Forced Labor Hearing Suggests WRO Process Changes; Chair Says Corporate Audits Should Go Deeper

"Forced labor is …not the choice of a few badly behaving contractors," said Jennifer Rosenbaum, executive director of global labor justice at the International Labor Rights Forum, "Forced labor is the predictable consequence of business models that profit from exploitation, a system of labor governance that allows corporations to police their own behavior through weak or voluntary corporate social responsibility (CSR) initiatives, discriminatory legal frameworks, and deeply entrenched power imbalances between workers and employers."

But those witnesses also offered support for the ideas of the industry witness, who suggested that CBP should not be as secretive in its forced labor investigations.

And some members of the House Ways and Means Committee's Trade Subcommittee asked a more fundamental question during the July 21 hearing: Is the imposition of withhold release orders reducing the incidence of forced labor?

Brian Lowry, senior vice president-innovation, regulation and trade at the U.S. Council for International Business, said that USCIB "emphatically supports" the goal of eradicating forced labor and effective enforcement of the ban on goods made with forced labor. He also acknowledged that some companies do not know what their third tier and fourth tier suppliers do.

He said he would like to see CBP announce to all involved parties, including importers, when it decides that allegations of forced labor merit investigation. "CBP should provide companies with at least 60 days to either respond to the allegation, provide information that may be critical or useful to the investigation, or, in appropriate circumstances, remediate the allegation," he testified. Within 60 days of the initiation, he said, CBP should issue a preliminary determination, and then provide a 60-day comment period/remediation period. A final determination should come 120 days or more after the investigation began, and then parties should have 60 days to submit a remedy before a WRO is issued, he argued.

Charity Ryerson, executive director of the Corporate Accountability Lab, said she agreed on many of his points on a multistep process for CBP.

"We’re looking for CBP to provide a lot more information throughout the process for us to use in our investigations," she said. Ryerson, who testified about child trafficking in the West African cocoa industry and about labor abuses of Haitian migrant workers in the Dominican Republic's sugar cane fields, said the current approach in China's Xinjiang region makes sense, but in West Africa, more nuance is warranted, because a WRO on all cocoa from the region would hurt impoverished farmers and workers most, including those who do not hire children who are working far from home. In Ryerson's written testimony, she said, "CBP could issue narrow WROs, targeting only those actors that do not comply with CBP requests for information and documentation. Companies that fail to provide data, or whose data provided shows the continuation of practices that lead to forced labor, should face WROs and civil penalties. This process, allowing companies to participate in good faith and punishing those who do not, reduces unintended consequences, protects vulnerable workers and precarious economies, and results in more strategic interventions in supply chains than might be expected under a strict read of the statute."

Lowry said that CBP doesn't accept any information from importers before a WRO, and that doesn't make sense, given its collaboration with the trade community on other enforcement issues. He said the way WROs are happening now, the goods are already in port or on the water when an importer finds out that CBP suspects they contain goods made with forced labor. All you can do at that point is either reexport or prove that the goods were not made with forced labor.

He said that if companies had more notice, they could "stop payment, cancel the order and use the power of the purse." He said that after a WRO, "Companies will stop working with the supplier and cut and run rather than pressuring the supplier to be a good actor in a bad neighborhood."

Rep. Darin LaHood, R-Ill., asked Lowry if businesses need better guidance from CBP on how to root out forced labor in their supply chains.

Lowry said it's critical to look at existing regulations and evaluate what works and what doesn't. "If business is in the middle of this mix, then business will also be in the middle of the solution," he said.

Rep. Suzan DelBene, D-Wash., asked the panelists if WROs have reduced the amount of forced labor.

Rosenbaum said more information is needed to answer that question. "We do know that the WROs bring significant financial and legal risks for companies that engage in or tolerate forced labor," she said.

She and other witnesses argued that there should be fines large enough to change conduct, and several said there should either be more criminal prosecutions, or that Congress should change the Alien Tort Statute so that it applies outside the U.S.

Rosenbaum also said she's worried that the palm oil WRO will be lifted before there is proper remediation in working conditions. "Standards for modification and removal of WROs must be clear and independently verifiable," she said.

At the end of the hearing, Trade Subcommittee Chairman Earl Blumenauer, D-Ore., said he is keenly interested in moving against business models that are based on exploitation in lower tiers of the supply chain. He said that audits need to move past the first or second tier. "We’ve got our work cut out for us," he said.