The United States has blocked imports from the world's top rubber glove maker just as health care workers are facing a new surge of coronavirus cases in some states.
U.S. Customs and Border Protection imposed a "withhold release order" on two subsidiaries of Malaysia's Top Glove Corp. on Wednesday over evidence of forced labor at their factories.
Malaysia produces roughly two-thirds of the world's disposable rubber gloves, a critical piece of personal protective equipment for health care workers on the front lines of the battle to stem the tide of the novel coronavirus pandemic. Top Glove alone makes about 20 percent of the gloves globally.
"The evidence reveals multiple International Labor Organization ... indicators of forced labor including debt bondage, excessive overtime, retention of identification documents and abusive working and living conditions," the U.S. Customs and Border Protection said in a statement.
The ban on shipments, it added, "sends a clear and direct message to U.S. importers that the illicit, inhumane and exploitative practices of modern-day slavery will not be tolerated in U.S. supply chains."
The CBP said it was aware of the critical need for rubber gloves during the pandemic and that the ban on Top Glove "will not have a significant impact on total U.S. imports of this type of gloves."
Top Glove downplayed the impact of the block on the company, noting that it was a seller's market for glove makers with COVID-19 cases continuing to surge in the United States and elsewhere.
“Other countries can take up these orders easily," the firm's executive chairman, Lim Wee Chai, told reporters in Malaysia late Thursday.
“We have other plans as well if the U.S. does not allow the shipment to enter into their country,” he added, citing Brazil, which now has the second most confirmed COVID-19 cases in the world, as one potential alternative.
The block does not cover all Top Glove imports to the United States, either. The company said the U.S. accounts for a quarter of its total sales and that the two subsidiaries hit by the withhold release order make up only half of those.
Labor rights groups said that raises concerns the company could skirt the ban.
Independent labor rights advocate Andy Hall said there would be "close monitoring by multiple stakeholders across [Top Glove] sites to see whether orders are shifted to get around the CBP" withhold release order and keep exports to the U.S. steady using other subsidiaries.
Even so, he added, Top Glove will "find it hard to sidestep the impact of the ban given the severity of the challenges facing the company's reputation now."
The CBP did not reply to a request to elaborate on its reasons for blocking the company's imports. But Top Glove, reacting to the ban, said in a statement it may have to do with the recruitment fees many of its migrant workers pay middlemen to land jobs at its factories.
Malaysia's rubber glove industry runs on an army of migrant workers from poorer countries in the region lured by the promise of higher wages than those on offer at home. Along the way, many end up in crippling debt to recruitment agents who can charge upwards of $5,000 to set them up at a factory, leaving them virtually enslaved to their employers while they work off their loans at minimum wage.
Top Glove said it has already "resolved" the issue among its migrant workers except for those who paid agents before 2019. But the company said it was working on a plan that could cost it up to $11.7 million to reimburse them and that it hoped to convince the CBP to lift its import ban in a matter of weeks.
The U.S. agency handed down a similar import ban on another Malaysian rubber glove maker, WRP Asia Pacific, in September over similar forced labor concerns, then lifted it in March claiming the factories were by then free of labor abuses.
Just last month, WRP launched a scheme to reimburse its migrant workers for their recruitment fees over the next two-and-a-half years.
Hall said the U.S. import ban on WRP, the first for any Southeast Asian country, had been meant as a warning to the nation's other glove makers to settle their own accounts with their migrant workers. He believes most ignored it thinking the United States would not risk its rubber glove supplies during a pandemic but expects more firms to reconsider, now that a second Malaysian company, considered an industry leader, has been hit.
"We should expect all gloves companies to quickly move to remediate worker recruitment fees now to avoid further sanctions," he said.