The recent developments affecting the palm oil and rubber gloves exports to the United States of America are a real cause of concern. In particular, the US import bans technically known as Withholding Release Orders (WROs) imposed on Sime Darby Plantation and FGV Holdings along with the EU’s anti-palm oil campaigns are “hurdles” to the palm oil industry.
https://www.malaymail.com/news/money/2021/12/19/a-year-of-two-halves-for-palm-oil-sector/2029554.
In my view, they are more than “hurdles.” Unless these WROs are revoked or modified, the products would not be allowed to enter the US. As such, the WROs could be devastating to the Malaysian economy, especially so when combined with the WROs imposed on several Malaysian rubber gloves companies. The two products are major Malaysian exports and the WROs’ full ramifications for the country’s economy and reputation remain to be seen.
Should we be surprised at all?
Allegations that Malaysia’s major exports to the US used forced labour in their productions are certainly not new. In her 2020 New Straits Times article, Dr Alima Joned makes this point.
She informs us that these allegations can be found in numerous US government official reports for more than 10 years. She urges the Malaysian Government to respond to these allegations because failure to do so is detrimental to Malaysia.
So she writes, “When allegations of forced labour in Malaysian palm oil production are repeated in several US agency reports year after year, the allegations are likely to be accepted as the truths however false such perceptions may be.”
Dr Alima calls the Malaysian Government to respond to these allegations. Where the allegations are credible, she urges the Government to investigate them further. She similarly calls the private sector to reach out to US buyers of Malaysian palm oil products to assuage their concerns, assuming the allegations are baseless. On the other hand, if the allegations are credible, Malaysian companies must take the necessary steps to address the forced labour concerns.
The New Straits Times published Dr Alima’s article on August 29, 2020. Since then, in addition to FGV Holdings, SDP and several rubber gloves producers have also been sanctioned with these WROs. Her published article can be found at:
https://www.nst.my/opinion/columnists/2020/08/620448/act-fast-quash-smears-against-palm-oil-industry
It is a long article as it deals with a complex subject. It may be challenging for impatient readers to comprehend its value without the subheadings that are in the original version.
I reproduce below the original version of the article.
As long as I know Dr Alima, and I have known her for over 30 years, she is a patriot known for her fierce (but tempered) defense of Malaysia in Washington. See Dr Alima’s background in my comments on her remarks regarding the globalization of Malaysian companies and the challenges of cross-legal culture at https://www.newsarawaktribune.com.my/the-conundrum-of-cross-legal-culture/
We certainly need more such champions in other capitals of the world – Malaysians who still have a heart for their motherland.
As a lover of literature, I find the way she describes her experience reading US Government reports on Malaysia very charming. She writes:
“Once upon a time, I cared deeply about Malaysia’s image in Washington. So, I used to read these reports closely. They 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 skeptical 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 skeptical evaluation of information that was presented to them. They seemed to have been easily misled by skillful purveyors of misinformation.”
Indeed, she still cares deeply about Malaysia’s image in Washington. She still reads these reports and urges us, especially relevant Malaysian officials and private sector executives, not only to read them, but to take the necessary actions.
Speaking of defending Malaysia’s reputation in Washington and elsewhere, it would take a capable, credible, and experienced team that understands the many facets of the challenges Malaysia is facing. It requires a team that is very knowledgeable of Malaysia – a team that can, not only react to negative campaigns, but one that can also compellingly tell Malaysia’s story — a story of a country on the brink of a developed status; of a vibrant democracy; of a multi-racial and multi-religious society that the US should want to pursue as a friend.
Responding to Allegations of Forced Labour in the Malaysian Palm Oil Industry
Dated 27 August, 2020
By Alima Joned*
*Alima Joned is a Washington, D.C–based lawyer and an Adjunct Professor at the Faculty of Law, Universiti Malaya.
Sudah jatuh ditimpa tangga. This may well be the story of Malaysian palm oil and rubber gloves exports to the United States.
As the Malaysian economy is facing challenges of COVID-19, the country’s palm oil exports to the US came under a new threat. What’s to be done? Plenty.
Malaysia must be steadfast in her battle against the new onslaught on the Malaysian palm oil industry.
- Petitions to block the importation of Malaysian palm oil into the United States
On 20th April 2020, Hong Kong–based organization 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).
SDP was accused of using forced labor in the production of the products. This petition 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 labor (as well as child labor) in the company’s palm oil plantations.
The US Tariff Act of 1930, as amended, bans the importations of any goods made with forced labor into the country.
Anyone, according to the CBP Regulations, can file a petition to exclude the imports of any product on forced-labor grounds.
Although the CBP website provides information regarding the process, certain basic questions remain unanswered.
For example, immediate questions that come to mind:
- Can the accused companies see the entire 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? Pursuant to the CBP Regulations, a petition will be investigated “as appears to be warranted by the circumstances of the case.” 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 labor allegations.
In the face of these serious allegations, how have the accused companies responded?
If they are listed companies, media statements in response would follow. SDP did this first on 8th July 2020, 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 of the Use of Forced Labor in US Government Reports
Allegations linking the Malaysian palm oil industry with forced labor practices are not new. It also isn’t the only industry that stands accused.
In addition to palm oil, electronics and garments industries have also been associated with forced-labor.
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 labor in Malaysia.
These reports, required by US law, are primarily for members of the US Congress and US government officials. As such, and for their main readers, these reports are the official sources of information regarding the production of palm oil in Malaysia.
Unlike the CBP petitions, forced labor 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 Labor Department (DOL) under the US Trafficking Victims Protection Reauthorization Act is required to publish every other year a list titled List of Goods Produced by Child Labor or Forced Labor. This list, known as the TVPRA List, has continued to identify Malaysian palm oil as products produced by forced labor for nearly a decade.
When allegations of forced labor in the Malaysian palm oil industry are repeatedly in several US agency publications year after year, they are likely to be accepted as truths however false such perceptions may be.
- Reading US Government Reports as a Professional
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 skeptical 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 skeptical evaluation of information that was presented to them. They seemed to have been easily misled by skillful purveyors of misinformation.
It would not surprise me that a Malaysian government official reading these reports similar concerns.
The official might have serious ideological problems with these reports.
The hubris of the US sitting in judgment 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 labor 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 the US policymakers and decision-makers to the detriment of Malaysia.
- Malaysia Must Be Persistent in Response to Forced Labor Allegations
Given palm oil’s significance to the Malaysian economy, Malaysia must be forceful and persistent in her 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 labor 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 product.
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 labor.” The Malaysian government may seek clarification as to the sources, assuming it disputes these claims or provide facts and data to refute them.
- To provide new affirmative evidence
The Human Rights Report and TIP Report suggest that forced labor problems in Malaysian oil palm industry are rooted in a foreign-labor 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 Malaysian 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 in the country, may rally the support of the rakyat in defense of the reputation of the Malaysian palm oil industry.
- Reaching Out to American Palm Oil Consumers
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 that require them to disclose efforts to eradicate forced labor from their supply chains.
In addition to responding to the US government reports, it is 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 labor 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 the Malaysian palm oil industry.
Hopefully, the complaints regarding the current foreign labor 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-labor allegations.
Hopefully, Malaysia will update American palm oil buyers about her forced-labor elimination efforts.
But, let’s not live only in hope. Actions would go a long way to maintain Malaysia’s share of US palm oil imports.
