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Efforts Advance to Combat Trade in Goods Made with Forced Labour

As part of an on-going effort to reduce trade in goods made with forced labour, the United Nations Security Council voted recently to require UN members to send all North Korean nationals earning income in their jurisdictions back to North Korea by 22 December 2019. In the interim, however, countries will be able to continue to employ North Korean workers, which could pose headaches for U.S. companies sourcing abroad in light of restrictive U.S. laws.

U.S. law prohibits the importation of goods mined, produced or manufactured, wholly or in part, in any foreign country by forced or indentured labour, including forced child labour. Effective 1 March 2016, the Trade Facilitation and Trade Enforcement Act closed a loophole in this law that had allowed imports of certain forced labour-produced goods if there was insufficient domestic production to meet consumptive demands. When information reasonably but not conclusively indicates that imported goods were made with forced labour, CBP may issue withhold release orders requiring such goods attempting to enter at U.S. ports to be detained for review rather than subject to post-release review.

The Countering America’s Adversaries Through Sanctions Act enacted in 2017 created a presumption that goods produced in whole or in part by North Korean nationals or citizens anywhere in the world are forced labour goods and are thus prohibited from entry into the United States. This law places the burden on importers to prove either that no North Korean nationals were involved in the production of their imported goods or that any North Korean nationals employed by the producer are not forced laborers.

Prompted in part by reports of North Koreans working in the apparel, seafood and other industries in mainland China, Poland, Mexico, Russia and other locations, CBP has not only started detaining shipments but is also sending importers requests for information about their efforts to ensure their supply chains are free from forced labour, including labour performed by North Koreans. Among other things, CBP is asking importers to provide information on their due diligence programmes, contact information for manufacturers at all levels of their supply chains and copies of any forced labour audits, including findings and recommendations.

The recent UN Security Council resolution requires UN members to repatriate all North Korean nationals earning income within their jurisdictions, as well as all North Korean government safety oversight attachés monitoring those workers, within two years. While foreign producers may thus continue to use North Korean workers during this period, that could pose a problem for U.S. importers sourcing abroad in light of CAATSA. As a result, to avoid lengthy import delays U.S. importers are advised to update their practices, procedures and documents to address forced labour and the nationality of workers with respect to not only immediate vendors but also suppliers of materials further back in the supply chain.

Content provided by Picture: HKTDC Research
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