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Lawmakers Finger China as ‘Forced Labor’ Offender

As forced labor casts an increasingly long shadow over the global supply chain, a bipartisan group of U.S. lawmakers is mulling measures to improve enforcement efforts, promote greater transparency, hold violators accountable and close any remaining loopholes in trade law that make exceptions for goods made with modern slavery.

“The United States is a country with a lot of economic and political muscle,” Senator Ron Wyden (D-Ohio), chairman of the Finance Committee, said at a hearing Thursday. “The country should use that muscle to fight for American jobs and workers. It should also use it, whenever possible, to improve the lives of powerless people around the world.”

In 2016, Wyden and Senator Sherrod Brown (D-Ohio) sponsored an amendment stitching up a clause in Section 307 of the 1930 Tariff Act that exempted goods made by forced or indentured labor if American domestic production could not meet demand. In the years since, Wyden said, enforcement actions have increased but so have “glaring examples of the scourge of forced labor, most notably in China.”

“Two U.S. administrations have now concluded that what the Chinese government is doing to the Uyghur people in the Xinjiang region in Western China constitutes genocide,” he said. “[But] forced labor is a problem in other countries, too, including in India, Burma and Malaysia.”

The International Labour Organization estimates that 25 million people worldwide are being held under conditions of forced labor. Four million of them are in forced labor imposed by state authorities.

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The fight against forced labor is “not a Democrat issue or a Republican issue, [but] an issue that unites us all,” said Senator Mike Crapo (R-Idaho), a ranking member of the committee, adding that the government needs to “empower” Americans and “other good citizens of the world” to effectively respond to the challenge.

“This includes effectively utilizing technology to identify where goods are made with forced labor can enter the supply chain,” he said. “It means our laws and regulations must be transparent and provide informative and thoughtful guidance so Americans know how to avoid importing such goods. It means we need to know the ongoing efforts of our businesses so that government can help leverage them in the fight against forced labor. Many of them have developed best practices to stamp out forced labor from there so we need to leverage their experience and expertise.”

Authorities must also partner with civil society to “raise awareness on this important issue,” Crapo added.

An ‘enforcement vacuum’

While China has been a focus of U.S. Customs and Border Protection (CBP) action, forced labor is a “global issue,” said witness Martina E. Vandenberg, founder and president of the Human Trafficking Legal Center, which joined other non-governmental organizations last year to petition CBP to block all imports of Xinjiang cotton into the United States. Yet the prosecution of cases has been “practically non-existent.” Federal prosecutors, she noted, indicted only 12 forced labor cases in fiscal year 2019. And although extraterritorial jurisdiction has been exercisable since 2008 to prosecute forced labor cases in global supply chains, federal prosecutors have “never brought even one forced labor supply-chain case that invoked extraterritorial jurisdiction.”

“So what is the result of this enforcement vacuum?” Vandenberg said. “Impunity, complacency and immense human suffering. The closing of the U.S. Tariff Act consumptive demand loophole in 2016 changed the game, catapult[ing] section 307 from a more than statutory relic to a valuable tool to combat forced labor. We still have a long way to go.” A Withhold Release Order (WRO) that restricts problematic imports, she added, is only the first step; “robust and swift enforcement must follow.”

Vandenberg said CBP needs to include workers and unions in all remediation plans. It should also create an emergency fund, created using fines paid by offending companies, for workers “harmed by WROs,” and release enforcement updates on each WRO every quarter.

Forced labor, she added, should not be treated as a corporate social responsibility issue. “Forced labor is a feature, not a bug in global supply chains,” Vandenberg said. “There should be no safe harbor for goods made with forced labor, anywhere in the world.”

All trade agreements that are negotiated, in fact, need to have provisions that ban the importation of goods with forced labor because countries cannot tackle the problem in silos, she added.

“It’s because goods brought into U.S. markets that are blocked by WROs can simply be transshipped, and we have evidence that goods are being transshipped to Canada and to other markets,” Vandenberg said. “And so all of the markets need to have this importation ban.”

A shared approach

Julia K. Hughes, president of the U.S. Fashion Industry Association, who also provided testimony, said the trade group’s members understand that forced labor exists in many parts of the world, which is why most have maintained codes of conduct and strict requirements for supply-chain partners that ban the use of forced labor.

“But we recognize that there remains more action needed to guarantee that forced labor is not in the supply chain for fashion products,” she said. To that end, the organization teamed up with the American Apparel Footwear Association, the National Retail Federation and the Retail Industry Leaders Association to establish an ad-hoc forced labor working group to “facilitate the sharing of information and the sharing of resources among the industry.”

But Hughes disagrees more punitive measures are the answer. “My personal belief is that to eliminate forced labor we need to…use multi-stakeholder approaches. The combination of civil society, NGOs, companies, governments and international institutions is needed to reach our goal.” She described programs such as the Cotton Campaign, a coalition of human rights, labor, investor and business organizations that has helped ameliorate child and forced labor in Uzbekistan’s cotton fields.

“But even with all these initiatives we know we need more, and we need to work with the executive branch, and with the Congress to eliminate forced labor,” Hughes said. “We believe what will help even more is more transparency in the process, and more of a shared approach. We don’t think success is measured by the number of detentions, success will be measured by the degree to which we all work together to effectively reduce and eliminate forced labor.”

A level playing field

But first, brands and federal agencies alike need better tools, said Leonardo Bonanni, founder and CEO of Sourcemap, a New York-based supply-chain transparency company that deploys software to help businesses measure and manage risk.

“We’re fighting these bad actors with technology from the last century, and rather than use such blunt instruments as banning imports from an area, we need to move toward the real use of supply-chain transparency technology which many industry members already using today,” he said. “What I mean by that is we need to grow the scale at which customs can enforce these issues.”

Supply-chain transparency, he said, is a “very small price.” And while not every company has the time or resources to audit every direct and indirect supplier, he added, advances in technology mean that for the first time, companies can have a verified and up-to-date map of their global supply chain.

“Is it a panacea? No, but it represents a step-change in the degree of supply-chain transparency businesses and governments can expect in support of their ongoing fight against forced labor,” Bonanni said, urging CBP to put supply-chain transparency technology “at the center” of its efforts. At a minimum, companies should disclose the names and addresses of their direct and indirect suppliers to obtain a “baseline level” of visibility not only in high-risk regions but low-risk ones as well.

“Supply-chain transparency is good for business in many other ways: it reduces risk, it saves money, it helps to secure hard-to-get materials [and] it helps to monitor for quality counterfeiting, environmental conditions [and] health and safety,” he said. “Setting a simple standard for supply-chain transparency will help create a level playing field for all companies importing goods into the U.S. It’s not just the right thing to do for our values, it’s the smart thing to do for U.S. business and for U.S. workers.”