How forced labor laws have taken a prominent role in U.S. trade policy

Irina Baranova

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February 16, 2022 – It may come as a surprise to most businesses that some goods around the globe are still being made with forced labor at this moment in time. But, unfortunately, that is the case, and decades-old laws are increasingly being dusted off to address these practices. That is the case of Section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307).

Section 307 prohibits the importation of goods mined, manufactured, or produced “in whole or in part” in any foreign country by convict, forced, or indentured labor, including forced child labor. “Forced labor” is defined as “all work or service which is exacted from any person under the menace of any penalty for its nonperformance and for which the worker does not offer himself voluntarily.” Customs and Border Protection (CBP) enforces this provision through the issuance of Withhold Release Orders (WROs) and findings under C.F.R. § 12.42 – 12.45).

Although Section 307 has been in place for over 90 years, it has been largely dormant and underutilized until recently. In the 1990s, CBP issued 31 WROs, mainly against goods from China. For the next 15 years (2001-2015), no WROs were issued. However, between 2016-2021 the uptick in WROs was even more profound. In that period, CBP issued 36 WROs on goods from eight countries and fishing vessels, 64 percent of which occurred in 2020 (15) and 2021 (eight) (see graph below).

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During the same period, Section 307 and enforcement regulations underwent significant adjustments. Simultaneously, other factors have also bolstered actions against importing goods produced by forced labor, such as the Uyghur Forced Labor Prevention Act signed into law on Dec. 23, 2021.

This article examines Section 307 and how it has become the cornerstone to adopt additional regulations to fight forced labor globally.

Enforcement of Section 307: WROs and findings

Anyone suspecting that an imported good (or one about to be imported) is produced with forced labor can make an allegation to CBP. The agency will initiate an investigation provided that the information received complies with certain requirements, such as a description of the good, a full statement of the reasons for the belief, and all facts available about the production of the good. CBP may also start an investigation on its own at any time.

If CBP finds that the information “reasonably but not conclusively” indicates the use of forced labor under Section 307, and the good is being imported or is likely to be imported, the agency will issue a WRO and will detain the goods covered in the order.

To have the goods released, the importer will need to provide evidence showing that they were not produced by forced labor within three months after the date of the importation. If the information is timely submitted and CBP considers the goods to be admissible, it will be released. Alternatively, the goods may be exported within three months or before being seized under a finding issued by CBP, whichever occurs first. If CBP determines that the goods are not admissible, the importer must export the goods, or they will be destroyed by CBP.

The statute also provides for CBP to issue a formal finding if the evidence presented confirms that the goods are produced by forced labor. The finding will be published in the Federal Register and the Customs Bulletin. Subsequently, CBP officers will seize the goods, and these will be forfeited to the government if no proof of admissibility was established or timely submitted.

Revamping the enforcement of Section 307

The WROs issued between 2016 and 2021 were not the only relevant measures adopted by the United States to fight forced labor globally. As described below, Section 307 was amended during that period, and additional forced labor regulations were adopted.

Section 307amendment. Effective Feb. 24, 2016, the U.S. Congress eliminated the “consumptive demand” exception in Section 307. The exception had prevented CBP from issuing a WRO in cases where goods that could be subject to the prohibition were not produced, mined, or manufactured “in such quantities in the United States as to meet the consumptive demands of the United States” (Pub. L. 114-125).

Establishment of the Forced Labor Enforcement Task Force. The United States-Mexico-Canada Agreement (USMCA) Implementation Act (signed on Jan. 29, 2020) ordered the creation of a U.S. interagency group, the Forced Labor Enforcement Task Force, to monitor the enforcement of Section 307.

President Trump established the Task Force on May 15, 2020, by Executive Order 13923. The interagency group is chaired by the Secretary of Homeland Security and composed of representatives from the Department of State, the Department of the Treasury, the Department of Justice, the Department of Labor, and the Office of the United States Trade Representative (USTR).

Adoption of timelines to enforce Section 307.The USMCA Implementation Act also commissioned the Task Force to adopt timelines for CBP to respond to petitions alleging the importation of goods produced by child or forced labor under Section 307. Accordingly, on July 30, 2021, the Task Force reported to Congress the timelines, which are summarized below.

Adoption of timelines to enforce Section 307.

Uyghur Forced Labor Prevention Act. More recently, on Dec. 16, 2021, the Senate passed a bill barring all imports of goods from China’s Xinjiang region due to forced labor conditions, directly applying Section 307.

However, the Act is not limited to the specific restriction on goods imported from China’s Xinjiang region. It also required the Task Force to develop a strategy to ensure that goods produced wholly or in part with forced labor in other areas of China are not imported into the United States. The Task Force has until June 21, 2022, to issue guidance to importers specifying the steps they need to take to ensure compliance with the Act. Similarly, companies and interested parties have until May 2022 to submit public comments to the CBP on how best to implement the Act and ensure compliance.

Furthermore, the Act calls on the United States to lead international efforts to end forced labor practices around the globe. For instance, the Act calls for coordination with Mexico and Canada to implement the USMCA prohibition on importing goods produced in whole or in part by forced labor into the territories of the three countries (Article 23.6). Therefore, not surprisingly, the USMCA Parties agreed on the importance of fully implementing USMCA Article 23.6 during the first meeting of the USMCA Deputies held on Jan. 13, 2022.

The increased use of WROs combined with recent regulatory changes indicate that human rights violations are a concern that the U.S. government intends to address through more rigorous trade policy and import enforcement. Companies should increase supply chain due diligence and identify or mitigate risks to human rights violations that could impact supply chains.

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