US directs ports to detain Top Glove shipments from Malaysia, citing forced labor

Date: Tuesday, April 6th, 2021
Source: Supply Chain Dive

Dive Brief:

1. Customs and Border Protection has directed U.S. port personnel to seize imports of gloves produced by Top Glove in Malaysia, citing evidence of forced labor in the manufacturer's supply chain.

2. "CBP has sufficient information to believe that Top Glove uses forced labor in the production of disposable gloves," the agency stated Monday. The finding follows a withhold release order from last July "based on reasonable but not conclusive information" of forced labor in the manufacturer's production, which resulted in detained imports from two Top Glove subsidiaries.

3. The seizure will not significantly impact total U.S. imports of disposable gloves, according to John Leonard, CBP acting executive assistant commissioner for trade.

Dive Insight:

CBP has stepped up its crackdown on forced labor in supply chains, including gloves from Malaysia and cotton and tomatoes from Xinjiang. It issued its most sweeping WRO to date in January, stating that all cotton and tomato imports produced in China’s Xinjiang Uyghur Autonomous Region would be detained.

Directives to seize imports put the burden of proof on procurement and supply chain leaders. Once a good is seized, the importer must be able to prove forced labor was not used, through submitting a certificate of origin and statement such as an audit, a fact sheet from CBP states. That requires traceability through several tiers of the supply chain.

"The days of being able to say, 'I didn't know,' are over," said Gail Strickler, president of global trade for Brookfield Associates and former assistant U.S. Trade Representative.

CBP must also have enough visibility to enforce its WROs. The agency has applied artificial intelligence link analysis and other technologies to test origins, according to Brenda Smith, executive assistant commissioner in CBP's Office of Trade. Smith acknowledged in January that full traceability is "an ongoing challenge" for CBP and the private sector.

CBP's latest finding comes as nitrile gloves have been in short supply. Top Glove halted operations at 28 factories last November after a COVID-19 outbreak spread among workers. The constraints in production collided with increased demand for gloves, as essential workers in grocery and e-commerce began to use gloves in the workplace. Glove demand also increased once COVID-19 vaccinations began.

Get Us PPE, a nonprofit that distributes personal protective equipment, reported nitrile gloves are the second most requested item, after wipes. Nearly 20% of those requesting nitrile gloves have no remaining supply. And the Institute for Supply Management's manufacturing report released Thursday named gloves as one of the commodities in short supply.

The detention order against Top Glove covers a significant source of disposable gloves. Top Glove is the biggest glove producer in the world, holding 26% of global market share, according to the company's website. North American accounts for 22% of Top Glove's sales, according to Bloomberg citing Kenanga Investment Bank.

Still, CBP said its enforcement against Top Glove would not significantly affect U.S. imports.

"CBP conducted a detailed analysis of disposable glove imports prior to issuing the WRO on Top Glove," a CBP spokesperson said in an email. "Based on that analysis of importations, the affected manufactures do not represent a significant proportion of the overall volume of gloves imported in their respective categories."


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