US crackdown on forced labor opens seafood importers to heightened scrutiny

The imposition by U.S. authorities of a ban on imports from a top Chinese fishing firm important raises due diligence issues for American seafood importers, according to a lawyer working on such cases.

On 28 May, U.S. Customs and Border Protection imposed a withhold release order on distant-water fishing firm Dalian Ocean Fishing, barring the company’s products from entering American ports. CBP cited the findings of a yearlong investigation that revealed forced labor in the company’s operations as the basis for its action.

The move represents a warning sign for U.S. importers of Chinese seafood, according to Deborah B. Stern, a lawyer at Sandler, Travis, and Rosenberg, an international customs- and trade-focused law firm. Stern has been advising clients on enhanced U.S. enforcement measures targeting imports potentially produced with forced labor, and warned companies that believe the U.S. government’s Seafood Import Monitoring Program protects them from importing seafood with ties to forced labor that they still could face exposure.

“The recent [withhold release order] issued on seafood harvested by a particular fleet of [Chinese] vessels highlights that, while the Seafood Import Monitoring Program imposes similar tracing requirements, it covers only certain species and does not remove the possibility of a Customs and Border Protection verification action or detention, even for products that are not clearly coming from the alleged violator’s vessels,” Stern told SeafoodSource.

U.S. enforcement of the forced labor provisions increased following implementation of the Trade Facilitation and Enforcement Act of 2015 (TFTEA), which removed the domestic consumption exception to the existing prohibitions, according to Stern.

“As a result, forced labor became a higher enforcement priority,” she said.

But the WRO placed on Dalian Ocean Fishing, along with others recently made by the U.S. government under U.S. President Joe Biden, shows the still-young administration is pushing even harder to crack down on forced labor and other perceived abuses by governmental officials and international fishing firms with alleged connections to illegal, unreported, and unregulated (IUU) fishing, Stern said. As a result, U.S. importers should take a closer look at their supply chains.

“CBP conducts risk-based targeting, which could result in the detention of products that it traced to entities with some relationship or connection to the enumerated fleet, supplier, or region, for other WROs. It places importers in a position to prove its imports are unrelated to the WRO,” Stern said.

Chinese authorities have insisted that Dalian Ocean Fishing doesn't sell product in the U.S., but it specializes in tuna, a commodity widely imported by American distributors. Stern said she believes there’s a possibility the company’s products are indeed in circulation in the U.S. market.

“CBP indicated in the press conference announcing the WRO that there are a few fairly recent imports into the U.S. products from Dalian [Ocean Fishing], and a history of larger imports back in 2018,” she said. “In any case, one of the challenges importers face with any WRO is the downstream impact. In this case, for example, CBP stated that the WRO also covered downstream products from the fleet, such as canned tuna and pet food.  Unlike fresh or frozen fish, these articles are not imported with documentation about the vessel on which the source fish was caught.” 

Sandler, Travis, and Rosenberg is advising companies with forced labor concerns and assisting them conduct supply chain reviews, due diligence strategies, and proactive remediation, according to Stern The law firm has advised companies effected by sanctions on garments from Hetian Taida Apparel Co., a firm at the center of forced labor allegations in the Xinjiang region. It has likewise advised companies sourcing cotton and tomato-based products from that region.

“This includes assisting some of the first importers affected by the new withhold release orders and obtaining release of detained goods through effective traceability measures and effective communication with CBP,” Stern said. “Being able to respond appropriately but quickly minimizes the disruption in supply chain operations and mitigates the days, weeks, or potentially months a product is kept from distribution or sale.”

Seafood aside, U.S. CBP WROs have applied to other commodities imported from China – and other nations. While the foreign ministry and various state media outlets in Beijing have portrayed the WRO placed on Dalian Ocean as part of a coordinated Western effort to tarnish China, the country is not the only one subject to the instrument: gloves and palm oil from Malaysia, cotton from Turkmenistan, and gold products from the Democratic Republic of the Congo have all been subjected to withhold release orders.

As a result, all U.S. seafood importers should work to ensure their supply chains do not in any way touch any activity liable to be hit with a WRO under the heightened enforcement regime, Stern said. That goes especially for U.S. importers of Chinese products – already coping with increased tariffs as a result of the Sino-U.S. trade war – due to the special focus from the United States on China’s use of forced labor in distant-water fishing, Stern said.

Photo courtesy of Sandler, Travis, and Rosenberg