The United States has launched sweeping forced labour investigations into 60 of its largest trading partners, including a broad swathe of Asian economies, with trade and legal experts warning the move could pave the way for tariffs on a scale similar to those recently struck down by the US Supreme Court.
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China, Japan, South Korea, Hong Kong and Taiwan are among the economies being probed over whether a failure to address forced labour has affected US commerce, said the US Trade Representative office (USTR) in a 12 March statement.
Cambodia, Indonesia, Malaysia, the Philippines, Thailand and Singapore are also among the countries affected under what the USTR calls a Section 301 investigation.
The announcement comes less than a month after the US Supreme Court struck down sweeping tariffs imposed by US president Donald Trump’s administration under the International Emergency Economic Powers Act (IEEPA).
It also followed the USTR’s investigation into “structural excess capacity and production in manufacturing sectors” by other countries, announced a day earlier. This affects only 16 trading partners, more than half of which are located in Asia: China, Cambodia, Indonesia, Malaysia, Singapore, South Korea, Taiwan, Thailand and Vietnam.
“These investigations…could result in tariffs of the same (or very similar) breadth and level as the terminated IEEPA tariffs,” said experts at legal firm Holland & Knight in a note.
They added that if the investigated economies were found to have “actionable” forced labour practices, the USTR has said it could respond with tariffs and import restrictions as potential remedies.
“Although the administration has said that they have additional trade policy tools at their disposal, the US president has a specific fondness for tariffs as a measure,” noted Khalil Manaf Hegarty, founder and director at international trade and sustainability consultancy Oxley Hegarty.
Bilateral agreements on labour
China’s commerce ministry was among the most critical of the USTR’s forced labour investigation, saying that it was “extremely unilateral, arbitrary and discriminatory, and a typical protectionist act.”
However, Singapore, South Korea and Taiwan said they would engage the USTR on the investigations.
In other Southeast Asian countries, bilateral trade deals signed with the US in response to the Trump administration’s first round of tariffs already had “some sort of labour element,” Hegarty pointed out to Eco-Business.
“Indonesia’s were quite prescriptive…(they) had a commitment to amend certain labour laws,” he said. On 20 February, Indonesia had signed a trade agreement with the US in which it committed to “adopt and implement a forced labour import ban”.
The government also agreed to “remove provisions from its labor laws that restrict workers and unions from fully exercising freedom of association and collective bargaining rights,” the US embassy in Indonesia said.
In a similar trade agreement with the US last year, Malaysia had committed to preventing forced labour and “effectively identifying and addressing labour law violations in sectors with a high-risk of forced labour and child labour.”
However, Malaysia’s minister of investment, trade and industry Johari Abdul Ghani told reporters recently that the country has clear, national labour laws to protect workers against exploitation. This includes requiring valid working permits and adherence to the minimum wage, as well as prohibiting the employment of underage workers, national news agency Bernama reported.
The USTR in its latest announcement acknowledged that some of these trading partners have already adopted measures to combat forced labour, but said that none of the economies named “have both adopted and effectively enforced a forced labor import prohibition to date.”
US workers disadvantaged
Forced labour is defined by the International Labour Organisation (ILO) as all work which is extracted from workers under threat. The organisation’s 11 indicators of forced labour include restriction of movement, retention of identity documents and withholding of wages, among others.
The USTR cited an ILO estimate that as of 2021, 28 million people globally are in forced labour, an increase of 2.7 million since 2016.
“Despite the international consensus against forced labour, governments have failed to impose and effectively enforce measures banning goods produced with forced labour from entering their markets,” said US ambassador Jamieson Greer, who leads the USTR.
“Companies using forced labour benefit from artificially lower labour costs, and, as a result, are able to sell their goods at a lower price than they would otherwise. This disadvantages US workers and exporters,” the USTR said.
The current investigations will focus on the US’ top 60 trading partners, collectively covering more than 99 per cent of US imports in 2024, the agency added.
The US has previously placed import bans on individual companies accused of forced labour through the issuance of Withhold Release Orders by US Customs Border Protection. This has in the past included firms in Malaysia’s palm oil and glove manufacturing sectors.
However, actions on companies such as palm oil producer FGV Holdings and Top Glove have been lifted after the firms took measures to improve labour practices in their supply chains.
Ignore at your own peril
The latest round of investigations by the USTR extend beyond complaints regarding specific firms or products, Hegarty said. “They’re really looking at an economy-wide approach as opposed to a firm-level approach,” he explained.
This means that the investigations could affect a wide range of manufactured products and global supply chains, according to a note by legal firm Clark Hill.
“Companies with exposure to the identified economies should consider monitoring the proceedings closely, evaluating product- and country-level exposure, and assessing whether participation in the comment process, hearing, or related advocacy efforts may be warranted,” it said.
Countries are expected to submit written comments to the USTR by mid-April, with public hearings to begin on 28 April.
The investigations are expected to conclude by the end of July, which is when the Trump administration’s current 10 per cent temporary global tariff is set to expire, said Hegarty.
Singapore-headquartered consultancy APAC Advisors had previously warned in an Eco-Business op-ed that the Trump administration continues to focus on labour standards in order to protect American workers and producers.
“Businesses, investors and the governments of Southeast Asia which do not ensure their accountability for migrant worker’s rights with Trump in the White House do so at their own peril,” wrote the firm.
Hegarty shared a similar opinion: “Although it is tempting to think that the Trump administration will just impose tariffs anyway, that’s no excuse not to make your voice heard, particularly if your practices are good and in line with international standards.”
“At the end of the day, companies really need to remember that they must engage with the US process wherever they can, whether at a firm level, with their industry associations, and with their host governments in the region,” he said.
