Certification Programs Ineffective in Fighting Forced Labor, So Policymakers Searching for New Approaches
A proposed bill to create a rebuttable presumption of forced labor for goods made in China's Xinjiang province never came up in a discussion on how to move forward in combating forced labor hosted by the McCain Institute. The April 30 webinar called "Eliminating Human Trafficking and Forced Labor in Global Supply Chains: whose responsibility is it?" instead talked about how consumer pressure could convince companies to do more due diligence beyond first tier suppliers.
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Sen. Rob Portman, R-Ohio, noted that the Trade Facilitation and Trade Enforcement Act gave the government more power to stop imports made with forced labor, adding, "The question is: How do you enforce it effectively? I think that issue is a tougher one, and again, driven by consumers is probably the most effective way to make sure companies abide by it."
He also pointed to government subsidies for reshoring as a response to the problem, with the example that before the pandemic, there were four companies producing personal protective equipment in Xinjiang, and 51 after demand spiked. He said 17 of those 51 are believed to use forced labor. He has introduced a bill to spur domestic production of PPE, but said the government will have to pay for that, since it is not as profitable as producing the masks in Asia.
Professor Genevieve LeBaron from the University of Sheffield, who researches forced labor in corporate supply chains, said she's learned from interviewing cocoa workers in Ghana and tea plantation workers in India that certification programs such as Fair Trade for cocoa, are almost completely ineffective. She said that farms that sell to companies that have formal Environmental, Social and Governance departments are some of the worst offenders, and there is almost no difference in frequency of forced labor among sellers who are certified or not.
Instead, LeBaron said, companies have to start making an effort to estimate how much it would cost to produce the product they buy if the people making it are paid according to local labor laws, and buy at those prices. She said that forced labor is not a matter of bad actors, but is a natural consequence of corporations sourcing below the cost of production.
Former British Prime Minister Theresa May, another panelist, said that the United Kingdom's Modern Slavery Act, which requires companies of a certain size to see if they have forced labor in their supply chains, is a good start. "We’ve got to make sure it isn’t just a tick box activity, that they’re really taking action," she said.
"Xinjiang province and the Uighurs, I think this has brought this question of supply chains into sharp focus," she said, and said that lawmakers in the United Kingdom are considering whether there should be an import ban similar to the one in the U.S. on products made with forced labor.