Forced Labor & Trade, How Far We've Come
The Sweet Evolution of Trade & Labor Rights through the 21st Century
Long Read: In this final FLT post for 2022, I use the most recent CBP forced labor enforcement action, against sugar produced by Central Romana Corporation in the Dominican Republic, as a lens for examining the evolution of trade and labor rights through the 21st century. I hope you enjoy.
Observers of global trade would have no trouble listing the reasons why 2016 was a transformational year in the history of international trade.
Brexit.
The U.S. abandonment of the Trans Pacific Partnership (TPP), which it had pioneered.
The election of Donald Trump, and the transformation of U.S. trade policy he engendered.
But when the forces of serendipity or sovereignty cook, they cook. And to the internationally-recognized list of aforementioned developments, I would add the enactment of Section 910 of Pub. L. 114-125, the Trade Facilitation and Trade Enforcement Act of 2015.
Unlike the other colossal developments of that year, this development didn’t follow from the tidal wave of populism that crashed the shores of Europe and the United States. This was, quite literally, a “miscellaneous provision” of law. It was the tenth of twenty-two such provisions, buried deep in Title IX of a yawn-inducing omnibus trade bill.
Borne neither of the wrath of middle America, nor of the hubris of British politicians, this statutory amendment was definitively prosaic, and almost comically benign:
(1) IN GENERAL.—Section 307 of the Tariff Act of 1930 (19 U.S.C. 1307) is amended by striking “The provisions of this section” and all that follows through “of the United States.”.
That’s it. A history-altering pivot of global trade in a nutshell no larger than an almond.
As originally drafted, and for the first 86 years of its existence, Section 307 of the Tariff Act of 1930 was a law to protect domestic industries. Specifically, it protected them from having to compete against imports that were quite literally subsidized by the kind of abnormally low labor costs you can maintain when you wield power to force people to work.
Before this amendment in 2016, this law only applied when there was a domestic industry that could credibly claim (1) it could satisfy the entire domestic demand of the entire U.S. consumer economy for some specific product, except that (2) some forced-labor made imports that were gobbling up market share. That’s an obscure set of facts. And so, this was a pretty dusty provision.
But upon the enactment of Section 910 of Public Law 114-125, all that changed.
Overnight, Section 307 was reborn. It arrived as all newborns, naked and bare. A new life, full of promise and potential perceived, but yet unknown. It had become a stark prohibition on the importation of anything made, wholly or in part, with forced labor. If you beheld it at the time, you’d have marveled.
In January 2003, the scars of 9/11 were still tender in Washington, but there was enough distance that Congress was ready to give the Bush administration the green light for its trade policy agenda. And so commenced a brief but vigorous era of negotiating and approving bilateral and regional trade deals. Over the ensuing ~3 years, the U.S. would quadruple the number of standalone trade deals it had entered into with foreign states.
The deals came into being via a two part process. First, was the negotiation. Second, was the messy political business of each country persuading its domestic constituencies that this is a good idea! There’s really no doubting which is the harder job.
The United States only needed a year to negotiate the regional trade pact with Central American countries Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua, known as CAFTA. (The Dominican Republic would jump into the pre-negotiated pact early in 2004.) But it would take an additional 5 years of bruising domestic policy battles for each signatory—including a hotly contested and narrow vote of support in the U.S. Congress1—before the agreement took effect in all jurisdictions.
Was this agreement a good idea? It’s fair to say that reasonable minds differed.
With the benefit of a couple decades of hindsight, it is fascinating to consider the debates associated with the U.S. vote to approve CAFTA-DR. It’s a portal both to what we thought important about trade at the time, and to what we thought possible.
There seems to have been little question in anyone’s mind that labor abuses proliferated in many of these jurisdictions with which the U.S. was committing to forge deeper economic ties. I’ve read as much of the contemporaneous commentary as I can get my hands on, and not even the most ardent supporters of CAFTA contest that assertion.
And yet, the U.S. negotiated CAFTA-DR to achieve the same objective as any trade agreement, namely, greater market access. This for U.S. products headed to Central America of course, but also for products made in Central America and the Dominican Republic and destined for the U.S. market.
And what was the result when a well documented record of regional labor abuses was greeted by CAFTA-DR, a multinational effort to make it as easy as possible to sell goods to the world’s largest consumer market? Within the first two years of the pact being in effect, a lengthy complaint was compiled by labor rights activists detailing numerous labor and human rights abuses occurring in production environments, in Guatemala alone.
At the time CAFTA-DR was negotiated, the prevailing theory on labor rights violations & international trade was that when they occur, this was always the result of a failure to enforce (or possess) local labor laws. At that time, the enlightened insight was that the primary reason forced labor proliferates in a producing jurisdiction is a failure of local governance. There might be a lack of knowledge or capacity to effectively enforce labor laws. And so, the natural remedy would be for the more developed jurisdiction (the United States) to provide resources—training, funding and capacity building, etc.—to the developing jurisdictions. Problem solved!
The problem with that apparently eloquent framing is that it ignores entirely the power of the economic forces at play. The world’s largest consumer market generates a voracious, throbbing, unrelenting drumbeat of consumer demand. Against which, what hope is even a strident effort at training, funding and capacity building for local labor authorities?
The beast will be fed. The beast is always fed.
But at the time, no one could conceive of doing more! The most forward-thinking commentary was anchored on the question of whether the labor standards in CAFTA were equivalent to, or a step back from, the labor standards in the just completed U.S.-Jordan Free Trade Agreement. (In hindsight, both agreements imposed trivial labor obligations, and spying the difference between the two was nearly impossible. Neither agreement required its signatories to do more than “strive to ensure” compliance with their own labor law, and “strive to ensure” that they didn’t weaken their labor laws to encourage more trade.)
During this era of trade policy, which sought ever expanding economic integration and always better market access, it never seems to have occurred to anyone that there might be some types of trade with zero popular support. Let alone widespread, visceral opposition.
But times change, as do laws. And so, when reports of egregious human rights violations in CAFTA-DR countries began percolating again in 2021 and 2022, the result was both different and dramatic.
The U.S. helps CAFTA countries build their labor rights capacity through work undertaken by U.S. Bureau of International Labor Affairs (ILAB) at the U.S. Department of Labor. ILAB issues periodic reports on the results of such efforts in CAFTA countries. In June 2021, ILAB released the fourth such report, which concluded that:
despite [ILAB’s] efforts, challenges remain in each country, particularly with respect to the investigation, sanction, and remediation of labor law violations, and the allocation of sufficient resources to government enforcement agencies and labor courts.
Separately, in September 2021, Mother Jones published a detailed piece of photojournalism chronicling the existence of alleged labor and human rights violations by the largest sugar producer in the Dominican Republic, Central Romana. A month later, the Washington Post released a story of its own on Central Romana’s alleged labor and human rights abuses and financial dealings.
The plot really started to thicken. The Mother Jones and WaPo journalism attracted attention in Congress. In subsequent reporting by Mother Jones in November 2021, Central Romana was again criticized for subsequent efforts to “improve” the living conditions for workers, which reportedly involved rapidly destroying the present living facilities for workers.
Then, the full-court press: a letter on January 22, 2022 from fifteen members of Congress urging the Biden Administration to “take action” against Central Romana and/or the Dominican Republic in response to these allegations of labor and human rights abuses. That was followed by a congressional delegation to visit the Dominican sugar plantations in July 2022. The delegation noted thereafter in a statement that:
Important progress has been made to address child labor and reduce human trafficking. However, our observations and conversations with people on the ground confirmed official reports and recent news investigations that indicators of forced labor persist.
Then finally, U.S. Customs and Border Protection took action on the day before Thanksgiving, 2022. It did not find the existence of forced labor by Central Romana per se, but it did note that
CBP identified five of the International Labour Organization’s 11 indicators of forced labor during its investigation: abuse of vulnerability, isolation, withholding of wages, abusive working and living conditions, and excessive overtime.
And so, on that basis, Central Romana’s access to the U.S. market was suspended.
What a turn. Central Romana might be the greatest individual corporate beneficiary of the expanded market access made possible by CAFTA.2 It is the largest landholder in the Dominican Republic, and the sole producer of 59% of the Dominican Republic’s sugarcane. The Dominican Republic exported $109M of raw sugar in 2020, 99.6% of which to the United States. And now, for some period of time, until it can get its act together to the satisfaction of U.S. Customs3, Central Romana remains in international trade purgatory.
For the American public, there are two litmus tests that more-or-less determine popular opinion on global trade. The first is whether my job and community have been harmed or threatened by global trade. The second is whether I think the stuff I buy might have been made in conditions that would appall me.
And a lot of times, the answers to those questions comes down to who are you going to trust?
Will you trust experts who assure you that your anxieties about globalism are misplaced (“China’s not coming for your job, robots are”), or your own uninformed so-called “experience”?
Will you trust companies who claim that “[l]ike any socially responsible company, we strive to advance each year and continue to invest in all of our processes, including health and industrial safety, labor aspects, environmental compliances and social responsibility programs”, or your own lying eyes?
Don’t tell me that the way things are is the way things always must be. Don’t tell me that families toiling for generations under debt they’ll never relieve, braving wickedly hazardous conditions, and living in extreme poverty is just the natural cost of the global commodity market for sugar.
Do you know how much we love sugar? Have you been to America lately? Consuming sugar is the single greatest thing about this place.
Sugar producers: “you can’t possibly want any more sugar.” America: “hold my beer.”
Our willingness to buy sugar HAS NO THEORETICAL LIMIT. It is exponential growth without an asymptote. So if you can’t guarantee that we’ll admire the way you're running your sugar operation, we’ll just have to redirect our buying power to someone that will.
In this respect, Section 307—as it was transformed in 2016—is the greatest of all trade laws. Because there is finally a tool to channel the firehose of American consumption where we all want it to go.
America is desperate to consume the world’s goods, and the world is desperate to sell them to us. And for the first time in history, a major consumer economy has set down as a matter of law the bare minimum human and labor rights condition for such exchange.
No slave labor. No more stuff from genocidal labor camps. No more weak-sauce promises in trade agreements to “strive to enforce” local labor laws. No more 10-year state-to-state litigations over whether the killing of a union organizer is or is not a trade-affecting problem. And no weaseling around some technical definition of forced labor (“what? all my workers are free to leave whenever they want!”) with labor conditions that just plain appall us either.
What a difference a law makes.
I hope you can savor this moment, in this long read4 I’m publishing as my final FLT post of 2022.
There are aspects and dimensions of the enforcement of Section 307 that are a true victory. Truer than true. A legitimate feel-good moment when such moments in the context of governance (not to mention global trade) are hard to come by.
When it revised Section 307 in 2016, the U.S. rediscovered the long-forgotten delight of creating domestic trade legislation that achieves something that everyone5 can feel good about.
It’s good to have a real, small success under your belt, whenever there’s a lot of work to do. If we want a forced labor import ban to be successful—and there are a million reasons why, no matter what hat you wear, or where you sit, we should—it needs to be modernized.
The law doesn’t comport with the realities of modern global supply chains.
It doesn’t incentivize the behavior we want to incentivize (all of it anyways).
And for all its promise, this law far too vulnerable to be living on its own just yet.
Being guided by sovereignty and/or serendipity into the care and tending of a baby forced labor import ban was one of the hidden gifts of 2016. But erecting a modern version of the law capable of incentivizing the identification and eradication of forced labor won’t be achieved by accident.
I have big plans for FLT in 2023. I hope to continue to be a source of useful commentary on the state of Forced Labor trade enforcement. I’ll publish on the obscure developments that matter, and the big developments that purport to. I hope to conduct a few interviews, maybe publish a couple podcasts. But most of all, I hope to help illuminate what is needed.
Merry Christmas, Happy Hanukkah, Happy New Year, and Happy Holidays, however you celebrate.
54-45 in the Senate, 217-215 in the House
In 2005, expanded market access for Dominican sugar was controversial. Not because of labor conditions in Dominican sugarcane fields, but because of the perceived “threat” to U.S. sugarcane producers.
Why is it so hard to satisfy U.S. Customs? Because no matter how they rule, they’re always CROSS.
Thank you so much, I’ll be here all week!
ha ha, wise-guy, yes I know they’re all long reads
excepting Central Romana, I suppose.