1 Sept 2017
Report Outlines Challenges in Combating Mainland Chinese Goods Made with Forced Labour
An 8 August report from the U.S.-China Economic and Security Review Commission finds that the United States faces challenges in identifying and preventing the entry of goods imported from mainland China that are produced with forced labour despite a 2015 law that enhanced U.S. Customs and Border Protection’s authorities in this area.
19 USC 1307 prohibits the importation of goods mined, produced or manufactured, wholly or in part, in any foreign country by forced labour, including convict labour, forced child labour and indentured labour. Effective 1 March 2016, the Trade Facilitation and Trade Enforcement Act closed a loophole in this law that had allowed imports of certain forced labour-produced goods if they were not produced domestically in such quantities as to meet consumptive demands. When information reasonably but not conclusively indicates that goods within the purview of 19 USC 1307 are being imported, CBP may issue withhold release orders requiring detention of those goods at all U.S. ports of entry.
Since the enactment of the TFTEA CBP has acted on its new authority four times, issuing WROs against soda ash, calcium chloride, caustic soda, potassium, potassium hydroxide, potassium nitrate, stevia and its derivatives and peeled garlic, all from mainland China. The USCC report states that these WROs were the first to be issued against mainland Chinese companies since 1996 and that two of the companies in question appear to have since closed.
In June 2016 then-Commissioner Gil Kerlikowske officials told Congress CBP was also taking a number of other steps to enforce the TFTEA’s provisions on forced labour, including establishing a 24-member task force focusing on this issue, working to place more agents in other countries, reaching out to non-governmental organisations to find leads, and co-operating with U.S. State Department personnel posted overseas to monitor forced labour and other issues. Kerlikowske said CBP expected to be proactive in issuing WROs when warranted by the information gathered from these sources, noting that the standard for reasonable suspicion is “pretty low.”
However, no WROs have been issued since September 2016 despite the fact that mainland China “maintains a network of prison labour facilities that use forced labour to produce goods intended for export,” in violation of U.S. law and U.S.-China trade agreements. According to information from the U.S. Department of Labor, mainland Chinese goods known to be associated with forced labour include artificial flowers, bricks, Christmas decorations, coal, cotton, electronics, fireworks, footwear, garments and construction nails.
The report cites as a major challenge the opacity of mainland China’s forced labour industry, which is “exacerbated by the use of middlemen companies to market the products in question for export, by U.S. inspectors’ lack of access to suspected sites, and by the mainland Chinese government’s refusal to agree with the U.S. government on what constitutes forced labour and thus which products are governed by relevant bilateral agreements.” The report notes that U.S. Immigration and Customs Enforcement agents have not been permitted to make site inspections in mainland China since 2009 and that mainland Chinese officials still routinely deny that suspected forced labour is occurring, instead claiming that the factories in question do not exist or do not make the products in question. Additionally, the report states that the status of the planned abolition of the mainland Chinese “re-education through labour” system is uncertain, with some reports indicating that forced labour continues to occur at these sites but under a different penal framework.
The report highlights action taken at the U.S. state level to address forced labour in corporate supply chains. A good example is the California Transparency in Supply Chains Act, which requires certain retail sellers and manufacturers doing business in the state to disclose their efforts to eradicate slavery and human trafficking from their direct supply chains. The California law acknowledges that market forces are a “key impetus” in the perpetuation of the crimes of slavery and trafficking, causing consumers and businesses to inadvertently purchase and promote tainted goods. In response, the law requires large retailers and manufacturers to disclose publicly in a “conspicuous and easily understood” fashion their efforts to eradicate slavery and human trafficking from their supply chains, to educate consumers on how to purchase goods produced by companies that responsibly manage their supply chains and, thereby, to improve the lives of victims of slavery and human trafficking. The law applies to any company doing business in California that has annual worldwide gross receipts of more than US$100 million and that identifies itself as a retail seller or manufacturer on its California tax return.
The report concludes that one way to reduce the United States’ vulnerability to forced labour exports from mainland China could be federal legislation mandating not only disclosure of corporate anti-forced labour efforts but also taking certain steps to eliminate forced labour components from supply chains based on internal corporate investigations.