These targeted restrictions present a pressing need for U.S. solar and electronics companies to evaluate their supply chain for critical inputs and monitor subsequent U.S. Customs Border Patrol ("CBP") forced labor enforcement.
On June 24, 2021, the White House announced new restrictions targeting producers of solar panels and silica-based products over allegations of forced labor in China's Xinjiang region. Manufacturers, importers, technology licensors, and others that deal in silica-based inputs for solar panels or electronics should pay particularly close attention to the new restrictions and confirm that they are taking sufficient steps to ensure compliance.
The new restrictions affect certain imports and exports, and include (i) a CBP-imposed Withhold Release Order that effectively prohibits the entry into the United States of silica-based products made by Hoshine Silicon Industry Co., Ltd. and its subsidiaries, as well as "materials and goods (such as polysilicon) derived from or produced using those silica-based products"; and (ii) U.S. Department of Commerce "Entity List" additions that will substantially curtail the ability of companies to export U.S.-origin products, software, and technology to five Chinese entities—Hoshine Silicon Industry (Shanshan); Xinjiang Daqo New Energy; Xinjiang East Hope Nonferrous Metals; Xinjiang GCL New Energy Material Technology; and the Xinjiang Production and Construction Corps. The latter has already been subject to sanctions administered by the U.S. Department of the Treasury's Office of Foreign Assets Control. Additionally, the Department of Labor updated its "List of Goods Produced by Child Labor or Forced Labor" to include certain polysilicon products.
Companies active in the solar, electronics, and other related industries should consider how these new restrictions may affect their supplier and customer relationships, and confirm that they are taking sufficient steps to avoid dealing in products made with forced labor or importing such products into the United States. The White House announcement suggested that additional restrictions may be forthcoming, and underscored the Biden administration's commitment to "taking additional steps to hold those who engage in forced labor accountable and ensure that we continue to remove goods made with forced labor from our supply chains."
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