CBP Should Establish Criteria for Forced Labor Prior Disclosures, Issue Guidance on Compliance, COAC Says

CBP should “develop guidelines on the disclosure procedure and reporting requirements that importers should follow when an incident of forced labor is found to reasonably exist in their supply chain,” and “identify reasonable factors that CBP can consider for voluntary self-disclosure, full cooperation, and timely and appropriate remediation related to forced labor violations,” the COAC said.

The current prior disclosure regulations only explicitly allow for disclosures of Section 592 and drawback violations, so CBP should add new Section 19 162.74a to specifically address forced labor, the COAC said, suggesting regulatory language in a document posted in connection with the meeting. Suggested provisions include that withhold release orders (WROs) should not be considered ongoing investigations that limit eligibility for filing a disclosure if the importer and supplier are not named in the investigation at that point. Like with existing prior disclosures, CTPAT members should be allowed to submit forced labor disclosures up to 30 days after notification from CBP of an existing investigation, it said.

Benefits of prior disclosures should include being exempt from penalties, an option to export or destroy goods in transit to the U.S. that are the subject of a prior disclosure, and an exemption from liquidated damages for failure to redeliver merchandise that is no longer able to be redelivered, the COAC said. When evaluating a disclosure, CBP should consider the company’s level of cooperation with the investigation, its demonstrated efforts to remediate the forced labor issues, and the company’s “overall commitment and established social responsibility compliance program.”

The COAC also suggested lists of criteria for forced labor allegations and questions CBP may ask on CF 28s related to forced labor, in the same document that included the suggested prior disclosure regulations. The criteria that should be included in forced labor allegations are “common sense” information like a description of the allegation, supply chain type, timeline, geography and current status of the goods at issue. CBP should develop a guidance document with specific criteria to “assist individuals and organizations in identifying meaningful information to include when reporting forced labor allegations,” the COAC said.

The suggested questions for CBP to use on CF 28s are intended to be broad, rather than prescriptive, so companies can “really demonstrate what sort of processes and methods they’re using for due diligence,” said Brian White of J.M. Smucker, co-chair of the COAC’s forced labor working group, as he read the recommendations during the April 15 meeting. CBP should also update its forced labor regulations with specific criteria for enforcing WROs, and issue an informed compliance publication on forced labor “to include guidance on mechanisms to report forced labor allegations, investigations/WROs, due diligence, enforcement, prior disclosure, and mitigating factors,” the COAC said.

In response to the recommendations, CBP trade remedies enforcement Executive Director Ana Hinojosa said that current prior disclosure provisions cover forced labor, too, but that she understands the trade community’s desire for “more specificity into what may apply for forced labor cases.” She also said the COAC’s recommendations would be useful toward putting together a guidance document on allegations and an informed compliance document on forced labor. But she did take some issue with the group’s suggested questions for CBP to include on CF 28s. “Forced labor cases are very diverse, and so it’s important that we all recognize that what might be the right evidence for one type of product may be a little bit different for a different product,” Hinojosa said.