Trade and Labor Compliance Service Sheet

Increased Enforcement Activity Spurs Need for Technology-Based Solutions

FTI Consulting's experience combatting trade barriers, ensuring compliance, and implementing tech-driven solutions allows us to help clients manage supply chain scrutiny.

Supply chain constraints, both expected and unexpected, continue to disrupt global trade and appear to be the new normal for the foreseeable future. As the world is slowly recovering from the pandemic and constraints in both materials and labor cause unprecedented supply chain challenges, recent government actions are also creating unexpected hurdles in the “last mile” such as unforeseen cargo detentions and compliance requirements.

The U.S., Australia, and Germany have all recently proposed or enacted regulations or legislation aimed at ensuring companies take affirmative steps to prevent and eliminate forced labor in both their direct and indirect supply chains. As supply chains have grown more complex with additional tiers, the risk of exposure to potential human rights issues has grown as well.

Importers subject to withhold release orders (“WROs”) often lack complete visibility into their full supply chain and regulators might not specify where their forced labor suspicions lie. This heightened risk is also driven, in part, by geopolitical tensions and global focus on environmental, social and governance (“ESG”) initiatives. A forced labor investigation may originate internally within the organization wanting to ensure a compliant supply chain, through non-governmental organization (“NGO”) reporting, or from a regulatory inquiry.

In the U.S., if Customs and Border Protection (“CBP”) receives information that “reasonably indicates” merchandise intended for importation contains any components that are the result of forced labor, the agency may detain the suspected merchandise at the port of entry under the authority of a WRO.