A few days before Christmas, the Senate followed the House in
bringing its legislative year to a swift but unsatisfying end.
Although enough bipartisan goodwill was mustered to pass a massive
National Defense Authorization Act for fiscal year 2024, lawmakers
remain embroiled in bitter partisan squabbles that are paralyzing
critical federal funding measures.
Yet only hours before heading back home for the holidays, Senators
from both the mainstream and activist quarters of the parties came
together to unanimously pass a novel measure — one that would
provide U.S. industry with robust guidance from federal commercial
risk experts aimed at improving their ability to identify, assess,
and prevent human rights abuses which they could be involved in
through their operations and transnational supply chains.
S. 484 – the Combating Human Rights Abuses Act – would
require the U.S. Department of Commerce to offer guidance to
companies in support of their human rights due diligence and risk
management practices, with a particular focus on helping companies
comply with the UFLPA and identify/mitigate risks of supply chain
linkages to Uyghur forced labor abuses.
Although the measure extends to human rights due diligence in both
U.S. and international business settings, its origination in the
Senate Commerce Committee indicates a primary focus on U.S.
companies whose products are manufactured or distributed through
complex transnational supply chains involving regions with systemic
human rights problems.
The bill would provide companies with new openings to work closely
with federal regulators through the guidance process itself,
exchange mutually beneficial information on related challenges, and
cultivate a longer-term relationship with key agency officials who
want American businesses to prosper in the international
market.
While details regarding the congressional intent and scope of the
proposed measure are still emerging, S. 484 would assumedly make
official federal guidance available to both U.S.-based companies
and internationally headquartered companies with major U.S.
subsidiaries that are active, or considering investment, in
countries where there is a high risk of human rights abuse.
Companies within the legislation's jurisdiction would also be
able to secure guidance from the Commerce Department in support of
their existing or prospective commercial relationships with other
supply chain partners operating in high-risk countries, and/or that
are under the control of governments with a poor record of
protecting rights. The measure states that this will especially
apply to a U.S. company's commercial relationships with supply
chain partners that are operating in China, under the control of
the Chinese Government, or have operations in China where there is
high risk of forced labor from Uyghurs or other persecuted Chinese
minority communities.
S. 484 first requires officials at Commerce who are already
advising U.S. companies on other business practices to undergo
training and knowledge-building courses that increase their
awareness of human rights challenges, the attendant reputational
and legal risks facing companies, and the human rights context in
high-risk countries and regions – with forced labor in the
Xinjiang region or elsewhere in China once again the focus.
The bill would come at a critical point in corporate forced labor
risk management, with the United States, Mexico, Canada, United
Kingdom, Australia, and the European Union committed to sweeping
new laws against modern slavery throughout the commercial supply
chains feeding their economies. Companies will see greater benefits
in the long term, due to the the risk mitigation mechanisms,
regulatory predictability, knowledge-building, and transnational
consistency that are taking greater form in this expanding global
regime. Key measures that have been or will be enacted include: the
U.S. Uyghur Forced Labor Prevention Act (UFLPA), the
U.S.-Mexico-Canada Agreement, Canadian Modern Slavery Reporting
Act, U.K. Modern Slavery Act Amendments, Australian Modern Slavery
Acts, and the E.U. Council of Minister's new proposal for a
E.U. Forced Labor Prevention Law (which will be reconciled with the
E.U. Parliament's original antislavery legislation and likely
in effect around late 2025 or first quarter 2026).
Regulators across these jurisdictions are also beginning to shift their focus onto new sectors where forced labor risks are rapidly emerging, most critically products in the renewable energy market. The latter's increasing intersection with human exploitation is significant and the potential ramifications for industry be given more attention in future blog articles. But already, the U.S. Customs and Border Protection (CBP) agency has placed critical and rare earth minerals used in solar panels, wind turbines, electric vehicle parts, microprocessors, and new generation batteries into its highest UFLPA enforcement category. This comes at the same time that U.S-bound importers and the multinationals supplying them continue to call for clearer regulatory guidance from the agency on how best to predictably minimize forced labor risks and manage the UFLPA's manifold compliance burdens.
While the bill may not be immediately consequential to some companies, it is hopefully a portent of expanded federal guidance that will be essential to effective corporate compliance efforts. S. 484 also requires Commerce to incorporate the new employee human rights training into the agency's existing training practices, suggesting that issues of forced labor in supply chains will be better appreciated by a wider cross-section of agency regulators.
An intra-agency expansion of human rights guidance would also
help the private and public sectors coalesce around a shared risk
management approach and enforcement-compliance partnership. To
continue this momentum, it would make the most sense if similar
guidance was instituted by other federal agencies sharing
jurisdiction over U.S. forced labor laws – namely the Labor
Department's Bureau of International Labor Affairs, Homeland
Security's CBP, Securities and Exchange Commission, Treasury,
and the State Department's Bureau of Democracy, Human Rights,
and Labor.
Presently, there doesn't seem to be any notable opposition to
the legislation in the House, and its passage under unanimous
consent in the Senate suggests federal human rights guidance would
fare well with House lawmakers should they take S. 484 up this
year.
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