Tariff Act Strengthened, But Will Enforcement Follow?

The United States Senate passed legislation last week (The Trade Facilitation and Trade Enforcement Act of 2015) that will make it easier to prevent goods made with forced labor from being imported into the United States. President Obama is expected to sign the bill into law soon. 

The new law closes a long-standing loophole in Section 307 of the Tariff Act of 1930, which prohibits the importation of merchandise mined, produced or manufactured, wholly or in part, in any foreign country by forced labor.  But Section 307 also contained an exemption that allowed goods made with forced labor to continue to be imported into the United States if there was insufficient domestic production to meet internal demand. In short, if U.S. producers couldn’t satisfy consumer demand, forced labor concerns weren’t enough to keep us from importing it.

The closing of the so-called “consumptive demand loophole” is a major victory for advocates seeking to end the thriving international trade in goods made with forms of modern day slavery.  Eliminating the loophole means goods commonly known to be at a high risk of being produced with forced labor, including cocoa from farms in West Africa, palm oil from Malaysia, and seafood from Thailand, are now open to challenge for exclusion from the U.S. market under Section 307. 

Just as importantly, the legislation also requires the Commissioner of the U.S. Customs and Border Protection (CBP) to file an annual report with Congress disclosing how many times in the previous year goods made with forced labor were denied entry to U.S. market under Section 307. The report will deliver a long overdue measure of transparency and accountability to prod the agency to step up its historically weak enforcement efforts.  In the past twenty years, CBP has been extremely reluctant to use its power to stop forced labor goods at the port by issuing formal detention or exclusion orders. The last publically reported detention of goods under Section 307 occurred in the year 2000. 

ILRF has learned first-hand about Customs and Border Patrol’s reluctance to use its power to exclude forced labor goods under Section 307.  In 2013, ILRF filed a petition with CBP seeking the enforcement of Section 307 of the Tariff Act to prevent the importation of goods made with cotton from Uzbekistan. The case for excluding cotton from Uzbekistan is a particularly strong one because it is produced in a closed, state-run system.  All cotton from Uzbekistan, regardless of which particular farm it comes from, is produced with the forced labor of Uzbek citizens.

Despite the strength of the petition, CBP never issued a detention order and refused to share any information regarding its investigation or if any enforcement measures have been taken.  In response to a Freedom of Information Act (FOIA) request filed by ILRF, the agency declined to share any information about the Uzbek cotton case, citing a FOIA exemption for “ongoing law enforcement investigations.”

The closing of the consumptive demand loophole is a major step forward, but more work remains to transform the Tariff Act into an effective tool in the fight against trade in forced labor goods.  Advocates should call on CBP and Congress to take further steps to strengthen Section 307, including:

  • Establish an Office for Labor Enforcement within the U.S. Immigration and Customs Enforcement Agency of the Department of Homeland Security to coordinate enforcement of the prohibition on importing goods made with forced labor under section 307 of the Tariff Act of 1930.
  • Require U.S. Customs and Border Protection to maintain and regularly update a public web page containing basic information regarding its enforcement efforts under Section 307, including a list of all active petitions and investigations, goods targeted, countries involved, and whether CBP has denied entry to any goods related to the investigation.     
  • Expand CBPs existing authority to include the ability to issue detention orders that cover regions or industries within countries where forced labor is widespread.  Currently enforcement is limited to the enterprise level: petitioners must prove that forced labor is taking place on a particular factory or farm and trace the tainted product to a particular shipment entering a U.S. port. This makes enforcement of Section 307 nearly impossible with many agricultural goods, where products from many farms are comingled before being processed and shipped to the U.S. market.