Background

Witnesses at a recent hearing of the House Ways and Means Trade Subcommittee said current efforts to eliminate forced labor from global supply chains have been insufficient and improvements are needed. Among other things, both business and labor groups agreed that processes and procedures involving withhold release orders issued by U.S. Customs and Border Protection should be revamped.

Subcommittee Chairman Earl Blumenauer, D-Ore., said that while enforcement of the prohibition on imports of goods made with forced labor has ramped up in recent years, “we’re still a significant distance away from enforcement actions that measure up to the scale and pervasiveness of forced labor across the world.” For example, he noted, the Department of Labor’s latest report highlights forced or child labor in more than 75 countries and more than 150 different products, “many of which are used in everyday products across the United States.” Several witnesses highlighted the scope of the problem as well, including 25 million workers subjected to forced labor worldwide.

However, witnesses said existing methods of addressing this problem have had little effect. For example, Genevieve LeBaron, a professor at the University of Sheffield, said that “much anti-slavery legislation … adopts a model called transparency legislation, which places new reporting requirements on some corporations to disclose any efforts they are taking to address and prevent forced labor in their supply chain.” However, LeBaron said, “this low-stringency regulatory approach has to date been largely ineffective in achieving its purpose of reducing actual levels of forced labor and human rights abuse in supply chains” due to weaknesses such as a lack of strong sanctions for noncompliance, weak or no enforcement in most jurisdictions, and the ability of corporations to comply without altering commercial practices that create incentives for forced labor in their supply chains. LeBaron added that there has been a parallel “proliferation of private, voluntary supply chain monitoring tools, including social auditing, ethical certification, and various forms of corporate social responsibility programs” that “can give the impression that forced labor is being addressed” but after 20 years have shown “little evidence of meaningful impact.”

One remedial measure supported by multiple witnesses is additional transparency in the process of issuing and enforcing WROs. Suggested improvements include announcing to all involved parties, including importers, when a review based on allegations is deemed to merit investigation; giving companies at least 60 days to respond to allegations, provide information that may be critical or useful to the investigation, or remediate the allegation; and setting timeframes for preliminary and final determinations. Other changes could include CBP publishing its reasoning for issuing a WRO along with the number of affected shipments detained and the value of those goods, clarifying the standard and evidentiary burden for revoking a WRO, and sharing information with civil society and labor petitioners through the enforcement phase.

Other proposed improvements include the following.

- CBP could exercise its authorities to levy stiff fines for imports produced with forced labor, which one witness said “would prompt companies to enact more meaningful due diligence and put real protections in place.”

- CBP could stop allowing importers to reexport goods detained in violation of a WRO.

- Additional penalties could be levied on companies subject to a WRO that retaliate against their workers.

- Corporations could be required to (1) map and report their supply chains to raw material levels, particularly for high-risk regions or goods, (2) report on outcomes rather than just processes, and (3) report on their human rights due diligence processes.

- Where companies make claims about corporate social responsibility programs, CBP could request specific information on the impacts of these programs.

- Companies that fail to provide data, or whose data shows the continuation of practices that lead to forced labor, could face WROs and civil penalties.

- Criminal penalties could be assessed under the Trafficking Victims Protection Reauthorization Act on corporations knowingly benefiting from forced labor in global supply chains.

- Trade rules could be reformed to incorporate bans on forced labor, such as by adding it as a general exception within the World Trade Organization’s General Agreement on Tariffs and Trade, and prohibiting forced labor within bilateral trade agreements with strong commercial sanctions.

- Governments could target and expand their enforcement efforts around business models and supply chain segments known to make use of or incentivize forced labor (e.g., where sectors are labor-intensive, labor costs comprise a high proportion of total business costs, there are high levels of subcontracting and intermediaries, and there is a focus on low-value added activities.

- The U.S. could include forced labor as a key part of its trade policies and international diplomacy and consider work being done in other countries in determining how to strengthen existing import restrictions.

Sandler, Travis & Rosenberg offers a comprehensive suite of services to help companies address forced labor concerns, including supply chain reviews, due diligence strategies, and proactive remediation. In addition, ST&R has launched a new web page offering a broad range of information on forced labor-related efforts in the U.S. and around the world. ST&R also has an on-demand webinar on forced labor and supply chain transparency available online.

For more information on any of these initiatives, please contact Amanda Levitt (at (212) 549-0148) or via email), David Olave (at (202) 730-4960 or via email), or Nicole Bivens Collinson (at (202) 730-4956 or via email).

Copyright © 2021 Sandler, Travis & Rosenberg, P.A.; WorldTrade Interactive, Inc. All rights reserved.

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