Importers: If you Can’t Answer These 12 Questions on Forced Labor You’re In Trouble!

An estimated 40.3 million people were living in modern slavery at any moment in time in 2016. This amounts to 5.4 victims of modern slavery for every thousand people in the world. Seventy three per cent of the victims of forced labor were female, and one in four victims were children. Forced labor accounted for 24.9 million people, while 15.4 million were in forced marriage.

What is the U.S. Doing About It?
On February 24, 2016, the President signed the Trade Facilitation and Trade Enforcement Act of 2015, which repeals the “consumptive demand” clause in section 307 of the Tariff Act of 1930 (19 U.S.C. §1307), and strengthens the capabilities of the U.S. Customs and Border Protection (CBP) to enforce U.S. trade laws and regulations. Originally section 307 of the Tariff Act of 1930 provided a “consumptive demand” exception, which allowed importation of forced-labor goods “if the goods were not produced in such quantities in the United States as to meet the consumptive demands of the United States.”

Section 307 of the Tariff Act of 1930 defines forced labor as “all work or service which is exacted from any person under the menace of any penalty for its non- performance and for which the worker does not offer himself voluntarily. For purposes of this section, the term ‘forced labor or/and indentured labor’ includes forced or indentured child labor.” The International Labour Organization (ILO) Forced Labour Convention, 1930 (No. 29), Article 2.1’s definition of “forced compulsory labour” implies the use of deception or coercion, either by the state and public agencies, or by private individuals and enterprises, to force people to enter work or service against their will, to work in conditions they did not accept and to prevent them from leaving the job by using any form of punishment or threat of penalty.

What Is CBP Doing About It?

Under section 484 of the Tariff Act, 19 U.S.C. § 1484, the importer of record is responsible for using reasonable care to enter, classify and determine the value of imported merchandise and to provide any other information necessary to enable CBP to properly assess duties, collect accurate statistics, and determine whether other applicable legal requirements, if any, have been met.

In September 2017, CBP published an updated Reasonable Care Checklist to Include Forced Labor. In order for an importer to use reasonable care, it must answer these questions on Forced Labor:

Basic question: Have you taken reliable measures to ensure imported goods are not produced wholly or in part with convict labor, forced labor, and/or indentured labor (including forced or indentured child labor)?

1. Have you established reliable procedures to ensure you are not importing goods in violation of 19 U.S.C. § 1307 and 19 C.F.R. §§ 12.42-12.44?
2. Do you know how your goods are made, from raw materials to finished goods, by whom, where, and under what labor conditions?
3. Have you reviewed CBP’s "Forced Labor" webpage, which includes a list of active withhold release orders and findings, as well as forced labor fact sheets?
4. Have you reviewed the Department of Labor’s "List of Goods Produced by Child Labor or Forced Labor" to familiarize yourself with at-risk country and commodity combinations?
5. Have you obtained a "ruling" from CBP regarding the admissibility of your goods under 19 U.S.C. § 1307 (see 19 C.F.R. Part 177), and if so, have you established reliable procedures to ensure that you followed the ruling and brought it to CBP’s attention?
6. Have you established a reliable procedure of conducting periodic internal audits to check for forced labor in your supply chain?
7. Have you established a reliable procedure of having a third-party auditor familiar with evaluating forced labor risks conduct periodic, unannounced audits of your supply chain for forced labor?
8. Have your reviewed the International Labour Organization’s “Indicators of Forced Labour” booklet?
9. Do you vet new suppliers/vendors for forced labor risks through questionnaires or some other means?
10. Do your contracts with suppliers include terms that prohibit the use of forced labor, a time frame by which to take corrective action if forced labor is identified, and the consequences if corrective action is not taken, such as the termination of the contractual relationship?
11. Do you have a comprehensive and transparent social compliance system in place? Have you reviewed the Department of Labor’s “Comply Chain” webpage?
12. Have you developed a reliable program or procedure to maintain and produce any required customs entry documentation and supporting information?

What Actions Can CBP Take?

An importer that does not use reasonable care to avoid importing merchandise made with forced labor is subject to a Withhold Release Order or a CBP Form 28.

Withhold Release Order (WRO) CBP may issue a Withhold Release Order (WRO) pursuant to 19 C.F.R. § 12.42(e), which will exclude the imported merchandise from entry when information reasonably, but not conclusively, indicates that the merchandise meets the criteria in 19 U.S.C. § 1307.

• The importer must submit to the port director, within three months following the importation, a certificate of origin by the foreign seller or owner and a detailed statement demonstrating that the subject merchandise was not produced with forced labor.
• If the proof submitted does not establish the admissibility of the merchandise, or if none is provided, the merchandise is subject to seizure for a violation of 19 U.S.C. § 1307.
• The importer may export its merchandise to a location outside the United States within three months of the importation.
• If the importer fails to re-export the detained shipment or timely furnish the required certificate of origin and the detailed statement, the shipment will be excluded from entry.

CBP Form 28

A CBP Form 28 is also known as a “Request for Information,” and it requires the importer of record to respond, in writing, within thirty days from the date of the Request for Information. Usually, the response is signed and dated by a company official, typically a corporate officer or manager. By signing the response, the employee certifies that the statements made by the company are true and correct and may result in criminal prosecution against that person.

If CBP is not satisfied with the importer’s response to the Request for Information, CBP will then issue a CBP Form 29, otherwise known as a Notice of Action. Further, if the importer does not properly respond to the Notice of Action, CBP can then take further action. CBP may decide to seize future importation, or decide to issue a 1592 penalty. CBP will decide whether it believes the importer acted with negligence, gross negligence, or fraud when importing items manufactured with forced labor. CBP will then assess a penalty pursuant to 19 U.S.C. § 1592 in accordance with the level of the level of intent of the violation.

What Tools are Available to Help Importers Meet this New Obligation?

In an effort to facilitate importer’s compliance with reasonable care, CBP has released a Forced Labor – Importer Due Diligence Fact Sheet, a Forced Labor Procedures Fact Sheet, and a Force Labor Detained Shipments Fact Sheet. However, an expert’s opinion is always helpful. Therefore, if you need help with properly importing your merchandise and not violating the Trade Facilitation and Trade Enforcement Act of 2015 and ensuring that you are using reasonable care, contact us today at info@diaztradelaw.com or 305-456-3830 with any questions.