By Doug Palmer
09/30/2020 11:41 AM EDT Updated: 09/30/2020 06:02 PM EDT
U.S. Customs and Border Protection said Wednesday it was barring imports of palm oil from a large Malaysian producer because of evidence the oil is produced with forced labor.
Why CBP took the step: The order against FGV Holdings Berhad and its subsidiaries and joint ventures is the result of a year-long investigation that found evidence of numerous forced labor practices, including deception, restriction of movement, isolation, physical and sexual violence, intimidation and threats, retention of identity documents, withholding of wages and debt bondage, CBP said in a statement.
The probe also raised concerns that forced child labor is potentially being used in FGV’s palm oil production process, the agency added.
Overall context: The forced labor “withhold release order” was the 13th issued by CBP in the fiscal year ending Wednesday. That is the most in the agency’s history.
Market impact: Palm oil is a common ingredient in products such as processed foods, cosmetics, pharmaceuticals, soap and biodiesel.
Malaysia is the world’s second-largest palm oil exporter, after Indonesia. The Southeast Asian country is forecast to export more than 17 million metric tons of palm oil in the current crop marketing year, according to USDA.
U.S. imports of palm oil from all suppliers are forecast this year at 1.5 million metric tons, or slightly less than a third of total vegetable oil imports of 4.9 million. Total U.S vegetable oil consumption this year is forecast at 16.4 million metric tons, USDA said.
A CBP spokesperson said he was barred from saying how much palm oil the United States has imported through FGV. But the agency does not expect the order “to have a significant impact on total U.S. imports of palm oil and palm oil products,” he said.
Next step: The order takes effect Wednesday at all U.S. ports of entry.
CBP provides importers of detained shipments an opportunity to export their shipments or to submit proof
that the merchandise was not produced with forced labor.
“CBP urges FGV swiftly to eliminate forced labor from its supply chains so that its palm oil and palm oil products are once again admissible into the United States,” the agency spokesperson said.