New U.S. Legislation Closes Loophole, Banning Forced Labour Imports

On 24 February 2016 President Obama signed into law the Trade Facilitation and Trade Enforcement Act of 2015. The comprehensive, bipartisan legislation is expected to have wide-reaching impacts on U.S. companies that use foreign suppliers—and represents the latest push in the global effort to promote supply chain transparency.

The law aims to strengthen U.S. efforts to enforce its trade laws, promote legitimate trade, and modernize U.S. Customs and Border Protection (CBP). And it closes a long-standing loophole that previously permitted some imports derived from forced labour into the country.

Although usually illegal to import foreign-made goods manufactured or produced by forced labour, a provision known as the “consumptive demand exception” to the Tariff Act of 1930 (19 U.S.C. § 1307), a Depression era law, had permitted the importation of some goods likely to have been produced with forced labour when there was insufficient supply to meet domestic demand.

The relevant language reads:

“[a]ll goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict labour or/and forced labour or/and indentured labour under penal sanctions shall not be entitled to entry at any of the ports of the United States, and the importation thereof is hereby prohibited…but in no case shall such provisions be applicable to goods, wares, articles or merchandise so mined, produced, or manufactured which are not mined, produced, or manufactured in such quantities in the United States as to meet the consumptive demands of the United States."

The Trade Facilitation and Trade Enforcement Act strikes the italicized language from the Tariff Act and requires the Commissioner of the CBP to file annual reports with Congress on compliance efforts. The CBP is expected to pursue enforcement more vigorously and to apply stiffer penalties in instances of noncompliance. The law also mandates the CBP Commissioner and Director of U.S. Immigration and Customs Enforcement (ICE), which enforces federal laws governing border control, customs, trade and immigration, to regularly educate agency personnel on opportunities to enhance the enforcement of child labour laws.

U.S. businesses and importers, particularly those that use foreign suppliers, should take note.

A link to the law can be found here.