Published on June 21, 2016 by Ryan Lynch
A recent SCREEN report stated that U.S. Customs and Border Protection (CBP) has blocked shipments of stevia, a sugar substitute, imported from China by a single American company. Authorities announced that the product was made with the use of convict labor, and thus in violation of U.S. law covering imports. The firm claims that this information is inaccurate and has since submitted documentation in an attempt to reverse the decision.
Eliminating forced labor in the supply chain
If you’ve been following recent legislation, you’ll know that the uptick is due to the passage of the Trade Facilitation & Trade Enforcement Act of 2015, which serves to remove the consumptive demand clause in the Tariff Act of 1930. The Tariff Act has always prohibited forced labor, and has also given CBP the authority to seize cargo in violation. That said, it also provided a loophole, based on ‘consumptive demand’, allowing CBP to overlook cargo made with forced labor if there was a market need within the US that exceeded US manufacturers’ ability to produce the product.
CBP seizures due to forced labor peaked in 1992 at 17, all from China. This comes as no surprise, as that had been a particularly low point in recent history in US/China relations. Within a few years, between 2001 and 2016 to be specific, zero seizures had taken place (from China or elsewhere). Now within a 60 day period between March and May of this year, CBP has issued three detention orders due to forced labor. If seizures were to maintain this pace, 2016 will record the second highest number of seized shipments due to forced labor.
CBP has stated that it relies on information from various sources, including the US Department of Labor List of Goods Produced with Child or Forced Labor, as well as formally filed petitions, in order to identify and detain cargo. Petitions can be submitted by any individual or organization, and CBP has the authority to detain goods based on a ‘reasonable but not conclusive’ determination that forced labor contributed to the production of the product.
What should you expect?
The bottom line is that companies should expect a modest surge of petitions submitted to CBP by civil society organizations that look to use CBP’s focus on forced labor as a lever to apply pressure to multinationals to commit to improving workplace conditions in their supply chains. Companies who don’t have sufficient visibility into the workplace conditions of their supply chains will be faced with the increasing financial and operational hardships of potential detentions. Without evidence of appropriate due diligence practices, these companies will be in a weak position to secure the release of their goods.
What responsible sourcing strategies do you have in place to mitigate forced labor exposures?
Published by: Ryan Lynch - Head of Corporate Social Responsibility, Ryan has worked with customers from a variety of industries over the past decade to design solutions to support transparency and collaboration across complex supply chains.