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28 February 2020
The Department of Homeland Security (DHS) recently released a department-wide strategy to combat human trafficking, child exploitation and forced labour in the supply chain.
The strategy will build on current efforts to interdict imports of goods made with forced labour that US Customs and Border Protection (CBP) has been enforcing since the passage of the Trade Facilitation and Trade Enforcement Act in 2016.
Notably, CBP has taken numerous steps to detain merchandise that violates the ban on forced labour and has expanded its enforcement efforts regarding imports that used forced labour to industry outreach and audits of importers.
DHS has noted that it is already taking steps to prevent the importation of goods produced with forced labour, including:
In its new strategy, DHS announced that it intends to take additional steps, including:
Section 307 of the Tariff Act 1930 (19 USC § 1307) prohibits the importation of merchandise mined, produced or manufactured, wholly or in part, in any foreign country by forced or indentured child labour – including forced child labour. Subject merchandise is subject to exclusion through withhold release orders (WROs) enforced by CBP or seizure and may lead to criminal investigation of the importers.
When WROs are issued, importers of all sizes are often faced with the difficulty of having to prove a negative (ie, that their goods are not made with forced labour). According to CBP, importers should update their practices, procedures and documents to address forced labour and the nationality of workers, with respect to not only immediate vendors but also suppliers of materials further back in the supply chain.
CBP has published the following guidance for use as a starting point to develop procedures:
In order to demonstrate that reasonable care was exerted, importers are expected to have documented controls in place that can mitigate the risk of importing merchandise made with forced labour, as well as a comprehensive and transparent social compliance system. The Informed Compliance Publication on Reasonable Care lists 12 questions to indicate that an importer has exercised reasonable care to avoid forced labour. The expectation is that importers must, at a minimum, have taken reliable measures to ensure that imported goods are not produced wholly or in part with:
DHS's website provides additional guidance on due diligence steps to take in regard to the use of North Korean labour in the supply chain. The answer to question 8 – "What steps should my company take to ensure North Korean workers are not in my supply chain" – provides particular steps that DHS agencies will likely assess when reviewing imports or importers for forced labour issues. These steps include:
Importers should also monitor recent reports on child or forced labour. For example, the International Labour Organisation recently published a child and forced labour monitoring report on the Uzbekistan cotton harvest.
Recently, the enforcement effort has expanded from WROs to include a review of forced labour procedures by the CBP Office of Regulatory Audit. According to CBP:
Audits can reveal an importer's knowledge of forced labor and the steps being taken to oversee its supply chain. For example, auditors check records and related documents, interview company officials and look for clauses in vendor contracts warning against forced labor.
Importers should have a comprehensive and transparent social compliance system in place to combat child and forced labour.
Other enforcement measures taken by CBP include the following:
This increase in enforcement measures indicates that forced labour will be a DHS and CBP priority going forward. Importers need to be prepared for the resulting expansion of a broad range of enforcement efforts, particularly when sourcing high-risk goods or goods from high-risk countries. Companies that have a robust compliance process are more likely to detect a risk of forced labour and answer those critical questions. Importers should review existing processes and assess practices along the supply chain, as well as conduct employee training.
For further information on this topic please contact Teresa Polino or David Salkeld at Arent Fox LLP by telephone (+1 202 857 6000) or email (email@example.com or firstname.lastname@example.org). The Arent Fox LLP website can be accessed at www.arentfox.com.
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