New legislation in the US that officially prohibits imports of goods produced by forced or child labour is likely to have a major impact on global supply chains, a report has found.
The report from risk management firm Resilinc entitled New Forced Labor Legislation to Impact Global Supply Chains claims the new law will force US companies to ensure greater supply chain visibility.
In February the Trade Facilitation and Trade Enforcement Act 2015 closed an 86-year-old loophole and reauthorized the US Customs and Border Protection Agency to seize any imports suspected of being produced by forced labour.
The new law could affect global trade by raising business continuity risk, brand or reputation risk and compliance/legal risk, the report found.
“Companies may be inadvertently linked to sub-tier suppliers that may engage in unethical, and now, purely illegal, business practices,” said Neil Shenoi, Resilinc lead analyst and primary author of the report.
Even clean companies could come under increased scrutiny and would need to achieve a greater degree of supply chain visibility to make clear their supply chains are free of forced labour, he said.
The changes will force companies to think strategically about supply chain risks and address them as part of a comprehensive resiliency strategy rather than a “one-off” risk mitigation exercise, the report said.
According to the International Labour Organization forced labour is responsible for $150bn a year in profits in international trade and affects 21m people worldwide.