A few days before Christmas, the Senate followed the House in bringing its legislative year to a swift but unsatisfying end. Although enough bipartisan goodwill was mustered to pass a massive National Defense Authorization Act for fiscal year 2024, lawmakers remain embroiled in bitter partisan squabbles that are paralyzing critical federal funding measures.
Yet only hours before heading back home for the holidays, Senators from both the mainstream and activist quarters of the parties came together to unanimously pass a novel measure — one that would provide U.S. industry with robust guidance from federal commercial risk experts aimed at improving their ability to identify, assess, and prevent human rights abuses which they could be involved in through their operations and transnational supply chains.
S. 484 – the Combating Human Rights Abuses Act – would require the U.S. Department of Commerce to offer guidance to companies in support of their human rights due diligence and risk management practices, with a particular focus on helping companies comply with the UFLPA and identify/mitigate risks of supply chain linkages to Uyghur forced labor abuses.
Although the measure extends to human rights due diligence in both U.S. and international business settings, its origination in the Senate Commerce Committee indicates a primary focus on U.S. companies whose products are manufactured or distributed through complex transnational supply chains involving regions with systemic human rights problems.
The bill would provide companies with new openings to work closely with federal regulators through the guidance process itself, exchange mutually beneficial information on related challenges, and cultivate a longer-term relationship with key agency officials who want American businesses to prosper in the international market.
While details regarding the congressional intent and scope of the proposed measure are still emerging, S. 484 would assumedly make official federal guidance available to both U.S.-based companies and internationally headquartered companies with major U.S. subsidiaries that are active, or considering investment, in countries where there is a high risk of human rights abuse.
Companies within the legislation’s jurisdiction would also be able to secure guidance from the Commerce Department in support of their existing or prospective commercial relationships with other supply chain partners operating in high-risk countries, and/or that are under the control of governments with a poor record of protecting rights. The measure states that this will especially apply to a U.S. company’s commercial relationships with supply chain partners that are operating in China, under the control of the Chinese Government, or have operations in China where there is high risk of forced labor from Uyghurs or other persecuted Chinese minority communities.
S. 484 first requires officials at Commerce who are already advising U.S. companies on other business practices to undergo training and knowledge-building courses that increase their awareness of human rights challenges, the attendant reputational and legal risks facing companies, and the human rights context in high-risk countries and regions – with forced labor in the Xinjiang region of China elsewhere in China once again the focus.
The bill would come at a critical point in human rights risk management, with the United States, Mexico, Canada, Australia, and the European Union imposing sweeping new measures to eliminate modern slavery in their commercial supply chain jurisdictions. Companies will see greater benefits in the long term from the risk mitigation mechanisms, regulatory predictability, and transnational consistency created by the U.S. Uyghur Forced Labor Prevention Act (UFLPA), the U.S.-Mexico-Canada Agreement, U.K. Modern Slavery Act Amendments, Canadian Modern Slavery Act, and the E.U. Council of Minister’s new proposal for a E.U. Forced Labor Prevention Law (which will now be reconciled with the E.U. Parliament’s original authorizing legislation against forced labor.
This comes at the same time that U.S-bound importers and the multinationals that supply them continue to call for clearer regulatory guidance from the U.S. Customs and Border Protection agency on how best to minimize forced labor and associated human rights risks as part of the manifold compliance burdens imposed by the landmark Uyghur Forced Labor Prevention Act (UFLPA).
Commerce will also be required to incorporate the human rights training into the agency’s existing training protocols and practices, suggesting that it will be more broadly disseminated within the agency.
While the bill may not be immediately consequential to some companies, it is hopefully a portent of a forthcoming expansion in much-needed federal guidance to companies regarding human rights risks and essential due diligence practices. A cross-agency expansion of the employee training and company guidance would also help regulators and the private sector alike better prevent forced labor in U.S. supply chains, and would aid enforcement and compliance efforts associated with UFLPA implementation.
As such, it would make the most sense if similar guidance was instituted by additional federal agencies sharing jurisdiction over enforcement of U.S. forced labor laws – namely the Labor Department, SEC, Treasury, and the State Department’s Bureau of Democracy, Human Rights, and Labor.
Presently, there doesn’t seem to be any notable opposition to the measure in the House, and its passage under unanimous consent in the Senate suggests it would fare well when taken up by the House next year.
