The Federation of Malaysian Manufacturing (FMM) urged the US to adopt a balanced approach to its proposed Section 301 tariff action on imports linked to forced labour, cautioning that blanket duties could penalize compliant Malaysian manufacturers and disrupt established supply chains.

In a submission to the Office of the United States Trade Representative (USTR), FMM president Jacob Lee Chor Kok said it fully supports efforts to eliminate forced labour from global supply chains but stressed that any additional tariffs should not unfairly affect manufacturers that already comply with stringent labour standards.

“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,” he said in a statement.

The federation also warned that 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 feedback from its members, Lee said the additional costs may be passed directly or partly to US customers, with potential effects on pricing, product availability and delivery times.

Among its recommendations, FMM called on the USTR to retain the existing Annex A exclusions, particularly for electrical and electronics (E&E) products, semiconductors and related product lines, which it described as critical to global supply chains.

It also urged the US not to subject Malaysian products already covered under Section 301 action.

“A key recommendation in FMM’s submission is for USTR to establish a periodic review mechanism, at minimum annually, to assess the continued necessity and appropriateness of any duty rate applied to Malaysian-origin goods,” Lee said.

He stressed that Malaysia has strengthened its efforts to improve labour compliance through reforms to recruitment-fee practices, amendments to labour laws and remediation measures following previous US Customs and Border Protection Withhold Release Orders.

Lee cited the establishment of the Inter-Agency Task Force on Forced Labour – announced by Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani earlier in June – as evidence of the country’s continued commitment to tackling forced labour.

“FMM is of the view that Malaysia’s ongoing reform efforts should be recognised in any future assessment by USTR,” he said, adding that 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.

He also mentioned that FMM would continue to engage with the Malaysian government, the USTR and other stakeholders to support measures that effectively eliminate forced labour while preserving legitimate trade, supply chain resilience and the competitiveness of responsible manufacturers.

Source: SMEAsia

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