U.S. bans importation of palm oil from Malaysia’s FGV Holdings on alleged use of forced labour

USA – The United States has blocked importation of palm oil and palm oil products from a Malaysian producer FGV Holdings Bhd and its subsidiaries together with its joint ventures.

The U.S. Customs and Border Protection (CBP) directed the issuance of a Withhold Release Order (WRO) against palm oil and palm oil products made by the company based on information that indicated it uses forced labor in its operation.

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FGV, one of the world’s largest crude palm oil producer and some other suppliers of the oil used in food and cosmetics to biodiesel, have long faced allegations from rights groups over labour and human rights abuses.

“The use of forced labor in the production of such a ubiquitous product allows companies to profit from the abuse of vulnerable workers.”

Brenda Smith – Executive Assistant Commissioner of CBP’s Office of Trade

According a press-release by CBP, the move was the result of a year-long investigation that revealed signs of forced labour such as abuse of the vulnerable, deception, physical and sexual violence, intimidation and threats, and retention of identity documents, withholding of wages, debt bondage, abusive working and living conditions, and excessive overtime.

The investigation also raised concerns that forced child labor is potentially being used in FGV’s palm oil production process.

“The use of forced labor in the production of such a ubiquitous product allows companies to profit from the abuse of vulnerable workers,” said Brenda Smith, Executive Assistant Commissioner of CBP’s Office of Trade.

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“These companies are creating unfair competition for legitimately sourced goods and exposing the public to products that fail to meet ethical standards,” she added.

Federal statute 19 U.S.C. 1307 prohibits the importation of merchandise mined, manufactured, or produced, wholly or in part, by forced labor, including convict labor, forced child labor, and indentured labor.

The move is the latest blow to the palm oil industry after the spread of the coronavirus shuttered restaurants, curbing demand for cooking oil.

Malaysia, the second-biggest shipper of palm oil to the U.S. and the world’s second-largest producer, is also grappling with a chronic worker shortage after the pandemic restricted travel.

FGV response to the palm oil ban

FGV in response to the issue said that all the issues raised have been the subject of public discourse since 2015 and that they have taken several steps to correct the situation.

“FGV is disappointed that such decision has been made when FGV has been taking concrete steps over the past several years in demonstrating its commitment to respect human rights and to uphold labor standards,” it said in a statement.

Efforts the company has been carrying out in honouring its commitment, include strengthening its procedures and processes in the recruitment of migrant workers.

To this end FGV has established four One-Stop Centres in Malaysia and in source countries namely in India and Indonesia, to strengthen the pre-departure and post-arrival orientation programmes for its migrant workers.

About 84% of palm plantation workers in Malaysia, or some 337,000 workers, are migrants from countries including Indonesia, India and Bangladesh.

Also, FGV states that it has committed to paying official costs associated with the recruitment of migrant workers, which include airfare and costs for work permit, visa, medical check-up and insurance.

In addition, the company indicated it is pioneering the implementation of the electronic wallet (e-wallet) cashless payroll system for its plantation workers thus does not with-hold any payments and has prove of it.

On allegation of retaining its workers’ passport the oil producer stated that it has installed a total of 32,250 safety boxes throughout all its 68 complexes, as an option for migrant workers to keep their passports safely, among other measures.

About 84% of palm plantation workers in Malaysia, or some 337,000 workers, are migrants from countries including Indonesia, India and Bangladesh.

In 2019, US$441 million worth of tropical oils were imported to the U.S. from Malaysia, much of that being refined palm oil, according to U.S. Department of Agriculture data.

Through the first seven months of 2020, the shipment volumes were down 15%.

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