Follow up # 2 on US CBP forced labor seizures

Just a quick entry here, to give an update on some new developments on this subject, since my first two posts:

First post on forced labor

Second post on forced labor

Since those posts, a couple key developments tell me this is a story that has yet to be fully told.

First, on July 27, CBP Commissioner Kerlikowske raised the matter in his opening remarks to the Commercial Customs Operations Advisory Committee (COAC)[i]:

“And as you know, enforcement of the nation’s trade laws is a core mission for CBP, and I want to announce the new Forced Labor Working Group focusing on this key enforcement priority.

Following the Custom’s Bill’s repeal of the “consumptive demand” loophole, we have been working with industry, civil society organizations, and others to rigorously enforce the law and prevent the import of goods made with forced, convict, or child labor into the United States.”

He further went on to say:

“The role of industry in this issue is clear, and we must work closely with importers, brokers, and companies who want to do the right thing to clarify standards for their supply chains.”

I find this second statement very interesting. Is this hinting at a trusted trader type strategy? Perhaps a CTPAT type model, but targeting forced labor in supply chains? How about CTPAFL? No, to many letters…. Regardless of my conspiracy theories, this is just further evidence that CBP has no intention of dropping the matter, whatever their future plans are exactly.

Another development comes from the private business side. Recently Descartes’ SPL division “Descartes MK Denied Party Screening” added a new list type to their offering, called “Customs and Border Protection Forced Labor”.  They explain the list as: “The manufacturers listed have Withhold Release Orders (WRO) issued by the Commissioner”.

Descartes MK is a leader in the generation of SPL content[ii] for automation, such as in SAP GTS, and their inclusion of this content is a good indication that we can expect to see the list grow.

I’ll keep checking in on this subject, and I encourage anyone reading this to start the process of a supply chain review for forced labor. As I mentioned in my last post on the subject, there are other good reasons to do so.

P.S.: I’m a little surprised that Descartes called the list “… Forced Labor”. I was really hoping to see “… Forced LaboUr” from a Canadian company, eh! Ok. If you’re not Canadian, you probably didn’t get that one….

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[i] https://www.cbp.gov/newsroom/speeches-and-statements/2016-07-27-000000/commissioner-kerlikowske%E2%80%99s-opening-remarks

[ii] https://www.descartes.com/documents/descartes-mk-denied-party-screening-list-offerings

Import controls on products produced with forced labor: a developing story

Most professionals involved in international trade compliance in the USA have heard of the recent Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), signed by President Obama on February 24, 2016. There was significant coverage of this both within our industry and outside of it, no doubt helped by the incredible coverage of the Republican and Democratic primaries. Some of the clauses in this act have been covered well, such as:

• The increase from $200 to $800 for Section 321 clearances
• Changes to the US Goods Returned program
• Minimum standards for Customs Brokers
• Changes to Duty Drawback procedures
• Etc.….

One aspect of this bill that has not been discussed as much, is the repeal of an old law called the “Consumptive Demand” clause. This clause was found in 19 U.S.C. § 1307[i] until the TFTEA repealed it.

What does this mean exactly?

The hidden lesson in OFAC guidance on “false hit lists”

http://www.treasury.gov/resource-center/sanctions/OFAC-Enforcement/Pages/20151021.aspx

A recent OFAC press release, and guidance document, offers some good advice, but also risks misleading readers. A careful read of the case and guidance will reveal a hidden lesson to be learned. At first glance, the guidance simply reminds companies to ensure their SPL lists are updated and reviewed, and most readers will come away satisfied that they are compliant.  A primary message in the guidance refers to what they call “false hit lists”, and reminds readers to ensure entities on that list are reviewed as regulations change. Upon a deeper look, however, this Finding of Violation contains another lesson, one that may surprise readers and give them reason to review their compliance program. Before we explain that statement, let’s take a good look at the finding, and the guidance.