As USTR cites failure to prohibit 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 goods 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 restrict imports that were produced with forced labor.
“The results of this investigation indicate that the acts, policies and practices of the Philippines related to the failure to impose and effectively enforce 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 important trading partners to address the importation of goods made with forced labor is unacceptable,” USTR Ambassador Jamieson Greer said in a statement. “This creates a dynamic where American workers are forced to compete globally on an unlevel playing field. We will no longer tolerate this disparity.”
Under the proposal, the USTR said that economies that do not have any measures against forced labor imports will face an additional 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 failed to prohibit the import of goods that were produced with forced labor.
For the rest of the economies, it said these would face an additional tariff of 10%.
It identified six economies: Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan as having “failed to effectively enforce a prohibition on the importation of goods produced with forced labor.”
“Some trading partners have taken initial steps to prevent the importation of forced labor goods, including through USMCA (US-Mexico-Canada Agreement) and commitments in Agreements on Reciprocal Trade. However, each of our trading partners must do more to ensure that trade does not perversely encourage and entrench forced labor globally,” Mr. Greer said.
It said the 60 economies’ failure to impose and enforce a forced labor import prohibition is “unreasonable” as it undermines the aim to curb forced labor globally; allows companies to practice forced labor to produce goods at a lower cost and distorts market conditions for firms that do not use forced labor; and undermines profitability of companies that do not use forced labor.
The USTR said it also was proposing a textile mechanism that would allow for a certain volume of apparel and textile imports to enter the US at a reduced tariff rate, though the duties and volumes were not disclosed.
The announcement comes ahead of the July 24 expiration of a 10% 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.
In the forced labor findings, the USTR said it would exempt from the tariffs a number of products including energy, rare earths and certain other metals, beef, coffee, certain fruits and vegetables, pharmaceuticals, organic chemicals and aircraft parts.
The USTR said it would 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 new tariff on Philippine exports could be the final “nail in the coffin” for exporters already burdened by rising costs amid geopolitical tensions, said Foreign Buyers Association of the Philippines (FOBAP) President Robert M. Young.
“Right now, we are already struggling to be competitive, as far as pricing and costing is concerned,” he said via telephone.
“So, [the tariffs] will add to the cost [of doing business] and buyers might get turned off. The Philippines might be erased from their (American firms’) buying program radar already.”
He noted that most FOBAP members are located in export zones, such as 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 every purchase order to ensure that its manufacturing practices comply with international laws and regulations.
Jose Sonny G. Matula, president of the Federation of Free Workers, said the USTR’s findings serve as a “wake-up call” for the Philippine government to strengthen labor inspection and due diligence mechanisms.
“The key issue is not only whether forced labor exists, but whether government agencies are effectively detecting, investigating, and preventing it in high-risk sectors and supply chains,” he said in a Viber message. — Beatriz Marie D. Cruz with Reuters
previous post
