Forced Labor Law Loopholes Leave Enforcement Open-Ended

July 06, 2023
By Melanie Stern

Global business practices are in the spotlight as governments continue to bring accountability to the fore of public and private enterprise. Worker conditions, hiring processes and the flow of product and material sourcing and delivery are now the subject of implemented legislation that as of yet, remains unenforced.

Social responsibility and governance intentions are well-meaning, and subsequent adherence will provide improvements in human security and productivity; however, forced labor law loopholes are counterintuitive to the goals. Differences in cultural ideologies, social mores and economic conditions push supply chain tiers into non-compliant territory — with some companies indicating that it happens without their knowledge, according to a recent report.

Sourcing Discrepancies

A consortium of U.S. lawmakers converged during a hearing entitled “The Chinese Communist Party’s Ongoing Uyghur Genocide,” to discuss findings of ongoing illegal activity within large retail conglomerates including Adidas, Nike and online retailers Temu and Shein. The complaints specifically called out the apparel companies’ fabric and worker sourcing as originating, in part, from Uyghur forced labor, prohibited under the 2021 Uyghur Forced Labor Prevention Act (UFLPA), signed into law by President Joe Biden.

The 22-member group, known as the China Select Committee, which includes ranking chair U.S. Representative Mike Gallagher, R-Wisconsin, and ranking member U.S. Rep. Raja Krishnamoorthi, D-Illinois, submitted letters of discontent to top executives of the companies. The communications requested responses from the corporations regarding the allegations of business misconduct within their supply chains, specifically within the Xinjiang-Uyghur autonomous region. The infractions cited garments sourced from a variety of commodities in the region: polyester, leather, linen, cotton and more.

Investigative reporting by Bloomberg uncovered U.S.-imported Shein garments containing cotton sourced from the Xinjiang region, after results from lab testing verified the claim. Shein denied the accusation in a statement to The Daily Signal.

Hidden Gaps at Borders and Points of Entry

During the hearing, China Select Committee members raised concerns over the existing ability to move product across the Xinjiang-Uyghur region ultimately to the U.S. when labor law non-compliance was evident. According to U.S. Customs and Border Patrol, of the 3,588 shipments under the UFLPA’s scrutiny, 1,323 of them were released for transport.

Another shipping workaround for companies wanting to import product from China is de minimis packages, those that can enter without duty and with minimal review. The committee also drew attention to the number of these types of packages entering the U.S. Because each shipment falls under US$800, it circumvents the normal process: Tariffs are waived, no customs filings are required, and the product remains duty-free. Between 2018-22, de minimis packages from China grew to nearly 275 million.

The letters sent to the apparel companies also noted disparaging instances of human trafficking, as labor transfer programs brought workers from the region to other countries unchecked, void of reporting and congressional approval.

America’s Child Labor Rabbit Hole

Child labor issues aren’t confined to certain parts of the world; they also exist in the U.S. The New York TimesPulitzer-prize winning reporter Hannah Dreier gathered personal accounts made by working children seeking safe harbor from the human trafficking criminals who misled them.

They often come from Guatemala by way of Mexico and are documented and processed through the U.S. federal system, Dreier said. Some live in shelters. Half enter the country without their parents but are placed with relatives, distant relatives or strangers. There is no follow-up from social welfare agencies to check on their well-being. These designated “caretakers,” she said, are more like sponsors, demanding payment for rent and food.

Companies hire the children for positions requiring 12 to 16 hours of work each day in jobs that defy the labor laws meant to protect them. The dirty and dangerous tasks include commercial roofing installations or duties in meat processing plants where the responsibilities and associated equipment use can be life-threatening. The aforementioned descriptions, according to Dreier, are based on testimonies of 100 children across multiple states within the last couple of years.

Social Justice Through Supply Chains

There are some entrepreneurs developing solutions to support labor forces, employers and social governance legislation.

Global third party and supply chain risk management solutions company, New York-based Exiger, supports supply chains by partnering with non-profits focused on combating forced labor and modern slavery. The Slave-Free Alliance is one such partner experiencing the benefits of Exiger’s advanced machine learning technology. Together, former law enforcement, subject-matter experts and investigators help implement international human rights law mitigating labor exploitation while ensuring supply chain resiliency.

A continuous monitoring system, innovated by United Kingdom-based ES³G, enables worker engagement in real time. Through a social scoring platform, workers voice their truth about employment conditions and experiences through a mobile app. The information brings visibility and transparency across internal human resources departments and external stakeholders across supply chains, invaluable as Tier-3 suppliers carry substantial risks in labor-related compliance.

For customers and potential customers searching for validation about a company’s products — its sourcing, manufacturing and the treatment and safety of workers throughout — the people-centric platform provides answers. ES³G’s tool also generates empathy from employer-to-workers while simultaneously keeping all parties accountable.

An ES³G-issued statement said businesses have used social audits as a stand-alone tool to provide supply chain human rights due diligence (HRDD). Although a competent tool for measuring such critical areas as building integrity, health and safety, and business policies, social audits often fail to uncover the reality of workers’ experiences where employers, managers or hiring partners practices are contrary to stated policy.

ES³G addresses this significant gap in HRDD in a way that is economically scalable and resource efficient. By hearing the opinion of the workers, protected in disclosing the truth about their working conditions, businesses can have a competent HRDD system in place reducing the risks of forced labor and human trafficking.

Realistic Resolve

The oversights noted by the China Select Committee in the sourcing and transport of materials, goods and people revealed a disingenuousness about the overall problem. Commission co-chair U.S. Sen. Jeff Merkley, D-Oregon, stated that unless corporations shifted their perspectives and practices about the issues, positive change would be stagnant.

Top-level social and governance initiatives that focus on the betterment of broadscale business practices can be wrought with red tape, negotiations and abundant costs, thus increasing delays and prohibiting implementation. These challenges, collectively, can subvert the end-benefits meant for migrant workers from reaching fruition, leaving the workers unvalidated, at risk and without a voice.

(Photo credit: Mark Kerrison/In Pictures via Getty Images)

About the Author

Melanie Stern

About the Author

Melanie Stern is Manager, Communications at Institute for Supply Management®.