26th April 2021
Jennifer Diaz and Denise Calle, Diaz Trade Law
Importers not adequately auditing their supply chains for use of forced labor are at risk of administrative and criminal enforcement. Imported merchandise produced with forced labor is subject to the Department of Homeland Security (DHS) enforcement. Find out more in this article by MSI's specialist member Diaz Trade Law (Miami), which was originally published in Bloomberg Law.
Such enforcement includes U.S. Customs and Border Protection’s (CBP) right to detain, exclude, and/or seize imported goods and Homeland Security Investigation’s potential criminal investigation. This article provides an overview of CBP’s current enforcement environment in targeting and combatting the use of forced labor, practitioner’s tips to avoid the use of forced labor, and tips on how to best defend against CBP enforcement actions.
Currently, forced labor is the third most lucrative illicit trade, behind only drugs and weapons, and has an annual trade value of roughly $150 billion. In 2020, over 40 million people around the world were victims of some type of forced labor, including modern slavery and human trafficking.
Previously, under the “consumptive demand” clause in Section 307 of the Tariff Act of 1930, the U.S. effectively allowed for the importation of goods that had been partially produced by forced labor. However, since the enactment of the Trade Facilitation and Trade Enforcement Act of 2015, which eliminated the “consumptive demand” clause, DHS and its enforcement agencies have been greatly increasing measures to combat forced labor.
Section 307 of the Tariff Act of 1930 (19 U.S.C. 1307) prohibits the importation of all goods and merchandise mined, produced, or manufactured wholly or in part in any foreign country by forced labor, convict labor, and/or indentured labor under penal sanctions, including forced child labor.
CBP combats import risks, detects high-risk activity, deters non-compliance, disrupts fraudulent behavior, and thoroughly investigates allegations of forced labor. CBP’s Forced Labor Division, established in 2017 within the Office of Trade, leads enforcement of the prohibition against importing goods made with forced labor. The division actively works to curb the illicit practice by examining various supply and investigating allegations of forced labor around the globe.
According to CBP, the agency does not target whole product lines or industries, rather it focuses on information regarding specific actors and their merchandise based on allegations received from industry and other sources, including CBP’s Eallegation Portal. The agency acts on information concerning specific manufacturers/exporters and specific merchandise.Allegations may be reported anonymously.
The more detailed and timelier the information that is provided, the more likely the enforcement action can be successful. As an incentive for the trade community to assist, CBP will compensate parties that provide original information that leads to the recovery of any penalty, fine, or forfeiture of merchandise. The parties are eligible to seek compensation of up to $250,000, under 19 U.S.C. § 1619.
Read the full article on ‘ U.S. customs targets use of forced labor’
Diaz Trade Law is a leading Customs and International Trade Law firm. The firm’s diverse team of highly-experienced attorneys provide counsel on every aspect of U.S. federal import/export requirements, from resolving crucial issues, to developing compliance programs.
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