New Anti-Trafficking Legislation May Spur Closer Look at Manufacturers’ Supply Chains

On September 26, the Senate Committee on Foreign Relations approved the Frederick Douglass Trafficking Victims Prevention and Protection Reauthorization Act of 2018 (H.R. 2200).  The bill would reauthorize the Trafficking Victims Protection Act of 2000.  In July 2017, the House passed its version of H.R. 2200.

Of potential consequence for companies, Section 133 of H.R. 2200 would enhance the List of Goods Produced by Child Labor or Forced Labor that is issued and updated periodically by the  Department of Labor’s International Labor Affairs Bureau (ILAB).  The Trafficking Victims Protection Reauthorization Act of 2005 requires ILAB to maintain a list of goods and their source countries that the agency has reason to believe are produced by child labor or forced labor in violation of international human rights standards.  Section 133 would require the List to also include “to the extent practicable, goods that are produced with inputs that are produced with forced labor or child labor” [emphasis added].

ILAB currently places goods on the List at the stage of production at which the agency determines that there is reason to believe child labor or forced labor was involved.  If, for example, there was reason to believe that child labor or forced labor was used in the extraction, harvesting, or production of raw materials or component articles and these materials or articles are subsequently used as inputs in the manufacture or processing of final goods under non-violative conditions, only the raw materials or component articles are included on the List and only for those countries where they were extracted, harvested, or produced.  If child labor or forced labor was used in both the production or extraction of raw materials or component articles and the manufacture or processing of final goods, the raw materials or component articles and the final goods are included on the List for those countries where the violative conditions were found.

The 2018 edition of the List covers 148 goods in 76 countries.  This latest edition includes several new goods produced by forced labor, such as peppers and poppies from Mexico, and bricks and timber from Russia; and goods that were produced by child labor, such as mica from India, cocoa from Brazil, and garments from Turkey.

The ILAB List is not intended to be punitive and carries no direct legal risks.  U.S. manufacturers are encouraged to use the List as a reference tool for carrying out human rights risk assessments and due diligence/mapping exercises in their global supply chains, designing effective monitoring mechanisms, and strategic plans for remediating any violations.  The Department of Labor has pointed out that the List can also help ensure U.S. companies do not face unfair competition from their international counterparts operating under less stringent labor and human rights regimes.

However, the legislation’s changes to the current law definition of “goods” produced by child/forced labor and any concomitant augmentation of the current List may make due diligence efforts more complex.  Furthermore, if the changes lead to more specific levels of reporting on goods, the new List could provide human rights groups and public interest advocates with greater leverage to press companies on their supply chain obligations and expectations.  Ultimately, the vaguely-defined terms “inputs” and “extent practicable” in Section 133 may necessitate clarifications in procedural guidances promulgated by the Department of Labor once H.R. 2200 becomes law.  In developing such guidances, regulators would be expected to first consult with relevant stakeholders, including manufacturers of goods.

Looking towards a possible legislative path, the House and Senate versions of Section 133 are virtually the same.  Moreover, a comparison of the two versions in their entirety reveals that they are not substantially dissimilar, suggesting that a final effort by lawmaker to reconcile differences is not likely to be protracted.  It is therefore reasonable to expect that Congress would be able to pass a final bill before the 115th Congress completes its legislative work in mid-December.

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