The report by the Office of the US Trade Representative said Malaysia’s failure to impose and enforce such a prohibition was “unreasonable” and burdened or restricted American commerce.

“For the foregoing reasons, the results of this investigation indicate that the acts, policies, and practices of Malaysia related to the failure to impose and effectively enforce a forced labor import prohibition are unreasonable and burden or restrict US commerce,” said the report.

Malaysia was among 60 countries probed by the US Trade Representative over their failure to impose and enforce a ban on the import of goods made with forced labour.

Other countries investigated include Australia, Canada, China, Japan, New Zealand, Singapore, and South Korea.

The report found that all 60 countries failed to impose or effectively enforce the prohibition, which it said undermined efforts to eradicate forced labour and allowed companies that use forced labour to produce goods at lower costs, distorting market conditions.

It said this also undermined the profitability of firms that do not use forced labour, while allowing culprits to circumvent existing prohibitions.

It said Malaysia had made commitments regarding forced labour import prohibitions under its reciprocal trade agreement with the US, though this was declared nullified by trade minister Johari Ghani in March.

While the Office of the US Trade Representative lauded Malaysia and other nations for this commitment, it maintained that it must be followed by action.

“Until such time as the commitment is implemented, US products will continue to compete against forced labor products that have a competitive advantage in global markets which, among other reasons explained in the report, is unreasonable,” it said.

It proposed that Washington impose an additional 10% duty on products from Malaysia due to its failure to ban forced labour imports.

In March, Johari warned that Washington could impose tariffs of up to 10% on Malaysia under the US’s Trade Act, based on the results of this investigation.

However, the trade minister said these tariffs could only be in force for around five months before further investigations are held.