Summary
Increased enforcement of forced labour actions outside Asia
DHS timeline for forced labour actions
Comment
Importers should be prepared for increased forced labour actions (including new withhold release orders (WROs) and product import bans) in connection with products from Latin America, the Middle East and Africa because US Customs and Border Protection (CBP) has allocated more enforcement resources by adding a second forced labour investigations branch.
The key points of this article are as follows:
- Importers should conduct supply chain due diligence and ensure forced labour policies and procedures are in place to avoid both reputational risks and disruption to supply chains.
- Companies that source products suspected of production using forced labour (eg, apparel, cotton, footwear, bricks, gold, diamonds, a variety of food products, beef, furniture, coffee, wood products and construction materials) from Latin America, the Middle East and Africa should be aware that their goods may be banned from import in the future.
- Importers should seek guidance in determining whether their products are at risk and may be detained at the border.
- The Department of Homeland Security (DHS) and the Forced Labor Enforcement Task Force have published estimated timelines for agency forced labour actions.
Increased enforcement of forced labour actions outside Asia
CBP has added a second forced labour investigations branch within its forced labour division, which will likely lead to increased forced labour enforcement actions outside Asia, including Latin America, the Middle East and Africa. Based on the Department of Labor's list of goods produced by child labour or forced labour, apparel, textiles, footwear, bricks, gold, diamonds, a variety of food products, beef, furniture, coffee, wood products and construction materials are produced in those regions and are suspected of forced and/or child labour. Importers should expect the issuance of further WROs and product detentions at the border.
In just two years, CBP enforcement of WROs increased from 12 detentions covering $1.2 million of merchandise in 2019 to 1,213 detentions covering $415 million of merchandise in fiscal year 2021 as of 13 September 2021. The exponential increase in enforcement actions and the addition of a second forced labour branch that will target other regions demonstrates CBP's commitment to ensuring that goods produced with forced labour do not enter the country.
DHS timeline for forced labour actions
In response to calls for more transparency in the forced labour enforcement process, and as mandated by section 742 of the United States-Mexico-Canada Agreement Implementation Act 2020,(1) the DHS and the Forced Labor Enforcement Task Force released a report for Congress, published online on 22 September 2021, that outlines the timeline for CBP's response to allegations of forced labour in a supply chain.
The timeline begins once CBP receives a petition from "any person outside of CBP" alleging that goods produced with forced labour, including forced child labour, convict labour or indentured labour under penal sanctions, are being, or are likely being, imported into the United States. Several large companies have been the subject of these petitions, made public by the petitioners. The timeline is as follows:
- within 30 days of submission of the petition – CBP conducts a preliminary review of the submission, including source verification, risk and impact assessment, and case prioritisation. CBP will decide whether the action is:
- viable for action under CBP authority (under 19 US Code (USC) section 1307, which prohibits the import of goods into the United States made with forced or convict labour);
- not viable under CBP authority but viable for action under other agency authority; or
- likely not viable for action;
- approximately 90 to 180 days from the initiation of an investigation – where CBP accepts a petition for investigation, CBP will determine whether reasonable suspicion of violation(s) of 19 USC section 1307 exists and, if so, the agency will issue WROs that authorise CBP to detain covered goods at the border. This can cause significant disruption to importer supply chains and affect the ability to fulfil contracts in the United States. CBP will strive to provide a two-week advance notification of an impending WRO;
- within 180 to 365 days from the initiation of an investigation – if CBP finds probable cause that the goods were produced with forced labour in violation of 19 USC section 1307, CBP will issue a formal finding; and
- 60 days after CBP issues a finding – with the approval of the DHS, the finding will be published in the Federal Register per 19 Code of Federal Regulations section 12.42(f).
These timelines are not, however, absolute. CBP has indicated that various factors may affect the ability to adhere to these timelines, and that they may be modified at any time.
During the investigation process, if CBP discovers evidence of illegal prison labour, the matter may be referred to US Immigration and Customs Enforcement Homeland Security Investigations or the Department of Justice.
Importers must take proactive measures to address forced labour risks in order to avoid public scrutiny that may arise when forced labour petitions are publicised. As noted above, the detention of products subject to a WRO also results in supply chain disruption and affects the ability to fulfil US contracts. To avoid these risks, importers should conduct supply chain due diligence and implement forced labour compliance policies and procedures.
For further information on this topic please contact Angela Santos, Sylvia G Costelloe or Christine Hintze at Arent Fox LLP by telephone (+1 212 484 3900) or email ([email protected], [email protected] or [email protected]). The Arent Fox LLP website can be accessed at www.arentfox.com.
Endnotes