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CBP Initiates Inquiries on Nationality of Workers in Supply Chain

Monday, October 23, 2017

Importers need to act immediately to ensure no producers in their supply chains in any foreign country are employing North Korean nationals as forced laborers to produce goods imported into the United States.  U.S. Customs and Border Protection has initiated inquiries to importers enforcing new legislation on this issue and has the authority to detain shipments for admissibility. Goods made with North Korean labor are banned effective Sept. 21, 2017, with the burden of proof on importers to prove either no North Korean nationals were used in the production of the detained goods or, if North Koreans were used, they were not forced to labor.

The new requirement was buried in the recently enacted Countering America’s Adversaries Through Sanctions Act. While CAATSA primarily involved changes to economic sanctions against Iran, Russia, and North Korea, it also contains a provision that prohibits the importation into the U.S. of goods produced in whole or in part by North Korean nationals employed anywhere in the world. The statute places the burden of proof on importers to prove either that no North Korean nationals were involved in the production of the imported goods or that any North Korean nationals employed by the producer of those goods are not forced laborers.

The U.S. government is monitoring media reports of North Koreans working in such varied countries as Poland, Mexico, Angola, Equatorial Guinea, China, and Russia. 

Importers need to change their approach to forced labor compliance, warned Kenneth J.F. Kennedy, senior policy advisor for forced labor programs with U.S. Immigration and Customs Enforcement, during a webinar hosted by the U.S. Fashion Industry Association. Kennedy asserted that importers’ typical corporate social responsibility and supply chain due diligence processes are likely insufficient to meet obligations under CAATSA. Importers need to know if North Koreans have worked or are currently working in their supply chains, he said; if they are, importers need to gather evidence proving they are not forced laborers. Kennedy acknowledged this is no easy task given today’s complicated supply chains and migratory work forces. He emphasized this is a ban on the importation of products, so the employment of North Korean forced laborers on any existing (as well as future) inventory stored overseas will taint those products. Given the potential penalties and reputational harm from public allegations (particularly given what he suspects will be more media reports forthcoming), Kennedy urged importers to “act before ICE shows up.”

ST&R professionals are ready to assist you in acting quickly to implement new compliance measures and initiate immediate reviews of your supply chain. For assistance, please contact Tom Travis at (305) 894-1001, Marilyn-Joy Cerny at (212) 549-0161, or Elise Shibles at (415) 986-1088 x 1403.

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