Do you own any clothing made in North Korea? (Answer: Don’t be so sure.)

The U.N. Security Council is reportedly considering a variety of new sanctions against North Korea over its latest missile test, and according to Reuters, a ban on textile exports is among the sanctions under consideration. For a few years, we’ve known that the export of textiles (or textile workers, who labor under sweatshop conditions for little or no pay) is increasingly lucrative for Pyongyang. I don’t need to explain that historically, textile work has lent itself to particularly exploitative labor arrangements.

As always with North Korea sanctions, enforcement is the rub. We can expect North Korean exporters to continue sewing “made in China” labels on their wares and sneaking them into foreign markets — including the United States — to defraud customs officials to get lower tariff rates, and to defraud consumers who would boycott North Korean products and the stores that sell them. In case you’re wondering, yes, we have a law against country-of-origin fraud, and yes, President Obama did sign an executive order prohibiting imports of goods made with North Korean goods, services, or technology (so that’s two felonies, in case you’re keeping count).

It’s entirely possible, of course, that retailers may be selling North Korean-made textiles without knowing it. This recent New York Times story, for example, claims that North Korean sweatshops sew “made in China” labels on their products. That’s consistent with other reports I’ve bookmarked over the years that Chinese exporters are conspiring to commit country-of-origin fraud. Way back in 2004, in the earliest days of this venerable blog, the Korea Times reported that JC Penney was importing and selling North Korean-made textiles in its stores. At the time, I wrote to JC Penney to inquire about the story. JC Penney wrote back promptly and strongly denied having ever imported or sold North Korean-made goods in its stores.

In other cases, manufacturers knowingly use North Korean labor while hoping we won’t find out about it. RipCurl Sportswear and Woolen Mills clothing both became objects of controversy recently for using North Korean labor. And of course, textiles were among the main products manufactured in the Kaesong Industrial Complex. Textile export sanctions would be yet another blow to Moon Jae-In’s plans to revive Kaesong.

As with other facets of the North Korea problem, there isn’t just one answer to this problem. Part of the answer lies in better due diligence by merchants about their supply chains. Next, suspend your sense of historical irony and learn a lesson from the American cotton industry, which has waged an effective anti-slavery campaign against cheap imports made with Uzbek cotton. The cotton industry collected evidence that this cotton is often harvested with forced labor, and then joined forces with human rights NGOs to mount an effective public and political pressure campaign. It also made good use of this regulation to petition Customs and Border Protection to exclude the imports from U.S. commerce.

Finally, when NGOs, industry groups, and investigators discover evidence of fraudulent or illegal North Korean exports within U.S. jurisdiction — either because the transactions were cleared through U.S. banks, because a U.S. person was involved in a transaction facilitating the exports, or because the wares entered U.S. commerce — the U.S. government has several tools it can use to prosecute offenders, and to freeze or forfeit their assets. These include the prohibition against country-of-origin customs fraud, Executive Order 13570 , the new discretionary textile export sanctions authority in section 104(b)(1)(E) of the NKSPEA (as amended here), and the new sanctions against users of North Korean forced labor, which blacklist not only the manufacturers that use North Korean labor, but also the governments that tolerate it.

2 Comments

  1. Off the topic, but what is your reaction to Mr.Victor Cha’s impending appointment? Looking forward to your insight in this regard. Thank you very kindly.




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  2. from my understanding of the uzbek-cotton-trafficking issue, it seems to be more of a rhetorical commitment. companies make public statements on refusing to source from there yet have no actual due diligence or policies on ensuring that their cotton is uzbek-traffick free (the same goes for tech companies and conflict minerals). uzbekistan also continues to export a large amount of cotton (with forced/child labor concerns)
    companies don’t really care unless they’re caught..the focus in retail/tech is more the tier 1 suppliers (i.e. factories), while tier 3 (raw material traceability, such as cotton) is not really a focus in terms of committing actual resources, such as conducting due diligence at the most basic levels. the most that they do is to ‘educate’ their suppliers to avoid irresponsibly sourced raw materials. perhaps most importantly, many consumers don’t seem to care

    as for the issue of north korea textile factories, illegal subcontracting is certainly a growing concern — possible material support provided to the nk regime. best practice in the retail industry is conduct periodic audits to detect unauthorized subcontracting, but if a purchase order comes in late, i’m willing to bet that many companies are willing to turn a blind eye to subcontracting..not to mention the less than reputable companies that don’t care one bit about responsible sourcing (e.g., ivanka trump apparel, donald trump apparel, some contracted chinese apparel suppliers who actually manufacture the products and subcontract, etc.)

    lastly, has any company ever faced serious legal repercussions for use of sweat shops? furthermore does the US government even have the resources to detect subcontracting to firms employing north korean forced labor?




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