U.S. blocks imports of palm oil from Malaysian producer Sime Darby

TRADE WAR - KUALA LUMPUR. The United States has banned imports of palm oil from Malaysian producer Sime Darby Plantation over allegations of forced labour in the production process, the U.S. Customs and Border Protection said on Wednesday.

The ban on Sime Darby, which is seen as a leader in sustainably-produced palm oil, could further hurt an industry that has faced mounting allegations of labour and human rights abuses.

Palm oil is used in everything from food to cosmetics to biodiesel. It is mainly produced in Malaysia and Indonesia, where the producers are also blamed for wide-scale deforestation and habitat destruction.

The U.S. Customs and Border Protection (CBP) said it has issued a 'withhold release order', which will allow it to detain shipments based on suspicion of forced labour involvement under longstanding U.S. laws aimed at combating human trafficking, child labour and other human rights abuses.

"The issuance of a withhold release order against Sime Darby Plantation palm oil is based on information that reasonably indicates the presence of all 11 of the International Labour Organization's forced labour indicators in Sime Darby Plantation's production process," CBP said in a statement.

Sime Darby did not immediately respond to a request for comment from Reuters.

The ban was effective from Wednesday but CBP said it provides importers of blocked shipments an opportunity to export their shipments or demonstrate that the merchandise was not produced with forced labour. CBP could lift the ban if remedial action is taken.

In July, Hong Kong-based anti-trafficking group Liberty Shared petitioned CBP to ban Sime Darby products, citing evidence of labour abuse.

Sime Darby had then said the allegations contradicted the group's public commitments to responsible agriculture and human rights, and that it would engage with Liberty Shared.

Sime Darby is the third Malaysian company to be slapped with a U.S. ban this year over forced labour allegations.

The CBP banned another Malaysia palm oil producer, FGV Holdings, in September. It also blocked gloves made by Top Glove, the world's biggest producer of medical-grade latex gloves.