Operating an international supply chain already raises many legal concerns for U.S. companies under U.S. and international laws. And now, new regulatory developments are likely to increase the level of due diligence that U.S. companies need to conduct on their international product and worker supply chains.
The recent legal developments, which include the new Federal Acquisition Regulation (FAR) proposed rule “Ending Trafficking in Persons,” and the proposed Business Supply Chain Transparency on Trafficking and Slavery Act of 2014, come at a time of wide news coverage highlighting problems with outsourced production (such as, for example, Samsung ceasing business relations with a Chinese supplier due to child-labor concerns and last year’s factory collapse in Dhaka, Bangladesh). Despite these known problems, while an estimated two-thirds of the U.S. gross domestic product (GDP) comes from retail consumption, a tremendous amount of manufacturing is taking place abroad, largely in the Far East. In a time of increasing regulatory oversight and media coverage of the problems with outsourced production, companies in all industries are advised to reevaluate their compliance programs and policies to ensure that they are in line with the new regulations and best practices.
