PRC Firm Files To Contest WRO Against Silica Products In Court Of International Trade

Last week, Hoshine Silicon Industry Co. ("Hoshine") filed a complaint at the Court of International Trade contesting a withhold release order ("WRO") issued against it by U.S. Customs and Border Protection ("CBP").

The withhold release order prohibits Hoshine and its subsidiaries from importing silica-based products into the United States due to allegations of forced labor in Hoshine's manufacturing process. The WRO applies to materials and final goods derived from or produced using those silica-based products, regardless of where the materials and final goods are produced. The WRO therefore effectively bans any solar panel product containing Hoshine silica materials from entering the United States. At the time of WRO issuance, it was estimated that around 80% of the world's polysilicon supply originated in China, nearly half of which came from the Xinjiang region.

The complaint alleges that the WRO was issued without prior notice to Hoshine and that CBP's press release announcing the WRO contains factual inaccuracies including the statement that Hoshine's parent company is located in Xinjiang Uyghur Autonomous Region. The complaint further alleges that Hoshine attempted to meet with Customs, but the agency did not provide any additional reasons for the WRO. Moreover, despite efforts to establish supply chain tracing and third-party audits in support of a petition to be removed from the WRO, Hoshine's petition was summarily denied by CBP. This denial ultimately prompted Hoshine to file its CIT suit.

This lawsuit tees up several interesting issues before the Court of International Trade and could have a significant impact on forced labor prevention enforcement. To date, while several other cases challenged forced labor-related determinations have been brought, neither the Court of International Trade nor any other Court has assessed CBP's forced labor prevention enforcement on the merits. Should this case proceed, it may be the first insight we get into how the courts will view CBP's increasing enforcement efforts.

Additionally, the complaint's focus on CBP's alleged lack of prior notice or reasoning seems to take aim at the Court of Appeals for the Federal Circuit's recent decision in Royal Brush Manufacturing, Inc. v. United States, in which the Court of Appeals found that CBP violated an importer's due process because it did not share information used to make the underlying determination. Though not a case in the forced labor context, the Royal Brush decision may impact the progression of this litigation.

Crowell & Moring, LLP continue to monitor this case and the potential impact any court decision will have moving forward.

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Weronika Bukowski
Crowell & Moring LLP
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