ILMA Compoundings March 2018 - 14

INDUSTRY RUNDOWN

International Insight
The Tide Has Turned
US toughens enforcement of forced-labor imports ban
By James Eggenschwiler
The subject of forced-labor import bans is technically
not new. It has been around for more than 85 years,
beginning with the Tariff Act of 1930. But in real terms,
this is a new day for importers. Congress began its work
in early 2016, removing market-based rationale that has
been traditionally used to prevent enforcement. Then
last fall, the Legislature cut its teeth by empowering the
U.S. Customs and Border Protection (CBP) to establish
presumptions concerning use of forced labor that must
be effectively disproven by the importer. At stake - total
loss of the imported goods, plus penalties.
CONTRAST WITH THE PAST
Up to now, importers had a legal duty to avoid the importation of commodities manufactured in whole or in part
by "forced labor" (discussed later in more detail), but the
burden was on the government to first establish that forced
labor was likely involved by demonstrating that a particular
exporter actually engaged in such practices. Absent a strong
government evidentiary dossier, the State Department
attaché contacted the importer to advise that a case file has
been opened and investigation is ongoing, but the call or
visit would seldom go beyond a request for diligence and
assistance by the importer. CBP remained silent.
In cases where sufficient evidence was found to establish
a foreign exporter's use of forced labor, CBP would suspend
the import and allow the importer to present its argument
that the forced-labor prohibition should be set aside because
of compelling market circumstances. The circumstances
offered by importers, with tremendous success, typically
involved the U.S. and other competitive market dynamics that would negatively affect the importer (and other
industry participants) if the import was disallowed. Rarely
did an import entry become blocked. Even fewer penalties
were actually issued by CBP. The evidentiary standard that
was imposed on the State Department and CBP was high

14

MARCH 2018

| COMPOUNDINGS | ILMA.ORG

enough, and the market-based exceptions were easy enough
to assert, that CBP seldom made the attempt.
'FORCED LABOR' DEFINED AND DETERMINED
The definition of what constitutes "forced labor" has expanded as well. It began as an emphasis on compelled child labor,
then grew over time to include prison labor and egregious
forms of slave labor. Now, as the result of congressional
action, the definition is far broader. On one hand, the definition itself has been expanded to include less formal types of
involuntary servitude, all manner of human trafficking and its
implications, and (to some extent) oppressive circumstances
involving refugees and other similarly situated individuals.
On the other hand, the evidence required to establish
forced-labor involvement with an import transaction
has been significantly relaxed, so much so that a growing
number of situations are giving rise to a presumption of
forced-labor involvement, without specific details. For
instance, it is easy to foresee that commodities whose origin
includes known and emerging conflict zones will be given
the same status.

Now, as the result of congressional action, the definition
of forced labor is far broader."
This is in addition to a statutory presumption created in
August 2017, which specifies that all commodities made by
North Korean laborers, regardless of location, are presumed
made with forced labor and subject to the import ban.
Another important shift is that now CBP has the ability
to determine the circumstances that constitute forced labor.
Although experience with the new approach is in its infancy,
this attribute, combined with the redefinition of "forced labor," has already made its mark, as will be discussed further.


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Table of Contents for the Digital Edition of ILMA Compoundings March 2018

LETTER FROM THE CEO
INSIDE ILMA
WHAT’S COMING UP
INDUSTRY RUNDOWN
In the Know
International Insight
Market Report
IS A JOINT VENTURE THE ANSWER?
WHERE’S YOUR INVENTORY?
SPEAKING YOUR LANGUAGE
BUSINESS HUB
COUNSEL COMPOUND
WASHINGTON LANDSCAPE
IN NETWORK
Member Connections
Cross Connections
PORTRAIT
ILMA Compoundings March 2018 - Cover1
ILMA Compoundings March 2018 - Cover2
ILMA Compoundings March 2018 - 1
ILMA Compoundings March 2018 - 2
ILMA Compoundings March 2018 - LETTER FROM THE CEO
ILMA Compoundings March 2018 - INSIDE ILMA
ILMA Compoundings March 2018 - 5
ILMA Compoundings March 2018 - 6
ILMA Compoundings March 2018 - 7
ILMA Compoundings March 2018 - 8
ILMA Compoundings March 2018 - 9
ILMA Compoundings March 2018 - WHAT’S COMING UP
ILMA Compoundings March 2018 - 11
ILMA Compoundings March 2018 - INDUSTRY RUNDOWN
ILMA Compoundings March 2018 - In the Know
ILMA Compoundings March 2018 - International Insight
ILMA Compoundings March 2018 - 15
ILMA Compoundings March 2018 - 16
ILMA Compoundings March 2018 - 17
ILMA Compoundings March 2018 - Market Report
ILMA Compoundings March 2018 - 19
ILMA Compoundings March 2018 - IS A JOINT VENTURE THE ANSWER?
ILMA Compoundings March 2018 - 21
ILMA Compoundings March 2018 - 22
ILMA Compoundings March 2018 - 23
ILMA Compoundings March 2018 - WHERE’S YOUR INVENTORY?
ILMA Compoundings March 2018 - 25
ILMA Compoundings March 2018 - 26
ILMA Compoundings March 2018 - 27
ILMA Compoundings March 2018 - 28
ILMA Compoundings March 2018 - 29
ILMA Compoundings March 2018 - SPEAKING YOUR LANGUAGE
ILMA Compoundings March 2018 - 31
ILMA Compoundings March 2018 - 32
ILMA Compoundings March 2018 - 33
ILMA Compoundings March 2018 - BUSINESS HUB
ILMA Compoundings March 2018 - 35
ILMA Compoundings March 2018 - COUNSEL COMPOUND
ILMA Compoundings March 2018 - 37
ILMA Compoundings March 2018 - 38
ILMA Compoundings March 2018 - WASHINGTON LANDSCAPE
ILMA Compoundings March 2018 - Member Connections
ILMA Compoundings March 2018 - 41
ILMA Compoundings March 2018 - Cross Connections
ILMA Compoundings March 2018 - 43
ILMA Compoundings March 2018 - PORTRAIT
ILMA Compoundings March 2018 - Cover3
ILMA Compoundings March 2018 - Cover4
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