On March 31, 2026, the Office of the United States Trade Representative (USTR) published its 2026 National Trade Estimate Report on Foreign Trade Barriers (NTE). Among its findings: Japan has no law prohibiting the importation of goods produced with forced labor. That single observation signals a growing risk for Japanese small and medium-sized enterprises (SMEs) that manufacture in Thailand and export to the United States. Far from being someone else’s problem, the NTE’s critique cuts directly to the heart of how these companies structure their supply chains.
1. What Happened — A Double Blow from the NTE and Section 301
Japan Named in the 2026 NTE
The USTR publishes the NTE annually in late March to catalogue foreign trade barriers. The 2026 edition devoted twelve pages to Japan and stated plainly that Japan lacks a law prohibiting the importation of goods produced with forced labor.
USTR went further, arguing that this legislative gap artificially suppresses prices for Japanese goods and services, potentially creating an unfair competitive advantage over U.S. products. Japan was also singled out as one of the few major trading partners that has not entered into any agreement restricting transshipment of goods to the United States. The report also criticized Japan for insufficiently addressing non-market policies and practices (NMPPs) and for continuing to import Russian pollock, salmon, and crab.
The NTE is a report, not a sanction. It does not by itself trigger trade measures. However, legal analysts have noted that NTE findings may be drawn upon as supporting evidence in Section 301 investigations — which is precisely what is now running in parallel.
Section 301 Investigations Are Underway for 60 Countries
More than two weeks before the NTE was published, USTR had already moved. On March 12, 2026, it initiated Section 301 investigations under Section 301(b) of the Trade Act of 1974 against 60 countries, covering over 99% of all U.S. imports by value in 2024. Japan ranks 28th and Thailand ranks 53rd on that list. The investigations ask whether each country prohibits the importation of goods made with forced labor and whether it effectively enforces that prohibition.
Key dates:
| Date | Event |
|---|---|
| April 15, 2026 | Deadline for public comments and hearing participation requests |
| April 28 – May 1, 2026 | Public hearing (at the International Trade Commission) |
| Around July 24, 2026 | Expected completion of investigations and potential measures |
The Legal Pivot: From IEEPA to Section 301
The current wave of Section 301 activity has a clear backdrop. On February 20, 2026, the U.S. Supreme Court struck down the Trump administration’s tariffs imposed under IEEPA (the International Emergency Economic Powers Act) as unconstitutional. With that legal foundation removed, the administration turned to Section 301 to rebuild its tariff architecture on a new legal basis.
The temporary 10% duty imposed under Section 122 on February 24, 2026 carries a 150-day statutory cap — placing its expiry around July 24, 2026. USTR is moving at a remarkable pace, compressing what is normally a twelve-month process into roughly four months. Read against this backdrop, the current Section 301 investigations appear to function not only as a human rights enforcement mechanism but also as a trade policy tool aimed at establishing a legal foundation for maintaining and expanding tariffs. Understanding both dimensions is essential to properly assessing the risk.
2. Why Japan Is in the Crosshairs — The Legal Gap in Comparative Perspective
How the U.S., EU, and Canada Compare
The rationale for USTR singling out Japan becomes clear in international comparison.
The United States bans imports of goods produced with forced labor under 19 U.S.C. § 1307 of the Tariff Act of 1930. The Uyghur Forced Labor Prevention Act (UFLPA), enacted in 2021, adds a rebuttable presumption that goods from Xinjiang are produced with forced labor. U.S. Customs and Border Protection (CBP) enforces these rules through Withhold Release Orders (WROs), which physically halt the importation of products from named entities.
The European Union adopted its Forced Labour Regulation in December 2024, banning the sale, import, and export of goods made with forced labor on the EU market. Non-compliance can result in fines exceeding 5% of global annual turnover. The Corporate Sustainability Due Diligence Directive (CSDDD), which entered into force in 2024 and begins phased application from 2027, further requires large European companies to conduct human rights due diligence across their entire supply chains.
Canada and Mexico are legally bound by USMCA obligations to prohibit imports of forced-labor goods.
Japan, by contrast, relies entirely on soft law:
- 2020: National Action Plan (NAP) on Business and Human Rights
- September 2022: METI Guidelines for Respecting Human Rights in Responsible Supply Chains
- April 2023: METI Practical Reference Material on Human Rights Due Diligence (aimed at SMEs)
None of these instruments carries legal force. There are no penalties, no enforcement mechanisms, and no mandatory disclosure requirements. A survey by METI and the Ministry of Foreign Affairs found that roughly half of listed companies have yet to implement human rights due diligence.
Japan’s Version of UFLPA — A Bill in Motion, Not Yet Law
On February 25, 2026, Keiji Furuya, chair of the Japan-Uyghur Parliamentary League (LDP), announced plans to draft a Japanese equivalent of the UFLPA (Human Rights Watch report). If enacted, the legislation would transform Japan’s supply chain management from voluntary guidelines to binding obligations. The timing and final content of any such bill remain uncertain, however, and should not be treated as settled law.
3. Three Risk Pathways for Japanese SMEs in Thailand
Pathway 1: Direct Exports from Thailand to the United States
Japanese companies exporting directly from Thailand to the U.S. face potential Section 301 tariffs if USTR concludes that Thailand fails to adequately prohibit and enforce against forced-labor imports. This risk compounds the parallel excess-capacity Section 301 investigation (initiated March 11, 2026), which also covers both Japan and Thailand. For details on the excess-capacity investigation, see “USTR Section 301 Investigations — What Japanese Companies with Thai Manufacturing Bases Need to Know”.
Pathway 2: The Thailand → Japan → U.S. Transshipment Risk
The NTE’s characterization of Japan as one of the few major trading partners without transshipment-restriction agreements with the United States is particularly significant for companies that import parts or materials from Thailand into Japan before re-exporting finished goods to the U.S. A “Made in Japan” label does not necessarily immunize a product if its substantive content originates in Thailand — or in a Thai supplier’s supply chain. Transshipment scrutiny has intensified and is explicitly flagged in the NTE as a concern.
Pathway 3: Forced Labor Risk Inside Thailand’s Supply Chain (UFLPA / CBP WRO)
Thailand’s fishing and seafood processing industries have been repeatedly documented as sites of forced labor and human trafficking, particularly involving migrant workers from Myanmar and Cambodia — debt bondage, passport confiscation, and wage theft are among the practices identified by the U.S. Department of Labor and multiple NGOs. The EU issued a yellow card to Thailand in 2015 over illegal, unreported, and unregulated (IUU) fishing (lifted in 2019), and the U.S. State Department’s annual Trafficking in Persons Report has long placed Thailand in its lower tiers.
Beyond fishing and seafood, electronics components, garments and textiles, and agricultural processing sectors in Thailand also carry documented labor risks. If a Thai supplier receives a CBP WRO, any Japanese company incorporating that supplier’s products into U.S.-bound goods will face immediate disruption — regardless of whether the Japanese company was aware of the underlying labor conditions.
The rebuttable presumption under UFLPA is exacting. “We didn’t know” is not, as a rule, a viable defense once CBP has acted. Prevention is far preferable to remediation.
Pathway 4: Indirect Exposure through EU CSDDD
Even without direct U.S. exports, Japanese SMEs embedded in the supply chains of large European companies will face increasing demands for human rights due diligence documentation as the CSDDD begins phased application from 2027 onwards. Failure to meet those requirements risks exclusion from those supply chains.
4. Five Practical Steps to Take Now
Step 1: Map Your Supply Chain
Start by identifying every Thai supplier and what you are sourcing from them. Determine how those suppliers recruit their workers — particularly the proportion of migrant laborers, their countries of origin, and whether recruitment agents are involved. Suppliers in seafood processing, agriculture, textiles, and electronics assembly warrant the highest attention.
Step 2: Begin Human Rights Due Diligence Under the METI Guidelines
The METI Guidelines (2022) and the accompanying Practical Reference Material (2023) provide a workable starting framework for SMEs. These are not legally binding, but working through them demonstrates that a company is not doing nothing — which is itself a meaningful risk-mitigation step. “We have a process” is a better position than “we have no process.”
Step 3: Build Traceability Documentation for U.S.-Bound Products
Gather records: certificates of origin for raw materials and components, process logs, and evidence of labor practices (payroll records, recruitment agreements). If Thai-origin seafood or agricultural products are inputs, obtain equivalent documentation from the relevant suppliers. This documentation forms the basis for a UFLPA rebuttal if CBP ever challenges a shipment.
Step 4: Review Supplier Contracts
Consider whether your current supplier agreements include: a prohibition on the use of forced labor; the right to conduct audits (or to have a third-party auditor conduct them); and termination rights in the event of a violation. If these provisions are absent, the next contract renewal is an opportunity to introduce them. For an overview of recent changes to Thai labor law that affect supplier risk, see “Key Points of Thailand’s 2025 Labor Protection Act Amendments”.
Step 5: Monitor the Section 301 Schedule
The April 28 – May 1 public hearings and the approximately July 24 deadline for investigation completion are the two most significant near-term milestones. Track what USTR says, what industry groups submit, and how the Thai government responds. The Japan-Thailand Chamber of Commerce, JETRO, and major law firm client alerts are useful monitoring channels.
No SME can build a perfect human rights compliance program overnight. The point is not perfection but progress — and not standing still.
5. Looking Ahead — Japan’s Legislative Trajectory and the Global Shift
The Potential for a Japanese UFLPA
If the proposed Japanese UFLPA-equivalent moves through the Diet, Japan’s compliance landscape will change significantly. Large Japanese companies would likely be required to prohibit imports of forced-labor goods and conduct mandatory due diligence. SMEs that supply to those large companies — directly or indirectly — would feel the downstream effects.
Section 301 Results Could Mean Additional Tariffs
If USTR determines in July that Thailand inadequately prohibits and enforces against forced-labor imports, Thailand-origin goods could face new Section 301 tariffs. The precise rates and product categories are not yet known. Depending on the scope, the impact on Japanese manufacturers operating in Thailand could be substantial.
From “Human Rights DD as a Cost” to “Human Rights DD as a Market Access Condition”
The convergence of EU CSDDD, U.S. UFLPA enforcement, and Japan’s pending legislative developments marks a fundamental shift in the global trading environment. Companies that treat human rights due diligence as an optional, aspirational exercise risk finding themselves excluded from major markets. Those that build it into their sourcing and contracting processes now are better positioned for what is becoming a baseline market access requirement.
Summary Timeline
| Date | Event |
|---|---|
| February 20, 2026 | U.S. Supreme Court strikes down IEEPA tariffs as unconstitutional |
| February 24, 2026 | Section 122 temporary 10% duty takes effect |
| March 11, 2026 | USTR initiates excess-capacity Section 301 investigations (16 countries, including Japan and Thailand) |
| March 12, 2026 | USTR initiates forced-labor Section 301 investigations (60 countries, including Japan and Thailand) |
| March 31, 2026 | 2026 NTE published; Japan singled out for lacking a forced-labor import ban |
| April 15, 2026 | Public comment deadline |
| April 28 – May 1, 2026 | Public hearings |
| Around July 24, 2026 | Section 122 expiry; expected completion of Section 301 investigations |
These investigations remain open — no additional tariffs have been finalized. But inaction is the highest-risk response. The immediate priorities are mapping your supply chain, understanding your Thai suppliers’ labor practices, and building a documentary record.
For advice on building a human rights due diligence framework for your supply chain, reviewing supplier contract terms, or assessing trade risk for your U.S.-bound exports — from the perspective of Japanese law, Thai law, and international trade law — please feel free to contact us.
This article is for general informational purposes about Thailand’s legal system and does not constitute legal advice under Thai law. For specific matters, please consult a Thai-qualified legal professional. Our firm works in collaboration with JTJB International Lawyers’ Thai-qualified attorneys.