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Corporate Counsel Connect collection

June 2016 edition

Five steps general counsel should consider to protect their companies from enforcement actions on imports made by forced labor

Timothy P. O’Toole and Richard Mojica, Miller & Chevalier

BuildingThe Commissioner of U.S. Customs and Border Protection (CBP) has promised Congress more enforcement actions against imports made by forced labor. His statements follow an amendment to the customs laws earlier this year which closed a loophole that exempted products made with forced labor if the merchandise was not available in the United States in sufficient quantities to meet U.S. consumer demand.

Since the changes, CBP created a task force that will focus on the interdiction of forced labor imports. CBP has also begun detaining shipments of products manufactured by companies suspected of using forced labor, and it has the option of pursuing civil or criminal penalties against the importer in such cases.

Below are five steps that general counsel should consider to protect their companies from these sorts of enforcement actions.

1. Screen the names of the company’s suppliers against the applicable U.S. government blacklists. The U.S. Department of Labor maintains a list of goods and their source countries which it has reason to believe are produced by child labor or forced labor. CBP also publishes a list of the foreign entities and commodities subject to an active detention order on its website. Screening a company’s suppliers against those lists is an effective step to mitigate risk; however, it is important to do more. Screening often produces complicated issues about whether a match has actually occurred and what to do after it is determined that a supplier is on one of the applicable lists. A trained, experience person must be part of the screening process to ensure it works as efficiently and as effectively as possible.

2. Insert a Forced Labor Statute compliance clause in supplier contracts. In addition to representations concerning the prohibition on forced labor, the contract clause should outline supplier obligations designed to protect your company (e.g., providing annual certifications, providing timely responses to information requests, conducting due diligence on the entire supply chain, etc.). It should also establish the company’s right to audit the supplier and to terminate the agreement in the event of noncompliance with company’s policies regarding forced labor.

3. Request annual certifications from direct suppliers in high-risk areas. To date, CBP’s forced labor investigations have primarily targeted Chinese companies and subsidiaries, although a recent allegation was filed by an international labor rights group concerning a company in Turkmenistan. Periodically surveying key suppliers in China and other high-risk areas, and requiring those suppliers to certify compliance with contractual forced labor prohibitions, while not enough by itself, may help insulate the company from liability.

4. Offer training to employees and suppliers on the company’s prohibition on forced labor. For company employees to carry out a policy against import of goods produced through forced labor, they must be trained on that policy. These trainings should make employees aware of the company’s policy of compliance, and should also sensitize employees to the sorts of situations in which risks could arise. These trainings will create a culture of compliance and reduce the risk of violations.

5. Create an internal mechanism to report allegations of forced labor. Even the best compliance policies are not foolproof. Violations can still occur, and if they do, the company will want to learn about them as quickly as possible so that it can address them. Anonymous hotlines or other similar reporting mechanisms can serve as an important tool to allow the company to get ahead of any problems, rather than being blind-sided.

About the authors

Timothy P. O’Toole is a member of Miller & Chevalier. His practice focuses on defending allegations related to violations of U.S. export controls, economic sanctions and embargoes, and other trade laws, and he works with companies on compliance issues related to export controls and sanctions laws. He can be reached at

Richard Mojica is Counsel at Miller & Chevalier. His practice is focused on international trade and customs compliance counseling. He regularly advises clients on a variety of U.S. customs issues, including tariff classification, valuation, country of origin determinations, free trade agreements, penalty proceedings, and duty-preference programs. He has experience with the development and implementation of supply chain optimization strategies and internal customs compliance policies and procedures. He can be reached at

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