Recent FAQs on Silicon WRO Shows CBP Focus May Go Beyond Solar Industry
A recent set of frequently asked questions about the withhold release order aimed at silica-based products produced by Hoshine Silicon Industry, a company located in China's Xinjiang province (see 2108030026), provides some insights on how CBP views its enforcement role, Miller & Chevalier lawyers said in an alert. CBP's list of example products subject to the WRO showed that the agency views the detention order as “far-reaching,” including both raw materials and “downstream products that contain silicon metals sourced from Hoshine or any [of] its subsidiaries, regardless of where the later-stage products (e.g., ingots, wafers, cells, and modules) are physically made.”
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The agency “confirmed in its response that the WRO does indeed reach beyond solar products -- it includes other finished goods such as electronics, adhesives, and lubricants -- and that CBP is likely to enforce it in these industries,” the lawyers said. “This warrants attention by companies in other industries, which may have previously viewed enforcement as a relatively remote risk given that previous U.S. government statements regarding the WRO mentioned only the solar supply chain.”
CBP also seemed to claim some new discretion in enforcing the silica WRO based on the whether “the contribution of prohibited labor to the whole product is insignificant (both from a quantitative and a qualitative perspective).” In practice, this policy isn't exactly clear because the statute “does not include a de minimis exception and CBP's guidance does not provide detailed objective criteria to make de minimis determinations.”
While this seems “intended to offer relief to importers outside of the solar supply chain containing, for example, a small amount of silica-based sealant as a component part,” but that isn't totally reassuring, the lawyers said. “At this point, importers cannot be sure how CBP will view these products. Absent a similar, clear-cut way to apply the de minimis exception in the context of 19 U.S.C. § 1307, the exception does not provide importers of finished products with any reasonably certain means of determining whether their goods are within the scope of the WRO.” CBP also doesn't say whether this discretion applies to only the Hoshine WRO or for all WROs. CBP didn't comment.
Based on the documentation CBP said it will seek from importers that would like goods released that were detained under the WRO, “CBP is requesting companies to seek unprecedented cooperation from upstream suppliers,” the firm said. “For the solar supply chain, CBP is requiring significant documentation related to the “the provider of the silica” (quartz provider) and the provider of the metallurgical grade silicon. Importers are highly unlikely to have direct relationships with these suppliers and must work with their direct suppliers and higher-tier indirect suppliers to (1) gain access to these lower-tier entities and (2) convince them to provide this documentation.”