By Arnaud POITEVIN
The new U.S. Trade Facilitation and Trade Enforcement Act prohibiting importation of goods made, wholly or in part, with convict labor, forced labor, or indentured labor took effect a few days ago. The Act requests the Secretary of the Treasury to ensure its enforcement and the Commissioner of U.S. Customs and Border Protection to report to Congress on compliance with the Act in less than 180 days.
This new federal law closes a loophole in the Tariff Act of 1930 which banned importation of such goods but granted exemptions whenever “consumptive demand” could be established (e.g. domestic production didn’t meet demand for the product). It still remains unclear so far how much it will affect businesses, as applicable federal regulations have not been updated so far.
To get an idea how broad an impact this might have, see the U.S. Department of Labor site which publishes a list of goods that it has reason to believe are produced with child or forced labor. From brinks in Bangladesh to cotton in Zambia, the list currently reports 102 goods linked to forced labor.
Businesses must ensure their supply chain does not include any of these products, and should monitor their supply base closely to identify or mitigate any new risks of violations. Financial and reputational consequences are potentially significant.
“If the U.S. government works to really keep out goods made with forced labor, this change will have a profound ripple effect on supply chains worldwide,” said David Abramowitz vice president for Humanity United, said in this Associated Press article, who advocated for the change.
The current federal regulation on forced labor is likely to be amended soon to comply fully with the new Act but remains the only enforcement mechanism available as of today. It allows any person, which includes any principal Customs officer, Union, competitor or civil society organization, to submit a communication to the Customs Service on goods about which the person has reasons to believe are made with forced labor. The Commissioner of Customs investigates all communications and can withhold release of the goods and publish a finding in the Customs Bulletin and in the Federal Register.
When goods are implicated in a finding, the importer must provide satisfactory evidence that the merchandise was not made with the use of a class of labor specified in the finding. The importer must provide certificates of origin and a statement showing in detail that he had made every reasonable effort to determine the source of the merchandise and all its components. If the importer cannot provide sufficient proof (or does not immediately reexport), the merchandise is seized and will face forfeiture proceedings.
Will this new law cause game changing consequences for supply chain and risk management? Maybe. We are keeping a close eye on the developments in this area.
Arnaud POITEVIN, a legal researcher specialized in business and human rights at CNRS, France.
The contents of this publication are for reference purposes only. They do not constitute legal advice.