Don’t penalise compliant manufacturers, FMM urges US

 The Federation of Malaysian Manufacturing calls for a periodic review mechanism following proposed Section 301 action over alleged forced labour.

FMM president Jacob Lee said Malaysia has taken concrete steps over the years to improve labour compliance. (FMM pic)

PETALING JAYA:

The Federation of Malaysian Manufacturing (FMM) has urged the US not to penalise producers who comply with its anti-forced labour requirements or disrupt established trade and supply-chain relationships between the two countries.

In written comments to the Office of the US Trade Representative (USTR), FMM said many Malaysian manufacturers exporting to the US already operate under strict customer-driven labour compliance requirements, including audits, supplier codes of conduct and traceability obligations.

It was responding to the proposed US Section 301 action, including tariffs, involving economies alleged to lack an import prohibition on goods produced with forced labour. Malaysia is one of the countries targeted.

The federation said a key recommendation in its submission is for USTR to establish a periodic review mechanism, at least once a year, to assess the continued necessity and appropriateness of any duty rate applied to Malaysian-origin goods.

“This is particularly important in view of Malaysia’s ongoing domestic efforts, including the establishment of the Inter-Agency Task Force on Forced Labour announced by investment, trade and industry minister Johari Ghani in Parliament on June 23.

“FMM is of the view that Malaysia’s ongoing reform efforts should be recognised in any future assessment by USTR. A periodic review mechanism would provide a practical pathway for progress in Malaysia’s domestic framework to be considered in a fair and structured manner,” FMM president Jacob Lee said in a statement.

Lee said FMM fully supports the objective of eliminating forced labour from global supply chains.

This has been the federation’s consistent position as reflected in its ongoing engagement with members, government agencies and stakeholders on labour compliance, responsible business conduct, and supply-chain due diligence.

He said any proposed additional tariff should not be applied in a manner that penalises compliant manufacturers or disrupts established trade and supply-chain relationships between Malaysia and the US.

FMM also said the proposed additional duty could itself burden US commerce by raising costs for US importers, manufacturers and consumers, particularly where Malaysian suppliers form part of long-standing and specialised supply chains.

“Based on FMM’s member feedback, the cost of the tariff may be passed directly or partly to US customers, with potential effects on pricing, product availability and lead times.

“FMM has, therefore, urged USTR to retain the existing Annex A exclusions, particularly for electrical and electronics products, semiconductors and related product lines, which are critical to global supply chains.

“FMM also requested that Malaysian goods already subject to Section 232 tariff measures should not be exposed to duplicative tariff treatment under the proposed Section 301 action,” it said.

FMM said Malaysia has taken concrete steps over the years to improve labour compliance, including remediation following US Customs and Border Protection Withhold Release Orders in affected sectors, reforms to recruitment-fee practices, and amendments to labour laws.

These developments should be considered as part of the broader context in assessing Malaysia’s response to forced labour risks.

It said it will continue to engage the Malaysian government, USTR and relevant stakeholders to support measures that eliminate forced labour while preserving legitimate trade, supply-chain stability and the competitiveness of responsible manufacturers. - FMT