Imports of goods that may have been made with forced labor are under increasing scrutiny by U.S. Customs and Border Protection, which has accelerated its issuance of orders to detain such imports at U.S. borders and has even begun issuing penalties. Products including apparel, cotton, hair products, toys, disposable gloves, diamonds, and food items have been targeted.
Companies importing goods subject to a WRO can face significant and costly challenges. These include working with foreign suppliers and gathering and submitting evidence to CBP to overcome the presumption that the goods were made with forced labor and secure their release, a process that can take months. They can also incur charges for storage of detained goods and may face penalties and liquidated damages.
To help importers avoid or address such circumstances, CBP has issued the following guidance.
Responsible Business Practices
CBP recommends the Department of Labor’s Comply Chain principles to create a social compliance system as a best business practice. These principles indicate that importers should do the following.
- have a comprehensive understanding of the natural supply chain, from sourcing of raw materials to subcontracting manufacturing to the assembly of finished goods destined for the U.S.
- conduct a comprehensive risk assessment of forced labor in the global supply chain for their products and conduct onsite production visits to the factory, farm, or mine for high-risk countries
- engage with industry-specific multi-stakeholder initiatives
- develop and apply a formal written code of conduct for all international interactions associated with the sourcing of foreign goods
- ensure that the code of conduct includes specific language as to minimum labor standards as specified by the International Labor Organization, other intergovernmental organizations, or multi-stakeholder initiatives
- share the code of conduct with all suppliers in the global supply chain as a stand-alone document or as addendums to purchase orders, contracts, or letters of credit
- have sufficient internal controls in place to effectively deter and detect instances of noncompliance with the code of conduct and other best practices
- establish internal controls according to professionally recognized objective audit standards
- ensure that the internal control process covers every level of the product supply chain, including relevant business documents
- conduct periodic compliance audits using in-house personnel or external audit professionals
- have adequate corrective action plans to address noncompliance and deter weak business practices
Withhold Release Orders
CBP can issue withhold release orders detaining specific goods at the U.S. border if it has reason to believe the goods may have been made with forced labor. In response, importers may either reexport the goods or submit evidence that they were not produced with forced labor. In addition, WROs may be revoked or modified if evidence shows the goods were not made with forced labor, are no longer being produced with forced labor, or are no longer being or likely to be imported into the U.S.
According to CBP, helpful documentation includes (1) copies of policies and evidence of their implementation, (2) copies of recent unannounced third-party audits, (3) copies of remediation plans, (4) supply chain maps that specify locations of manufacturers, factories, farms, and processing centers, and (5) pictures of living and working accommodations.
On the other hand, importers should avoid (1) data and document dumps, (2) providing policies without explaining how they are implemented, and (3) providing information about efforts to detect and address child labor without explaining the relevance to combatting forced child labor.
Sandler, Travis & Rosenberg is experienced and active in helping companies respond to forced labor issues, including working to obtain the release of goods subject to WROs, assembling and submitting documents to CBP, and obtaining certifications from vendors. For more information, please contact Elise Shibles.