DHS Details Enforcement of Prohibition on Goods Made by North Koreans

The Department of Homeland Security released a set of frequently asked questions about the prohibition of products made by North Koreans under the Countering America’s Adversaries Through Sanctions Act (CAATSA). That law "reiterates the need for comprehensive due diligence by and on behalf of U.S. companies involved in importing goods," DHS said. Importers "have the responsibility to exercise reasonable care and provide CBP with such information as is necessary to enable CBP to determine if the merchandise may be released from CBP custody," it said.

The FAQs are focused on CAATSA's provisions that affect "the entry of merchandise produced by North Korean nationals or citizens," it said. As of January, CBP had stopped 15 shipments due to the possible use of North Korean laborers (see 1801120007). CBP updated its informed compliance publication on reasonable care last year to include some new questions on forced labor, but the agency has not given much detail on how to determine whether North Koreans are involved in a supply chain (see 1712120026).

Section 321(b) of CAATSA "creates a rebuttable presumption that significant goods, wares, merchandise, and articles mined, produced, or manufactured wholly or in part by North Korean nationals or North Korean citizens anywhere in the world are forced-labor goods prohibited from importation." To rebut that presumption, an importer must provide "clear and convincing evidence" that North Koreans were not involved in the mining, production or manufacture of the goods, DHS said. Importers that would like to import goods subject to the rebuttable presumption carry "the burden to overcome the presumption by providing sufficient information to meet the clear and convincing standard."

The department offers some due diligence best practices, though cautions that the suggestions "are merely examples of actions that may be taken to ensure due diligence as it is a flexible, risk-based process and not a specific formula for companies to follow" and "additional steps may be required." The best practices include a "high-level statement of policy" and "a rigorous continuous risk assessment of actual and potential human rights and labor impacts or risks of company activities and relationships, which is undertaken in consultation with stakeholders."

DHS also gave some examples for how importers can demonstrate reasonable care to CBP. "An importer may present any material that it chooses to, which may include comprehensive due diligence efforts that may have been undertaken, such as:

• Information demonstrating that your company engaged meaningfully with affected stakeholders, including workers and trade unions, as part of the due diligence process;
• Workforce composition at the location in question;
• Training materials on North Korean forced labor prohibitions that have been provided to suppliers and sub-contractors;
• Company policies, and evidence of implementation, on using North Korean laborers;
• Contracts with suppliers and sub-contractors that state your policy on North Korean forced labor;
• Publishing the full names of all authorized production units and processing facilities, the worksite addresses, the parent company of the business at the worksite, the types of products made, and the number of workers at each worksite;
• Information on how and to whom wages are paid at the location;
• Information demonstrating that recruitment agencies are within the scope of any third-party audit with your suppliers;
• Documents verifying the use of authorized recruitment agencies and brokers or that you use direct recruitment;
• Documents verifying that the fee structure presented by the recruitment agency is transparent and has been verified through worker interviews;
• If you have reimbursed any fees paid, verification of such reimbursement,
• Demonstrated commitment to human rights and labor due diligence at the highest levels of your company; and,
• Results of your human rights and labor impact assessments."

While Section 321(b) is limited to the involvement of North Koreans in mining, production or manufacturing, other roles may also pose a risk to U.S. companies, DHS said. For example, North Koreans may be able to handle goods headed to the U.S. at the docks without violating Section 321(b), other provisions of CAATSA or other laws could be violated, DHS said.

Violations of Section 321(b) may be eventually made public by CBP, DHS said. "If a detention leads to a penalty proceeding, after the proceeding is closed, CBP may disclose the identity of the violator, the section of the law violated, the amount of the penalty assessed, loss of revenue, mitigated amount, and amount of money paid in response to any properly submitted requests for such information under The Freedom of Information Act."