Today, everybody, thank you so much for joining us today. I'm Josh Schrager. I'm a Senior Vice President on Kharon. On behalf of Kharon and our good friends and partners at Descartes, who you will be hearing from shortly, thank you for joining us today. The truly global nature of understanding, managing, and complying with emerging forced labor regulations around the world really became crystal clear to me just a few minutes before dialing in today. I was glancing through our final registration list, over 800 people from 50 countries on all six inhabited continents and across more industries than I can count. The reality set in to me, looking at these numbers, looking at where everyone was located, that managing forced labor and supply chains is something that every business and organization around the world is now concerned with. To discuss a complex global problem, we have assembled a panel of top global experts, and today we're fortunate to be joined by Carolyn Krampitz from Crowell & Moring, David Stepp from Crowell & Moring, Matthias Böhning of the International Society for Human Rights, Kit Conklin from Kharon, Shahab Wahdatehagh from Descartes, and Jackson Wood from Descartes. A couple last moments from me. We are off the record today. As always, we hope to make today's session as interactive as possible, so please ask questions. We'll get to as many as we can. What else do I have for you? We will make the recording today available, so along with all the visuals that you see. Keep an eye on your inbox, and we'll certainly get those over to you as soon as we can. With that, let me pass it over to Shahab, who will kick us off here. Thank you very much, Joshua. Welcome everybody. Good day. My name is Shahab Wahdatehagh. I head up the EMEA Trade Intelligence practice of Descartes. As Joshua already said, we have worked with our partner Kharon and two great specialist organizations, Crowell & Moring and the International Society for Human Rights, to put together today's very insightful webinar. It is therefore really a great pleasure to see the immense resonance this topic has had. Organizations around the world today are more and more faced with the societal and legal shifts that put the focus on good practice in social and governance aspects of international trade and the whole topic of supply chain. During today's webinar, we will be able to hear from the experts on the triangle between understanding the legal background and the new and changing laws putting emphasis on forced labor. Second, developing a perspective on the social problem of forced labor. Finally, the question of how technology can help organizations gain and maintain the required visibility. Without taking more time, I pass to the esteemed panelists, starting with Crowell & Moring. Thank you. Thank you, Shahab. If we could go to the first slide. Hi, I'm gonna start here. Hello, and good morning, good afternoon, good evening, wherever you are. I'm David Stepp. As Josh had indicated, I'm at Crowell & Moring out in L.A., my colleague Carolyn Krampitz and I today are gonna talk about the forced labor laws and initiatives that are in place around the world. On this first slide, we've listed many of the forced labor laws and regimes that are in place currently or being proposed around the world. We're gonna be talking specifically about the U.S. laws, the Tariff Act 1307, and the Uyghur Forced Labor Prevention Act. Then Carolyn's gonna be talking about the EU proposed legislation and the Due Diligence Directive that's in place, or going to be in place in Europe, as well as the German law. Then I'll talk a bit about the U.K. and Australian acts. As you can see here, this list of laws is in, is quite large, and it's increasing as governments are waking up around the world, to the problem of modern slavery and forced labor, especially within the supply chain. If we could go to the next slide. I'm gonna start off with talking about Section 307 of the U.S. Tariff Act. This is one of the oldest laws in the U.S. addressing forced labor. It's been in place since the early 1900s. It was mainly focused on slave labor, especially indentured prison labor, and it was more of a competitive sort of piece of legislation that was in place to protect U.S. companies and workers from foreign prison labor. The law was amended significantly in 2015 in the Trade Facilitation and Trade Enforcement Act, and it really gave the law a lot of teeth by imposing an import ban for any good that is made wholly or in part with forced labor. This was really the first time where it became, you know, a pretty namby-pamby law, if you will, to a law that really focused on the imports coming into the U.S. and actually block those imports. I've got some statistics on the side here of some of the actions that are in place. There are 53 Withhold Release Orders, and a WRO is something where CBP reasonably, in their words, reasonably but not conclusively, determines that goods are made with forced labor. A WRO will be issued by CBP, and then it's up to the importer to demonstrate that there was no forced labor in the supply chain. There are 53 of those WROs. There are eight findings, and a finding is usually a WRO that has moved into a more serious phase where customs has determined that there actually is proof of forced labor in the supply chain, and that's a complete import ban. For the Section 307 and the UFLPA, which I'll talk about in a moment, non-governmental organizations, NGOs, often are the first indicators of and identifiers of forced labor in the supply chain. We've seen time and time again with CBP, when those NGO reports come out, we'll see new WROs issued when they're focused on specific products or specific industries. In addition to CBP, Department of Homeland Security is authorized to investigate and prevent the import of those goods made with forced labor into the U.S. Those are two very strong enforcement entities, agencies of the government who are focused on keeping these goods out of the U.S. Going to the next slide, I'm gonna talk a bit about the UFLPA, which came into effect in June of 2022, just last summer. You know, you think about over the past year, what a sea change there has been for companies and their supply chains in trying to ensure that the goods are not made with forced labor, not from the Xinjiang region, because as I set forth here, there's from the CBP perspective, there's a rebuttable presumption that goods are made with forced labor if they're mined, manufactured, or produced wholly or in part in the Xinjiang region or produced by entities on the UFLPA Entity List. As with the WRO and the Section 307 statute, that wholly or in part really is the key, is really an important piece of the legislation because it doesn't mean where the good was finally assembled or fabricated. It really goes back to the raw materials. If there are precious metals, where those precious metals are mined. If it's apparel, where the cotton was actually grown back to the farm. As you can imagine, with the detentions that have been in place, the amount of due diligence that must be performed to go back to those raw materials is really something that we haven't seen on this scale before. It's really quite a sea change from a customs compliance and from a supply chain perspective. So much of what is going on today is to show that goods that are imported from China or from a third country that might have China inputs has no connection with the Xinjiang region. Because if you can demonstrate that all the inputs and the labor originated from outside of the Xinjiang region, then the claim can be made that the goods do not fall within the scope of the UFLPA. If there are connections to the Xinjiang region, then the presumption, rebuttable presumption applies by CBP, and then the importer must show with clear and convincing evidence that the goods were not made with forced labor. That's a much... That's a very high burden of proof and something, quite frankly, that companies are gonna be really hard-pressed to try to demonstrate because that clear and convincing evidence is quite significant. Quite frankly, it's in the current situation, it's almost impossible to go back through the supply chain with state-owned enterprises in China and try to collect the information that's necessary for meeting the standard. It's really important for companies to understand how this statute is set up, what the requirements are, ensuring that there's no connection to the Xinjiang region, and mapping your supply chain and getting and doing the hard due diligence to know your suppliers throughout the tiers of production. Will you go to the next slide? I had a map here, with the Xinjiang region in the red part of the northwest part of China, just for a visual. We can go to the next slide. I'm gonna pass it over to my colleague, Carolyn Krampitz, to talk about what's being proposed on the European side. Thank you, David. First of all, I need to apologize. I'm traveling, and it seems that my Wi-Fi is not strong enough for audio and video, unfortunately, I will be off camera today, but I hope this is okay. As David already mentioned, I will give you a brief overview about the forced labor development in the EU and Germany since I am a German-qualified lawyer advising clients on EU and German international trade laws. Similar to the US, the European Union as a whole and the individual member states have or will have policies and laws in place to prevent human rights violations in supply chains. On EU level, a proposal on how to ban forced labor products from the EU has been published in September 2022. The proposed regulation will prohibit economic operators from placing products on the EU market that are made with forced labor, whether they are imported or produced in the EU or from exporting such products from the EU. Similar to the UFLPA in the U.S., as David mentioned, the EU proposal covers any supply of a product and covers any stage of extraction, harvest, production, or manufacturing of a product. Where there is a substantiated concern of forced labor, products will be suspended or refuse circulation within the EU market or export. An important difference between the U.S. law and the EU law is that in the U.S., it is the company who has the burden of proof that there has not been forced labor involved. In the EU, it is the authority who has the burden of proof. Seems to be a big difference, however, at the end, it is the company who has to provide all documents that they can gather, that it could receive from their suppliers to prove that no forced labor has been involved. This regulation will be directly effective legal obligation, although we do not know when this will be the case. It's strongly recommended to get prepared for this additional due diligence and transparency requirements in the EU. Next slide, please. Oh, this is already UFLPA. Yeah, those are a couple of my slides. Why don't you go up to. This one is the right one? Yes. Let me continue with that one. Another initiative by the European Commission is the Corporate Sustainability Due Diligence Directive. With the introduction of this directive, especially environmental protection will play a much more significant role on EU level. For example, the first draft of the directive provides much higher level of regulation with regard to environmental issues and includes a detailed catalog of environment-related violations and matters of biodiversity, for example. Something important to highlight is that non-compliance would not only result in penalties established by each member state, but also can provide a right of private action with potential civil liability. Similar to the EU Forced Labor Act that I mentioned before, the directive is not in force yet, but in contrast to that act, once adopted at EU level, the directive still needs to be implemented by the member states within two years. For example, Germany has already a law in place, but they will have to adapt their national law to be in line with all the requirements that will need to be in place when this directive is effective. Let's see if the next slide is the German Supply Chain Act. Yes, it is. I think one of the national laws that came into force recent, Supply Chain Act. This act imposes extensive new obligation on companies with regard to human rights along the supply chain. These are the so-called due diligence obligations. Since January, the rules of the German Supply Chain Act affect primarily all companies established in Germany. I say primarily because the implementation of due diligence obligations in contractual relationships, as well as the delegation of obligation based on terms and condition of a supplier, this is becoming an essential component of supplier contracts, and actually can affect any company doing business with a German entity that is directly subject to the German Supply Chain Act. For the time being, the scope of the German Supply Chain Act covers companies of at least 3,000 employees. From 2024 onwards, the act will cover companies with more than 1,000 employees per average per fiscal year. Again, through the delegation of the obligations, the scope of the act can quickly, indirectly apply to small and medium-sized companies that do not meet the aforementioned number of employees. On the central obligations for companies is to integrate due diligence obligations as part of their corporate policies. And this includes various supplementary and link measures, some of which are listed on the slides, like establishing risk management system, development policy statements for ESG and human rights, and so on. The act also stipulates a range of fines in the event of violations, and depending on the nature and seriousness of the violation, penalties can go up to EUR 800,000, and failing to take remedial actions may result in even greater penalties. An average worldwide turnover of more than EUR 400 millions may be fined up to 2% of the total worldwide annual group turnover. It will be important to be compliant with all these regulation. There is a lot in the pipeline in the EU and a lot to get to prepare for. David will give us another overview of another law, of the developments in Australia. Yes. Well, just finish out, if we can go to the next slide, this quick survey of these laws around the world. The Modern Slavery Act 2015 and the Australian Modern Slavery Act are mainly laws there that have reporting requirements with very little teeth to them, no import bans. We work with our colleagues in our London office with respect to those reporting requirements in the UK and our partner firms down in Australia, which we understand that current law is currently under review by the Australian Parliament, and there are proposals to revise it to make it more like the UFLPA in Section 1307 to apply to importers and not just to businesses with due diligence requirements. I... There's a lot going on around the world, as you can see, with respect to the forced labor enforcement. It's here to stay. Recent customs webinars and announcements from DHS and from the CBP acting commissioner indicate that companies are really going to have to address and understand, fully understand their supply chains going forward or else their businesses could very much be hampered. I'm gonna... With all of these national and regional laws, trying to tackle the global phenomenon of forced labor and modern slavery, I'm gonna pass the podium over to our friend here, Matthias, to talk about the background for some of the reasons why the pervasiveness of forced labor is occurring around the world and how it's being identified and reported. Matthias, I'm gonna pass it to you. Real quick, just to butt in, before Matthias, I see a lot of questions coming in, which is great. Keep them coming. We're gonna make it through Matthias and then run through a couple of case studies, and we will have ample time at the end to get through as many questions as we can. Please keep them coming throughout, and I assure you we'll have plenty of time to address them. Over to you, Matthias. Thank you, Josh, thank you, David, greetings from my side. I'm Matthias Böhning, General Secretary of the International Society for Human Rights. I would like to introduce us to the dimensions of the problem of forced labor and modern slavery, which illustrate why the regulatory instruments we have just heard about from various countries are needed indeed. Doing so, I would like to give both the big picture with the big numbers and then also zoom in on a very concrete forced labor situation, a real-life story. Today, maybe you can bring up the slide here, 21 to 45 million people worldwide are trapped in some form of slavery. This is the overarching category of human rights violations, which includes forced labor. In international legal usage, it has become accepted to distinguish the following forms of slavery that you see listed on the slide here. Of course definitions differ here and there, on the whole, the problem we are dealing with today can be characterized by the categories that you see listed here. First of all, domestic servitude, which is mainly dealing with work in private homes. Sex trafficking, when women, men or children are forced into the commercial sex industry. Forced Labor, our topic, when human beings are forced to work under the threat of violence and for no pay, and very characteristic aspect is here that these slaves are often most of the time treated as private property. We see bonded labor, individuals that are compelled to work in order to repay a debt and who are unable to leave until this debt is repaid. This is the most common form of enslavement throughout the world. Child labor is any of the above categories when the person involved is a child, according to the ILO definition, anyone under the age of 18, although we see some differences here in definition around the world in different countries, per the U.S. definition, anyone under the age of 16, for example. It is a huge problem. More than a quarter of the world's slaves are today children. Forced marriage, women and children who are forced to marry another without their consent or against their will. Not only for the sake of completeness here, it is also a form of forced labor coming in a different form here. When we take a closer look at forced labor, it's important to keep in mind that this category captures both labor exploitation and sexual exploitation. The two ingredients are always violence or the threat of violence on the one hand and no pay on the other. If sex trafficking, as we've just heard, is a separate form of slavery, one can of course ask the question, well, what are the differences? Legally and in regulatory terms, there's still a difference between a woman forced into and kept in the commercial sex industry by coercive structural conditions, who still earns an income and still has some scope for shaping her life, albeit very limited, and on the other hand, a sex slave that works under constant physical violence for no pay and also has no power whatsoever to shape his or her own circumstances. About 20.9 million people globally are victims of forced labor. These people are part of our global supply chains, and they produce a wide array of products in industries as diverse as fishing, textile, construction, minerals, and agriculture, just to name those that are particularly laced with forced laborers. What is important for us, today, 90% of all forced labor globally occurs in the private economy. The driving motivation behind this form of modern slavery is the desire for profit, not the desire for sex, not for status, not comfort, not luxury. Profit. It is indeed a profitable business. The illegal use of human labor through force, through fraud, through coercion, generates around $150 billion a year only. The illegal drug trade is more profitable. You see that it's a very profitable industry here. Beyond, the private economy, let me just add this as a final point on this slide. About 2.2 million people worldwide are caught in state-imposed forms of forced labor. Forced labor in state prisons, forced labor through convict leasing programs or in work schemes imposed by military or rebel armed forces. All of these fall into this category. This is just to make clear that supply chains do not automatically have to be free of forced labor just because they are free of profit-driven private sector actors. I now wanna take you into a real-life story, which I would like to use to illustrate some important aspects of forced labor. Zaw Win, and his story points to four common ingredients of forced labor. It all started when the 57-year-old Burmese Zaw Win, and please note that the stately age of this male forced labor victim shows that it's not like often assumed only children, young people or women who are victims of forced labor. He migrated to Thailand to find a job, hoping to earn money to send home to his family. He traveled with a broker who said he would get him across the border and secure a food processing job that would pay him 150 THB, which is about $4.50 a day. Once he reached the Thai side of the border, Zaw Win was put in the cargo bed of a truck sandwiched between other undocumented migrants. I wanna stop here and make a first point, which is that forced labor is in the vast majority of cases preceded by some form of illegal migration. That is, we are dealing with people who are not native to the forced labor environment in which they find themselves. This is particularly clever in a sense because forced laborers are alone in a different language environment, in a different legal environment, and often even more helpless and much less likely to seek context appropriate help. It means at the same time that any instruments of prevention, monitoring, and also control must include this aspect. For example, supply chain instruments, we've just heard about them, often refer to grievance mechanisms, and it is very important here that they must be accessible in the languages spoken by the illegally migrated forced laborers, not necessarily, which is not necessarily the same language than the national language of the respective country. When Zaw Win arrived in Kantang, a port town in Trang province on Thailand's southwest coast, he was confined to a room with 40 other men. In the morning, the men were separated and sold to different brokers controlling migrant crews working at the town's various fishing piers. Zaw Win said he worked on a trawler with no pay for three months. He assumed he would be set free when the boat returned to the port, but the broker's men were waiting at the pier and locked him away again, this time for three days. According to research from the IOM, the International Organization for Migration, migrant fishers going to overseas fishing grounds are typically provided with fraudulent seafarer books that mimicked official marine department documents, but were then filled with false biographic information that identified the migrant fisher as a Thai national. This is the second point I want to make. Often, only the photograph of the holder of the seafarer book was genuine, it is, and that's the point, not so much the challenge as it is commonly assumed that forced laborers have no documents. Rather, it should be noted that they may well have very skillfully and also precisely forged documents, the identification of which requires local legal expertise. Zaw Win 's broker sold him later on to a boat in Songkhla off Thailand's southeast coast. The carrier boat transported him into the South China Sea, where he was forced to board a purse seiner fishing illegally for mackerel in Indonesian waters. Zaw Win tearfully described the year he spent aboard this ship. The Thai skipper regularly bats the crew with an iron rod and threatened them at gunpoint. Payment was meager amounts of food withheld if the skipper did not think that the crew had worked hard enough. Some men became malnourished and seriously ill, contracting diseases like scabies. One crew member became so sick that he could no longer work, and Zaw Win said that he was still conscious when the skipper threw this man overboard, and this man drowned in front of his eyes. A real problem is that forced laborers are deliberately kept away from the public eye, and thus they are almost invisible, as this story shows. In fishing, of course, this is particularly possible. As we see in this story, it is not uncommon for some forced laborers to even spend several years on board, a ship away from any controlling, any monitoring, any scrutiny. One night, I wanna end the story of Zaw Win with this, he decided to jump overboard near the Malaysian coast. Luckily, another passing Thai purse seiner plucked him from the water and concealed him on the boat. Soon afterwards, he set foot in Malaysia, his first time on land in almost two years. I would like to conclude with an aspect that further complicates the fight against forced labor. It is not uncommon for forced laborers to be mixed with regular workers in the same workforce. That clean cases can be quite cleverly presented during surprise inspections. Our message is therefore always, it is important to keep in mind that a skillful system of cover-up always includes the discrepancy between the shop window and the work room. With this, I'd like to say thank you and hand back over to you, Josh. Thanks. Thank you, Matthias. From there, let's take it. We're gonna, you know, get back into really interesting context, and look, we read about the laws and regulations, and of course, we heard about them from our friends at Crow. Obviously, you know, I think it's important that we understand what's this actually look like and what's this mean. Now pivoting to the other side, we're gonna walk through a couple of case studies showing the complexities of the global supply chains and how it touches these forced labor issues. With that, Kit is gonna walk us through a couple of case studies, and we can understand what this means and how do we navigate this and look at this from a data perspective, and what does this mean to our organizations who are importing and trading goods. Kit, over to you. Thanks, Josh. To start, what I'm gonna do is provide a bit of context for what Kharon does and how we actually detect forced labor within global supply chains. This really gets to the power of the joint solution between Kharon's data integrated into Descartes. As a starting point, for the work that we do, we have to spend a lot of time conducting research to identify U.S. government indicators of forced labor. In particular, today, I'm gonna focus on the Uyghur Forced Labor Prevention Act and some of the warning signs that the U.S. government has highlighted as being representative of risk for this law. What you're seeing on the screen, these typologies, these warning signs of forced labor, this comes directly from the U.S. government, originally published in the Xinjiang Supply Chain Business Advisory in 2020, and that language has now been updated and incorporated into the UFLPA, as well as subsequent CTPAT due diligence best practices. I highlight that because what we do at Kharon is research, for example, those prisons, those internment camps, those vocational schools in Xinjiang. We look for other types of warning signs and typologies. Things, for example, like labor transfers, ethnic Uyghurs, Kazakhs, Turks, other ethnic minorities being involuntarily moved from their homes in Xinjiang and forced to work at factories in other provinces in China. From there, what we do is follow those high risk or banned raw materials that are connected back into these typologies as they enter the global supply chains for all commodities. Historically, you may know the UFLPA targeted polysilicon, tomatoes, and cotton. Now it's a blanket ban on all products. We at Kharon specialize in following all of those products before they enter the global supply chains. What does that actually mean, right? We've talked about the law. We've talked about the human rights impact from this from a personal perspective. These are the warning signs. When it comes to due diligence and actually complying with these laws, what does it mean, right? Let's dive into a real case study here that does just that. What we're gonna do as a starting point for this case study is explore one of the forced labor indicators that the U.S. government has highlighted for the UFLPA. In this case, what we're gonna look at is a high-risk industrial park. For those that may not know, industrial parks located in the province of Xinjiang sometimes have prisons located inside of the industrial parks. Sometimes there's so-called vocational schools located in these centers. Either way, if it's a prison or if it's a vocational center, any company that is located at these industrial parks or any mine or farm that's located at these high-risk industrial parks is representative of elevated risk for a detention for any product that is connected back into those goods. Let's explore this a bit further. By mapping out, for example, those industrial facilities and identifying which one of these industrial facilities represents risk for other red flags. In this case, Kharon analysts have identified that this economic development zone, this industrial park, has received labor transfers. Uyghurs have been involuntarily moved from their homes, forced to work at these industrial zones, and the companies that are located at these industrial zones have access to those Uyghur forced laborers. We know this by identifying publicly available information, and you could click on that over on the right and see exactly what the source is, in this case, a stock disclosure, published by this company that enabled our analysts to detect where this risk was taking place. By looking at open source information, by identifying these types of red flags, we're able to then build out what are those other companies that are co-located at this industrial park, that could receive those forced laborers. In this case, you have chemical companies, some of which are joint ventures with Western and European companies. This is, again, any product manufactured in whole or in part with inputs from forced labor, whether it's, you know, a joint venture with a European company or a U.S. company, or it's a Chinese company, it doesn't matter. They're still subject to possible elevated detention risk for that. Same goes with other parties that are located at these industrial parks. Sometimes when people are thinking about the UFLPA, they just think it's relevant for cotton or clothing. These industrial parks have all sorts of industry verticals co-located with them. You have chemical companies, you have chemical processing companies. Sometimes you have mines for critical minerals. Sometimes there's aluminum smelters there. In this case, though, this industrial park has chemical facilities. It also has clothing manufacturing facilities, as well as subsequent investment firms that invest in all sorts of manufacturing processes to include bio and chemical precursors for pharmaceuticals. It gives you an idea of just the scope of the type of risk affiliated with one particular technology development zone or industrial park. There are hundreds of others that we have all mapped out. Just to summarize, this is just a quick example, a quick snapshot of one type of risk typology that connects to all sorts of industry verticals. As you're thinking about your own supply chain, as you're thinking about how do I detect this type of risk, when you're conducting screening, when you're conducting mapping, and you're thinking about your supply chain, what type of intelligence do you have today that signals to you that these companies that aren't gonna appear on any sort of government list are actually representative of significant UFLPA risk because they're tied back into a facility that's received labor transfers and have taken place in these high-risk industrial zones? Let me transfer to another case study here, and we're gonna walk through a bit of a different type of supply chain example. What you're seeing here is again, the starting point for Kharon's research in this is starting with the risk itself. We follow the supply chains that are connected back into that risk as they move throughout Xinjiang, as they move to other provinces in China, as they enter the global economy through third countries. In this case, what you're seeing is two red flags. The first is a labor transfer that this company, Xinjiang Nonferrous Metal Industry, conducted. You can see over on the right that according to Chinese state media, this comes directly from the Chinese government, the number of ethnic minorities that were transferred to work at this company, Xinjiang Nonferrous Metal Industry Group. I would offer two comments on this. Number 1, 2017. In the risk compliance and the supply chain world, that's pretty old, right? 2017 was 6 years ago. Here's the reality: CBP has explicitly stated publicly that any company that has received a labor transfer, regardless of when that labor transfer took place, is subject to elevated risk for UFLPA due diligence. Therefore, there's no statute that explicitly states when this risk ends and when these supply chains are therefore clean. As you're thinking about your own due diligence, and as you're thinking about screening for this type of risk, you need to really understand the historic relationships that these parties have maintained because there is, number 1, there's no time requirement or no statutory obligation for when and where to include these types of risks within your supply chain mapping program. The second piece that I would note is that there's no de minimis threshold for the UFLPA. What that means is that if you've got a commodity that you're sourcing from a company like Xinjiang Nonferrous or a company like Xinjiang Wuxin Copper Industry, Limited, it means that you could have 1% of banned raw material in your supply chain, and that supply chain still could be targeted with the UFLPA detention. The way that the law is written, and as our friends earlier in the webinar discussed, there is the rebuttable presumption, which dictates to industry that you must conduct due diligence to understand where in your supply chain there are forced labor inputs, and then it's up to you to prove to the US government that you do not have inputs derived from forced labor if you have a detention. You could have 1% of a product connected back into this supply chain, and you could be subject to a detention. Back to the case study here. What does this actually mean from a due diligence perspective? Well, it means that you've got a company that is not on the UFLPA Entity List, even though it has a similar name, I should note, that's received those labor transfers. Then you also have another company that's a subsidiary of that party, that has received another batch of labor transfers. Unlike in the sanctions world, other compliance professionals may be aware, there's the so-called 50 Percent Rule, which dictates that entities that are majority owned by sanction actors are illegal to do business with. There is, once again, no ownership threshold rule for the UFLPA. Any subsidiary of a party that's received labor transfers is subject to elevated risk for the UFLPA. In this case, it just highlights that there's multiple factors of risk for not just subsidiary relationships, but also those labor transfers. From there, as you follow these supply chains throughout China, you get to parties that have received these inputs, right? These are now two tiers removed from the original source of the risk. Every product now that you are buying from or from other companies located in other provinces, like for example, this one in Hubei or in Zhejiang, these parties represent elevated risk for the UFLPA. Just to kind of summarize here, there's a lot coming at you, I'm sure. To make this a bit more digestible, number 1, the U.S. government has explicitly stated what types of red flags you should be looking for within your supply chain. Number 2, there is no de minimis threshold. Number 3, there's no ownership threshold. Unlike the OFAC world, unlike the sanctions world, there's no de minimis or there's no, excuse me, there's no minority ownership risk versus majority ownership risk. There is a much larger, higher swath of risk when it comes to these supply chains. Number 4, you can't just screen against companies in Xinjiang and think that that's it. Of the global nature of this program, any company around the world that has received inputs from these products or received inputs from these companies is representative of risk. Let me pause there and turn it back over to Josh as we transition to the next session here. Yeah. A lot to digest is probably an understatement of the day, but we'll take it. From that, I wanna pass it over to Jackson Wood from Descartes. Thanks very much, Josh, thanks to all the speakers today for what has been a very informative and hopefully useful session. Just a few points that I'd like to make in closing today before we get to some really excellent questions that have come in from the audience. As Kit just alluded to, the first thing that I'd offer our perspective on is as wicked a problem as the forced labor issue is, it's the continuation of a trend from a compliance and due diligence perspective of governments creating criteria or frameworks that organizations need to be compliant with, without correlated entity lists or clear guidance on parties or organizations that meet those criteria that ultimately you can't do business with. If we think about the evolution of third-party due diligence going back to the early 2000s, particularly United States, where exhaustive lists would be published and an organization could more or less feel comfortable that as long as those lists were being screened, the appropriate level of due diligence was happening. As we've seen, particularly recently with the aforementioned OFAC 50 Percent Rule, as well as some of the, in the United States at least, the military end use or military-intelligence end use issues where guidance is published, but only partial incomplete lists are provided by government agencies. That's where organizations like Kharon are able to step in and start closing those gaps with their very specialized research skills to be able to start filling in some of those blanks. That's the first part of the equation, the content. The second part of the equation, though, is capabilities. Organizations need to be able to take advantage of that content to be able to do appropriate levels of due diligence, and that's where we come into the picture. Whether that's being able to take the content that Kharon creates and build that into digital due diligence solutions that are web-based, that can consume due diligence in a bulk format, or, and this would be the most important piece that I would highlight for the audience today, integrated into existing business systems. This is where I think particularly in the forced labor context, organizations have a huge opportunity to not only start to build in better compliance protocols in terms of the due diligence that is done for forced labor in the supply chain, but building compliance into your organization can also go a long way to demonstrating reasonable care. If you are in an unfortunate situation where an import is seized by U.S. Customs, doing all of the work to demonstrate that your organization has taken this issue seriously, has made appropriate investments into its infrastructure, whether that's in a purchasing system, a contract management system, inventory management systems, et cetera, really can signal a strong commitment to addressing this issue within your supply chain, and also a reasonable degree of care around the importance of recognizing that these types of due diligence procedures need to be built into your business, not simply bolted on as an afterthought and something that you're really just going to do in particular circumstances. I'd really encourage if anybody in the audience today, if you're feeling overwhelmed and not knowing where to start in terms of protecting your organization, not only from the forced labor risk, but some of these broader, more nebulous compliance challenges like the OFAC 50 Percent Rule, to have a conversation internally with your partners in the information technology space or in the procurement space. "Hey, how can we work together to integrate some additional compliance due diligence steps to make sure that we're doing everything we can to identify risks to our organization before we end up in an unfortunate enforcement context?" With that, Josh, I will hand it back to you so that we still have time to answer the questions that have come in. Thanks, Jackson. Appreciate your insights and views and certainly apt for, you know, the, our conversation today. Folks, I see a bunch of questions that have come in, and we'll get through as many as we can right now. Please keep them coming. As I said, we'll do a lot of lightning rounds here and certainly hope to. We have a lot of expertise on the line. Let's for the next 11 minutes tap into it. You know, look, we talked a lot about, you know, David and Carolyn started off talking about, you know, the regulatory frameworks, and there was a focus on UFLPA, but obviously, you know, David and Carolyn talked about EU and UK and Germany and Australia. I guess starting with the U.S., but we can go beyond, what sort of penalties, there the question asked, what sort of penalties would individuals, would companies, I should say, face if they violated the UFLPA or other, you know, regulatory frameworks aimed at mitigating the use of forced labor? Yeah. In response to that, the most immediate one is an exclusion of the goods from being imported into the U.S., which obviously has its own financial cost. There also can be penalties. In the reasonable care publication set out by CBP, there's an entire page about doing the due diligence to identify forced labor and supply chain having policies. If a company does not do that due diligence, penalties could certainly be imposed by the agency under 1592. There are several other statutes I didn't even mention today, which apply to companies that normally benefit from forced labor in the supply chain. Thanks, David. Kit, I know, CBP on the U.S. side released, I think a couple weeks ago, their UFLPA dashboard, which they're giving updates on goods that were detained and the amount, monetary amount and the originating point, what have you. I think this is really interesting and kind of leads into the penalties. It's not exactly talking about the penalties, but talks about the actual ramifications, what this looks like. Will you take a moment and walk through some of the highlights or kind of key findings of that? Yeah, it's a good question. I think over the last 10 months or so since the UFLPA went into force in June of last year, there's been a lot of questions from industry about how big of a problem is this? How much enforcement will there be of this law? How will CBP enforce this law? Recently, earlier, or I guess it was in March rather, CBP announced the so-called dashboard where you can go to CBP's website and see the overall statistics for trends for enforcement and the overall dollar amount that's been detained. A couple of things just for those that haven't seen that yet. CBP has detained nearly $1 billion worth of goods in the last 10 months underneath of their authorities for the UFLPA. The exact figure is around $950 million. That's in less than one year, CBP has detained that much, it's just a tremendous amount of goods that have been detained at the border. The other interesting thing that I would note from a high-level perspective is that Malaysia, Vietnam, and other third countries are being targeted much more so than China for direct import bans. What that means is raw materials that are manufactured in whole or in part with forced labor in Xinjiang are entering the global supply chains, they're being incorporated into other products, sold onwards to companies in Malaysia or manufacturing facilities in Southeast Asia, CBP is detaining those products as they're entering in the United States from Malaysia. It's a good reminder, I think, to everybody on the call that it's global in nature. CBP is targeting goods across the world with their authorities with the UFLPA. The other interesting thing that I would note, Josh, is that it's not just those three high-risk commodities that CBP prioritized for enforcement, last year, so polysilicon, tomatoes, cotton. You're now seeing a huge amount of electronics being detained. You're seeing an increased emphasis on aluminum, that's being detained, so a lot of heat right now on the auto sector globally, as well as OEMs and others that utilize aluminum, made in Xinjiang and made from forced laborers located in other provinces underneath of these authorities. Yeah, global in nature, nearly 1 billion goods, $1 billion worth of goods detained in the last 10 months or so. Some additional questions to Kit or to please all these questions are open to our full panel here. Specifically, and I think part of this you just answered, Kit, kind of talking about CBP's, you know, board and looking at, you know, various products. I think when the UFLPA kind of first was, you know, enacted last June, you know, cotton was very much, you know, I'd say the forefront of at least what we heard folks talking about. Certainly you look at the dashboard and see that, well, this goes well beyond cotton and touches all sorts of industries. Someone asked specifically, and I don't know if you have a view on, you know, I guess according to the Sheffield Hallam report that came out, they talked about vinyl tile, and then I guess there's also, you know, lots of conversations now about auto parts that originate from China. I don't know, specifically on those industries or substances if you have a view. Obviously, Carolyn and David, if you have views also, happy to hear them. I'll just say briefly that those reports like the Sheffield report on the vinyl flooring and auto parts and other commodities have a huge impact on how customs enforces. That's essentially the low-hanging fruit when those sorts of reports come out. After the flooring report came out, after the automotive report came out, it was CBP was very quick to start with detentions and actually amending their detention notices with those specific commodities. They have a big influence on the enforcement policies. Thanks, David. What about talking about another question coming in that's I think dovetailing on this. How long are goods detained before it's resolved? When you look at these numbers, if you look at the CBP dashboard, and I shared the URL in our, in our webinar chat. Feel free to take a look at it. They do talk about detentions and then, look, sometimes those detentions, you know, it's found out that the goods are not used for, you know, have not been, you know, originate from forced labor concerns. How long of a period? Do we have an idea of how long of a period that we're looking at before there's a resolution? Right. When goods are detained by CBP, the importer has 30 days to respond with the documentation to demonstrate that the goods were not made with forced labor or not connected with Xinjiang region. As you can imagine, 30 days is a very short period of time to go back and map your supply chain. Hopefully you're well underway on that process. Customs is giving extensions beyond the 30 days. I know we've gotten up to probably 90 days and a bit more for those detention submissions. Once they go into customs, I know under the WRO last year we had customs, it took probably 5 or 6 months for their decision. They have shortened that time under the UFLPA. A couple of months, 60 days, 90 days, you'll get a decision as to whether the goods will be excluded from import into the US. That's a rough timeline that's out there. It can be... Yeah, gathering all the documentation and the information for purposes of that submission takes a considerable amount of time. Those extensions have been granted and are sought by the importers. Thanks, David. Looking at the time, we're approaching our hour, so I'm gonna ask one more question that hopefully we'll get a number of views on. The question was: Horizon scanning, what does the future of forced labor enforcement, they said in the U.S., look like? I'll expand it and say U.S. and beyond. We've talked about, you know, David and Carolyn walked us through what's happening throughout the world, U.K., Germany, Australia, and beyond. You know, do we think that, you know, in the U.S. context, the individual asked, will the U.S. double down on issues in China and Xinjiang? What's enforcement gonna look like going into the future? I don't know, David and Carolyn, and then if you wanna go back to Kit, if you have views on that. Just very briefly, and Carolyn, feel free to chime in here. I think the enforcement is definitely increasing here in the U.S. It's announced at the CBP tech fair last month that the customs and DHS are actively pursuing and expanding the enforcement actions. Things are not contracting, they're increasing. You know, when we have goods excluded from the U.S., companies are seeking to ship the goods elsewhere where they might be allowed entry. Right now it's much easier to get goods into Europe because they don't have the laws in effect. As those gaps in the legislation around the world tighten, then companies are gonna have fewer options with respect to their goods when they're subject to enforcement actions. I think the EU and especially all the European member states that are planning their national laws, they're watching the U.S. very carefully and are learning how to implement all the processes. As soon as they get ready, I think we will see similar developments to the U.S. I think it's the same approach. Perhaps, Josh, just one final point to make on that, and I referenced this in my comments previously, but I think it bears emphasizing. These types of issues are going to continue to be challenges for organizations doing business around the world. The time is now to begin the internal discussions and ultimately thinking about how are we going to be able to embed appropriate due diligence procedures across our organization. That not only stems from people-based work in terms of individuals that are doing due diligence research exercises, but also creating the capabilities within the infrastructure of our organization, whether that's, as I said, ERP systems, purchasing systems, et cetera, so that due diligence is happening digitally as a part of how we operate every day. Now is the time to start making the investments in our organizations to create long-term resilience for these types of challenges. Hear, hear, Jackson. Any final words on your end? This issue's not going away. Bottom line, United States, it's only gonna get harder. There are new jurisdictions that are now being targeted on the Hill. Congress is considering expanding the UFLPA to include new provinces, particularly Tibet. This is not going away. We're in this reality and it's, we should buckle in. Buckle in. Then, Matthias, please. I just support this and I thank you, Kharon and Descartes and David and Carolyn for the contributions. This is a very important topic and we can only tackle it together. Thank you. Thanks, folks. Looking that we're 1 minute after the hour, not bad. Yeah, I mean, I think the one last point, not to belabor what all of our esteemed panelists have said, we are just nine and a bit months into the enactment of the UFLPA in the U.S. Again, you know, you heard from Carolyn, you heard from David, everything that's happening in the EU and Germany and Australia and beyond. Certainly I think as folks say, we are at the beginning, it's, you know, this is just so true. With that, I realize there's a handful of questions we may have not have gotten to or otherwise you may have questions that emerge to you later. Ask us. Send us, if you send us an email at webinars@descartes.com, we'll get the question over to our friends at Descartes or Crow or Matthias. Certainly get your questions into the right hands. Additionally, we will have an email going out to you all within the next day that's gonna have a on-demand so you can version of this. We'll have, where applicable, the visuals, the slides and cases that you saw. Also more information on getting in touch with Descartes and Kharon if you have questions or want a demo about our joint solutions. With that, a huge thank you, first of all, to all of our panelists, Carolyn, David, Matthias, Shahab, Jackson, Kit. Did I miss anyone? Gosh, lots of panelists today. Certainly lots of help behind the scenes as well, so a huge thanks to everyone who contributed. Of course, thank you all, folks around the world for spending an hour of your time with us today. With that, we certainly will look forward to more, Kharon-Descartes collaborations, and certainly we'll bring in our other friends here as well. Stay tuned for more events in the future. Wishing you all a good day.