Studies examine forced labor 'revolution,' help define digital trade
LAWRENCE — The international trade world evolves, sometimes slowly, sometimes rapidly, through domestic laws and multinational agreements. A University of Kansas international trade law expert has published a pair of studies on a new forced labor law and on new digital trade agreements. The first study concludes this law is the most significant revolution in American trade policy in decades. The second study is a critical primer on these agreements.
Forced labor and digital trade may seem like vastly different topics, but Raj Bhala, Brenneisen Distinguished Professor of Law at KU, said he wanted to explore them further in a coordinated way. That’s because of their common theme: Each addresses pressing 21st century trade issues. It’s also because neither is being dealt with effectively at the World Trade Organization, he said, thus countries are left to deal with the challenges individually – or ignore them at their peril.
Forced labor revolution
In 2021, the United States passed the Uyghur Forced Labor Prevention Act. The bipartisan legislation was in response to the Chinese Communist Party’s treatment of Uyghur Muslims, specifically in Xinjiang province, a situation numerous governments and nongovernmental organizations describe as a genocide. The UFLPA’s rules require importers of merchandise prove their goods are made with no forced labor. The burden of proof is very high and presumes merchandise made in Xinjiang to be in violation.
“The UFLPA is the biggest revolution in America’s international trade regime since NAFTA in 1994 and the formation of the World Trade Organization in 1995,” Bhala said. “The U.S. is saying, ‘Every article of merchandise we import must be free of forced labor.’ This commitment is more than an evolution, it is a revolution. It’s in the context of, but transcends, the Sino-American Trade War.”
The law is significant as many companies inside and outside of the U.S. have supply chains that trace to Xinjiang. Bhala’s article provides an overview of the UFLPA, its provisions, shows how it works in practice, gives examples of companies that export goods to the United States and identifies how they can potentially run afoul of the law.
The revolutionary nature of the UFLPA also lies in its enforcement. Section 307 of the Tariff Act of 1930 codified that the United States forbids entry of goods manufactured overseas with convict, forced or indentured labor. However, for decades, Section 301 enforcement was lax, Bhala writes. The new law is also distinct from recent changes in the U.S. trade regime that focus primarily on national security. Labor and human rights are the focus of the UFLPA.
“For those who wonder about America’s commitment to those rights, well, here is a good story, a triumph, perhaps,” Bhala said.
He hopes the article, published in the prestigious, American Bar Association-sponsored journal, The International Lawyer, is helpful to practitioners to understand how the provisions of the new law work, and to scholars to argue why it is different from past policy.
“Forced labor is morally indefensible, and we don’t want to support it. With this approach, the United States is at the forefront of addressing forced labor through its trade laws,” Bhala said.
Digital trade diversity
As with multiple facets of life, international trade is moving online and becoming ever more digitized. Bhala and co-author Brien Stonebreaker, a 2024 KU Law graduate, explore regulation of digital trade in a study published in Taiwan’s Soochow Law Journal. Like forced labor, digital trade is a front-line topic.
“Both are bleeding-edge matters that are being addressed by individual countries and coalitions of the willing, not at the multilateral, WTO level,” Bhala said. “Both raise deep issues of policy and morality.”
No universally agreed-upon definition of digital trade currently exists. The authors propose a definition via a two-dimensional table that considers whether the subject matter that crosses an international boundary is tangible merchandise or an intangible item. Likewise, their definition asks whether the negotiation and transportation methodology for an import-export transaction is in person or virtual.
“Our article starts with what we mean by ‘digital trade’. How do you define it? If we want to avoid impeding it, we must define it on how a transaction is negotiated and what the nature of the transaction is,” Bhala said.
The authors also explore several existing digital trade agreements and point out their varying natures, arguing they can be qualified as nonexclusive and exclusive. Examples of the former include the United States-Mexico-Canada Agreement and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. Both deals have chapters on digital trade. Examples of the latter include the U.S.-Japan Digital Trade Agreement, which features a “data free flow with trust” philosophy.
The study goes on to analyze the potential benefits and social impacts of digital trade and identify emerging trends, including highlighting countries that regulate the practice and explaining how and why. The authors point out that national security concerns influence digital trade agreements via exceptions that can undermine efforts to forge a harmonized regulatory framework among nations.
Given the diversity of digital trade, including a lack of definition of what it is or is not, and different approaches from nations with agreements on digital trade, Bhala and Stonebreaker said they hope to help practitioners, policymakers, treaty negotiators, scholars and others better understand a complex and changing issue. Ultimately, given the absence of international leadership, they hope their article calls on major powers such as the United States, China and India to provide unified leadership amidst the diversity.
“Given the dearth of multilateral approaches toward constructive solutions, several innovative countries are addressing digital trade via plurilateral and bilateral agreements,” Bhala said. “We examine the pros and cons of these alternatives as we organize and appraise this confusing landscape. Ours is a critical primer.”