ICE Policy Advisor Warns Criminal Prosecutions Possible for Importers, Retailers Over Forced Labor

NEW YORK -- While CBP recently issued multiple withhold release orders for goods the agency believes were produced with forced labor (see 1910010017 and 1902040017 and 1805210028), ICE is also working to increased enforcement of forced labor laws. The enforcement effort is not going to stop with civil penalties, warned Kenneth Kennedy, senior policy advisor for forced labor programs at the Homeland Security Investigations division at ICE. "We are teeing up criminal investigations within the next year, or two years," he said, and U.S. business officials will the targets.

Executives can be subject up to 20 years of prison time if they knew or should have known there was forced labor in their companies' supply chains, he said. "We are under an extraordinary amount of pressure from Congress to enforce these laws," he said.

Kennedy, who was speaking at the U.S. Fashion Industry Association Trade & Transportation Conference Nov. 7, said there are many people in the trade community who think the emphasis on rooting out forced labor in U.S. imports will fade away if the administration changes or under a new Congress. "Honestly, I don't think that is the case," he said.

The law is written very broadly, but the government looks at the 11 criteria laid out by the International Labor Organization, including companies that retain workers' passports to prevent them from leaving; debt bondage, where migrant laborers have to work to pay off what they paid recruiters to get a job; and physical and sexual violence. "Most of our cases have multiple aspects," said Debbie Augustin, executive director of the Trade Remedy Law Enforcement Directorate at CBP.

Kennedy said labor abuses that fall under forced labor are so common abroad that "if you look, you're going to find it." He said every multinational corporation has forced labor somewhere in its supply chain. But he said that doesn't mean he's going to charge executives at all those companies. The dividing line between reasonable care and disregard of knowledge is, he said, "What do you do with it when you find it? If you found it and continued to source there, now we have a problem."

Kennedy said the type of company he'll be scrutinizing is the one that goes to a vendor after more well-known companies leave that vendor because they found something sketchy. Traditionally, the importer was the responsible party, but Kennedy said now the Department of Justice is willing to prosecute retailers or online marketplaces that profit from the low prices provided by forced labor.

Augustin advised attendees that they need to know the recruitment practices of companies in their supply chains, especially if they use third party recruiters.

Ryan Lynch, sustainability practice director at the British nonprofit British Standards Institute, said this time when companies are in a rush to move production from China to Vietnam, Bangladesh or other Asian countries is a point of vulnerability. He said many Vietnamese factories are already at capacity, but might accept your orders anyway. He said sourcing officials should be asking if factories will be sending work to undisclosed sites. If a factory in China is employing Nepalese, Vietnamese and Filipino workers, U.S. companies should be asking who is paying the recruiters' fees, he said. If the workers are paying, that's going to be a forced labor violation. So companies should be talking to their vendors about paying enough to cover those recruiting fees as part of the cost of goods.

Staying in China is not risk-free, either, Lynch noted. Uighur prisoners have been picking cotton, and 84 percent of China's cotton is grown in the province where Uighur detention camps are located. So, Lynch said, you should presume some of that cotton is in your product, if you're buying cotton or cotton blend garments or home goods made in China. "You should assume you're at risk."

Lynch said the law is clear, raw materials count for criminal liability.