In 2023, there was an expansion in scope of the discussion around forced labor in the global supply chain. In the United States, the enforcement of the Uyghur Forced Labor Prevention Act (UFLPA) continued to be the main focus, but with added pressure to demonstrate impact. In addition, congressional scrutiny zeroed in on the auto, food, and retail industries. Questions about direct and passive investments implicated in forced labor were also raised as well as the loophole created by the de minimis threshold. Canada and Mexico adopted legislation to address goods and materials made with forced labor entering their markets in accordance with the United States-Mexico-Canada Agreement (USMCA).
The European Union is currently working through a series of directives aimed at eradicating forced labor in supply chains and markets. In addition, there are investigations and litigation in EU member states aimed at the auto, retail, and energy industries.
In the United Kingdom, an important ruling opened the door for the National Crime Agency to investigate companies that import goods made or assembled by forced laborers on the grounds that the products may constitute the proceeds of crime. In addition, a proposed amendment to the UK Energy Bill was introduced to address the systemic use of forced labor in the energy industry, particularly in the import of polysilicon for solar energy installations.
The momentum of these developments has carried into 2024 with the US House Homeland Security Committee’s Oversight, Investigations, and Accountability Subcommittee holding its first hearing on “Exploitation and Enforcement Part II: Improving Enforcement in Countering Uyghur Forced Labor.” We anticipate the activities noted below to continue to develop in 2024.
Given the complexity and ubiquitous nature of the global supply chain, most businesses are involved at some level. As the approach to eliminating forced labor in the global supply chain has evolved, the risk portfolio for companies has diversified as well. Add in the sustained focus on environmental, social and governance (ESG), and forced labor concerns will continue to be front and center. Keeping abreast of the developments is critical to managing the risks.