Proposal for a Regulation of the European Parliament and of the Council on prohibiting products made with forced labour on the Union market

Update

In September 2022, the European Commission set out a proposal to prohibit products made with forced labour, including agricultural products. The proposal sets out mechanisms for EU Member States to assess companies’ behaviour, and systems for controlling and preventing the placement of such products on the EU market.

What is changing?

The Commission proposes to prohibit the import and sale (including online) of products made with forced labour. This covers all stages of the production process, including harvest, production and processing of agricultural products (Art. 3 of the proposal).

The EU’s definition of forced labour is from the International Labour Organization’s Convention on Forced Labour: “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily".

How will products be controlled?

EU Member State competent authorities will be responsible for assessing the risk that products have been made using forced labour (Art. 4). They have the power to investigate potential labour abuses on the basis of a risk analysis that takes into account information that is:

• provided by the public
• collected from the competent authorities and customs authorities
• from external expertise, including international organisations and third country authorities.

The EU Member State competent authorities enforcement will be risk based, taking into account the size of business, quantity of trade and the scale of suspected forced labour.

The competent authorities of Member States will coordinate with each other and with the Commission within a Union Network Against Forced Labour Products established by the Regulation (Art. 24).

What is the role of businesses?

Food businesses, exporters and traders putting products on the EU market must perform due diligence, defined in this context as efforts to “implement mandatory requirements, voluntary guidelines, recommendations or practices to identify, prevent, mitigate or bring to an end the use of forced labour” (Art. 2 (c)). In the course of an investigation, businesses will be expected to provide information on the efforts they have undertaken within 15 days. The authorities then have 30 days to complete this preliminary phase of the investigation and conclude whether there is a substantiated concern regarding forced labour (Art. 4).

If so, the competent authority will launch a full investigation. Businesses must provide all information that is relevant and necessary for the investigation within 15 days.

Where an investigation concludes that products made with forced labour have been imported or sold on the EU market, operators will, within a reasonable time limit set by the authorities (not less than 30 days):

• not to be able to sell products on the EU market, or export them
• have to withdraw any products from the EU market
• have to dispose of the products.

Where they have new information not presented in the initial investigation, operators can request a review of the decision within 15 working days (or 5 working days for perishable goods).

Within 18 months of the entry into force of the Regulation, the Commission will develop guidance on due diligence in relation to forced labour (Art. 23).

Database of forced labour risk areas and products

The Commission will establish a publicly available database of forced labour risks in specific geographic areas, and for specific products, including where forced labour is imposed by state authorities (Art. 11).

Controls at the EU’s borders

Where the Commission identifies products or product groups at high risk of being made with forced labour, it will pass on this information to the EU Member State customs authorities (Art. 16). Where customs authorities identify products potentially made with forced labour, they will suspend the release of those products for circulation in the EU. The products will be released within 4 working days (2 working days for perishable goods) with the agreement of the competent authorities (Art. 18). Where release has been refused, the product must be disposed of in accordance with national laws (Art. 20).

Why?

Forced labour is an ongoing problem, and several EU Member States have indicated the need to adopt new legislation. Having different regulatory approaches in different Member States would complicate the free movement of goods within the EU internal market, so a harmonised approach across the EU is considered to be necessary.

Timeline

This Commission proposal still needs to be discussed by the European Parliament and Council. The Parliament’s evaluation of the proposal started in October 2022. The legislative process is expected to be completed by 2024.

What are the major implications for exporting countries?

Opportunities

The Commission’s proposal has been welcomed by stakeholders (e.g. ETUC 2022; Solidar 2022) who have long been calling on EU institutions to stop European consumers buying products made with forced labour. A Regulation specifically aimed at products is seen as an important supplement to other due diligence instruments, particularly where action on the ground is impossible, for example in the case of state-imposed forced labour (ECCJ 2022).

Challenges for EU businesses and suppliers

Compliance costs: It is unclear what steps companies will have to take in order to ensure their due diligence obligations are met, and who will end up paying for compliance costs. These can include costs for monitoring systems and supply of information, administration, and the withdrawal and destruction of products. The Commission’s proposal for a Directive on Corporate Sustainability Due Diligence places an obligation on larger companies to cover at least some of the compliance costs for suppliers (Art. 7(4)), but there are no such obligations foreseen in this proposal. The proposal states that compliance costs for companies will depend on the extent to which they are already undertaking due diligence on a voluntary basis today or as a result of compliance under the corporate sustainability due diligence Directive.

Legal uncertainty: Operators’ efforts to undertake due diligence will be taken into account by the competent authorities when assessing suspected use of forced labour “If a company has carried out effective due diligence on its supply chains, such that they mitigate, prevent and bring to an end the risks of forced labour, this will be taken into account by the competent authorities when they assess whether there is a well-founded suspicion that a product is likely to have been made with forced labour” (European Commission 2022). This suggests that effective due diligence is not in itself enough to ensure that products will not be withdrawn from the market. If due diligence does not provide legal guarantees, this could create legal uncertainty for operators and encourage companies to move away from potentially high-risk suppliers, rather than to try and improve current practices.

Businesses damaged by association: The proposal foresees the establishment of a database to identify specific geographical areas and specific products associated with a high risk of forced labour. Businesses who are in compliance with labour laws may risk being penalised by association if they are active in geographical areas and value chains that become associated with forced labour. Some argue that the database must be sufficiently specific and detailed to prevent exclusion from the EU market of operators who are sensitive to and engaged in labour rights issues (FRUCOM 2022).

Composite products: The proposal is not clear what action may be taken against composite (complex) food products, if any of the raw materials are identified as having been harvested/ produced using forced labour (FRUCOM 2022). For example, would a food containing a minor ingredient have to be withdrawn and disposed of, even where the other ingredients in the product are not associated with forced labour?

Lack of remedial action for victims: Some have criticised the proposal for not containing any obligation to provide remedies to those whose rights have been harmed through forced labour, or at least guarantees of measures preventing further harm (ECCJ 2022). The root causes of forced labour are therefore considered to be unaddressed (Fair Trade Advocacy Office 2022).

Background

The International Labour Organization estimates that 27.6 million people are subject to forced labour (ILO 2022). The Commission proposal for a Directive on Corporate Sustainability Due Diligence establishes processes to ensure that companies minimise the risk of their operations creating adverse impacts on human rights. This includes the prohibition of forced labour (ILO Convention No. 29). However, due diligence obligations under the proposed Directive are aimed only at the largest operators. These rules do not prohibit outright the import or sale of products that have been made with forced labour. Other EU legal instruments aim at preventing the trafficking of human beings (Directive 2011/36/EU) and prohibiting the employment of victims of trafficking (Directive 2009/52/EEC). However, forced labour still persists, leading the EU to consider introducing additional measures.

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