Forced Labor is the third most lucrative illicit trade, behind only drugs and weapons, and has an annual trade value of roughly $150 Billion. Right now, over 40 million people around the world are victims of some type of forced labor, including modern slavery, human trafficking, etc.

Thankfully, U.S. Customs and Border Protection has been working to curb this inhumane practice.

Ending the “consumptive demand” clause; 19 U.S.C. § 1307

The relatively recent push to fight forced labor came about with revisions to Section 307 of the Tariff Act of 1930. Section 307 of the Tariff Act of 1930 codifies into law the prohibition of importing items produced -wholly or in part- by the use of forced labor.

Previously, under the “consumptive demand” clause in 19 U.S.C. § 1307the United States effectively allowed for the importation of goods that had been partially produced by forced labor. However, since the enactment of the Trade Facilitation and Trade Enforcement Act of 2015, which eliminated the “consumptive demand” clause, United States’ federal agencies have been greatly increasing active measures to combat this practice. Since its repeal, CBP, in partnership with U.S. Immigration and Customs Enforcement (ICE), has been actively investigating allegations of forced labor around the globe, examining various supply chains in order to curb the illicit practice. According to CBP, the agency does not target whole product lines or industries, rather it focuses on information regarding specific actors and their merchandise. The Forced Labor Division, established in 2017 within CBP’s Office of Trade, leads enforcement of the prohibition against importing goods made with forced labor.

Forced Labor Process

CBP provides the public with an infographic detailing the detention process if merchandise is in any way related to forced labor, and in violation of 19 U.S.C. § 1307. Below is a chart categorizing CBP’s detention process for merchandise related forced labor:

FORCED LABOR PROCESS

Step(s)

Description

(1)  Receipt of Allegation or Self-Initiation

The provisions of 19 C.F.R § 12.42 detail who may submit information

(2)  CBP Evaluation

CBP must determine or establish reasonable suspicion to issue a Withhold Release Order (WRO) or conclusively demonstrate that merchandise is prohibited to publish a finding.

(3)  Commissioner Review of WRO Issuance

If Commissioner approves a WRO, CBP detains subject merchandise.

(4)  Issuance of WRO

Port directors instructed to withhold release of subject merchandise.

(5)  Detention of Merchandise

CBP begins to detain all shipments within WRO parameters.

(6)  Export, Contest, or Protest

Importer may export, contest, or protest; CBP may release or exclude

(7)  Finding/ Customs Bulletin and Federal Register

If a finding is published, subject merchandise that has not been released from CBP custody shall be treated as an importation prohibited by 19 U.S.C. § 1307.

(8)  Seizure – Subsequent FPF Process

CBP will seize merchandise. Violator may petition for the release of merchandise

(9)  Judicial Forfeiture

CBP will commence summary forfeiture proceedings.

Withhold Release Order(s) WRO(s)

The strategic use of Withhold Release Orders (WROs) by CBP has been especially effective at identifying certain nations, industries, and companies that employ forced labor. CBP issues WROs after receiving information that reasonably indicates the use of prison or forced labor at any point in a product’s supply chain. Prior to TFTEA, the United States had only implemented 30 WROs in the past five decades. Since 2016, however, USTR has implemented over 20 WROs.

CBP provides the public with a list of all WROs and the findings of the investigations. The chart below details the WROs imposed since the abolition of the “consumptive demand” clause by country, alphabetically:

#

Date: Merchandise; Manufacturer:

Country:

1 9/30/2019 Bone Black, Bonechar Carvao Ativado Do Brasil Ltda

Brazil

2 3/29/2016 Soda Ash, Calcium Chloride, and Caustic Soda; Tangshan Sanyou Group and its Subsidiaries [Partially Active]

China

3 3/29/2016 Potassium, Potassium Hydroxide, Potassium Nitrate; Tangshan Sunfar Silicon Industries [Revoked on 2/5/2018]

China

4 5/20/2016 Stevia and its Derivatives; Inner Mongolia Hengzheng Group Baoanzhao Agricultural and Trade LLC

China

5 9/16/2016 Peeled Garlic; Hongchang Fruits & Vegetable Products Co., Ltd.

China

6 3/5/2018 Toys; Huizhou Mink Industrial CO. LTD.

China

7 9/30/2019 All Garments; Hetian Taida Apparel Co., Ltd.

China

8 5/1/2020 Hair Products; Hetian Haolin  Hair Accessories Co., Ltd.

China

9 6/17/2020 Hair Products; Lop County Meixin Hair Products Co., Ltd

China

10 8/11/2020 Garments; Hero Vast Group

China

11 8/25/2020 Hair Products; Lop County Hair Product Industrial Park

China

12 8/25/2020 Labor; No. 4 Vocation Skills Education Training Center (VSETC)

China

13 9/3/2020 Apparel; Yili Zhuowan Garment Manufacturing Co., Ltd. and Baoding LYSZD Trade and Business Co., Ltd.

China

14 9/8/2020 Cotton and Processed Cotton; Xinjiang Junggar Cotton and Linen Co., Ltd.

China

15 9/8/2020 Computer Parts; Hefei Bitland Information Technology Co., Ltd.

China

16 9/30/2019 Gold; Artisanal Small Mines

Democratic Republic of the Congo

17 11/1/2019 Tobacco; Tobacco Produced in Malawi

Malawi

18 9/30/2019 Disposable Rubber Gloves; WRP Asia Pacific Sdn.  Bhd.    [Revoked 03/2020]

Malaysia

19 7/15/2020 Disposable Gloves; Top Glove Sdn Bhd and TG Medical Sdn Bhd

Malaysia

20 9/30/2020 Palm Oil & Palm Oil Products; FGV Holdings Berhad and its subsidiaries and joint ventures

Malaysia

21 5/18/2018 Cotton; All Turkmenistan Cotton Products

Turkmenistan

22 9/30/2019 Artisanal Rough Cut Diamonds; Marange Diamond Fields

Zimbabwe

23 2/4/2019 Seafood; Fishing Vessel: Tunago No. 61 [Revoked 3/2020]

Other/ Individual

24 5/11/2020 Seafood; Fishing Vessel: Yu Long No. 2

Other/ Individual

25 8/18/2020 Seafood; Fishing Vessel: Da Wang

Other/ Individual

What Can You Do to Address Forced Labor?

Have you taken reliable measures to ensure that you are not inadvertently using forced labor at any point in your supply chain? Ask yourself these 12 questions.

According to CBP, importers must exercise reasonable care and due diligence to ensure that forced labor is not included in any aspect of their supply chain. To effectively do this, importers must include forced labor into their internal risk assessment. CBP recommends referencing the International Labour Organization’s eleven (11) Indicators of forced labor, which are:

  1. Abuse of Vulnerability
  2. Restriction of Movement
  3. Withholding Wages
  4. Deception
  5. Isolation
  6. Physical & Sexual Violence
  7. Intimidation & Threats
  8. Retention of Identity Documents
  9. Debt Bondage
  10. Abusive Working & Living Conditions
  11. Excessive Overtime

Additionally, to further its strategic goal of stopping the importation of goods produced with forced labor, CBP recommends reviewing the Department of Labor Comply Chain principles to create a social compliance system as a best business practice:

Comprehensive Supply Chain Profile

  • Does the importer have a complete understanding of the supply chain from the sourcing of raw materials (manufacturing factory, farm, mines, etc.) to packaging and shipping, to ensure that none of the production uses forced labor?

Written Code of Contact

  • Has the importer ‘developed and applied for a written code of conduct for all international interactions associated with the sourcing of foreign goods?
  • Is the code of conduct shared with all suppliers in the global supply chain as a stand-alone document or as addendums to purchase orders, contracts, or letters of credit?
  • Does the code of conduct include specific language as to minimum labor standards as specified by the United Nations International Labor Organization, other intergovernmental organizations, or multi-stakeholder initiatives?

Robust Internal Control Process

  • Are the internal controls established according to professionally recognized objective audit standards?
  • Does the US importer have sufficient internal controls in place to effectively deter and detect instances of noncompliance with the code of conduct and other best-practices?
  • Does the U.S. importer conduct periodic compliance audits using in-house personnel or external audit professionals?
  • Does the U.S. importer’s internal control process cover every level of the product supply chain including relevant business documents?
  • Does the U.S. importer have adequate corrective action plans to address non-compliance and deter weak business practices?

Tips for importers whose shipment(s) has been detained under a WRO:

  • Merchandise Subject to a WRO: If your product has been detained by CBP due to a WRO, you may export your shipment to another country within three (3) months of the initial importation.
  • Merchandise Subject to a Finding: Within three (3) months of importation, the importer must submit “a certificate of origin and a detailed statement demonstrating that the subject merchandise was not produced with forced labor. If the proof submitted does not establish the admissibility of the merchandise, or if none is provided, the merchandise is subject to seizure for a violation of 19 U.S.C. § 1307”.
  • Amendment or Revocation of a WRO/Finding: WROs have no expiration date and stay in effect until they are revoked. WROs may be revoked if CPB is presented with sufficient evidence that substantially proves that the “subject merchandise was not made with forced labor, is no longer being produced with forced labor, or is no longer being, or likely to be, imported into the U.S”.

For assistance with importer due diligence in relation to forced labor requirements; or for assistance re-exporting your detained merchandise, in submitting documents to dispute the use of forced labor, or for assistance with the revocation request process, contact our Customs and International Law attorneys at info@diaztradelaw.com or 305-456-3830.