International Suppliers and Importers Take Notice-The Trade Facilitation and Trade Enforcement Act of 2015 Puts Greater Scrutiny on Supply Chain Management
By: Edward O. Patton
Suppliers and importers of overseas goods should take immediate notice of a new federal law, the Trade Facilitation and Trade Enforcement Act of 2015, which went into effect in March. Trade Facilitation and Trade Enforcement Act of 2015 now officially prohibits the importation of goods produced by forced labor or child labor, closing an 86 year old loophole and reauthorizing the Customs and Border Protection Agency to seize any imports suspected of being produced by forced labor. The timing of the Trade Act coincide with changes to the Federal Acquisition Regulations and DFARS that greatly strengthen anti –trafficking prohibitions and compliance requirements.
What Does the New Trade Law Prohibit?
The Trade Law prohibits importing into the U.S. goods that are produced, manufactured, or mined by forced, indentured, or convict laborers. The Trade Law effectively ends the loophole that previously existed under the U.S. Tariff Act of 1930 which previously permitted, if consumer demand exceeded domestic production, the importing of goods made with forced labor. Because demand in many sectors of the U.S. economy often exceeded domestic production, this loophole often permitted the importing of such goods. However, with the 2015 Act now in effect, this loophole was closed and now goods can be seized.
Changes to the Federal Acquisition Regulations and DFARS that greatly strengthen anti –trafficking prohibitions require that contractors and subcontractors supplying the Federal government have anti trafficking compliance programs.
Who Does the Law Apply To?
All importations into the U.S. and to any company that is a subcontractor or supplier to a Federal contract.
What Does This Mean for Importers of Overseas Goods?
The 2015 Trade Law places more pressure on suppliers and importers to scrutinize their supply chains and develop compliance systems to ensure forced indentured, or convict laborers are not producing their imports. The law also allows any interested party to request the U.S. Customs and Border Protection to investigate imports to determine if they were produced with forced labor in a foreign country. Interested parties will likely turn to the U.S. Department of Labor’s List of Goods Produced by Child Labor or Forced Labor and Executive Order 13126 to identify potential goods when making their requests. Goods found to be produced, in whole or in part, with forced labor can be excluded and/or seized. Further, such a finding can compel the investigation of the importer itself.
What does this mean for Suppliers to Federal Contracts?
All Federal contractors and subcontractors are prohibited from engaging in trafficking activities and are required to implement and certify compliance to a formal compliance plan. A plan must include procedures for preventing agents and subcontractors from engaging in trafficking in person and for monitoring, detecting and terminating those who engage in the prohibited activities.
What Should Suppliers and Importers Do to Comply?
With these changes in mind, it is very important that importers and suppliers to Federal contracts or contractors work to limit the risks under federal law. As a result of the new legislation, companies should implement a policy and/or compliance plan to meet the revised laws because of Federal Contract “flow down” provisions which require compliance at all levels of a Federal contract or subcontractor regardless of dollar values so that even lower tier contractors require compliance. Companies should implement a screening program to deter their supply chain from engaging in the prohibited conduct.
For more information on this matter and how to best limit such risks and ensure compliance with the 2015 Act, please contact Mansour Gavin’s Corporate and Business Services Group.