The U.S. government doesn’t want goods coming into the country if they’ve been produced with forced labor. It’s placed a variety of legal demands on importers because of this. Complying with these obligations is essential if you import goods into the United States. Otherwise, your shipments could be detained, returned to their origin port, or seized entirely.
What Is Forced Labor?
According to U.S. definitions, forced labor is any work or service offered non-voluntarily and under the menace of a penalty for nonperformance.
Child Labor
The Tariff Act of 1930 also prohibits the import of goods produced by child labor.
Governing Regulations On Forced Labor
One key regulation U.S.-based importers should be aware of is Section 307 of the Tariff Act of 1930. It gives U.S. Customs and Border Patrol (CBP) the power to investigate potential forced labor import violations. This can lead to the temporary seizure of any imported goods being investigated. If the investigation proves a forced labor violation, the goods can be seized permanently.
Withhold Release Orders (WROs)
When the CBP investigates a potential forced labor violation, it’ll end up with one of three decisions:
- There is no violation
- There is a violation
- There may be a violation
The government defines option three as, “reasonably but not conclusively indicating” that the goods in question are the product of forced labor. When that happens, the CBP Commissioner can issue a withhold release order (WRO).
WROs begin the initial seizure of the goods. However, importers have three months to contest them. To be successful, they need to show that “every reasonable effort” has been made to rule out forced labor.
The Uyghur Forced Labor Protection Act (UFLPA)
Importers are further restricted by the UFLPA, which was enacted in December 2021. This Act creates a legal presumption of forced labor for goods produced in Xinjiang, China, or by certain banned entities.
You can rebut this presumption by following the provisions for doing so laid out in the Act. Those often include the following three steps.
Supply Chain Mapping
You must map your supply chains and assess forced labor risks along the way.
Supply Chain Tracing
Next, you have to supply proof to CBP that you’ve completed the required analysis. That means sending various supply chain tracing documents, such as detailed descriptions of partner businesses and their role in production.
Supply Chain Controls
Finally, you must supply documentation on your internal supply chain management measures. These should include evidence of the controls you have in place to mitigate forced labor risks.
UFLPA’s Enforcement Process
CBP employs a risk-based approach to UFLPA enforcement. This means they focus more on shipments with profiles that fit known violation patterns. For example, CBP is focusing on high-priority sectors like cotton, tomatoes, electronics and silicon-based products.
Consequences And Penalties
Importers that violate the UFLPA can have their goods seized or excluded from the country. They can also face civil penalties.
Detention
The first step in an enforcement action is detainment. At this point, CBP has investigated the shipment and decided that it either violates UFLPA or might.
Exclusion
Next, CBP could exclude the goods from entering the United States. This essentially means the shipment is stopped at the border and must be returned to its port of origin.
Seizure
Finally, CBP has the right to seize certain goods permanently. However, it has suggested that it will likely only take such severe action in cases of deliberate fraud.
Current Uyghur Forced Labor Prevention Act Statistics
Thus far in enforcing the UFLPA, CBP has:
- Reviewed 8,878 shipments for UFLPA violations
- Released 4,063 shipments for normal delivery
- Denied 3,493 shipments from entering the country
Importer’s Liabilities And Risks Against Forced Labor
These laws create financial risks for importers. If goods are detained or seized because of forced labor protections, it can lead to lost revenue.
Good Mitigation Strategies Against The Risk Of Illegal Labor
Given the risks presented by forced labor laws, importers must be proactive about keeping any hint of potential violation out of their operations. These tactics will help you do that.
Updated Supplier Ethical Standards
First, update your list of supplier standards based on UFLPA and Section 307 of the Tariff Act of 1930. That way, you only choose suppliers that have low risk profiles.
Revamped Corporate Code of Conduct
You can also revamp your internal code of conduct related to your supply chain. Providing detailed guidance on risk factors will help your whole team understand how to best comply with these regulations.
Using Audits For Identification And Remediation
You don’t want to be caught off guard by a supplier that slips through the cracks in your updated policy framework. That’s why audits are still useful. They’ll help you find and stop any supplier that may try to take advantage of your business relationship.
Tailored Due Diligence Package For UFLPA Compliance
Finally, consider creating a more robust process for creating UFLPA compliance due diligence packages. Going above and beyond what CBP requests could help your business avoid enforcement problems.
Related Content: How to Evaluate a Customs Broker
How Deringer Can Help You Stay Compliant
Forced labor laws place serious demands on importers that bring foreign goods into the United States. Deringer can help you understand and comply with these obligations with its diverse logistics, warehousing, and distribution solutions.
Customs Brokerage And Consulting
Deringer has been helping clients meet compliance obligations since before the Tariff Act of 1930. From supply chain and logistics consulting to technological solutions that make complying with laws easier, we can help your import business thrive.
Ensure Your Business Progresses Ethically Through Compliance
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