The United States Government since 1930 has prohibited the import into the United States of goods “mined, produced, or manufactured wholly or in part” by convict, forced, or indentured labor. The sweep of this prohibition is potentially very broad. Approximately 21 million people around the world are currently subjected to forced labor, including millions of children. Enforcement of this prohibition was relatively rare until February 2016, when Congress, on a bipartisan basis, repealed the so-called “consumptive demand” exception to the import ban as part of the Trade Facilitation and Trade Enforcement Act of 2016. That exception had allowed goods into the United States, despite their production by forced labor, if the domestically produced supply of the goods was not sufficient to meet domestic demand for the goods.
In the 86 years between the Tariff Act of 1930 and the Trade Facilitation and Trade Enforcement Act of 2016, CBP issued only 39 “withhold release” orders or official findings of cause. The vast majority of these actions—26 orders and 6 findings—targeted goods imported from China; the only other countries on CBP’s list of enforcement actions so far are India, Japan, Mexico, Mongolia, and Nepal. From November 2000 to March 2016, CBP had not issued a single enforcement action. However, in the year following TFTEA’s passage, CBP has issued four detention orders:
- Soda ash, calcium chloride, caustic soda, and viscose/rayon fiber from China (March 29, 2016).
- Potassium products from China (March 29, 2016).
- Stevia from China (June 1, 2016).
- Peeled garlic from China (September 16, 2016).
This uptick in enforcement actions highlights the potential for increased enforcement of the prohibition against forced labor goods. It remains to be seen whether its current geographical focus on China expands to capture other countries as well.
The Trump Administration has emphasized the need to fight much more aggressively against “unfair” trade. President Trump and his team have been outspoken, both during the presidential campaign and in the first months of his term, about trade enforcement in general. This has applied to a number of US trading partners, with China as a particular focus.
The fact that China was the subject of all four of CBP’s most recent forced labor enforcement actions may therefore presage a potential new enforcement trend moving forward. The likelihood of active enforcement of this law is only enhanced by Congress’ recent attention to this issue, and the bipartisan consensus it reflects. This law may become one of the tools employed actively in that effort, and other countries, in addition to China, could become targets.
Importers of goods into the United States are advised to be aware of this issue and take actions to mitigate the risk of forced labor products in their supply chains. Importers may monitor US Government resources such as CBP’s list of all enforcement actions and the Bureau of International Labor Affairs’ list of goods and their source countries that raise concerns about forced or child labor. Many companies also review other publicly available information, including reports in the countries from which they import, comments by international organizations, press reports, and other data sources. They may draft and issue a policy against using forced labor in their supply chain, perform a supply chain audit and conduct due diligence on outside parties, and implement a strong anti–forced labor compliance program. It is important for importers to document these and other efforts clearly, to ensure there is a clear record of the company’s compliance in this area, and to help address inquiries by federal authorities, should any occur.
For a more full description of this issue, read our Advisory that can be found here.
*Licensed to practice law in Virginia; application pending in Washington, DC.