US palm oil ban baffles industry watchdogs

(MENAFN- Asia Times) Pressure is mounting on US officials to provide evidence to support a ban slapped on one of the world's largest producers of sustainable palm oil (SPO) after unsubstantiated forced-labor allegations.

A Withhold Release Order (WRO) was issued by US customs and Border Protection (CBP) against Malaysia's Sime Darby Plantation (SDP) last year following information supplied by anti-trafficking group Liberty Shared.

However, industry experts have questioned the absence of direct evidence against Sime Darby in the petition, which offers no details of interviews with workers the non-governmental organization claims to have conducted, or dates or names or specific locations to back up the claims.

Seemingly at a loss as to how the rectify the situation, the SPO giant on March 1 appointed an independent assessor to help them identify any measures that need to be taken. The move came at the same time as the US Government Accountability Office (GAO) published a 67-page report calling for greater transparency regarding WROs.

A Sime Darby spokesman said: 'The well-being of our 30,000 workers is of paramount importance to us and thus, our focus is to address the WRO and to understand what the actual allegations against us are, so we can take corrective measures where necessary. 

'We are very conscious that it has been nearly a year since the petition was filed, a year during which we could have closed any gaps in the implementation of our policies, had we received the necessary information.

'Thus far, useful information from the actual complainant has not been forthcoming.'

The petition against Sime Darby contains a chart of ILO (International Labor Organization) indicators of forced labor by the firm. Yet insiders have pointed to a Liberty Shared report on palm oil published three months earlier that used the same chart to indicate the alleged abuses were found across four separate firms and that some interviews dated back many years.

Benjamin Loh of WWF-Malaysia described the ban as 'a surprise,' having worked 'very closely' with Sime Darby for more than two years to enhance the company's no-deforestation and no-exploitation approaches. He also admitted to not having heard of Liberty Shared before the allegations.

'We try to see sustainability as a whole and it is a concerning issue for us, especially with such a big company in Malaysia and around the world being accused of such issues, but looking at it in detail we are also surprised as to what are the key aspects of the allegations and how they led to a US Customs and Border Protection ban for Sime Darby,' Loh said.

'We are wondering, what [are] the key criteria that they need to address? What are the key points that involve exploitation and human rights? But unfortunately, the information is not there. There's very little evidence that proves this to us. With the track record of Sime Darby, and that they have been transparent and quite clear with us as to what they are doing, it is a surprise.'

Part of the surprise for environmental and human-rights groups working on the ground comes from the lack of red flags surrounding what Loh describes as 'the most certified palm-oil company in the world.'

Industry expert M R Chandran – a founding member of the Roundtable on Sustainable Palm Oil (RSPO) – also described the ban as 'baffling.'

'In the case of SDP, many of their mills are certified by the International Sustainability and Carbon Certification, or ISCC, and the group itself has ISO certifications,' he said.

'They have multiple certifications and it is puzzling because the allegations indicate that the auditors of all the certifications were not doing their job.'

SDP is the world's largest oil-palm plantation company by planted area, with more than 600,000 hectares in Malaysia, Indonesia, Papua New Guinea and the Solomon Islands, producing approximately 4% of the world's crude palm oil (CPO) output.

A recent report by the Consortium for Agrarian Reform (KPA) into land-grab violence in Indonesia – where SDP has 202,301 hectares – made no mention of the firm in a comprehensive list of plantation companies and affiliated conglomerates that it said were embroiled in conflict. The NGO recorded 138 land conflicts between April and September 2020, which left 11 people dead.

From a financial perspective, the ban on palm-oil exports to the US is relatively insignificant, making up only 3% of Malaysia's total exports of palm oil from January to November 2020. However, the ban is still a concern. According to Statista, the United States was the fifth-largest importer of palm oil in 2019, with big-name users including L'Oreal, Unilever, P & G, Johnson & Johnson, Colgate-Palmolive and Kiehl's.

Alongside the financial repercussions, the CBP ban also places SDP – and Malaysian palm oil in general – at severe reputational risk. As a direct result of the WRO, this month the US-based food company General Mills issued a global 'no buy' order for imports from the plantation.

In contrast, companies such as Kraft Heinz, Nestle and Unilever said they were in discussions with Sime Darby about the allegations. Both Nestlé and Unilever have suspended another palm-oil company, FGV Holdings, after the RSPO found 'exploitative' labor practices.

US law has long prohibited the importation of merchandise produced using forced labor. However, CBP need only have a 'reasonable suspicion' that articles imported into the United States are produced in part by forced labour to justify issuing a WRO, which prevents the admission of suspect articles into the country until an investigation can be completed. 

In a recent online forum titled 'Using the US Tariff Act to Disrupt Forced Labor in Supply Chains: A Practitioner's Perspective,' Liberty Shared founder and managing director Duncan Jepson said this counted in the favor of NGOs that were seeking to build evidence to lodge a complaint with the CBP.

'What I particularly like from an action perspective is that you are obviously submitting a petition with evidence to really form an argument that doesn't have to go through a court,' he said.

While full details of the allegations against SDP have not yet been published by either Liberty Shared or the CBP, the Liberty Shared petition shares similarities with a report called 'Cruel Outcomes' that it published last September, three months before the petition was filed. The report contains a chart of ILO indicators that also appeared in the petition.

However, while the 'Cruel Outcomes' report uses this chart to record alleged failures by four companies, FGV, SDP, IOI Group and Wilmar International, in the petition submitted to the CBP the same chart is used to suggest failures by SDP alone.

The CBP has declined to go into specific details of SDP's case, saying that it had 'had communications' with representatives of Sime Darby.

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