The Endangered Asian Century
America, China, and the Perils of Confrontation
Malaysia’s inclusion in the Trans-Pacific Partnership (TPP) trade agreement has given human rights advocates cause for concern. Until last year, the U.S. State Department classified the country as a Tier 3 violator of human rights in its annual Trafficking in Persons Report (TIP). That ranking situated Malaysia among the world’s worst offenders and would have prevented Washington from fast-tracking the TPP’s ratification due to recent federal law. And so, when the State Department suddenly upgraded Malaysia to Tier 2 Watch List status in 2015, which let Washington move forward with the fast track, human rights groups suggested that foreign and trade policy concerns were behind the change.
If the allegations are true, it is discouraging that Washington has softened its stance on Malaysian human rights violations. There is still reason to hope, however, that the United States could leverage Kuala Lumpur into improving its labor conditions through trade. If Washington ratifies the TPP, the treaty’s side agreements with member nations, including Malaysia, would encourage countries to adhere to international standards on forced labor. Perhaps more important, the recent move to close a loophole in the Tariff Act of 1930 has empowered domestic agencies to further prevent goods made with forced labor from entering the United States. This change may represent a promising way to ensure that Malaysia and other countries abide by their commitments.
Malaysia’s track record on human trafficking and forced labor is poor at best, but the TPP will create a new opportunity for Washington to promote change. The TPP includes a chapter on labor protections that requires its signatories to enforce the International Labor Organization’s Declaration on Fundamental Principles and Rights at Work, which prohibits the use of forced and child labor. The agreement also includes a new trade standard that requires all signatories to “discourage […] the importation of goods from other sources produced in whole or in part by forced or compulsory labor, including forced or compulsory child labor.” But for these efforts to work, Washington must be ready to enforce the new rules.
The United States has also undertaken a series of side agreements with TPP members that will help make the treaty’s labor protections a reality. These side agreements, known as Consistency Plans, require signatories to amend a number of their labor laws, in addition to providing regulations that help implement and enforce the new rules. The plans also require states to provide forums where participants can discuss whether or not these laws are being obeyed. Brunei, Malaysia, and Vietnam have all signed Consistency Plans to help keep their national labor laws in agreement with TPP’s standards, as well as other issues. Most importantly, these agreements also force signatories to fund the enforcement of new rules. For example, Malaysia’s Consistency Plan requires the government to strengthen its ability to tackle labor issues with expanded financing and training initiatives.
The United States is also doing more to prevent goods made with forced labor from reaching its shores. The most important initiative on this score is the closure of a loophole in the Tariff Act. The original act prohibited the import of goods made with forced labor, prison labor, or forced child labor, but included an exception in the case of “consumptive demand” for a product. And so the United States was able to import cocoa despite widespread human rights and labor violations in the industry, since it is highly coveted in chocolate manufacturing and cannot be produced domestically. This exception has allowed a wide array of other goods to enter the United States as well, regardless of the labor practices behind their production. But as of February 2016, these imports can now be kept out of the United States. In fact, since the loophole was closed, Customs and Border Protection (CBP) has already prohibited the entry of goods produced by prison laborers, banning soda ash, rayon fiber, and potassium products made by two Chinese companies.
ENFORCEMENT OR BUST
Enforcing the new agreements and regulations will be a major challenge, as they will rely on third parties (such as labor unions, advocacy groups, and trade federations) to petition member states when violations occur. Such petitions can take years to resolve, even when they involve powerful interests. For example, the passage of the North American Free Trade Agreement created a 20-year dispute between Mexican and U.S. trucking companies, which led to an agreement between the two countries in 2011. Trade benefits can be hard to roll back even in cases where petitions are successful, as the negative impact of suspended trade can negatively affect both countries in the dispute.
These challenges have led nongovernmental organizations and Democratic members of the House of Representatives to question whether future presidential administrations would enforce labor standards in Malaysia and other countries, if there is evidence that they have violated the terms of their consistency plans.
The Tariff Act revisions can help address some of these challenges, but agencies such as the Department of Homeland Security (DHS), as well as its CBP and ICE units, will need to undertake large procedural reforms to accommodate their new responsibilities. Washington has allowed the consumptive demand loophole to thrive for decades, which has resulted in an atrophied and virtually useless enforcement system. Currently, the CBP is required to seize goods made with forced labor, but it has no capacity to investigate the sources of most goods, and therefore does not initiate these investigations themselves. For that, it must rely on ICE to conduct investigations through its overseas agents.
This type of law enforcement coordination has proved to be notoriously tricky and could impede progress in the years ahead. Moreover, the CBP has to fulfill two often contrasting roles: trade facilitation and trade enforcement. In other words, the CBP is responsible for bringing in the right goods while keeping out the wrong ones. This may account in part for why investigations, such as a petition against forced and child labor in Uzbekistan’s cotton industry, languish for years as the trade facilitation wing of the CBP questions the actions of its enforcement team.
THE WAY FORWARD
The Tariff Act prohibitions provide the United States with an opportunity to promote human rights and enforce labor agreements. But Washington will need to develop new tools and approaches to its ICE investigations, overcome existing bureaucratic inertia, and find the funding to make these initiatives succeed. The DHS, the CBP, and the ICE must work together to streamline their investigative processes, and to make the current petition process more transparent so that nongovernmental organizations can make stronger cases. These departments should also work with businesses to discuss the new changes to the Tariff Act, making sure that companies obey the law. The CBP, meanwhile, should invest in new technologies, such as supply chain tracing tools that help determine the origin of goods arriving to the United States. The agency could also hold products at the border if they are suspected of having been produced through forced labor, or it could target specific types of goods in industries that are known for having prior labor violations and are doing little to remedy them.
Thankfully, the White House may be willing to tackle this challenge. During the annual meeting of the President’s Interagency Task Force to Monitor and Combat Trafficking in Persons (PITF) last January, U.S. Secretary of State John Kerry said, “Hopefully, in this last year of the administration, we can make a quantum leap in what we can say to the world we were able to accomplish.” The TPP is a legacy issue for U.S. President Barack Obama, and he has championed the agreement as a platform for U.S. leadership on human rights. The Tariff Act’s prohibitions on forced labor could make companies seek out violations in their supply chains, allowing them to resolve issues before they become a problem. Other countries would likely do the same in order to prevent their goods from being stopped at the U.S. border. The United States has a unique opportunity to prove that labor provisions have teeth, and could make Washington a leader on labor issues. In combination, Obama’s capstone trade deal and rigorous enforcement of the Tariff Act could lead to better labor conditions for workers around the world, which is not a bad legacy to leave behind.