Tariff Act of 1930 Revised

Important changes take time – in this case a loophole in the US Tariff Act of 1930 has just been closed, with important implications for the protection of workers in severely exploitative working conditions.

President Obama has signed a bill – the Trade Facilitation and Trade Enforcement Act – that, among other things, amends the US Tariff Act of 1930. This represents an important victory for the collective work of the anti-slavery community and, it should be noted, a bipartisan group of legislators. Why? Because the Depression Era Tariff Act had a provision designed to protect the US economy from unfair competition from foreign producers that relied on forced, child or prison labor. But there was a huge loophole that ensured that the provision was almost never used: if producers in the US couldn’t meet the entire consumer demand for the product, then no action could be taken against tainted products from other countries. This ‘consumptive demand’ exemption was eliminated as part of the recently enacted Trade Facilitation and Trade Enforcement Act.  The closure of the “consumptive demand” loophole is big news and has been receiving a good deal of media coverage.

In order to meaningfully implement this law, the US customs official will continually seek credible information on specific products in shipping container, likely made with forced labor.  This likely will lead to more investigations of suspect supply chains. This also means that other efforts by the US government to delineate where forced and child labor occurs (such as the US Department of Labor’s list of goods made with forced or child labor and the State Department’s Trafficking in Persons report) will take on even more meaning, as ICE will reasonably look to those lists and reports for how to prioritize the products and countries they investigate. 

The potential for enforcement provides a further reason for companies to conduct effective due diligence on the great risks faced by workers in their operations and supply chains.  The Federal Government has proven a powerful ally for advocates in the past few years through the Federal Acquisition Regulations emerging from the President’s 2012 Executive Order and the inclusion of supply chains as a key area of exploration and attention in the State Department’s Trafficking in Persons Office annual reporting. Governments in Europe are pursuing transparency and other regulations to crack down on forced labor.  The pendulum is clearly swinging towards legal and regulatory accountability for supply chains after decades of focus on voluntary initiatives that rely on reputational risk as their primary driver.

Food Transparency: Companies Step Up

The Wall Street Journal highlighted the latest efforts by the food companies to increase transparency in their supply chain.  Companies are pledging to use special codes on their labels and post information on an associated website to show consumers where the food is coming from.  The label promises to reveal the source of the food, but it is unclear if the companies will go the extra mile to determine if the food will also be prepared with integrity.  (For the full version of the article, click here.)

The fact is, the trend is moving towards supply chain transparency.  Consumers will ask and want to know more about where and how goods are prepared.  Is your company ready to answer these questions? 

 

Last Week Tonight with John Oliver: FASHION

Behind the tongue-in-cheek statements, there is stark truth to what is happening in this world.  

Men, women, and children, under slave-like working conditions, are working to produce the goods we use, wear, and consume.  

As a company, we can turn the other way and deny what is happening in our company.  After all, companies like Gap, Children's Place, Joe Fresh, and H&M, are riding out the trafficking problems as "PR" problems and continuing to thrive.  However, if you believe in something more, something more meaningful in your business, consider asking the hard questions with your suppliers.  Enjoy!

Supply Chain Integrity: When and where does one's responsibility begin?

During a meeting with a top Las Vegas hotel chain's head of corporate social responsibility, the question of "where does our responsibility begin?" was extensively discussed.  The hotel, by nature is designed to provide hospitality services.  Should they focus their supply chain monitoring efforts on the people who are working in the hotel and its restaurants, or do they evaluate the goods they use, display, promote, and consume as well?  

The ideal answer is yes to both.  After all, this hotel desires to become completely free of malicious practices in its labor and goods, and align its day-to-day operation to be aligned with its business values.  

However, as the head of corporate social responsibility gloomily admitted, it would be extremely difficult to monitor all aspects of its operations -- given the time and resources.  More importantly, he said it was a sobering reality check for the company to realize how little it knew about its supply chain.  All the audits and precautionary measures the company had taken barely scratched the surface of the extensive supply chain of the company, and the company simply did not know how clean its supply chain was. 

This hotel chain, however, is not the only business answering this serious question and facing a sobering reminder.  With many hands that produce the products, from raw materials to final goods, to many hands that use the goods as part of the business operation, to hands that provide clients and customers services, companies do not have the visibility they thought they had.  Companies need experts who understand the complex crimes of trafficking; understand the companies' individual business model and supply chain; and then adeptly apply these concepts and practices into helping companies identify their key goals and priorities to protect their business values and integrity.  Companies need experts who can draw the link between trafficking and supply chain integrity, and help them reach their potential. 

So the question your business should ask is, "when and where should our responsibility begin?"

Acts, Means, & Purposes

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To better understand human trafficking, it is helpful to break the concept up into its three essential elements. According to the Trafficking Victims Protection Act, human trafficking must involve one element from each of the following three categories:

Acts

  • Recruitment
  • Harboring
  • Transportation
  • Provision
  • Obtaining of a person for labor or services

Means*

  • Force
  • Fraud
  • Coercion
    • (A) threats of serious harm to or physical restraint against any person;
    • (B) any scheme, plan, or pattern intended to cause a person to believe that failure to perform an act would result in serious harm to or physical restraint against any person; or
    • (C) the abuse or threatened abuse of the legal process.

Purposes

  • Involuntary servitude
  • Peonage
  • Debt bondage
  • Slavery
  • Commercial sex act induced by force, fraud, or coercion
  • Commercial sex act or in which the person induced to perform such act has not attained 18 years of age

*Means are not required when involving the sex-trafficking of a child to qualify as human-trafficking.

The Legal Definition of Human Trafficking

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What is the international legal definition of human trafficking?

The internationally recognized definition of trafficking is set forth in the Protocol to Prevent, Suppress and Punish Trafficking in Persons, especially Women and Children. This is also known as the Palermo Protocol. Under Article 3, which supplements the United Nations Convention against Transnational Organized Crime, it reads:

(a) ‘Trafficking in persons’ shall mean the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation.  Exploitation shall include, at a minimum, the exploitation of the prostitution of others or other forms of sexual exploitation, forced labour or services, slavery or practices similar to slavery, servitude or the removal of organs;   

(b) The consent of the victim of trafficking in persons to the intended exploitation set forth in the subparagraph (a) of this article shall be irrelevant where any of the means set forth in subparagraph (a) have been used; 

(c) The recruitment, transportation, transfer, harboring, or receipt of a child for the purpose of exploitation shall be considered ‘trafficking in persons’ even if this does not involve any of the means set forth; and 

( d ) "Child" shall mean any person under eighteen years of age.

 

Indicators of Forced Labor

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The United States Department of Agriculture (USDA) recently recognized that human trafficking is an issue that affects 12.3 million people worldwide. This includes the agricultural industry, which contains people who are being forced to work in harsh conditions. 

But what are the indicators of forced labor?

To increase awareness, the United Nations published an article listing key indicators. They state that people who have been trafficked for labor exploitation may:

  • Live in groups in the same place where they work and leave those premises infrequently, if at all
  • Live in degraded, unsuitable places, such as in agricultural or industrial buildings
  • Not be dressed adequately for the work they do: for example, they may lack protective equipment or warm clothing
  • Be given only leftovers to eat
  • Have no access to their earnings
  • Have no labor contract
  • Work excessively long hours
  • Depend on their employer for a number of services, including work, transportation and accommodation
  • Have no choice of accommodation
  • Never leave the work premises without their employer
  • Be unable to move freely
  • Be subject to security measures designed to keep them on the work premises
  • Be disciplined through fines
  • Be subjected to insults, abuse, threats or violence
  • Lack basic training and professional licenses
  • Notices have been posted in languages other than the local language.
  • There are no health and safety notices.
  • The employer or manager is unable to show the documents required for employing workers from other countries.
  • The employer or manager is unable to show records of wages paid to workers.
  • The health and safety equipment is of poor quality or is missing.
  • Equipment is designed or has been modified so that it can be operated by children.
  • There is evidence that labor laws are being breached.
  • There is evidence that workers must pay for tools, food or accommodation or that those costs are being deducted from their wages.

The information above is quoted from an online article published by the United Nations, entitled, "Human Trafficking Indicators". It can be found at the following address: http://www.unodc.org/pdf/HT_indicators_E_LOWRES.pdf

The White House Forum

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The White House released a statement last week, saying that they are continuing to combat human trafficking in supply chains. The following is a quotation of their press release:

Statement from NSC Spokesperson Bernadette Meehan on the White House Forum on Combating Human Trafficking in Supply Chains
http://www.whitehouse.gov/the-press-office/2015/01/29/statement-nsc-spokesperson-bernadette-meehan-white-house-forum-combating
Washington -- Today, as we commemorate National Slavery and Human Trafficking Prevention Month, the White House hosted a forum dedicated to combating human trafficking in supply chains. The event brought together leaders from the private sector, nongovernmental organizations (NGOs), and the federal government to discuss the prevention and elimination of trafficking-related activities in federal contracts and in private sector supply chains.
 
Today’s forum was part of President Obama’s sustained commitment to combat human trafficking.  This year, the Administration will be focusing in particular on human trafficking issues in supply chains.  The President spoke to this issue earlier this week at the U.S.-India Business Council Summit, where he stressed the need to “keep striving to protect the rights of our workers; to make sure that our supply chains are sourced responsibly.”
 
As part of this effort, the Federal Acquisition Regulatory Council (FAR Council) published updates today to the Federal Acquisition Regulation (FAR) as required by the President’s Executive Order “Strengthening Protections Against Trafficking in Persons in Federal Contracts.”  These updates establish a number of new safeguards largely modeled on successful private sector practices, and reflect public input from federal contractors, academia, NGOs, and other stakeholders.  The new FAR rule prohibits federal contractors and subcontractors from charging employees recruitment fees or using misleading or fraudulent recruitment practices, and requires contractors and subcontractors performing work over $500,000 outside the United States to develop and maintain a trafficking compliance plan and to certify that to the best of their knowledge neither they nor any of their subcontractors has engaged in trafficking-related activities, among other things.  The Administration will continue to work together with the private sector, civil society, and government partners to fight to end human trafficking in all its forms, wherever it occurs.

The Modern Slave

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Today, there are 20 million victims of trafficking in the world. The general public, however, does not know who they are. Unlike the trans-Atlantic slaves of the 18th Century, the slaves of today are not of a single race or region. Neither do they work in a single industry. Their stories are far more complex.

Every country of the world – including the USA – is home to people subjected to forced labor. People of all races, genders, and ages are vulnerable. People with physical or mental disabilities fall victim, as well. The well-educated are vulnerable, just as the poor and uneducated fall prey.

No industry is free from the risk of exploitation: Agriculture, manufacturing, construction, electronics, domestic work, the seafood industry, health care, raw material extraction, retail, restaurants – all are at risk. This means that everything we purchase could have been made, prepared, or delivered by a victim of trafficking.

We often assume that only people who are uneducated or gullible fall prey to trafficking. This is far from the case. When we look at the profiles of trafficked victims, they are: 

  • Responsible mothers and fathers who moved to a metropolitan city or to another country to earn a better living for their families
  • Brave young people and adults who left their homes in search of a livelihood
  • Ambitious students who worked during the school year to pay for their tuition and to save for the future
  • Entrepreneurial and adventurous individuals who pursued an opportunity

Many of these victims are not kidnapped; instead, they are lured into slavery with promises of a better job, higher pay, and a superior life. The terms of their working and living conditions, however, are often undisclosed to them. Indeed, the full picture of what awaits them could not be further from what they expected.

Indicators of forced labor are (but not limited to) excessively long working hours, non- or underpayment of wages, no or little rest period, elements of debt bondage, deplorable working or living conditions, lack of freedom of movement, lack of redress mechanisms, working in fear or threat of deportation or arrest, and passport or other identity document confiscation.

Although not always in physical bondage, victims are often manipulated to remain enslaved. Many are coerced with threats of deportation or arrest. Many have families back home and remain in slavery to keep their loved ones fed. Many have put down their houses, property, or savings as collateral before taking their jobs and are afraid to risk losing them by attempting to escape.

Victims, moreover, are conditioned to “endure”, regardless of the conditions they are living and working under. They are taught that conditions are the same everywhere and that to complain is a risk to themselves. With such complex pressure on these victims, physical bondage and abuse are not necessary.  

Unless businesses ask questions about how workers at their supplier sites are recruited, retained, paid, and treated, there is no way of knowing if their products are clean. ClearChain can help build your confidence in your supply chain. Contact us for a free and confidential assessment of your supply chain.

Is Everything Tainted?

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Today, the public is increasingly aware of human trafficking and forced labor. Through the media and official reports from NGOs and academics, these issues are steadily coming to light. It is less well known, however, that the general population consumes products prepared or made by victims of forced labor every day.

How can this be?

Many companies are unaware that forced labor is present in their supply chains. Raw materials go through so many hands before becoming a final product that oversight becomes a complex issue. Most companies are ill-equipped to address the lack of transparency in their supply chains, so they usually wash their hands of responsibility.

No industry, however, is exempt from fighting against forced labor. Forced labor has been reported in all sectors, especially in manufacturing, electronics, agriculture, construction, and raw material extraction industries.

Because no industry is immune, all business leaders should be on guard. A movement must begin to require that all products be produced – at every stage – by free and fair labor. Because business leaders own the capital, they can dictate the manner in which it is used. Consumers also have a part to play. They must educate themselves and create a greater demand for clean products.

A final word to business leaders: On its journey, from raw materials to consumers, your product passes through many hands. At each stage, are you confident that your product is not being handled by a victim of forced labor? Let ClearChain build your confidence.  Contact us for a free and confidential consultation.

Berkeley Competition Update

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Out of the hundreds of ideas that were submitted in this year’s Berkeley competition, ClearChain made it to the 2nd round of sixteen participants, the Sweet 16!

Berkeley invited us to participate in a video-conference interview. The members of our team logged on from New Zealand, Washington DC, and New York City. We were thrilled!

We shared about the short history of our company and our desire to eliminate slavery from supply chains. During the interview, however, we struggled to answer one question in particular: To what extent has your service been validated by the market?

Alas, ClearChain did not make it to the next round – but we cherished the opportunity to learn from this process. This competition gave us a chance to articulate our value proposition and business strategy. It also helped us to work as a team – even across the world!

Market validation is the necessary next step for ClearChain. In the few months that we have been in business, ClearChain has proven that we have an appealing value proposition and an effective team – now we have to find clients who are the right fit for our services. Validating our services, therefore, is our #1 priority for 2015.

We look forward to an exciting year ahead! To learn more about how your business can decrease operational risks by ensuring that your supply chain is free of slavery and forced labor, contact us for a free and confidential consultation.

Slavery in the U.S.?

Have you seen the recent documentary, Food Chains? It's a powerful film that follows the lives of tomato farm workers in Immolakee, Florida. Tired of being overworked, underpaid, and living in poverty, the workers rallied and formed the Immolakee Workers Union (IWU). Their objective is to enlist those with the most power to affect wages and working conditions – supermarkets – to join the Fair Foods Program (FFP).

The film focuses on Publix, the dominant supermarket in Florida. Their leadership, however, states that they don't get involved in labor disputes between farms and their workers and would not agree to sit at the table with the IWU to discuss their grievances. To demonstrate their desperation and resolve, the IWU organized a six-day hunger strike in front of Publix headquarters. In spite of the workers' peaceful demonstration, however, Publix still refused to talk.

Our work at ClearChain is certainly spurred on by films like Food Chains. Although we work to combat slavery and forced labor, we believe that workers should also receive fair wages and appropriate working conditions. Indeed, not all labor disputes should be considered forced labor issues or human trafficking. Forced labor contains elements of debt bondage, depravation of movement, under-payment or non-payment of wages, and/or excessive long working hours.

Migrant workers, however, are vulnerable to trafficking. In fact, the film referenced a legal case in Florida, where two workers were enslaved and locked in a container truck as punishment. ClearChain works to identify, stop, and prevent these kinds of abuses. In the U.S., migrant farm workers are at risk – around the world, however, the problem is even greater. Will you stand with us?

ClearChain Enters the Ring

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When you first share your idea with the world, it is unavoidable to feel nervous about how it will be received. I remember the first time I shared my idea for ClearChain with someone. I was nervous, but my confidante displayed the right amount of interest and skepticism. 

This conversation energized me! And it spurred me on to keep sharing. As of Thanksgiving Day, I have shared my idea with countless friends, talked to many potential clients, recruited two dear friends to join the venture, and have entered ClearChain in our first case competition!

We have spent countless hours preparing for this competition’s three requirements: executive summary, business model canvas, and team description. We worked hard, refining our message over and over again. It felt great to put a tangible product together with the new team; moreover, it felt right knowing that we were entering the arena ready to be a meaningful player in the fight against slavery around the world.

Our submission will soon be reviewed by a panel of judges. No doubt, they will be blown away by dozens of other amazing ideas. No matter what happens, my team and I are happy to be on this journey together. This is simply one of many "first steps" to come. We are ready for the challenge.

Stay tuned for updates on the competition!

"If those are my best priced mangos ... "

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Last week, I spoke with the CEO of a medium-sized fruit supplier. I explained that ClearChain's mission is to help businesses ensure that their supply chains are free of slavery and forced labor. Her response was candid, but disturbing:

"If those are my best priced mangos ... "

To her credit, she did eventually acknowledge that forcing someone into labor is wrong. But when it came down to it, she didn't believe that she could make a difference. To her, the problem is too big. 

I mustered my courage and went on to explain that she could make a difference. As the CEO, she has the ability to dictate where her supplies are coming from. With ClearChain's assistance, she could better understand her options.

In addition, if she were to raise her voice against this problem, she would join a coalition of people standing up for fair practices around the world. The more leaders who join the fight, the more slavery weakens.

After explaining this to her – I'll be honest – I felt great! I truly believe that developing supply chains free of slavery makes companies better. ClearChain wants to work with cutting-edge businesses that have a similar passion to produce and sell their products ethically.

For businesses, this can only be a good thing. Imagine marketing mangos as free – not only of chemicals – but also of the sweat of enslaved workers. Talk about a product that stands out.