Closed Loophole, Open Ports: Section 307 of the Tariff Act and the Ongoing Importation of Goods Made Using Forced Labor.

• Author: Higgins, Matthew M.

Table of Contents Introduction I. Forced Labor in Global Supply Chains II. Legal Background A. Federal Courts' Shrinking Capacity to Redress Labor Abuses Abroad 1. Alien Tort Statute 2. Civil RICO 3. Trafficking Victims Protection Reauthorization Act B. Import Restrictions 1. The Tariff Act of 1930 2. Section 307 enforcement procedures 3. The Trade Facilitation and Trade Enforcement Act of 2015 III. Understanding the Early Impact of TFTEA A. Structural Changes Within CBP B. Uptick in Enforcement Actions C. The Insufficiency of Existing Enforcement Efforts 1. Quantifying enforcement efforts 2. Continued imports of high-risk goods 3. Minimal deterrence IV. Diagnosing TFTEA's Limited Impact on Section 307 Enforcement A. Narrowly Targeted WROs B. Limited Access to Information C. Insufficient Funding D. Nonreviewability of Agency Inaction V. Expanding CBP Enforcement of Section 307 A. The Uyghur Forced Labor Prevention Act B. Shifting Away from Targeting Individual Entities C. Shifting the Burden of Proof to Importers Conclusion Appendix A: Active WROs as of April 15,2023, by Country Appendix B: WROs Issued Since 2016 Introduction

A few years ago, we asked a slave newly freed on a cocoa farm in West Africa if he knew what happened to the cocoa he harvested. "No," he said.... So we asked him, what would you say to those millions of people who eat the chocolate made from the cocoa you have grown in slavery? "Tell them," he said, "when they eat chocolate, they are eating my flesh." (1) Products harvested, mined, manufactured, or packaged by forced laborers and enslaved persons inundate global supply chains and line the shelves of American stores. "[I]t's virtually impossible to get dressed, drive to work, talk on the phone, or eat a meal without touching products tainted by forced labor." (2) An estimated 27.6 million people worldwide are subjected to forced labor. (3) This is considered a conservative estimate, (4) and it is significantly higher than previous estimates made during recent decades. (5)

A significant amount of forced labor is used to produce goods that are ultimately consumed in the United States. The United States imports at least SI44 billion worth of "at-risk" goods every year, (6) representing more than 40% of all such goods imported by G20 countries. (7) This $144 billion figure includes only the top five at-risk imports: laptops, computers, and mobile phones; garments; fish; cocoa; and sugarcane. (8) Accordingly, it is likely an underestimate, and perhaps drastically so: Other estimates of the amount of atrisk goods that enter the United States each year approach $400 billion. (9) Though this Note focuses on forced labor that occurs outside the United States, forced labor within the United States is also a major problem: "[0]n any given day in 2016 there were 403,000 people living in conditions of modern slavery in the United States." (10)

Forced labor causes many harms. (11) Most obviously, victims of forced labor experience significant trauma. Many are subjected to inhumane living conditions (12) and have their movement severely restricted. (13) Many are physically isolated from their families, communities, and houses of worship, (14) and are given insufficient access to food, water, sanitation, and news media. (15) Many are forced to work extreme hours (16) and are physically and emotionally abused. (17) Many are paid little or nothing at all, see their wages withheld, and incur debts they are unable to pay off, forcing them to work in perpetuity. (18) Still others are forced to perform hazardous jobs without adequate safety precautions, risking serious injury and exposure to toxic chemicals. (19) Child victims of forced labor, some as young as three years old, are often deprived of the ability to attend school, play, and experience childhood. (20)

The harm caused by forced labor extends beyond its victims. Forced labor limits the competitiveness of businesses that pay full labor costs (21) and damages the reputations of those associated with it. (22) Consumers can suffer cognizable injuries after discovering that they unwittingly purchased tainted goods. (23) And efforts to combat forced labor can strain international relations. (24)

Though the problem of forced labor in global supply chains persists, federal courts--seemingly driven by the desire to promote separation of powers, international comity, and the interests of defendants--have grown increasingly wary of adjudicating cases that span international borders. (25) To facilitate this wariness, a set of doctrines--known as "transnational litigation avoidance doctrines"--has emerged over the last few decades. (26) The avoidance doctrines--personal jurisdiction, forum non conveniens, abstention comity, and the presumption against extraterritoriality--each restrict federal courts' capacity to remedy harms caused by forced labor abroad. (27) Altogether, they have the effect of excluding "substantial amounts of litigation" from federal courts, including much litigation that the United States may have an interest in adjudicating. (28)

With the federal courts receding from view, renewed attention is due to other tools capable of addressing forced labor. One such tool is trade law: The importation of goods made using forced labor has been barred for nearly 100 years under section 307 of the Tariff Act of 1930. (29) For most of this time, however, enforcement by U.S. Customs and Border Protection (CBP) has been minimal or nonexistent. (30) Recent legislative enactments, specifically the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA) and the Uyghur Forced Labor Prevention Act (UFLPA), seek to increase CBP enforcement of section 307.

This Note investigates why existing efforts to end the importation of products made using forced labor have been inadequate. It proceeds in five parts. Part I begins by providing background information on forced labor in global supply chains. Part II then describes the legal regime before the enactment of TFTEA, including the disappearance of federal courts as a potential avenue for relief and the expansive "consumptive demand loophole" that limited CBP enforcement of section 307. It also discusses how TFTEA changed section 307 and details the procedures through which CBP enforces the ban on importing forced-labor-made goods.

This Note then makes a unique contribution to the existing literature. Part III evaluates CBP's early enforcement of section 307 following the modifications made by TFTEA. It shows that, although there has been a minor uptick in enforcement actions, significant quantities of at-risk goods continue to be imported into the United States. (31) Part IV argues that continued underenforcement of the forced-labor ban is driven by multiple key factors: CBP's decision to initiate narrow enforcement actions; significant identification challenges and lack of access to information; insufficient funding; and the general nonreviewability of discretionary nonenforcement decisions. Part V then proposes two possible solutions to decrease the importation of forced-labor-made goods.

1. Forced Labor in Global Supply Chains

   Forced labor is defined by the International Labour Organization (ILO) as "all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily." (32) U.S. law has adopted a nearly identical definition. (33) The scourge of forced labor is a global challenge: An estimated 27.6 million people worldwide are subjected to forced labor. (34) Though victims are found on every inhabited continent, (35) the number of individuals subjected to forced labor is highest in the AsiaPacific region on an absolute basis and in the Arab States on a per capita basis. (36)

   Scholarship by Genevieve LeBaron, Neil Howard, Cameron Thibos, and Penelope Kyritsis has identified multiple root causes of forced labor. (37) People are pushed into forced labor due to underlying poverty, (38) discrimination against marginalized groups, (39) a lack of labor protections, (40) and restrictive governance regimes. (41) In addition, specific features of the global economy make forced labor more likely. Concentrated corporate ownership has consolidated market power and created monopolies, allowing companies to "accrue huge profits while squeezing ever-lower margins down along their supply chains." (42) Some corporations outsource their manufacturing and other processes to subcontractors, which "allows labour exploitation to take place without tarnishing the reputation or credibility of [multinational corporations]." (43) Moreover, organizations get away with having forced labor in their supply chains because laws designed to combat forced labor are "spottily enforced." (44) Combined, these factors have created conditions under which forced labor has thrived.

   This Note focuses on improving the enforcement of section 307 of the Tariff Act, which is just one of many laws worldwide that address forced labor. (45) While greater enforcement of section 307 is important, it is also critical to recognize that lasting success in reducing the incidence of forced labor will require addressing each of its root causes.

   Forced labor is particularly pervasive in global supply chains. "[R]ather than being an artifact of isolated 'bad apples,' worker exploitation is an integral feature of global supply chains...." (46) This is a consequence of modern supply chain design: "The supply chains of modern multi-national corporations have developed into complex and opaque webs that extend across the globe." (47) Many of these supply chains "cut across transnational borders to take advantage of lower labour costs and weaker labour protections in other countries," giving multinational corporations access to "a vast army of people so poor and lacking in state protections that they epitomise the inability to say no to exploitation." (48)

   In the agricultural...