What Importers and Wise Men Should Know About Forced Labor and WROs

Summary:

• What Are WROs? Learn how Customs Withhold Release Orders combat forced labor and ensure trade compliance.
• The Scale of the Problem: Forced labor and child exploitation affect millions worldwide, with serious economic and ethical impacts.
• How to Respond: Practical steps importers can take to build ethical and compliant supply chains.

The nativity story tells us that three wise men brought gifts of gold, frankincense, and myrrh to honor the baby Jesus. It’s a good thing they didn’t have to deal with modern Customs regulations—or the recent Customs Withhold Release Order on frankincense might have delayed their journey.

Recently, Customs and Border Protection (CBP) issued a WRO on frankincense from Somalia, citing concerns over forced labor in its production. This highlights the critical role WROs play in protecting human rights and ensuring compliance in global trade.

In fiscal year 2023 alone, CBP reported stopping 4,415 shipments valued at $1.46 billion, suspected of being produced wholly or in part with forced labor. For importers, understanding these enforcement tools is key to navigating supply chain challenges and building ethical trade practices.

What Are WROs and Why They Matter

CBP issues a Withhold Release Order (WRO) when reasonable evidence exists that goods are produced with forced labor. These shipments are detained at the border, and importers must prove that their products comply with U.S. labor standards.

For importers, a WRO can mean delays, legal complications, and reputational damage. Beyond compliance, it underscores the need to proactively address forced labor risks in their supply chains.

Established under Section 307 of the Tariff Act of 1930, WROs prohibit the importation of merchandise mined, produced, or manufactured wholly or in part by forced labor, including forced or indentured child labor. While the law has existed for over 90 years, it was largely dormant until recent years, as highlighted by the law firm Clark Hill in their 2021 article, “Withhold Release Orders: How Forced Labor Laws Are Being Resurrected for Traded Goods in the 21st Century.”

The Costs of Forced and Child Labor

Forced and child labor are pervasive global issues with devastating human and economic consequences. According to the International Labour Organization (ILO), 27.6 million people worldwide are trapped in forced labor, and up to 160 million children are engaged in exploitative work. These practices exploit the most vulnerable, perpetuate poverty, and undermine legitimate businesses.

The Scale of the Problem

The 2024 U.S. Department of Labor report identifies 204 goods from 82 countries linked to forced or child labor. The most affected industries span agriculture, mining, textiles, and technology, revealing the widespread nature of this exploitation. Examples include:

• Cocoa from C?te d’Ivoire and Ghana: Children as young as 12 work with machetes in hazardous conditions to harvest cocoa beans for global chocolate production.
• Cobalt from the Democratic Republic of Congo: Used in batteries for phones and electric vehicles, cobalt mining involves forced labor and exposes workers to life-threatening conditions.
• Garments from Burma: Exploited workers face forced overtime, physical abuse, and withheld wages.

The ILO data breaks forced labor into distinct categories:

• Private Sector Exploitation: 17.3 million people are forced to work in industries such as agriculture, construction, and manufacturing.
• Commercial Sexual Exploitation: 6.3 million individuals are coerced into the sex industry.
• State-Imposed Forced Labor: 3.9 million people are compelled to work by state authorities.

Economic and Ethical Impacts

For businesses, association with forced labor is not just a moral failure—it poses significant risks:

• Reputational Damage: Consumers increasingly prioritize ethical sourcing, and allegations of labor abuse can irreparably harm brands.
• Regulatory Consequences: Enforcement actions like Customs WROs or legislative frameworks (e.g., the Uyghur Forced Labor Prevention Act) can result in blocked shipments, fines, and increased scrutiny.
• Supply Chain Disruptions: Addressing compliance issues midstream is costly and can delay production cycles.?

How Importers Can Ensure Ethical Sourcing

Ensuring ethical sourcing goes beyond compliance—it requires proactive steps to prevent forced and child labor from entering your supply chain. Here’s How Importers Can Protect Their Supply Chain:

???? 1. Conduct Supply Chain Audits

Regularly audit suppliers to ensure compliance with labor and ethical standards. Engage third-party organizations for unannounced inspections to verify conditions firsthand.

???? 2. Leverage Technology

Use blockchain or other traceability tools to map and monitor supply chains, ensuring transparency from raw materials to finished goods.

???? 3. Certifications and Standards

Partner with suppliers with certifications like Fair Trade or SA8000, verifying adherence to ethical practices and labor laws.

???? 4. Educate Your Team

Train your procurement and compliance teams to recognize signs of forced and child labor derived goods.Develop protocols to address red flags quickly and effectively.

???? 5. Engage with Enforcement Agencies

Stay updated on CBP WROs and other government actions. Build relationships with Customs and labor compliance experts to anticipate and mitigate risks.

???? 6. Implement a Zero-Tolerance Policy

Publicly commit to ethical sourcing by implementing a zero-tolerance policy for forced and child labor. Use this as a foundation for supplier agreements and contracts.

Taking these steps helps importers avoid regulatory penalties and positions their businesses as leaders in ethical trade practices.

Ethical Sourcing: A Shared Responsibility

The story of the three wise men may seem distant, but their gift of frankincense resonates today. It reminds us that sourcing goods isn’t just about profit but also about values, ethics, and humanity.

By understanding enforcement tools like WROs and taking proactive steps to eliminate forced labor from their supply chains, importers can ensure they meet compliance requirements and make a meaningful difference in the global fight against exploitation.

Takeaway:? As we celebrate the season of giving, let’s also reflect on the responsibility we share in building fair and humane supply chains. What steps will your company take in 2025 to ensure ethical sourcing?

From my desk to yours. Stay informed.

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