UK law change on import of goods made under modern slavery

Did the UK government outlaw imports linked to forced labour abuse?

On 12 January 2020 the UK Foreign Minister Dominic Raab said of the Uyghur region of west China that:

Xinjiang’s position in the international supply chain network means that there is a real risk of businesses and public bodies around the world – whether it’s inadvertently or otherwise – sourcing from suppliers which are complicit in the use of forced labour“,…

And that “we must take action, to make sure that UK businesses are not part of the supply chains that lead to the gates of the internment camps in Xinjiang. 

And to make sure that the products of the human rights violations that take place in those camps don’t end up on the shelves of supermarkets that we shop in here at home.” 

I was interviewed on the BBC World Service on 12 Jan 2020 to comment on the UK government’s announcements (at 18mins here).

So has the UK government now taken action to ensure goods made by Uyghur people in forced labour in China doesn’t end up in the UK? 

It appears that the announced amendments may not stretch that far, nor even as far as existing and increasingly enforced USA law (the Tariff Act-TEFTA) against imports made by forced labour, enforced by USA customs late 2020 with a US$575,000 fine against a company importing Stevia.

We can agree that “with the introduction of the Modern Slavery Act, the United Kingdom was the first country to require companies by law to report on how they are tackling forced labour in their supply chains” (although the law built on a California law).

The Modern Slavery Act improvements though (mentioned today, but announced October 2020), whilst enforcing both that companies must comply with their transparency obligations (or risk fines), and clarifies what they must report on, will not make it illegal to have forced labour in a company’s supply chain.

By contrast, existing French law for business human rights due diligence (including for supply chain labour standards), and similar German, Swiss, and EU law under draft, creates potential liability on businesses which have not taken sufficient due diligence steps to assess where risk might be, investigate, and remediate it (applying buyer influence) when found.

The UK government will only “encourage” due diligence, and regarding Uyghur forced labour in export factories across China, will apparently only engage UK businesses which deal with the Xinjiang Uyghur region (despite forced labour of Uyghurs reported across China).

The new announcements are therefore not likely to help much with the government’s “aim, put simply, … that no company that profits from forced labour in Xinjiang can do business in the UK, and no UK business is involved in their supply chains”. As announced so far, they would do little to incentivise more businesses to take the action that leaders with better Ethical Trade programmes do (such as M&S, ASOS, NEXT, etc), to root out modern slavery and exploitation, including in UK supply chains, such as in Leicester garment factories supplying the online fashion player Boohoo (the retailer was had not, despite available guidance, investigated nor influenced to stop exploitation and faces no legal consequences).

Guidance is not enforcement

As for the “new, robust and detailed guidance to UK businesses on the specific risks faced by companies with links to Xinjiang and underlining the challenges of conducting effective due diligence there” issued by the FCDO and DIT, this provides very little advice to companies on how to ensure no Uyghur forced labour in their China supply chains. In my work I’ve investigated and advised in far more detail for many years, and (enforced) USA law guidance which we train companies on is far more practical and detailed. As stated above, new UK law changes still in no way make it illegal for companies to have modern slavery in their supply chains, or illegal to even have done insufficient due diligence. 

Training on business human rights due diligence

The Foreign Minister described a “campaign of business engagement” to “reinforce the need for UK businesses to take concerted action to address that particular and specific risk”. This is welcomed, but as this is not enforced in law, we are likely to see the same leaders taking leadership action, whilst laggards are not incentivised to improve from their little to no action. Companies such as Nestle, Adidas and Adidas have publicly called for business human rights due diligence legislation to “level the playing field“.

One good change announced is that “any company profiting from forced labour will be barred from government procurement in this country” although UK NHS and other public bodies have strived for some time to monitor for supplier labour standards, in some bodies with diligent effort. Whilst their processes can certainly be improved, with their budgets never more stretched, supermarket and other businesses are in a far better position to do the actual due diligence to assess which suppliers do profit from forced labour and bar them if they do not remediate it. Yet the law change will bar public rather than private procurement from companies profiting from forced labour.

In summary, whilst any improvement in laws clarifying how laggard businesses should catch up with leaders in rooting out modern slavery and exploitation in supply chains is good news, the new UK legal changes announced today do not yet reach the level of USA law which already makes it illegal for companies to import goods made by forced labour in their supply chains, nor existing and emerging European laws for business human rights due diligence (built on the UN Guiding Principles on business and human rights) which hold (and for pending law aim to hold) companies responsible to investigate, assess, influence and root out such exploitation.

References:

UK Foreign Minister Dominic Raab’s statement on the situation in Xinjiang and the government’s response:

https://www.gov.uk/government/speeches/foreign-secretary-on-the-situation-in-xinjiang-and-the-governments-response

USA customs fines a company US$575,000 for importing goods made with forced labor

https://www.cbp.gov/newsroom/national-media-release/cbp-collects-575000-pure-circle-usa-stevia-imports-made-forced-labor

UK Government Guidance issued to business on specific risks faced by companies with links to Xinjiang and underlining the challenges of conducting effective due diligence there, etc, at 6.1 here: 

https://www.gov.uk/government/publications/overseas-business-risk-china/overseas-business-risk-china 

The UK Modern Slavery Act 2015:

https://www.legislation.gov.uk/ukpga/2015/30/contents/enacted

The UK Modern Slavery Act Guidance:

https://www.gov.uk/government/publications/transparency-in-supply-chains-a-practical-guide

This article was written by Kate Larsen, Founding Director of SupplyESChange Training and Advisory.

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