Those studying today's compliance trends and “hot topics” will surely have noticed that 2012's U.S. efforts to fight human trafficking and other forms of forced labor around the globe have gained an exceptionally powerful new ally, namely, the U.S. business community. Whether this ally voluntarily joined the fight or was conscripted is a debate for another time. What is beyond doubt, however, is that U.S. lawmakers and their enforcers are ramping up their efforts to compel the business community's compliance with new anti-trafficking laws, including the Sept. 25 Executive Order Against Trafficking in Government Contracting and 2012's California Transparency in Supply Chains Act (as well as its pending federal analog, H.R. 2759). And other nations are, once again, watching with great interest—for those fond of historical antecedents, the world's response to ramped up U.S. Foreign Corrupt Practices Act enforcement after 2005 comes to mind.

It is against this rapidly-shifting anti-trafficking backdrop that the potential impact of a pair of powerful, little-known (and almost never associated) statutes—18 U.S.C. § 545 (prohibiting certain categories of smuggling) and 19 U.S.C. § 1307 (prohibiting importation of products made by or through forced labor) —lurks quietly.

 

Section 545- The anti-smuggling provision

To understand the prosecutorial potential these two provisions pack, let's first consider the anti-smuggling statute. The second paragraph of 18 U.S.C. § 545 creates liability for anyone who “knowingly imports or brings into the United States, any merchandise contrary to law, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise after importation, knowing the same to have been imported or brought into the United States contrary to law.” (Emphasis added). “Knowing,” moreover, encompasses “conscious disregard.”

Making § 545 even more prosecution-friendly is its rather exceptional burden-shifting provision:

“Proof of a defendant's possession of such goods, unless explained to the satisfaction of the jury, shall be deemed evidence sufficient to authorize conviction for violation of this section.”

Thus, if a person or company is found in mere possession of the smuggled products, there automatically is a rebuttable presumption of guilty knowledge (and it, then, is up to the accused to convince the jury that he/she/it did not, in fact, know the products to be contrary to law). Even the most experienced federal prosecutor will likely concede that this little-known provision comes as an unexpected though, no doubt, a welcome surprise.

Section 1307—Proscribing import of products made with forced labor

Despite § 545's pro-prosecution aspects, it is only through an even less-known statute that the section's full anti-forced-labor potential is brought into sharp focus. After all, what does “import…contrary to law” have to do with human trafficking and forced labor?

The statute animating § 545 is 19 U.S.C. § 1307. Section 1307 provides that it is illegal to import merchandise “manufactured wholly or in part in any foreign country by…forced labor.” A violation of § 1307's prohibition, in turn, is criminally punishable by two years' imprisonment pursuant to 18 U.S.C. § 1761.

 

A new theory of prosecution emerges?

The government's potential theory of prosecution, once at best a blur, has now come into focus.   Merchandise made with forced labor (that is, in violation of § 1307) is imported into the U.S. “contrary to law” (in violation of § 545). Despite the elegance of these potential charges, to date this section 545 and 1307 combination has, for whatever reason, gone unrecognized among prosecution and advocacy group circles; as far as we can tell, it indeed has never been charged.

What makes this apparent disregard even more surprising is the stiff statutory maximum penalties § 545 provides. Far from threatening a slap on the wrist, violations of § 545 may carry penalties of up to 20 years' imprisonment, a fine of $250,000 (or twice the gross gain or loss) and forfeiture of the value of the imported products.

Suffice it to say that the section's burden-shifting provision and high statutory penalty caps provide prosecutors with an exceptionally sizeable stick to wield against those who attempt to bring products made by forced labor into the U.S.

At the risk of appearing to be an imprudent angler giving away his favorite fishing hole, once federal prosecutors come to appreciate the tandem power of statutory provisions so close at hand, we can almost certainly expect multi-count indictments alleging free-standing violations of § 1307, together with violations of § 545 (premised on § 1307 liability). From the perspective of the anti-trafficking advocacy community, such creative prosecutions will be celebrated; to the business community handling average annual imports of around $2 trillion (most of these coming from high-risk developing countries), these prosecutions will surely further shift compliance with U.S. and foreign forced labor laws from a “should do” option to a “must do” requirement. 

Those studying today's compliance trends and “hot topics” will surely have noticed that 2012's U.S. efforts to fight human trafficking and other forms of forced labor around the globe have gained an exceptionally powerful new ally, namely, the U.S. business community. Whether this ally voluntarily joined the fight or was conscripted is a debate for another time. What is beyond doubt, however, is that U.S. lawmakers and their enforcers are ramping up their efforts to compel the business community's compliance with new anti-trafficking laws, including the Sept. 25 Executive Order Against Trafficking in Government Contracting and 2012's California Transparency in Supply Chains Act (as well as its pending federal analog, H.R. 2759). And other nations are, once again, watching with great interest—for those fond of historical antecedents, the world's response to ramped up U.S. Foreign Corrupt Practices Act enforcement after 2005 comes to mind.

It is against this rapidly-shifting anti-trafficking backdrop that the potential impact of a pair of powerful, little-known (and almost never associated) statutes—18 U.S.C. § 545 (prohibiting certain categories of smuggling) and 19 U.S.C. § 1307 (prohibiting importation of products made by or through forced labor) —lurks quietly.

 

Section 545- The anti-smuggling provision

To understand the prosecutorial potential these two provisions pack, let's first consider the anti-smuggling statute. The second paragraph of 18 U.S.C. § 545 creates liability for anyone who “knowingly imports or brings into the United States, any merchandise contrary to law, or receives, conceals, buys, sells, or in any manner facilitates the transportation, concealment, or sale of such merchandise after importation, knowing the same to have been imported or brought into the United States contrary to law.” (Emphasis added). “Knowing,” moreover, encompasses “conscious disregard.”

Making § 545 even more prosecution-friendly is its rather exceptional burden-shifting provision:

“Proof of a defendant's possession of such goods, unless explained to the satisfaction of the jury, shall be deemed evidence sufficient to authorize conviction for violation of this section.”

Thus, if a person or company is found in mere possession of the smuggled products, there automatically is a rebuttable presumption of guilty knowledge (and it, then, is up to the accused to convince the jury that he/she/it did not, in fact, know the products to be contrary to law). Even the most experienced federal prosecutor will likely concede that this little-known provision comes as an unexpected though, no doubt, a welcome surprise.

Section 1307—Proscribing import of products made with forced labor

Despite § 545's pro-prosecution aspects, it is only through an even less-known statute that the section's full anti-forced-labor potential is brought into sharp focus. After all, what does “import…contrary to law” have to do with human trafficking and forced labor?

The statute animating § 545 is 19 U.S.C. § 1307. Section 1307 provides that it is illegal to import merchandise “manufactured wholly or in part in any foreign country by…forced labor.” A violation of § 1307's prohibition, in turn, is criminally punishable by two years' imprisonment pursuant to 18 U.S.C. § 1761.

 

A new theory of prosecution emerges?

The government's potential theory of prosecution, once at best a blur, has now come into focus.   Merchandise made with forced labor (that is, in violation of § 1307) is imported into the U.S. “contrary to law” (in violation of § 545). Despite the elegance of these potential charges, to date this section 545 and 1307 combination has, for whatever reason, gone unrecognized among prosecution and advocacy group circles; as far as we can tell, it indeed has never been charged.

What makes this apparent disregard even more surprising is the stiff statutory maximum penalties § 545 provides. Far from threatening a slap on the wrist, violations of § 545 may carry penalties of up to 20 years' imprisonment, a fine of $250,000 (or twice the gross gain or loss) and forfeiture of the value of the imported products.

Suffice it to say that the section's burden-shifting provision and high statutory penalty caps provide prosecutors with an exceptionally sizeable stick to wield against those who attempt to bring products made by forced labor into the U.S.

At the risk of appearing to be an imprudent angler giving away his favorite fishing hole, once federal prosecutors come to appreciate the tandem power of statutory provisions so close at hand, we can almost certainly expect multi-count indictments alleging free-standing violations of § 1307, together with violations of § 545 (premised on § 1307 liability). From the perspective of the anti-trafficking advocacy community, such creative prosecutions will be celebrated; to the business community handling average annual imports of around $2 trillion (most of these coming from high-risk developing countries), these prosecutions will surely further shift compliance with U.S. and foreign forced labor laws from a “should do” option to a “must do” requirement.