U.S. Immigration and Customs Enforcement’s latest weapon to take hold of imports suspected or alleged to have been made by forced labor is getting lots of attention.
“For NGOs, it’s like Christmas time,” said Kenneth J.F. Kennedy, senior policy adviser for the Forced Labor Program for the Homeland Security Investigations’ unit of ICE.
Kennedy was referring to enactment of legislation in February that removed a decades-old exemption limiting the authority of Customs to detain goods that were suspected of being made by forced labor.
President Obama signed the new Customs and trade enforcement bill into law, which removed something known as the “consumptive demand” exemption. For decades, Customs officials were prohibited from detaining imports if those products weren’t made in sufficient quantity in America to meet total U.S. demand. With the removal of the exemption, Customs can now detain all imported products suspected of being made by forced labor based on due diligence.
Kennedy explained that the law that prohibits the importation of goods produced by convicted, forced or indentured labor under penal action, including forced or indentured child labor, has been on the books since 1930, when the U.S. wanted to stop the Soviet Union from making forced goods. He said investigations can be triggered by tips from outside or internal sources, or can be self-initiated by the agency.
“For all these years [nongovernmental organizations] have been looking for attention on this issue,” Kennedy said at a discussion at the Park Avenue offices of Kelley Drye & Warren. “For awhile, we’re going to see a lot of interest and attention. Quite frankly, I’ve been meeting with a lot of NGOs asking me a lot of questions about petitions and so on, but I think when they see that the actual process is slow, even this new improved process, even if when a finding is used, it’s not splashy, there’s not a lot of data that comes out of it. If there are criminal charges, it’s going to be two or three years down the road at best.”
Kennedy explained there have been two “withhold release orders” issued since the law went into effect, which then triggers an investigation by ICE and Customs & Border Protection to determine whether there’s “standard probable cause” that the shipment in question, from shrimp and coffee to apparel and textiles, used forced labor anywhere in the supply chain, and whether criminal charges are warranted.
The ultimate decision is made by CPB commissioner R. Gil Kerlikowske.
In March, one of this shipments was detained and Kerlikowske issued the withhold release order against several imported products, including viscose rayon fiber, calcium chloride, soda ash and caustic soda manufactured or mined by China-based Tangshan Sanyou Group. The company’s web site notes it has subsidiaries throughout China and a trading office in Hong Kong.
CBP said the order is based on information obtained by authorities “indicating that the Tangshan Sanyou Group and its subsidiaries utilize convict labor in the production of the merchandise.”
Details of the second order have not been made public and Kennedy said there are other shipments being investigated. He said it’s important to note that the program targets specific shipments, not industry sectors, as in the case of a European Union regulation. He also said the apparel industry is of particular risk since the law has a “wholly or in part standard” for illegal forced labor in any product, and given the industry’s complicated supply chain.
“There’s a lot of Congressional interest in this — there’s about seven or eight Congressional representatives that are very interested in this, that I can see hanging onto this topic. A lot will be determined by who is the next president because I think we’ll have two have very different philosophies toward this area of enforcement.”
He said he didn’t think ICE will be any more aggressive in terms of number of cases, but probably as far as working with trade and NGOs “because if we’re not all in this together, it’s not going to work.”
“We would like to be able to prosecute the offenders but let U.S. trade continue,” he said. “There’s a lot of balance we need to do on the enforcement side that NGOs don’t want to hear. I have not asked for more resources as a result of this change….I may put if for one additional person in the 2018 cycle. CBP is putting in more because that have many more mandates. I think you’ll see more enforcement, but I think it will be targeted, more rational, and there will be more content then there’s been in the past.”
Kennedy stressed that he wants to work with he industry to understand the new law, what is required of companies to demonstrate their lack of culpability or how they can change their supply chain to eradicate a forced labor aspect of it.
“It’s a very nuanced approach,” he added.