Section 307 Enforcement and Your Compliance Program

Hello again. This is George Thompson. Today we’re going to revisit a topic we covered in a couple of recent video discussions, Section 307 of the Tariff Act. This is the statute prohibiting U.S. imports of products made with forced or slave labor. It’s enforced by Customs and Border Protection, and that agency recently issued a couple of additional findings. These provide useful guidance on the criteria CBP uses to make its determinations, and therefore the points that U.S. importers and their foreign suppliers should address in a compliance program.

First, CBP issued a Withhold Release Order against a Malaysian company called YTY Group, a supplier of disposable gloves. After investigating the company’s manufacturing operation, CBP found information that reasonably indicates the use of forced labor. In particular, the agency identified seven of the International Labour Organization’s eleven indicators of forced labor, namely: abuse of vulnerability, deception, retention of identity documents, intimidation and threats, debt bondage, abusive working and living conditions, and excessive overtime. The resulting Withhold Release order means that entries of the company’s products will be withheld by CBP.

Second, the agency made two additional forced labor findings, one for a Malaysian palm oil company and the other for a Vietnamese fishing vessel. Once again, CBP used the ILO’s forced labor indicators as the standard. It found that all eleven were present. In addition to the ones that I previously mentioned, these include restriction of movement, isolation, physical and sexual violence and withholding of wages.

What CBP is telling us is that the eleven ILO criteria provide a template to evaluate whether forced labor is taking place. A U.S. importer’s compliance program must address them, and I think requires affirmative information that factors in an audit or questionnaire is the starting point.

Keep in mind that the use of forced labor in making materials or components for end-products means those end-products, too, are subject to exclusion from the United States.

Products covered by these findings are subject to seizure by CBP. This means that foreign suppliers, too, must implement a compliance program. Even if the end product’s manufacturer is clean as a whistle, its products could be tainted if any of its suppliers aren’t.

I expect more enforcement of the forced labor requirements, especially once implementation of the Uyghur Forced Labor Prevention Act gets underway. So, it’s a word to the wise to take this seriously.

Thank you for listening.