The US is demanding stronger labour laws in Southeast Asia as a condition for market access, under new trade agreements. Companies doing business in the region should prepare for potential regulatory shifts.
Key takeaways
- US trade deals tie stronger labour standards to tariff reductions.
- Malaysia and Cambodia have signed binding agreements, while US negotiations with Indonesia, Thailand and Vietnam continue.
- Businesses should monitor trade-deal developments to avoid disruption when conditions become binding.
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Following US President Donald Trump’s tour of Southeast Asia (SEA) in October, a shift is emerging in US trade architecture. The Trump administration has highlighted “weak labour standards” as a “non-tariff barrier,” and binding measures to improve trade are being embedded into trade deals with several SEA nations.
This is a new approach. Previously, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership addressed foreign labour issues through unenforceable multilateralism. Other actions – such as the Uyghur Forced Labour Prevention Act 2021(UFLPA) – relied on unilateral pressure to improve labour conditions.
If trade with the US hinges on stronger labour standards, SEA countries could reform their labour laws to maintain market access. For companies operating in the region, this could translate into new requirements, such as stricter rules on forced labour, enhanced protections for freedom of association, and clearer obligations around migrant worker rights.
Businesses should start assessing how these potential changes could affect their operations and supply chains.
Key features of the recent US-SEA trade negotiations
Trump’s trade policy with SEA followed a familiar pattern: imposing steep tariffs to force negotiations, then offering targeted relief through bilateral deals.
On 2 April 2025, Trump’s reciprocal tariffs landed SEA countries with tariff rates between 19% and 49%, with Cambodia and Vietnam facing the highest tariff rates in the region.
Following bilateral talks, the US reduced these tariffs through individual agreements. Indonesia was the first SEA nation to announce a framework with the US, and following Trump’s tour of ASEAN in late October, the White House unveiled similar frameworks with Thailand and Vietnam along with agreements signed with Malaysia and Cambodia. Together, these arrangements cover trade flows of more than US$200 billion.
Cambodia, Thailand, Indonesia and Malaysia all secured tariff reductions to 19%, and Vietnam’s reciprocal tariff reached 20%.
Product‑specific carve‑outs further reduce some duties to zero. Under Cambodia’s agreement, items such as textiles, apparel, and footwear qualify for duty‑free access if suppliers meet strengthened labour standards. Malaysia’s agreement lists palm‑oil derivatives, rubber products, and electrical components among the goods eligible for zero tariffs, contingent on adherence to agreed labour obligations. These carve‑outs make tariff relief a direct reward for demonstrable improvements in worker protections.
Frameworks vs agreements: what's the difference?
The frameworks between the US and Indonesia, Thailand and Vietnam are joint statements that serve as roadmaps for future agreements. The frameworks agreed with Thailand and Indonesia both feature commitments to amend local labour laws and strengthen enforcement for non-compliance. Vietnam’s framework has the fewest details mentioning labour only as a topic for future negotiation.
In contrast, Malaysia and Cambodia concluded legally binding agreements in October 2025 that will see the two countries introduce enforceable labour obligations on companies. The agreements bind both nations to adopt import bans on forced-labour goods under Section 307 of the Tariff Act 1930. These pacts mandate penalties such as fines and seizers for non-compliance, alongside anti-backsliding clauses prohibiting weakened labour laws, demand alignment with International Labour Organisation core conventions, and supply-chain transparency to curb transshipment of non-compliant goods.
Despite the contrasts between all the deals and frameworks, some common themes provisions can be seen across frameworks and agreements alike:
Forced-labour import bans
Agreements with Malaysia and Cambodia include binding commitments to ban imports of goods produced wholly or partly by forced or compulsory labour. Malaysia sets a two-year timeline for implementation, whereas Cambodia does not specify any timeline. Indonesia’s framework mentions an import ban as a negotiation goal, while Thailand makes no reference to such import restrictions.
Separately, both Thailand and Malaysia explicitly reference prohibition of forced child labour in their commitments. Thailand’s framework pledges to strengthen enforcement against forced and child labour in “high-risk sectors”, while the fact sheet on Malaysia’s agreement requires enhanced enforcement of labour laws to address violations involving forced and child labour.
The US has previously embedded similar bans in other trade agreements. Under Article 23.6 of the US-Mexico-Canada Agreement (USMCA) all parties must prohibit imports of goods produced wholly or partly by forced or compulsory labour. Mexico implemented this requirement in 2023 through domestic regulations, making USMCA an example of how such obligations can operate in practice.
Freedom of association and collective bargaining
The Indonesian framework states that the country will “amend its labour laws to ensure that workers’ rights to freedom of association and collective bargaining are fully protected.” Thailand’s agreement includes almost the exact same wording.
For Cambodia, the accompanying US Trade Representative fact sheet mirrors this language, and part of its trade agreement provides further details on how: Cambodia must amend its Trade Union Law 2016 to fully protect workers’ rights to freedom of association and collective bargaining, as well as guarantee the ability to register trade unions and exercise the right to strike. In addition, Cambodia is required to publish guidelines prohibiting interference in legitimate trade union activities and the use of violence or harassment against union organisers.
Migrant worker protections in Malaysia
Malaysia’s agreement includes unique commitments to expand efforts to inform migrant workers of their rights. It requires Malaysia to expand efforts to inform migrant workers of their rights, enhance transparency around migrant‑worker quota systems through clear and publicly accessible rules, and prohibit the charging of recruitment fees prior to migration.
Annex III of the agreement stipulates that, within two years of its entry into force, Malaysia must amend the Trade Unions Act 1959 to allow migrant workers to hold elected union office without prior authorisation. Experts further highlight provisions requiring Malaysia to ensure migrant workers have unrestricted access to their passports and clear options for legal recourse against exploitation.
Implications for 2026 and beyond
As of now, no SEA country has enacted labour reforms directly tied to their respective trade negotiations. But with the US remaining a critical export market for the region, such changes are likely on the horizon.
Companies operating in SEA should closely monitor developments in labour laws and regulations over the coming months as frameworks solidify into deals and agreements take shape.
According to Nishimura & Asahi partners Victor Crochet and Kojiro Fuji, "major US exporters should expect scrutiny of their labour practices, if not from their home governments, then from the US."
Businesses with operations or suppliers in these five SEA nations should undertake near‑term operational reviews focused on labour‑law exposure. They should also map their supply chains end‑to‑end and build forced‑labour risk assessments into M&A due diligence so that parties can substantiate provenance and avoid penalties.
Experts believe that these agreements signal a need for US companies to reevaluate due diligence processes and adopt mechanisms that enhance supply chain transparency to ensure alignment with the evolving trade–labour framework.