Supply Chain Transparency Laws

Supply chain transparency laws are not ends to themselves. They are intended to inform the public, hold companies accountable, and make regulatory action more likely.  The United States has been increasingly active in sanctioning governments who fail to act or are themselves culpable by blocking companies and products from the U.S. market.  In 2016, changes to United States customs enforcement laws provided new avenues1  to prevent the importation of slavery-tainted goods into the country. 

The Tariff Act operates through the mechanism of a “withhold release order,” (WRO) through which U.S. Customs prohibits the goods entering into the United States.  WROs are issued when there is reasonable suspicion to believe the goods are made by forced labor, prison labor, or forced child labor.  WROs can be lifted once U.S. Customs is satisfied that the company has taken remedial measures in its supply chain. Issuing WROs is a relatively new activity for the U.S. Government, but the reach of the affected goods has to date been broad, ranging from agricultural commodities to minerals, from personal protective equipment to fish. Important precursor chemicals such as soda ash and potassium nitrate have also been barred entry. 

In assessing the flow of slave-made goods in international commerce, major economies are increasingly paying attention to the role of governments, whether as actively participating in forced labor, failing to adequately protect workers from exploitation, or pursuing policies that facilitate exploitation.  Accordingly, if goods or services are obtained or maintained through coercive force, it does not matter if a particular practice is legal in a country, such as holding workers’ passports, using political prisoners’ labor, or allowing child labor– the resulting goods are services are considered tainted by slavery nonetheless. Compliance with the least stringent legal standard in a developing or autocratic country will not shield a company from liability in the globalized world.2