Date: Tuesday, August 23, 2022
Source: Sourcing Journal
A post-9/11 supply-chain program designed to improve U.S. border security is upgrading minimum requirements for forced labor from a “should” to a “must.”
Beginning in January, companies validated by the U.S. Customs and Border Protection’s Customs Trade Partnership Against Terrorism (CTPAT) security program, which offers shorter wait times at the border and fewer inspections, among other benefits, will have to show proof of a social compliance program that, at minimum, addresses how they ensure that goods imported into the United States were not mined, produced, or manufactured, wholly or in part, with modern slavery.
Those planning to join CTPAT’s trade compliance scheme, which makes more stringent demands in exchange for additional perks, such as enhanced data access and expedited rulings, will have to level up their forced-labor policies even more—and sooner. As of Aug. 1, Tier 2 and Tier 3 CTPAT members applying for the program will be required to present not only evidence of a social compliance program but also risk-based business mapping, codes of conduct, due-diligence training for suppliers, remediation plans and a way to share best practices.
Participation in CTPAT, now in its 20th year, is purely voluntary. Companies can bow out if they don’t want to comply with membership, though this means they’ll also miss out on the privileges that come with membership, said Angela Santos, who leads the forced-labor taskforce at ArentFox Schiff. Further details are expected down the pike next month, but if fashion importers haven’t already enacted measures to root out forced labor in their supply chain, they should certainly do so now.
“It’s certainly the trend, and it’s going to be required of all companies,” Santos said. “Fashion companies need to prepare, if they haven’t already.”
While Section 307 of the 1930 Tariff Act has always barred goods made with forced labor from reaching American shores, enforcement has ratcheted up since the passage of the Uyghur Forced Labour Protection Act (UFLPA), which essentially outlaws any products tied to persecuted Muslim minorities in the Xinjiang Uyghur Autonomous Region of China.
“These new forced labor requirements represent an important step in the government’s efforts to decrease forced labor in our supply chains,” Laura Murphy, professor of human rights and contemporary slavery at Sheffield Hallam University’s Helena Kennedy Centre for International Justice, told Sourcing Journal.
“For apparel companies to receive the benefits of reduced import scrutiny that CTPAT offers, they will now be responsible for mapping their risk of sourcing from the Uyghur region and other areas where forced labor has been identified,” she added. “Many companies will need to come to terms with the pervasiveness of Xinjiang cotton in our supply chains.”
Nicole Bivens Collinson, president of international trade and government relations at Sandler Travis & Rosenberg, said that most CTPAT companies should have “very good” compliance programs and will likely be able to meet the new requirements. So far it’s unclear if participation in CTPAT will result in extra incentives such as fewer reviews of shipments that might fall under a Withhold Release Order or eligibility for exceptions to the UFLPA’s “rebuttable presumption.”
The new requirements, however, appear to be part of a “global sea change” around supply-chain transparency. Gone are the days of mere zero-tolerance policies, said Justin Dillon, founder and CEO of FRDM (pronounced “freedom”), a San Francisco-based traceability platform.
Mapping, monitoring, and mitigating forced labor risk isn’t an event, but rather a process that improves with practice, he said, recommending that companies start with risk mapping their first-party spend data before building supply chain intelligence that leads to “empirical and meaningful” action.
“Mapping risk across their Tier 1 to 3 suppliers would be a great start,” he said. “Working with your suppliers is absolutely key here. Overwhelming suppliers with onerous questionnaires will not produce the intelligence Customs and Border Protection is interested in. They need big data intelligence and proof of risk.”
Companies will need to up their data game, added Mark Burstein, industry principal at Logility, an Atlanta-based traceability platform, noting that this isn’t something you can do on Excel spreadsheets.
“I don’t think you can do this with a bunch of siloed systems,” he said. “It’s going to require a comprehensive evaluation of all of this data that’s dispersed throughout the world. How do you collect it? How do you format it and how do you report on it?”
A ‘crime against humanity’
The new guidelines are swirling as a long-awaited report said Tuesday that it was “reasonable to conclude” that forced labor was taking place among Uyghur, Kazakh and other ethnic minorities in sectors such as agriculture and manufacturing.
“While these programs may create employment opportunities for minorities and enhance their incomes, as claimed by the government, the special rapporteur considers that indicators of forced labor pointing to the involuntary nature of work rendered by affected communities have been present in many cases,” wrote Tomoya Obokata, the United Nations special rapporteur on contemporary forms of slavery.
Obokata said that the “nature and extent of powers” exercised over affected workers, including excessive surveillance, abusive living and working conditions, restriction of movement through internment, threats, physical and/or sexual violence and other inhuman or degrading treatment, could amount to “enslavement as a crime against humanity, meriting a further independent analysis.”
The 20-page paper described two “distinct” state-mandated systems: a vocational skills education and training center system, where minorities are “detained and subjected” to work placements, and a poverty alleviation through labor transfer system, where surplus rural laborers are transferred into secondary or tertiary sector work.
China’s foreign ministry spokesperson Wang Wenbin hit out at the report at a press briefing on Wednesday, calling it an effort to “smear and denigrate” the nation. He also said that there has never been forced labor in Xinjiang.
“The Chinese government follows a people-centered development philosophy and attaches great importance to protecting the rights and interests of workers,” Wang said. “We protect the equal right of workers from all ethnic groups to seek employment, to participate in economic and social life, and to share the dividends of socioeconomic progress. Some forces manipulate Xinjiang-related issues and fabricated the disinformation on forced labor in Xinjiang. In essence, they are using human rights as a pretext to undermine Xinjiang’s prosperity and stability and contain China’s development and revitalization. Their scheme will never succeed.”
Last week, China signed documents confirming its ratification of two International Labour Organization (ILO) treaties on forced labor, bringing its total number of ratified conventions to 28.
Convention No. 29 bans the use of forced labor in all its forms and requires state parties to make such practices punishable as a penal offense, while Convention No. 105 calls for the immediate abolition of compulsory labor as a means of political coercion, education, punishment, economic development or discrimination.
“We welcome the ratification by China of these two ILO fundamental conventions on forced labor which aim to suppress the use of forced or compulsory labor in all its forms, including as a means of racial, social, national or religious discrimination,” said ILO director-general Guy Ryder. “This is a crucial opportunity to promote renewed momentum and further efforts by the government and the social partners in China to combat forced labor and support human-centered development and decent work in the second largest economy in the world.”
Human-rights campaigners are less convinced. In April, the Coalition to End Forced Labour in the Uyghur Region, whose roster includes Anti-Slavery International, the Clean Clothes Campaign, the Uyghur Human Rights Project and the Worker Rights Consortium, said it was “deeply concerned” that Beijing will use convention ratifications to “appear to be taking a firm stance on forced labor, while continuing to operate the largest mobilization of forced labor in the world today—one based on religion and ethnicity.
“Indeed, the government of China continues to deny the fact of widespread and systematic forced labor in the Uyghur region and in factories across China employing forced labor transfers from the Uyghur region,” the coalition wrote on its website. “The ratification of these two conventions will be meaningless if the government of China does not work to immediately cease the exaction of forced labor throughout the country.”