Customs Modifies Forced Labor Finding

Sept. 21st, 2021
By: Meaghan E. Vander Schaaf

Customs has modified the forced labor Finding on Top Glove Corporation Bhd (Top Glove). This means that Customs will now permit disposable gloves made at Top Glove facilities in Malaysia to be imported into the United States.

A Finding, such as the one in place for Top Glove, is one of two enforcement tools Customs uses with respect to forced labor. Customs also uses the Withhold Release Order (WRO), which is implemented when information reasonably, but not conclusively, indicates that merchandise manufactured with forced labor is being, or is likely to be, imported into the United States. A WRO may be issued for merchandise from a specific manufacturer or for a type of good produced in a particular location, country, or region. Once a WRO is issued, Customs may detain shipments of relevant merchandise at the U.S. port of entry. Once the merchandise has been detained, the importer may reexport the shipment to a different country or contest the detention and provide additional information, which Customs refers to as proof of admissibility, to show that the shipment’s merchandise was not produced with forced labor. A Finding is issued when the Commissioner of Customs has sufficient information to make a determination that the goods in question are subject to the provisions of 19 U.S.C. §1307, i.e., probable cause. Shipments subject to Findings may be denied entry into the United States or seized by Customs, unless the importer establishes by satisfactory evidence that the merchandise is admissible.

On July 15,2020, Customs issued a WRO for disposable gloves manufactured in Malaysia by Top Glove. Through its investigation, Customs determined that there was sufficient information to support a Finding that Top Glove was manufacturing disposable gloves with forced labor and that such merchandise was likely being imported into the United States. Customs issued a Finding to that effect in the Federal Register on March 29, 2021 (86 FR 16380). Customs reports that since the Finding was issued, Top Glove provided additional information which convinced the agency that the subject disposable gloves are no longer manufactured in any part with forced labor.

However, the announcement from Customs included no specifics on what information Customs required or how any forced labor concerns were addressed. Top Glove has publicized their efforts to improve worker accommodation and welfare, including making improvements to housing facilities, tightening monitoring of rest days and overtime hours, making safety improvements, increasing health care benefits, and reimbursement of over MYR 150 million ($35,801,231 USD) to workers for recruitment agency fees.

If you have questions about the Customs process for WROs or concerns about forced labor in your supply chain contact any attorney at Barnes, Richardson & Colburn for assistance.

Export Privileges Revoked Following Illegal Firearm Exports to Australia

Sept. 21st, 2021
By: Michael N. Coopersmith

On September 14, 2021, the Bureau of Industry and Security (BIS) revoked the export privileges of a Chilton, Wisconsin, man after he illegally exported various firearms and firearm components in violations of Section 38 of the Arms Export Control Act (AECA). The move follows a December 13, 2019, conviction in the US District Court for the Eastern District of Wisconsin in which Andy Lloyd Huebschmann, the former owner of Thureon Defense LLC., was sentenced to two years in prison, one year of supervised release, a $15,000 criminal fine and a $100 assessment. Huebschmann’s export privileges have now been revoked until December 13, 2029.

The conviction and subsequent denial of export privileges relates to a series of unlicensed firearm exports from Huebschmann in Wisconsin to Paul Munro in Australia. While Huebschmann was registered with the Directorate of Defense Trade Controls (DDTC) as a manufacturer and/or exporter defense articles, as required by Section 122.1 of the International Traffic in Arms Regulations (ITAR), the exports nonetheless required prior DDTC authorization in the form of a DSP-5 license. Huebschmann not only failed to obtain required DDTC authorization but reportedly took affirmative steps to conceal the true nature of the exports in hopes of evading US and Australian authorities.

According to a 2019 plea agreement, Huebschmann agreed to illegally ship firearms from Wisconsin to Munro in Australia after the two men met at a gun show in Las Vegas, NV. Following the encounter, Munro constructed crates containing a hidden compartment designed to pack and conceal the various firearm components. Munro delivered the shipping crates to Huebschmann in Wisconsin, following which Huebschmann proceeded to illegally ship the firearm kits which contained parts for semi-automatic and fully automatic triggers, frames, and slides. In 2015 Munro later requested that Huebschmann begin manufacturing firearms without serial numbers or “Thureon” branding.

The schemed continued undetected for several years until Australian authorities recovered a Huebschmann-manufactured fully automatic rifle at the scene of a 2016 high-profile armed robbery. Australian authorities arrested Munro after he later completed a deal to sell illegally imported Thureon firearms to an undercover Australian officer. Munro, who has now been sentenced to 10 years in Australian prison, reportedly paid Huebschmann $1,000 USD for each rifle kit and $2,000 USD per pack of pistol slides and frames. Australian news outlets have reported that Munro illegally sold the weapons inside of Australia for the equivalent of $5,000 to $15,000 USD. According to Australian authorities, numerous Thureon-imported guns, including fully automatic weapons, remain on Australian streets as a result of this scheme.

Huebschmann’s export privileges have now been revoked pursuant to Section 1760(e) of the Export Control Reform Act (ECRA). Under the ECRA export privileges may be revoked when a person is convicted of certain offenses, including Section 38 of the AECA, for a period of up to ten years from the date of his/her conviction. While the BIS provided Huebschmann with the opportunity to submit a written statement prior to revocation, as required by Section 766.25 of the EAR, Huebschmann reportedly did not submit a written submission within the allotted time.

If you have any questions regarding the ITAR, AECA, or EAR do not hesitate to contact an attorney at Barnes, Richardson & Colburn LLP.

RAMPA Bill, Seeking National "MADE in USA" Standard, Passes Senate

Sept. 21st, 2021
By: Lois E. Wetzel

On September 15, 2021, the Reinforcing American-Made Products Act (RAMPA bill) passed in the Senate by unanimous consent. We wrote on the RAMPA bill in February when it was first introduced by Senator Mike Lee (R-UT) and Angus King (I-ME) here.

The RAMPA bill seeks to amend 15 U.S.C. 45a to codify a “national standard” for country-of-origin labeling. Establishing a national standard would have the effect of preventing states from making more stringent rules for “Made in USA” labeling. For example, if RAMPA is enacted, a state like California, which has unique legislation governing “Made in the USA” claims that is stricter than the Federal Trade Commission’s (FTC) standard would be prohibited from enforcing the incongruous rules.

The bill is not an attempt to clarify the long-standing, ambiguous FTC standard known as the “all or virtually all” rule. Rather, the aim is make the “all or virtually all” rule the standard across the United States. One representative from New Balance expressed strong support for the bill, stating that the proposed federal standard for “Made in USA” claims “benefits American manufacturers and encourages increased domestic manufacturing.” Indeed, the bill incontrovertibly simplifies life for businesses that must navigate federal and state definitions and regulatory requirements to label products “Made in USA.” Streamlining the rule to the operative FTC rule would permit business that qualify under the Federal rule but fail to meet a state threshold to properly take advantage of the “Made in USA” mark.

A companion bill in the House of Representatives has not yet been introduced. However, under the Biden Administration, which has set out a broad agenda to protect domestic industry and support American manufacturing, RAMPA may have more momentum to get through U.S. Congress.

Should you have any questions on "Made in USA" claims under the FTC's "all or virtually all" standard or in the event the RAMPA bill is enacted, please contact an attorney at Barnes, Richardson & Colburn LLP.