OFF THE CUFF
OFF THE CUFF
Board Member Company Levi Strauss & Co. has an innovative way to make jeans greener. When you wanted worn, vintage-look jeans, you used to use pumice stones and about 15 different kinds of chemicals. This process took manufacturers 20-30 minutes by hand per pair of jeans. Today, however, Levi’s is utilizing digital image files and fabric-zapping lasers to whiskers, worn spots, crackle textures, and other features commonly found on trendy distressed jeans. Even better, Levi’s is doing this with fewer hazardous finishing chemicals, working towards its goal of eliminating discharge of hazardous chemicals by 2020, and an expansion of its water recycling program. This process is not only greener, but also significantly faster. How fast? Try 90 seconds! Click here to watch how the process works.
The legal premise of innocent until proven guilty gets turned on its head with the passage of the “Countering America’s Adversaries Through Sanctions Act” known as CAATSA. At a government meeting last week, representatives from the Departments of Homeland Security, State, Labor, and Treasury participated in a panel discussion of addressing North Korean forced labor in the supply chain.
A kickoff of the two hour meeting by Assistant Secretary (Homeland Security) Michael Dougherty and Deputy Assistant Secretary (State) Scott Busby set the stage for highlighting the seriousness of this enforcement focus that is starting to descend on the import community. The government officials were joined by Greg Scarlatolu, Executive Director, Committee for Human Rights in North Korea, and Bob Mitchell, Vice President, Responsible Business Alliance.
The panel focused specifically on CAATSA Section 321(B) which provides for sanctions on goods produced by North Korean forced labor. It was stressed that these sanctions are part of the Administration’s larger strategy regarding the denuclearization of North Korea.
The State Department indicated in the last call for information on forced North Korean labor from U.S. embassies around the world, 39 countries reported the use of such labor. In the latest call for information, the number of countries reporting the use of forced Korean labor has risen to 59. China exceeds the number of laborers followed by Russia, and various Southeast Asian nations along with those in Latin America. While North Korean forced labor has been used in the countries of the Middle East and Africa it appears that here it is part of a construction labor force.
Key industries where North Korean forced labor is used include textiles and footwear, mining, seafood, logging, and pharmaceuticals.
The panel stressed the need for comprehensive due diligence by and on behalf of U.S. companies involved in importing goods. Careful consideration of, and reasonable care with respect to, the different risks presented in your supply chain should always be taken into account when importing into the United States. Failure to do so will result in seizures, penalties, and possible criminal prosecution.
The presumed prohibition of merchandise mined, produced, or manufactured with North Korean nationals or citizens may be overcome by “clear and convincing evidence.” Clear and convincing evidence is a higher standard of proof than a preponderance of the evidence. Determining that the importer has met this standard will be under the authority of U.S Customs and Border Protection. Importers will have to show clear evidence that the goods were not produced with convict labor, forced labor, or indentured labor.
You are encouraged to read the newly published FAQ document which can be found posted on the Department of Homeland Security’s website. One area to note is section 8 of the document entitled: “What steps should my company take to ensure North Korean workers are not in our supply chain?” While many questions were raised regarding the due diligence aspect, the government was adamant that when it comes to due diligence there is no such thing as one size fits all. In addition, they stressed that use of prior disclosure may mitigate the penalty, but does not exonerate one from having committed a violation.
I highly recommend intense training on this issue and that someone in the corporate legal department and someone in the import compliance department join forces to ensure that strong corporate measures are in place to address this hot burner issue.
Please contact Vandegrift if you have received a CF28 on this issue or been contacted by directly by CBP regarding North Korea forced labor.
This article was reprinted with permission from Janet Labuda, Vice President of Global Compliance at Vandegrift.
Earlier this month, USFIA President Julia K. Hughes participated in the 6th China and Asia Textile Forum in Shanghai, alongside Chinese government agencies, industry associations, international textile and apparel enterprises, textile manufacturers, and leading apparel retailers, including several USFIA members. Organized by the China Chamber of Commerce for Import and Export of Textile and Apparel, the event focused on our rapidly changing industry.
On the opening day, USFIA’s presentation focused on the topic that everyone wanted to talk about—U.S. trade policy under the Trump Administration. In advance of the announcement of retaliatory tariffs under Section 301 of the Trade Act of 1974, Hughes warned the attendees that we are at the beginning of a difficult time for global traders. Sharing with the audience some of the key findings from last year’s USFIA Fashion Industry Benchmarking Study, she highlighted the impact of the U.S. government on the fashion industry, particularly reflecting the fact that the top business concern for companies was the protectionist trade policy agenda. This makes sense, when you consider that 8 out of 10 of the top sourcing destinations are located in Asia; in the last year, China has remained the top apparel supplier, with Vietnam a rising star at #2. As global uncertainty is on the rise, companies are rightly worried about the impact of anti-trade policy on their supply chains.
During the two-day Forum, other speakers shared their opinions on the new developments in the industry: new opportunities and challenges facing China’s textile industry, the digital supply chain, changes in China’s procurement market, and the new technology challenges and industrial upgrading of textile and apparel production. Han Bekke, President of the International Apparel Federation (IAF), opened the event with a reminder of the need for smarter, stronger, and more sustainable supply chains by way of international collaboration. Meanwhile, Jiachang Cao, China Chairman of Commerce of Import and Export of Textile and Apparel (CCCT), emphasized three significant factors in the progress of China’s apparel supply chain: the rise of smart apparel factories, China’s investment in neighboring apparel industries, and the increase in apparel imports in China, too, as the domestic market develops rapidly. (Stay tuned for USFIA’s 2018 Sourcing Report, being released next week, for some of the key statistics.)
Justin Huang, President of USFIA International Affiliate Taiwan Textile Federation (TTF) reiterated CAO’s points by emphasizing that the power of the Chinese textile and apparel industry stems from its people. In addition, Orient International (Holding) Co., Ltd President Yong Zhu, spoke about what it takes to build a global textile industry chain and how powerful globalization can truly be.
Kutluhan Samataci, Executive Vice President of Li & Fung, discussed how Li & Fung is creating the supply chain of the future to help customers navigate the digital supply economy. With a digital platform at the core, the company aims to reduce speed to market by 50%+. He covered China’s changing role in the world textile & apparel sourcing market with an emphasis on the importance of China as a textile supplier for apparel-exporting countries in Asia.
Edwin Keh, CEO of the Hong Kong Research Institute of Textile and Apparel, presented the digitalization of the textile and apparel supply chain. He made note of three supply chains: physical, financial, and data. It was noted that the physical is deflationary while the financial is free, and the data is the most valuable. Challenges arise with the role of regression and the role of expert systems as decision tools. Opportunities are presented with the use of data, the Cloud, real time information sharing, total information transparency and data analytics.
Global apparel brands and supply chain managers touched base on the development of global fashion industry and consumer insights, the best practices for international sourcing, the challenges today of hazardous chemicals control of apparel products, and what the future holds in terms of a green supply chain. Closing out, Sustainability Consortium Executive Secretary General Weidong Zhou highlighted the path to a bright future for the global textile and apparel industry and discussed the benefits of a green supply chain. Stanley Kee, Managing Director for APAC at The NPD Group, Inc., summed up the trends and prospects in the developing apparel market across Asia-Pacific region.
USFIA Member News for April 2018
In the News
During the U.S. Global Value Chain Coalition fly-in, USFIA joined with other apparel and retail associations in publishing an op-ed in Morning Consult, Growing American Jobs with the U.S. Global Value Chain. And, USFIA Vice President Samantha Sault was recently included in Washington Life Magazine’s Young and the Guest List, honoring the most influential Washingtonians under 40. For more press hits, visit our website.
In Case You Missed It…
April 4: USFIA and USFIA Associate Member Akin Gump hosted a webinar with an update on NAFTA.
April 5: USFIA and USFIA Customs Broker Partner GEODIS hosted a webinar, What’s New with Customs from ACE to Z.
April 9: USFIA participated in a congressional delegation to the U.S. Embassy in Bern, Switzerland, led by House Majority Whip Steve Scalise (R-LA). Overlooking the beautiful Bern skyline, we had one-on-one conversations with Rep. Scalise as well as Rep. Bradley Byrne (R-AL) and other members and staffers from Alabama, Florida, Indiana, Kansas, North Carolina, Ohio, South Carolina, and Texas about the importance of trade and supply chains.
April 10-12: USFIA and several of our member companies participated in the U.S. Global Value Chain Fly-In, led by the U.S. Global Value Chain Coalition. Over the three days, we met with dozens of Members of Congress and key staffers to discuss the importance of global value chains for American jobs and the economy. Special thanks to Anna Walker and Steve Berube from Levi Strauss & Co. who participated in a special roundtable session at the International Trade Commission.
April 11: During a reception at the World Trade Organization (WTO) in Geneva, USFIA had the opportunity to meet the new U.S. Ambassador to the WTO Dennis Shea, who had just arrived in Geneva the week prior. We were among some of the first industry representatives to personally welcome him to Geneva, and we look forward to talking with him more about the Trade Facilitation Agreement (TFA) and other global trade initiatives.
April 13: USFIA attended the CAATSA 321(b) stakeholder event covered by Janet Labuda. During a pre-meeting between Administration officials and private sector stakeholders, we emphasized the need for more publicly-available information and closer communication to achieve the goal of no North Korean labor (i.e. forced labor) in global supply chains. Read more about the meeting in the article above from Vandegrift.
April 24: USFIA participated in the second Smart Fabrics Summit hosted by the U.S. government, which focused on the future for textiles and new research. Secretary of Commerce Wilbur Ross spoke about the Commerce Department’s commitment to leading the way for new technology, and shared some insights based on his experience owning textile companies.
Calendar of Events
May 3 (Online): USFIA and SuperDry International will host a webinar on best practices in protecting your products across the ocean.
May 10 (Arlington, VA): USFIA Sustainability Partner BSI and C4ADS will hold event, Identifying and Mitigating the Risk of Forced Labor & Exploitation of North Korean Nationals in Your Supply Chain.
May 16 (Online): USFIA Associate Member Kelley Drye & Warren will host a free webinar, Fashion and Retail Customs & Trade Roundtable.
May 31 (London): BSI and C4ADS will hold event, Identifying and Mitigating the Risk of Forced Labor & Exploitation of North Korean Nationals in Your Supply Chain.
June 26-28 (Brussels): The Better Cotton Initiative (BCI) will host the Global Cotton Conference.
November 7 (New York, NY): SAVE THE DATE for USFIA’s annual conference—and stay tuned for an exciting announcement about the event!
November 8 (New York, NY): The USFIA Board of Directors will meet.
During the American Association of Port Authorities (AAPA) semi-annual conference in Washington, D.C., maritime industry stakeholders came together to talk about the impact of trade policy on ports, particularly Western Hemisphere supply chains.
From March 20-21, 2018, stakeholders participated in general sessions and committee and board meetings to discuss current trends in the maritime industry relevant to Western Hemisphere ports and policy issues within the United States. With fashion products moving through just about every port, there was a lot of conversation about trade. USFIA President Julia K. Hughes spoke about global value chains, and the importance of jobs made possible by global trade.
Bruce Stokes, Director of Global Economic Attitudes, was a featured speaker and his presentation showcases how Americans see trade. In just one lifetime, the U.S. perception on trade has changed dramatically. His data shows that younger generations support trade more than older generations. Americans as a whole are divided when it comes to determining the value of trade on the global economy: 49 percent see it as a bad thing and believe it reduces wages and jobs in the United States, but 44 percent believe it to be a good thing for providing the U.S. market opportunities for growth.
Several USFIA Associate Members were on the roster, including Port Everglades, Port Authority of New York and New Jersey, and Port of Long Beach. Dr. Noel Hacegaba, PPM, Chief Commercial Officer & Managing Director of Commercial Operations at Port of Long Beach, facilitated a discussion on the future of the workforce.