On July 15, 2020, US Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) for rubber gloves produced by two subsidiaries of Top Glove, the world’s largest rubber glove company. CBP issued the WRO based on reasonable belief that the subsidiaries were using forced labor, in this case debt bondage, to produce rubber gloves. In issuing this WRO, CBP blocked all imports of these rubber gloves into the US, closing the companies’ access to the US market.
The WRO came during a year in which CBP has increased its use of Section 307 of the Tariff Act and has issued twelve WROs in the past twelve months, including a separate WRO against another Malaysian glove company. (In the previous twelve months, CBP had issued only one WRO.) The speed with which Top Glove and its subsidiaries attempted to remediate the harm the workers suffered was surprising. In early August 2020, Top Glove agreed to refund foreign workers who had paid recruitment fees to agents. The fact that Top Glove has been so responsive to the WRO and has taken such large steps so quickly is a sign of Section 307’s power and demonstrates one way in which it can be leveraged to protect workers.
This post first provides an overview of Section 307 and then discusses the Top Glove case in more detail. It looks at the WRO as an example of how Section 307 can be used in a rights-respecting manner, even though the law was designed to protect American businesses, not forced laborers abroad. It ends by focusing on some of the issues related to using 307 petitions as a human rights tool, including how blunt a tool a WRO is, the ethics of working with CBP, and the fact that CBP has the decision-making power.
Section 307 of the Tariff Act
Section 307 is a part of the Tariff Act of 1930. It provides that “[a]ll goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in any foreign country by convict labor or/and forced labor … shall not be entitled to entry at any of the ports of the United States, and the importation thereof is hereby prohibited…” This means that CBP can prohibit any good that has been manufactured even in part by forced or prison labor from entering the US.
The ability to use Section 307 as a human rights tool is relatively new. In 2016, Congress passed the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA), closing the “consumptive demand loophole.” This loophole had provided that Section 307 did not apply to goods that were not “mined, produced, or manufactured in such quantities in the United States as to meet the consumptive demands of the United States.” This meant that CBP could not issue a WRO against any good if the US did not itself produce enough of that single good for consumer demand -- an exception that swallowed the rule. Because the US imports so many of its consumer goods, there was almost always a need for foreign goods and WROs were rarely issued. More recently, CBP has become more active, issuing nineteen WROs since the loophole was closed.
Top Glove’s Remediation
On July 15, CBP issued a WRO and blocked the importation of all rubber gloves produced by two of Top Glove’s subsidiaries, Top Glove Sdn Bhd and TG Medical Sdn Bhd -- despite the massive demand for rubber gloves during Covid-19. While a WRO, or detention order, blocks the goods at the border, companies can re-export the products and sell them in other markets. Initially, at least publicly, Top Glove seemed unconcerned that it could not import rubber gloves from its two subsidiaries into the US. However, by early August, just two weeks after the WRO had been issued, Top Glove started to state publicly that it would remediate recruitment fees – as much as $12.65 million (53 million ringgit) to be paid to 10,000 workers -- and would improve workers’ accommodations. (The amount actually owed to workers could be higher. Andy Hall, a migrant workers’ rights advocate, estimates that Top Glove owes its workers closer to $100 million.)
While we don’t know for sure why Top Glove changed its mind, it’s possible that the change was related to the large number of sales the company was going to lose. According to Top Glove, shipments from the two subsidiaries constituted 12.5% of its group sales and half of its US sales. Top Glove’s shift in its response could be indicative of the power that CBP – and to some extent civil society – can leverage by using Section 307 to block or threaten the possibility of being blocked from the US market.
In many ways, Top Glove’s interactions with CBP and the resulting remediation (paying workers back for recruitment fees) is a tangible example of how Section 307 can be leveraged as a rights-promoting tool, and not just a tool for protectionism. By blocking access to the US market, CBP put pressure on companies to make real changes in their supply chains. CBP appears to have worked with Top Glove to explain what steps Top Glove needed to take to remediate workers and to create a plan for if and when the WRO can be lifted. The remediation that CBP has required Top Glove to take is worker-focused. It is both meant to ensure that workers who paid recruitment fees are actually given their money back, and it sends a strong signal to other companies that tolerate recruitment fees to change their practices.
Are we using the master’s tools to dismantle the master’s house?
Although the WRO issued against Top Glove’s subsidiaries demonstrates that Section 307 can be used as a rights-promoting tool, there are clear tensions for civil society organizations that try to leverage the Tariff Act. First, a WRO is a blunt tool that simply stops the goods at the border. Although CBP can use WROs in a way that is worker-focused, it has no obligation to do so. This means that a WRO, if issued without accompanying efforts that push companies to make changes that benefit their workers, can have devastating consequences for workers and local economies. For instance, instead of dealing with the underlying forced labor issues, companies may shut down and lay off their workers, leaving workers in a worse situation -- in some cases stranded in foreign countries with no work and no way to pay off debts or return home. Depending on the breadth of the WRO, it can also lead to real economic consequences for local economies, especially in the case of a country-wide WRO. These unintended consequences mean that, if not applied carefully, there can be a big risk inherent in using a protectionist statute that is meant to protect US companies, not workers.
Second, at CAL, we are under no illusions about CBP: it is the same agency that terrorizes families on the border. It is a part of the Department of Homeland Security, the agency responsible for detaining children in cages and violating international and US law. While we work only with the forced labor division within CBP on these issues, we are aware that there are risks of working with the agency at all. We may eventually, in the course of our dealings, determine that the lack of trust between CBP and civil society is fatal to leveraging 307 petitions effectively under some or any circumstances.
Third, the fact that the remedy under Section 307 is under CBP’s sole control means that at most civil society may be able to influence the outcome, but not make the final decision. We can and do have dialogue with the forced labor division, but CBP holds all the decision-making power. This means that CBP chooses if and when to issue a WRO and if and when to leverage its power to push companies to remediate workers and fix working conditions. It also decides what efforts constitute adequate remediation by companies and when to lift a WRO.
Lastly, although CBP has increased its enforcement actions over the past year, there have been only twelve WROs over the past twelve months. (Thus far, CBP has issued six WROs in 2020. It issued seven WROs in 2019 but only two in 2018.) While the threat of these actions can have an impact and each enforcement action sends a message to companies, CBP needs to issue a greater number of WROs on a regular basis -- and include remediation requirements as in the Top Glove case -- in order to make it a more powerful tool.
*The blog post’s title is a reference to Audre Lorde’s essay, “The Master’s Tools Will Never Dismantle the Master’s House.”
Allie Brudney is a Justice Catalyst Legal Fellow at CAL.
