[Senate Hearing 117-285]
[From the U.S. Government Publishing Office]





                                                        S. Hrg. 117-285
 
                     FIGHTING FORCED LABOR: CLOSING
                    LOOPHOLES AND IMPROVING CUSTOMS
                  ENFORCEMENT TO MANDATE CLEAN SUPPLY
                       CHAINS AND PROTECT WORKERS

=======================================================================

                                HEARING

                               before the

                          COMMITTEE ON FINANCE
                          UNITED STATES SENATE

                    ONE HUNDRED SEVENTEENTH CONGRESS

                             FIRST SESSION

                               __________

                             MARCH 18, 2021

                               __________
                               
                               
 [GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]                              

                                     
                                     

            Printed for the use of the Committee on Finance
            
            
            
                                ______                       
  

               U.S. GOVERNMENT PUBLISHING OFFICE 
 47-802-PDF           WASHINGTON : 2022    
            
            
            


                          COMMITTEE ON FINANCE

                      RON WYDEN, Oregon, Chairman

DEBBIE STABENOW, Michigan            MIKE CRAPO, Idaho
MARIA CANTWELL, Washington           CHUCK GRASSLEY, Iowa
ROBERT MENENDEZ, New Jersey          JOHN CORNYN, Texas
THOMAS R. CARPER, Delaware           JOHN THUNE, South Dakota
BENJAMIN L. CARDIN, Maryland         RICHARD BURR, North Carolina
SHERROD BROWN, Ohio                  ROB PORTMAN, Ohio
MICHAEL F. BENNET, Colorado          PATRICK J. TOOMEY, Pennsylvania
ROBERT P. CASEY, Jr., Pennsylvania   TIM SCOTT, South Carolina
MARK R. WARNER, Virginia             BILL CASSIDY, Louisiana
SHELDON WHITEHOUSE, Rhode Island     JAMES LANKFORD, Oklahoma
MAGGIE HASSAN, New Hampshire         STEVE DAINES, Montana
CATHERINE CORTEZ MASTO, Nevada       TODD YOUNG, Indiana
ELIZABETH WARREN, Massachusetts      BEN SASSE, Nebraska
                                     JOHN BARRASSO, Wyoming

                    Joshua Sheinkman, Staff Director

                Gregg Richard, Republican Staff Director

                                  (ii)
                                  
                            C O N T E N T S

                              ----------                              

                           OPENING STATEMENTS

                                                                   Page
Wyden, Hon. Ron, a U.S. Senator from Oregon, chairman, Committee 
  on Finance.....................................................     1
Crapo, Hon. Mike, a U.S. Senator from Idaho......................     2

                               WITNESSES

Wrona, Joseph, Local 135L member, United Steel, Paper and 
  Forestry, Rubber, Manufacturing, Energy, Allied Industrial, and 
  Service Workers International Union (USW), Buffalo, NY.........     4
Vandenberg, Martina E., J.D., president, Human Trafficking Legal 
  Center, Washington, DC.........................................     5
Hughes, Julia K., president, U.S. Fashion Industry Association, 
  Washington, DC.................................................     7
Bonanni, Leonardo, Ph.D., founder and CEO, Sourcemap Inc., New 
  York, NY.......................................................     9

               ALPHABETICAL LISTING AND APPENDIX MATERIAL

Bonanni, Leonardo, Ph.D.:
    Testimony....................................................     9
    Prepared statement...........................................    39
    Responses to questions from committee members................    40
Crapo, Hon. Mike:
    Opening statement............................................     2
    Prepared statement...........................................    42
Hughes, Julia K.:
    Testimony....................................................     7
    Prepared statement...........................................    42
    Responses to questions from committee members................    46
Vandenberg, Martina E., J.D.:
    Testimony....................................................     5
    Prepared statement...........................................    50
    Responses to questions from committee members................    56
Wrona, Joseph:
    Testimony....................................................     4
    Prepared statement...........................................    59
    Responses to questions from committee members................    61
Wyden, Hon. Ron:
    Opening statement............................................     1
    Prepared statement with attachments..........................    63

                             Communications

Center for Fiscal Equity.........................................    71
McKinney, Sheridan S.............................................    72
National Association of Foreign-Trade Zones......................    76
Tony's Chocolonely...............................................    77
United States Council for International Business.................    81


                     FIGHTING FORCED LABOR: CLOSING

                    LOOPHOLES AND IMPROVING CUSTOMS

                  ENFORCEMENT TO MANDATE CLEAN SUPPLY

                       CHAINS AND PROTECT WORKERS

                              ----------                              


                        THURSDAY, MARCH 18, 2021

                                       U.S. Senate,
                                      Committee on Finance,
                                                    Washington, DC.
    The hearing was convened, pursuant to notice, at 10 a.m., 
via Webex, in the Dirksen Senate Office Building, Hon. Ron 
Wyden (chairman of the committee) presiding.
    Present: Senators Menendez, Carper, Cardin, Brown, Bennet, 
Casey, Warner, Whitehouse, Cortez Masto, Warren, Crapo, 
Grassley, Cornyn, Thune, Cassidy, Lankford, Young, Sasse, and 
Barrasso.
    Also present: Democratic staff: Sally Laing, Senior 
International Trade Counsel; Virginia Lenahan, International 
Trade Counsel; and Joshua Sheinkman, Staff Director. Republican 
staff: Gregg Richard, Staff Director; and Mayur Patel, Chief 
International Trade Counsel.

   OPENING STATEMENT OF HON. RON WYDEN, A U.S. SENATOR FROM 
             OREGON, CHAIRMAN, COMMITTEE ON FINANCE

    The Chairman. The Finance Committee will come to order. 
This is our third hearing of the week, and the attendance among 
members has been terrific on both sides of the aisle. And I see 
Senator Crapo here, and I appreciate all his efforts to get 
members on both sides involved.
    This morning we are going to focus on the issue of forced 
labor. We understand in our country, we have a lot of economic 
and political muscle, and our country should use that muscle to 
fight for American jobs and our workers. It should also use 
that muscle, wherever possible, to improve the lives of 
powerless people around the world. It is not every day you have 
an opportunity to talk about accomplishing both of those goals 
at once.
    Today is one of those days, with the Finance Committee 
meeting to discuss stamping out forced labor, which is modern-
day slavery, around the globe. Now, it is going to take hard 
work, even in 2021, to live up to a moral standard that says 
the U.S. will not profit from slave labor. And yet it still 
goes on in many places around the world, including in places 
that are part of our global supply chain. The hard work to 
fight forced labor is absolutely essential.
    A government ought to use every available tool to root out 
the practice of forced labor and address its causes. That 
includes diplomacy, efforts to alleviate poverty, sanctions, or 
any other means within the jurisdiction of the Finance 
Committee. The government has to use every tool in the trade 
toolbox to keep forced labor products out of our market.
    The Federal ban on imports made with forced labor goes back 
to 1930. It is known in trade law as section 307. It gives 
Customs the authority to stop products made with forced labor. 
However, there was a loophole in that Federal ban that applied 
to products that are not made within the United States, and it 
persisted for decades.
    Senator Brown, who has led on this issue for years, and I 
wrote an amendment that closed the forced labor loophole in 
2016. Since then, enforcement action has increased, but so have 
glaring examples of the scourge of forced labor, especially in 
China.
    Two U.S. administrations have now concluded that what the 
Chinese Government is doing to the Uyghur people in the 
Xinjiang region in western China constitutes genocide. The 
Chinese Government and Chinese companies are using forced labor 
from that region to produce a variety of products.
    For example, the U.S. took action to block the import of 
cotton and tomatoes picked by slave labor in Xinjiang. The 
Finance Committee is going to hear today from Joseph Wrona, 
whose good-
paying union job in the production of silicon metal was shut 
down, in part due to forced-labor competition from China.
    Forced labor is a problem in other countries too, including 
in India, Burma, and Malaysia. As I indicated, Senator Brown 
and I have been pushing for U.S. trade enforcers to do work on 
a variety of fronts, including taking action against the import 
of mica, palm oil, and cocoa produced with forced labor.
    The bottom line is, the continued existence of forced labor 
is morally repugnant, and when American workers have to compete 
with forced labor, everybody loses. We want to make sure that 
Customs and Border Protection has the tools and resources it 
needs to step up enforcement. And like so much of what we are 
doing, this is another crucial area for bipartisanship. Ending 
forced labor is morally just. Raising the bar for labor 
standards around the world will help protect high-skill, high-
wage jobs here in the United States.
    So this is an important hearing, and we look forward to our 
witnesses.
    [The prepared statement of Chairman Wyden appears in the 
appendix.]
    The Chairman. Senator Crapo?

             OPENING STATEMENT OF HON. MIKE CRAPO, 
                   A U.S. SENATOR FROM IDAHO

    Senator Crapo. Thank you, Mr. Chairman.
    This is a very important hearing. The International Labor 
Organization estimates nearly 25 million people in the world 
are victims of forced labor. The criminals behind this tragedy 
reap nearly $150 billion in profits every year. As horrifying 
as that is, nearly 30 percent of the victims are also victims 
of forced sexual exploitation and generate $99 billion, or two-
thirds of those profits that I just referenced.
    The fight against forced labor is not a Democrat issue or a 
Republican issue. It is an issue that unites all Americans. 
That is critical to remember. Americans, including consumers, 
workers, and businesses, are all committed to this fight and 
doing everything possible to combat this scourge.
    The problem lies not with them, but with foreign autocrats 
and individuals who lack all sense of basic humanity. Our fight 
is with them. For example, as the chairman just mentioned, 
China's Government has pressed nearly 100,000 Uyghurs and other 
Muslim minorities into forced labor, while euphemistically 
calling it ``poverty alleviation.''
    As the Newlines Institute for Strategy and Policy explained 
in a report last week, China's treatment of the Uyghurs meets 
every criteria of genocide under the United Nations Genocide 
Convention. That report's findings joined declarations by 
foreign legislatures, including Canada and the Netherlands, and 
track with a similar determination made by the State Department 
during the Trump administration.
    Accordingly, Senators like Marco Rubio and Jeff Merkeley 
and many others are showing leadership on this issue through 
their proposed Uyghur Forced Labor Prevention Act. Their 
efforts should be matched by the current administration.
    The U.S. Secretary of State and National Security Advisor 
are meeting today in Alaska with their Chinese counterparts. 
Forced labor is among the rights' issues they need to press 
with them.
    Critically, this all reinforces that we need to broadly 
empower Americans and other good citizens of the world to be 
able to more effectively respond to this challenge. This 
includes effectively utilizing technology to identify where 
goods made with forced labor can enter the supply chain.
    It means our laws and regulations must be transparent and 
provide informative and thoughtful guidance so Americans know 
how to avoid importing such goods. It means we need to know 
about the ongoing efforts of our businesses so that government 
can help leverage them in the fight against forced labor.
    Many of them have developed best practices to stamp out 
forced labor from their supply chains. We need to leverage 
their experience and expertise.
    Finally, it means we must partner with civil society to 
raise awareness on this important issue. The witnesses we have 
today can speak to each of these points. Their expertise and 
knowledge will help this committee address this important 
matter.
    Mr. Chairman, I am glad this is an issue which we both care 
deeply about, and thank you for organizing this hearing. I look 
forward to hearing the testimony from our witnesses.
    [The prepared statement of Senator Crapo appears in the 
appendix.]
    The Chairman. Thank you very much, Senator Crapo. Let me 
now introduce our witnesses.
    Mr. Joseph Wrona of Buffalo, NY is a United Steelworkers 
member. He is a former employee of Globe Specialty Metals. They 
produce a critical input for semiconductor chips and solar 
panels, and they are based in Niagara Falls, NY. Globe 
Specialty Metals shuttered its factory in 2018 due to intense 
competition from underpriced Chinese products, as well as 
shifts in global demand driven in part by Chinese product that 
was produced with forced labor. He now works for another firm.
    Ms. Martina Vandenberg of Washington, DC will be next, the 
founder and president of the Human Trafficking Legal Center, an 
important organization established in 2012. It is a 
nongovernmental organization dedicated to the eradication of 
forced labor.
    Ms. Julia Hughes of Washington, DC is president of the 
United States Fashion Industry Association, which represents 
brands, retailers, importers, and wholesalers based in the 
United States that do business globally.
    And Dr. Leonardo Bonanni of New York is the founder and CEO 
of Sourcemap, a supply chain transparency company. They track 
the supply chains for more than 50 raw materials.
    We welcome all of them, and we will make your prepared 
remarks a part of the record. And let's begin with you, Mr. 
Wrona.

  STATEMENT OF JOSEPH WRONA, LOCAL 135L MEMBER, UNITED STEEL, 
   PAPER AND FORESTRY, RUBBER, MANUFACTURING, ENERGY, ALLIED 
  INDUSTRIAL, AND SERVICE WORKERS INTERNATIONAL UNION (USW), 
                          BUFFALO, NY

    Mr. Wrona. Chairman Wyden, Ranking Member Crapo, members of 
the committee, my name is Joe Wrona, and I am a member of the 
United Steelworkers and a maintenance mechanic at Sumitomo Tire 
Plant in Tonawanda, NY. Thank you for the opportunity to 
testify today on the important topic of how to fight forced 
labor and improve our supply chains.
    Connecting my life in Buffalo to global supply chains and 
forced labor is, unfortunately and surprisingly, too 
straightforward. While I have worked at the tire plant for the 
last couple of years, my previous job was at Ferroglobe's 
Niagara Falls, NY, plant. I worked there for 10 years roughly, 
with 100 other union members and management.
    The Ferroglobe facility, which I will call Globe, used to 
produce metal silicate by taking quartz, wood chips, and coal 
and cooking them in an electric arc furnace until the quartz 
was reduced into silicon metal. Metal silicate is a product 
that we made 24/7 at the plant. It is a product you interact 
with every day in a variety of ways, from strengthening 
aluminum, to the caulking that seals your home, or even 
cosmetics.
    Silicon metal is everywhere. It is also a base component to 
the production of polysilicon, which is vital to solar panel 
production. Expecting that strong demand for solar power would 
boost metal silicate demand, in 2009 Globe planned a $35-
million upgrade to convert its metallurgical grade silicon into 
4,000 tons of upgraded metallurgical grade silicon each year--
enough to produce 500 megawatts of solar power.
    Our company, in an investor report in 2016, highlighted the 
opportunity to see demand grow as SolarCity, a solar panel 
company connected to Elon Musk, was supposedly in the final 
stages of construction. However, that vision fell apart for the 
workers at Globe in 2018 when the plant was closed because of 
lack of demand.
    Globe has been fighting illegal trade practices in metal 
silicate for decades now. The first trade enforcement case 
against dumped and subsidized metal silicate from China started 
30 years ago in 1991. But, while tariffs on metal silicate 
helped to defend our jobs at Globe, they could not stop 
products further up the supply chain, like solar panels or 
those produced with forced labor.
    The growth of China's industrial capacity is well 
documented. Chinese companies in polysilicon produced over 80 
percent of global polysilicon in 2020. This has effectively 
locked the U.S. out of the growing solar demand, and over-
capacity in China destroys nearly any ability of U.S. companies 
to compete.
    But for my brothers and sisters who make good wages at 
Globe, between $70,000 and $100,000 a year, they were victims 
not only of unfair trade practices, but also forced labor in 
China. About 45 percent of the world's supply of solar grade 
polysilicon comes from Xinjiang. The news about human rights 
abuses there is unacceptable. According to economic experts, 10 
million Muslim minorities in the region are under lockdown 
control, and over 1 million Uyghurs and others have allegedly 
disappeared into internment camps.
    One study estimates that more than 80,000 Uyghurs were 
transferred out of Xinjiang to work in factories across China 
between 2017 and 2019. There should be no debate: eliminating 
forced labor from our country's supply chain should happen 
today. And companies that have benefited should be held 
accountable.
    It was a good step when Customs and Border Protection 
issued a Withhold Release Order against cotton and tomato 
products produced by Uyghurs. We should act immediately to do 
the same for products like solar panels that contaminate the 
supply chain with forced labor.
    We also need to act urgently to defend American workers and 
foster the domestic solar industry here. This means direct 
investment in metal silicate plants like my old facility in 
Niagara Falls or the plants in Alloy, WV, where my union 
brothers and sisters work.
    Thank you for the opportunity to testify today, and I look 
forward to answering any questions you may have.
    Finally, working with my union, I have included additional 
materials with my written testimony.
    [The prepared statement of Mr. Wrona appears in the 
appendix.]
    The Chairman. Thank you very much, Mr. Wrona.
    We will next have Ms. Vandenberg.

  STATEMENT OF MARTINA E. VANDENBERG, J.D., PRESIDENT, HUMAN 
            TRAFFICKING LEGAL CENTER, WASHINGTON, DC

    Ms. Vandenberg. Thank you so much, Chairman Wyden, Ranking 
Member Crapo, and distinguished members. It is an honor to 
appear before you today to address the issue of forced labor, 
global supply chains, and the Tariff Act. I lead the Human 
Trafficking Legal Center, a human rights organization dedicated 
to the eradication of forced labor.
    In 2020, we joined a coalition of nongovernment 
organizations to petition Customs and Border Protection to 
block all imports of Xinjiang cotton into the United States. 
CBP issued a region-wide Withhold Release Order in January 
2021.
    China has been much of the focus of CBP enforcement, but 
forced labor is a global issue. We once assumed we could 
prosecute our way out of forced labor, but we were wrong. 
Prosecutions are practically nonexistent. According to the 
State Department's 2020 Trafficking in Persons report, there 
were just 1,024 forced labor prosecutions in the entire world 
in 2019. And the United States is no exception.
    According to the Department of Justice, Federal prosecutors 
indicted just 12 forced labor cases in the entire country in 
fiscal year 2019. And although extraterritorial jurisdiction 
has existed since 2008 to prosecute forced labor cases in 
global supply chains, Federal prosecutors have never brought 
even one forced labor supply chain case that invoked 
extraterritorial jurisdiction.
    So what is the result of this enforcement vacuum? Impunity, 
complacency, and immense human suffering. We now live in a 
world where migrant workers must pay for their jobs. They must 
buy their jobs. They do not pay to play; workers pay to work. 
And because they cannot afford to pay the recruitment fees 
outright, workers must borrow.
    Many find themselves trapped in forced labor and debt 
bondage. And until recently, these workers had few remedies. 
The closing of the U.S. Tariff Act's consumptive demand 
loophole in 2016 changed the game. That move catapulted section 
307 from a statutory relic to a valuable tool to combat forced 
labor. We still have a long way to go.
    We can analogize to the Foreign Corrupt Practices Act. In 
the 1970s, bribery was ubiquitous, just as forced labor is 
today. That all changed when the Department of Justice started 
prosecuting companies and individuals under the FCPA. Suddenly, 
bribery allegations went straight to the C Suite. So what had 
changed?
    It was risk, the advent of risk. We are a long way from 
FCPA anti-bribery enforcement levels for forced labor, but 
Customs and Border Protection's section 307 enforcement under 
the Tariff Act is bringing us closer.
    According to data recently released by CBP, in the first 
quarter of fiscal year 2021 the government detained 90 
shipments of cargo covered under different WROs. The value of 
that cargo was $20.8 million. In fiscal year 2020, CBP detained 
a total of 324 shipments valued at $55 million. So it looks 
like CBP is poised to shatter the fiscal year 2020 detention 
record in fiscal year 2021, which is a welcome development.
    So we applaud this progress, but there are gaps. Issuing a 
WRO is only the first step. Robust and swift enforcement must 
follow. CBP announced that, despite the region-wide WRO on all 
Xinjiang cotton, the agency would focus only on direct imports 
from the region. The agency termed this a ``scalpel'' approach 
to enforcement.
    We believe that this is inadequate. The WRO should be 
enforced broadly. And we also see now a backlash against Tariff 
Act enforcement, with lawsuits filed by corporations against 
nongovernmental organizations and researchers.
    These retaliatory legal actions have a chilling effect on 
NGOs, which we can only surmise is their intent. Sime Darby, a 
Malaysian palm oil producer subject to a WRO, filed a lawsuit 
in U.S. Federal Court against the director of Liberty Shared, 
seeking extensive discovery of confidential investigation 
materials. And Chinese corporations have filed a suit in China 
against Adrian Zenz, a U.S.-based human rights researcher, who 
has documented widespread forced labor in Xinjiang.
    Facing universal outrage, Sime Darby dropped their lawsuit 
just a week after filing. But increasingly loud corporate 
voices seek to dismantle section 307's enforcement regime. 
Couched in the language of calls for ``due process,'' these 
critics come to bury section 307, not to praise it.
    My written testimony has extensive recommendations, but I 
will focus on just four.
    Number one, include workers and unions in all remediation 
plans. CBP should ensure that affected workers and their unions 
have a role in enforcement and remediation.
    Two, create emergency worker funds for workers harmed by 
WROs.
    Three, punish companies that retaliate against workers or 
petitioners.
    Four, disclose shipments detained under a WRO.
    CBP should also release enforcement updates on each WRO 
each quarter. Forced labor is a feature, not a bug, in global 
supply chains. There should be no safe harbor for goods made 
with forced labor anywhere in the world.
    I welcome your questions.
    [The prepared statement of Ms. Vandenberg appears in the 
appendix.]
    The Chairman. Thank you. Very good.
    Next will be Ms. Hughes.

STATEMENT OF JULIA K. HUGHES, PRESIDENT, U.S. FASHION INDUSTRY 
                  ASSOCIATION, WASHINGTON, DC

    Ms. Hughes. Thank you, Chairman Wyden, Ranking Member 
Crapo, and members of the committee. I thank you for the 
invitation to appear today.
    I am president of the U.S. Fashion Industry Association, 
and I appreciate the chance to talk about the industry and the 
fight against forced labor, and how to improve enforcement to 
reach our shared goal of the elimination of forced labor.
    A little background about USFIA. We represent apparel 
brands, retailers, importers, and wholesalers based in the 
United States and doing business globally, including many of 
the iconic brands worn and loved by everyone participating in 
this hearing.
    Global trade, and ethically sourced trade, is essential for 
American brands and retailers to be successful and reach 
consumers around the world. Because we are a global industry, 
we know that forced labor exists in many parts of the world.
    For several decades, USFIA member companies have maintained 
codes of conduct and strict requirements for supply chain 
partners that ban the use of forced labor. Companies maintain 
an extensive network of contracts, audits, verifications, 
training, and direct engagements with suppliers. But we 
recognize that there remains more action needed to guarantee 
that forced labor is not in the supply chain for fashion 
products. So what are we doing to root out forced labor from 
the supply chain?
    Even before the very public media reports about forced 
labor in the past year, our Industry Association's USFIA, 
working with our friends at the American Apparel and Footwear 
Association, National Retail Federation, and Retail Industry 
Leaders Association joined together to create an ad hoc forced 
labor working group to facilitate the sharing of information 
and the sharing of resources among the industry.
    The task is not easy, to put it mildly. My personal belief 
is that to eliminate forced labor, we need to go beyond what 
companies can do on their own, and go beyond an emphasis on 
punitive measures, to use multi-stakeholder approaches, the 
combination of civil society, NGOs, companies, governments, and 
international institutions, to reach our goal.
    In my written statement, I shared a few examples of how 
this has worked. I am especially pleased to mention the Cotton 
Campaign--which for more than a decade brands and retailers 
have been a part of--focused on eliminating the government-
sanctioned use of forced labor in the cotton fields of 
Uzbekistan, and today moving forward with reasoned responsible 
sourcing agreements with cotton growers, cooperatives, and 
brands looking to the future.
    Another approach that is just at the beginning is Yarn 
Ethically and Sustainably Sourced (YESS). This is an initiative 
to eliminate forced labor with a pilot program based on OECD 
due diligence guidance that has wide industry support.
    There are also pilot programs recently funded by the 
Department of Labor that will focus on developing solutions to 
forced labor that bring together technology tracking in the 
supply chain and awards to Verite that will support a project 
based in India. ELEVATE Limited will be looking at supply 
chains for cotton in Pakistan and cobalt in the DRC.
    But even with all these initiatives, we know we need more, 
and we need to work with the executive branch and with the 
Congress to eliminate forced labor.
    In my remaining time, I want to just briefly focus on the 
executive branch aspect. We support a coordinated effort to 
engage with our trading partners to eradicate forced labor from 
the supply chain, working together with the State Department, 
U.S. Trade Representative's office, Labor, Commerce, NSC, and 
USDA, to make this a priority for a whole-of-government 
approach.
    We especially want to talk about the important role of the 
U.S. Customs and Border Protection to implement this 
enforcement strategy. U.S. companies are partners with CBP on 
enforcement. The policy of informed compliance and the 
participation of companies in CBP's trusted trader programs 
means there already is a shared approach to enforcement. But we 
believe what will help even more is more transparency in the 
process, and more of a shared approach.
    What does that mean in practice? Two recent GAO reports 
highlighted some of the issues, and it boils down to 
transparency and objective criteria being essential for 
success. We do not think success is measured by the number of 
detentions. Success will be measured by the degree to which we 
all work together to effectively reduce and eliminate forced 
labor around the world.
    Transparency is key for this. We hope to work with CBP and 
the committee, and I thank you again for the opportunity to 
speak today. Fashion brands and retailers have zero tolerance 
for forced labor. We believe working together to eradicate 
forced labor from global supply chains will be good for 
American workers, American consumers, and the world. And we 
stand ready to work with members of the committee and the 
Congress to achieve this goal.
    [The prepared statement of Ms. Hughes appears in the 
appendix.]
    The Chairman. Thank you very much, Ms. Hughes.
    Dr. Bonanni?

    STATEMENT OF LEONARDO BONANNI, Ph.D., FOUNDER AND CEO, 
                 SOURCEMAP, INC., NEW YORK, NY

    Dr. Bonanni. Chairman Wyden, Ranking Member Crapo, 
distinguished members of the committee, thank you for the 
opportunity to speak with you today.
    I am the founder and CEO of Sourcemap, a leading provider 
of technology for supply chain transparency. As this committee 
has underscored in bipartisan fashion, forced labor is endemic 
to many supply chains. At the same time, no company can afford 
to audit every supplier every day. Business needs a scalable 
solution.
    I founded Sourcemap at MIT with the goal of leveraging the 
reach of the Internet to monitor global supply chains to a 
degree that was never before possible. Let me describe how it 
works.
    First, we set up a unique social network to help companies 
identify all of the actors in their supply chain, down to the 
names and addresses of every mine, every farm, every factory, 
and every warehouse.
    Second, companies use this network to regularly collect 
data from all of the actors in the supply chain, which our 
software then analyzes to detect patterns that indicate the 
presence of forced labor. We can even collect data in remote 
supply chains where there is little to no Internet access, 
using a Smartphone app that works online and offline.
    Third, and most importantly, we never take the information 
that has been provided at face value. Instead, we continuously 
analyze data from suppliers for errors and omissions, for 
patterns of fraud, waste, and abuse. To do this, we use the 
best available techniques, including satellite imagery, mobile 
device tracking, machine learning, and artificial intelligence.
    The demand for this level of supply chain transparency is 
growing. Sourcemap is used today by some of the largest 
companies in the U.S., companies responsible for tens of 
billions of dollars in U.S. imports. Thousands of their 
suppliers log into Sourcemap from every corner of the globe to 
share extensive information on their supply chains. And that is 
because supply chain transparency is a very small price to pay 
for access to the U.S. market.
    For the first time in the history of globalization, 
companies can have a map of their global supply chain that is 
verified and up-to-date. It is not transparency for 
transparency's sake. This map is the foundation for identifying 
and remediating forced labor in the end-to-end supply chain, so 
that one day everything arriving in the U.S. can have a clean 
bill of health.
    Is it a panacea? No. But it represents a step change in the 
degree of supply chain transparency businesses and governments 
can expect in support of their ongoing fight against forced 
labor.
    Mr. Chairman, supply chain transparency is good for 
business in many other ways. It reduces risk. It saves money. 
It helps to secure hard-to-get materials. It helps to monitor 
for quality, counterfeiting, environmental conditions, health, 
and safety.
    This committee has an important role to play. This hearing 
itself sends a message that you expect action from all 
stakeholders. Mr. Chairman, I know that you have been working 
with Senator Brown on the new tools to empower Customs and 
Border Protection. I encourage you to put supply chain 
transparency technology at the center of those efforts.
    Supply chain transparency needs to become the norm. At a 
minimum, companies should disclose the names and addresses of 
their direct and indirect suppliers. This evidentiary standard 
will establish the U.S. as the leader in combating forced labor 
in supply chains, while saving companies and Customs Protection 
millions of dollars.
    Setting a simple standard for supply chain transparency 
will help create a level playing field for all companies 
importing goods into the U.S. It is not just the right thing to 
do for our values; it is the smart thing to do for U.S. 
business and for U.S. workers.
    Thank you for the opportunity to testify. I look forward to 
your questions.
    [The prepared statement of Dr. Bonanni appears in the 
appendix.]
    The Chairman. Thank you very much, Dr. Bonanni. I think you 
have a land speed record for impressive content delivered very 
quickly.
    Now let me start with you, Mr. Wrona, because I want to ask 
the question that really frames this whole discussion. To what 
extent did imports produced by forced labor contribute to your 
plant closing and you and your co-workers losing your jobs?
    Mr. Wrona. To what extent did it effect all of us?
    The Chairman. Yes.
    Mr. Wrona. Well, we lost our jobs. We lost our livelihood. 
You know, we have rent to pay, mortgage to pay, car payments, 
food, college, you know? And these jobs in western New York are 
not that easy to fill--or replace, I should say.
    The Chairman. I asked it the way I did because I wanted to 
give you a chance to really lay out, as you did, just how 
serious the consequences were. I was looking at the record and 
I thought, well, maybe there would be other factors, but you 
basically said that imports produced by forced labor was the 
ball game. That is what took that livelihood away from you? Is 
that right?
    Mr. Wrona. Yes, and we cannot, as American companies or 
employees, compete with that.
    The Chairman. Right.
    Let me go on to you, Ms. Vandenberg. You said that an 
increase in Customs and Border Protection forced labor 
investigations and enforcements since 2016 was helpful--that 
there was an increase, and it took place when Congress closed 
the loophole in the forced labor ban.
    While this is obviously progress, speak, if you would, to 
the scope of the problem that remains, and the difficulties in 
obtaining sufficient evidence for Customs and Border Protection 
to issue additional Withhold Release Orders.
    Ms. Vandenberg. So the scope of the problem is enormous. I 
want to thank you for your leadership, and Senator Brown for 
his leadership in closing the loophole. It has made an enormous 
difference.
    As Senator Crapo pointed out in his opening remarks, the 
ILO estimates that there are more than 25 million people held 
in forced labor around the globe. So we are barely, barely 
touching the surface of the problem here.
    In terms of evidence provided by CBP, this is an enormous 
problem, and we would like to see more self-initiated 
investigations by Customs and Border Protection. At this point, 
nongovernmental organizations send in petitions to Customs and 
Border Protection requesting Withhold Release Orders. It 
requires enormous, enormous effort by these nongovernmental 
organizations. It requires enormous risk as well, with 
witnesses on the ground providing testimony of forced labor--
many of them in fear of retaliation.
    So I do not think the system is perfect. We have a lot of 
work to do on this, but we are delighted to see additional 
enforcement.
    The Chairman. Ms. Hughes, a question for you. The Customs 
statute charges importers to exercise reasonable care to comply 
with Customs requirements when importing goods. And I guess 
there is a kind of process, a risk management process, which 
your members take to make sure that they are exercising 
reasonable care.
    Could you just briefly touch on that?
    Ms. Hughes. Sure. Thank you so much for the question, and 
absolutely. Brands and retailers--this, by the way, is not just 
since TFTEA and the change in section 307, but long before 
that--had an extensive process of audits, and investigations, 
and review of documents, because we know we are the ones on the 
ground. We are on the front lines to make sure that we can, if 
we see a problem, that companies will take the care that is 
needed and be able to show what they have done to remediate, if 
remediation is possible. And if remediation is not possible, 
then of course companies will take action to cut ties.
    The Chairman. Okay. I just want to give a quick kind of 
summary of what this panel really has outlined to me.
    Mr. Wrona was very, very blunt. He made it clear that 
imports produced by forced labor were the bad guy when it came 
to destroying the livelihood that he and his colleagues 
enjoyed. And Ms. Vandenberg said we had better up the 
enforcement efforts. And Ms. Hughes said the private sector 
wants to cooperate. And to me, what it tells me as we start 
this discussion, is protecting American jobs against imports 
made with forced labor, and still going to bat for workers 
exploited around the world, are not mutually exclusive. We can 
save the jobs of people like Mr. Wrona, and we can help address 
exploitation around the world.
    We have a lot of colleagues interested in this issue, and 
we have a new administration, and it is time to step up our 
game and do the work you are talking about. And I thank our 
excellent panel.
    We are now going to turn to Senator Crapo.
    Senator Crapo. Thank you very much, Mr. Chairman.
    I will go first to you, Ms. Hughes. As I alluded in my 
opening statement, U.S. businesses are partners in combating 
forced labor. It seems imperative to me that Customs and Border 
Protection should develop an enforcement strategy that works 
with reliable American businesses to focus on unscrupulous 
actors.
    What elements would you look for in such a strategy?
    Ms. Hughes. Thank you so much for that question. You know, 
I think that is at the heart of the discussion today.
    First, we are looking for more transparency. We want to be 
partners with CBP, particularly those companies that are 
trusted traders and have already been fully vetted and provided 
extensive details about their supply chain to Customs and 
Border Protection.
    We think that we can do more working together than working 
separately, and looking at enforcement actions--the real 
actions that will get to the perpetrators of the crime, which 
is not the U.S. companies that are good corporate citizens.
    Senator Crapo. Thank you. And continuing on that line, some 
of the businesses in your association have developed supplier 
codes of conduct.
    Ms. Hughes. Yes.
    Senator Crapo. They sort of rely on international 
instruments like the Universal Declaration of Human Rights, 
some of them, the International Labor Organization's 
conventions, and it is positive that American companies are 
striving for these high ethical standards.
    My question is, what do you view as some of the minimum 
elements that an effective code of conduct should contain? And 
what can CBP do to help reinforce those efforts?
    Ms. Hughes. Thank you so much. You know, the basic thing is 
no forced labor in our supply chain, period. And there is no 
question that in the code of conduct for every company that is 
a basic.
    But how can CBP work with us on this? Part of that is 
sharing of information so that when they have gathered 
information, as other speakers have mentioned, and we have 
gathered information, that we can share that information 
together to focus on eliminating the practices that already 
exist.
    Senator Crapo. Well, thank you.
    And that leads to a question for you, Dr. Bonanni. It 
appears that we are actually under-utilizing the potential of 
technology in combating forced labor imports.
    What can be done at CBP to expedite the adoption of the new 
technologies?
    Dr. Bonanni. I think that is right, Ranking Member Crapo. 
We are fighting these bad actors with technology from the last 
century. And rather than use such blunt instruments as banning 
imports from an area, we need to move towards the real use of 
supply chain transparency technology, which many industry 
members are already using today. What I mean by that is, we 
need to grow the scale at which Customs can enforce these 
issues. Remember, it is not just the areas that have been 
identified as being at high risk for forced labor, because as 
soon as an area has been identified that way, the bad actors 
will try to move the products to areas that are considered low-
risk.
    And so we need to have transparency on both those high-risk 
and low-risk sourcing areas to make sure that we can stamp out 
forced labor and any path that it might take to market.
    I would also urge Customs to set a very simple standard for 
the kind of company data that should be collected, so that 
companies can confidently import goods into the country.
    And then--I know I only have a little bit of time to 
explain what is a relatively complicated technology to address 
a very complex problem, but we are very open to, and in fact 
are already working with the government, including having been 
selected to provide traceability for the Department of Labor's 
recent project to trace goods of child labor in India.
    And so I welcome your questions, but also further questions 
from the committee on how we can help to set that data standard 
and really go big, so that all of the companies are pushing 
transparency to the same degree and tackling the problem 
together.
    Senator Crapo. Well, thank you.
    And, Ms. Vandenberg, I have read that your research 
indicates that many countries lack the political will to 
criminally prosecute forced labor. That is deeply troubling. It 
is simply not enough to stop goods made with forced labor from 
entering the United States. Forced labor is a crime against 
humanity, and perpetrators must be punished.
    What can we do to incentivize countries to bring such 
prosecutions?
    Ms. Vandenberg. That is an excellent question, but I think 
we need to start at home. I think it is highly troubling that 
the United States has not brought any cases whatsoever in their 
jurisdiction to prosecute global supply chain forced labor in 
the U.S. Federal courts.
    And what we have seen instead are civil cases brought by 
plaintiffs and victims themselves in U.S. courts, using 
strategic litigation. I think that the Trafficking in Persons 
report issued by the State Department should focus very deeply 
on this area to prosecute forced labor around the world. It 
does now, but I think it should emphasize that even more.
    Senator Crapo. All right; thank you.
    My time has expired. Thank you, Mr. Chairman.
    The Chairman. I thank my colleague.
    Senator Cantwell is next.
    Senator Cantwell. Thank you, Mr. Chairman. I appreciate the 
hearing.
    The United States Department of Justice led an interagency 
Task Force on Human Trafficking in Fishing in International 
Waters and issued a report just this January. It made specific 
recommendations about combating forced labor in fishing on the 
high seas.
    The U.S. Government promoted the industry effort to help 
due diligence in the global supply chain. And among other 
actions, the task force reported that they recommend 
strengthening the capacity to collect, fuse, and analyze data 
from multiple sources to human trafficking in international 
waters. And it notes that more data from the fishing industry 
regarding this issue of human trafficking, or the risk of it, 
would be useful. And I fully agree with that.
    I want to ask Dr. Bonanni if he thinks technology might 
help in the traceability of the seafood problem, or promote 
more transparency so that we could use that on a global scale? 
And I would also like to ask Ms. Vandenberg if she could 
comment on Customs and Border Protection and enforcing laws to 
prevent seafood and other products tainted by forced labor from 
entering the United States.
    Dr. Bonanni. Thank you, Senator. You know, the problems you 
describe are tragic and occur in that industry on a huge scale. 
There is absolutely the need to install the same kind of 
tracking that we do for land-based industries: factories, 
warehouses, mines, farms. There is absolutely the need to 
install that technology on fishing vessels and to track them, 
because of the fact that they can in fact operate extra-
jurisdictionally.
    And so I would urge that the same traceability approaches 
that we have seen the leaders of industry implement today for 
land-based assets be deployed and be part of the required 
tracking of vessels, which is required for many other reasons.
    And I would urge that we do it under the same auspices as 
one of the other programs that we support that Customs has in 
place, the Customs Trade Partnership Against Terrorism, the so-
called CTPAT, which again, for the same reasons, uses that and 
mandates a level of tracking and tracing of goods for a 
different reason. But the same technology could be used in this 
way to ensure the abolition of forced labor on fishing vessels.
    Senator Cantwell. So Customs and Border Protection should 
take the lead on that?
    Dr. Bonanni. I am not versed in policy well enough to tell 
you that.
    Senator Cantwell. Okay; all right.
    Ms. Vandenberg?
    Ms. Vandenberg. Yes, Senator Cantwell; thank you for that 
question.
    CBP has actively enforced WROs on individual fishing 
vessels, looking largely at long-line tuna fishing vessels 
flagged in Taiwan. Many of those petitions have been put in by 
Greenpeace. The problem that we have is that the Seafood Import 
Monitoring Program, SIMP, which tracks seafood coming into the 
United States, only covers 13 varieties of fish and seafood. 
That is only about 40 percent of the fish coming into the 
United States. I would have to admit, we are way behind the 
Europeans, because Europe, at this point, tracks 100 percent of 
seafood coming into their markets.
    And so we would strongly suggest that Congress increase the 
scope of the Seafood Import Monitoring Program run by NOAA so 
that it covers all seafood coming into the United States. One 
of the great problems that we have as NGOs filing petitions 
with CBP is that we do not have to just file evidence of forced 
labor, we also have to show that it is coming into the U.S. 
markets, which, without seafood tracing at a 100-percent level, 
is extremely difficult.
    Thank you.
    Senator Cantwell. And so how are the Europeans doing it? 
Are you saying they put the resources behind it?
    Ms. Vandenberg. I do think that this is a resources issues. 
And a number of NGOs that focused on fishing and illegal 
fishing have suggested that this program, the SIMP program, 
could be extended with just additional resources here in the 
United States.
    Senator Cantwell. Well, thank you.
    Mr. Chairman, I really do believe--as we have said at other 
hearings related to USMCA and others--that capacity building 
and enforcement go hand in hand. So if we do not have the 
capacity--and so we will certainly work at this. We will take 
that charge back to NOAA.
    Is there anything else they need to do with Customs and 
Border Protection in a resource way, or the Coast Guard, to 
make this work?
    Ms. Vandenberg. I do think that there is a problem with 
interagency communication, and interagency cooperation. And so 
we would push very hard for Customs and Border Protection to 
work more closely with the Department of Labor and with ILAB. 
They are already working with NOAA, so I think that is 
progress. The limitation is in the number of seafood varieties 
they track.
    Senator Cantwell. Okay. Well, let's get them all tracked. 
So, anyway, thank you so much.
    Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Cantwell. It is important 
for the country, and it is especially important for the people 
who give us an election certificate in the Pacific Northwest, 
and I thank you for doing that.
    Next will be Senator Grassley.
    Senator Grassley. Thank you, Mr. Chairman, for holding this 
hearing. We need fairness in our trade, and we need to level 
the playing field. And you are hitting that very hard with this 
hearing.
    I want to lead into a question with Ms. Hughes this way: 
the Australian Strategic Policy Institute in January of last 
year said around 600 ethnic minority workers from Xinjiang were 
employed at a shoe manufacturer whose primary customer is Nike. 
These workers were mostly Uyghur women who at night were 
required to study Mandarin and sing the Chinese national 
anthem. New evidence from a Nankai report--a Chinese academic 
publication with information from public government sources--
shows that the primary aim of what the Chinese call ``labor 
transfers'' are not economic but political and demographic. The 
report, which was made public in English by the Victims of 
Communism Memorial Foundation, details the state's campaign of 
cultural and demographic genocide.
    In your testimony, you said you want to look at the role of 
the U.S. CBP to implement enforcement so that no products with 
forced labor reach the United States. So my question: would you 
be supportive of holding companies accountable by having 
Customs and Border Protection issue Withhold Release Orders on 
products that were manufactured with forced labor?
    Ms. Hughes. Thank you very much for the question. 
Obviously, this is one of the most critical issues facing us 
today when we talk about forced labor. And absolutely, speaking 
on behalf of the fashion industry and all of those products, 
there is no room for forced labor in our supply chains.
    And we did not oppose the Withhold Release Order on 
products from XPCC, or products from the XUAR region that are 
made with forced labor. We recognize this is a critical issue. 
We have read the reports that have come out, and companies have 
responded strongly to eliminate any of those products from 
their supply chain to the best of their ability, where they 
have the transparency in the supply chain. And we continue to 
support those efforts.
    That is why we want to work closer with CBP, if we can, to 
eliminate the forced labor.
    Senator Grassley. Could you speak to what American 
companies like Nike are doing to eliminate forced labor from 
their supply chains?
    Ms. Hughes. I wouldn't put myself forward to represent 
Nike, because I know they can speak well for themselves. But 
what I do know is that companies such as Nike, and many other 
of the global brands and retailers, have already taken action 
in their supply chain.
    They have taken action, and we certainly can respond after 
the hearing with specifics, you know, from the company level. 
But I am very confident that they are not doing any business in 
the XUAR region, nor are the other brands and retailers that we 
represent.
    Senator Grassley. Okay.
    To Dr. Bonanni, I am going to skip a lead-in to your 
question and get immediately to the question, because time is 
running out. With the technology that you have developed at 
Sourcemap, are you able to know how many factories in China use 
forced labor from Uyghur Muslims? And I was talking about 
Uyghur Muslims in my opening, which I skipped to use the time 
efficiently.
    Dr. Bonanni. Of course. Thank you, Senator. And we all 
recognize how important this issue is. With our technology, we 
are able to provide to our customers, to leading brands in the 
U.S., importers, the data that they need to know whether they 
can confidently rely on a supplier, whether that supplier is 
direct or is a supplier of a supplier, or a supplier of a 
supplier of a supplier.
    The main issue we have when we are collecting data from 
Xinjiang is the lack of willingness to share. And for a company 
like us--we are a transparency platform. So as soon as there is 
no more transparency, then the risk becomes absolute, and our 
customers will typically choose to vote with their feet and 
look elsewhere for sourcing.
    Senator Grassley. Okay. I have just 10 seconds left, so one 
other quick question. Are you able to track which goods were 
produced at factories using forced labor in China?
    Dr. Bonanni. We are absolutely able to give our customers 
the confidence to know which factories have a very high chance 
of using forced labor.
    Senator Grassley. Okay. Thank you, Mr. Chairman.
    The Chairman. Very good.
    Our next panel member will be Senator Menendez, and Senator 
Crapo is going to chair because I have to run to the Senate 
floor and speak briefly. And we thank Senator Crapo, and 
recognize Senator Menendez.
    Senator Menendez. Thank you, Mr. Chairman.
    Ms. Vandenberg, in your testimony you referenced a recent 
GAO report that found that, as a result of a September 2019 
order that blocked the importation of rubber gloves from 
Malaysian producers, many workers at the company were 
terminated, increasing their risks of further exploitation.
    We should all be able to agree that our enforcement of the 
laws against forced labor should not have the perverse effect 
of making the victims of forced labor even more vulnerable. You 
suggest creating an emergency fund for workers to help mitigate 
these efforts.
    How do you envision that fund working? And what would be 
the best way to pay for it?
    Ms. Vandenberg. Thank you, Senator Menendez. We have talked 
a lot today about Withhold Release Orders. We have not talked 
about fines and penalties. Because bringing goods made with 
forced labor into the United States is forbidden, the importers 
should pay fines. Those fines should then be used to fund an 
emergency fund.
    There has been only one finding issued by Customs and 
Border Protection, and only one penalty so far that has been 
initiated against a company. It was a $575,000 fine against 
PureCircle for bringing in shipments of stevia, the artificial 
sweetener that was subject to a Withhold Release Order.
    So what we would like to see is that money for fines go not 
to the Treasury, and not to the General Fund, but see that 
money go to an emergency fund for workers. The ability to 
create this emergency fund is really predicated on greater 
enforcement by CBP and higher fines. So that is the idea, but 
we look forward to working with you to put flesh on the bones 
of the proposal.
    Senator Menendez. Well, I appreciate you offering a 
potential solution. As we work to reauthorize the Trafficking 
Victims Protection Act in the Senate Foreign Relations 
Committee, I look forward to working with you more on this idea 
and seeing if we can put it into action.
    In my role as chairman of the Foreign Relations Committee, 
we have been particularly focused on goods and services source 
information sharing by U.S. companies, ranging from computer 
terminals and other high-tech goods, to cotton used in the 
manufacturing of textiles and apparel. Last year I wrote to 
then-Commerce Secretary Ross asking him to establish clear and 
transparent standards of procurement and requirements for 
additional labor and human rights vetting for any goods or 
services that are manufactured in Xinjiang.
    My colleagues Senators Murphy and Rubio have introduced 
bipartisan legislation, the Uyghur Forced Labor Prevention Act, 
that would do this and more, including authorizing the use of 
sanctions on individuals knowingly facilitating forced labor. 
And I look forward to having a markup, in some form in the near 
future, of that type of approach.
    So let me ask, Dr. Bonanni, in your experience, how 
widespread is the problem of forced labor in Xinjiang, and are 
there specific companies, big or small, that you have seen 
knowingly disregard human rights for the sake of profit?
    Dr. Bonanni. You know, Senator, I think--I think the extent 
of the problem is widely documented. In fact, companies come to 
us, to Sourcemap, because they are looking to make completely 
certain that they are not buying anything from Xinjiang. But 
let me back up a little bit.
    There are 155 goods identified by the Department of Labor 
from 77 countries at risk of forced labor and child labor. So 
the problem extends far beyond Xinjiang. The neighboring 
region, or even China as a country, I think needs to be tackled 
on a global basis. And not the least of which, the problem is, 
as soon as one region becomes marked at high risk, those goods 
will find their way to markets through other regions.
    And so we have to apply the data collection--the 
transparency as we call it--we have to apply it uniformly 
across supply chains, or else goods will find their way to 
market one way or another, and it will be nearly impossible.
    I do want to underscore the complexity here. A 
multinational company has thousands of suppliers, maybe tens of 
thousands, and they have not, by and large, identified all of 
the actors in the supply chain yet. So by setting a clear 
standard for what Customs can do, it makes it very easy for 
companies to obtain that baseline level of visibility to know 
who the actors are--not just direct, but indirect; and not just 
in high-risk regions, but in low-risk regions as well where 
product is likely to be smuggled.
    Senator Menendez. The Finance Committee was debating Trade 
Promotion Authority legislation in 2015. It passed my amendment 
that barred fast-track procedures for any trade agreement with 
a country on Tier 3 of the State Department's Trafficking in 
Persons report, which essentially are the countries whose 
governments do not expend even a minimum effort to fight forced 
labor or sex trafficking.
    Ms. Hughes and Ms. Vandenberg, how have these disciplines 
worked out so far? And how should we be looking to improve 
forced labor standards in future agreements?
    Ms. Hughes. Thank you so much. I will go first. We think it 
is essential that those provisions are included in our trade 
agreements. We need the support from, not just the U.S. 
Government that we have been really focused on during the 
hearing, but also our international trading partners, to 
eliminate forced labor in the supply chain.
    So we very much support that approach and look forward to 
continuing to work to that end.
    Ms. Vandenberg. And I would completely agree. It is our 
view that all trade agreements that are negotiated need to have 
provisions that ban the importation of goods produced by forced 
labor.
    And the reason is clear why we need this. It is because 
goods brought into the U.S. market that are blocked by a 
Withhold Release Order can simply be trans-shipped. And we have 
evidence that goods are being trans-shipped to Canada and to 
other markets.
    And so all of the markets need to have this importation 
ban.
    Senator Menendez. Thank you, Mr. Chairman.
    Senator Crapo [presiding]. Thank you, Senator Menendez.
    I do not see another Senator on camera right now. Senator 
Thune is next. Senator Thune, are you here?
    [No response.]
    Senator Crapo. All right, I have--I do see Senator 
Whitehouse. Senator Whitehouse, would you like to proceed?
    Senator Whitehouse. I would be delighted to. Thank you very 
much. And I want to, first of all, thank you, Senator Crapo, 
and our chairman for this hearing. And I want to thank Chairman 
Cantwell for her remarks and focus on fisheries. And I want to 
follow up on her questioning there.
    One of the things that we have been trying to do has been 
to get the U.S. military to share its information better with 
our efforts at enforcement against pirate fishing in the open 
oceans. Our first effort to get the Navy to do this was met 
with the response that we should go pound sand. It was not 
their job. So we came back, and in the following NDAA got the 
Coast Guard roped into it. And there is a lot of information 
that the Navy and the Coast Guard have access to about the 
travel of ships on the high seas.
    So as we are dealing with NOAA, with the Department of 
Labor, and with Customs and Border Protection folks on this, 
there is also this overlay of military and security 
intelligence that we should have.
    I want to thank the Pew Trusts, and Vulcan, and other 
groups that have been really active in this space. Vulcan 
describes what it calls a ``devastating and corrupt criminal 
conspiracy at the heart of the seafood industry,'' and it is 
not just a question of forced labor, it is a question of actual 
slavery.
    And of course if you are shipping stuff illegally around 
the globe, it is just as easy to put arms, or human trafficking 
victims, or other contraband in with the fish as well. So 
cleaning up this abuse of the high seas, I think is a real 
priority. And I wanted to ask Ms. Vandenberg what you see 
happening with this, and how we can work better together to 
combine all of the different assets and eliminate, once and for 
all, this problem.
    A lot of things, like vehicle monitoring systems, are 
useful for providing data, but that presupposes that the 
fishing vessel is legitimate enough to install a vessel 
monitoring system, and not corrupt enough to flip it off as 
soon as it gets out of the territorial waters of its home 
country.
    And it is really pretty gross stuff. I mean, you have 
people living in cages. You have stories of people who, when 
they got sick, were thrown overboard because it was too much of 
a pain to go and get them treatment.
    I am sure it is a pretty brutal criminal conspiracy out 
there, and I am glad that Chairman Cantwell brought attention 
to it, and I hope we will keep that as a focus of this. It 
combines all the worst elements of forced labor, slavery, 
piracy, and international crime.
    Ms. Vandenberg, your reaction.
    Ms. Vandenberg. Senator Whitehouse, I could not agree with 
you more. If you look at the reporting, for example, that is 
done by Ian Urbina and the publication of his book, ``The 
Outlaw Oceans,'' we are talking about modern-day slavery on the 
high seas in a way that is outside the reach of law, unless 
countries choose to prosecute. And so murders that are 
committed against workers and fishermen on these ships are 
unpunished and are treated with total impunity.
    I would just add a footnote to your comment on the Coast 
Guard. Several years ago we learned that a fisherman had been 
handing notes to Coast Guard officers boarding vessels. Those 
notes said, ``Please help me.'' We are not certain at this 
point what the Coast Guard's protocol is when a fisherman on a 
boat cries out and asks for help because they are being held in 
forced labor.
    So I would ask that the Coast Guard's protocol be clear 
about what they do, and how the U.S. Government will intervene 
when it finds forced labor on a vessel.
    Senator Whitehouse. Well, under the new NDAA provisions 
that we got put in, they are going to have to do more reporting 
on this. And we will be sure to add that to the questions that 
we have in our scrutiny of all of this.
    The only thing I would add, Mr. Chairman, is that while 
they are not an outright pirate fleet, the Chinese fishing 
fleet is behaving in extraordinarily aggressive ways, both as 
regards crewing, picking people off of other countries and 
taking their papers and putting them into effective servitude, 
and also in terms of violating other countries' sovereignty--
and even in the case of one instance in Indonesia, sending a 
Chinese military vessel into Indonesian waters to forcibly take 
back from Indonesian coastal authorities a Chinese pirate 
fishing vessel that it had seized and was going to sink, having 
seized it.
    So it was basically an act of war, but the Indonesians do 
not want to tangle with the Chinese on that level. But in my 
trips, particularly with Senator McCain across the Pacific 
region, country after country after country raised concerns and 
complaints about the improper pressure of the Chinese fishing 
fleet against their sovereignty.
    So I think it is an area where we can make some real 
friends in the region, if we are seen as being active 
supporters. I flag that for my colleagues, and thank you for 
recognizing me.
    Senator Crapo. Thank you, Senator Whitehouse. And those are 
very appropriate observations.
    Next will be Senator Cortez Masto. And I should also say to 
the other Senators that I know we have a lot of Senators who 
are trying to shuffle a lot of actions today, but we need you 
to start coming back for the hearing.
    Senator Cortez Masto?
    Senator Cortez Masto. Thank you. Thank you, Ranking Member 
Crapo.
    Ms. Vandenberg, I would like to start with you. And thank 
you for this conversation today. I so appreciate the work that 
you have been doing, providing legal representation to 
survivors of human trafficking. This is an area that I have 
worked in previously as the Attorney General of the State of 
Nevada.
    As you mentioned in your testimony, Federal prosecutors in 
the United States indicted just 12 forced labor cases in the 
entire country in the year 2019. So what would you say are the 
biggest barriers that prevent traffickers from being prosecuted 
in the United States?
    Ms. Vandenberg. Focusing on the global supply chain piece, 
so on the international cases, I think that there has been a 
tremendous reluctance at the Department of Justice to use the 
extraterritorial jurisdiction tools that Congress delivered in 
2008. I think that is partly a resources problem. I think that 
the U.S. Attorneys' offices are reluctant to spend the 
resources required to do international investigations.
    I think we need international investigators who are 
competent and trained to do the sort of investigations that 
would be required to bring these cases into a U.S. Federal 
court.
    Again, looking into the FCPA, as an example, many of those 
cases are brought because companies self-report. Companies go 
to DOJ with evidence and white papers of their own and inform 
DOJ of bribes that have been paid before they get caught.
    We do not have that same tradition with forced labor. 
Forced labor is currently treated as just a corporate social 
responsibility issue, which is enormously problematic.
    Senator Cortez Masto. Yes, I cannot agree more with you. To 
me, any type of human trafficking we need to aggressively 
enforce, and make sure we are doing everything we can. And I 
just so appreciate you having this conversation.
    Let me ask you--with respect to forced labor, can you talk 
a little bit about how well the different Federal departments 
and agencies have coordinated around this strategy and tactics 
to meet this common goal? What should we be doing in Congress 
to help facilitate, if that is not happening?
    Ms. Vandenberg. I think that it is improving. And certainly 
the GAO has recommended increased interagency cooperation 
across the board.
    One of the issues that we have is that Customs and Border 
Protection investigations are criminal investigations, and so 
there are legitimate reasons why it is not possible to share 
all of the evidence.
    The increased cooperation that we are seeing, and that we 
welcome, is increased cooperation between Customs and Border 
Protection, ICE, and the Department of Justice. Because the end 
game here has to be prosecution of forced labor in global 
supply chains. And so that criminal justice alliance is what 
will lead to those prosecutions.
    Senator Cortez Masto. And can you touch a little bit on why 
prosecutions are so important? Just in general for people to 
understand, why does this make a difference?
    Ms. Vandenberg. On the forced labor side of the house, it 
sends an incredibly strong message that forced labor is not 
tolerated. Again, I have dealt with agents on forced labor 
cases where the agents have essentially pooh-poohed the case 
and said, ``Well, this is just a dispute between an employer 
and an employee. This is not worthy of the Federal attention.''
    The reality here is that we have people who are facing 
threats of deportation, threats of violence, physical violence, 
sexual violence, in order to compel them to work. These cases 
are worthy of Federal attention, and it will be a much greater 
deterrent if we can say to corporations and perpetrators, ``If 
you commit these crimes, the U.S. Government will prosecute 
you.''
    Senator Cortez Masto. Thank you very much.
    Thank you, Mr. Ranking Member.
    Senator Crapo. Thank you.
    And next we will have Senator Brown.
    Senator Brown. Well, thank you, Mr. Chairman; thank you, 
Senator Crapo. I thank Chairman Wyden for holding this hearing 
today. He and I have done a lot of work together to close the 
consumptive demand loophole to combat forced labor and child 
labor. I am excited. This is the first hearing that the Finance 
Committee is doing in the trade space this year.
    I have two questions. According to a GAO report issued 
earlier this month, CBP has issued 29 Withhold Release Orders 
since February 2016. Five of them cover a type of good produced 
in a specific location or region, such as cotton in Xinjiang, 
China, which produces 80 percent of Chinese cotton for apparel 
production in China.
    The Center for Global Policy issued a report that suggests 
more than a half-million Uyghurs and other Muslim minority 
people in Xinjiang have been forced into picking cotton.
    Chairman Wyden and I wrote to the previous administration 
urging them to do more to enforce the law and stop importing 
products made by state-sanctioned forced labor. We clearly must 
do more.
    Ms. Vandenberg, you have recommended we strengthen 
enforcement of the existing regional WRO on cotton and cotton 
products in Xinjiang. Can you elaborate on your 
recommendations, please?
    Ms. Vandenberg. Absolutely. I work with a coalition of 
nongovernmental organizations, the Tariff Act Advisory Group 
(TAAG), and we have actually submitted concrete recommendations 
to CBP that I referenced in my written testimony, encouraging 
them to robustly enforce region-wide WROs, and particularly the 
region-wide WRO on cotton and tomatoes in Xinjiang.
    So very specifically, just three points.
    Number one, there needs to be greater transparency. We do 
not have any insight at this point into shipments detained 
under the region-wide WRO that banned Xinjiang cotton and 
tomatoes. So we need more insight to see what is coming into 
the country.
    Secondly, this is a very narrow approach. Looking only at 
goods coming directly from Xinjiang ignores the fact that has 
been raised in this hearing that goods will be trans-shipped, 
not just to other countries, but also from other regions in 
China. Brenda Smith of Customs and Border Protection's trade 
office has said herself that China itself tracks cotton down to 
the bale level. And so we need to also be tracking goods down 
to that level.
    The last point I would make is just to reference the 
testimony from Scott Nova from the Worker Rights Consortium 
before the House Ways and Means Committee. He pointed out, and 
I think it is true, that at this point, companies should simply 
not be in Xinjiang. There is no reason to be there anymore. And 
this rebuttable presumption that goods coming from the region 
are made with forced labor, I think must stand.
    Senator Brown. Thank you so much, Ms. Vandenberg. I thank 
you for devoting your professional life to such important work.
    My other question is for Mr. Wrona. Thank you for your 
advocacy on behalf of organized labor and the steelworkers. I 
wear a pin I've worn through most of my congressional career; 
it's a pin designed and stamped by United Steelworkers, so, 
thank you for that.
    One of the big themes that seemed to come across today's 
testimony is a need for additional transparency and better 
coordination among the CBP, other government entities, and 
stakeholders.
    GAO has recommended CBP strengthen its communication with 
stakeholders and make a description of its WRO revocation and 
modification process publicly available. Several people today 
have recommended that CBP expand its collaboration and 
communication with other agencies like USTR--and we are 
thrilled with the 98-0 vote for the new U.S. Trade Rep--ILAB, 
the State Department, as well as nongovernment organizations.
    So, Mr. Wrona, my question for you: what additional 
transparency would help unions and other worker support 
organizations protect workers who find themselves at risk of, 
or impacted by forced labor? And as you answer that, I ask you 
to answer this question, too: how does greater transparency 
around CBP decisions of ongoing investigations help protect 
workers at risk, as well as U.S. workers who are impacted by 
this?
    Mr. Wrona. Well, Senator Brown, to your first question, I'm 
a maintenance worker in a plant, and I don't have that much 
knowledge on the transparency issue. But I do know that if I am 
at work and I have a job to do, it gets checked, whether by 
quality, by management, by whoever.
    So I think it should be our government's job such that 
everything that is coming into this country can be stopped if 
they are products from forced labor. And greater transparency 
will help stop illegal goods and keep corporations that are 
honest in our supply chains. Thank you.
    Senator Brown. Okay; thank you, Mr. Wrona.
    Mr. Chairman, thank you for the time, and I appreciate it. 
Thanks for doing this.
    Senator Crapo. Thank you, Senator Brown.
    Next is Senator Thune, and then Senator Warren.
    Senator Thune. Thank you, Mr. Chairman.
    Ms. Hughes, in your written testimony you state that member 
companies of the Fashion Industry Association have made, and I 
quote, ``extensive progress toward removing links with forced 
labor in their supply chains.'' While forced labor is deeply 
wrong wherever it occurs, there is increasing evidence of 
Uyghur Muslim forced work in cotton fields and factories in the 
Xinjiang region of China.
    What actions have your member companies taken to help 
ensure the goods they are selling are not from forced labor in 
China? And what is the most important thing that the U.S. 
Government can do to help, in your mind?
    Ms. Hughes. Thank you so much. I want to be very clear to 
the members of the committee that brands and retailers have 
taken action to not have any links to trade from the XUAR 
region and the Uyghurs.
    You know, even before the Withhold Release Order was 
issued, it was clear from the information that was publicly 
available that there were problems and concerns in the region, 
and particularly with the pandemic where there was no ability 
for anyone to actually visit a facility to look for themselves. 
I think it is clear that companies have cut off those ties with 
the region.
    So what could we really use? You know, I think the big 
takeaway from the hearing today is that more resources are 
needed overall for dealing with this issue. And for our 
industry in particular, we continue to look for more 
transparency--you know, release of names of bad actors, when we 
know who they are, release of best practices. When we see 
those, what is working--which may be tracking, transparency, 
technology solutions--more resources are definitely part of 
what we are looking for. And we look forward to working more 
with you and the committee.
    Senator Thune. Let me, just as a follow-up, talk a little 
bit about those Withhold Release Orders against Chinese 
entities----
    [Loss of audio].
    Senator Thune. In November, CBP issued a Withhold Release 
Order on cotton products from Xinjiang, and 43 shipments valued 
at more than $2 million. CBP is doing excellent work. But in 
your estimation, how can the Withhold Release Order process be 
made more effective?
    And perhaps on a related theme, what new technologies 
should CBP be considering to detect where supply chains are 
most susceptible to forced labor?
    Ms. Hughes, do you want to start with that? And if others 
have comments, that would be great. Thanks.
    Ms. Hughes. Thank you so much. When we look at the data for 
what had been detained, what you see is that those were 
obviously small shipments, probably from smaller producers. So 
we go back to, CBP needs to work with trusted traders--that is, 
the companies that have already been vetted and provided that 
information on their supply chains--and be able to focus their 
energies more on the bad actors.
    The folks who are not part of trusted trader programs and 
are probably not the large importers to the United States, I 
think that that is one way to kind of use the resources that we 
do have more effectively.
    Senator Thune. All right; anybody else quickly on that?
    Ms. Vandenberg. I would just like to add, very briefly, 
that we are very concerned about the process for modification 
and revocation of these WROs. It is not just their issuance, it 
is also how they are removed over time.
    And it is very important that workers be at the table to 
actually articulate and determine whether the remediation that 
the company claims it has done has actually been achieved.
    We are seeing reimbursement of recruitment fees being 
completed over a period of months, rather than in a lump sum, 
which basically means that workers are loaning corporations 
money, which is not acceptable. So workers really need to weigh 
in on the validity of remediation plans that are submitted.
    Senator Thune. Let me just quickly shift to the labor 
audits. There was a Wall Street Journal report in September 
that said at least five auditing firms say they will not offer 
supply chain inspections in China's Xinjiang region. There was 
a U.S. Government report last year that stated the supply chain 
auditors had reportedly been detained, threatened, or stopped 
by Chinese authorities in the region.
    As American companies look at their supply chains, are they 
finding it more difficult to find independent labor audit 
inspections in Xinjiang? And given the lack of access for 
independent auditors, how are companies adapting their supply 
chains from the area? And I only have about 20 seconds left.
    Ms. Hughes. If I can jump in, just briefly, that is why 
companies are not doing business in the region. If you cannot 
audit--and we follow the example of the Better Cotton 
Initiative or the Fair Labor Association--many of the 
organizations that our members work with were not doing 
business in the region for exactly that reason.
    Senator Thune. Okay. I see I am out of time. I would love 
to get others' comments on that, but maybe they could supply 
them for the record.
    The Chairman. Very good.
    Senator Warren?
    Senator Warren. Thank you, Mr. Chairman. I appreciate it. 
And thank you for having this hearing.
    The use of forced and trafficked labor in China and too 
many other places around the world ranks as one of the worst 
abuses of basic human rights. We have a moral obligation to 
stamp out these despicable violations and to protect workers, 
regardless of where they are in the world. This is about our 
values, but it is also about consequences here at home.
    American consumers are unwittingly buying products made 
with forced labor at their local clothing stores. American 
workers are being placed in the impossible position of 
competing against forced labor and child labor. And big 
American corporations who have spent decades moving jobs 
overseas are taking advantage of forced labor to improve their 
profitability.
    Mr. Wrona, are corporations doing enough themselves to 
scrutinize their own supply chains for forced labor?
    Mr. Wrona. No. The answer is, absolutely they are not.
    Senator Warren. That pretty much answers it.
    So let's talk about what corporations are doing. Apple, 
Nike, Coca-Cola, companies that are as American as apple pie, 
are just a few of the brands that are suspected of relying on 
suppliers that use forced labor. And they have spent huge 
amounts of money, and deployed armies of lawyers and lobbyists, 
trying to water down legislation that would make them take more 
responsibility for their supply chains.
    So, Mr. Wrona, how do you reconcile these companies' 
actions with their strong public statements against forced 
labor? Do you--or let me ask it another way. Do you think they 
are likely to take meaningful steps to clean up their supply 
chains voluntarily?
    Mr. Wrona. No, I don't think they will. That is why I 
believe the government has a role to protect our American 
workers from forced labor. Corporations making voluntary 
changes has been talked about for decades, of course, but this 
topic was--my father brought this topic up when I was a 
teenager. We talked and talked and talked about it, and not a 
lot gets done about it. It needs to stop now.
    Senator Warren. Yes. Well, I appreciate your point about 
how this has been going on for a long time, and it is just more 
talk. You know, there is a lot we need to do across government 
to end forced labor, and it starts with holding corporations 
that profit from forced labor accountable.
    And that means corporations should not be allowed to hide 
behind cheap talk or opaque audit processes. They need to show 
us that their supply chains are clean, and to face meaningful 
consequences if they are not.
    We also need to pass meaningful anti-corruption legislation 
to prevent corporate lobbyists from sabotaging efforts to put 
our core values ahead of corporate profits. Under no 
circumstances should our supply chain support the repression of 
workers' right overseas, or undercut workers' rights and 
workers economic security here at home.
    It is long past time that corporations are held to account 
for their complicity in forced labor.
    Thank you, Mr. Chairman. I yield back my time.
    The Chairman. Thank you, Senator Warren. You and I both saw 
that Mr. Wrona set the all-time record for succinctness. And we 
have appreciated that.
    Senator Warren. And that is because there is no ambiguity 
on this point. As he said, we have been talking about that 
since we were all teenagers. We have understood this problem, 
and Mr. Wrona is ready to go on it.
    The Chairman. Well stated.
    Senator Carper?
    [Pause.]
    Senator Carper. Can you see me?
    The Chairman. Yes.
    Senator Carper. Can you hear me? Tommy, can you hear me? 
Tommy, can you see me? Apologies to The Who. [Laughter.]
    Here we go. First I want to thank you for holding this 
hearing, Mr. Chairman, Ranking Member. I do appreciate the 
witnesses joining us as well.
    I want to--and we are here to--discuss the challenges that 
we are facing when it comes to forced labor in our supply 
chain. It is a timely topic, and one that is important.
    Throughout my time in public service as Treasurer, 
Congressman, Governor, and Senator, and Naval officer before 
that, I have tried to live by a few guiding principles. And 
some of them may sound familiar to all of you. One of them is 
The Golden Rule, the idea that we ought to treat other people 
the way we want to be treated.
    And another one comes out of Bible study, later today. 
Barry Black, the Senate Chaplain, always reminds us to show up, 
and we have about seven, or eight, or nine of us who show up, 
for those who need the most help in the U.S. Senate, and he 
always reminds us of a verse of scripture, Matthew 25, about 
the least of these, that we need to care for the least of these 
among us.
    And I want to live up to this. I think we have a moral 
obligation to those in need. We cannot turn a blind eye with 
respect to this obligation.
    I have been heartened to see that the U.S. Customs and 
Border Protection has increased its forced labor enforcement 
actions, including, I am told, nearly 30 Withhold Release 
Orders in the past 5 years--30 Withhold Release Orders in the 
past, I guess it is the past 5 years.
    I know there is still a good deal more we can do to ensure 
that our laws forbidding forced labor are not just words on a 
piece of paper, but that they really are enforceable. This 
means working with a number of entities, Federal agencies for 
one, private-sector businesses large and small, and 
nongovernmental organizations, consumers alike, to increase 
transparency in our supply chains.
    The question, if I could, for Ms. Hughes and Ms. 
Vandenberg, is, could you share with us one or two 
recommendations for Customs and Border Protection and how that 
agency, that entity, can improve its communications with key 
stakeholders on forced labor, including industry and 
nongovernmental organizations? Please, Ms. Hughes, Ms. 
Vandenberg?
    Ms. Vandenberg. Thank you very much. As I know I have said 
multiple times today, this enforcement is the critical way that 
brands and retailers can guarantee that we are maintaining 
clean supply chains, and making sure that there is not forced 
labor in our supply chains.
    So we specifically have been asking Customs and Border 
Protection--and we have been meeting with them regularly--for 
additional transparency on the findings that they do have, so 
that we are able to take action faster against the bad guys, 
and also to work with us to guarantee that there are other 
resources to--there is a lot of additional enforcement that we 
have talked about today, but we clearly need to beef up the 
resources that are available to CBP and to other agencies to 
deal with a globally difficult issue like forced labor.
    Senator Carper. All right. Ms. Hughes?
    Ms. Hughes. I would just add that communication has 
improved immensely, and CBP now meets with----
    Senator Carper. Over what period of time have you observed 
that?
    Ms. Vandenberg. In the last, I would say year, they have 
started meeting with the NGO community quarterly. And what we 
would like to see is much more informal back and forth. Some of 
that happens--I will give you a good example.
    Greenpeace has done a great deal of work to get the 
Withhold Release Orders on vessel-level forced-labor fishing 
vessels. Those vessel-level Withhold Release Orders, we 
believe, should be expanded to fleet level, since that forced 
labor on one vessel would actually infect the entire fleet, 
because it is probably going on throughout the fleet.
    So those kinds of communications with CBP, those informal 
communications, are extremely important. But it is also 
important for petitioners to know when CBP plans to take action 
on a petition. And it is also important for petitioners to know 
when CBP plans to revoke or modify a petition so that we can 
see whether the remediation on the ground is adequate.
    Senator Carper. And I have one follow-up question, if I 
could. This deals with improving the release order process--Ms. 
Vandenberg, if you would.
    Recently, GAO, the Government Accountability Office, issued 
several reports that concluded that CBP faces challenges in 
implementing its Withhold Release Order process. At this time, 
CBP, as far as I know, has not shared its criteria process for 
revoking or modifying these Withhold Release Orders. And 
although the number of forced labor investigations has risen in 
recent years, CBP has struggled to collect sufficient data to 
set performance standards.
    My question, Ms. Vandenberg, is, in your view, how can the 
WRO process be improved? And what additional might CBP need in 
order to bolster its enforcement authority?
    Ms. Vandenberg. So CBP has actually provided the revocation 
process documents and fact sheets on how the system works. But 
I do think that there is a need for additional resources to 
deal with the system-wide issues. Again, one of the things that 
we frequently say is that forced labor is a feature and not a 
bug. And so dealing with these issues as one-off attacks on 
individual bad guys is not going to work. CBP needs to work 
with unions and with workers' rights organizations in order to 
make sure that we are systemically eliminating forced labor.
    Senator Carper. Thank you, ma'am. I expect my time has 
expired. Thank you, Mr. Chairman.
    The Chairman. Thank you, Senator Carper.
    The next two in line are Senator Portman and Senator Casey.
    Senator Portman, are you there? Or, if we do not hear from 
Senator Portman, we will go to Senator Casey and get Senator 
Portman later.
    Senator Casey?
    Senator Casey. Mr. Chairman, thanks very much. And I want 
to thank you for this hearing.
    I just have one question for Mr. Wrona regarding some of 
the material covered today, but also referencing a hearing we 
had earlier this week. We had a hearing on Tuesday about 
American competitiveness in the context of manufacturing.
    And I know that your experience at Ferroglobe tells the 
other side of the story. That means illegal subsidies, forced 
labor, and over-capacity have been devastating for U.S. 
production and manufacturing. It is not simply a matter of 
providing better incentives. We have to have strong, iron-clad 
trade enforcement. Because if we do not, we will continue to 
lose foundational industrial capacity.
    So we know in the United States we can make it here with 
good-paying jobs, family-wage jobs, $70,000 and up, all the way 
up to $100,000 or more. But we have heard a lot from this panel 
today, rightfully, on the impact of forced labor in foreign 
countries, but there are impacts here at home.
    Forced labor anywhere--anywhere--harms workers everywhere. 
Illegal subsidies anywhere harm workers everywhere. So whether 
it is forced labor or illegal subsidies, can you talk about the 
impact that this has had on you and your family when you lost 
your job because of forced labor?
    Mr. Wrona. When at Globe, and quite frankly, when American 
Axle closed, it impacted my family severely. I mean, I look at 
both of my children's student debt. If these manufacturing 
factories were still here, their debt would not be as 
substantial as it is, or at all.
    Senator Casey. Anything else you think we should know about 
what is the best policy here for us?
    Mr. Wrona. I think American workers and American companies 
that manufacture here--it needs to be a fair playing field. 
There are certain things we just cannot compete with. Not only 
cheap labor, but slave labor is impossible for anybody to 
compete with.
    Senator Casey. A level playing field.
    Well, I promised one question. Mr. Chairman, I will yield 
back more than 2 minutes. Thank you.
    The Chairman. I thank my colleague. Members have pretty 
hectic schedules, so we are going to Senator Young, and then 
Senator Warner. And I hope others who would like to ask 
questions will let us know.
    Senator Young?
    Senator Young. Thank you, Mr. Chairman. My home State of 
Indiana is the most manufacturing-intensive State in the 
country and employs over a half-million Hoosiers. Despite our 
excellence and success, we have not been immune to job losses 
because of offshoring, as companies seek cheap inputs from 
China.
    A supply chain that is dependent on China is plagued with a 
number of issues. Intellectual property theft, disruptions, and 
forced data transfer are among them. And unsurprisingly, China 
is guilty of using forced labor to facilitate this dependence 
on their inputs in our supply chain.
    Dr. Bonanni, in your testimony you explain how your 
technology can help businesses identify the use of forced labor 
in their supply chains. What are some barriers that might 
prevent a company from seeking your services?
    Dr. Bonanni. Thank you for the question, Senator. The real 
problem here is that there is not a clear standard across the 
board. So we have companies that have already gone to the 
trouble of mapping their supply chains down to the raw 
materials, and have also extricated themselves from parts of 
the world where they felt the risk as simply too high to 
continue operating.
    However, the standard is not evenly distributed. 
Transparency is not the norm. It is still the exception. And 
companies today need to be aware that identifying the actors in 
the supply chain, monitoring them continuously, and rooting out 
fraud, waste, and abuse are totally doable. These are things 
that are being done. They have been done now for years--that 
is, on the private-sector side, on the technology side.
    On the Customs and Border Protection side, we just need a 
very clear standard for what kind of data companies need to 
collect regularly, and keep up to date and keep fraud-free, in 
order to be ensured that their shipments can enter the U.S. and 
be confident that those shipments do not touch forced labor.
    And again, that standard needs to be applied across the 
board.
    Senator Young. Sure. So you have indicated that is an 
appropriate role, as you see it, for the Federal Government. 
Customs and Border Patrol needs to come up with a coherent and 
consistent standard for the private sector.
    Are there other roles that the Federal Government should 
fill in deterring the use of inputs or products at the hands of 
forced labor, to your mind?
    Dr. Bonanni. I think that it is very clear that the 
diplomatic pressure that the government applies is 
extraordinarily useful and essential to rooting out forced 
labor. But in order to apply it effectively, we are going to 
have to look at not just those goods that are traced to the 
XUAR, we are going to have to look at all factors that could be 
used to pass through goods from the XUAR.
    So the standard does need to be applied uniformly to 
effectively enact this diplomatic pressure. It also needs to 
look at other countries and other regions of China where these 
goods might be passing.
    Senator Young. Very good. Well, relatedly, I am working on 
a piece of legislation that, among other things, would require 
the disclosure of whether materials, goods, or services from 
areas such as Xinjiang were made utilizing forced labor. While 
I am skeptical that we can ever trust the information provided 
by Chinese companies, do you believe that such disclosure 
requirements would be helpful at the time of production and/or 
purchase of these goods?
    Mr. Bonanni. Absolutely. Look, supply chain transparency is 
a new thing. Until just a few years ago, the technology did not 
exist to even implement that, how you communicate effectively 
with thousands of suppliers, tiers upon tiers upon tiers of 
supply.
    Now that that technology exists, now that we can monitor 
that data for accuracy, we can cross-reference. We can look at 
satellites. We can look at third-party databases. We can audit 
the auditors. There is a tremendous wealth of technology 
available to companies that want to do this and do it the right 
way.
    Senator Young. And, yes or no, if possible, would I be 
correct to assume that you would agree that public companies 
that make profits off the back of those in forced labor camps 
should be forced to disclose their utilization of supply chains 
that run through Xinjiang?
    Dr. Bonanni. I think the disclosure of all suppliers, 
direct and indirect, should be a norm that all U.S. companies, 
and all foreign companies doing business in the U.S., should be 
held to.
    Senator Young. Okay. Very good. I will be following up with 
some questions for the record to you, Doctor, about how 
blockchain technology can help tackle forced labor issues 
embedded within our global supply chain.
    Dr. Bonanni. Happy to work with you.
    The Chairman. Thank you, Senator Young. We are going to go 
to Senator Warner, and then Senator Cassidy. We are trying to 
go back and forth as much as possible.
    Senator Warner?
    Senator Warner. Thank you, Mr. Chairman. Thank you for 
holding this hearing.
    I want to build on so many of my colleagues' comments, but 
I do want to say one thing as we talk about China. I am very 
concerned about forced labor, and I am very concerned about the 
situation with the Uyghurs.
    You and I serve on the Intelligence Committee, and we have 
raised concerns about China's technology and unfair competition 
in a series of areas. But I do think something I have tried to 
be sensitive to, literally over the last couple of years, is, 
when we talk about China, we constantly reference the fact that 
our beef is with the Communist Party of China. It is with the 
policies of Xi Jinping. It is not with the Chinese people. We 
stand with the Chinese people in Hong Kong who are trying to 
fight for freedom.
    And too often, particularly accentuated by the former 
administration, this current blasting of China has translated 
into anti-Asian American hate activities. We see the tragedy 
that took place in Georgia yesterday. And I know from talking 
to my Asian American community, but particularly the Chinese 
American community in Virginia, that it is important that we 
make this distinction about our beef being with the Communist 
Party of China and Xi Jinping, which again has mistreated not 
only the Uyghurs, but I point to the people of Hong Kong.
    Ms. Vandenberg, can you talk a little bit about which kind 
of product lines, and where we are seeing Uyghurs in forced 
labor in our supply chains? Because I think there is a general 
perception that it is chiefly low-end textiles and other 
things, but I think that it has proven not to be simply those 
lower-end things.
    Ms. Vandenberg. You are absolutely correct, Senator Warner. 
It is across the board. It is high-end goods that are 
electronic goods that we purchase. So it is high-end goods. It 
is also garments, clothing that is either produced in Xinjiang 
or in other parts of China, or in Vietnam and other countries 
where they export the cotton.
    So I think that cotton and tomatoes are a good start for 
the WRO, but it is so much broader than just those two 
categories.
    Senator Warner. I would agree. As a matter of fact, there 
is a recent report by the Horizon Advisory Group that has shown 
that, in Xinjiang, a number of solar companies have actually 
moved in. We all want to move towards greater solar panel 
production, but when that production includes forced labor, it 
has to be of huge concern.
    And I simply--in the effort to try also to cede back time, 
I just want to make one last comment, Mr. Chairman. That is, I 
echo some of the concerns that Senator Young has raised. I 
think we need more transparency on the global supply chain.
    I think for a long time we have looked at the lowering of 
the prices that have come from the global supply chain, but 
with the opaqueness of that supply chain in this last year with 
COVID, we have seen the downside to that supply chain.
    We have seen where we are dependent for the supply of our 
pharmaceuticals and raw materials coming disproportionately 
from China. We have seen single points of failure. We have 
seen--one of my concerns is that the Chinese Community Party 
seeks an economic model whereby they allow competition in their 
domestic market, and some of that competition can be brought 
about by using forced labor. You always will then have a 
Chinese company win the Chinese domestic market--75 to 80 
percent in the case of a Huawei. That translates into 20, 25 
percent of the global market.
    And then when China can bring enormous economic heft behind 
that Chinese champion, it puts any company, American or 
otherwise, at an economic disadvantage.
    So I hope we can work on more transparency. I think Senator 
Young has some good ideas around that global supply chain. And 
I will close with this, simply, that we need to go after forced 
labor, but I think it really is important that we note that our 
beef is with the Community Party and their policies, not with 
the Chinese people.
    And for the first time, Mr. Chairman, ever, I may be 
yielding back 41 seconds.
    The Chairman. And I very much share your views, Senator 
Warner, with respect to who the real beef is with. It is not 
with the people who are working hard and trying to play by the 
rules; it is with that government. So I thank you for that.
    We are now going with Senator Cassidy, followed by Senator 
Portman. We are trying to go back and forth with members, but 
it is kind of getting hard to keep track of everybody.
    Senator Cassidy?
    Senator Cassidy. Dr. Bonanni, thank you for being here. I 
am very interested--Senator Young finished up by mentioning 
blockchain. It does seem like a distributed public ledger would 
help us follow many things.
    Can you comment upon its potential usefulness in this 
situation?
    Dr. Bonanni. Senator, thanks for the question. I absolutely 
think there are many places where a distributed ledger could be 
extremely effective and help to standardize exactly what I was 
talking about in my testimony, which is the disclosure of 
suppliers in the supply chain uniformly for high-risk and 
lower-risk regions alike. I will say that our company 
specializes in tracing supply chains from the retail all the 
way back to a small farm, or even an artisanal mine--operations 
that are completely off the grid, sometimes record-keeping is 
only done on paper, if at all. And we do need to look at a 
suite of technologies that does not leave out those parts of 
the supply chain where implementing a distributed ledger would 
right now represent a barrier to entry. We need a solution. And 
we have solutions that have been proven to work, and they work 
today for monitoring forced labor even in contexts where, until 
recently, all record-keeping was done on paper.
    So while there is a place for blockchain, there is also a 
place for general use of the cloud and mobile technology, 
especially in emerging markets where smartphone adoption is 
taking off.
    Senator Cassidy. Got you. Now let me just explore that a 
little bit, because I was so pleased Senator Young spoke to 
that, because I have been thinking about it as well. 
Recognizing what you say, that from the factory door back down 
to the small farm, you need a different mechanism. But from the 
factory door all the way to the end retailer, it may be that a 
distributed ledger works.
    And just for the context, we know that all the parties are 
able to look at the ledger, and they can monitor whether or not 
something has been done appropriately or not and if there is an 
alteration or attempt to forge a record to make it appear 
different than it really is, or at least as it was originally 
posted.
    Is that a fair kind of a summary of the potential of the 
technology?
    Dr. Bonanni. You know, the technology has that potential. I 
do want to caution. The ways that it is used are very subtle, 
and some of that data of course cannot be shared in a public 
blockchain because of antitrust concerns.
    So there is a great deal of data that will have to be 
collected using existing techniques and technologies. I also 
want to add that once something is in the blockchain, it may 
not be changed. But fraudulent data can be written to a 
blockchain at any time.
    And so we still need verifiable raw data to be collected at 
the source. And that means that the data has to exist in 
multiple places and be scrutinized by many pairs of eyes. And 
so we, for example, even when we have an auditor going through 
a factory, we track that the auditor is actually in the place 
where they are supposed to be. Before they had to use the 
smartphone to conduct the audit, we saw a lot of audits being 
completed from home or from the office.
    And so we recognize that very high-tech solutions are 
beneficial, and especially for very sophisticated players in 
the supply chain. But we also need to make sure that we look 
for bad actors at every stage; that we do not just take data 
that has been declared by suppliers as being true.
    Senator Cassidy. Got it. With that, Mr. Chairman, I will 
yield the floor to whomever is next.
    The Chairman. Thank you very much, Senator Cassidy.
    Senator Portman?
    Senator Portman. Thank you, Mr. Chairman. And thank you for 
making this possible, with all of our schedules. I want to 
thank you for the hearing too, you and Ranking Member Crapo. 
This is a really important one.
    Ms. Vandenberg, I appreciated your views this morning and 
your work more generally on this issue. You clarified that 
forced labor involves a lot of different sectors of our 
economy.
    Ms. Hughes, I appreciate what you said in your testimony 
about how success should be measured by a reduction of forced 
labor. And we appreciate your company's work in that regard.
    I have to tell you, I was surprised last year when I saw 
this investigation by The New York Times on what is happening 
during the pandemic in the Xinjiang region of China. This of 
course is where the Uyghurs are experiencing so many human 
rights abuses, and one of course is forced labor.
    I learned that, with regard to personal protective 
equipment, PPE, there were only four companies prior to the 
pandemic that were producing PPE. Yet, by June that number had 
increased to 51 companies; 17 of those companies were known to 
utilize Uyghur forced labor.
    While not all of these were for export--I acknowledge 
that--the principle still stands: instead of meeting the demand 
for PPE with products produced by forced labor in China, what 
we should be doing, obviously, is incentivizing the return of 
PPE production to the United States--just one more reason.
    And one way we can do that is by issuing these long-term 
contracts. What we have found is, the companies in the United 
States--and I spoke to some as recently as yesterday--they do 
want to produce more products here, textiles in general, but 
specifically PPE, but they need to know there is going to be a 
market for it. And specifically, it frustrates me that our 
Federal Government will not give them long-term contracts with 
some predictability and some certainty. And it seems to make 
sense, frankly, for the U.S. Government as well; otherwise, the 
reshoring is not going to occur.
    So in our proposal called the Make PPE in America Act, we 
simply add a Berry Amendment requirement to strengthen these 
supply chains.
    Mr. Wrona, I am going to turn to you because I have not 
seen you answer a question recently--I am sure you were busy 
earlier--but can you explain how doing this, diversifying the 
supply chains and reshoring manufacturing, can help reduce 
reliance on forced labor?
    Mr. Wrona. Well, I think if the government would spend some 
money on our factories, and some investment--you know, Globe 
itself has spent millions and millions and millions of dollars 
fighting cheap Chinese products. If they were to spend that 
money on our factories, they would run more efficiently and 
maybe we would still be open.
    We need some type of fair playing field to help us out. And 
if the country wants to go solar, wants to go green, but we are 
going to rely on 80 percent of our solar-grade silicon to come 
from China, so then we rely on China to go green? That does not 
make sense to me. I do not know how we can let that happen.
    Senator Portman. Yes. And it also helps with regard to the 
forced labor in China if we can have that PPE, as an example, 
be made here.
    Mr. Wrona. Right.
    Senator Portman. So the general principle stands.
    Another issue we talked about was this blockchain, the 
distributed ledger idea. And I found that a really interesting 
conversation with Senator Cassidy.
    Dr. Bonanni, I think there is an opportunity here to use 
artificial intelligence better. I am chair of the caucus here 
in the Congress on this, and I led a letter with Senator 
Warner, actually last year, to Secretary Pompeo about the AI-
enabled facial recognition technology the Chinese Party is 
using to surveil Uyghurs. And also other authoritarian regimes 
are increasingly using artificial intelligence. So it is 
certainly being used in a negative way.
    But I also think that artificial intelligence can play a 
helpful role in combating forced labor. Researchers 
successfully used machine learning, as an example, to identify 
fishing vessels using forced labor by recognizing patterns that 
were unique to those vessels.
    Your company uses technology in this regard. Are you 
interested in this? Are there forced labor signatures within 
supply chains? How can AI make it easier to identify those 
signatures which might not be readily apparent?
    Dr. Bonanni. Absolutely. Look, I am an MIT guy at heart, so 
I think of this as a fight that we have against supply chain 
hackers. They are using modern technology to misrepresent the 
origins of goods to get them into the U.S., and we are still in 
many cases using last century's technology to monitor supply 
chains. And we need to bring that level of technology that we 
use in enforcement much higher than the hackers. It is not that 
sophisticated what they are doing. We just need to detect 
fraud.
    And what we do ranges from very simple things like making 
sure a farm produced the right amount to be expected for the 
area, to making sure that the audits are conducted blindly and 
with lots of supporting documentation. And all of that, you can 
think of it like a credit card company scanning your 
transactions to look for anomalies to put up red flags early, 
to help companies immediately detect a problem in their supply 
chain months before they even receive the goods.
    So artificial intelligence, machine learning, those are 
absolutely essential to monitoring those supply chains once we 
have transparency.
    Senator Portman. Thank you, Mr. Chairman.
    The Chairman. Senator Cardin?
    Senator Cardin. Thank you, Mr. Chairman. And thank you very 
much for this hearing. It is incredibly important.
    I want to ask Ms. Vandenberg and Dr. Bonanni a question in 
regards to what we can learn from our experiences in the 
trafficking world. In dealing with human trafficking, we have 
been able to get the global community to enact very strong 
laws. We talk about transparency and the need to deal with 
supply chains and forced labor, but we have strong laws dealing 
with trafficking. We have put resources behind those laws in 
order to get the facts. We do not have to just rely on 
transparency if we have capacity to know what countries are 
doing in regards to fighting human trafficking.
    And then we have global recognition, through the 
Trafficking in Persons report, as to what every country is 
doing in dealing with this issue. And lastly, there are 
consequences if you do not meet certain standards. There are 
consequences in those regards.
    And I can tell you that when I meet with representatives 
from other countries, they know about our Trafficking in 
Persons report. They know how they are rated. And that document 
has received widespread support, and of course it gets 
visibility every year when the report is released.
    So my question to the two of you is, is there something we 
can take out of what we have been able to do with trafficking 
which also deals with forced labor and trafficking in labor? 
Are there lessons that we can learn in order to strengthen the 
transparency and global cooperation in rooting out the unfair 
human rights violations of forced labor?
    Ms. Vandenberg. So I would answer, briefly, with two 
points: one, end complicity; and two, be skeptical.
    Number one, it is very difficult for the United States to 
complain about forced labor in supply chains when the end-
importers of those forced-labor goods are U.S. companies and 
there is no enforcement against the U.S. companies and Customs 
and Border Protection enforcement is against suppliers on the 
ground in other countries.
    So I think we need to make sure that we are holding 
American companies accountable for importing goods made with 
forced labor. One fine, one penalty is not enough.
    The second point I would make is skepticism. The State 
Department learned over time that it needed to be very 
skeptical about self-reporting from those countries, about how 
many prosecutions and what enforcement they had done. They 
needed to be very skeptical that those countries were, for 
example, taking credit for work that was actually done on the 
ground by nongovernmental organizations, rather than with state 
funding or with state programs.
    That skepticism from the Trafficking in Persons world 
should be focused like a laser beam on auditors. Because what 
we see with this audit industrial complex is exactly what Dr. 
Bonanni referenced: audits that are fake, audits that are 
bogus. I will just give you one example to close.
    There was a factory that had a third-party auditor, and it 
was unannounced. So everything seemed utterly kosher. But when 
the unannounced auditor arrived at the door, the owner of the 
factory simply changed the music to a different song, which in 
the factory was the well-known sign to all the children to run 
out the back door.
    So we have to be very skeptical of what is coming in about 
whether or not these supply chains are clean, because the 
auditors are not independent.
    Dr. Bonanni. Let me just add two points on my end. The 
resounding lesson of the past year has been that Customs and 
Border Protection sent a signal that was heard around the world 
with WRO enforcement. It is leading, frankly, the world in this 
approach, and it has spurred a lot of companies to implement 
transparency, traceability, verification of their supply chain, 
in a way that they were not doing before Customs and Border 
Protection.
    So I applaud CBP for doing this. And I think you should 
recognize just how powerful that signal has been to a variety 
of industries.
    And the second is the same skepticism that I want to 
underscore, which is with that enforcement, with that will to 
enforce, there needs to be a commensurate collection, analysis, 
verification of data that can be used to definitively prove 
that a supply chain is up to par, but also to definitively 
exclude supply chains in which there is not sufficient 
transparency to have the confidence that there is not forced 
labor, and so that we can know and companies can know exactly 
who to do business with and who to avoid.
    Senator Cardin. I would just underscore that I agree with 
what was said, that in the trafficking review, we review all 
countries, including the United States, and destination 
countries have strong responsibilities in regards to stopping 
trafficking. And we rate countries on how well they do as 
destination countries, not just transit countries and countries 
of origin.
    So your point is very well-taken. We need that 
transparency, and we need enforcement.
    Thank you, Mr. Chairman. I appreciate this.
    The Chairman. I thank my colleague very much.
    I see our friend Senator Crapo is back. I believe there are 
no further members, Senator Crapo, and I thought I would 
deliver perhaps a 2-minute wrap-up of the week. Is there 
anything that you would like to say at this point?
    Senator Crapo. No; thank you, Mr. Chairman. I think this 
was a very needed hearing and a very helpful hearing, and I 
look forward to your wrap-up comments.
    The Chairman. And I would only say that today these are 
exceptionally serious issues with respect to China's use of 
forced labor. It poses a threat to Chinese workers, American 
workers like Mr. Wrona, but it also is going to affect our 
ability to address the climate crisis in a meaningful and 
expeditious way. And to that end, I would like to introduce for 
the record two articles addressing concerns with the use of 
forced labor in polysilicon and solar panels.
    Without objection, so ordered.
    [The articles appear in the appendix beginning on p. 63.]
    The Chairman. Let me, if I might--and I see Senator Crapo 
here--I have been struck this week. We have had three hearings 
in the Senate Finance Committee: boosting American 
manufacturing to get more high-skill, high-wage jobs for our 
people; improving nursing home care--urgent business after the 
national tragedy there of the last year; and now the question 
of ending forced labor so we can protect workers like Mr. 
Wrona, who spelled out exactly what happened when he lost a job 
as a result of forced labor.
    And what runs through all of the work we did this week is 
the need for more good-paying jobs in America; health and 
safety--critical issues for our workers and our well-being; and 
transparency and fair treatment. And particularly when Senator 
Crapo is here, I want to note we have had exceptional 
participation by Democrats and Republicans all week long, when 
there were a lot of activities going on here.
    I regard this as a good sign. I think there is a lot of 
what we discussed this week that can be tackled in a bipartisan 
way, with colleagues working together--starting with the 
semiconductor issue. Those memory chips drive everything as it 
relates to the way we live.
    So this has been a great panel, and really a very important 
week. Questions for the record on today's hearing are due next 
Friday, March 26th, by close of business.
    And I thank our guests. You gave us in this third session a 
lot of very constructive ideas about, again, what we need to do 
in this country to strengthen the ability of Americans to get 
high-skill, high-wage jobs, and we can do it in a bipartisan 
way.
    With that, the Finance Committee is adjourned.
    [Whereupon, at 12:01 p.m., the hearing was concluded.]

                            A P P E N D I X

              Additional Material Submitted for the Record

                              ----------                              


            Prepared Statement of Leonardo Bonanni, Ph.D., 
                    Founder and CEO, Sourcemap Inc.
    Chairman Wyden, Ranking Member Crapo, distinguished members of the 
committee, thank you for the opportunity to speak with you today.

    I am the founder and CEO of Sourcemap, a leading provider of 
technology for supply chain transparency.

    As this committee has underscored in bipartisan fashion, forced 
labor is endemic to many supply chains. At the same time, no company 
can afford to audit every supplier, every day. Business needs a 
scalable solution.

    I founded Sourcemap at MIT with the goal of leveraging the reach of 
the Internet to monitor global supply chains to a degree that was never 
before possible.

    Let me describe how it works. First, we set up a unique social 
network to help companies identify all of the actors in their supply 
chain, down to the names and addresses of every mine, every farm, every 
factory and every warehouse.

    Second, companies use this network to regularly collect data from 
all of the actors in the supply chain, which our software then analyzes 
to detect patterns that indicate the presence of forced labor. We can 
even collect data in remote supply chains where there is little to no 
Internet access using a smartphone app that works on- and offline.

    Third and most importantly, we never take the information that has 
been provided at face value. Instead we continuously analyze data from 
suppliers for errors and omissions, and for patterns of fraud, waste, 
and abuse. To do this we use the best available techniques including 
satellite imagery, mobile device tracking, machine learning and 
artificial intelligence.

    The demand for this level of supply chain transparency is growing. 
Sourcemap is used today by some of the largest companies in the United 
States, companies responsible for tens of billions of dollars in U.S. 
imports. Thousands of their suppliers log into Sourcemap from every 
corner of the globe to share extensive information on their supply 
chains. That's because supply chain transparency is a very small price 
to pay for access to the U.S. market.

    For the first time in the history of globalization, companies can 
have a map of their global supply chain that's verified and up-to-date. 
It's not transparency for transparency's sake: this map is the 
foundation for identifying and remediating forced labor in the end-to-
end supply chain, so that one day every container arriving in the U.S. 
can have a clean bill of health.

    Is this a panacea? No. But it represents a step change in the 
degree of supply chain transparency businesses and governments can 
expect in support of their ongoing fight against forced labor.

    Mr. Chairman, supply chain transparency is good for business in 
many other ways: it reduces risk, it saves money, it helps to secure 
hard-to-get materials, and it helps to monitor for quality, 
counterfeiting, environmental conditions, and health and safety.

    This committee has an important role to play. This hearing itself 
sends a message that you expect action from all stakeholders. Mr. 
Chairman, I know that you have been working with Senator Brown (D-OH) 
on new tools to empower CBP. I encourage you to put supply chain 
transparency technology at the center of those efforts.

    Supply chain transparency needs to become the norm. At a minimum, 
companies should disclose the names and the addresses of their direct 
and indirect suppliers. This evidentiary standard will establish the 
United States as the leader in combating forced labor in supply chains, 
while saving companies and CBP millions of dollars.

    Setting a simple standard for supply chain transparency will help 
create a level playing field for all companies importing goods into the 
United States.

    It's not just the right thing to do for our values: it's the smart 
thing to do for U.S. business and for U.S. workers.

    Thank you for the opportunity to testify, and I look forward to 
your questions.

                                 ______
                                 
     Questions Submitted for the Record to Leonardo Bonanni, Ph.D.
                 Question Submitted by Hon. Mike Crapo
    Question. It appears that we are underutilizing the potential of 
technology in combating forced labor imports.

    What can be done at CBP to expedite adoption of new technologies?

    Answer. Let me underscore that my company welcomes the opportunity 
to sit down with CBP and talk about the difference that technology can 
make today. We work with the U.S. Department of Labor on supply chain 
tracing and engagement methodologies; we have found government actors 
to be highly motivated and mission-driven to succeed; and we bring 
expertise and best practices from our ongoing work with some of the 
largest companies in the United States.

    I believe that supply chain transparency technology can be a game-
changer for Customs and Border Protection in its day-to-day activities, 
and that it can benefit its relationships with U.S. importers. Supply 
chain transparency provides a clear evidentiary standard for the types 
of data needed to prove that a shipment or a supply chain is free of 
forced labor. The technology we have developed for supply chain 
transparency ensures that businesses can efficiently collect this data, 
verify it and share it with the authorities. CBP deserves access to the 
same technology that companies use so that together they can cast a 
wider net to identify risks and alternatives across global supply 
chains.

    As the committee considers investing in and giving additional tools 
to aid CBP in its mission, we would emphasize the technology 
opportunity at hand--an opportunity that did not exist 10 years ago. 
Today we can take the most complex supply chains, map and verify them, 
and keep tabs on them using real-time intelligence to empower companies 
and governments to make informed and timely decisions. We want to make 
supply chain transparency technology available to more companies, more 
NGO's, and more governments, not just as a commercial opportunity, but 
because the more supply chain transparency is deployed in more parts of 
the world, the harder it is for bad actors to hide in the shadows. 
Neither government nor the private sector can do this alone, and the 
more companies act, the more entities make clear that supply chain 
transparency matters, the more pressure builds on other governments to 
act as boldly as the United States.

                 Question Submitted by Hon. Todd Young
    Question. For the average layman, blockchain is associated with 
Bitcoin and cryptocurrencies; however, there are several other 
applications that can use ledger technology--especially beyond the 
field of finance.

    Today, humanitarian and tech leaders are actively exploring how 
blockchain could revolutionize humanitarian response.

    Can you comment on how blockchain can help tackle forced labor 
issues embedded within our global supply chains?

    Answer. Blockchain is often associated with Bitcoin and non-
fungible tokens (NFTs), but its applications for supply chains are 
entirely different: blockchain allows each actor to keep their 
commercial data confidential while sharing enough to provide assurance 
on a product's chain of custody. It could be an effective way for CBP 
to encourage data sharing from U.S. importers to ensure that imported 
goods are free of forced labor, without the risk of commercial data 
being shared or misused.

    However, blockchain technology is ill-suited to the upstream or raw 
materials supply chain, where the risk of forced labor is most 
pronounced. Blockchain requires that advanced technology be adopted by 
all of the actors in the supply chain, yet raw materials often come 
from areas with limited Internet access and little or no computerized 
inventory management. Most importantly, blockchain does not prevent 
fraud: false data can be entered by anyone in the supply chain, and 
blockchain is too costly to collect the meta-data that could be used to 
verify a supply chain.

    Instead, smartphone audit apps together with cloud data validation 
are a cost-
effective, proven solution to establishing a clean chain of custody 
while continuously monitoring for fraud, waste and abuse. We deploy 
this technology in high-risk regions because it casts a much wider net 
than blockchain by collecting and corroborating supply chain data using 
other information, including business licenses, contracts, receipts, 
audit reports, and on-the-ground GPS, photo and video evidence.

                                 ______
                                 
               Questions Submitted by Hon. John Barrasso
                 congressional proposals on import bans
    Question. Since 2009, China has been included on the List of Goods 
Produced by Child Labor or Forced Labor. The Bureau of International 
Labor Affairs recently added five new categories of products from 
Xinjiang to the list. It included gloves, hair products, textiles, 
thread/yarn, and tomato products.

    In January, the Trump administration issued a sweeping ban on 
imports of cotton and tomato products from China due to evidence of 
forced labor. There are several congressional proposals aimed at 
expanding the administration's authorities to more robustly address 
widespread and systematic force labor in China.

    What are your views on the proposal to implement a comprehensive 
import ban on all goods produced, wholly or in part in Xinjiang?

    Answer. It's important for Congress, regulators, and policy-makers 
to make decisions on how best to clamp down on the use of forced labor 
worldwide, including by recognizing the heightened risk of sourcing 
from specific regions and industries. These decisions are critical not 
only for business, but as a reflection of American values and 
interests. And we believe it's in everyone's interest to make these 
decisions and processes transparent so that businesses, NGO's, and 
other actors can understand and adopt them as soon as possible.

    But I would also highlight a lesson we've learned, sometimes the 
hard way: a blanket ban on imports from an industry or a region is a 
well-intentioned lever that governments can deploy, but it can lead to 
a global game of Whack-A-Mole where banned goods are smuggled through 
intermediaries in other regions or countries to make their way to the 
U.S. market. That's why deploying supply chain transparency standards 
and technology is so important: because it levels the playing field for 
all importers and makes it impossible for these abuses to hide ``off 
the grid.''

    Question. What ways would you recommend the United States take to 
enhance import controls and enforcements on goods produced in China?

    Answer. Import controls and enforcement are an important way to 
impact the supply side of the forced labor challenge; it's important 
that companies have the information they need to fight it from the 
demand side as well. We have seen companies make significant changes to 
their purchasing practices and their global supply chains through 
increased supply chain transparency. The same data and technology would 
benefit CBP as a way to uniformly and efficiently assess the risk of 
forced labor, and detect fraud, across industries and regions. I would 
humbly recommend that the committee keep supply chain transparency 
technology front and center in discussions about new controls and 
enforcement because it provides a common standard for which data can be 
collected, verified, and shared, and a proven solution for doing so at 
scale. Technology can empower governments to facilitate data sharing 
between all stakeholders, including NGO's and companies, to create a 
greater awareness of the scale of the challenge, and to empower U.S. 
companies to fight forced labor anywhere.

                                 ______
                                 
                Prepared Statement of Hon. Mike Crapo, 
                       a U.S. Senator From Idaho
    This is a very important hearing.

    The International Labor Organization estimates nearly 25 million 
people in the world are victims of forced labor. The criminals behind 
this tragedy reap nearly $150 billion in profits every year. As 
horrifying as that is, nearly 30 percent of the victims are also 
victims of forced sexual exploitation--and generate $99 billion--or 
two-thirds of the profits I just referenced.

    The fight against forced labor is not a Democrat issue or a 
Republican issue; it is an issue that unites all Americans. That is 
critical to remember.

    Americans, including consumers, workers, and businesses, are all 
committed to this fight--and doing everything possible to combat this 
scourge. The problem lies not with them, but with foreign autocrats, 
and individuals who lack all sense of basic humanity. Our fight is with 
them.

    For example, China's government has pressed nearly 100,000 Uyghurs 
and other Muslim minorities into forced labor, while euphemistically 
calling it ``poverty alleviation.'' As the Newlines Institute for 
Strategy and Policy explained in a report last week, China's treatment 
of the Uyghurs meets every criteria of genocide under the United 
Nations' Genocide Convention. That report's findings join declarations 
by foreign legislatures, including Canada and the Netherlands, and 
track with a similar determination made by the State Department during 
the Trump administration.

    Accordingly, Senators like Marco Rubio and Jeff Merkely, and many 
others, are showing leadership on this issue through their proposed 
Uyghur Forced Labor Prevention Act. Their efforts should be matched by 
the current administration.

    The U.S. Secretary of State and National Security Advisor are 
meeting today in Alaska with their Chinese counterparts. Forced labor 
is among the human rights issues they need to press with them.

    Critically, this all reinforces the need to broadly empower 
Americans and other good citizens of the world to be able to more 
effectively respond to this challenge. This includes effectively 
utilizing technology to identify where goods made with forced labor can 
enter the supply chain. It means our laws and regulations must be 
transparent and provide informative and thoughtful guidance so 
Americans know how to avoid importing such goods.

    It means we need to know the ongoing efforts of our businesses so 
that the government can help leverage them in the fight against forced 
labor. Many of them have developed best practices to stamp out forced 
labor from their supply chains. We need to leverage their experience 
and expertise.

    Finally, it means we must partner with civil society to raise 
awareness on this important issue. The witnesses we have today can 
speak to each of these points. Their expertise and knowledge will help 
this committee address this important matter. Mr. Chairman, I am glad 
this is an issue we both care about deeply.

    Thank you for organizing this hearing. I look forward to the 
testimony from our witnesses.

                                 ______
                                 
           Prepared Statement of Julia K. Hughes, President, 
                   U.S. Fashion Industry Association
    Chairman Wyden, Ranking Member Crapo, and members of the committee, 
thank you for the invitation to appear today. My name is Julie Hughes, 
and I am the president of the U.S. Fashion Industry Association. I 
appreciate the opportunity to testify on behalf of the industry about 
the fight against forced labor and how to improve enforcement to reach 
our shared goal of the elimination of forced labor.

    A little background about the United States Fashion Industry 
Association (USFIA). USFIA represents apparel brands, retailers, 
importers, and wholesalers based in the United States and doing 
business globally, including many of the iconic brands worn and loved 
by everyone participating in this hearing. Our members are global, with 
production, operations, and sales in the United States and around the 
world. Our member companies manage supply chains that span the globe. 
Global trade, and ethically sourced trade, is essential for American 
brands and retailers to be successful and reach consumers around the 
world.

    More than most types of manufactured goods, the fashion industry 
relies on global supply chains. A bale of cotton may be grown in Texas, 
shipped to Europe to be made into yarn, shipped to Korea to be made 
into fabric, shipped to Vietnam to be made into apparel, and shipped to 
the United States to be sold at retail in a store back in Texas. But 
even more exciting, those garments made using that supply chain also 
might be sold in Singapore, Japan, Dubai, or London.

    Because we are a global industry, we know that forced labor exists 
in many parts of the world. For several decades USFIA member companies 
have maintained codes of conduct and strict requirements for supply 
chain partners that ban the use of forced labor. Companies maintain an 
extensive network of contracts, audits, verifications, training, and 
direct engagement with their suppliers.

    But we recognize that there remains more action needed to guarantee 
that forced labor is not in the supply chain for fashion products. One 
example is the supply chain for cotton products. The growers who 
produce this cotton commonly sell to traders, or middlemen, who 
intermingle the crops of several farms and regions and send cotton to 
ginning facilities all over the world. Indeed, U.S. cotton comprises 38 
percent of world exports and a substantial quantity of it is used in 
China. China alone imports more than $800 million of U.S. cotton 
annually.

    Ginning facilities, in turn, send their product to middlemen and 
traders, who, again, intermingle their purchases and sell to yarn 
spinners all over the globe. Yarn spinners will, at times, outsource 
the dyeing portion of their production, before selling their yarn to 
fabric producers all over the world. Fabric producers, too, may 
outsource their dyeing operations before supplying apparel-producing 
customers that are also spread all over the globe.

    Retailers and apparel brands are at the end of this supply chain 
and, while retailers and brands can effectively ensure that the cut and 
sew operations with which they do business are free of forced labor, it 
is often a challenge for retailers and brands and their apparel-
producing vendors to ensure that every bit of cotton, or yarn, or 
fabric incorporated into the final product is free of forced labor. The 
further down the supply chain you get, the more difficult, if not 
impossible, it gets to obtain visibility into the origin of the inputs 
and the conditions of their manufacture.

    While it is difficult, and complicated, this is an important task 
for the industry. So, what are we doing to root out forced labor from 
the supply chain?

    Even before the very public media reports about forced labor in the 
past year, fashion industry, apparel, footwear and retail associations 
joined together to create an ad hoc forced labor working group to 
facilitate the sharing of information and the sharing of resources 
among the industry. One of the first tasks was to create an online 
resource of initiatives and best practices available, and we continue 
those discussions.

    As part of this process, the industry is pioneering and 
implementing new technologies and innovative approaches to decipher 
where supply chains are susceptible to forced labor. Our member 
companies have made extensive progress towards removing any 
associations with forced labor in their supply chains as they continue 
to strengthen measures to identify and eliminate forced labor.

    USFIA members have long audited and inspected suppliers to ensure 
that their suppliers do not use forced labor (or engage in other 
abhorrent labor practices, for that matter). Our member companies 
regularly seek certifications that the vendors to their suppliers also 
do not utilize forced labor, an effort that was bolstered almost 10 
years ago by California's Supply Chain Transparency Act, which requires 
apparel brands and retailers to undertake best efforts to audit the 
supply chain for forced labor and to inform the public of the results 
of the audit. We support adoption of a similar regulation on a national 
level to codify our members' efforts and expand to apply to not just 
U.S.-based companies, but all companies that sell in the U.S. above a 
certain sales threshold.

    The task is not easy (to put it mildly). My personal belief is that 
to eliminate forced labor we need to go beyond what companies can do on 
their own, and go beyond an emphasis on punitive measures, to use 
multi-stakeholder approaches. The combination of civil society, NGOs, 
companies, governments and international institutions is needed to 
reach our shared goal to eliminate forced labor.

    I would like to share a few examples. For more than a decade brands 
and retailers have been a part of an initiative called the Cotton 
Campaign. The Cotton Campaign was created to combat the government 
sanctioned use of forced labor in the cotton fields in Uzbekistan. From 
the beginning this initiative included NGOs and civil society, as well 
as industry associations such as USFIA, and especially brands and 
retailers. While it has taken time, this campaign has had an impact.

    Today the Uzbekistan Government no longer supports forced labor to 
harvest cotton--it is now against the law. And while the ILO monitors 
and civil society found that forced labor is not yet fully eliminated 
based on last year's harvest, the scale and breadth of forced labor is 
tremendously reduced and I think all agree the progress has been 
substantial. With the end of state support, the Cotton Campaign is now 
moving forward with an innovative concept to develop Responsible 
Sourcing Agreements with the cotton growers and the cotton 
cooperatives, and brands, to ensure that there is direct engagement and 
monitoring for the future. We support this initiative and hope it will 
be a successful approach that can be used in other areas.

    One other approach that is just at the beginning is 
YESSTM: Yarn Ethically and Sustainably Sourced (YESS). This 
is an initiative of RSN, an NGO that works to eliminate forced labor 
associated with raw material inputs and works to eliminate forced labor 
from the textile value chain by building capacity and managing an 
assessment of value chain actors' ability to identify, address, and 
prevent sourcing cotton produced with forced labor. YESS applies the 
OECD Due Diligence Guidance for Responsible Supply Chains in the 
Garment and Footwear Sector, which has wide industry and government 
support and is a proven method for companies to identify and address 
risks over time. With financial support from brands and retailers, and 
a program developed by leaders who have been active in the labor 
community for decades, the main goals of this project are to:

        Build capacity with and empower yarn spinners and textile 
mills to implement a due diligence system to identify and address 
forced labor involved in cotton production;
        Enable brands to make informed sourcing decisions and avoid 
sourcing cotton produced with forced labor;
        Promote harmonized engagement and assessments of spinners and 
textile mills; and
        Spearhead an industry-wide, risk-based due diligence approach 
to identify, prevent, and mitigate forced labor in cotton production.

    There also are two pilot projects funded by the Department of Labor 
that will focus on developing solutions to forced labor that bring 
together technology, tracking and supply chain. ILAB partners with 
international organizations, non-governmental organizations, 
universities, research institutions, and others to advance workers' 
rights and livelihoods through technical assistance projects, research, 
and project evaluations. USFIA welcomes efforts to bolster ILAB's work. 
Such efforts leverage existing authorities and expertise at ILAB to 
develop and improve supply chain tracing technologies, and promotes 
collaboration and shared learnings between the U.S. Government and the 
private sector in identifying and deploying reliable, scalable, and 
affordable supply chain tracing tools.

    Earlier this year the Labor Department funded two $4-million awards 
for cooperative agreements to Verite Inc. and ELEVATE Limited to 
implement technical assistance projects to increase the downstream 
tracing of goods made by child labor or forced labor. The award to 
Verite will support a pilot for upstream tracing of raw cotton, thread/
yarn and textiles in India. ELEVATE's award will support pilot tracing 
in supply chains for cotton in Pakistan and cobalt in the Democratic 
Republic of the Congo. These pilot projects have the capacity to enable 
enhanced supply chain tracing tools and methodologies across industry 
sectors that are traditionally complex and opaque, improving our 
members' ability to fully identify and eliminate forced labor in their 
supply chains.

    Even with all these exciting initiatives, and a commitment from the 
industry, we are committed to do whatever we can to eliminate forced 
labor, and we very much want to work with Congress and the executive 
branch to eliminate this scourge.

    Now, how can the Government help us tackle the challenge of forced 
labor in the supply chain?

    First, with respect to stakeholders in the executive branch, I 
cannot stress strongly enough the need for a coordinating effort to 
engage our trading partners to eradicate forced labor from the supply 
chain. The State Department, USTR, the Department of Labor, the 
Commerce Department, the NSC, and USDA should make it a priority to 
execute a ``whole of government'' strategy to eliminate forced labor 
from supply chains. Similar to the testimony the committee heard 
earlier this week about supply chains, we know that the path to success 
will be faster and better if there is a unified approach. We also 
strongly support efforts by the administration and the Congress to take 
a leadership role on this issue on the international stage. Forced 
labor is a global problem--a problem that often involves the active or 
tacit blessing of foreign governments--and so calls for a global 
solution whenever possible.

    We also want to look at the role of U.S. Customs and Border 
Protection to implement an enforcement strategy to guarantee that no 
products with forced labor reach the United States. U.S. companies are 
partners with CBP on enforcement. The policy of informed compliance and 
the participation of companies in the CBP Trusted Trader programs means 
that there already is a shared approach to enforcement. What we believe 
would help improve enforcement is more transparency in the process and 
more of a shared approach.

    USFIA supports the series of recommendations released this week by 
the Commercial Customs Operations Advisory Committee (COAC) Intelligent 
Enforcement Subcommittee Forced Labor Working Group, which include:

    (1)  The recommendation that CBP take a collaborative, multi-agency 
approach utilizing the expert resources of all relevant U.S. Government 
agencies to develop a synchronized strategy, as well as engage more 
extensively in dialogue and priority setting with the trade. This 
includes working with the Departments of Homeland Security, Labor, 
Treasury and State, as well as Immigration and Customs Enforcement and 
the Office of the U.S. Trade Representative;
    (2)  The recommendation that CBP expand its collaboration and 
communication with the trade sectors and industries, identifying and 
sharing best practices, including government to industry efforts to 
minimize forced labor in supply chains;
    (3)  The recommendation that CBP develop an objective methodology 
to measure the ``success'' of the agency's forced labor informed 
compliance, facilitation, enforcement, and risk mitigation that is not 
based on enforcement output. Rather, a best developed practice would be 
to measure success based on outcome metrics that ultimately focus on 
improvement of the communities most impacted by forced labor, as 
recommended by the GAO 2020 Forced Labor Imports Report; and
    (4)  The recommendation that CBP apply the same principles, tools, 
guidance, and outreach to forced labor as is the case with the other 
Priority Trade Issues, that is, ``world class expertise to design trade 
processes and policies that minimize cost and provide certainty, 
transparency, security, and predictability to members of the trade 
community.''

    USFIA also agrees with the conclusion of two recent GAO reports, 
which evaluated Customs and Border Protection's process for issuing and 
enforcing withhold release orders (WROs) in response to suspicions of 
forced labor. Last fall, the GAO recommended that CBP evaluate whether 
or not its forced labor division was staffed adequately and with the 
right expertise. Then, just a couple weeks ago, the GAO urged CBP to be 
more transparent about the criteria and evidence that it uses to modify 
and withdraw WROs. CBP apparently agreed with both of these 
recommendations.

    Very importantly, in addition to the GAO's recommendations, CBP 
should work to adopt objective criteria to measure success. Success 
should not be measured merely by the number of detentions. Rather, 
success should be measured by the degree to which CBP's enforcement 
activity is effectively reducing forced labor. To this end, CBP should 
adopt a risk-based approach to enforcement, focusing on the worst 
actors first and providing as much predictability and certainty to 
impacted stakeholders, as possible, to enable them to amplify CBP's 
enforcement efforts.

    Another area where more transparency is needed is for CBP to share 
best practices, and other solutions, when they find them. CBP recently 
began a pilot program with a company that may have the capability to 
identify the origin of finished cotton products entering the borders of 
the United States. We welcome this effort. Any congressional action 
should require CBP to report back to Congress and the public on the 
learnings from this demonstration pilot, to include actual or potential 
shortfalls or gaps in the capability, and enter into pilots with other 
vendors to similarly assess alternative capabilities to trace the 
origins of finished cotton products and other commodities.

    Finally, to build upon tools like the Department of Labor's Sweat 
and Toil and Comply Chain mobile applications, and the Xinjiang Supply 
Chain Business Advisory issued by the executive branch this summer, 
Congress could endorse and fund a ``forced-labor free'' supplier 
certification process, similar to the Democratic Republic of Congo 
Conflict-Free Smelter certification program developed by the 
Responsible Business Alliance. The certificates could serve as proof of 
due diligence and admissibility of the product into the U.S. The bill 
could charge Labor with developing and administering the program, in 
close coordination with CBP.

    Thank you again for asking for USFIA's input today. Fashion brands 
and retailers have zero tolerance for forced labor. We believe that 
working together to eradicate forced labor from global supply chains 
will be good for American workers and American consumers, and for 
world. USFIA and its member companies stand ready to work with the 
members of the committee and with the Congress to achieve this goal.

                                 ______
                                 
         Questions Submitted for the Record to Julia K. Hughes
                 Questions Submitted by Hon. Mike Crapo
    Question. U.S. businesses are partners in combating forced labor. 
It is imperative that CBP develop an enforcement strategy that works 
with reliable American businesses to focus on unscrupulous actors.

    What elements would you look for in such a strategy?

    Answer. USFIA agrees that an effective enforcement strategy is 
essential to combat forced labor in all its forms. The strategy must be 
built on partnership and collaboration between business and U.S. 
Customs and Border Protection. We all support the goal for an 
enforcement strategy that guarantees that no products with forced labor 
reach the United States. The framework already exists for a shared 
approach to enforcement--the policy of informed compliance and the 
participation of companies in the CBP Trusted Trader programs. The top 
priority to improve enforcement is more transparency with respect to 
CBP decisions to withhold release and/or subsequently release shipments 
and expanding the collaboration for enforcement by working with the 
companies that are on the frontlines.

    As an overview, USFIA recommends the creation of a public CBP 
strategy that is transparent, evidence-based, and risk-based. 
Historically that approach to enforcement has been successful.

    To achieve that goal, USFIA would like to highlight some of the 
recent recommendations from the Commercial Customs Operations Advisory 
Committee (COAC) Intelligent Enforcement Subcommittee Forced Labor 
Working Group, which include the following:

    (1)  The recommendation that CBP take a collaborative, multi-agency 
approach utilizing the expert resources of all relevant U.S. Government 
agencies to develop a synchronized strategy, as well as engage more 
extensively in dialogue and priority setting with the trade. This 
includes working with the Departments of Homeland Security, Labor, 
Treasury and State, as well as Immigration and Customs Enforcement and 
the Office of the U.S. Trade Representative;

    (2)  The recommendation that CBP expand its collaboration and 
communication with the trade sectors and industries, identifying and 
sharing best practices, including government to industry efforts to 
minimize forced labor in supply chains;

    (3)  The recommendation that CBP develop an objective methodology 
to measure the ``success'' of the agency's forced labor informed 
compliance, facilitation, enforcement, and risk mitigation that is not 
based on enforcement output. Rather, a best developed practice would be 
to measure success based on outcome metrics that ultimately focus on 
improvement of the communities most impacted by forced labor, as 
recommended by the GAO 2020 Forced Labor Imports Report; and

    (4)  The recommendation that CBP apply the same principles, tools, 
guidance and outreach to forced labor as is the case with the other 
Priority Trade Issues, that is, ``world class expertise to design trade 
processes and policies that minimize cost and provide certainty, 
transparency, security, and predictability to members of the trade 
community.''

    To build on the COAC recommendations, USFIA would like to emphasize 
a few recommendations. First, a successful strategy requires CBP to 
adopt objective criteria to measure success. Success should not be 
measured merely by the number of detentions. Rather, success should be 
measured by the degree to which CBP's enforcement activity is 
effectively reducing forced labor. To this end, CBP should adopt a 
risk-based approach to enforcement, focusing on the worst actors first 
and providing as much predictability and certainty to impacted 
stakeholders as possible, to enable them to amplify CBP's enforcement 
efforts. This builds on the recommendation that CBP work more closely 
on this issue and coordinate with Trusted Traders, whose supply chains 
are known to CBP.

    A focused strategy also depends on CBP sharing best practices with 
industry. Whether there are insights gained from the review of supply 
chains, or insights gained from pilot programs using technology 
solutions, targeting and enforcement will be greatly improved if those 
learnings are shared with industry. USFIA also welcomes support from 
Congress to require CBP to report back to Congress and to the public on 
best practices.

    USFIA also recommends that the strategy include specific plans to 
assess and take action to ensure that there is adequate staffing and 
resources to achieve the strategy. This includes staff with the 
appropriate expertise and training to ensure the enforcement team is 
fully engaged with complex supply chains.

    Question. Some of the businesses in your association have developed 
supplier codes of conduct. Some of them rely on international 
instruments like the Universal Declaration of Human Rights and some of 
the International Labor Organization's (ILO) conventions. It is 
positive that American companies are striving for high ethical 
standards.

    What are some of the minimum elements an effective Code of Conduct 
should contain, and what can CBP do to help reinforce those efforts?

    Answer. Fashion brands and retailers do business globally--both 
sourcing around the world and selling to consumers around the world. 
For several decades, USFIA member companies have maintained codes of 
conduct and strict requirements for supply chain partners that ban the 
use of forced labor. Companies maintain an extensive network of 
contracts, audits, verifications, training, and direct engagement with 
their suppliers. Companies regularly update their Codes of Conducts to 
reflect new risks and best practices to address them. Industry best 
practices keep the welfare of workers at the center of remediation.

    Some of the minimum elements that are part of an effective Code of 
Conduct are: clear descriptions of standards; clear descriptions of 
corrective actions and timelines for remediation if a violation is 
found; and clear descriptions of practices for which the purchaser has 
zero tolerance, practices that always include forced labor and that 
also commonly include such things as forced overtime and unsafe working 
conditions.

    Question. One of the major challenges faced by U.S. businesses is 
the Chinese Government's lack of transparency and outright obstruction 
of efforts by U.S. businesses to stamp out forced labor from their 
supply chains. To put pressure on China, we need to work with allies--
as the Biden administration has indicated it will try to do.

    How do you think we can expand our relationship with foreign allies 
and foreign companies to push China to end the use of forced labor, and 
to stop further harassment of U.S. businesses?

    Answer. The State Department, Office of the U.S. Trade 
Representative, the Department of Homeland Security, U.S. Customs and 
Border Protection, the Labor Department, the Commerce Department, the 
Agriculture Department and the National Security Council, should make 
it a priority to execute a whole-of-government strategy to eliminate 
forced labor wherever it is found. We know that the path to success 
will be faster and better if there is a unified approach with the U.S. 
Government as well as with key allies. Multilateral action and 
engagement by international institutions are needed, as well. We 
strongly support efforts by the administration and Congress to take a 
leadership role on this issue on the international stage. Forced labor 
is a global problem--a problem that often involves the active or tacit 
blessing of foreign governments--and so calls for a global solution 
whenever possible.

                                 ______
                                 
                 Question Submitted by Hon. Todd Young
    Question. For the average layman, blockchain is associated with 
Bitcoin and cryptocurrencies; however, there are several other 
applications that can use ledger technology--especially beyond the 
field of finance.

    Today, humanitarian and tech leaders are actively exploring how 
blockchain could revolutionize humanitarian response.

    Unfortunately, for the textile industry, ``Made in China'' products 
have a high probability that the cotton was harvested by forced labor. 
How is the fashion industry turning to technology--such as blockchain--
to add transparency to the chain of custody in product production?

    Answer. Technology is absolutely an essential element in how 
companies, and governments, can improve transparency in supply chains. 
There are a number of different technologies currently available, with 
intense interest in options that focus on tracking and traceability. At 
this point, there is no single technology that meets the need for 
enforcement. Critical for successful technologies are scalability (the 
ability to cover large volumes of trade and many different types of 
products) as well as affordability (the ability of small and medium 
sized enterprises to use the technology).

    Fashion industry companies are using certain technologies today and 
there are a number of technologies that are in pilots. As we mentioned 
in our testimony, there are some promising pilots that were launched 
this year with funding from the Labor Department's Bureau of 
International Labor Affairs (ILAB). These are multi-year pilots that we 
believe will be important in the long-term efforts to eliminate forced 
labor. We know there also have been several pilot projects conducted by 
CBP and have asked for updates about what those pilots revealed. In 
addition, some brands and retailers are funding their own pilot 
projects, such as the YESS pilot, to focus on solutions specifically 
developed for fashion products.

    The industry also has been meeting with new company-entrants into 
this space in order to assess the efficacy of additional technology 
solutions that have recently become available. There are companies that 
use tracing technology, tracking technology, biome analysis as well as 
more traditional blockchain-like technologies that focus on the chain 
of custody. If members or staff are interested, USFIA would be pleased 
to provide a briefing about the variety of technologies and the 
opportunities for technology solutions.

                                 ______
                                 
               Questions Submitted by Hon. John Barrasso
                      actions taken by businesses
    Question. The U.S. Custom and Border Protection's investigation 
revealed terrible working conditions in China. It found ``debt bondage, 
restriction of movement, isolation, intimidation and threats, 
withholding of wages, and abusive living and working conditions.''

    On July 1, 2020, four U.S. agencies jointly issued a warning of 
``reputational, economic, and legal risks'' for businesses with supply 
chains in Xinjiang. Due to forced labor and human rights abuses taking 
place there, business were instructed to implement human rights-related 
due diligence policies and procedure.

    What specific actions are businesses taking to ensure forced labor 
is not part of their supply chain?

    Answer. Even before the very public media reports about forced 
labor, the fashion industry had taken this issue very seriously with 
regular member updates, analysis, and webinars focused on this issue in 
textile and apparel supply chains. With the initial reports from the 
XUAR region, fashion, apparel, footwear and retail associations joined 
together to create an ad hoc forced labor working group to facilitate 
the sharing of information and the sharing of resources among the 
industry. As part of this forced labor-focused initiative, industry 
particularly focused on what resources are available for companies to 
understand best practices and new initiatives to ensure that forced 
labor is not part of the supply chain.

    USFIA member companies require suppliers to adhere to strict codes 
of conduct and vendor agreements that require suppliers to certify that 
they do not use forced labor and that they do not utilize 
subcontractors and input suppliers that utilize forced labor. USFIA 
member companies regularly audit and inspect their suppliers in an 
effort to ensure that suppliers are living up to these commitments. In 
addition to the focus on forced labor, these supplier codes of conduct 
commonly extend far beyond a prohibition on the use of forced labor and 
focus on the full range of worker welfare issues. That includes 
prohibitions on other types of reprehensible labor practices, such as 
coercive overtime, restrictions on freedom of movement, and unsafe 
working conditions.

    Question. What challenges are businesses experiencing in 
implementing the policies and procedures needed to end this practice?

    Answer. While USFIA member companies do not source from the XUAR 
region of China and require all suppliers to warrant they do not 
utilize forced labor, USFIA cannot stress strongly enough the need for 
a coordinated effort to engage our trading partners to eradicate forced 
labor from the supply chain. The complete elimination of forced labor 
in all forms is the goal that we all want to achieve. U.S. companies 
are positioned at the end of complex, lengthy, and non-transparent 
supply chains. The State Department, USTR, the Department of Labor, the 
Commerce Department, the Department of Homeland Security, and the White 
House should make it a priority to execute a whole-of-government 
strategy to eliminate forced labor from supply chains. We know that the 
path to success and a world with no forced labor will be faster and 
better if there is a unified approach with our allies and with 
international organizations such as the International Labor 
Organization and the United Nations.

    From a business perspective, of course, there are many challenges 
to gain visibility to every aspect of the supply chain. This is a 
collaborative effort with U.S. Customs and Border Protection and we ask 
for CBP to adopt a risk-based approach to enforcement, focusing on the 
worst actors first and providing as much predictability and certainty 
to impacted stakeholders as possible, to enable them to amplify CBP's 
enforcement efforts. This builds on the recommendation that CBP work 
more closely on this issue and coordinate with Trusted Traders, whose 
supply chains are known to CBP. USFIA also supports efforts to use 
technology and other initiatives to develop new best practices and 
procedures to support company efforts to validate there is no forced 
labor in supply chains.

    Question. What are your views on congressional proposals creating 
due diligence and financial disclosure requirements for companies 
operating in Xinjiang?

    Answer. USFIA understands that there are various congressional 
proposals that would require due diligence and impose financial 
disclosure requirements upon companies operating in the Xinjiang region 
of China. While USFIA member companies do not source from the Xinjiang 
region of China, USFIA stands ready to work with Congress to ensure 
that such requirements, should they be enacted by Congress and impact 
USFIA member companies, are both administrable and an effective part of 
our joint efforts to eliminate forced labor from the supply chain.
                 congressional proposals on import bans
    Question. Since 2009, China has been included on the List of Goods 
Produced by Child Labor or Forced Labor. The Bureau of International 
Labor Affairs recently added five new categories of products from 
Xinjiang to the list. It included gloves, hair products, textiles, 
thread/yarn, and tomato products.

    In January, the Trump administration issued a sweeping ban on 
imports of cotton and tomato products from China due to evidence of 
forced labor. There are several congressional proposals aimed at 
expanding the administration's authorities to more robustly address 
widespread and systematic force labor in China.

    What are your views on the proposal to implement a comprehensive 
import ban on all goods produced, wholly or in part in Xinjiang?

    Answer. USFIA members companies are committed to meet all legal 
requirements, including the comprehensive ban on any products with 
forced labor. We appreciate the Senate proposals that are currently 
under discussion to address systematic forced labor and support the 
effort to develop a comprehensive strategy and include the business 
community in the enforcement efforts.

    Question. What ways would you recommend the United States take to 
enhance import controls and enforcements on good produced in China?

    Answer. There are several levels of action that the United States 
can take, and should take, to eliminate forced labor.

    First, there needs to be a coordinated effort to engage our trading 
partners to eradicate forced labor from the supply chain. The complete 
elimination of forced labor in all forms is the goal that we all want 
to achieve. U.S. companies are positioned at the end of complex, 
lengthy, and non-transparent supply chains. The State Department, USTR, 
the Department of Labor, the Commerce Department, the Department of 
Homeland Security, and the White House should make it a priority to 
execute a whole-of-government strategy to eliminate forced labor from 
supply chains. We know that the path to success and a world with no 
forced labor will be faster and better if there is a unified approach 
with our allies and with international organizations such as the 
International Labor Organization and the United Nations.

    From a business perspective, of course there are many challenges to 
gain visibility to every aspect of the supply chain. This is a 
collaborative efforts with U.S. Customs and Border Protection and we 
ask for CBP to adopt a risk-based approach to enforcement, focusing on 
the worst actors first and providing as much predictability and 
certainty to impacted stakeholders, as possible, to enable them to 
amplify CBP's enforcement efforts. This builds on the recommendation 
that CBP work more closely on this issue and coordinate with Trusted 
Traders, whose supply chains are known to CBP. Close collaboration with 
CBP, including greater transparency about who are the ``bad guys'' and 
what are the best practices that CBP sees in action will go a long way 
to eliminate forced labor in supply chains.

    USFIA also supports efforts to use technology and other initiatives 
to develop new best practices and procedures to support companies to 
validate there is no forced labor in supply chains.

                                 ______
                                 
          Prepared Statement of Martina E. Vandenberg, J.D., 
               President, Human Trafficking Legal Center
    Chairman Wyden, Ranking Member Crapo, and members of the committee, 
it is an honor to appear before you today to address the issue of 
forced labor in global supply chains. My name is Martina Vandenberg, 
and I serve as president of the Human Trafficking Legal Center, a human 
rights non-governmental organization dedicated to the eradication of 
forced labor.

    That goal, the eradication of forced labor, is a heavy lift.

    My colleagues and I frequently say that forced labor is a feature, 
not a bug, in global supply chains. The issue requires system-wide 
solutions, not just isolated prosecutions against individual bad 
actors. Criminal prosecutions have failed to curb forced labor around 
the globe, largely because there are almost no prosecutions. According 
to the State Department's June 2020 Trafficking in Persons (TIP) 
report, there were just 1,024 forced labor prosecutions in the entire 
world. Based on International Labor Organization (ILO) global estimates 
of forced labor, that is one prosecution for every 20,410 victims held 
in forced labor.

    The United States is no outlier. According to Department of Justice 
data, Federal prosecutors indicted just 12 forced labor cases in the 
entire country in FY 2019. And although extraterritorial jurisdiction 
has existed since 2008 to prosecute global supply chain forced labor 
cases with a nexus to the United States, Federal prosecutors have never 
brought even one forced labor supply chain case that invoked 
extraterritorial jurisdiction.

    The result of this enforcement vacuum? Impunity. Complacency. 
Immense human suffering.

    A race to the bottom--to markets with the lowest wages--has 
cemented these abuses into global supply chains. Forced labor is not an 
aberration. It is a direct result of policy--and pricing--decisions 
made by corporations around the globe. The COVID-19 pandemic has only 
exacerbated the vulnerability of workers to conditions of forced labor. 
According to the ILO,\1\ the disparate effects of the global health 
crisis will bear most heavily on children held in child labor, victims 
of forced labor, and victims of human trafficking, particularly women 
and girls.
---------------------------------------------------------------------------
    \1\ COVID-19 impact on child labor and forced labor: The response 
of the IPEC+ flagship programme, https://www.ilo.org/wcmsp5/groups/
public/@ed_norm/@ipec/documents/publication
/wcms_745287.
---------------------------------------------------------------------------
              pay to work is the norm for migrant workers
    We now live in a world in which migrant workers must buy their 
jobs. They do not pay to play. Workers pay to work. Because they cannot 
afford to pay the recruitment fees outright, workers must borrow. Those 
loans wrack up massive interest payments, compounding workers' debts. 
And despite corporate ``employer pays'' policies, workers continue to 
drown in recruitment fee debts. Many find themselves trapped in debt 
bondage.
                 tariff act--a game changer since 2016
    Until recently, corporate actors importing goods made with forced 
labor had little to fear. Governments seemed unlikely to prosecute 
them. Civil cases brought under the Alien Tort Statute or the private 
right of action under the Trafficking Victims Protection 
Reauthorization Act (TVPRA) took years to litigate. And the 
reputational harm of a forced labor allegation frequently dissipated 
after initial bursts of consumer outrage.

    The closing of the U.S. Tariff Act of 1930's consumptive demand 
loophole in 2016 changed the game.

    That amendment catapulted section 307 \2\ from a moribund statutory 
relic to a valuable tool to combat forced labor. Finally, the use of 
forced labor in global supply chains could trigger meaningful 
accountability. Enforcement of the Tariff Act through a Withhold 
Release Order (WRO) or a Finding can have significant financial 
consequences for a supplier, as well as for an importer. Finally, 
corporations are sitting up and taking notice. The Tariff Act has made 
forced labor more than a corporate social responsibility issue. Forced 
labor is now a serious enforcement issue for corporations. At last, 
there is risk.
---------------------------------------------------------------------------
    \2\ 19 U.S.C. Sec. 1307 states, ``All goods, wares, articles, and 
merchandise mined, produced, or manufactured wholly or in part in any 
foreign country by convict labor and/or forced labor and/or indentured 
labor under penal sanctions shall not be entitled to entry at any of 
the ports of the United States, and the importation thereof is hereby 
prohibited[.]''
---------------------------------------------------------------------------
 a recent gao report confirms the impact of section 307 of the tariff 
                                  act
    The recent Government Accountability Office (GAO) report \3\ on the 
Tariff Act underscores these conclusions:
---------------------------------------------------------------------------
    \3\ Government Accountability Office, Forced Labor: CBP Should 
Improve Communication to Strengthen Trade Enforcement, March 1, 2021, 
GAO-21-259, available at https://www.
gao.gov/products/gao-21-259.

        Officials from Federal agencies, NGOs, and private sector 
        entities we spoke with generally described section 307 as an 
        effective mechanism to help prevent the importation of goods 
        produced with forced labor. According to CBP officials, 
        importers typically stop trying to import goods subject to a 
        WRO about a month after it is issued, which demonstrates WROs' 
        deterrent effect. Additionally, at a meeting with various NGOs, 
        representatives told us they agreed that section 307 was a 
        helpful mechanism to eradicate forced labor. Further, according 
        to State officials, section 307 enforcement is a powerful tool 
        to advance the U.S. Government's mission to combat forced 
---------------------------------------------------------------------------
        labor.

        A private-sector representative said that section 307 is an 
        effective signal that all companies involved in supply chains 
        need to address forced labor violations. In addition, 
        representatives from a private sector entity commented that 
        section 307 is an important law, in part because it has 
        intensified companies' focus on forced labor in their supply 
        chains.

    As we pause to review the success and challenges of section 307 of 
the Tariff Act, I am reminded of the Foreign Corrupt Practices Act's 
(FCPA) evolution. In the 1970s, bribery was ubiquitous across the 
globe, just as forced labor is today. In Germany, bribes were tax-
deductible. That all changed when the Department of Justice began 
prosecuting companies and individuals under the FCPA. Suddenly, bribery 
allegations went straight to the C Suite. What changed? The advent of 
risk. Risk compelled corporations to implement robust, comprehensive, 
and expensive compliance plans. Bribes were not the stuff of corporate 
social responsibility (CSR) backwaters; bribes became the province of 
internal investigations, outside counsel, and compliance monitors.
                        cbp's enforcement surge
    We are a long way from FCPA anti-bribery regime levels for forced 
labor. But Customs and Border Protection (CBP)'s section 307 
enforcement is bringing us closer.

    CBP issued 29 WROs between February 2016 and January 2021. In the 
prior 80-plus years, CBP had issued just 33 WROs. According to the GAO 
Report issued in March 2021:

        Twenty WROs covered merchandise from specific manufacturers, 
such as hair products produced by Hetian Haolin Hair Accessories Co., 
Ltd., in China.
        Five WROs covered a type of good produced in a specific 
location, country, or region, such as cotton from Xinjiang, China.
        Four WROs covered seafood imports from fishing vessels, such 
as seafood from the Taiwan-flagged Yu Long No. 2.
        More than half of the WROs (16 of 29) pertained to products 
from China.
        The remaining 13 WROs pertained to products from Brazil, the 
Democratic Republic of the Congo, Malawi, Malaysia, Turkmenistan, and 
Zimbabwe and from four fishing vessels.

    In October 2020, CBP issued its first Finding for imports produced 
with forced labor in 24 years. The agency collected $575,000 in 
penalties from PureCircle USA, Inc., for importing at least 20 
shipments of stevia powder and its derivatives that were processed in 
China with prison labor.\4\ CBP had issued a WRO for these products in 
2016.
---------------------------------------------------------------------------
    \4\ CBP Collects $575,000 from PureCircle U.S.A. for Stevia Imports 
Made With Forced Labor, https://www.cbp.gov/newsroom/national-media-
release/cbp-collects-575000-pure-circle-usa-stevia-imports-made-forced-
labor.

    And according to data recently released by CBP, in the first 
quarter of FY 2021, the government detained 90 shipments of cargo 
covered under different WROs. The value of that cargo was $20.8 
million. In FY 2020, CBP detained a total of 324 shipments valued at 
$55 million. CBP appears poised to shatter the FY 2020 detention 
record, a welcome development.
          enforcement is welcome, but significant gaps remain
    The Human Trafficking Legal Center and our NGO coalition partners 
have applauded CBP's increased enforcement. Indeed, non-governmental 
organizations are fundamental to this success.\5\ According to public 
records, NGOs have filed no fewer than ten petitions since 2016. Some 
of those petitions have resulted in Withhold Release Orders, such as 
the January 2021 region-wide WRO on Xinjiang cotton. That petition, 
filed in August 2020 by 10 non-governmental organizations,\6\ provides 
a telling example of the power--and lacunae--in section 307 
enforcement.
---------------------------------------------------------------------------
    \5\ Human Trafficking Legal Center published a practice guide on 
how to file petitions to CBP in June 2020. That guide, Importing 
Freedom: Using the U.S. Tariff Act to Combat Forced Labor in Global 
Supply Chains, has been translated into multiple languages and 
distributed to partners across the globe. The guide was authored by 
Human Trafficking Legal Center Human Rights and Trade Policy Advisor 
Anasuya Syam, https://www.htlegalcenter.org/wp-content/uploads/
Importing-Freedom-Using-the-U.S.-Tariff-Act-to-Combat-Forced-Labor-in-
Supply-Chains
_FINAL.pdf.
    \6\ Human Rights Groups Call on U.S. for Regional Ban on Imports 
From China Made With Uyghur Forced Labor, https://www.iccr.org/human-
rights-groups-call-us-regional-ban-imports-china-made-uyghur-forced-
labor.

---------------------------------------------------------------------------
    Two issues relating to this petition raise concerns:

Communication and Transparency

    Once the Xinjiang cotton petition was filed, it was unclear how the 
CBP investigation was progressing or whether the agency was satisfied 
with the information provided by the petitioners. There were rumors \7\ 
in September 2020 that CBP was ready to issue a regional block on all 
cotton from Xinjiang. However, it appears that the announcement was 
rolled back soon thereafter. The agency resorted to issuing a narrower 
order against cotton imports from one entity--the Xinjiang Production 
and Construction Corps (XPCC) in December 2020. The region-wide WRO 
against all Xinjiang cotton (and tomatoes) was eventually issued on 
January13, 2021. Throughout this saga, the petitioning organizations 
were not informed of when the investigation would conclude and a WRO 
would issue. This is despite the fact that in a press conference 
announcing the XPCC WRO in December 2020, CBP Acting Commissioner Mark 
A. Morgan thanked the coalition of non-governmental organizations for 
their Xinjiang cotton petition and noted the critical role played by 
NGOs in Tariff Act enforcement.
---------------------------------------------------------------------------
    \7\ U.S. readies bans on cotton, tomato imports from China's 
Xinjiang, https://www.
reuters.com/article/us-usa-trade-china-xinjiang/u-s-to-block-cotton-
tomato-product-imports-from-chinas-xinjiang-over-forced-labor-cbp-
idUSKBN25Z29N.
---------------------------------------------------------------------------
Capacity to Enforce
    As the GAO report pointed out:

        Forced Labor Division officials and representatives from 
        several private-sector entities and NGOs said that difficulty 
        in tracing supply chains presents a challenge for section 307 
        investigations and compliance. Forced Labor Division officials 
        noted that CBP often cannot trace goods produced with forced 
        labor overseas and imported into the United States because of 
        the complexity of the goods' supply chains.

    Issuing the WRO is only the first step. Robust and swift 
enforcement of the order must follow. CBP announced that despite the 
prohibition on all Xinjiang cotton, the agency would focus only on 
direct imports from the region, reflecting what the agency terms a 
``scalpel approach'' to enforcement.\8\ This is especially concerning 
considering that direct imports from Xinjiang represent only a fraction 
of all imports that contain Xinjiang cotton. Many goods containing the 
offending cotton are shipped via third countries. For the WRO to have 
the most impact, CBP should enforce the order broadly and without any 
limitations. It must cultivate internal capacity to trace these supply 
chains through training and use of cutting-edge tracing technology.
---------------------------------------------------------------------------
    \8\ CBP's Smith says initial focus for Xinjiang WRO is direct 
connections, not goods finished elsewhere, https://
internationaltradetoday.com/news/2021/01/28/cbps-smith-says-initial-
focus-for-xinjiang-wro-is-direct-connections-not-goods-finished-
elsewhere-2101280025.

    Annually, the United States imports billions of goods at risk of 
being produced by forced labor and child labor. However, as mentioned 
above, Tariff Act enforcement in the previous financial years have only 
netted a very small portion of this figure. It is critical that more 
shipments are detained at U.S. ports of entry. Non-governmental 
organizations are finding it difficult to assess the impact of WROs 
without knowing how CBP is enforcing the order and to what degree. CBP 
does not release enforcement data for each WRO. The agency recently 
began releasing data on total number of shipments detained each quarter 
(under all WROs), but that does not give us the full picture.
                     the corporate backlash begins
    The backlash against Tariff Act enforcement has throttled up in 
recent days, with lawsuits filed by corporations against non-
governmental organizations and researchers. These retaliatory legal 
actions have a chilling effect on NGOs, which we can only surmise is 
the intent. Sime Darby, a Malaysian palm oil producer subject to a WRO, 
filed a lawsuit in U.S. Federal court against Duncan Jepson, the 
director of Liberty Shared, seeking extensive discovery of the human 
rights organization's confidential investigation files.\9\ And Chinese 
corporations have filed a suit \10\ in China against Adrian Zenz, a 
U.S.-based human rights researcher who has documented widespread forced 
labor and crimes against humanity against the Uyghur population in 
Xinjiang.
---------------------------------------------------------------------------
    \9\ Civil miscellaneous case In re Application of Sime Darby 
Plantation Berhad, pursuant to 28 U.S.C. Sec. 1782 to conduct discovery 
for use in foreign proceedings, Case No. 1:21-mc-00006 (EDVA March 9, 
2021).
    \10\ Chinese firms seek damages from foreign researcher over forced 
labor reports, https://news.trust.org/item/20210309064206-l7inv/.

    Corporate response to WROs should include internal investigations, 
remediation, and corporate governance reform and internal controls to 
prevent forced labor in the future. Instead, some corporate actors have 
adopted a ``shoot the messenger'' strategy, seeking to embroil the 
petitioner in litigation. Facing universal outrage, Sime Darby dropped 
their lawsuit just a week after filing.\11\
---------------------------------------------------------------------------
    \11\ Sime Darby withdraws lawsuit against activist, https://
www.freemalaysiatoday.com/category/nation/2021/03/16/sime-darby-
withdraws-lawsuit-against-activist/.

    Similarly, subtle, but increasingly loud, corporate voices seek to 
dismantle section 307's enforcement regime. Couched in the language of 
calls for ``due process,'' corporate advocates have suggested that CBP 
abandon the section 307 petition regime to move to a tribunal-based 
system, such as that used in section 337 enforcement. Rhetorical 
condemnation of forced labor notwithstanding, these critics truly come 
to bury section 307, not to praise it.
         recommendations for robust enforcement of section 307
    The NGO community asks that Congress resist calls for a ``grand re-
envisioning'' of the Tariff Act. Instead, there are concrete 
recommendations that will increase CBP's effectiveness in implementing 
and enforcing section 307. The Human Trafficking Legal Center serves as 
the secretariat to the Tariff Act Advisory Group (TAAG), a coalition of 
non-governmental organizations dedicated to enforcement under section 
307 of the Tariff Act of 1930. Many of the recommendations that I 
suggest today are discussed in greater depth in a series of letters 
TAAG has provided to CBP and the Department of Homeland Security:

        Letter to Secretary of Homeland Security Mayorkas on Effective 
Enforcement of the Tariff Act: https://www.htlegalcenter.org/wp-
content/uploads/Letter-to-Secretary-Mayorkas-March-4-2021.pdf.
        Letter to CBP on Reimbursement of Recruitment Fees: https://
www.
htlegalcenter.org/wp-content/uploads/Letter-to-CBP-re.-Reimbursement-
September-21-2020.pdf.

        Letter to CBP on Effective Enforcement of Section 307 of the 
Tariff Act: https://www.htlegalcenter.org/wp-content/uploads/Letter-to-
CBP-re.-Effective- Enforcement-November-19-2020.pdf.

    Similarly, one of our partner organizations, Global Labor Justice/
International Labor Rights Forum (GLJ/ILRF) has made important 
recommendations in a letter recently submitted to CBP on the 
enforcement of another palm oil WRO, this one against FGV. That letter 
may also be found online at: https://laborrights.org/publications/
march-9th-2021-letter-cbp-about-enforcement-fgv-wro.
Recommendations for Enforcement:
    Uphold freedom of association. Workers' rights and ability to 
unionize are central to any effort to eliminate forced labor in supply 
chains. Freedom of association is a necessary factor in remediating 
forced labor. Workers and worker representatives must be included in 
the Tariff Act process. CBP should ensure that affected workers, their 
unions, workers' rights organizations, and migrant workers' rights 
groups have a role in enforcement. Workers' agency to monitor and 
report on their working conditions must be respected and incorporated 
as part of an enforcement plan for each WRO.

    Create an emergency fund for workers harmed by WROs. Workers can 
face dire consequences after the issuance of a WRO. As the March 2021 
GAO report pointed out:

        ILAB officials told us that, as an unintended consequence of 
        the September 2019 WRO for disposable rubber gloves produced in 
        Malaysia, many workers' employment was terminated, which had a 
        negative effect on workers facing exploitation. The officials 
        said that it is important that the U.S. Government be prepared 
        to support workers who are placed in a position of increased 
        vulnerability as a result of enforcement actions to prevent 
        forced labor.

    The creation of an emergency fund for workers is essential to 
mitigate the harm to workers. There is the danger that U.S. companies 
will ``cut-and-run,'' abandoning foreign suppliers instead of working 
to remediate forced labor. This emergency fund should be financed by 
fines levied against importers, as in the stevia case, or by funds 
created by the corporations themselves.

    Punish companies that retaliate against workers or petitioners. If 
a corporate actor retaliates against a petitioner or witnesses, all 
negotiations on revocation or modification of the WRO should cease. 
Attacks on petitioners should be considered when corporations seek 
relief from CBP. Retaliation does not signal good faith efforts to 
remediate or eliminate forced labor.

    Increase transparency. We agree with the GAO's recommendation that 
CBP better ``communicate to stakeholders the types of information they 
could collect and submit to CBP to help it initiate and investigate 
forced labor cases. . . .'' There is still little clarity on the 
standards CBP applies or the evidence required. At a recent meeting, 
CBP informed the NGO community that the agency would soon publish 
guidance on types of information needed in a section 307 allegation. 
CBP should work more closely with the Bureau of International Labor 
Affairs (ILAB) and the Bureau of Democracy, Human Rights, and Labor 
(DRL) to bring the definitions of forced labor, child labor, and prison 
labor used by the agency in line with the International Labor 
Organization (ILO) core labor standard definitions.

    Disclose shipments detained under a WRO. CBP's recent disclosures 
of the number and value of shipments detained in FY 2020 are 
encouraging, but these aggregated numbers are untethered to specific 
WROs. For example, we have no confirmation or data to indicate that CBP 
ever enforced the 2018 WRO against Turkmenistan cotton, although we do 
have credible information that imports containing cotton from 
Turkmenistan have entered the United States. CBP should release 
enforcement updates on each WRO each quarter.

    Increase enforcement and penalties. Enforcement of the Tariff Act 
should be ramped up with the issuance--and robust enforcement--of more 
WROs. U.S. importers that continue to source goods in violation of the 
U.S. Tariff Act should face penalties. We hope to see more WROs, more 
findings, more monetary penalties (for higher amounts), and criminal 
prosecutions for forced labor. We also encourage CBP to press more 
aggressively for fines and penalties. Pure Circle, which paid a 
$575,000 fine for the importation of stevia manufactured by prisoners 
in China, bragged in a press release that this was less than 7 percent 
of the fine that CBP had originally sought to enforce.\12\
---------------------------------------------------------------------------
    \12\ PureCircle and U.S. Customs and Border Protection Resolve 2014 
Stevia Sourcing, https://purecircle.com/news/purecircle-and-u-s-
customs-and-border-protection-resolve-2014-stevia-sourcing/.

    Prosecute forced labor in global supply chains. The U.S. Government 
has never prosecuted a case of forced labor in a global supply chain, 
despite the existence of extraterritorial jurisdiction under 18 U.S.C. 
Sec. 1596. Victims of forced labor in supply chains have brought civil 
suits in the Federal courts under 18 U.S.C. Sec. 1595, but criminal 
prosecutions have not followed. We encourage DHS to ramp up 
investigations (and prosecutions) under chapter 77 of title 18, the 
Trafficking Victims Protection and Reauthorization Act (TVPRA). We are 
also concerned that the U.S. Government has not prosecuted even one 
case alleging the importation of goods made with forced labor. We urge 
the agency to work with the Department of Justice (DOJ) to prosecute 
---------------------------------------------------------------------------
violators.

    Strengthen enforcement of WRO on cotton and cotton products from 
Xinjiang. Effective enforcement of this regional WRO is a key tool to 
end China's widespread and systematic forced labor and other abuses 
against Uyghurs and Turkic Muslims. CBP's recent announcement that 
enforcement would be done with a ``scalpel'' raises significant 
concerns. The WRO should be enforced broadly.

    Diversify Tariff Act enforcement. More than 72 percent of WROs 
issued in the Tariff Act's 90-year history have been against goods 
produced in China. The Chinese Government's systematic oppression of 
the Uyghur peoples and other ethnic minorities is reprehensible. But 
China should not be the sole target of Tariff Act enforcement under 
section 307. Forced labor continues in many countries in East Asia, 
South and Central Asia, Africa, the Americas, the Middle East, and 
Europe.

    Increase transparency on modifications and revocations. Non-
governmental organizations and unions are left in the dark on the 
process leading to a WRO revocation. Without information about 
remediation claims, petitioners cannot verify whether conditions of 
forced labor have in fact been remediated. NGO/union involvement at 
each stage of the Tariff Act process is critical to ensure that workers 
affected by a WRO do not remain trapped in forced labor and involuntary 
servitude.

    Establish cooperation and communication channels with U.S. allies. 
Goods made with forced labor--and subject to WROs--are routinely re-
routed from U.S. ports to neighboring countries or other regions. Our 
own research has identified transshipment to Canada of goods subject to 
WROs in the United States. Mexico, the United States, and Canada should 
establish an infrastructure to facilitate cooperation in combating 
forced labor, including identification and movement of goods produced 
using forced labor (Articles 23.12 (5)(c) and 23.6 of the United 
States-Mexico-Canada Agreement).

    Incorporate section 307 provisions into all trade agreements. There 
should be no safe harbor for goods made with forced labor anywhere in 
the world.
                               conclusion
    Section 307 has enormous potential to disrupt forced labor in 
global supply chains. The community of non-governmental organizations 
stands ready to cooperate with CBP, and with Congress, to maximize the 
effectiveness of this tool.

                                 ______
                                 
   Questions Submitted for the Record to Martina E. Vandenberg, J.D.
                 Question Submitted by Hon. Mike Crapo
    Question. I have read that your research indicates that many 
countries lack the political will to criminally prosecute forced labor. 
That is deeply troubling. It is simply not enough to stop goods made 
with forced labor from entering the United States. Forced labor is a 
crime against humanity. Perpetrators must be punished.

    What can be done to incentivize states to bring such prosecutions?

    Answer. Forced labor must be prosecuted. More than 20 years after 
passage of the Trafficking Victims Protection Act, impunity remains the 
norm. I would make three recommendations to address this question.

    First, the State Department's Office to Monitor and Combat 
Trafficking must increase the level of attention and scrutiny on forced 
labor around the globe. It was not until 2008 that the State 
Department's annual Trafficking in Person's report even broke out 
forced labor as a separate category in the report's global estimated 
prosecution figures. In that year, the State Department began providing 
forced labor prosecution numbers as a parenthetical, alongside the 
total trafficking prosecution numbers. Since then, the forced labor 
prosecution numbers have remained dismal, never even reaching 1,200 in 
any year.

    The Biden administration has not yet nominated a new ambassador to 
lead the Trafficking in Persons Office at the Department of State. But 
once that individual is confirmed, the TIP Office should be tasked with 
allocating resources to promote forced labor prosecutions around the 
globe. Forced labor should be emphasized in meetings with foreign 
governments. In addition, the failure to prosecute forced labor should 
be weighed heavily in downgrading a country to Tier 2 Watch List or 
Tier 3 in the annual report. Embassy officers filing State Department 
annual TIP reporting cables should be required to investigate and 
report on the causes of the dearth of forced labor prosecutions in 
their jurisdiction.

    Second, the United States must lead by example. The U.S. cannot 
condemn other countries for failing to prosecute forced labor when our 
own prosecution numbers are so abysmal. In the 21 years since passage 
of the Trafficking Victims Protection Act, Federal prosecutors have 
never brought more than 32 forced labor prosecutions in any given year. 
The U.S. forced labor prosecution record is grim, even compared to 
similar nations. For example, in FY 2019, Federal authorities 
prosecuted just 12 forced labor cases in the entire United States. In 
contrast, the European Union prosecuted 106 forced labor cases in 2019. 
The Department of Justice must focus not only on prosecution of U.S. 
forced labor cases committed on U.S. territory. Prosecutors should also 
use the extraterritorial jurisdiction provided by 18 U.S.C. Sec. 1596 
to bring Federal trafficking cases for crimes committed by U.S. persons 
abroad. When the United States sets this example, other countries will 
follow.

    Third, states can be incentivized to bring forced labor 
prosecutions by prioritizing forced labor in U.S. aid and assistance 
programs. The U.S. Government offers multiple fellowship, visitor, and 
training programs around the globe. These programs should focus on 
forced labor experts, particularly on those with expertise on global 
supply chains. Additional resources should be made available to DOL-
ILAB to pursue systemic approaches to eradicate forced labor and child 
labor. In addition, the U.S. government should use sanctions regimes, 
such as Global Magnitsky sanctions, to punish those using forced labor 
in global supply chains. Sanctions can be particularly effective in 
targeting the endemic corruption that allows forced labor to flourish 
unchecked. Sanctions should be used to punish government officials 
profiting from forced labor.

                                 ______
                                 
               Questions Submitted by Hon. John Barrasso
                      china's human rights abuses
    Question. The Chinese Communist Party continues to commit terrible 
human rights abuses. The Uyghurs, a religious and ethnic minority in 
China, have experienced brutal repression at the hands of the Chinese 
Government. They continue to be subjected to torture, imprisonment, and 
forced labor. At least 1 million Uyghurs have been put in internment 
camps by the Chinese Communist Party. Around 100,000 Uyghurs and ethnic 
minority ex-detainees have reportedly been used as forced labor in 
textile and other industries in China.

    How effective have U.S. actions been at addressing the human rights 
abuses and the use of forced labor?

    Answer. The United States needs the support of allies to 
successfully combat forced labor. If the United States continues to be 
the only country blocking the importation of goods made with forced 
labor, transshipment to other ports will continue. This blunts the 
effectiveness of section 307 of the Tariff Act as a tool to combat 
forced labor. In addition to Tariff Act enforcement, the United States 
should ramp up use of Global Magnitsky sanctions and increase Federal 
criminal prosecutions to address forced labor in global supply chains.

    Question. What more should the United States do on transparency and 
enforcement?

    Answer. The United States should take the following steps to 
increase transparency and ramp up enforcement:

        Customs and Border Protection (CBP) should inform petitioners 
under section 307 of the Tariff Act about the status of their petitions 
for Withhold Release Orders.
        CBP should communicate with petitioners before revoking or 
modifying a WRO.
        CBP should involve workers' rights organizations and/or unions 
to confirm that remediation plans submitted to CBP by companies to 
support a request for modification or revocation of a WRO are 
legitimate. For example, CBP should corroborate claims that recruitment 
fee reimbursements and back wage repayments to workers have been 
carried out.
        CBP should provide quarterly data on shipments detained under 
each WRO.
        CBP should issue additional forced labor Findings.
        CBP should levy significant fines against importers that bring 
goods made with forced labor into the U.S. market.
        The U.S. Government should prosecute forced labor in global 
supply chains, relying on extraterritorial jurisdiction provided under 
the Federal trafficking statutes, codified at 18 U.S.C. Sec. 1596.
                          working with allies
    Question. In your testimony, you noted the need to create 
cooperation and communication channels with our allies to address 
forced labor. You explained that goods made with forced labor and 
subject to U.S. Withhold Release Orders are re-routed from U.S. ports 
to neighboring countries.

    How aligned are the U.S. and our allies, such as Canada and the 
United Kingdom, on addressing the risk of forced labor-produced goods 
entering the global supply chains?

    Answer. The United States and its close allies are becoming more 
aligned in the fight against forced labor in global supply chains. 
However, to date, only Canada has taken concrete steps to address the 
risk of forced labor-produced goods entering its supply chains.

    In accordance with requirements under the USMCA, Canada enacted a 
prohibition on the importation of goods made using forced labor and 
prison labor. The publication of Customs Notice 20-23 marked a positive 
step forward. The Canadian government recently updated their website to 
provide information on how members of the public can submit allegations 
of forced labor to Canadian authorities.

    On January 12, 2021 Canada and the U.K. announced coordinated trade 
restrictions against China over the issue of forced Uyghur labor.

    Non-governmental organizations in the United Kingdom have pressed 
their government to implement a prohibition on the importation of goods 
made with forced or prison labor similar to the Tariff Act. In 2020, a 
U.K.-based NGO, Global Legal Action Network (GLAN), and the World 
Uyghur Congress filed a petition to Her Majesty's Revenue and Customs 
Authority requesting the suspension of imports of cotton goods produced 
with prison labor in China. The petition, which relied upon the U.K.'s 
Foreign Prison-Made Goods Act of 1897, has not yet received a final 
decision.

    Question. In what areas does the United States need to work with 
our allies to improve and coordinate efforts to address forced labor?

    Answer. One fundamental problem facing successful Tariff Act 
enforcement is transshipment. Goods subject to a Withhold Release Order 
(WRO) can simply be moved to another market. The United States must 
press its key allies--the U.K., the EU, Australia, and New Zealand--to 
implement legislation similar to the U.S. Tariff Act. The allies should 
also share intelligence on forced labor investigations. Only this can 
halt transshipment. There should be no safe harbor for goods made using 
forced labor.

    Canada has already made excellent progress in adopting a Tariff 
Act-like regime, as required under the USMCA. The United States should 
coordinate with Customs authorities in Canada and Mexico to identify 
and track the cross-border movement of goods produced using forced 
labor. Goods subject to a Withhold Release Order (WRO) should be 
refused entry into Canada and Mexico. The United States should also 
support Mexico in implementing its obligations under the USMCA to bar 
goods made with forced labor.
                         push for green energy
    Question. In your testimony, you noted: ``Forced labor is not an 
aberration. It is a direct result of policy--and pricing--and decisions 
made by corporations around the globe.'' I'd like to focus on the 
policy side of your statement for just a moment.

    President Biden has made decarbonizing the American economy a 
policy cornerstone for his administration. To achieve this policy goal, 
America will have to significantly increase imports of equipment, 
critical minerals, and raw materials from China and other countries 
known to use forced labor and child labor--solar panels from Xinjiang, 
cobalt mined by children in the Congo.

    Do you believe the rapid push for green energy deployment in the 
U.S. is the type of policy that will contribute to the problem of 
forced labor and child labor?

    Answer. The problem of forced labor is ubiquitous. It is a systemic 
issue in global supply chains. It is not confined to one product, 
industry, or region. The problem is not the rapid push for green energy 
development. It is the lack of accountability for forced labor, 
resulting in complete impunity. The accountability problem is 
compounded by opaque supply chains, dearth of criminal prosecutions for 
forced labor, sheer ineffectiveness of corporate self-regulation, and 
inadequate implementation of existing labor laws. Increased enforcement 
under the U.S. Tariff Act will serve as a deterrent against forced 
labor in global supply chains. And, as noted at the hearing, increased 
enforcement will also protect U.S. workers. U.S. workers cannot compete 
with workers held in forced labor abroad; increased enforcement evens 
the playing field.
                      mineral extraction in china
    Question. In 2020, China controlled about 60 percent of the natural 
graphite and rare earths produced globally.

    To what extent is mineral production or processing in China 
associated with the human rights abuses--what the U.S. State Department 
has called ``genocide''--against the Uighurs?

    Answer. All goods, including mineral and rare earths, from China 
should be suspect. Because the Chinese government has forcibly 
relocated Uyghurs throughout China to engage in forced labor, raw 
materials from all regions, not just Xinjiang, should be scrutinized 
for links to forced and prison labor.

    Question. Would we be better served safely mining rare earths and 
critical minerals in places like Wyoming instead of relying imports 
from China or other bad actors?

    Answer. The State Department has just confirmed again that the 
abuse against the Uyghur population in Xinjiang rises to the level of 
genocide. Obtaining minerals from any other source other than Xinjiang 
is in the best interests of the United States.
                 congressional proposals on import bans
    Question. Since 2009, China has been included on the List of Goods 
Produced by Child Labor or Forced Labor. The Bureau of International 
Labor Affairs recently added five new categories of products from 
Xinjiang to the list. It included gloves, hair products, textiles, 
thread/yarn, and tomato products.

    In January, the Trump administration issued a sweeping ban on 
imports of cotton and tomato products from China due to evidence of 
forced labor. There are several congressional proposals aimed at 
expanding the administration's authorities to more robustly address 
widespread and systematic force labor in China.

    What are your views on the proposal to implement a comprehensive 
import ban on all goods produced, wholly or in part in Xinjiang?

    Answer. The Human Trafficking Legal Center supports the proposal to 
implement a comprehensive import ban on all goods produced, wholly or 
in part, in Xinjiang. There should be a rebuttable presumption that 
these goods are made with forced labor. There is absolutely no excuse 
for any U.S. corporation to be manufacturing goods or importing goods 
from Xinjiang.

    Question. What ways would you recommend the United States take to 
enhance import controls and enforcements on goods produced in China?

    Answer. China is currently able to transship goods through third 
countries to mask the goods' origin. Customs and Border Protection 
(CBP) should use available technology to trace Xinjiang cotton and 
other raw materials in finished goods. In addition, CBP should 
vigorously scrutinize imports from companies that have buckled to 
Chinese Communist Party pressure to source from Xinjiang. Many of these 
companies originally denounced forced labor in Xinjiang cotton 
production, but have since issued groveling statements indicating that 
they will continue to purchase cotton from the region. Companies 
issuing such statements on their Chinese-language social media feeds 
should be subjected to heightened scrutiny on all imports brought into 
the United States.

                                 ______
                                 
 Prepared Statement of Joseph Wrona, Local 135L Member, United Steel, 
 Paper and Forestry, Rubber, Manufacturing, Energy, Allied Industrial, 
             and Service Workers International Union (USW)
    Chairman Wyden, Ranking Member Crapo, members of the committee, my 
name is Joe Wrona, and I am a member of the United Steelworkers (USW) 
and a maintenance mechanic at the Sumitomo tire plant in Tonawanda, NY. 
Thank you for the opportunity to testify today on the important topic 
of how to fight forced labor and improve our supply chains.

    Connecting my life in Buffalo to global supply chains and forced 
labor is unfortunately, and surprisingly, too straightforward. While 
I've worked at the tire plant for the last couple of years, my previous 
job was at Ferroglobe's Niagara Falls, NY plant. I worked there for 10 
years, with roughly 100 other union members and management. The 
Ferroglobe facility, which I'll call Globe, used to produce metal 
silicate by taking quartz, woodchips, and coal and cooking them in an 
electric arc furnace until the quartz is reduced into silicon metal.

    Metal silicate is a product that we made 24/7 at the plant. It is a 
product you interact with every day in a variety of ways. From 
strengthening aluminum, to the caulking that seals your home, or even 
cosmetics, silicon metal is everywhere. It is also a base component to 
the production of polysilicon, which is vital to solar panel 
production.

    Expecting that strong demand for solar power would boost metal 
silicate demand, in 2009 Globe planned a $35-million upgrade to convert 
its metallurgical grade silicon into 4,000 tons of upgraded 
metallurgical grade silicon each year--enough to produce 500 megawatts 
of solar power.\1\ The company, in an investor report from 2016, 
highlighted the opportunity to see demand grow as SolarCity, a solar 
panel company connected to Elon Musk, was supposedly in the final 
stages of construction on the site of a shuttered steel mill.\2\ 
However, that vision fell apart for the workers at Globe in 2018 when 
the plant was closed because of a lack of demand.
---------------------------------------------------------------------------
    \1\ https://www.labor.ny.gov/pressreleases/2009/
November24_2009.htm.
    \2\ https://www.petrole.gov.mr/IMG/pptx/
session_8_s2___jean_du_plessis_ferroglobe_2_.pptx.

    Globe has been fighting illegal trade practices in metal silicate 
for decades now. The first trade enforcement case against dumped and 
subsidized metal silicate from China started 30 years ago in 1991.\3\ 
But while tariffs on metal silicate helped to defend our jobs at Globe, 
they could not stop products further up the supply chain, like solar 
panels or those produced with forced labor.
---------------------------------------------------------------------------
    \3\ https://www.usitc.gov/publications/701_731/pub4783.pdf.

    The growth of China's industrial capacity is well documented. 
Chinese companies in polysilicon produced over 80 percent of global 
polysilicon in 2020.\4\ The Chinese Government has used more than $1.6 
billion dollars in state subsidies to increase production of 
polysilicon from 45 kilotons to 410 kilotons per year. This has 
effectively locked the U.S. out of growing solar demand and the 
overcapacity in China destroys nearly any ability of U.S. companies to 
compete.
---------------------------------------------------------------------------
    \4\ https://www.nytimes.com/2021/01/08/business/economy/china-
solar-companies-forced-labor-xinjiang.html.

    But for my brothers and sisters who made good wages at Globe 
between $70,000 and $100,000 dollars a year, they were victims not only 
of unfair trade practices, but also forced labor in China. About 45 
percent of the world's supply of solar-grade polysilicon comes from 
Xinjiang.\5\ The news about human rights abuses there are unacceptable. 
According to academic experts, 10 million Muslim minorities in the 
region are under lockdown control, and over 1 million Uyghurs and 
others have allegedly disappeared into internment camps.\6\ The 
Australian Strategic Policy Institute estimates that more than 80,000 
Uyghurs were transferred out of Xinjiang to work in factories across 
China between 2017 and 2019.\7\
---------------------------------------------------------------------------
    \5\ https://www.bloomberg.com/news/articles/2021-02-10/why-it-s-so-
hard-for-the-solar-industry-to-quit-xinjiang?sref=HEwoTbCT.
    \6\ https://fsi.stanford.edu/news/human-rights-crisis-xinjiang-
uyghur-autonomous-region.
    \7\ https://www.aspi.org.au/report/uyghurs-sale.

    There should be no debate. Eliminating forced labor from our 
country's supply chain should happen today, and companies who have 
benefited should be held accountable. It was a good step when Customs 
and Border Patrol issued a Withhold Release Order against cotton and 
tomato products produced by Uyghurs in Xinjiang. We should act 
immediately to do the same for products, like solar panels, that 
---------------------------------------------------------------------------
contaminate the supply chain with forced labor.

    We also need to act urgently to defend American workers and foster 
a domestic solar industry here. This means direct investment in metal 
silicate plants like my old facility in Niagara Falls or the plant in 
Alloy, WV where my union brothers and sisters work.

    Thank you for the opportunity to testify today, and I look forward 
to answering any questions you may have. Finally, working with my 
union, I've included additional materials with my written testimony.

    Additional supporting materials related to ``Fighting Forced Labor: 
Closing Loopholes and Improving Customs Enforcement to Mandate Clean 
Supply Chains and Protect Workers'':

      AFL-CIO statements regarding Forced Labor in the Xinjiang 
Uyghurs Autonomous Region, China:

        https://aflcio.org/about/leadership/statements/ending-forced-
        labor-xinjiang-uighur-autonomous-region-china

        https://aflcio.org/press/releases/progress-long-awaited-ban-
        certain-products-uyghur-region-china

        https://aflcio.org/press/releases/afl-cio-applauds-action-ban-
        goods-made-forced-labor-linked-xinjiang-production-and

      Articles referencing the AFL-CIO letter to Biden administration 
urging the blocking of imports of solar products containing polysilicon 
from China's Xinjiang region:

        https://www.nytimes.com/live/2021/03/15/business/stock-market-
        today#the-afl-cio-urges-president-biden-to-ban-solar-products-
        from-xinjiang

        https://www.reuters.com/article/us-usa-trade-china-
        idUSKBN2B806L

        https://www.bloomberg.com/news/articles/2021-03-15/afl-cio-s-
        trumka-demands- cutoff-of-solar-products-from-xinjiang

      Center for Strategic and International Studies on Industrial 
Policy in Clean Energy, brief section on Chinese dominance in solar but 
not on forced labor:

        https://www.csis.org/analysis/industrial-policy-trade-and-
        clean-energy-supply-chains

      Council on Foreign Relations article:

        https://www.cfr.org/backgrounder/chinas-repression-uyghurs-
        xinjiang

      March 2021 report making comprehensive case that CCP is 
practicing systematic genocide in the Uyghur region, including forced 
labor:

        https://newlinesinstitute.org/wp-content/uploads/Chinas-
        Breaches-of-the-GC.pdf

      On U.S. importers in solar sector and XUAR forced labor:

        https://pulitzercenter.org/stories/us-solar-companies-rely-
        materials-xinjiang-where-forced-labor-rampant

        https://www.spglobal.com/marketintelligence/en/news-insights/
        latest-news-headlines/firms-with-xinjiang-ties-lead-us-solar-
        imports-62204298

      On allies and EU concerns about solar:

        https://www.politico.eu/article/xinjiang-china-polysilicon-
        solar-energy-europe/

      On support for the Uyghur Forced Labor Protection Act passed in 
the House last September:

        https://aflcio.org/press/releases/afl-cio-supports-uyghur-
        forced-labor-prevention-act

      Reintroduced bill in 2021 with special mention of the solar 
industry:

        https://enduyghurforcedlabour.org/news/us-house-bill-would-
        effectively-block-import-of-goods-produced-with-uyghur-forced-
        labor/

                                 ______
                                 
           Questions Submitted for the Record to Joseph Wrona
                 Questions Submitted by Hon. Todd Young
    Question. China's unfair actions--like bloated state subsidies--
have had ripple effects throughout the global market, and specifically 
the Midwest.

    As China's increased industrial capacity grows, we continue to see 
predatory trade actions that accompany that effort. As a case study, 
Mr. Wrona, you cited the example of solar panels. I would also raise 
that Chinese dumping of steel and aluminum is concerning to 
manufacturers in my State as well as other members of Congress.

    In your testimony, you mentioned that 45 percent of the world's 
supply of polysilicon--a key component for solar panels--comes from 
Xinjiang. Realistically, how soon can American manufacturers divert 
that supply chain from the region given China's strategic control 
compared to other markets?

    Answer. This should be a key element of the Build Back Better plan. 
The U.S. used to be a leader in polysilicon production, but a number of 
factors have impacted the industry. These range from insufficient 
Federal support for solar supply chain manufacturing to China's 
aggressive state support and market consolidation. The dramatic decline 
in domestic polysilicon production was a function of multiple factors 
but can be directly linked to China's rise in PV manufacturing using 
anti-competitive tactics, including--as referenced at the hearing--
forced labor. Establishing new U.S. manufacturing plants for PV solar 
would require government support to push back against China's anti-
competitive behavior. Domestic procurement requirements that include 
all manufacturing processes with stepped-up timelines could also help 
direct federal spending to create a base for a developing the domestic 
PV market.

    Sources and references worth considering:

    1.  China's 12th 5-year plan on solar Photovoltaic industry--
https://policy.
asiapacificenergy.org/sites/default/files/chinas-five-year-plan-for-
solar-translation.pdf.

    2.  2015 CRS report on PV manufacturing--https://fas.org/sgp/crs/
misc/R42509.pdf.

    Question. What implications are most concerning if our domestic 
manufacturers are unable to move this supply chain out of the hands of 
forced labor?

    Answer. As my testimony indicated, U.S. workers suffer when anti-
competitive behavior and illegal forced labor is permitted by state 
actors in countries like China. Lost jobs, lost competitiveness, and 
declining global leadership are the results when our country's leaders 
do not stand against injustice.

    International corporations which are not held accountable by our 
government for forced labor in their supply chains also unfairly impact 
domestic manufacturers. By choosing to allow forced labor to 
contaminate their products, corporations risk international sanctions, 
decline in consumer trust, potential boycotts by the public and 
identification of their brands with forced labor, which is the most 
common form of modern slavery.

                                 ______
                                 
               Questions Submitted by Hon. John Barrasso
                 congressional proposals on import bans
    Question. Since 2009, China has been included on the List of Goods 
Produced by Child Labor or Forced Labor. The Bureau of International 
Labor Affairs recently added five new categories of products from 
Xinjiang to the list. It included gloves, hair products, textiles, 
thread/yarn, and tomato products.

    In January, the Trump administration issued a sweeping ban on 
imports of cotton and tomato products from China due to evidence of 
forced labor. There are several congressional proposals aimed at 
expanding the administration's authority to more robustly address 
widespread and systematic force labor in China.

    What are your views on the proposal to implement a comprehensive 
import ban on all goods produced, wholly or in part in Xinjiang?

    Answer. Simply put, this ban on imports from Xinjiang should be 
imposed tomorrow. However, there are now significant differences 
between the House version of legislation and the Senate version called 
the ``Uyghur Forced Labor Prevention Act.'' The ability of 
multinational corporations to avoid responsibly or accountability or 
for the U.S. government to stop goods at the border which were produced 
by forced labor should not be debated or contain loopholes which DC 
policy experts say ``you could drive a truck through.'' To discuss the 
details on the differences in the legislation in more detail please 
feel free to reach out to the USW legislative director Roy Houseman at 
(202) 778-4384.

    Question.What ways would you recommend the United States take to 
enhance import controls and enforcements on good produced in China?

    Answer. Prioritizing prevention of forced labor at U.S. Customs and 
Border Protection (CBP) is a start. This should be part of a broad 
approach that encompasses not just forced labor but all illegal trade 
practices. The USW has participated in over 100 AD/CVD cases, and we 
have seen the inability of CBP to collect duties or hold importers 
accountable for importing goods subject to duties, According to CBP, 
$4.5 billion remained uncollected as of May 2019 in well-documented AD/
CVD cases.

    Testimony by Martina E. Vandenberg, J.D., president of the Human 
Trafficking Legal Center, also provides key recommendations on removing 
forced labor from the supply chain. It starts by taking a comprehensive 
approach. Quoting her testimony:

        For the WRO to have the most impact, CBP should enforce the 
        order broadly and without any limitations. It must cultivate 
        internal capacity to trace these supply chains through training 
        and use of cutting-edge tracing technology.

    When manufacturers face risk or accountability they are able to 
locate deficiencies in their supply chains. The Takata airbag recall is 
instructive. When faced with significant backlash and penalty, the 
company traced its supply chain and located the offending subsidiary. 
Multinational corporations can and do monitor their supply chains if 
properly prompted, but it requires a Congress and an administration 
willing to demand 21-century solutions like blockchain tracing to solve 
a slavery problem that has existed at least since 3,500 BCE.

                                 ______
                                 
                 Prepared Statement of Hon. Ron Wyden, 
                       a U.S. Senator From Oregon
    The United States is a country with a lot of economic and political 
muscle. The country should use that muscle to fight for American jobs 
and workers. It should also use it, whenever possible, to improve the 
lives of powerless people around the world. It's not every day you have 
an opportunity to talk about accomplishing both of those goals at once. 
Today is one of those days, with the Finance Committee meeting to 
discuss stamping out forced labor--modern-day slavery--around the 
globe.

    It takes hard work, even in 2021, to live up to a moral standard 
that says the U.S. will not profit from slave labor. It still goes on 
in many places around the world, including in places that are part of 
our global supply chains. But that hard work to fight forced labor is 
absolutely essential.

    Our government needs to use every available tool to root out the 
practice of forced labor and address its causes, whether it's through 
diplomacy, by alleviating poverty, sanctions, or any other means. 
Within the jurisdiction of the Finance Committee, the government needs 
to use every tool in the trade policy tool kit to keep forced labor 
products out of our market.

    The Federal ban on imports made with forced labor dates back to 
1930. It's known in the trade policy world as section 307. It gives 
Customs the authority to stop products made with forced labor. However, 
a loophole in that Federal ban that applied to products that aren't 
made within the United States persisted for decades. Senator Brown and 
I wrote an amendment that closed that forced labor loophole in 2016. 
Since then, enforcement actions have increased, but so have glaring 
examples of the scourge of forced labor, most notably in China.

    Two U.S. administrations have now concluded that what the Chinese 
Government is doing to the Uyghur people in the Xinjiang region in 
Western China constitutes genocide.

    The Chinese Government and Chinese companies are using forced labor 
from that region to produce a variety of products. For example, the 
United States took action to block the import of cotton and tomatoes 
picked by slave labor in Xinjiang. The Finance Committee will hear 
today from Joseph Wrona, whose good-paying union job in the production 
of silicon metal was shut down in part due to forced labor competition 
from China.

    Forced labor is a problem in other countries too, including in 
India, Burma, and Malaysia. Senator Brown and I have pushed for U.S. 
trade enforcers to look at taking action against the import of mica, 
palm oil, and cocoa produced with forced labor.

    Bottom line, the continued existence of forced labor in 2021 is a 
morally repugnant scourge, and when American workers have to compete 
with forced labor, everybody loses. I'm interested in making sure CBP 
has the tools and resources it needs to step up enforcement. There is 
also bipartisan interest in creating effective new standards and new 
enforcement tools to support this effort.

    Ending forced labor is morally just. Raising the bar for labor 
standards around the world also helps to protect high-skill, high-wage 
jobs here in the United States. So this is a vitally important hearing. 
I want to thank the witness panel for joining the committee today, and 
I am looking forward to our discussion.

                                 ______
                                 

                     S&P Global Market Intelligence

October 21, 2020

              Human Rights Allegations in Xinjiang Could 
                     Jeopardize Solar Supply Chain

By Michael Copley

The solar industry's growing dependence on China's autonomous Xinjiang 
region for a critical raw material poses mounting risks to a wide range 
of companies as the U.S. Government moves to confront Beijing over 
alleged human rights abuses there.

In 2019, when solar ranked as the world's top source of new power 
generating capacity, about one-third of the polysilicon the industry 
used to make solar panels came from Xinjiang, according to Johannes 
Bernreuter of Bernreuter Research. China as a whole accounts for about 
80% of global capacity. With polysilicon makers boosting production in 
Xinjiang, Richard Winegarner, a former industry analyst who retired in 
late 2019, said the region is poised to become ``even more important'' 
to the solar market in the coming years.

Those deepening ties come as Washington's scrutiny of labor conditions 
in the region intensifies. On the heels of a U.S. Government report 
that described rampant abuse of Uighurs and other Muslim minorities in 
Xinjiang, the U.S. House of Representatives passed a bill in September 
that would ban goods made ``wholly or in part'' in the region unless 
the producers were proven not to have used forced labor. The near-
unanimous vote came a week after U.S. Customs and Border Protection 
ordered officers to seize certain imports from Xinjiang, including 
cotton and computer parts.

Senator Marco Rubio, a Republican member of the Committee on Foreign 
Relations who introduced a companion bill to the House legislation, 
said in September that the U.S. ``must ensure that goods stained with 
forced labor stop entering our supply chains.'' Rubio's bill, which has 
19 co-sponsors, including six Democrats, was referred to the Committee 
on Foreign Relations in March.

A spokesperson for Joe Biden said in August that the Democrat 
presidential nominee believed that the Chinese Government is committing 
``genocide'' against Uighur Muslims in Xinjiang.

Beijing denies it is committing human rights abuses.

Red flags

In light of the allegations, human rights advocates are calling for 
blanket trade restrictions on Xinjiang like those pushed by Rubio and 
the House of Representatives.

``Within the context of labor, a red flag goes up for every single 
sector,'' said David Schilling, senior program director of human rights 
and resources at the Interfaith Center on Corporate Responsibility. 
``It's not just those [industries] that have been called out.''

That echoes an assessment by staff for the Congressional-Executive 
Commission on China, a panel of U.S. lawmakers and administration 
officials that monitors human rights in that country. The report, 
released in March, found that forced labor in Xinjiang is 
``widespread,'' and independent audits are impossible to perform.

While human rights advocates have said they are not aware of public 
reports directly implicating polysilicon makers in labor abuses, 
without independent audits, American solar companies could find they 
are unable to meet U.S. requirements.

S&P Global Market Intelligence reached out to more than two dozen solar 
consumers, investors, ratings agencies, project developers, polysilicon 
producers and equipment manufacturers. Only a handful responded to 
requests for comment; none provided detailed information about their 
efforts to examine potential exposure to labor abuses in Xinjiang or to 
safeguard their supply chains in the region.

In response to questions from Market Intelligence, John Smirnow, vice 
president of market strategy at the Solar Energy Industries 
Association, the top U.S. trade group for the industry, said the 
association is ``strongly encouraging companies to immediately move 
their supply chains out of the region.'' The association is also 
relaunching an initiative to raise ``awareness and action within the 
industry on the importance of ensuring ethical supply chains.''

``The reports of human rights violations out of the Xinjiang region are 
reprehensible, and we support efforts in the U.S. Congress to stamp out 
these abuses,'' Smirnow said in an emailed statement.

The threat of additional import bans on Xinjiang should worry solar 
investors, said Clayton Allen, senior vice president of trade, policy 
and geopolitical risk at research firm Height Capital Markets, 
``especially in an industry that doesn't have a lot of diversity in its 
supply chain already.''

In addition to the political risks, just doing business with Xinjiang 
can have reputational costs, Allen said, noting the outcry that The 
Walt Disney Co. faced this year over its decision to film part of the 
movie ``Mulan'' in the region.

``I have not heard any accusation that Disney was utilizing forced 
labor or contributing to human rights violations, [but] just the 
relationship with the government was enough to drive this big massive 
backlash,'' Allen said. ``And for investors, that's almost as scary, 
because you don't want to be doing business with a company that has 
that sort of a negative profile.''

The danger of costly disruptions to the solar supply chain are emerging 
at a time when many of America's biggest companies are turning to the 
industry to help cut their greenhouse gas emissions.

Apple Inc., the top corporate purchaser of solar power in the U.S., 
said in response to an inquiry from Market Intelligence that it is 
investigating the materials used in its solar installations.

U.S. warnings

By 2021, five companies in China and Hong Kong will control two-thirds 
of the world's polysilicon market, according to Dennis Ip, an analyst 
at Daiwa Capital Markets Hong Kong Ltd.

One of those is Xinjiang-headquartered Daqo New Energy Corp., the only 
company in the group with a U.S. stock listing.

Drawn to Xinjiang by cheap electricity from coal-fired power plants, 
Daqo started building polysilicon plants in Xinjiang in 2011 as a trade 
fight over solar equipment was heating up between Beijing and the Obama 
administration.

In recent annual reports to the U.S. SEC, Daqo said it ``enjoys 
additional advantages in the costs of electricity'' because the 
regional power grid is operated by a division of Xinjiang Production 
and Construction Corps, or XPCC, which the U.S. Government describes as 
a paramilitary organization.

The U.S. Treasury Department sanctioned the XPCC in July in connection 
with ``serious rights abuses.'' Before that, the XPCC was added to a 
U.S. Commerce Department ``entity list'' in 2019 after the government 
determined that the group was ``acting contrary to the foreign policy 
interests of the United States.'' The U.S. departments of State, 
Treasury, Commerce and Homeland Security warned businesses in July that 
engaging with companies on the Commerce Department's entity list could 
trigger law enforcement action.

Analysts said the XPCC's role in Xinjiang's economy underscores the 
difficulty companies face trying to ensure their supply chains in the 
region are not in jeopardy. ``Even if the company that is producing the 
semi-finished product that you're using as an input for your production 
of solar panels'' is not implicated in labor abuses, ``you don't know 
what's upstream from them,'' Allen said.

The U.S. Government has also provided companies with a list of 
``potential indicators of forced labor or labor abuses.'' They include 
``any mention of internment terminology'' such as education training 
centers ``coupled with poverty alleviation efforts, ethnic minority 
graduates, or involvement in reskilling,'' according to an advisory 
from the Departments of State, Treasury, Commerce and Homeland 
Security.

In an annual report published earlier this year, GCL-Poly Energy 
Holdings Ltd., another top polysilicon producer, said it began a 
``staff localization plan'' in Xinjiang in 2019 in cooperation with 
vocational schools in the area. At the end of 2019, the company said it 
employed about 120 people from ``ethnic minority groups.''

GCL-Poly told Market Intelligence that its Uighur employees are 
provided with special benefits, including holidays and access to a 
halal restaurant.

If the U.S. Government links a polysilicon company to labor abuses, 
Customs and Border Protection could seize shipments of solar cells and 
panels that contain the raw material from that producer, and under the 
Tariff Act of 1930, importers could be criminally investigated. Customs 
and Border Protection cited the law in September when it ordered the 
seizure of certain imports from Xinjiang and palm oil products and 
derivatives from a company in Malaysia.

To make a seizure, Customs and Border Protection only needs information 
that ``reasonably'' indicates the use of forced labor.

China watchers see such evidence throughout Xinjiang's economy, and the 
U.S. Government has said that to comply with existing law, companies 
have few options but to cut Xinjiang out of their supply chains 
entirely.

Further complicating matters, the solar industry may not be able to 
address Washington's concerns simply by sourcing polysilicon from other 
parts of China. Uighurs have been forcibly transferred from Xinjiang to 
work elsewhere in the country, according to the Australian Strategic 
Policy Institute, which is partially funded by the U.S. Government. And 
within the solar industry, polysilicon buyers often mix material from 
multiple producers, said Winegarner, making it difficult to trace the 
polysilicon in an individual solar panel back to its source.

``If there is some risk of forced labor . . . it's going to be very 
hard to identify, and so the question is, are these companies receiving 
goods that potentially could be seized?'' said Amy Lehr, director and 
senior fellow of the Human Rights Initiative at the Center for 
Strategic and International Studies in Washington. ``If they're unable 
to confirm the labor conditions in factories they're sourcing from, 
that puts them at significant risk.''

``I don't think they're giving it any attention''

Those risks reach beyond solar equipment manufacturers and power plant 
developers to some of America's biggest consumer brands.

In 2018, for example, one of Daqo's long-time customers, JinkoSolar 
Holding Co. Ltd., landed a blockbuster contract to sell solar panels to 
U.S. renewable energy giant NextEra Energy Inc. A year later, in early 
2019, Alphabet Inc.'s Google LLC said it agreed to buy electricity from 
solar farms built by NextEra subsidiary NextEra Energy Resources LLC.

Google's connection to Xinjiang's polysilicon industry represents the 
sort of risk that is drawing more scrutiny in boardrooms and on Wall 
Street with the rise of environmental, social and governance investing.

``It's not just the product that lands on the shelf'' that needs to 
meet ESG standards, Audrey Choi, Morgan Stanley's chief sustainability 
officer, said at a renewable energy conference in September. ``It is 
that whole value chain that needs to be aligned.''

As of June 30th, Morgan Stanley was a shareholder in Daqo. When asked, 
the firm would not say what, if anything, it is doing to ensure the 
polysilicon maker's supply chains are not at risk.

Daqo said there are no human rights issues in the part of Xinjiang 
where it operates. ``The cities/region in question are in Southern 
Xinjiang,'' the company said in a statement to Market Intelligence.

JinkoSolar COO Zhiqun Xu said in a statement that the company 
``condemns the use of forced labor and does not use it in any of its 
facilities.'' One of the leading solar panel shippers to the U.S. 
during the third quarter, JinkoSolar operates a factory in Xinjiang and 
is on the board of the Solar Energy Industries Association, the U.S. 
lobbying group.

NextEra did not respond to a message seeking comment.

Google, Amazon.com Inc. and Target Corp., three of the country's 
leading corporate purchasers of solar power, also did not respond to 
messages seeking comment. Walmart Inc., another top corporate buyer, 
said it buys electricity from solar farms rather than the panels 
themselves. ``However, we have zero tolerance for forced labor and 
protecting the dignity of workers and addressing forced labor is a 
priority for Walmart,'' a spokesperson said.

Without pressure from customers and investors, the solar market's ties 
to Xinjiang have been overlooked or ignored by an industry that is 
laser-focused on cutting costs, said Dustin Mulvaney, a professor at 
San Jose State University who teaches courses on energy and 
sustainability.

``I think the climate conversation is just such a loud voice that no 
one's really interested in playing this story out,'' Mulvaney said. ``I 
don't think they're giving it any attention.''

Years of tariffs

U.S. companies are trying to take back some of the polysilicon market 
from China, but that alone will not solve the problem America's solar 
industry is facing. Even if the U.S. produced enough of the raw 
material to meet domestic demand, it does not have the factories it 
needs to turn polysilicon into the wafers and cells that ultimately get 
assembled into solar panels. Chinese companies dominate those steps of 
the supply chain as well.

It is an issue the U.S. has been trying to address, by degrees, for 
nearly a decade.

In 2018, the Trump administration imposed sweeping import tariffs to 
try to push cell- and panel-makers to set up shop in America. In the 
wake of those new taxes, some companies opened U.S. factories to 
assemble panels, but they still rely on cells shipped in from abroad.

SunPower Corp. Chairman and CEO Tom Werner told the U.S. International 
Trade Commission in 2019 that the country lacks the kinds of incentives 
that attracted manufacturers to Asia.

``We definitely are looking into . . . a value chain outside of 
China,'' Tore Torvund, CEO of polysilicon maker REC Silicon ASA, said 
on an earnings call in July. ``But it will take time to make it.'' The 
company is trying to develop a complete solar supply chain in 
Washington state.

With its U.S. operations hobbled by a yearslong trade fight between 
Washington and Beijing, REC Silicon said polysilicon, which is also 
used in semiconductors and batteries, should be viewed as a strategic 
material by the U.S. as the country tries to compete with China.

Bradford Ward, former Deputy General Counsel in the Office of the 
United States Trade Representative and the lawyer for a group of 
American polysilicon companies that is trying to reclaim market share 
from China, said he believes that the U.S. Government is ``becoming 
aware of the scale of the polysilicon industry in Xinjiang and the 
relevance of Xinjiang polysilicon to the global solar value chain and 
U.S. solar installations.''

But so far, the solar industry and lawmakers in the U.S. have not found 
a way to stand up a supply chain to rival China's.

Tariffs, the tool American policy-makers often turn to when they want 
to support domestic industries, are rarely effective, said Paula Mints, 
chief solar analyst at SPV Market Research. On October 10th, President 
Donald Trump said he was tightening trade restrictions on the U.S. 
solar industry, claiming that domestic manufacturers need more help 
almost 3 years after his administration imposed tariffs.

``Building up a complete solar value chain in the U.S. could be a 
lever'' to guard against potential labor abuses in Xinjiang, Bernreuter 
said, ``but I doubt that such an industry would be able to be price-
competitive.''

                                 ______
                                 

                From The New York Times, January 8, 2021

          Chinese Solar Companies Tied to Use of Forced Labor

                    By Ana Swanson and Chris Buckley

A new report shows some of the world's biggest solar companies work 
with the Chinese government to absorb workers from Xinjiang, programs 
that are often seen as a red fag for forced labor.

In a flat, arid expanse of China's far west Xinjiang region, a solar 
technology company welcomed laborers from a rural area 650 miles away, 
preparing to put them to work at GCL-Poly, the world's second-largest 
maker of polysilicon.

The workers, members of the region's Uighur minority, attended a class 
in etiquette as they prepared for their new lives in the solar 
industry, which prides itself as a model of clean, responsible growth. 
GCL-Poly promoted the housing and training it offered its new recruits 
in photographs and statements to the local news media.

But researchers and human rights experts say those positive images may 
conceal a more troubling reality--the persecution of one of China's 
most vulnerable ethnic groups. According to a report by the consultancy 
Horizon Advisory, Xinjiang's rising solar energy technology sector is 
connected to a broad program of assigned labor in China, including 
methods that fit well-documented patterns of forced labor.

Major solar companies including GCL-Poly, East Hope Group, Daqo New 
Energy, Xinte Energy and Jinko Solar are named in the report as bearing 
signs of using some forced labor, according to Horizon Advisory, which 
specializes in Chinese-language research. Though many details remain 
unclear, those signs include accepting workers transferred with the 
help of the Chinese government from certain parts of Xinjiang, and 
having laborers undergo ``military-style'' training that may be aimed 
at instilling loyalty to China and the Communist Party.

The Chinese Government disputes the presence of any forced labor in its 
supply chains, arguing that employment is voluntary. The companies 
named in the report either did not respond to requests for comment or 
denied any role in forced labor.

In a statement, a representative for the Chinese Embassy in Washington 
called forced labor in Xinjiang ``a rumor created by a few anti-China 
media and organizations,'' adding that all workers in Xinjiang enter 
into contracts in accordance with Chinese labor law. ``There is no such 
thing as `forced labor,' '' the representative said.

The report adds to a growing list of companies that have been accused 
of relying on coerced labor from Uighurs and other ethnic minorities in 
China, either in their own factories or those of their suppliers.

The United States and other governments have become increasingly vocal 
about forced labor in Xinjiang, including naming and shaming major 
corporations that operate in the region. The Trump administration has 
imposed sanctions on dozens of companies and individuals for their role 
in Xinjiang, including banning some exports from the region, which is 
also a major producer of cotton. On December 2nd, it banned imports 
made with cotton produced by the Xinjiang Production and Construction 
Corps, a paramilitary group that American officials say uses forced 
labor.

Congress is also considering sweeping legislation that would ban all 
products with materials from Xinjiang unless companies certify that the 
goods are made without forced labor.

John Ullyot, the spokesman for the National Security Council, said that 
China's campaign of repression in Xinjiang involved ``state-sponsored 
forced labor'' and that the United States would ``not be complicit in 
modern day slavery.''

``The administration has taken unprecedented actions to prevent China 
from profiting off of its horrific human rights abuses,'' he said.

Together, the solar companies named in the report supply more than a 
third of the world's polysilicon, which is refined from rock and turned 
into the solar panels that end up on rooftops and utility energy 
projects, including those in the United States and Europe.

Government announcements and news reports indicate that solar companies 
often take in assigned workers in batches of dozens or fewer, 
suggesting that the transfers are a small part of their overall work 
force. Still, the assertions from Horizon Advisory imply that much of 
the global solar supply chain may be tainted by an association with 
forced labor. Such charges could hurt its progressive image and risk 
product bans from Washington.

GCL-Poly, Daqo New Energy, Xinte Energy and East Hope Group did not 
respond to multiple requests for comment.

Ian McCaleb, a spokesman for Jinko Solar, said the company ``strongly 
condemns the use of forced labor, and does not engage in it in its 
hiring practices or workplace operations.'' He said that it had 
reviewed the claims in the Horizon report and ``found that they do not 
demonstrate forced labor in our facilities.''

China carries out a vast program of detention and surveillance of 
Uighurs, Kazakhs and other minorities in Xinjiang. Up to a million or 
more minorities may have been detained in indoctrination camps and 
other sites where they are forced to renounce religious bonds, and risk 
torture, assault and psychological trauma, Uighurs abroad and human 
rights groups say.

The Xinjiang government has promoted the labor transfer programs in 
parallel with the re-education camps, efforts that have ramped up 
drastically under the current leader, Xi Jinping. The government has 
uprooted many from farms to work in factories and cities, in the belief 
that steady, supervised work can pull minorities out of poverty and 
break down cultural barriers. Workers may have little choice but to 
obey local officials who oversee their move to distant towns and 
industrial zones to fulfill government-set quotas.

The growing scrutiny of the region has already prompted changes among 
some companies whose supply chains are entangled in these programs. 
Many textile and apparel companies that use cotton or yarn from 
Xinjiang have severed ties, including Patagonia, Marks and Spencer and 
H&M.

The solar sector could face similar pressure. The industry has deep 
ties to Xinjiang, which accounts for about 40 percent of global 
polysilicon production, said Jenny Chase, the head of solar analysis at 
BloombergNEF. Xinjiang's polysilicon production increased rapidly over 
the past decade, mostly because of cheap electricity from local coal 
plants and other government support, Ms. Chase said.

That expansion has helped Chinese companies dominate foreign 
competitors, including in the United States. China produced 82 percent 
of global polysilicon in 2020, up from 26 percent in 2010, according to 
data from IHS Markit, while the U.S. share of production shrunk to 5 
percent from 35 percent.

``I am concerned that forced labor may have been used in Xinjiang,'' 
said Francine Sullivan, the vice president for business development at 
REC Silicon, a Norwegian polysilicon manufacturer with operations in 
the United States. The company shut a facility in Washington State, 
despite surging overall U.S. demand.

Xinjiang is known for low safety and environmental standards, Ms. 
Sullivan said, and forced labor ``may be just part of the incentive 
package.''

Xiaojing Sun, a senior research analyst at Wood Mackenzie, said solar 
companies were starting to investigate their exposure to Xinjiang and 
reconfigure their supply chains to avoid the region if possible.

In a note to investors in October, analysts at Roth Capital Partners 
said the solar sector faced a ``heightened risk of disruption'' because 
of its ties to Xinjiang.

``Investors are getting nervous,'' Ms. Sun said.

The Solar Energy Industries Association, the largest industry 
association in the United States, has called human rights abuses in 
Xinjiang ``reprehensible'' and strongly encouraged companies ``to 
immediately move their supply chains out of the region.''

Since unfettered on-the-ground access to Xinjiang for foreign 
journalists and researchers is virtually impossible, the Horizon 
Advisory researchers do not provide direct testimony of forced labor. 
Instead, they present signs of possible coercion from Chinese-language 
documents and news reports, such as programs that may use high-pressure 
recruitment techniques, indoctrinate workers with patriotic or military 
education, or restrict their movement.

The report documents GCL-Poly accepting ``surplus labor'' from a rural 
region of Xinjiang last year. In 2018, according to an article on China 
Energy Net, a local news site, one of GCL-Poly's subsidiaries also 
accepted more than 60 such workers.

A local subsidiary of Jinko Solar, Xinjiang Jinko Energy Co., received 
state subsidies for employing local Xinjiang labor, including at least 
40 ``poor workers from southern Xinjiang'' in May, according to a local 
government announcement from July 2020 cited by Horizon Advisory.

On its public WeChat account, East Hope Group said that it had 
``responded to the national Western Development Call and actively 
participated in the development and construction of Xinjiang,'' 
including constructing a polysilicon project in Changji prefecture in 
2016, the Horizon report said.

That same year, according to a Chinese news report cited by Horizon, 
Xinjiang's Yarkand County signed a ``labor export cooperation framework 
agreement'' with a subsidiary named East Hope Group Xinjiang Aluminum 
Company.

Another subsidiary of East Hope, Xinjiang East Hope Nonferrous Metals 
Co., ``accepted 235 ethnic minority employees from southern Xinjiang,'' 
who were given training to make up for ``low educational 
qualifications, weak national language skills and insufficient job 
skills,'' according to a report on the company's website.

According to Horizon Advisory, several solar companies also have ties 
to the Xinjiang Production and Construction Corps, which has been 
penalized by the Trump administration. In its 2018 financial report, 
Daqo New Energy said its Xinjiang facilities benefited from a lower 
cost of electricity because the regional grid is operated by a division 
of the Xinjiang Production and Construction Corps.

Amy Lehr, the director of the Human Rights Initiative at the Center for 
Strategic and International Studies, said that work programs that draw 
on Xinjiang minorities and offer companies subsidies for employing them 
are a ``red flag'' for forced labor. These programs may restrict 
workers from quitting, traveling or participating in religious 
services, pay less than minimum wage, and involve harsh or unsafe work 
conditions, as well as the threat of detention, according to Ms. Lehr's 
research.

``The concern is that there is a potential for coercion, because of the 
level of surveillance and fearfulness,'' Ms. Lehr said. Companies that 
source products from the region have ``no way of knowing that you're 
not being connected to forced labor,'' she said.

Nathan Picarsic, a founder of Horizon Advisory, said what the firm had 
documented was likely ``just the tip of the iceberg.'' If Americans are 
buying solar panels made with materials from these Chinese companies, 
he said, ``I would say you are complicit in perpetuating this Chinese 
industrial policy that suppresses and disenfranchises human beings.''

                                 ______
                                 

                             Communications

                              ----------                              


                        Center for Fiscal Equity

                      14448 Parkvale Road, Suite 6

                          Rockville, MD 20853

                      [email protected]

                    Statement of Michael G. Bindner

Chairman Wyden and the Ranking Member Crapo, thank you for the 
opportunity to submit these comments for the record.

Supply chains are global and many nations who have controlled the virus 
by shutting down the economy rather than tailored quarantines will 
quickly find that many with less robust immune systems will get very 
sick when their economies open. There will be a third and fourth waves 
in these nations, precisely because there are available vectors who 
have not yet gotten sick. The supply chain will be stressed, if not 
stopped, even if draconian openings and closings can be imposed in 
China.

Draconian measures may be efficient, but they may add a different kind 
of fever, one that the regime will likely underestimate. Revolution 
kills production lines once people have too much. China, Inc. may not 
be as efficient a partner in a post-
revolutionary future. Workers with more freedom to bargain and vote 
will want more stuff, which means higher prices here. Higher prices 
mean higher wages will be required, but jobs will come back as the 
economy changes.

The other issue with China, as well as south Asia and the global south, 
is de facto slavery. Boycotting the products of slavery worked in 
fighting the Confederacy. The mass migration of slaves had more of an 
impact. A boycott of Xinjiang cotton and tomatoes is problematic during 
a pandemic, but generally it cannot succeed as a stand-alone action. 
Even though it may hurt in the short run, we should still do it.

To make a boycott work, we cannot do it alone. At minimum, Islamic 
nations must join in as well and start linking the cause of the Uygurs 
to the New Silk Road. The ethnic Turkmen range from modern Turkey to 
Xinjiang, so a little solidarity on their part could go a long way. If 
we do go this route, the whole effort to interfere in Iran must end. We 
cannot be with South Asian Muslims on some things and expect solidarity 
with them on others.

On the moral front, I am not sure we have room to talk. We hold 
migrants in stark conditions prior to deportation. If you doubt it, 
visit Lewisburg Federal Prison. Also stop in the Federal Prison 
Industries factory while you are there. Visit any food processing plant 
with large immigrant workforces (send people undercover) and see how 
many workers were trafficked and how local law enforcement reacts when 
they decide they want to leave. Examine the plight of sex workers in 
the United States and see how many of their pimps have arrangements 
with local police.

Our best weapon is our example. As long as slavery exists in the United 
States, our moral voice is compromised. Again, I am not saying to 
ignore this situation. I am saying to All In to really fight slavery. 
Also, call it slavery. On the same subject, examine the Chinese 
treatment of peasant workers at their factories. There is a two-level 
society, and American consumers benefit from this. Our commitment to 
abolishing slavery cannot live only in the fringes.

This is not to say that loopholes cannot be closed, although we must 
stop our own unfair trade practices as well. American food should not 
show up in countries just before harvest when doing so depresses the 
price of local agricultural products. Poverty begets slavery. Making 
others poor is an invitation to exploitation.

Poor farmers can either be individual or tenant farmers who are 
essentially peons. The drive for lower food prices for American 
consumers comes at a human cost. This is especially true when only one 
buyer dominates the market, as is sometimes the case for export to 
America (if not often).

Poor factory workers never have access to collective bargaining. This 
factor also drives down wages in American factories--often those with 
immigrant labor bearing the brunt of bad working conditions, poor wages 
and lax enforcement. The major difference is that being blacklisted in 
the United States for attempting to organize is rarely deadly, as it 
can sometimes be overseas.

Improved enforcement takes money and the willingness to accept higher 
food prices. More inspectors with more authority are needed at home and 
abroad. Government or third party inspection is vital to make sure work 
is safe, fairly compensated and able to organize. We cannot expect 
worker protection in China or Guatemala if we do not insist on it in 
North Carolina and Alabama.

Existing supply chains must be reexamined and should not privilege big 
named brands over smaller importers and suppliers. Citing bad behavior 
must be cited. There is no better education than a ticket.

As I commented on Tuesday, the long term solution to labor inequality 
is employee ownership at all points in the supply chain. A multi-
national employee-owned firm would provide all workers an equal 
standard of living and ownership rights. I would hope this would start 
here. The one pebble that will move mountains is allowing market 
investors the same exception to capital gains taxes when shares are 
sold to a qualified broad-based ESOP (or COOP) that privately owned 
companies now receive. A bigger pebble is enacting an asset value added 
tax with an internationally agreed upon rate with the same loophole. 
Sometimes loopholes can be a good thing.

Thank you for the opportunity to address the committee. We are, of 
course, available for direct testimony or to answer questions by 
members and staff.

                                 ______
                                 
    Statement Submitted by Sheridan S. McKinney, Adjunct Professor, 
             American University Washington College of Law
I hereby humbly submit the below comments for inclusion in the public 
record related to the hearing convened by the United States Senate 
Finance Committee on March 18, 2021 entitled ``Fighting Forced Labor: 
Closing Loopholes and Improving Customs Enforcement to Mandate Clean 
Supply Chains and Protect Workers.'' Comments have been limited to 
issues of enforcement under Section 307 of the Tariff Act of 1930 in 
the hope of providing a fresh perspective from a trade litigator and 
policy professional with experience with how both domestic producers 
and vulnerable communities may seek to avail themselves of the 
protections provided by these laws. The views expressed below are 
entirely my own and should not be attributed to any client or 
organization I am affiliated with.

I. Executive Summary

The Committee can make significant improvements in the efficacy of 
existing authorities to reduce the presence of the products of forced 
labor in the stream of U.S. commerce via a careful wielding of its 
existing oversight authority. Furthermore, even a small amount of 
legislation enabling U.S. workers, producers, and watchdog 
organizations to effectively augment efforts by regulators would 
fundamentally change the game by significantly reducing the resource 
limitations inherent to any strictly regulatory activity. Indeed, it is 
likely that amending Section 307 of the Tariff Act of 1930 to create a 
new labor-based trade remedy for use by domestic interested parties 
would all but ensure the eradication of the scourge of forced labor in 
U.S. supply chains.

II. Legal Authorities

Section 307 of the Tariff Act of 1930 establishes a clear, simple 
mandate:

        All goods, wares, articles, and merchandise mined, produced, or 
        manufactured wholly or in part in any foreign country by 
        convict labor or/and forced labor or/and indentured labor under 
        penal sanctions shall not be entitled to entry at any of the 
        ports of the United States, and the importation thereof is 
        hereby prohibited. . . . 19 U.S.C. Sec. 1307.

However, in spite of this clear prohibition, the ensuing 85-some-odd 
years saw only 39 enforcement actions. Section 910(a)(1) of the Trade 
Facilitation and Trade Enforcement Act of 2015 (TFTEA) amended the 
legal authority, removing what had proven to be an effective limitation 
on its use. The ``consumptive demand'' clause created a carve-out for 
goods not produced within the United States in sufficient quantities to 
supply the market. This limiting language (below) appeared to take on 
additional significance as trade integration blossomed and input goods 
were more frequently sourced abroad.

        The provisions of this section relating to goods, wares, 
        articles, and merchandise mined, produced, or manufactured by 
        forced labor or/and indentured labor, shall take effect on 
        January 1, 1932; but in no case shall such provisions be 
        applicable to goods, wares, articles, or merchandise so mined, 
        produced, or manufactured which are not mined, produced, or 
        manufactured in such quantities in the United States as to meet 
        the consumptive demands of the United States. Section 307 of 
        the Tariff Act of 1930 (as it appeared prior to the 2015 
        amendment).

Since taking effect on March 10, 2016, the repeal of the consumptive 
demand clause has opened the door for CBP to issue some twenty-nine new 
findings (and counting).

The statutory authority is implemented via a short list of regulations, 
19 CFR Sec. Sec. 12.42-12.44.\1\ Of these, Section 12.42 sets forth the 
procedural requirements for a party to raise an issue under Section 307 
and the substantive standards that CBP will apply in its investigation. 
In brief, in order to trigger an investigation a ``communication'' (as 
it is termed in the regulation) must include:
---------------------------------------------------------------------------
    \1\ April 1, 2020 Ed.

    (1)  A full statement of the reasons for the belief;
    (2)  A detailed description or sample of the merchandise; and
    (3)  All pertinent facts obtainable as to the production of the 
merchandise abroad.\2\
---------------------------------------------------------------------------
    \2\ 19 CFR Sec. 12.42(b).

Any communication failing to meet these standards will be returned to 
the party that submitted it with, ``detailed written advice as to the 
respects in which it does not conform.'' The avenue for this 
communication that is mentioned in the regulations is a port director, 
though we know from other CBP-published guidance that the e-Allegation 
web portal is the preferred filing method.\3\ Beyond conformity with 
vague concepts such as ``full statement'' and ``all pertinent facts 
obtainable,'' we are left with little criteria against which to 
evaluate evidence.
---------------------------------------------------------------------------
    \3\ See, e.g., CBP's Forced Labor Resource Page at https://
www.cbp.gov/trade/programs-administration/forced-labor (last accessed 
April 1, 2021).

If accepted, a communication then enters a stage where it is evaluated. 
At this point, CBP, ``will consider any representations offered by 
foreign interests, importers, domestic producers, or other interested 
persons.''\4\ As with other terms used in the regulations, we are left 
to imagine what might constitute ``representations.'' Furthermore, it 
is not clear whether parties will be capable of responding to specific 
averments from the other parties, or, indeed whether there even are 
other parties at all. As with other portions of the Section 307 regime, 
whether or not CBP has a policy or practice in place today is not the 
issue. The lack of transparency invites confusion, complacency, and 
gamesmanship by the parties--none of which has a place in a functional, 
enforceable program to eradicate forced labor in the United States' 
supply chain.
---------------------------------------------------------------------------
    \4\ 19 CFR Sec. 12.42(d).

The legal standard offered at Section 12.42(e) for evaluation of 
evidence in the first instance is if, ``information available 
reasonably but not conclusively indicates.'' This language could lend 
itself to a broad spectrum of interpretations. As discussed below, it 
is exactly one of the legal standards that could be developed through 
the publication of decisional output--even decisions that have been 
necessarily redacted to protect victims or sources. Such a practice, 
whether achieved by regulation, policy, or statute, would benefit any 
---------------------------------------------------------------------------
group interested in combating forced labor in the supply chain.

Section 12.42 goes on to discuss a next step that consists of an 
official determination, and the issuance of a finding. Unfortunately, 
as with many of the other standards referenced in the regulations, 
little can be gleaned about the operable standards used to make such a 
finding. The lack of transparency with respect to the evaluative 
process that CBP uses to make such decisions only further serves to 
obfuscate the matter.

CBP has further built upon these regulations with limited guidance in 
the form of process maps, presentations for traders, and a smattering 
of other procedural guidance. CBP Publication # 2133-0416 is an 
illustrative example of guidance intended to help make the Section 307 
regime better serve its intended purpose. The content of this 
publication makes clear that CBP considers itself chiefly and 
investigator and fact finder in administering this regime. Petitions 
are filed by outside parties and then investigated by CBP officials--
this appears to be the role CBP views itself as playing, though it does 
have the authority to self-initiate investigations under Section 
12.42(a). With that in mind, the section below sets forth some ideas of 
ways to make the Section 307 regime more accessible and functional for 
private and public sector parties interested in either filing petitions 
against exploitative traders, or simply making certain that an 
enterprise understands what to look out for and avoid in working with 
suppliers.

III. Opportunities to Improve the Mechanism

    a. Actions under existing oversight authority

        i. Policy or practice revisions

    1.  Publication of decisional output of investigations. Simply 
stating the terms of a WRO/finding once issued, as is the practice 
today, is not enough. Like any other government decision, and 
particularly one with such a sweeping impact as a WRO/finding, the 
evidence and analysis should be published. Publication enables traders 
and those concerned with protecting laborers to understand the 
standards being applied. This base level of transparency is 
foundational to our judicial and administrative systems and there is no 
reason to make an exception for this process. Where evidence critical 
to the decision is deemed proprietary or otherwise sensitive, that 
information can be protected under Administrative Protective Order 
(APO), as discussed below.

    2.  Establish clear formal petition procedures while maintaining 
the ability to file a complaint anonymously. Currently, CBP can be 
alerted to the suspicion that a product is being produced by forced 
labor via it's established mechanism, the e-Allegation portal. While 
this whistleblower-oriented anonymous process should be maintained, a 
more formal procedure should be put in place that makes clear for those 
wishing to be helpful, what must be alleged and the types of evidence 
that will be expected to open an investigation. At present, coupled 
with the lack of published analysis with decisions, parties must engage 
in an inefficient iterative process with CBP, with no clear guidelines 
as to where it may lead or whether CBP must be responsive and 
collaborative. As discussed above, the guidance on how to move CBP to 
start an investigation contained in 19 CFR Sec. 12.42 is lacking 
critical details on how to formulate a successful petition.

    3.  Make clear to CBP that under no circumstance is it authorized 
to weigh ``consumptive demand'' considerations. CBP Publication # 2133-
0416 ``Repeal of Consumptive Demand Clause--FAQs'' states in relevant 
part that the striking of the consumptive demand clause contained in 
the TFTEA resulted in CBP no longer being ``legally required to weigh 
consumptive demand considerations to process information concerning 
forced labor.'' That publication goes so far as to indicate some 
ambiguity as to whether the repeal resulted in changes to the WRO 
finding process at all. The language referencing legal requirements 
seems to suggest that officials feel that they have the discretion, but 
not obligation, to weigh consumptive demand considerations when 
reviewing petitions. It bears review as to whether Congress intended to 
allow such discretion to remain after the repeal.\5\
---------------------------------------------------------------------------
    \5\ The Congressional Record appears silent on this question. See, 
e.g., H. Rept. 114-376 (December 9, 2015) and H. Rept. 114-18 (February 
9, 2015).

---------------------------------------------------------------------------
        ii. Update regulations

    1.  Establish clear procedures, guidelines for engagement, and 
legal standards. At present, the existing regulations establish little 
in the way of either procedure or substance. Documentation provided by 
CBP somewhat clarifies certain aspects of its internal process, but 
does not establish clear procedural steps, clarify how to engage with 
investigatory staff or decision makers, or set forth a clear legal 
standard. As an example, the statutory language of Section 307 does not 
establish a legal standard for the evaluation of evidence to establish 
a product or shipment is produced by use of forced labor. That is done 
via 19 CFR Sec. 2.42(e), which states the standard as when 
``information available reasonably but not conclusively indicates'' 
that a product is being produced by forced labor a WRO will be issued. 
However, CBP Publication # 0550-0816 states that ``[f]indings require 
conclusive evidence, i.e., probable cause that the imported goods are 
made with forced labor,''--a statement that appears to create 
inconsistencies between the legal standard operative in the regulations 
on one hand, and that applied in practice on the other. Such ambiguity 
in the legal standard it is applying may well exist only in the minds 
of those not working in the investigation units of CBP. However, it 
serves neither the interests of traders, nor the interests of exploited 
workers to prevent interpretive guidance, or, indeed, jurisprudential 
interpretation, from developing around these important standards. As 
with the legal standards, practice guidelines that outline what sorts 
of input and collaboration CBP welcomes, from whom, and at what stages 
of the process should be developed and made public.

    2.  Establish Administrative Protective Order (APO) procedures to 
protect confidential data. Any concerns with respect to proprietary or 
sensitive information leaking during a transparent process can be 
addressed via the issuance of an APO. A starting point that could serve 
as a model for a Section 307 confidential data regime can be those used 
by the U.S. International Trade Commission and U.S. Department of 
Commerce in trade remedies cases. Currently, the entire process--from 
accusation to decision--is completely opaque. Care should also be given 
to considering what can be protected under the APO. For example, 
parties should remain motivated to affirmatively seek their public 
exoneration by proving that they are not engaged in exploitative trade. 
On the other hand, where parties vulnerable to retaliation have 
provided information in an investigation, that information should enjoy 
a reasonable degree of protection.

    b. Actions likely to require legislation

    1.  Provide for interested parties to proactively participate in 
the proceeding. Attempting to resolve an issue strictly based on what 
resources the government/CBP can marshal at a given time leaves 
entirely too much up to chance. Parties with an interest in a given 
proceeding should be able to enter an appearance and act as a resource, 
making submissions in the deliberative/adjudicative process, where 
appropriate. Today, the regulations merely provide for CBP to consider 
``representations'' of parties, with no commitment to how iterative or 
transparent that process must be. Allowing for complaining parties to 
be robustly involved in a deliberative and adjudicative administrative 
proceeding creates an incentive for those competing with violating 
imports to bring additional resources to bear beyond what portion of 
its budget CBP intends to commit to investigations.

    2.  Provide for the protection of certain types of confidential 
information used in the proceeding. A truly confidence-inspiring 
approach to protecting confidential data so as to facilitate 
transparency would likely require legislation. There should be two 
levels of protected data: (1) that information that can be accessed 
under APO by parties meeting the standard of outside counsel to an 
interested party; and (2) highly sensitive information that only 
investigating authorities have access to. As discussed above, there may 
be certain types of information that is sensitive to the personal 
safety of human beings, whether victims or whistleblowers. Lawmakers 
and administrators should be empowered to weigh the equities as to when 
such information shall remain inaccessible by interested parties. 
Engaging in such protection of information in a proceeding is something 
the United States federal government knows well how to do and all 
potential parties to a WRO proceeding--whether a complaining party 
filing a petition or an importer whose shipments are called into 
question--have much to gain from the transparency that such a provision 
would facilitate.

    3.  There should be tight procedural timelines. As is, it is merely 
guesswork to come up with an idea of how much time an investigation 
leading to a WRO, finding, or exoneration may take. These could be 
dealt with via either regulation or placed in statute. The timelines 
should contain a reasonable degree of administrative flexibility, as a 
practical matter. However, the interests of both the exploited workers 
and the entities under investigation are likely best served by 
statutorily mandated procedural timelines. As with other proposed 
reforms discussed above, the Committee need look no further than the 
trade remedies laws for an example of how such a limitation might work 
in practice.

    4.  Make the outcome of investigations appealable to the U.S. Court 
of International Trade (USCIT). Currently CBP can seek judicial 
forfeiture procedures as a final step, after making formal findings and 
seizing goods. However, creating a legal right to relief in federal 
courts for aggrieved parties will act as a permanent buffer against 
inconsistent interpretations, or a variance in the prevailing degree of 
interest in enforcement (i.e., either over- or under-enforcement), 
consistent with our legal traditions. Furthermore, creating a body of 
jurisprudential interpretations of Section 307 and its enforcement 
could only serve to make forced labor in supply chains an ever more 
rare occurrence.

IV. Conclusion

In conclusion, the forced labor enforcement regime is, in many ways, 
somewhat a work in progress. Although it is a critical law enforcement 
tool, there are many opportunities to improve upon the workings of the 
Section 307 regime in a way that empowers CBP to play the role it is 
most suited for: investigator, fact finder, and frontline enforcer of 
our trade laws. As the committee of jurisdiction, the Senate Finance 
Committee is well-situated to wield existing oversight authority to 
reshape this underutilized regime into a powerful, robust deterrent to 
the trafficking of goods whose human costs are high. I humbly submit 
the ideas expressed above in the hopes that committee members and staff 
may find herein a helpful idea or observation to assist them in this 
important work.

                                 ______
                                 
              National Association of Foreign-Trade Zones

                        National Press Building

                    529 14th Street, NW, Suite 1071

                          Washington, DC 20045

                              202-331-1950

                             April 1, 2021

U.S. Senate
Committee on Finance
Dirksen Senate Office Bldg.
Washington, DC 20510-6200

Re:  March 18, 2021 Hearing on ``Fighting Forced Labor: Closing 
Loopholes and Improving Customs Enforcement to Mandate Clean Supply 
Chains and Protect Workers''

The National Association of Foreign-Trade Zones (NAFTZ) is pleased to 
submit these comments for the record for the March 18, 2021 hearing of 
the Senate Committee on Finance on ``Fighting Forced Labor: Closing 
Loopholes and Improving Customs Enforcement to Mandate Clean Supply 
Chains and Protect Workers.''

The NAFTZ and its members in the foreign-trade zone (FTZ) community 
strongly support efforts to end forced labor and other forms of illicit 
trade. Preventing products made with forced labor from entering the 
U.S. market is a significant challenge for policy makers looking for 
effective enforcement mechanisms and companies importing into the 
United States looking for viable and manageable options to help meet 
their compliance obligations.

The U.S. Foreign-Trade Zones Program is one existing system managed and 
regulated by U.S. Customs and Border Protection (CBP) that can help 
support better and more effective enforcement and compliance in this 
effort. NAFTZ has been working with CBP on a proposal to allow targeted 
merchandise subject to a withhold release order (WRO) to be stored 
securely in a U.S. foreign-trade zone (FTZ) under Customs supervision 
during the pendency of a decision whether the goods may be allowed into 
U.S. commerce. While in an FTZ, WRO merchandise would be physically 
separated, specifically identifiable, and part of a sufficient record 
trail to allow an audit by CBP.

For CBP this proposal would: (1) provide the agency better assurances 
that targeted merchandise can be held securely and separately under its 
supervision and control; (2) lower the risk that such merchandise 
subject to a WRO could enter the U.S. market before a determination on 
its forced-labor status has been rendered; and (3) allow for proper 
disposition of violative products under FTZ procedures and CBP 
supervision.

This proposal will also assist companies in meeting their compliance 
obligations by providing them a wider array of cost-effective options 
if they choose to contest a WRO on one of their products by presenting 
evidence to CBP that the product was, in fact, not produced with forced 
labor. Instead of having to rely on a limited selection of high-cost 
and privately operated bonded warehouses, companies would have the more 
widely available alternative of storing the goods securely and safely 
in their or another company's FTZ facility. Finally, because the U.S. 
FTZ program imposes more stringent enforcement and compliance 
requirements on companies that use the program, CBP views it as a 
highly compliant program and an effective model and tool to help reduce 
the risk of trade in illicit and forced labor goods.

We urge Members of the Committee to support this sensible, effective, 
and straightforward proposal, which could be added to the ``Uyghur 
Forced Labor Prevention Act,'' a key piece of bi-partisan legislation 
currently before Congress in the fight against illicit trade. We look 
forward to working with the Members of the Committee and the Senate on 
this important issue.

Background

The National Association of Foreign-Trade Zones is a trade association 
of over 650 members and serves as the collective voice of the U.S. 
Foreign-Trade Zones program and the community of public and private 
stakeholders in the United States who use and rely on the program. The 
FTZ program was established by Congress in 1934 during the Great 
Depression to encourage the location of manufacturing and distribution 
operations in the United States; create and support American jobs; and 
promote U.S. exports and competitiveness in the domestic and foreign 
markets. FTZs now account for a significant portion of total U.S. 
trade. Over 3,300 companies operate within the FTZ program, employing 
over 460,000 American workers in all fifty states and Puerto Rico.

Sincerely,

Erik O. Autor
President

                                 ______
                                 
                           Tony's Chocolonely

                            Pazzanistraat 1

                           1014 DB Amsterdam

                              Netherlands

INTRODUCTION

Tony's Chocolonely is pleased to submit this statement to the Senate 
Finance Committee as part of the record pursuant to its March 18, 2021 
hearing on ``Fighting Forced Labor: Closing Loopholes and Improving 
Customs Enforcement to Mandate Clean Supply Chains and Protect 
Workers.''

We thank the Committee for arranging and holding the hearing. It is 
timely as in the chocolate industry child labor and modern slavery 
continue to be a huge problem in cocoa and chocolate products sourced 
from Ghana and the Ivory Coast. These two nations account for 60 
percent of the cocoa produced in the world and recent reports from non-
governmental organizations document the fact that there are today more 
than 1.56 million children are involved in cocoa-related child 
labor.\1\ Furthermore, an estimated additional 30,000 people are 
victims of modern slavery in the two countries.\2\
---------------------------------------------------------------------------
    \1\ https://www.norc.org/Research/Projects/Pages/assessing-
progress-in-reducing-child-labor-in-cocoa-growing-areas-of-c%C3%B4te-
d%E2%80%99ivoire-and-ghana.aspx.
    \2\ https://cdn.minderoo.org/content/uploads/2019/03/06111232/
Cocoa-Report_181016_V15-FNL_digital.pdf.

We understand that much of the Committee's focus centers on policies 
created and implemented by the People's Republic of China against its 
Uighur Muslim minority. But forced labor and modern slavery is a 
worldwide problem. The International Labor Organization (ILO) estimates 
that there are more than 152 million child laborers globally with 
almost half, 73 million, working under hazardous conditions.\3\ The 
Global Slavery Index says there are almost 25 million adults working in 
modern slavery regimes.\4\ A great percentage of these come from Asia, 
but this societal ill is found on all the continents. We at Tony's 
therefore believe there must exist a global solution to the issue 
involving all participants in every supply chain. To us, that means 
creating an effective human rights due diligence system applicable to 
all actions in the supply chain; those who purchase, process, transship 
cocoa as well as those who ultimately sell chocolate to the consumer.
---------------------------------------------------------------------------
    \3\ https://www.ilo.org/ipec/Informationresources/WCMS_653987/lang-
-en/index.htm.
    \4\ https://www.globalslaveryindex.org/2018/findings/importing-
risk/cocoa/.
---------------------------------------------------------------------------

ABOUT TONY'S CHOCOLONELY

Tony's Chocolonely, a Netherlands-based international chocolate 
company, is a global firm operating in 22 countries around the world 
including the United States. We source our cocoa, the key ingredient in 
chocolate, from the same West African nations of Ghana and the Ivory 
Coast as do the larger and better-known international chocolate 
companies such as Mars, Nestle, Hershey, Mondelez and others.

We were founded in 2005 by a Dutch investigative journalist who was 
horrified by the depth and breadth of child labor and modern slavery in 
the chocolate supply chain. He vowed to create a chocolate product free 
of this evil and to work closely with local farmers and local 
cooperatives in Ghana and the Ivory Coast on poverty reduction programs 
that would enable a living income in order to eliminate the pressure to 
use child and forced labor.

This founding impetus means we operate far differently than those with 
whom we compete. First, we are an impact company that makes chocolate, 
not the other way around. We were founded as referenced above to 
eradicate child labor and modern slavery in the cocoa industry. We 
believe the way to do that is by selling a profitable product and 
serving as an example for others in the chocolate industry.

Second, we have never accepted the argument that the eradication of 
child labor and modern slavery in the cocoa industry is anything less 
than the full and direct responsibility of the companies that invest in 
and profit from the products of these nations. We have raised and 
continue to raise global awareness of the inequities caused by current 
industry practices, we have created a system to address and overcome 
these inequities thereby leading by example, and we use our methods, 
tools and results to inspire others to act. It is the roadmap to our 
success, and it is a roadmap that others can use.

Third, we accept the international rules and guidances for the 
economic, social and ethical activities of transnational corporations 
in the 2003 United Nations document ``Norms on the responsibilities of 
transnational corporations and other business enterprises with regards 
to human rights''\5\ as well as the Organization for Economic 
Cooperation and Development's Guidelines for Multinational Enterprises 
\6\ and have adopted them into our business model. These are apparent 
in and directly applicable to our way of doing business. We believe 
that companies have a responsibility for their supply chains and should 
comprehensively act to mitigate, find and remediate human rights 
violations.
---------------------------------------------------------------------------
    \5\ https://old.business-humanrights.org/en/united-nations-sub-
commission-norms-on-business-human-rights-explanatory-materials.
    \6\ 2011 edition, http://www.oecd.org/daf/inv/mne/48004323.pdf.

The way we have adapted these overarching principles into our own 
---------------------------------------------------------------------------
business model can be illustrated by the chart below:

[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT] 


.epsFourth, we believe that using these guidelines, as well as the 
guidelines embodied in the several foreign corrupt practices acts in 
the United States and in Europe, provide an appropriate framework for 
corporate responsibility and liability and hold the power to spur 
action from industry stakeholders.

 TONY'S APPROACH TO ENDING CHILD AND FORCED LABOR IN THE COCOA INDUSTRY

The current cocoa trade system turns a blind eye to the origins of 
cocoa. ``We do not know'' is all too common an excuse for labor abuses 
at the start of the cocoa supply chain in Ghana or the Ivory Coast. A 
modest investment in time, technology and direct payments to growers 
can overcome both the ignorance that hides exploitive labor systems and 
those systems themselves.

Tony's has created just such a system including five requisite 
principles for sourcing cocoa beans. These sourcing principles are:

      Traceable cocoa beans. All our beans are made traceable by 
knowing our suppliers and trading directly with farmers and cocoa 
cooperatives.\7\
---------------------------------------------------------------------------
    \7\ https://tonyschocolonely.com/nl/en/tonys-beantracker.
---------------------------------------------------------------------------
      Strengthen farmers by working with them to professionalize their 
farming organizations.
      Create long-term relationships by signing 5 year contracts for 
the supply of cocoa.
      Improve agricultural quality and productivity through training 
and support.
      Pay a higher price so farmers can earn a living income.

All five principles need to be used together to fully address the 
issues that plague the cocoa supply chain, but the last point is 
perhaps the most neglected in the general state of affairs. The core 
cause of child labor and modern slavery is the inhumanely low price 
paid to farmers. Current efforts to pay farmers a premium such as that 
created by Fairtrade are a good starting point, but do not close the 
living income gap. Tony's pays a premium above existing premiums to 
help farmers earn a living wage.

The Tony's premium is determined by creating a set ``Living Income 
Reference Price,'' a model we created in conjunction with Fairtrade and 
integrating best practices and thorough research findings.\8\
---------------------------------------------------------------------------
    \8\ https://tonyschocolonely.com/us/en/living-income-model.

This financial investment is backed up by technology and by constant 
monitoring. Tony's uses GPS technology to map farms in order to denote 
boundaries and to help prevent deforestation or encroachment onto 
national parkland. We use outside certification sources, and an 
independent assurance from PwC, to let us know how we are meeting our 
non-financial key performance indicators, to identify abuses and, when 
---------------------------------------------------------------------------
found, to then take remedial action.

We firmly believe that poverty is the root cause of child labor and 
modern slavery in the cocoa sector. We certainly believe that is true 
in other industries and in other regions.

Our system is unique, but not exclusive. It can be accessed by other 
companies and we share it through our Open Chain collaborative 
initiative. It is scalable to meet all sourcing needs from a portion of 
a producing area, country wide production zone or the entire cocoa 
producing region.

 PAST EFFORTS TO SOLVE THIS ISSUE HAVE HAD LIMITED SUCCESS AT BEST

As a corporation engaged in the cocoa trade and in the manufacture of 
chocolate, we have followed with interest the various attempts to rid 
the sector of child labor, forced labor and modern slavery.

Interested parties have taken any one of three approaches to solve our 
common problem. The three are:

      Voluntary agreements to address the issue;
      Court cases relying on existing statutes; and
      Trade investigations.

Efforts related to voluntary agreements date back more than twenty 
years when the Harkin-Engel Protocol was created in a joint effort by 
your former colleague, Senator Tom Harkin and his House of 
Representatives counterpart, Representative Elliot Engel. 
Enthusiastically embraced by global chocolate companies as an 
alternative to direct government oversight, the results have largely 
failed. Millions of dollars have been spent with some benefits in terms 
of better schooling for children or increased cocoa productivity. 
Nevertheless, despite great fanfare, the corporations involved failed 
to meet the original target date for eradication of child labor and 
failed to meet any subsequent reduced targets even as they extended the 
deadline for success. The Harkin-Engel protocol is no longer in force. 
Even the corporations involved recognize that voluntary codes of 
conduct do not work and in December 2019 most of the leading 
international chocolate corporations called for direct regulation of 
their supply chains by the European Union and by the U.S. 
government.\9\
---------------------------------------------------------------------------
    \9\ https://www.washingtonpost.com/business/2019/12/31/chocolate-
companies-ask-taste-government-regulation/.

Interested parties have also filed lawsuits under several U.S. statutes 
including the Alien Claims Statute and the Trafficking Victims 
Protection Act. One of the suits is now before the Supreme Court of the 
---------------------------------------------------------------------------
United States for a decision.

Sadly, these cases take years to adjudicate. In the instance of the 
case before the Supreme Court it was first filed in 2005 and has yet to 
be decided. During those fifteen years, millions of children continue 
to labor in hazardous, forced conditions.

The use of trade law, specifically Section 307 of the Tariff Act of 
1930, does allow the government of the United States to prevent 
importation of products made with forced labor and while the U.S. 
market is one of the largest consuming markets in the world, 
application of Section 307 does not affect the ability of a company to 
shift imports elsewhere allowing the underlying problem to continue to 
exist.

To our mind, each of these solutions fail because they do not focus on 
the responsibility of corporations to maintain a due diligence over 
their supply chains. The legal cases hit only the corporations named, 
not the industry as a whole. Section 307 actions, although a key tool 
to address forced labor concerns, do not yet demonstrate the ability to 
force underlying systemic change.

 CORPORATE RESPONSIBILITY THROUGH CORPORATE DUE DILIGENCE IS KEY

We believe the locus of a solution to the child labor and modern 
slavery issue needs to be shifted from that of the farmer, the small 
producer or middleman to that of the end purchaser without absolving 
governments of their responsibilities. To do that, we suggest entering 
into law a comprehensive system of human rights due diligence that 
requires corporations to review their supply chains for abuses and to 
actively and transparently work to eliminate or remediate them within a 
short period of time. Such a system should entail penalties for failure 
otherwise it would essentially become nothing more than a reporting 
system.

Tony's is not alone in suggesting this approach. Globally, there is an 
emerging consensus in favor of supply chain due diligence; a few 
nations such as France, the United Kingdom and the Netherlands have 
already acted. Additionally, the European Union is gearing up to 
propose legislation this year with the European Parliament recently 
issuing a report to the European Council to enact legislation as soon 
as practicable.\10\
---------------------------------------------------------------------------
    \10\ https://www.europarl.europa.eu/news/en/headlines/society/
20210303STO99111/companies-should-be-held-accountable-for-their-
actions-say-meps.

Focusing on corporate responsibility in the area of human rights due 
diligence is neither a new nor a radical departure from existing norms 
and laws. In both Europe and the United States there exists a framework 
governing corporate responsibility for international business dealings 
embodied in the several foreign corrupt practices acts. Further, both 
the United States and Europe have laws governing corporate due 
diligence over ethical and safe workplace conditions as embodied in 
occupational health and safety acts. The Organization for Economic 
---------------------------------------------------------------------------
Cooperation and Development has likewise addressed both issues.

The foreign corrupt practices acts were created because bribery is 
considered a deviation from globally accepted business norms that 
confers an advantage upon the entity doing the bribing. Failing to 
provide a safe place to work and the means to protect workers from harm 
is considered a deviation from globally accepted business practices 
that likewise confers a cost advantage to the entity failing to act to 
ensure the health and safety of its workers. Global corporations accept 
these norms and accept being held accountable to them.

It is exactly the same in the area of human rights due diligence in the 
supply chain. Utilization of child and forced labor provide cost 
advantages to the end user and in doing so, they violate globally 
accepted human rights norms and standards.

 ENSURING A LEGALLY CREATED HUMAN RIGHTS DUE DILIGENCE SYSTEM WILL 
                    CREATE AMERICAN JOBS

We believe creating a system to implement human rights due diligence is 
the right thing to do. Companies should be a force for good and not a 
force that perpetuates old and harmful ways of doing business. That is 
why we do what we do; it is engrained in our nature and it is part of 
our mission. But we are not the only company undertaking such efforts. 
In the United States there are literally hundreds of chocolate 
companies seeking to source cocoa and other chocolate inputs in a 
sustainable and ethical manner. They are small businesses, and like 
small businesses everywhere, they are community oriented and create 
jobs and income for their towns and cities.

It does cost money to undertake supply chain due diligence and those 
corporations that do not have due diligence processes in place enjoy a 
cost advantage over those who do. Thus, creating such a global system 
will help level the economic playing field for these small companies 
allowing them more opportunities to grow and to create jobs across the 
50 states.

CONCLUSION

Today, the West African cocoa trade relies on child labor and modern 
slavery. The biggest chocolate companies have profited from this model 
for decades and continue to do so. What is true in our industry is also 
true in so many other industries. Just as no chocolate bar is sweet 
enough to cover or dismiss the bitter truth of modern day child labor, 
forced labor and slavery, no product offered to the consumer deriving 
from such a system can be worth its purchase price.

For these reasons, we deeply hope that not only does the Committee move 
to improve enforcement by the U.S. Customs and Border Protection but it 
also closes supply chain loopholes by instituting an effective, 
comprehensive human rights due diligence system that requires corporate 
action and penalizes those entities that fail to act.

                                 ______
                                 
            United States Council for International Business

                      1212 Avenue of the Americas

                        New York, NY 10036-1689

                            212-354-4480 tel

                            212-575-0327 fax

                             www.uscib.org

U.S. Senate
Committee on Finance
Dirksen Senate Office Building
Washington, DC 20510-6200

                                                     March 24, 2021

Dear Chairman Wyden and Ranking Member Crapo,

USCIB proposes amending the regulations that implement Section 307 to 
include a framework that is workable and effective at identifying and 
eliminating forced labor in supply chains. With supply chains spanning 
the globe over a wide range of commodities, products and sectors, these 
comments from the United States Council for International Business 
(USCIB) and its members focus on implementation of the forced labor 
import prohibition, contained in Section 307 of the Tariff Act of 1930, 
as amended. We applaud the bipartisan commitment within the Congress to 
ensure effective implementation, and the overall desire to achieve 
effective and efficient enforcement of Section 307 by U.S. Customs and 
Border Protection (CBP). However, we believe that greater transparency 
by CBP upon initiation of an investigation will result in the trade 
community becoming a partner with CBP to address forced labor, prevent 
the importation of goods made with such, and more immediately address 
workers' needs. This is an outcome that can be achieved through updated 
regulations in this area.

USCIB and its members share the objectives to prevent, identify and 
eradicate forced labor globally. USCIB joins the U.S. Government in 
recognizing the UN Guiding Principles on Business and Human Rights 
(UNGPs) as the globally agreed framework for advancing human rights as 
they relate to business. The UNGPs recognize the value and importance 
of company efforts to support remediation.

USCIB promotes open markets, international trade and investment, 
competitiveness and innovation, sustainable development and corporate 
responsibility, supported by international engagement and regulatory 
coherence. Our members include primarily U.S.-based multinational 
companies and professional services firms spanning every sector of the 
economy with global operations touching every region of the world. 
Member companies generate $5 trillion in annual revenues and employ 
over 11 million people worldwide. As the sole U.S. affiliate of the 
International Chamber of Commerce (ICC), the International Organization 
of Employers (IOE) and Business at OECD, USCIB provides business views 
to policy makers and regulatory authorities in the U.S. and worldwide.

USCIB member companies are deeply committed to eradicating forced 
labor, in any form, from their supply chains and devote significant 
resources to ensuring forced labor and other violations of core, 
internationally recognized labor rights are not present in their supply 
chains. Many USCIB member companies have been working for decades to 
establish and execute operational due diligence and other corporate 
programs targeting and eliminating the use of forced labor, and many 
have been recognized for their innovative efforts. USCIB and its 
members actively support the development of effective laws, regulations 
and policies to eliminate forced labor linked to supply chains. As the 
recognized representative of U.S. employers to the International Labor 
Organization, USCIB and its members are at the table with governments, 
workers' representatives, and other global employers to negotiate 
legally binding international labor standards.

 Eradicating Forced Labor in Partnership with CBP by Advancing Clear, 
                    Predictable, Effective Enforcement

It is with this background and in this context that we believe USCIB 
has a unique perspective, experience and capacity to inform and support 
U.S. policy makers on matters related to customs, trade and forced 
labor.

USCIB and its members support compliance consistent with the import 
prohibition of Section 307, working cooperatively with CBP. 
Regrettably, the current position of CBP is that as soon as they 
initiate an investigation, it becomes an enforcement action and 
therefore, they will not notify any entities that may be involved 
because CBP ``may'' take action to detain imported goods. CBP 
effectively creates a ``black box'' from which all companies are 
excluded. We want to partner with Congress and CBP on this process to 
use Section 307 as a mechanism to: (1) combat forced labor in the 
global supply chain; (2) prevent unfair pricing affecting U.S. workers; 
and (3) ensure a values-based trading system. The way the process is 
currently set up does not fully serve these goals and is damaging to 
the U.S. economy and to impacted forced laborers.

USCIB's proposal speaks to the following:

      Section 307 regulations were created in 1963 and they are not 
adequate for 21st-century supply chains. A regulatory framework based 
on objective standards that will be predictable, transparent and 
workable is needed. This proposal will help eliminate forced labor and 
support U.S. foreign policy and global development goals, rather than 
resulting in companies adopting a cut and run approach to suppliers 
that are identified as using forced labor as currently frequently 
happens.

      Increased engagement and transparency by CBP with all impacted 
parties, including the business community, as part of any investigation 
into allegations of forced labor, to include appropriate U.S. 
government agencies (e.g., the Office of the U.S. Trade Representative, 
the Department of Labor and the Department of State), foreign 
governments and the broader trade community, through (1) direct 
confidential outreach to companies at the outset of an investigation, 
and (2) engagement with business associations able to speak for 
businesses, in general, regarding investigations. Input from importers 
or other interested persons are currently required to be considered by 
CBP when an investigation is warranted, but the existing process does 
not include such input. Customs is currently assuming that when it 
initiates an investigation, that the result is possible violative 
imports that will result in enforcement action, therefore, they are not 
involving either the concerned exporting entity, country or importer as 
required under regulation.

Specifically, USCIB proposes amending the current process by which CBP 
issues Withhold Release Orders (WROs) as a multi-stepped approach:

    1.  Announce the initiation of a review based on allegations deemed 
to merit investigation to the importers that may be impacted according 
to objective and transparent standards. When allegations are against a 
company or set of companies, or if a company may be importing from a 
region, a country or an industry product subject to the allegations, 
CBP or the appropriate member of the interagency Task Force should 
alert both the U.S. importer (while maintaining confidentiality) and 
the foreign government. CBP should provide companies with at least 60 
days to refute, provide information that may be critical or useful to 
the investigation or, in appropriate circumstances, remediate the 
allegation.

    2.  Issue a preliminary determination within no less than 60 days 
of initiating an investigation, and provide at least a 60-day comment 
period, without repercussions to the importer other than 
inadmissibility of the goods, and/or for a remediation period by the 
trading community.

    3.  Make a final determination not earlier than 120 days after 
initiating the investigation, if CBP has determined after investigation 
and consultation with the Task Force that such WRO is merited. Involved 
parties should have at least 60 days to submit a remedy.

    4.  Issue final notification of a WRO.

CBP currently accepts allegations from a wide range of stakeholders 
through various means of transmission regarding forced labor, but it 
does not request, pre-WRO, any information from foreign governments, or 
importers on the subject merchandise. Though CBP is required to 
consider such information under existing regulations [19 CFR 12.42 
(d)], in practice, it excludes any potentially involved entities. CBP 
prioritizes collaboration with the trade community as required under 
the Customs Modernization Act, but in the case of WRO enforcement has 
fallen short of this goal. This omission of input hinders establishing 
a transparent and predictable process to determine if in fact there is 
potential forced labor and if so, engaging the trade community to 
remove the offending behavior by the manufacturer and eradicate 
possible forced labor. This lack of coordination between CBP and the 
trade community could also have a direct impact on workers' well-being 
because importers are not made aware and thus cannot help resolve CBP's 
concerns with their suppliers until a WRO is issued, often many months 
or years from the time the concerns were first raised.

We believe that improving the current process could address direct and 
indirect impacts to the U.S. economy. A WRO is not definite proof of 
forced labor, yet results in increased, lengthy, and even unrelated 
detentions in some instances.

Improperly detaining a shipment for just 5-6 days in a bulk commodity 
storage facility could cost the importer $1M or more. USCIB has 
examples of importers who have had substantial portions of their total 
inventory incorrectly detained for weeks. Such delays can threaten the 
existence of small to medium sized businesses, and delayed shipments to 
facilities in the U.S. could lead to full or partial shutdown of 
manufacturing, potentially impacting bothU.S. and foreign jobs. We look 
forward to providing additional content in future dialogues.

We strongly agree that CBP must modernize, update and align its 
regulations, policies and procedures to address the evolving threat of 
forced labor in supply chains in partnership with the trade community. 
In our view, the process outlined above will create a reasonable, 
transparent and--most importantly--effective process for assisting in 
effective implementation of the law while fostering greater 
collaborative engagement with the trade community in combatting forced 
labor in international supply chains.

USCIB believes that cooperation between the government, stakeholders, 
and the trade community is the most effective path to block imports of 
goods made with forced labor. USCIB would like to be a resource in the 
process to design an updated path forward for CBP to implement the 
import prohibition for goods made with forced labor while encouraging 
responsible business practices and avoiding unnecessary disruption of 
trade and supply chains.
For further information, contact Norine Kennedy, United States Council 
for International Business, at [email protected]. We look forward to 
working with the Committee on this important matter.

Respectively submitted,

Norine Kennedy
Senior Vice President, Policy and Global Strategy

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