Are You Sure Your Supply Chain is Free of Forced Labor?
The U.S. is taking an increasingly stronger stance on the use of Forced Labor in the supply chains of imported products, and so should you. Even if you think your products or supply chains are free of forced labor, review your databases, products and build a program to regularly review your supply chain, most importantly to ensure that the production of your products does not infringe on the human rights of those workers making your product, but also to avoid the detention or potentially denied entry of your products into the U.S.
The U.S. has long prohibited the importation of products determined to be minded, produced, or manufactured by the use of forced labor including prison, indentured, and child labor; however, the U.S. government has ramped up focus on stopping those products from entering the United States. Customs and Border Protection (CBP) has increased the use of Withhold Release Orders (WRO) to target, detain or restrict entry of suspect shipments. Once a shipment is detained, the Importer must prove the absence of forced labor in their supply chain to obtain release of the shipment.
Historically, WROs have been issued based on findings of forced labor in the production or manufacture of specific products, in specific countries, and in named factories. CBP’s website page on Forced Labor lists all of the WRO findings and their status by country. For importers, you could easily assess your risk by reviewing these lists against your products, countries, and the manufactures used in production. However, with the recent increase in WROs, including disposable gloves, palm oil and palm oil products from Malaysia, and nine (9) new orders for products manufactured in China including hair products, garments, computer parts, and cotton and cotton products, this can be quite an undertaking.
And now, more importantly, due to recent findings of horrific and widespread human rights violations and forced labor in Xinjiang, the Western region of China, Customs and Border Protection (CBP) issued a new WRO on January 13, 2021, that directs CBP personnel, at all ports of entry, to detain entries of certain cotton and tomato products, grown or produced in the Xinjian Uyghur Autonomous Region. This is the first regional WRO and also includes raw materials. According to the CBP announcement, this includes apparel, textiles, tomato seeds, canned tomatoes, tomato sauce, and other products made with cotton and tomatoes. This means that importers will need to dig further into their supply chain, to ensure that there is no forced labor at any point in the supply chain, including the harvesting and processing of raw materials.
This is not just for textile, apparel, and tomato importers. Importers must critically review product lines or categories to determine if there is any amount of cotton or tomato raw materials present. Not only must there be a review of the finished good manufacturer, but also the source country of raw materials. Cotton or tomato materials are shipped to other areas of China, or other countries for use in the final product imported into the U.S. This poses a significant import compliance challenge but must be taken seriously.
Stay informed and Train Staff – Monitor CBPs Forced Labor page, familiarize all staff with the laws and regulations of CBP and the U.S. Department of Labor and the published lists of products produced with Child Labor or Forced Labor.
Audit your Supply Chain – Be able to map or define your supply chain from raw materials through to the finished product and establish an assessment for potential risk of forced labor. If you can’t visit your factories, hire third-party auditors who know how to identify and report on forced labor or human rights violations. Request production records from your suppliers including sourcing of raw materials.
Make Forced Labor Standard Language in Purchase Contracts – Review, update and communicate with all suppliers that forced labor is prohibited in the production of your products.
Have a Plan – If your supply chain review identifies evidence of human rights violations or forced labor in the production of your products, have a plan to address the supplier, and if necessary, terminate purchase orders and the relationship. Additionally, if CBP detains your shipment due to a WRO, have a plan to respond and demonstrate to CBP that your product is not manufactured with forced labor.
Ultimately, the importer of record is responsible for ensuring that the products that they import are not made with the use of forced labor. The goal of the WROs is to protect the human rights of workers and eliminate forced labor globally, but importers have direct control over their supply chain; and are, therefore, critically important to this mission. Not only will an importer’s failure to do their due diligence result in detained or denied entry of products, but it also has the ability to significantly damage the reputation and bottom line of the importer.
Bureau of International Labor Affairs – List of Good Produced by Child Labor or Forced Labor
U.S. Department of Labor – Against their Will: The Situation in Xinjiang
Customs and Border Protection – Region Wide WRO on Products Made by Slave Labor in Xinjiang
U.S. Dept. of State, Secretary of State – Determination of the Secretary of State on Atrocities in Xinjiang 1/19/21
Customs and Border Protection – Forced Labor information and guidance
M.E. Dey Whitepaper – Withhold Release Order (WRO)