Key Points:
- New labor standards: The United States has announced reciprocal trade agreements with Cambodia and Malaysia featuring the most ambitious and enforceable labor rights provisions since the USMCA.
- Compliance impact: U.S. companies with suppliers or facilities in Cambodia, Malaysia, Thailand or Vietnam should review operations now to prepare for new labor compliance requirements.
On Sunday, the White House announced reciprocal trade agreements with Cambodia and Malaysia that include the most ambitious and enforceable workers’ rights provisions since the first Trump Administration negotiated the United States-Mexico-Canada Agreement (USMCA).
Frameworks for potentially similar agreements with Thailand and Vietnam were also disclosed.
U.S. businesses must prepare to comply with the changes on the horizon and consider how their supply chains may be impacted. Companies with facilities or suppliers in any of these four Southeast Asian countries should contact counsel experienced in international trade and labor law.
Cambodia
The U.S.-Cambodia agreement requires Cambodia to protect internationally recognized labor rights, including the rights to freedom of association and collective bargaining. It also requires Cambodia to ban the import of goods produced by forced labor.
Notably, Cambodia must engage in “tripartite” consultations to amend its laws related to union registration, the right to strike and other labor protections. Although the agreement is unclear, these consultations would appear to include government, employer and worker representatives in the tripartite style of International Labor Organization (ILO) decision-making. Cambodia must take other steps to protect workers’ rights, such as establishing independent labor courts to hear labor disputes.
The United States, through the Office of the U.S. Trade Representative (USTR), can enforce these provisions in a way that appears novel in international trade law. If the United States considers that Cambodia has not complied, it could take action “in accordance with applicable domestic law.” No details are provided regarding how this action may be taken. One interpretation is that the United States could unilaterally impose tariffs if Cambodia fails to live up to its new labor commitments. A less plausible interpretation is that the United States could sue Cambodia in a Cambodian court under Cambodian labor law, although how this would work in practice would be innovative, to say the least. Trade agreements typically include some form of state-to-state litigation to resolve disputes, but it is possible this one does not.
The USMCA allows the United States to enforce similar workers’ rights provisions against Mexico, and that agreement’s enforcement mechanism was groundbreaking under trade law at the time. However, the USMCA generally permits such lawsuits before an arbitration panel composed of panelists chosen by each country and a third selected from a joint list, whereas a fair interpretation of the U.S.-Cambodia agreement would contemplate unilateral tariffs in lieu of litigation.
As we noted in a prior alert, the USMCA contains a Facility-Specific Rapid Response Labor Mechanism (RRM), which provides for enforcement of union rights with respect to individual facilities in Mexico. By contrast, the U.S.-Cambodia agreement appears to provide for enforcement against Cambodia only for failing to adopt or enforce its labor laws, not with respect to specific facilities that violate workers’ rights like the RRM. It remains to be seen how the United States will effectively monitor compliance in Cambodia; unlike the U.S.-Cambodia agreement, the RRM provides several ways the United States can investigate labor compliance, including allowing anyone to file a complaint with USTR and the Department of Labor (DOL) and the stationing of DOL attachés in Mexico, among other monitoring tools.
The legal protections in the RRM are similar to those enforced by the National Labor Relations Board (NLRB) under the National Labor Relations Act (NLRA). Although the new agreement with Cambodia and the agreement with Malaysia (discussed below) provide some protections similar to those in the NLRA, they contain several protections that appear to address labor law issues unique to each country, particularly related to the labor rights of individuals who migrate to Malaysia for employment.
Malaysia
The U.S.-Malaysia agreement similarly requires that Malaysia protect internationally recognized labor rights and ban the import of goods produced by forced labor. Like Cambodia, Malaysia must take particular steps to protect rights related to freedom of association and collective bargaining, such as specifying how a union can obtain the sole right to bargain collectively on behalf of workers. Both the Malaysia and Cambodia agreements prevent those countries from weakening the protection of their labor laws to encourage trade or investment, including in industries or regions that “have lesser labor protections than the overall economy,” a phrase that is not defined.
Malaysia must also take several actions to protect migrant workers, such as:
- Prohibiting employers from charging migrant workers recruitment fees
- Increasing transparency around migrant worker quota systems
- Expanding efforts to inform migrant workers of their right to access their passports at any time and their options for legal recourse against exploitation
As in the U.S.-Cambodia agreement, the United States could take action to enforce these provisions under the vague “according to applicable domestic law” standard. The U.S.-Malaysia agreement’s enforcement provision additionally permits either government to impose tariffs “to remedy unfair trade practices, to address import surges, to protect its economic or national security, or for other similar reasons consistent with its domestic law.”
It is unclear whether the White House will submit the Malaysia and Cambodia agreements to Congress for ratification, as it did during President Trump’s first term with respect to the USMCA. The U.S.-Malaysia agreement will enter force 60 days after the countries notify each another that they have completed “applicable legal procedures” or “on such other date as the Parties may agree,” and the U.S.-Cambodia agreement will enter force after the countries notify each other that the “internal procedures” required for entry into force have been completed. It is possible that the Trump Administration styled these agreements as “reciprocal trade” agreements — not free trade agreements — to avoid the ratification process.
Thailand and Vietnam
In bilateral joint statements with Thailand and Vietnam, the United States agreed to “frameworks” that include a pledge to finalize reciprocal trade agreements with each country in the coming weeks.[1]
The joint statements are short on details with respect to the countries’ obligations to protect labor rights. The U.S.-Thailand joint statement provides that each government will finalize commitments to protect internationally recognized labor rights and strengthen labor law enforcement. The U.S.-Vietnam joint statement is even lighter on details, simply noting that each government will engage to address labor matters.
In July 2025, the United States issued a joint statement with Indonesia agreeing to a framework that included similar labor provisions and the pledge to finalize a reciprocal trade agreement within weeks. The Trump Administration has not yet announced such an agreement.
Next Steps
Trade agreements that feature enforceable workers’ rights requirements put employers on notice, and they are trending in each of President Trump’s terms. First the USMCA in our backyard, and now agreements with countries in China’s.
Companies with operations in these countries or that contract with suppliers there should contact experienced trade and labor counsel to prepare for the coming changes.
[1] The joint statements describe the frameworks, but the White House has not disclosed the text of the frameworks themselves, to the extent they exist separately from the joint statements. Each of the agreements or frameworks for agreement with the four Southeast Asia countries are referred to as “Agreements on Reciprocal Trade,” with the exception of the framework with Vietnam, which is referred to as an “Agreement on Reciprocal, Fair, and Balanced Trade.”
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