As USTR cites failure to ban imports made with forced labor
THE PHILIPPINES is facing the prospect of additional US tariffs, after a US Trade Representative (USTR) investigation found it and 59 other economies had not done enough to curb the importation of products that were made with forced labor.
In its report on the Section 301 investigation, the USTR proposed additional duties on imports from the 60 economies, citing what it described as inadequate measures to limit imports that were produced with forced labor.
“The outcomes of this investigation indicate that the acts, policies and practices of the Philippines related to the failure to impose and effectively implement a forced labor import prohibition are unreasonable and burden or restrict US commerce,” it said.
Last March, the USTR began a forced labor probe on 60 economies under Section 301 of the US Trade Act of 1974.
“The failure of our most significant trading partners to deal with the importation of products made with forced labor is unacceptable,” USTR Ambassador Jamieson Greer said in a press release. “This creates a dynamic where American staff are forced to compete globally on an unlevel playing field. We’ll not tolerate this disparity.”
Under the proposal, the USTR said that economies that should not have any measures against forced labor imports will face a further tariff of 12.5%.
The USTR identified 54 economies, including the Philippines, Australia, Cambodia, China, Japan, Malaysia, Singapore, South Korea, Taiwan, Thailand and Vietnam, as having did not prohibit the import of products that were produced with forced labor.
For the remaining of the economies, it said these would face a further tariff of 10%.
It identified six economies: Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan as having “did not effectively implement a prohibition on the importation of goods produced with forced labor.”
“Some trading partners have taken initial steps to stop the importation of forced labor goods, including through USMCA (US-Mexico-Canada Agreement) and commitments in Agreements on Reciprocal Trade. Nevertheless, each of our trading partners must do more to be certain that trade doesn’t perversely encourage and entrench forced labor globally,” Mr. Greer said.
It said the 60 economies’ failure to impose and implement a forced labor import prohibition is “unreasonable” because it undermines the aim to curb forced labor globally; allows firms to practice forced labor to provide goods at a lower cost and distorts market conditions for firms that don’t use forced labor; and undermines profitability of firms that don’t use forced labor.
The USTR said it also was proposing a textile mechanism that may allow for a certain volume of apparel and textile imports to enter the US at a reduced tariff rate, though the duties and volumes weren’t disclosed.
The announcement comes ahead of the July 24 expiration of a ten% temporary tariff imposed by the Trump administration on Feb. 20, the day the Supreme Court struck down US President Donald J. Trump’s tariffs under the International Emergency Economic Powers Act.
Within the forced labor findings, the USTR said it will exempt from the tariffs quite a lot of products including energy, rare earths and certain other metals, beef, coffee, certain vegetables and fruit, pharmaceuticals, organic chemicals and aircraft parts.
The USTR said it will accept public comments on the proposed tariffs and other remedies through July 6, with a public hearing scheduled for July 7.
‘NAIL IN THE COFFIN’
A brand new tariff on Philippine exports might be the ultimate “nail within the coffin” for exporters already burdened by rising costs amid geopolitical tensions, said Foreign Buyers Association of the Philippines (FOBAP) President Robert M. Young.
“Straight away, we’re already struggling to be competitive, so far as pricing and costing is anxious,” he said via telephone.
“So, [the tariffs] will add to the price [of doing business] and buyers might get turned off. The Philippines is perhaps erased from their (American firms’) buying program radar already.”
He noted that almost all FOBAP members are positioned in export zones, corresponding to free trade zones and special economic zones, which operate under state authorities that oversee compliance with labor laws.
Mr. Young said the group’s members sign a contract agreement with its American buyers for each purchase order to be certain that its manufacturing practices comply with international laws and regulations.
Jose Sonny G. Matula, president of the Federation of Free Staff, said the USTR’s findings function a “wake-up call” for the Philippine government to strengthen labor inspection and due diligence mechanisms.
“The important thing issue will not be only whether forced labor exists, but whether government agencies are effectively detecting, investigating, and stopping it in high-risk sectors and provide chains,” he said in a Viber message. — Beatriz Marie D. Cruz with Reuters