On Wednesday, July 21st, 2021 GLJ-ILRF’s Executive Director, JJ Rosenbaum testified at the Subcommittee on Trade of the U.S. House Committee on Ways and Means’s hearing to discuss innovative approaches to combat forced labor in global supply chains and how the U.S. government can strengthen enforcement & protect workers.

Other expert witnesses included Neha Misra, Global Lead of Migration and Human Trafficking at the Solidarity Center, Charity Ryerson, Executive Director of the Corporate Accountability Lab, Genevieve LeBaron, Professor of Politics at the University of Sheffield, and Brian Lowry, Senior Vice President of Innovation, Regulation, and Trade at the United States Council for International Business.

You can watch the full hearing here, and read the testimony submitted by GLJ-ILRF below:

 

Testimony of

Jennifer (JJ) Rosenbaum, JD

Executive Director

Global Labor Justice - International Labor Rights Forum

Before the House Committee on Ways and Means

Subcommittee on Trade

U.S. House of Representatives

Presented at a hearing titled:

The Global Challenge of Forced Labor in Supply Chains:

Strengthening Enforcement and Protecting Workers

Wednesday, July 21, 2021

Chairman Blumenauer, Ranking Member Buchanan, members of the Committee on Ways and Means Subcommittee on Trade, thank you for the opportunity to testify on the challenge of forced labor in global supply chains and how to strengthen enforcement and protect workers.  

Global Labor Justice-International Labor Rights Forum is a non-governmental organization whose mission includes both exposing forced labor and strengthening accountability for it – as well as promoting its antidote: worker empowerment, including freedom of association and assembly as well as the rights to organize and to collective bargaining.

Globally, we work to hold corporations and investors accountable for labor rights violations in their supply chains, to advocate for policies and laws that prevent forced labor and protect decent work and just migration, and to strengthen freedom of association, new forms of bargaining, and worker organizations.

According to the International Labor Organization’s 2016 (pre-pandemic) figures, 25 million workers are subjected to forced labor worldwide, 16 million in the private sector and 4.1 million in state-sponsored forced labor.[1] Initial research in fashion supply chains suggests that since the beginning of the pandemic, income loss, wage-abuses, and deteriorating working conditions pushed many workers closer to and likely into forced labor.[2] Forced labor is not an aberration or the choices of a few bad actors. It is a consequence of structural business models, governance gaps, and a lack of enforcement of laws that protect worker rights and enable worker and civil society organizations.  And forced labor occurs at the extreme end of a spectrum of labor abuses.  Prevention efforts should therefore be matched with the promotion of labor rights and workplace democracy.   

 

While the significant reliance of multinational corporations producing solar technology and fashion on components produced with forced labor in the Xinjiang Uyghur Autonomous Region (“Uyghur Region”) has brought new urgency and attention to the problem, forced labor and a spectrum of labor exploitation are endemic in modern global supply chains across sectors and geographies. Forced labor is the predictable consequence of business models that profit from exploitation, a system of labor governance that allows corporations to police their own behavior through weak or voluntary corporate social responsibility (CSR) initiatives, discriminatory legal frameworks, and deeply entrenched power imbalances between workers and employers.

Section 307 of the Tariff Act of 1930 and Forced Labor

For ninety years, Section 307 of the U.S. Tariff Act has prohibited the import into the United States of any product mined, produced, or manufactured, wholly or in part, by forced labor, including forced or indentured child labor. Since the closing of the “consumptive demand” loophole in 2016, U.S. Customs and Border Protection (CBP) has issued over 30 Withhold Release Orders (WROs) concerning the importation of a range of goods made with forced labor or forced child labor around the world.[3] Among these, a few WROs have implicated entire product lines – tobacco from Malawi, artisanal gold from the Democratic Republic of Congo (DRC) and cotton from Turkmenistan. A few other WROs, although targeted at specific producers, have potentially far-reaching impacts, including the recent WRO against palm oil and palm oil products produced by FGV Holding Berhad and subsidiaries (Malaysia), a joint venture of Procter & Gamble.

Notably, the U.S. government has taken significant action to address forced labor in the Uyghur Region using WROs as a key policy instrument. Starting in September 2020, CBP issued a series of WROs concerning the importation of goods from specific entities, followed by broader WROs targeting all cotton and tomato products from the region. In June 2021, an additional WRO was issued on silica-based products made by Hoshine Silicon Industry Co. and its subsidiaries, the world’s largest metallurgical-grade silicon producer and a critical part of the supply chain that supplies polysilicon to the solar module manufacturers with the world’s largest market share. Acting with a whole of government approach, the U.S. Department of Labor, U.S. Department of State, U.S. Department of the Treasury, U.S. Department of Commerce, U.S. Department of Homeland Security, and the Office of the U.S. Trade Representative issued a joint Xinjiang Supply Chain Business Advisory offering a model of coordination for future efforts.[4]

While U.S. Customs and Border Protection’s expanded use of WROs since 2016 shows some promise in keeping products made with forced labor out of U.S. consumer markets and incentivizing better supply chain accountability for multinational corporations, there are clear gaps that have undermined Section 307’s effectiveness as a tool to curb forced labor.[5] Several examples from our work illustrate both the potential of Section 307 actions to effectively combat forced labor as well as areas that need to be strengthened.

WRO on Palm Oil Imported from FGV Holdings Berhad (FGV)

In August 2019, the International Labor Rights Forum (ILRF) along with organizations Sum of Us and Rainforest Action Network submitted a petition under Section 307 of the Tariff Act to stop the importation of palm oil and palm oil products manufactured by FGV Holdings Berhad — one of Malaysia’s largest palm oil companies and a joint venture partner and major palm oil supplier to Procter & Gamble.[6]

In 2013, Tomo, a then-32-year-old man trafficked with fifty others under false pretenses, told ILRF:[7]

I worked for a coconut plantation in my village and made enough money to meet my basic needs. The recruiter said that if I moved to work for the palm plantation, the company would provide me with everything I needed – even housing, water and electricity. He told me that on top of this I would be paid a monthly salary … All that Piet Jogo promised came to nothing … My life was much better in my home village than here … I want to take my family home, but we are trapped here unless I can earn enough money.

Palm oil is used in about fifty percent of all packaged goods. Our petition alleged rampant forced labor across FGV Holdings. A series of 2020 articles in the Associated Press expanded on these allegations and also detailed the gendered aspects of forced labor including extreme gender-based violence and harassment.[8]  

On September 30th, 2020, U.S. Customs and Border Protection (CBP) announced a ban on palm oil imported from FGV Holdings Berhad (FGV) due to its use of forced labor. When CBP issued the WRO against FGV, it noted that its decision came as “the result of a year-long investigation that revealed forced labor indicators including abuse of vulnerability, deception, restriction of movement, isolation, physical and sexual abuses, intimidation and threats, retention of identity documents, withholding of wages, debt bondage, abusive working and living conditions, and excessive overtime.” These constitute serious abuses that result from systemic abusive company practices that need to be reformed.

This ban on FGV’s palm oil is the first step in corporate accountability in an industry notorious for extreme labor exploitation. However, a lack of transparency on enforcement and recent public statements by FGV leave us concerned that some products with tainted palm oil may continue to reach the U.S. market, and that the WRO will be lifted before full remediation.

WRO on Cotton from Turkmenistan

Turkmenistan, one of the most closed and repressive countries[9] in the world, for decades has used government-imposed, systematic forced labor to harvest cotton. All cotton in Turkmenistan is produced within this forced labor system and Turkmenistan does not import cotton. Therefore, all cotton or cotton goods of Turkmen origin or containing Turkmen cotton are produced with forced labor. In 2016, ILRF and our partner organization submitted a petition[10] to exclude all cotton products made in Turkmenistan from the U.S. due to these abuses. CBP’s subsequent WRO, issued in May 2018, was, to our knowledge, the first such country or region-wide WRO to exclude an entire commodity. Although the ban was widely covered in the media and helped drive more than 135 multinational companies to sign a public commitment[11] not to use Turkmen cotton in their products, enforcement has been weak, with no known enforcement actions taken to date.

New reporting by our partners, Turkmen.news and the Turkmen Initiative for Human Rights, shows that in the 2020 harvest, the Turkmenistan government forced public sector employees, conscripts, and students to pick cotton and extorted money from citizens to fund the harvest.[12] Despite this ever-growing body of evidence, to this day it is possible to buy from major retailers in the U.S. cotton towels, bed linens, and other goods manufactured in Turkmenistan. In 2019, ILRF wrote publicly about the problem of e-commerce platforms Amazon, Walmart and eBay allowing third party sellers to sell forced labor goods from Turkmenistan on their sites and profiting from those sales.[13] Just a few months ago, we wrote to Wayfair and Overstock after finding dozens of Turkmen cotton products for sale on their sites. It is difficult to understand why the ban is not enforced even in these blatant cases, seriously undermining the effectiveness of WROs as a deterrent for importers.

WROs Concerning the Importation of Goods from Xinjiang

The complex and transnational nature of global supply chains presents significant traceability and enforcement challenges for CBP. CBP has limited capacity to enforce WROs on forced labor goods shipped from third countries or where raw materials or other inputs tainted with forced labor are blended with other material, as in cotton, seafood, and silica, or manufactured into finished goods and shipped from third countries. This has been a key challenge to enforcement of the WROs related to the Uyghur Region, where, even as CBP has stepped up deterrence of goods under the WRO, it remains focused on targeting direct imports from the region.

In conjunction with these measures, the U.S. can make better use of existing laws to raise the stakes for importers and companies that use or profit from forced labor. First, CBP should exercise its authorities to levy fines for imports produced with forced labor. In October last year, CBP issued its first and only fine in such a case, on a shipment of stevia powder made with prison labor in China, for which there was a WRO in place.[14] Stiff fines on importers whenever forced labor-tainted goods are seized would prompt companies to enact more meaningful due diligence and put real protections in place to prevent forced labor from entering their supply chains. CBP should also ensure that proceeds from fines support remedy to victims, including but not limited to, compensation to affected workers. Finally, CBP should make good on the promise of no safe harbor for forced labor goods by ceasing the practice of allowing importers to re-export goods detained in violation of a WRO, essentially allowing them to dump forced labor-tainted goods in markets with weaker import protections.

WROs Concerning the Importation of Seafood from Fishing Vessels

Between 2019 and 2021, WROs were issued on four fishing vessels in Taiwan’s distant water fleet^[15] and for the first time, one on an entire Chinese fishing fleet[16] for suspected forced labor. These Taiwanese-owned or flagged vessels were known to supply to FCF Co. Ltd., one of the largest seafood traders in the world and parent company of U.S.-based Bumble Bee Foods.^[17] These WROs, together with the U.S. Department of Labor decision to add Taiwan to its List of Goods Produced by Child Labor or Forced Labor for Taiwan-caught fish,^[18] helped demonstrate that the abuses were systemic and widespread and provided a warning to the American public that tuna and other seafood products are at high risk of being produced by forced labor. However, GLJ-ILRF’s research shows continued forced labor conditions in the industry in both Taiwan[19] and Thailand.[20] While the 2021 TIP report downgraded Thailand to Tier 2 Watch List,[21] Taiwan disappointingly retained its higher-level Tier 1 ranking.[22]

Enforcement Recommendations to Strengthen Effectiveness of Section 307 Actions

GLJ-ILRF is also a member of the Tariff Act Advisory Group (TAAG), a coalition of non-governmental organizations dedicated to effective enforcement from a worker perspective under Section 307 of the Tariff Act of 1930. Many of the recommendations that we make today are discussed in greater depth in a series of letters TAAG has provided to CBP and the Department of Homeland Security as well as in recent written testimony before the Senate Finance Committee by Martina Vandenberg, President of the Human Trafficking Legal Center.[23]

Promote Labor Rights including Freedom of Association and Collective Bargaining. Forced Labor conditions often take advantage of structural vulnerabilities of worker populations including gender, race, caste, religion, and migration status.  Promotion of anti-discrimination and equity-based labor rights including ending gender-based violence and harassment also contributes to preventing forced labor conditions.  And a key antidote to forced labor is freedom of association and assembly and the right to collective bargaining – workplace democracy. Worker agency to monitor, report, and negotiate for decent work is fundamental to long term change. We recommend roles for unions and civil society groups at each phase of Section 307 enforcement.

Transparency. Additional transparency on the WRO issuance and enforcement process is in the public interest. Specifically, we recommend CBP consistently publish the reasoning for the enforcement order and the number of shipments detained and the value of the goods. Data on detained shipments that is not disaggregated is not sufficient. We also recommend ongoing dialogue and information sharing between CBP and civil society and labor petitioners through the enforcement phase.

Regular Congressional Oversight. We recommend Congress require the annual reports by CBP on enforcement of Section 307 to include justifications for enforcement actions on the goods detained and disaggregated information on detained shipments as well as challenges to effective enforcement. Congress should make public the annual reports.

Establish a Remediation Fund. Workers who participate in exposing forced labor are at risk of losing their jobs either through direct retaliation or due to a decision higher up the global supply chain to cut off a supplier, resulting in mass layoffs. We recommend a Tariff Act Worker Emergency Fund, which could be partially or fully funded through penalties and would ensure workers are protected. This would augment and not replace the remediation required of global supply chain actors for forced labor. USAID would be a strong partner in administering a remediation fund.

Robust Retaliation Protections. Retaliation is a serious global supply chain risk and must be anticipated and responded to quickly and decisively. We recommend specific protocols for a swift response when workers face retaliation including additional penalties for the corporate entity subject to the WRO. We also recommend training for CBP staff on workplace retaliation, conducted by agency and NGO colleagues with experience in workplace reprisals. This is particularly important given closing of civil society space and threats to labor rights defenders in multiple regions.

Increase Penalties. We encourage CBP to press more aggressively for fines and penalties. Forced labor is immensely profitable and fines and penalties must be sufficient to make a business case for compliance.[24]

WROs with Greater Impact. We recommend CBP continue with regional, sectoral, and other aggregate WROs which could impact the industry at key nodal points on global supply chains. For seafood, this includes moving beyond individual vessels and focusing fleets of vessels, traders, and processors. Strategically targeting the mid-chain entities and requiring them to exercise their leverage up the supply chain to branded products could have a significant impact. For cotton, this means requiring more detailed supply chain disclosures from importers that would allow more effective targeting of inputs and goods imported from third countries.

Geographically Diverse Tariff Act Enforcement: More than 70% of WROs issued in the Tariff Act’s 90-year history have been against goods produced in China. The Chinese government’s systematic oppression of the Uyghur people and other ethnic minorities is reprehensible. But China should not be the sole target of Tariff Act enforcement under Section 307. Indeed, there are many cases of forced labor in other countries, as described in the examples above.

Standards for Revocation. The standard and evidentiary burden for revocation is currently not transparent, and we are concerned that CBP may rely on ineffective audits- both onsite and remote- or a corporation’s internal due diligence without truly independent oversight.

Beyond Enforcement

While robust enforcement of existing laws is a key tool, enforcement alone is not enough. We offer these additional recommendations as components of a whole of government approach, consistent with commitments to prevent and eliminate forced labor and promote decent work and sustainable development including key roles for civil society and unions.

Coordination. The June 2021 coordinated agency actions related to polysilicon produced using forced labor in the Uyghur region represent an effective model recognizing the roles of multiple agencies and tools in addressing the complexity of global supply chains.[25] Incentives must be changed at the level of corporations and investors so that forced labor is no longer highly profitable, with real consequences imposed for violations and the failure to exercise effective due diligence. This realignment of responsibility from one that is enforcement-led to one in which corporations bear responsibility for forced labor in their supply chains would prompt corporations to enact stronger prevention, investigation, and remediation mechanisms.

Invest in and promote an enabling environment for labor rights and freedom of association in production countries. U.S. engagement abroad to combat forced labor has often focused on the core values of prevention, punishment of perpetrators, and protection of victims. But these should be complemented by commensurate support for an enabling environment in which labor rights, and particularly the right to freedom of association, can be fully realized. Freedom of association, the right of workers to join together to take collective action, is the most effective bulwark against forced labor. Also, freedom of association cannot be exercised without freedom of speech and assembly or in contexts where workers fear reprisals or experience racial, caste, and gender-based discrimination at work. The U.S. should use its influence and resources to expand space for civil society and freedom of association for labor activists. This could include recommending that high-level officials meet with independent labor activists; recommending that governments streamline and increase registration of anti-trafficking NGOs; or urging governments to refrain from interference with the formation or operation of labor unions.

This also includes collecting and evaluating data in the TIP rankings related to access to freedom of association and collective bargaining for all workers including migrants, timely NGO, and union registration, and other related indica.  

Increasing Transparency on Global Supply Chains. The lesson of today’s economy is that voluntary corporate social responsibility initiatives and corporate audits have utterly failed to prevent forced labor and labor exploitation. And the expectation that production countries – often with under-resourced labor inspectorates, weak rule of law systems, and lack of space for trade unions – bear the onus of enforcement of labor standards, while the multinational corporations that promote and profit from exploitation operate with impunity, is as ineffective as it is fundamentally unfair.

We recommend Congressionally-mandated requirements on corporations to map and report their supply chains to raw material levels, particularly for high-risk regions or goods, and update regularly. Corporations could then make meaningful their “zero tolerance” policies on forced labor by inserting binding provisions in their contracts with suppliers at every level regarding labor practices. Such disclosures would also better enable CBP to protect U.S. consumers from forced labor goods, even where those goods are blended or shipped from third countries.

Expand Corporate and Investor Accountability. We recommend Congress study and enact additional corporate and investor accountability legislation such that national borders are not a barrier to fundamental accountability and international labor standards, including prohibitions on forced labor as well as protections for workers’ right to organize and collectively bargain.  Such legislation would properly incentivize corporate due diligence and supply chain mapping.

Conclusion

Thank you to the Subcommittee for your time and attention to these important issues.