Obamas Trade Agenda Rewards U.S.

Companies That Profit From Slavery

By Zach Carter

WASHINGTON President Barack Obamas effort to include Malaysia in a major pending

trade pact has baffled human rights advocates, who see it as a reward for a regime
with one of the worlds worst human trafficking records. But the myriad interests
involved in the trade fight include some very large American corporations, which
are currently padding their profits with labor costs kept low by modern-day slavery
in Malaysia.

Major U.S. electronics brands, including Intel, AMD, Apple, Hewlett-Packard, Texas
Instruments and Dell, have relied on Malaysian manufacturing for years either in
their own factories, or through facilities operated by their suppliers. Computer
processors, hard drives, smartphone parts and other consumer electronic devices are
all part of the slavery system more than one-fourth of all workers in the
Malaysian electronics industry are victims of forced labor, according to a damning
2014 report commissioned by the U.S. Department of Labor.

U.S. companies say that in the wake of that report, they have enacted corporate
policies to root out slave labor from their supply chain. While labor experts
applaud the formal changes, they also say that actually implementing them is nearly
impossible under current Malaysian government policies. And indeed, American firms
have relied on Malaysian labor in large part due to its extremely low cost.

Some of the U.S. companies that operate within Malaysia have had privileged access
to Obamas Trans-Pacific Partnership as members of special Industrial Trade
Advisory Committees. While the terms of the TPP deal remain classified information
shielded from the American public, ITAC members have access to negotiation
documents. Apple, Intel and Hewlett-Packard all have such access, as does the
Semiconductor Industry Association, which includes Texas Instruments, AMD, Intel
and other processor manufacturers. The TPP talks, which are still ongoing, include
the United States, Malaysia and 10 other nations.

The Malaysian governments indifference to human trafficking abuses across a host

of industries now threatens Obamas trade agenda. The U.S. State Department put
Malaysia on its formal list of the worst human trafficking abettors last year,
prompted by years of government inaction and reports that Malaysian government
officials actually profit from human trafficking with impunity. Landing on the
State Departments bad guys list takes hard work Malaysias peers on the list
include Iran and North Korea. Many countries with horrible human trafficking
records, including Rwanda and Qatar, have higher State Department ratings than
Malaysia.

In order to pass his TPP deal, Obama needs so-called fast track powers, which bar
Congress from filibustering or amending whatever deal Obama reaches. In late May,
the Senate passed a trade bill that would block fast track privileges for trade
bills with countries on the State Departments list of worst human trafficking
offenders.

Human rights groups heralded the language, which was authored by Sen. Robert
Menendez (D-N.J.). So did Sen. Elizabeth Warren (D-Mass.), who said inclusion in
TPP is an opportunity for the United States to use our leverage to get countries
like Malaysia to clean up their acts. The Obama administration, by contrast,
claims that including Malaysia in the TPP deal will give it more policy tools to
fight human trafficking in Malaysia.

TPP is on track to require signatory countries to address forced labor through

enforceable labor provisions, which would be a major step forward in regional and
international efforts to address this problem, an administration official told
HuffPost. Further, we are working with Malaysia on specifications to help ensure
that it can meet this commitment.

But Obamas proposed compromise would not require the Malaysian government to
actually alleviate human trafficking problems in order to enjoy expanded trade
benefits from the United States. Human rights advocates have consistently said
Malaysia should be required to overhaul its trafficking policies before being
granted new trade preferences.

Forced labor is endemic to the Malaysian economy. It is an integral part of the

electronics sector, which is responsible for more than a quarter of all jobs in
Malaysia, and extremely widespread, festering in the construction workforce,
agriculture, domestic service and any other industry reliant on foreign workers.
Most trafficking victims are not native Malaysians, but immigrants who come to
Malaysia from Indonesia, Thailand, Bangladesh, Nepal and other countries, often
fleeing political oppression or natural disasters.

The darkest side of the Malaysian human trafficking business was revealed last week
with the discovery of a mass gravesite near the northern border with Thailand. At
least 139 graves were discovered, some with multiple bodies. The Malaysian
government had been alerted to reports of illegal jungle camps for labor smugglers
for almost a decade, according to British newspaper The Guardian, but has not
pursued the details.

Workers who make it to Malaysian electronics factories arent dying in wooded death
camps. Theyre just trapped in terrible situations, according to the 2014 report,
which was performed for DOL by the nonprofit group Verite. The report showed that
U.S., European and Japanese companies that operate in Malaysia are heavily reliant
on labor recruiters who charge workers hefty up-front fees to get their jobs,
typically creating a significant debt burden they have to work to pay off out of
paltry wages. Recruiters often confiscate passports and immigration papers, making
it impossible for workers to leave the country. Workers frequently live in shabby
housing provided by the recruiters, who put restrictions on travel beyond the
housing complex or the factory.

Some American firms have operations in Malaysia where they directly employ workers
for their own factories. But these firms also rely on other suppliers, who in turn
rely on recruiters.

The Malaysian government hasnt substantively altered any of its labor policies in
the year since the Verite report was published, although some companies have
announced changes in corporate policies. The Electronic Industry Citizenship
Coalition, which includes all of the companies mentioned in this article, said in
January that it would improve oversight of labor conditions with additional audits
of subcontractors involved in the supply chain.

While the EICC Code of Conduct explicitly bans trafficked and forced labor,
completely eradicating it in the global electronics industry supply chain remains a
challenge for everyone including EICC members, the organization said in January.

Apples policies have gone further. Any Malaysian company in its supply chain must
reimburse workers who have been forced to pay up-front fees as a condition of
employment. Hewlett-Packard requires every company in its supply chain to directly
hire its own employees they cant work indirectly for a recruitment firm.

Intel and Texas Instruments say they do not use recruited foreign labor in their
own factories, but acknowledged that suppliers have done so. The companies say they
forbid forced labor among their suppliers as a matter of company policy. Dell says
it thoroughly audits all of its suppliers for abusive practices, and has replaced
its suppliers when they have failed to improve conditions. AMD referred HuffPost to
the EICC.

But cheap foreign labor remains a key attraction and competitive advantage for
Malaysian middlemen that work with major American brands. Malaysian law makes it
difficult to employ those workers without going through recruitment firms. Until
Malaysia changes its immigration policies, human rights watchdogs expect forced
labor to remain a cornerstone of the electronics industry.

While many companies have stayed out of the political spotlight on TPP, Apple,
Hewlett-Packard and Intel are all members of the U.S. Business Coalition for TPP,
which supported the pact long before Menendez sounded a legislative alarm on human
trafficking in Malaysia.

While Obama and Republican leaders support TPP, the vast majority of Democrats and
a bloc of tea party Republicans are opposed. In mid-May, Menendez acquiesced to
compromise language that would have allowed Malaysia to participate in TPP while
taking concrete steps to address human trafficking even if those steps did not
actually result in any substantive changes. But his original amendment effectively
barring Malaysia from the pact nevertheless passed the Senate. On Monday, Menendez
authored an op-ed for Roll Call opposing the half-measure and urging the House to
block Malaysia from the deal unless it improves its human trafficking record. House
Ways and Means Committee Chairman Paul Ryan (R-Wis.) plans to scrap the slavery ban
with an amendment to a customs bill.