FMM calls for balanced US approach on forced labour tariff action

July 08, 2026

Head Office, KL

FMM In the News: THE EDGE, July 5, 2026

KUALA LUMPUR (July 5): The Federation of Malaysian Manufacturing (FMM) says the proposed additional tariff by the US on products imported from Malaysia on grounds of forced labour should not be applied in a manner that penalises compliant manufacturers, or disrupts established trade and supply-chain relationships between the two countries.

"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," said FMM president Jacob Lee Chor Kok in a statement on Sunday.

Lee said FMM has submitted its written comments to the Office of the US Trade Representative (USTR) in response to the proposed Section 301 action involving economies alleged to lack an import prohibition on goods produced with forced labour.

Section 301 of the US Trade Act of 1974 allows Washington to investigate and impose trade sanctions or tariffs on foreign practices that it deems are unreasonable or discriminatory against US commerce. The USTR report on the Section 301 findings released on June 2 proposes a 10% tariff on all products imported from Malaysia, except for exempted goods including those already covered by other tariffs.

Lee said FMM in its submission highlighted 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 FMM’s member feedback, the cost of the tariff may be passed directly or partly to US customers, with potential effects on pricing, product availability and lead times.

"FMM has therefore urged USTR to retain the existing Annex A exclusions, particularly for electrical and electronics products, semiconductors and related product lines, which are critical to global supply chains. FMM also requested that Malaysian goods already subject to Section 232 tariff measures should not be exposed to duplicative tariff treatment under the proposed Section 301 action," he said.

The FMM president said a key recommendation in its 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.

This, he said, is particularly important in view of Malaysia’s ongoing domestic efforts, including the establishment of the Inter-Agency Task Force on Forced Labour announced by Investment, Trade and Industry Minister Datuk Seri Johari Abdul Ghani in Parliament on June 23.

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

FMM also noted that Malaysia has taken concrete steps over the years to improve labour compliance, including remediation following US Customs and Border Protection Withhold Release Orders in affected sectors, reforms to recruitment-fee practices and amendments to labour laws. These developments, Lee said, should be considered as part of the broader context in assessing Malaysia’s response to forced labour risks.

He added that on its part, FMM will continue to engage the Malaysian government, USTR and relevant stakeholders "to support effective, practical and balanced measures that eliminate forced labour while preserving legitimate trade, supply-chain stability and the competitiveness of responsible manufacturers".

Source: https://theedgemalaysia.com/node/809423