In late December 2021, the United States banned imports of disposable gloves produced in Malaysia by manufacturer Brightway Holdings over allegations of forced labor. Brightway was a supplier of Kimberly-Clark Corporation and was the fifth Malaysian glove manufacturer to face a Withhold Release Order from U.S. Customs and Border Protection (“CBP”).
Supply chain challenges are on the front page of many newspapers, and a large number of life sciences have conducted, or are conducting, a supply chain audit on multiple issues. Such an audit can identify supply chain risks so companies can protect revenue and reputation. Audits also can assist in finding and stopping fraud and systematic errors and help improve supply chain performance. Importantly, supply chain audits can help life sciences companies stay on the right side of the law, including on forced labor matters.
Pursuant to 19 U.S.C. § 1307, U.S. life sciences companies may not import merchandise produced, wholly or in part, by convict labor, forced labor, and/or indentured labor, including forced or indentured child labor. CBP detains shipments of goods suspected of being imported in violation of this statute and issues a Withhold Release Order to the importer. Withhold Release Orders put the burden of proof on the importer to prove shipments do not contain the banned materials or product, requiring shippers to have visibility throughout all tiers of the supply chain. As difficult and time consuming as the process for contesting Withhold Release Orders is, the reputational damage on the importer is more significant.
Over the past year, CBP has dramatically increased its enforcement of 19 U.S.C. § 1307. Further, the U.S. has taken steps to sanction suppliers in the Xinjiang region of China over allegations of forced labor. Pursuant to the Uyghur Forced Labor Prevention Act, Pub. L. 117-78, imports for Xinjiang are banned unless the importer can prove that goods were made without the use of forced labor. A similar broad-based ban is in place for goods from North Korea.
As part of any supply chain audit, life sciences companies should compare supplier labor practices against the International Labor Organization’s Indicators of Forced Labor. These indicators are (a) abuse of vulnerability; (b) deception; (c) restriction of movement; (d) isolation; (e) physical and sexual violence; (f) intimidation and threats; (g) retention of identity documents; (h) withholding of wages; (i) debt bondage; (j) abusive working and living conditions; and (k) excessive overtime. If an audit reveals the presence of even one of these indicators, a life sciences company should initiate immediate corrective action.
There never is a bad time to audit your supply chain to ensure that it is efficient, effective, and in compliance with relevant law.