Malaysia hit with 10% US tariff over forced labour rules

 Washington says the Section 301 duties target economies that fail to ban and enforce restrictions on goods made with forced labour.

Malaysia was among 60 countries probed by the US Trade Representative over their failure to impose and enforce a ban on the import of goods made with forced labour. (Envato Elements pic)

PETALING JAYA:

The US will impose an additional 10% tariff on nearly all Malaysian exports, citing Malaysia’s failure to impose and effectively enforce a ban on imports linked to forced labour.

The tariff, which takes effect at noon today, follows a Section 301 investigation launched by the US Trade Representative (USTR) in March into 60 economies over their forced labour import restrictions.

Other economies subject to the 10% tariff include Argentina, Bangladesh, Cambodia, Canada, Ecuador, El Salvador, Guatemala, Honduras, India, Indonesia, Jordan, Mexico, Pakistan, Sri Lanka, Trinidad and Tobago, and the UK.

Malaysia was placed in the lower tariff band of 10%, compared with the 12.5% rate imposed on most other economies, due to commitments related to forced labour import prohibitions under its reciprocal trade agreement with the US, though this was declared nullified by trade minister Johari Ghani in March.

According to the USTR notice, several products are exempted from the tariff, including crude and refined palm oil, gemstones and silk, as well as psyllium seed husks, boswellia and argan oil.

Malaysia, along with Bangladesh, Cambodia and Indonesia, are also set to be included in a future tariff-rate quota mechanism that would allow a specified volume of textile and apparel products to enter the US duty-free in exchange for importing more US cotton.

USTR said the mechanism is not yet in force, with details to be announced in a separate notice.

Trade representative Jamieson Greer said the tariff move was taken at president Donald Trump’s direction, arguing that decades of diplomatic pressure had failed to eliminate forced labour from global supply chains.

“Today’s action will begin to correct what is both a human rights abuse and a distortive trade practice to improve the welfare of workers everywhere,” he said.

Greer said the US had enforced a forced labour import ban for nearly a century and called on other trading partners to adopt and enforce similar measures. - FMT