Forced Labor Reasonable Care Is Likely to Be as Strict as Conflict Minerals Documentation, Panelist Says

Amy Magnus, director of customs affairs and compliance at A.N. Deringer, said that taking reasonable care to see there is no forced labor in your supply chain is for all importers, not just for those importing from companies that have been targets of an investigation, or from countries that have been targets.

She said that a few years ago, clients were receiving CBP Form 28, a detailed questionnaire that had questions such as: Have you had audits to see if there is forced labor in your factories? Do you know all your suppliers and their suppliers? What are the names and contact information of your suppliers? Do your manufacturers use third-party labor brokers? Who are they? Are there recruitment fees? Do they use foreign workers? The form also asked importers to include buyer contact information, she said. “Many of our clients were unprepared to respond to these questions,” Magnus said. She said she hasn't been seeing these forms lately: “Maybe they’re being more targeted?”

Tsakiridis said Deloitte clients are still fielding what she called nonspecific inquiries. Importers are used to rule of origin certifications, she said, but rarely have contact with far-downstream suppliers. The withhold release order on Xinjiang cotton requires textiles or apparel importers to know the supply chain all the way back to the field.

Brian White, vice president of compliance at J.M. Smucker, said the Commercial Customs Operations Advisory Committee is hoping that CBP uses COAC's Forced Labor Working Group's suggestions when it does more rulemaking on forced labor. When goods are detained under a WRO, the trade industry is struggling to know what evidence CBP is seeking so the importer can prove the goods were not made with forced labor, he said.

White said the working group is also helping to assess existing and emerging traceability technology and to draft forced labor fact sheets.

Magnus said that some of her firm's clients had shipments on the ocean when they found out they would be subject to a WRO. One was already planning to go to a port of call in Canada, and so was able to offload the goods before arriving in the U.S. she said.

U.S. Trade Representative Katherine Tai is working to close that avenue to importers, as Canada and Mexico agreed under USMCA to ban the import of goods made with forced labor. In a speech June 30, on the eve of the one-year anniversary of the trade pact, Tai said getting that done is the next step.

Magnus said since October, over 600 detentions of goods have occurred. As she showed a slide she titled “proving a negative,” she warned that importers whose goods are detained will face a “great deal of expense trying to prove your goods were not subject” to the ban on the import of goods made with forced labor.

She said Virtus Nutrition, which imported palm oil from Malaysia, has spent $35,000 a month to store its palm oil that is detained. It unsuccessfully protested the WRO and is waiting for a Court of International Trade ruling. Virtus said the producer was not the one subject to the WRO.

Magnus said the best way for importers to ensure that their goods are not suspected of being made with forced labor is to use blockchain, so that all parties enter their information. She said she's been part of two pilots with blockchain, one on crude oil and one on steel, from ore to finished product. In the case of steel, she said, the documentation is more for showing what kind of carbon emissions were associated with the metal's production.

White said Smucker has tried to educate its suppliers with instructions such as: Every worker should have freedom of movement. No worker should pay for a job. No worker should be indebted or coerced to work. He said Smucker measures risk by spending tier but still engages with small vendors. He said with small companies, it's often going to “take a heavier lift to get them in line with your expectations.”