Slavery Labels Sought For U.S. Goods

“There is no question that many goods being sold to American consumers are produced with slave labor,” Maloney said. “We have a moral obligation to do something about it.”

Her legislation would require companies to regularly tell the SEC what they’re doing to eradicate forced labor, creating a new avenue for investor scrutiny -- and litigation. A similar bill is under consideration in the Senate.

In Europe, efforts to shed light on supply chains have been more robust. Not only is disclosure required in the U.K., but increased due diligence as well. The Modern Slavery Act of 2015, which takes effect next year, applies to companies with global revenue of at least 36 million pounds ($55 million), half of the revenue cutoff under California law. It also requires board members sign off on the statements.

The U.K. law “may be the tipping point” said Kilian Moote, project director for KnowTheChain, a California-based resource center for businesses seeking help with the new transparency laws. “Requiring board members to sign off elevates the issue to the executive level for the first time.”

EU rules requiring supply chain transparency in all member states take effect in 2017, while individual nations including France are considering legislation of their own. The EU earlier this year threatened to ban Thai seafood if the country fails to improve regulation.

Thai leader Prayuth Chan-Ocha said last month his government “will continue to prosecute these individuals and sustain progress on this matter.”

Old Law

Ironically, importing goods derived from slave labor is already a crime in the U.S., and has been for 85 years. The Tariff Act of 1930 bars goods made by convict, forced or indentured labor, but was written at a time when supply chains were much less complicated.

“The law is very simple, but the proof that’s needed is the part that’s making it very difficult in today’s age,” said Kenneth Kennedy, a senior policy adviser for U.S. Immigration and Customs Enforcement.

Chocolate provides the best example of how a loophole allows tainted products to enter the country, he said. The law states that if the U.S. doesn’t have enough domestic production of an item to meet demand, all bets are off.

“If we know cocoa is being produced on plantations in West Africa using slave labor, and then being imported into the U.S., we still have to allow it in because the U.S. cannot produce enough cocoa to meet U.S. demand,” Kennedy said. “That’s the Achilles heel of the law.”

The loophole doesn’t sit well with U.S. Senator Ron Wyden, an Oregon Democrat who wants it closed as part of a pending trade bill. Tucked away in the legislation is a sentence calling for the “elimination of the consumptive demand exception.”

Wyden has said the U.S. should be supporting reform in countries where slavery exists, rather than perpetuating the problem.

“This amendment says one very simple thing: There is never a time when forced labor is OK,” Wyden said.