Ten Years After the End of the Consumptive Demand Loophole: From Enforcement to Effective Prevention
In February 2016, Congress closed an over eighty-five year old gap in U.S. trade law by eliminating the “consumptive demand” loophole from Section 307 of the Tariff Act of 1930. With that amendment, imports made wholly or in part with forced labor were prohibited regardless of whether domestic production could meet U.S. demand. The change was technical in form, but transformative in impact.
Ten years later, forced labor enforcement has shifted from a rarely used authority into one of the most consequential trade enforcement tools affecting global supply chains. The next decade will require a similar evolution, not in law, but in practice, toward credible remediation and worker-informed prevention.
A Decade of Progress: From Dormancy to Deterrence
Before 2016, Section 307 enforcement was effectively dormant. The consumptive demand exception allowed goods produced with forced labor to enter the U.S. market if domestic production could not meet demand, creating a near-insurmountable barrier to enforcement. Its removal unlocked the statute’s original intent: to prevent unfair competition and human rights abuses by barring forced-labor-tainted goods from the U.S. market.
Since then, enforcement has accelerated markedly. U.S. Customs and Border Protection (CBP) has issued nearly 40 WROs and findings spanning sectors such as apparel, agriculture, seafood, electronics, and critical minerals. These actions have reshaped sourcing decisions, elevated supply chain risk to the board level, and exposed companies to shipment delays, contract disruption, and reputational scrutiny for both the producers and the brands that source from them.
Equally important, the evidentiary bar has become clearer. Over time, CBP has articulated how it assesses indicators of forced labor, evaluates supply chain traceability, and determines whether a company has sufficiently addressed the conditions that gave rise to enforcement. This increasing transparency has given companies a better understanding of what is required both to secure release of detained goods and to reduce the likelihood of enforcement actions.
Yet enforcement alone is not prevention. And exclusion from the U.S. market, while a powerful deterrent, does not by itself improve conditions for workers on the ground.
The Emerging Shift: Remediation as a Core Expectation
One of the most significant developments in recent years is CBP’s increasing emphasis on remediation, not merely compliance documentation. Guidance from CBP’s Forced Labor Division outlining how the agency evaluates modification requests signals that companies will be assessed on whether they have meaningfully addressed root causes, not merely whether they can produce paperwork.
Credible remediation is forward-looking. It requires demonstrating that forced labor indicators have been eliminated, worker harms have been remedied, and that systems are in place to prevent recurrence. This includes actions such as repayment of recruitment fees, contract regularization, wage remediation, and changes to recruitment and labor management practices.
A more comprehensive remediation framework from CBP expected later this year will likely further clarify expectations and raise the bar for companies seeking modification of enforcement actions or aiming to demonstrate reduced risk exposure.
This evolution matters. It signals that companies will increasingly be evaluated not only on supply chain visibility, but on whether they can show measurable improvements in working conditions.
Looking Ahead: Worker-Informed Due Diligence as Compliance
As forced labor enforcement matures, prevention will become the primary differentiator between reactive and resilient companies. Companies that treat Section 307 exposure solely as a legal or customs issue will remain vulnerable to disruption. Those that build worker-informed systems will be better positioned to identify risks early and prevent violations.
Several core elements are likely to define effective prevention in the coming years.
- Worker engagement beyond audits. Traditional social audits often miss coercive recruitment practices or debt-related indicators. Ongoing, confidential worker engagement, supported by trusted channels and local expertise, provides earlier and more reliable insight into conditions on the ground.
- Recruitment Reform as a Central Pillar
Recruitment remains one of the most significant forced labor risk drivers. Companies will increasingly be expected to monitor labor brokers, ensure no-fee recruitment, and verify that employment terms are transparent and understood. - Continuous Risk Monitoring
Supply chains shift constantly. Leading companies are moving from static mapping exercises to dynamic risk assessment that incorporates worker feedback, sourcing changes, geopolitical developments, and enforcement trends. - Credible Remediation Pathways
Even strong systems encounter issues. Companies that respond quickly with defined processes, trained teams, and worker-informed corrective actions will be better positioned to resolve problems before they escalate into enforcement matters.
The Next Decade
Ten years after the consumptive demand loophole closed, Section 307 enforcement has proven its ability, not only to block goods, but to change corporate behavior. The next phase will be defined by whether companies can translate that pressure into lasting improvements for workers.
The signal from regulators is increasingly consistent: traceability alone is not enough. Policies alone are not enough. Companies must be able to demonstrate that risks are identified early, workers can safely report concerns, and problems are addressed before goods reach the border.
Companies that act now to build worker-informed due diligence and remediation systems will gain a strategic advantage: lower enforcement risk, fewer shipment disruptions, stronger supplier performance, and greater credibility with regulators, investors, and customers.