COLOMBO — Sri Lanka has prohibited the import of any goods produced wholly or partly through forced labour, under an order that took effect on July 10 as the government moves to avert a proposed United States tariff of 12.5 percent that would leave its exporters at a disadvantage to regional competitors.
The order was issued by President Anura Kumara Dissanayake in his capacity as Minister of Finance, under the Imports and Exports (Control) Act. It requires importers to submit documents to the Director General of Customs certifying that their goods were not mined, produced, or manufactured using forced labour at any stage. It also empowers the Minister to designate specific goods, entities, regions, or countries for enhanced restrictions, taking into account decisions of the International Labour Organization (ILO).
It is the first time Sri Lanka has barred an import on the ground that it was made with coerced labour. Earlier import restrictions, including the wide curbs imposed during the 2022 foreign-exchange crisis, were aimed at conserving currency.
THE U.S. TARIFF BEHIND THE ORDER
The measure follows a determination by the Office of the United States Trade Representative (USTR). On June 2, the USTR concluded under Section 301 of the Trade Act that 60 economies had failed to impose or effectively enforce a prohibition on imports made with forced labour, a failure it termed “unreasonable” and a burden on U.S. commerce. It found that 54 economies, including Sri Lanka, had no such ban, while six others — Canada, Ecuador, the European Union, Indonesia, Mexico, and Pakistan — had one but did not enforce it. U.S. Trade Representative Jamieson Greer said the failures forced American workers to compete on “an uneven playing field.”
The USTR proposed additional duties of 12.5 per cent on economies without a ban and 10 percent on those that had legislated one. That gap is central to Sri Lanka's response: its proposed 12.5 percent rate is higher than the 10 percent facing garment rivals such as Bangladesh and Pakistan, a difference exporters say could divert orders. Industry stakeholders have been lobbying the government to secure Sri Lanka's inclusion in the lower tier, which is reserved for countries that maintain a forced-labour import ban.
The U.S. Trade Representative's concerns extend beyond labour conditions within individual countries and focus on the integrity of global supply chains, particularly those involving cotton and other raw materials from China's Xinjiang region. Under the Uyghur Forced Labour Prevention Act, the United States presumes that goods produced wholly or partly in Xinjiang are made with forced labour unless importers can provide clear and convincing evidence to the contrary. U.S. officials argue that raw materials from the region can be exported to third countries, processed into yarn, fabric or finished garments, and then shipped to the United States with their original source obscured. The USTR cited China-linked intermediary manufacturers operating in ten economies under investigation, including Sri Lanka, as examples of supply chains that could be used to circumvent those restrictions.
China has consistently rejected allegations of forced labour in Xinjiang, describing them as politically motivated and without factual basis. Chinese officials say employment in the region is voluntary, that cotton production is highly mechanised, and that the United States is using the forced-labour issue to justify trade restrictions and contain China's economic development.
The United States is Sri Lanka's largest export market, purchasing about $3 billion worth of goods each year, most of them apparel. The apparel sector generated about $5 billion in export earnings last year and employs around 300,000 workers. The industry is already under pressure: apparel exports fell 7.4 percent to $1.53 billion in the first four months of 2026, while tea exports also declined.
Deputy Finance Minister Anil Jayantha Fernando said in June that Sri Lanka would strengthen Customs screening and adopt further international labour standards to address the U.S. concerns, adding that the country “already has good labour practices” and an existing legal framework. He cited its ratification in April of ILO Convention No. 190 on violence and harassment at work. The July 10 order is the first legislative step to follow.
HOW FORCED LABOUR IS DEFINED
Under the ILO Forced Labour Convention of 1930, which Sri Lanka ratified in 1950, forced labour is work exacted from a person under the “menace of any penalty” and to which the person has not agreed voluntarily. Sri Lanka has also ratified the Abolition of Forced Labour Convention, the convention's 2014 Protocol, and, in April, Convention No. 190.
The ILO lists eleven indicators used to identify forced labour: abuse of vulnerability, deception, restriction of movement, isolation, physical and sexual violence, intimidation and threats, retention of identity documents, withholding of wages, debt bondage, abusive working and living conditions, and excessive overtime. The ILO says a single indicator is rarely conclusive, and that investigators weigh the overall circumstances, including whether a worker is able to leave freely.
WHY ENFORCEMENT IS DIFFICULT
Labour-rights specialists say forced labour is hard to detect because it is a condition of the workplace rather than a feature of the product, and can occur at any point in a supply chain. A garment may be assembled in one country from fabric woven in a second and cotton grown in a third, with coercion possible at any stage and none of it visible in a finished item.
Countries with established systems have built them over several years. U.S. Customs and Border Protection can issue a Withhold Release Order to detain goods when information reasonably indicates forced labour, placing the burden on the importer to prove otherwise; under the Xinjiang law, goods traced to the region are presumed barred unless the importer demonstrates they are not. The European Union has adopted a forced-labour regulation, an investigation-led model that will apply in full from December 2027. The anti-slavery organisation Walk Free has cautioned that several import bans introduced in 2026 still lack the operational procedures and resources needed to be effective.
WHAT THE ORDER LEAVES UNSPECIFIED
The order requires importers to certify that goods are free of forced labour but does not state what the certification must contain, how declarations will be verified, or what penalties apply for false statements. It does not identify who will investigate allegations, what standard of evidence Customs will apply, or whether goods may be detained on reasonable suspicion. It provides no mechanism for trade unions, workers, or civil society groups to submit information about suspected forced labour in overseas supply chains, and no commitment to publish the goods, entities, or countries designated, or the criteria for listing them. Officials have said implementing guidelines are expected.
Sri Lanka Customs is primarily equipped to assess tariff classifications, values, and origin documents. The order does not indicate whether a specialist forced-labour unit will be established, or how Customs will coordinate with the Department of Labour, the Foreign Ministry, and law-enforcement agencies. Trade analysts have said smaller importers, which lack the compliance departments and audit programmes of large firms, may find the requirements harder to meet.
CONCERNS OVER SRI LANKA'S OWN RECORD
The measure applies only to imports and does not address forced-labour risks within Sri Lanka's own economy. In May, Amnesty International reported that conditions on some private tea estates in the south “may amount to forced labour,” citing debt bondage, withheld wages, restricted movement, and abuse among Malaiyaha Tamil workers across 45 estates in the Galle and Matara districts, and called on the government to open criminal investigations. Successive U.S. State Department Trafficking in Persons reports have faulted Sri Lanka for failing to investigate forced labour on estates and for weak protection of migrant workers.
Some labour-rights groups have argued that the government should pair the new import controls with stronger enforcement against exploitation at home, and treat border measures as part of a broader labour-rights strategy rather than a trade instrument alone.
AN UNCERTAIN TEST
Trade specialists and rights groups broadly welcomed the order as a significant development that aligns Sri Lanka more closely with international efforts to keep goods made with forced labour out of supply chains, and that may support its case for a lower U.S. tariff. They said its effect would depend on enforcement powers, resources, and transparency that the government has not yet established. The government has described the regulation as a demonstration of its commitment to international labour standards and ethical trade, and said the goods and countries covered would be named in later notifications.
The government's first enforcement decisions are likely to determine whether the new regulation becomes an effective tool against forced-labour imports or remains largely a documentary requirement for importers.
