AS the Malaysian economy faces challenges from COVID-19, the country's palm oil exports to the US come under a new threat through petitions to block the importation of its palm oil into the US.
On April 20, Hong Kong–based organisation Liberty Shared filed a petition with the US Customs and Border Protection (CBP) to block the imports of certain palm oil products of Sime Darby Plantation (SDP), accusing SDP of using forced labor in the production of the products.
This followed another petition filed against FGV Holdings Berhad in June 2019 by New York-based law firm Grant & Eisenhofer ESG Institute, alleging the use of forced labour (as well as child labour) in the company's palm oil plantations. The US Tariff Act of 1930, as amended, bans the importations of any goods made with forced labour into the country. Anyone, according to the CBP Regulations, can file a petition to exclude the imports of any product on forced-labour grounds.
Although the CBP website provides information regarding the process, certain basic questions remain unanswered. For example, can the accused companies see the entirety of the petitions submitted to the CBP? In the case of SDP, Liberty Shared's website has only published a summary of its petition against SDP.
Will the CBP investigate every petition? What are the standards? How long does it take for the CBP to conduct its investigation? No timeframe is provided. The task force established by the White House in May this year is expected to eventually establish the procedures and timelines for petitions submitted to the CBP regarding forced labour allegations.
If they are listed companies, media statements in response would follow. SDP did this first on July 8, expressing grave concerns regarding the petition and the desire to engage Liberty Shared to further understand the allegations. (SDP and Liberty Shared have since been exchanging media statements regarding the petition).
Allegations linking the Malaysian palm oil industry with forced labour practices are not new. It also isn't the only industry that stands accused. Electronics and garments industries have also been associated with forced labour.
Of concern is that these allegations have found their way into annual reports of US government agencies, which cover a variety of issues – such as human rights in countries around the world and international cooperation in combating human trafficking.
For example, two reports published by the US State Department, Country Report on Human Rights Practices (Human Rights Report) and Trafficking in Persons Report (TIP Report) have raised concerns regarding forced labour in Malaysia.
These reports, required by US law, are primarily for members of the US Congress and government officials. As such, and for their main readers, these reports are the official source of information regarding the production of palm oil in Malaysia.
Unlike the CBP petitions, forced labour allegations repeated in these reports do not directly lead to the prohibition of the target products into the US. The allegations published in the TIP Report, for example, are intended to raise the US government's concerns regarding other countries' efforts in addressing human trafficking problems.
Additionally, the US Labour Department (DOL) under the US Trafficking Victims Protection Reauthorisation Act is required to publish every other year a list titled 'List of Goods Produced by Child Labor or Forced Labor' or TVPRA. This list has continued to identify Malaysian palm oil as products produced by forced labour for nearly a decade.
When allegations of forced labour in the Malaysian palm oil industry are repeated in several US agency publications year after year, they are likely to be accepted as truths however false such perceptions may be.
Once upon a time, I cared deeply about Malaysia's image in Washington. So, I used to read these reports closely. These reports are not the novels of Thomas Hardy that give pleasures after the experience of pain. They were pure (and lasting) pain.
The State Department's Human Rights Reports, for example, were often dated, incomplete, or puffed up. I was sceptical of 'civil society,' the primary source of the State Department's information. I was upset when one isolated event, for example, was depicted as Malaysian culture.
Their authors, in my view, were US bureaucrats whose understanding of the facts were shallow. Their knowledge and understanding of Malaysia were woefully thin. They were insufficiently critical or sceptical in their evaluation of information that was presented to them. They seemed to have been easily misled by skilful purveyors of misinformation.
It would not surprise me that a Malaysian government official reading these reports would have similar concerns. The official might have serious ideological problems with these reports.
The hubris of the US sitting in judgement of how another country accords human rights to its citizens (the objective of Human Rights Reports) might be palpable. That the US is grading another country's anti-human trafficking efforts (what TIP Reports do annually) might be hard to take.
Nonetheless, the reality is this: these reports, taken together over several years, have painted a picture of forced labour as an issue the Malaysian government has failed to address.
So, unless more efforts are made to challenge these reports with concrete and affirmative evidence, the negative image they have created will stay with US policymakers and decision-makers to the detriment of Malaysia.
Given palm oil's significance to the Malaysian economy, Malaysia must be forceful and persistent in its response to these allegations. The fact that palm oil continues to be on the TVPRA List, for example, indicates that more is needed to secure the removal of Malaysian palm oil from that list.
According to the DOL's website, Malaysia's last response to the TVPRA List was in 2015. There was no record of Malaysia's responses to subsequent editions of the TVPRA List. It is also unclear if Malaysia has ever formally responded to forced labour allegations in other US government publications.
All these responses might be useful as the CBP decides whether to "investigate" a petition to block the imports of Malaysian palm oil products. Further, such a response would give Malaysia the following opportunities:
To challenge the sources of the US information. For example, the recent Human Rights Report, again, mentioned "a variety of sources reported forced labour." The Malaysian government may seek clarification as to the sources, assuming it disputes these claims or provides facts and data to refute them.
To provide new affirmative evidence. The Human Rights Report and TIP Report suggest that forced labour problems in Malaysia's oil palm industry are rooted in a foreign-labour recruitment system rife with corruption and other criminal activities. Maybe Malaysia would like to offer new evidence to show its efforts to address this specific issue.
To protect the image of Malaysia's palm oil industry. Malaysia can publish its response as part of the larger effort to counter anti-Malaysian palm oil campaigns. Malaysia's response, if published widely, may rally the support of the rakyat in defence of the reputation of the palm oil industry.
US government reports, the TVPRA List in particular, have created specific reputational concerns for companies that source Malaysian palm oil. Many US-based companies now face reporting requirements which demand that they disclose efforts to eradicate forced labour from their supply chains.
In addition to responding to the US government reports, it is in Malaysia's reputational and economic interest to engage buyers of Malaysian palm oil. If Malaysia has not been proactive in reaching out to these companies to address their concerns regarding the use of forced labor in the industry, the time has come to do so.
These companies, for example, should have accurate and timely information regarding Malaysia's efforts to address forced labour issues. Indeed, Malaysia would benefit tremendously from an effort to assuage the American consumers' concerns.
Malaysia may have taken significant steps to eradicate forced labor in its palm oil industry. Hopefully, the complaints regarding the current foreign labour recruitment system are being looked into seriously.
Hopefully, those behind the corrupt and fraudulent foreign-labor recruitment system will be held accountable. Hopefully, Malaysia will respond to the US government's forced-labour allegations.
Hopefully, Malaysia will update American palm oil buyers about its forced-labour elimination efforts. Actions would go a long way to maintain Malaysia's share of US palm oil imports.
The writer is Washington, D.C.-based lawyer and Adjunct Professor at the Faculty of Law, University of Malaya.