US to block exports not meeting labour standards

Thai exporters must change labour practices to avoid new stricter US standards warns the Federation of Thai Industries (FTI).

INTERNATIONAL TRADE & THE LAW

US block exports not meeting labour standards

15/08/2016
Pawee Sirimai & Apornrath Phoonphongphiphat

A newly enforced US law could become another trade barrier blocking Thai exports.

Exporters may need to adjust to avoid restrictions under the US law's stricter labour standards.

US President Barack Obama endorsed a new Trade Facilitation and Trade Enforcement Act to enforce these stricter standards earlier this year. The law is a broad update of a US trade law.

BAN ON IMPORTS OF GOODS PRODUCED BY FORCED LABOUR

The update will allow a ban on any imported good produced by convicts or forced or indentured labour, said Vallop Vitanakorn, vice- chairman of the Federation of Thai Industries (FTI).

Indentured labour is "unfree labor under which an employee is bound by a contract (indenture) to work for a particular employer, for a fixed period of time." Usually the contract is a loan contract, so the labourer is essentially collateral for the loan and stuck in a sort of slave-like relation until the loan is paid off.

Previous US trade laws such as the Tariff Act of 1930 had loopholes that allowed the import of goods where US demand outstripped domestic production, according to Mr Vallop.

The new trade law eliminates such exemptions and loopholes, forcing all exporters to upgrade their labour standards immediately to avoid being banned by the US.

AGGRESSIVE CAMPAIGN TO ELIMINATE FORCED & CHILD LABOUR IN GLOBAL SUPPLY CHAIN 

The US is one of Thailand's top three export markets. Exports account for more than 60% of Thailand's GDP.

The move was seen as a more aggressive US approach in addressing the issues of forced and child labour used in the global supply chain.

IMPACT ON THAILAND

Thai exporters have been hit hard the past few years, especially in the seafood sector (for example, see here, here & here).

The US downgraded Thailand from the Tier 2 Watch List to the lowest level, Tier 3, in its 2014 Trafficking in Persons (TIP) report.

The EU also issued a yellow card to Thailand for accusations of Illegal, Unreported and Unregulated (IUU) fishing here.

The new law will have a broader effect on Thai exports than any other trade barrier because it covers all goods.

LABOUR PRACTICES: PAYMENT & LIVING CONDITIONS 

Thai labour-intensive industries such as the garments or clothing industry will be affected the most because they rely heavily on migrant workers.

Even if these migrant labourers are working in Thailand legally, some labour practices used by Thai employers may not be acceptable under the new US law (see examples here & here).

This might include wage payment practices such as holding back wages or living conditions such as taking the passports or documents of workers away, so that they are not free to leave.

[For one case study see: D. Arnold_& K. Hewison (2005) “Exploitation in Global Supply Chains: Burmese Workers in Mae Sot,” Journal of Contemporary Asia, download pdf file here]

Major Thai companies have started to adjust their practices, especially food-related industries, to avoid a US import ban.

BETAGRO SETS UP COMPANY-WIDE LABOUR STANDARDS

Betagro Group, one of the country's leading poultry breeders and agribusinesses, has improved its poultry raising process at all of its contracted farms throughout the supply chain.

In contract farming and other outsourcing arrangements, it is often difficult to ensure that good labour standards are followed (see example in Phuket's tourism industry here).

The company has set up a special company-wide Betagro Labour Standard to be applied to all supply chains that meets both Thai and international standards.

The company also recently coordinated with local government authorities to check up on all contracted poultry farms in Lop Buri province, the hub of the industry in Thailand with over 300 poultry farms in the province.

CERTIFICATION AS ONE WAY TO ENSURE COMPLIANCE

Another example is Mitr Phol, Thailand's top sugar producer, which wanted to retain its position as the industry leader by pursuing Bonsucro certification so that it would be better accepted in the global market.

Bonsucro is a global multi- stakeholder organisation founded in 2008 to oversee global sugar industry standards.

Bonsucro awards certificates to members who meet its stringent criteria, which focus on human rights, social responsibility and economic viability.

The company finally was awarded the Bonsucro certificate this year, making it one of the Thai industry leaders guaranteed to produce using higher labour standards.

http://www.bangkokpost.com/business/news/1061844/new-us-law-may-vex-exporters

สามารถฝึกอ่านออกเสียงและดูคำแปลได้ที่ : http://www.bangkokpost.com/learning/learning-from-news/1062245/us-to-block-exports-not-meeting-labour-standards