[The following article was written by Ryan Vann, Partner, Employment & Compensation Law, in our Chicago office.]
In the recently released 2017 Trade Policy Agenda and 2016 Annual Report of the President of the United States on the Trade Agreements Program, the administration set forth its key priorities in establishing trade policies in general and specifically towards particular countries. Among several other items listed as “Key Principles and Objectives of the Trump Administration’s Trade Policies,” the agenda includes a key objective of “[e]nforcing labor provisions in existing agreements and enforcing the prohibition against the importation and sale of goods made with forced labor.” Additionally, the report suggests that unfair trade practices of “violations of labor laws” and “use of forced labor” have distorted true, market-based competition among US trading partners.
The 2016 Annual Report reveals numerous cooperative and punitive trade actions with and against dozens of US trading partners on a variety of labor and human rights issues. It appears that the Trump trade agenda will include at least some of the same activity to ensure fair competition under the existing trade agreements based on labor provisions, but the targeted countries will likely change.
The key country to watch is China, which was a frequent target for Trump during the presidential campaign and appears to be an unnamed but prominent focus of the Trade Policy Agenda. The US/China trade provisions currently do not include labor standards, nor do World Trade Organization (WTO) regulations. According to a position paper “Reforming the US-China Trade Relationship” released by the Trump campaign prior to the election, one of the four key reforms Trump plans for the US/China trade relationship is to “[r]eclaim millions of American jobs and reviving American manufacturing by putting an end to China’s illegal export subsidies and lax labor and environmental standards. No more sweatshops or pollution havens stealing jobs from American workers.”
Even without trade agreement reform, one available tool currently at Trump’s disposal is US Customs and Border Protection (CBP). Section 307 of the Tariff Act of 1930 (19 U.S.C. § 1307) prohibits the importation of merchandise mined, produced or manufactured, wholly or in part, in any foreign country by forced or indentured child labor – including forced child labor. A 2016 amendment gives CBP enhanced ability to block goods covered by Section 307 by removing a requirement that US “consumptive demand” exceeds domestic production for such goods.
Given the enhanced focus on China, it is likely that the Trump administration will take decisive action before long. US companies importing from China should perform substantial supply chain labor compliance reviews to ensure, at a minimum, that forced and child labor are eliminated. Failure to do so could result in becoming a very public example to support the Trump administration’s China agenda.
[For additional information on the 2017 Trade Policy Agenda and 2016 Annual Report of the President of the United States on Trade Agreements Program, visit “The New Vision for Trade, Restated” posted on our Asia-focused Trade Crossroads Blog.]
