1. Few would think that the United States would permit the import of goods made by forced, prison, or indentured labor. Yet for decades, since the 1930s, this has been permitted by American law in cases where there was sufficient "consumptive demand" in the United States and if these goods were in short supply. The U.S. Department of Labor (Bureau of International Labor Affairs) is required by law to monitor, combat, and maintain a list of products made by forced labor, and some of this information is available in an online searchable database. Examples are indentured children locked in garment factories in South America, children sold into bonded labor to produce dried fish products in the Pacific Rim, children confined and forced to mine for gold in Africa, children making toys after being put into "work study" programs by corrupt teachers in Asia. Some reports are of military personnel and civilian convicts used to produce unfairly low-priced products for export. It was not until the passage of the Trade Enforcement and Facilitation Act of 2015 that the "consumptive demand" exception was removed and the United States began greater policing and enforcement of the law.
a. Under what ethical theory do you think the United States could have justified the "consumptive demand" exception in its trade laws? Do you feel this was appropriate?
b. Your firm designs and sells branded clothing and apparel worldwide. It relies on contract manufacturing by suppliers for cutting, sewing, and assembling finished goods through an established supply chain.
You are asked by your firm's CEO to prepare a corporate ethics statement on procurement of goods or materials produced by forced, prison, or indentured labor. What would you include in that statement? You may consult Chapter 19 and outside sources for additional information.
c. There are several nongovernmental and inter-governmental organizations devoted to fair labor issues. Which ones do you think would be good sources of information?
d. What ideas do you have to assure that abuses are not happening upstream in your supply chain with foreign suppliers?
e. What are the U.S. government's enforcement powers under the 2015 statute, and what powers do law enforcement agencies have to stop these imports?
2. Your firm is a paper converter. It converts paperboard into various articles for use in homes and restaurants for food preparation, sale, and storage. Its products are pizza boxes, ice cream boxes, bakery and deli boxes, and paper plates as well as boxes and trays for use in fast-food operations. You purchase paperboard from both domestic and foreign sources. Recently, a Chinese supplier has begun offering paperboard at extremely low prices-far lower than what you have been paying domestically. One of your colleagues at your firm calls the offer "too good to be true." You have always had reliable sources of supply, but the offer is very tempting. Why might the foreign exporter be cutting prices to U.S. customers? What information do you think you need before committing to a purchase? Specifically, what pricing information do you need? If it turns out that the products are being "dumped" in the U.S. market, what would be the result and how might it affect your firm and your purchasing decision? Do you think it is fair or unfair for an exporter to dump its goods in a foreign market? Evaluate the statement, "Selling at a low price can't be unfair."