This year’s National Action Plan is a missed opportunity to stand up for workers

In today’s globalized economy, multinational companies play increasingly important roles in determining how workers are treated. Secretary of State Antony Blinken recognized this in 2021 when he announced that the Biden administration would prepare a National Action Plan on Responsible Business Conduct that would address the need for companies to protect workers by “raising local wages, improving working conditions, building trust with communities and operating sustainably.” 

Unfortunately, the action plan the U.S. government released in late March fails to propose the concrete requirements necessary to improve workers’ lives.

The National Action Plan recognizes, as it should, that many companies are making positive contributions to the communities in which they operate, in the U.S. and worldwide. They generate jobs, economic growth and innovation. They provide resources to help address societal challenges by enhancing access to clean energy sources and improved healthcare and new technologies to strengthen educational opportunities.

But because businesses are driven by unrelenting pressures to maximize short-term profits, Washington needs to use its leverage — regulatory, purchasing and enforcement powers — to make protecting workers a higher priority. The National Action Plan fails to utilize this leverage. Instead, it reaffirms existing commitments, including the important work that the Departments of Labor and State are already doing to address trafficking in persons. However, it does not include any new binding commitments requiring companies to improve their human rights performance.

The National Action Plan fails in several ways. First, it declines to align the U.S. with mandatory human rights due diligence requirements that European governments are implementing. The European Union will soon require its 27 member states to adopt national mandatory due diligence laws. The EU is also enacting laws that target specific industries such as social media, artificial intelligence, and mining. 

The U.S. rejects this regulatory model and simply expects companies to undertake due diligence throughout their supply chains. The plan is silent on how the government will advance this “expectation” and what, if anything, it will do if companies refuse. In effect, the administration is ceding responsibility for regulating this area to the EU.

Second, the National Action Plan fails to make meaningful progress on federal procurement reform. The United States is the largest single purchaser in the world. Last year, the nation spent more than $700 billion on goods and services; for many companies, the U.S. is their largest customer. This market power gives the government powerful potential leverage to demand that contractors and subcontractors ensure meaningful human and labor rights compliance across their supply chains. 

The U.S. could thus provide a model of responsible purchasing to other governments and companies with global supply chains. While the National Action Plan says that “strengthening respect for human rights in federal procurement policies and processes” is a priority, it fails to articulate a concrete commitment to using the procurement process expansively to promote human rights.

Third, and more generally, most of the commitments in the National Action Plan ask federal agencies to consider business conduct issues, rather than take substantial, specific new steps to mandate corporate commitments. 

For example, various federal agencies will evaluate, assess, or review public reporting mechanisms, the Export-Import Bank will solicit public input on how to strengthen grievance mechanisms, the U.S. Agency for International Development will promote a Public-Private Alliance for Responsible Minerals Trade and the State Department will engage with the Freedom Online Coalition and internet service providers on best practices for mitigating risks of internet shutdowns. While these are all welcome steps, none impose new mandates on companies.

The National Action Plan should have compelled companies to make needed changes. The U.S. has done so in the past in a similar context. 

In the 1970s, it led the world in adopting the Foreign Corrupt Practices Act (FCPA). The act was adopted with bipartisan support in response to findings by the Securities and Exchange Commission that hundreds of U.S. companies were bribing foreign government officials. The FCPA barred such conduct and imposed civil and criminal penalties on companies that failed to comply. 

Over four decades, the Foreign Corrupt Practices Act and its strong federal regulatory system have played important roles in the global fight against corruption. Companies doing business in the U.S. take the law seriously and have reformed their conduct because they know they may pay a stiff price otherwise.

Likewise, the U.S. government took decisive action to address forced labor through the recent Uyghur Forced Labor Prevention Act (UFLPA). That act established a rebuttable presumption that goods mined, produced or manufactured wholly or in part in the Xinjiang region of China, or by an entity on the newly-created UFLPA Entity List, were made with forced labor. Under the Tariff Act of 1930, U.S. Customs and Border Patrol may hold goods at the border until it is determined they were not produced with forced labor.  

According to CBP, since the UFLPA took effect in June 2022, 7,566 shipments have been examined, worth a total value of $2.87 billion, and roughly 50 percent of those were denied entry. Using the threat of denied imports, the act forces companies to map and document their supply chains and move elements outside Xinjiang to ensure they are free of forced labor. As with the Foreign Corrupt Practices Act, this represents the kind of bold action needed from the U.S. government to ensure companies conduct business responsibly.

There is nothing in the National Action Plan that even remotely resembles this type of government leadership. The U.S. has missed a crucial opportunity to help shape the regulatory wave, in Europe and elsewhere, that is pushing companies to conduct business more responsibly and make substantial improvements for workers around the world. 

The Biden administration must look for other ways to reassert U.S. leadership in this important area. 

Michael Posner is the director of the Center for Business and Human Rights at New York University’s Stern School of Business. Previously, Posner served as the assistant secretary of State for Democracy, Human Rights, and Labor in the Obama administration.