Trump's latest tariff salvo no fix for global issue of forced labour

By Olivia Le Poidevin, Christoph Steitz and Josephine Mason

LONDON, June 5 (Reuters) - President Donald Trump's threat to slap new tariffs on trade partners the U.S. accuses of failing to crack down on forced labour will do little to fight modern slavery — and could even make things worse, experts, business groups and some human rights groups say.

In its latest trade salvo, the Trump administration proposed additional duties of 10% or 12.5% on imports from 60 countries for failing to curb trade in goods made with forced labour, an assertion that U.S. trading partners rejected.

The plan from the U.S. Trade Representative's office comes from a Section 301 unfair trade practices investigation designed to help restore Trump's emergency tariffs, struck down by the U.S. Supreme Court in February.

Trade and human rights experts said it would do little to solve widespread issues of child labour, forced labour and other abusive employment practices in the global supply chain.

"The essence of this new measure has very little or anything to do with forced labour. It's just a new justification for trade tariffs," said Ram Ben Tzion, co-founder and CEO of digital shipment-vetting platform Publican.

According to the International Labour Organization's most recent global estimates, there are 27.6 million people in forced labour — an increase of about 2.7 million since 2016. Nearly half of all forced labour cases in the private economy are found in export-related sectors: manufacturing, construction, agriculture and fishing, and mining.

THE EU COMPARISON    

The U.S. case against the European Union, one of its largest trading partners, has drawn particular scrutiny.

The USTR report criticised the EU's Forced Labour Regulation, which starts to apply in December 2027. It sets a higher bar for proof of violations than U.S. rules and requires authorities to establish a substantiated concern before acting.

The European Commission said the tariffs were unjustified, reiterating its commitment to the trade deal sealed with Washington last year that capped the U.S. tariff rate on most EU goods at 15%.

International human rights group Walk Free said no G20 country is doing enough to combat forced labour relative to its wealth. The U.S. is among the top 10 countries with the largest number of people living in modern slavery, Walk Free said.

International Chamber of Commerce Deputy Secretary-General Andrew Wilson said the "arbitrary nature" of the tariffs was a cause for concern.

"It doesn't make sense if the object of this is to enhance controls on modern slavery," he said, adding planned EU measures once implemented would eventually be broader than U.S. ones.

"The EU regime may ultimately have broader market reach because it covers imports, products sold in the EU, and exports from the EU."

Sebastian Ruenz, ESG and supply chain specialist at law firm Taylor Wessing, agreed the EU's framework was not as weak as Washington implied. The EU ban covers products made with forced labour worldwide, regardless of the country of origin. 

"It will be structurally far more comprehensive than the U.S. law," he said, noting that Germany, with the Supply Chain Due Diligence Act, and France, with a similar law, have already established national standards regarding forced labour.

TARIFFS AS A TOOL: POTENTIALLY COUNTERPRODUCTIVE

Businesses, struggling to navigate Trump's volatile trade war, which has piled on costs and upended supply chains over the past year, were still digesting the latest threat of levies.

Rick Woldenberg, CEO of educational toy maker Learning Resources, disputed the premise of the investigation which linked efforts to tackle modern slavery with U.S. commercial interests.

"The reason that ... countries have signed up in opposition to forced labour is not because of competitive reasons, it's because it's immoral," he told Reuters.

Even those who broadly support import bans as a weapon against modern slavery doubted whether tariffs like those threatened by Trump, calibrated to trade volumes rather than to the severity of exploitation, could achieve meaningful change. 

The most extreme forms of forced labour — state-imposed systems in China's Xinjiang region, Turkmenistan's cotton sector, and North Korea — are not the primary targets of the tariffs, which are instead shaped by trade volumes and geopolitical considerations, said Hélène de Rengerve, senior advocate for corporate accountability at Human Rights Watch.

"It is also not clear how will this be an incentive to actually improve the situation," she said. "It might even create more political resistance in some countries. I fear it might be counterproductive to the objective of fighting forced labour."

(Reporting by Olivia Le Poivedon in Geneva, Christoph Steitz in Frankfurt and Josephine Mason and Alexander Marrow in London; Additional reporting by Alessandro Parodi in Gdansk; Writing by Josephine Mason; Editing by Mark John, Adam Jourdan and Rod Nickel)