On February 24, the Trade Facilitation and Trade Enforcement Act of 2015 ("TFTEA") was signed into law by President Obama.1 The TFTEA is the first piece of comprehensive legislation for U.S. Customs and Border Protection ("CBP") since 2003, but one small section buried in the "Miscellaneous Provisions" portion of the Act is being given much of the attention.
Section 910(a) of the TFTEA eliminates the "consumptive demand" exception to a prohibition on the importation of goods that have been mined, produced or manufactured in a foreign country by forced labor. The exception, found in Section 307 of the Tariff Act of 1930,2 excluded from the import prohibition those goods produced by foreign forced labor if the goods were not produced "in such quantities in the United States as to meet the consumptive demands of the United States." To demonstrate the scope of the former loophole, there are countless goods that are not produced in large enough quantities in the United States to meet consumer demand. According to lists compiled by the Department of Labor, there are at least 139 goods from seventy-five countries that are likely produced by child or forced labor.3
The consumptive demand exception severely curtailed the enforcement of the import prohibition of goods produced using forced labor. In fact, over the 85 years that the prohibition (and accompanying exception) were in place, CBP issued only 31 withhold release orders ("WRO"), which block goods from entering the country under suspicion they were produced using forced labor. Further, there were zero WROs issued in fifteen years between 2000 and the elimination of the consumptive demand exception on March 10, 2016.4
Within weeks of the closing of the loophole, CBP stepped up enforcement and on March 29 it issued two WROs covering soda ash/calcium chloride/caustic soda and potassium/potassium hydroxide/potassium nitrate from identified manufacturers in China. Since then, two more WROs have been issued by CBP covering stevia and peeled garlic from two other Chinese companies.5 In May CBP also created a Trade Enforcement Task Force whose duties include the "interdiction of imported products using forced labor."6
The CBP can initiate investigations into whether an import was produced by forced labor based on petitions from customs officers or any third party, including competitors.7 Depending on the outcome of the investigation, WROs may be issued, potentially leading to the seizure and forfeiture of the goods and criminal investigation of the importer(s). Therefore, it is crucial that importers have in place compliance programs that make all reasonable efforts to identify and combat forced labor in their supply chains.
Forced and slave labor is a global problem with nearly 21 million victims, resulting in the generation of $150 billion in illegal profits annually.8 Since the elimination of the restrictive consumptive demand exception, CBP is beginning to more zealously enforce U.S. laws designed to help end that problem.
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1 Trade Facilitation and Trade Enforcement Act of 2015 § 910, 19 U.S.C. § 4301 (2016).
2 19 U.S.C. § 1307 (2000)
3 U.S. Department of Labor, List of Goods Produced by Child Labor or Forced Labor (Sept. 30, 2016), available at https://www.dol.gov/ilab/reports/child-labor/list-of-goods/.
4 U.S. Customs and Border Protection, Forced Labor (Oct. 17, 2016), https://www.cbp.gov/trade/trade-community/programs-outreach/convict-importations.
5 Id.; It must be mentioned that there have been other flurries of enforcement activities against China in the past, particularly in the early 1990s, and the recent forced labor statute enforcement could simply be a coincidence. However, a simple coincidence seems unlikely considering the recent WROs came on the heels of the elimination of a severely restrictive exception.
6 Press Release, U.S. Customs and Border Protection, CBP Creates Trade Enforcement Task Force (May 2, 2016), available at https://www.cbp.gov/newsroom/national-media-release/cbp-creates-trade-enforcement-task-force.
7 19 C.F.R. 12.42.
8 Forced Labour, Human Trafficking and Slavery, International Labour Organization (Nov. 2, 2016), http://www.ilo.org/global/topics/forced-labour/lang--en/index.htm.
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