CBP headquarters ruling; apparel produced by forced labor of North Korean nationals

CBP headquarters ruling

U.S. Customs and Border Protection (CBP) publicly released a ruling letter concluding that certain detained apparel had been produced by forced labor of North Korean nationals.

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Read the Headquarters Ruling Letter HQ H317249 (March 5, 2020)

Summary

A U.S. company in December 2020 made two entries of garments and textiles (women’s and girls’ clothing) at the port of New York that, according to the entry invoices, was manufactured by a company in China. CBP detained both entries at the Port of Newark, New Jersey, on the basis that the merchandise was subject to the Countering America’s Adversaries Through Sanctions Act (CAATSA)—which prohibits goods mined, produced or manufactured, in whole or in part, by North Korean nationals or North Korean citizens from importation into the United States.

CBP in January 2021 requested that the U.S. company submit:

  • Updated responses to CBP form questions that the company had previously submitted to CBP in 2017
  • Documentation detailing how employees of the Chinese manufacturer were recruited
  • Identification cards
  • Payroll records (or other proof of payment)

The U.S. company submitted this requested information in January 2021. Subsequently, the entries were excluded as prohibited merchandise. In February 2021, the U.S. company protested the exclusion of the two shipments, requesting accelerated disposition of its protest and application for further review (AFR).

CBP ruled that the U.S. company did not establish by clear and convincing evidence that the detained garments, manufactured by the Chinese manufacturer, were not produced with forced labor.  

Among the documents submitted to support the company’s claims were photocopies of the Chinese workers’ resident identity cards that indicated the worker’s ethnicities as Han or Mongolian. Because these ethnic designations are only for Chinese citizens, the company argued that the workers could not be North Korean nationals. CBP, however, found that the majority of the photocopies of the worker’s identification cards were either too dark or overexposed to be able to discern the authenticity of the cards.


For more information on this topic or to learn more about KPMG’s Trade & Customs Services, contact:

Doug Zuvich
Partner and Global Practice Leader
T: 312-665-1022
E: dzuvich@kpmg.com

John L. McLoughlin
Principal and East Coast Leader
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E: jlmcloughlin@kpmg.com

Andy Siciliano
Partner and National Practice Leader
T: 631-425-6057
E: asiciliano@kpmg.com

Steve Brotherton
Principal and Global Export and Sanctions Leader
T: 415-963-7861
E: sbrotherton@kpmg.com

Luis (Lou) Abad
Principal, Washington National Tax
T: 212-954-3094
E: labad@kpmg.com

Irina Vaysfeld
Principal
T: 212-872-2973
E: ivaysfeld@kpmg.com

Amie Ahanchian
Principal
T: 202-533-3247
E: aahanchian@kpmg.com

Christopher Young
Principal
T: 312-665-3229
E: christopheryoung@kpmg.com

Gisele Belotto
Managing Director
T: 305-913-2779
E: gbelotto@kpmg.com

George Zaharatos
Principal
T: 404-222-3292
E: gzaharatos@kpmg.com

Andy Doornaert
Managing Director
T: 313-230-3080
E: adoornaert@kpmg.com

Jessica Libby
Managing Director
T: 612-305-5533
E: jlibby@kpmg.com

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