If you had trouble finding the roses or chocolates for your Valentine’s Day shoppers this year – blame the continuing supply chain disruptions. These disruptions that we first saw in 2019 because of the COVID-19 global pandemic continue, unabated and even exacerbated by labor shortages and shipping delays. As we saw at Christmas, this high demand holiday has put even more pressure on an already fragile system.
High prices from the high demand and shortages pose another challenge. Roses into the U.S. market are flown from Columbia or Ecuador or trucked across country. With the higher demand because of the holiday, air freight becomes expensive. The wintry weather caused delays adding to the challenges.
With global supply chains already stretched to maximum capacity, it now takes very little for supply disruptions to occur, with implications for the ability of global trade to deliver just in time for these special holidays.
Estimates are that it will be at least 2023 before the situation normalizes. Some opportunities that companies can explore as they re-engineer their supply chains include stocking more supplies closer to their operations and taking advantage of trade agreements to seek out and build new supplier relationships.
Another favorite gift for this holiday of romance is jewelry. Relying on a complex supply chain across several countries, it can be difficult for a company to know the origins of the ingredients in each piece of jewelry, notes a 2018 Human Rights Watch Report, The Hidden Cost of Jewelry. Yet, the report continues, the conditions under which gold and diamonds are mined can be brutal and dehumanizing, involving child labor and environmental degradation from toxic chemicals. The United Nations Guiding Principles on Business and Human Rights affirm that businesses must prevent, mitigate and, if needed, remedy human rights abuses that they cause or contribute to. This responsibility extends to the operations, products, or services of their companies as well as suppliers and business partners. To meet this responsibility, companies must: 1) develop and institute the policy commitment; 2) undertake human rights due diligence to track and address the human rights impact of their operations; and 3) have in place processes to remedy any adverse human rights impact to which they contribute.
The Organisation for Economic Cooperation and Development (OECD) Due Diligence Guidance for Responsible Business Conduct provides practical steps and a common understanding of how to meet these goals. The organization has also produced sector-specific due diligence guides, including one to help companies respect and avoid contributing to human rights abuses in their mineral purchasing decisions and practices.
Blood Diamonds & Sanctions
“Conflict” or “blood” diamonds are of particular concern in this regard. These diamonds are mined in areas controlled by rebel forces who use the proceeds to wage war against the legitimately elected government and citizens of a country. To combat the ability of blood diamonds to make their way into global markets, the Kimberley Process was developed in 2003. The international certification process identifies entities legitimately involved in the mining and trading of rough diamonds. The diamonds must be exported with a Kimberley Process Certificate which certifies that the diamonds have not benefited rebel movements. The ultimate consignee must also report receipt of the shipment to the foreign exporting authority. The United Nations has instituted sanctions in support of this process.
Under U.S. law, it is a violation to trade in rough diamonds not controlled by the Kimberley Process. Violators face minimal criminal penalties of $50,000 per violation and/or ten years imprisonment for individuals. Maximum criminal penalties may be as high as $500,000. Civil penalties of up to $10,000 per violation may be imposed on an individual.
Whether to prevent illicit trading in rough diamonds, human rights abuses, or to find new partners who share your values – it pays to develop a corporate culture of compliance.
I am a seasoned international trade and customs attorney, and policy adviser for various companies and governments with a demonstrated history of successfully developing and implementing sustainable and dynamic trade programs. I am experienced in creating partnerships with various business-support organizations to drive compliance and growth in the international market.