Don’t punish compliant Malaysian manufacturers with blanket tariffs, FMM tells US

KUALA LUMPUR, July 5 — The Federation of Malaysian Manufacturing (FMM) has urged the United States (US) to adopt a balanced approach to its proposed Section 301 tariff action on imports linked to forced labour, cautioning that blanket duties could penalise 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 today.

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 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 232 tariffs to additional duties under the proposed 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.

He cited 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, 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,” Lee 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 said FMM would continue engaging the Malaysian govt, 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.

On June 2, the USTR published its findings under the Section 301 investigation on forced labour involving Malaysia, and proposed a 10 per cent tariff on Malaysian goods upon the expiry of the tariff imposed under Section 122 of the Trade Act 1974 on July 24. — Bernama