROs, do you see any modification of behavior or evasive behavior, any kind of reaction?
Our approach is as follows. We're going to take the enforcement actions that we need to take. We are hopeful that the enforcement actions that we take deter any perpetuation of this heinous activity. And if it doesn't, we'll address it in other fora as well.
Just wondering what are the prospects for this WRO to be expanded to a regionwide WRO. You started out with the cotton ban, which started out with a few entities and then expanded to XPCC and then region wide. Is this where this is headed and what are the implications for the Biden administration's energy goals here because Xinjiang produces like 45% of the world's polysilicon?
So, the environmental goals are a priority for this administration, our environmental goals will not be achieved on the backs of human beings in a forced labor environment. We're going to rule it out in forced labor, and we're going to use alternative products that are manufactured and produced legitimately, in keeping with our values and our commitment to a fair marketplace. I don't, I'll turn to Ana if I misspeak but a regional approach, this is, this is not necessarily calibrated to geography, but rather calibrated to conduct, and we're very mindful of the fact that we've seen a lot of this conduct, illegal conduct in a particular region, that may drive our investigative efforts, but it's not geographically determined, it's determined according to the conduct of particular companies. Ana, if you want to add anything ...
I would just say that at this point we are, we're not able to discuss any ongoing investigations. We certainly will continue to investigate allegations of forced labor in particular in this particular industry, but we're not in a position to indicate that this would stay as a regional area. As indicated by the Secretary, these products don't always stay within that region and so the regional umbrella isn't necessarily applicable. We are looking entities specific in most cases and only if we're able to substantiate that the issue involves all manufacturing of those products within the region would we then look to expand to that. At this point we can comment on where the investigations are going.
Your team is doing a lot more with the new WROs and a lot with detentions. What are you doing to cope with the increased workload In terms of the number of staffers beefing up the enforcement process?
I would just say thank you, as the Secretary mentioned thank you to Congress for allocating additional funds this year so we are continue to beef up our forced labor team and you're seeing the results of that.
… I have a question in regard to raw materials produced in Xinjiang exported to third countries, which, in turn, process the raw materials and produce finished products. An example would be cotton produced in Xinjiang and shipped to neighboring countries like Vietnam, Cambodia, or even Pakistan, which supply garments to the US. How do you propose to verify and control such products from entering the US market?
Clearly, you know this polysilicon and any silicon products in the manufacture of goods is huge. And what we're doing is we're focusing on where we're identifying the highest risk of shipments actually being produced in whole or in part with forced labor. We obviously have the direct shipments coming from those manufacturers. We've identified subsequent downstream products and we will continue to search, to make further connections of downstream manufacturers containing these products. These do not have to be coming out of China, nor do they have to be coming out of the Xinjiang region, but we are very focused in making sure that we are, we have tried to be very responsible in ensuring that we don't unintentionally stop legitimate trade that, that we don't have a clear connection to those raw material. So it is always a dynamic process and we continue even after withhold release order is issued to refine our targeting and refine our information so that we focus on those shipments again that are at highest risk of containing goods produced in whole or in part with those products, reasonably believed to be made with forced labor.