CF 28s Related to North Korean Labor
Any importer who receives a CF 28 (Request for Information) from U.S. Customs, referencing North Korean forced labor should be interested in the contents below.
U.S. Customs has been particularly interested in goods imported from regions closely bordering North Korea, such as: (A) Northeastern China (Liaoning and Jilin provinces), and/or (B) areas near the border of North Korea and Russia (such as the Vladivostok area).
In August 2017, Congress passed a new law, entitled the "Countering America’s Adversaries Through Sanctions Act", also known as the CAATSA, this piece of legislation requires that U.S. Customs and Border Protection ("CBP") undertake new efforts to enforce sanctions against the North Korea, a regime that is known to employ forced labor as an economic lever.
Specifically, the CAATSA requires that importers establish by "clear and convincing evidence" that their supply chains are free from involvement by North Korean nationals, wherever located. That means that Customs will be sensitive to exploring possibility that North Korean labor might have be employed in labor camps in northeaster China, and/or in Russia.
To undertake such reviews, U.S. Customs has already begun issuing CF 28 requests for importers to detail their efforts. This essentially requires importers to document the full extent of their supply chains, so that it can be established whether such supply inputs included North Korea labor. in this regard, U.S. Customs has been particularly interested in goods imported from regions closely bordering North Korea, such as: (A) Northeastern China (Liaoning and Jilin provinces), and/or (B) areas near the border of North Korea and Russia (such as the Vladivostok area).
In the absence of such documentation, if CBP comes to suspect that certain goods contain North Korean labor or inputs, then Section 302A of CAATSA allows CBP to take action to prohibit the entry of such goods. In this regard, CBP would then detain, seize and forfeit individual shipments, similarly refuse admission of future shipments. It is also possible that re-delivery orders could be issued, and/or for civil penalties could be assessed.
The precise documents necessary to satisfy the new CAATSA standard will obviously vary from case to case, and may include any number of documents created by a business in the normal course of activities. Documentation of, and photographs during, factory visits and inspections play an obvious role in due diligence for all importers; however, the CAATSA appears to require even more efforts from the importer. Certifications from suppliers may be a helpful part of the due diligence efforts.
Importers of goods from such areas closely bordering North Korea should be particularly diligent and may wish to undertake regular due diligence activities that may include more extensive record reviews. For example, Customs has long looked to commercial invoices, purchase orders and evidence of payments in establishing transactions between parties, and has used foreign supplier production records, employee lists, time sheets, wage records, bills of materials, inventory records, utilities records and other types of documentation to establish the fact of production in a given factory.
Customs Guidance on the CAATSA: https://www.cbp.gov/newsroom/national-media-release/cbp-combats-modern-day-slavery-passage-countering-america-s
Updated: Reasonable Care Checklist: https://www.cbp.gov/sites/default/files/assets/documents/2017-Oct/Reasonable%20Care%20FINAL.pdf