United States

United States

Summary of developments:
  • Reformed Section 307 of the Tariff Act 1930 prohibits companies from importing products produced by forced labour, even if US domestic supply cannot meet demand (2016).
  • Section 1502 of the Dodd-Frank Act requires disclosure of due diligence results on whether or not their products contain conflict minerals (2010).

Legislative Developments

Section 307 of the Tariff Act of 1930

 

In a nutshell

In more detail

Name of Legislation

Tariff Act of 1930

19 U.S.C. § 307 (2016)

Area of Law

Customs and Border Patrol (CBP)

 

Jurisdiction

Federal

 

Current Stage

In force

In 2016, the U.S. Congress closed the "consumptive demand" loophole in section 307, which exempted goods derived from forced labour where American domestic production could not meet demand.

Requirement

Prohibits importation of products produced, in whole or in part, by forced labour or convict labour

All companies are prohibited from importing products produced, in whole or in part, by forced labour or convict labour into the United States.

CBP is required to detain incoming shipments when information “reasonably but not conclusively” indicates that they contain goods that have been produced with forced labour. If further investigation confirms this initial finding, CBP is required to exclude the products from the American market and, in cases of serious violations, refer the importer to the Immigration and Customs Enforcement (ICE) for criminal investigation.

Material Scope

Forced labour, child labour, and convict labour

 

Personal Scope

All importers into the U.S.

 

Reach of the requirements

Any goods imported into the U.S.

 

Enforcement

Goods banned from entry into the U.S. and potential for criminal investigation

When information reasonably but not conclusively indicates that merchandise within the purview of the provision is being imported, the CBP Commissioner may issue withhold release orders pursuant to 19 C.F.R. § 12.42(e). If the Commissioner is provided with information sufficient to make a determination that the goods in question have been produced with forced labour, the Commissioner will publish a formal finding to that effect in the Customs Bulletin and in the Federal Register pursuant to 19 C.F.R. § 12.42(f). 

The CBP Commissioner is required to submit a report to the Committee on Finance of the Senate and the Committee on Ways and Means of the House of Representatives that includes:

  • The number of instances in which merchandise was denied entry during the one-year period preceding the report submission.
  • A description of the merchandise denied entry.
  • Other information deemed appropriate with respect to monitoring and enforcing compliance.

The forced labour provision has not been rigorously enforced due to issues of process, evidentiary standards, and capacity. However, if better enforced, the provision can be a powerful tool to encourage companies to take proactive steps to conduct due diligence of labour conditions in their supply chains and ensure that goods produced for the U.S. market are not made with forced labour.

Resources

♦ List of all withhold release orders here.

Dodd-Frank Wall Street Reform and Consumer Protection Act

 

In a nutshell

In more detail

Name of Legislation

Section 1502 of the Dodd Frank Act

Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act)

Area of Law

Company law

 

Jurisdiction

Federal

 

Current Stage

In force

The Dodd-Frank Act was passed in 2010, and the final rules implementing section 1502 by the U.S. Securities and Exchange Commission (SEC) were adopted in 2012

Requirement

Disclosure of conflict minerals due diligence results

Disclosure requirement that calls on companies to determine whether their products contain conflict minerals by carrying out supply chain due diligence.

Material Scope

Illegal commodities (conflict minerals)

 

Personal Scope

Public companies listed on U.S. exchanges with products that contain tantalum, tin, gold, or tungsten

 

Reach of the requirements

Full supply chain involving conflict minerals sourced from the Democratic Republic of Congo and surrounding areas

 

Enforcement

The company is required to report to the SEC under the Exchange Act. Reports are made publicly available.

The extent to which 1502 will be implemented and enforced remains uncertain following a decision of the U.S. District Court for the District of Columbia.

 

Resources:

Statement of Acting Chairman Piwowar on the Court of Appeals Decision on the conflict minerals rule, April 2017.

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