Closing the “Consumptive Demand Loophole”: Amendment to the Tariff Act of 1930

May 2, 2017

On February 11, 2016, the Senate passed an amendment (H.R. 644) to close a loophole in Section 307 of the Tariff Act of 1930, which bars products made by convict, forced or indentured labor. Until now, the law has exempted goods derived from slavery if American domestic production could not meet demand. The bill nullifying this exemption was approved 75-20 with overwhelming bipartisan support, and President Obama signed it into law on February 24th.

Senator Sherrod Brown (D-OH) and Senator Ron Wyden (D-OR) sponsored the amendment in response to an AP investigation exposing forced and child labor in seafood supply chains. Walmart, Whole Foods, and Red Lobster were among the retailers found to be selling slavery-tainted seafood products.

Human rights groups have been quick to applaud this bipartisan action, but the legislative victory is also spurring calls for robust enforcement. Eric Gottwald with the ILRF noted that the law will “make it easier to prevent goods made with forced labor from being imported into the United States,” but “more work remains to transform the Tariff Act into an effective tool in the fight against trade in forced labor goods.”

The Department of Homeland Security’s Customs and Border Protection (CBP) is tasked with implementing the law, but it has thus far shown significant reluctance to exercise its power to prevent forced labor-made goods from entering the U.S. Even after presented with compelling evidence regarding forced labor in Uzbek cotton production, Gottwald noted that “CBP never issued a detention order and refused to share any information regarding its investigation or if any enforcement measures have been taken.”

Importantly, the new legislation mandates the filing of an annual report with Congress by the Commissioner of the CBP, highlighting how many times in the past year goods made with forced labor were denied entry to U.S. market under Section 307. Since the last publicly reported detention of goods under Section 307 occurred in the year 2000, this is a critical first step toward greater transparency and accountability. Human rights groups are pushing for additional measures to ensure the law has maximum impact.