Congress has recently banned the import of any products linked to child or forced labor with the passage of the the Trade Facilitation and Trade Enforcement Act of 2015. Many countries do not have laws that protect workers from harsh working conditions like the United States, and when companies take advantage of this, it creates an unfair trade advantage. The U.S. Department of Labor maintains a list of countries that manufacture goods with child or forced labor. According to Kaitlyn McAvoy at SpendMatters:
The law amends previous legislation that allowed any product into the country regardless of how it was produced if it met the “consumptive demand” rule, which is when demand is high but supply is insufficient. The Tariff Act of 1930 allowed the Customs and Border Protection Agency [CBP] to seize imports of goods suspected to be produced by forced labor. However, according to the Associated Press, the agency last used that authority just 39 times due to consumptive demand. Section 910 of the new trade act closes that loophole.
Past Supply Chain Failures
There have been quite a few high profile manufacturers who have been found to have forced or child labor in their supply chain. However, up until now, companies mostly faced bad press when it occurred, rather than tangible penalties. However, It is expected with this elimination of the “consumptive demand” rule, that CBP will be enforcing the law more vigilantly and pursuing stiffer penalties for violations.
Famed candy maker Nestlé signed the Harkin-Engel protocol in 2001, to work to end child labor in its cocoa production supply chain. The voluntary agreement had little teeth, and in 2005, a human rights attorney sued Nestlé, Cargill and Archer Daniels Midland for the use of forced child labor. A decade later, a report commissioned by Nestlé from the Fair Labor Association found continued use of child labor on farms used by Nestle on the Ivory Coast. Additionally, the company has found that its suppliers in Thailand also use forced labor.
Apple, Microsoft and Samsung
Cobalt is mined with child labor in the Democratic Republic of Congo (DRC) and is a critical material in the manufacture of electronic components used in products made by Apple, Microsoft and Samsung. A recent Amnesty International report identified that while these companies have policies in place that prohibit the use of child and forced labor, these companies are not fully aware if products further down their supply chain are or are not compliant.
Walmart and Wrangler
Probably one of the most well-known child labor issues relates to clothing production. In a CBS News investigation in 2013 following several tragic workplace disasters, facilities in Bangladesh that supply Walmart and Wrangler were found to have unsafe working conditions and child labor. Both companies worked to resolve the issue upon discovery and would ban that particular supplier in question. However, the issue could recur as factories may trade manufacturing orders among each other without notifying the end customer.
How Can You Protect Yourself?
Companies seeking to protect their critical information and avoid data breaches must be aware of the cybersecurity of all of their suppliers along their supply chain. The same will be true for companies who need to protect themselves from violations of the new trade law. Thorough supply chain mapping of both direct and indirect suppliers will be important to ensuring that companies are not unintentionally using a supplier that sells their manufacturing contract to the neighbor across the street who isn’t following the rules, or using a supplier that’s not really checking the age of the workers that are harvesting its cocoa.
Once upon a time ignorance could be used as an excuse, but in this day of information and 24/7 news coverage, taking the time and making an investment to do a little proactive investigation can save your company money and brand reputation in the long run.