Prohibition of products made with forced labour

Proposal for a Regulation of the European Parliament and of the Council on prohibiting products made with forced labour on the Union market – Analysis of the final compromise text with a view to agreement

Update

The European Commission proposes to prohibit the sale of products made with forced labour, including agricultural products. The European Parliament and the Council of the EU have now reached an agreement on this proposal. The new Regulation will establish information, investigation, and enforcement systems to prevent these products entering the EU market. It is expected to be adopted and published in the second quarter of 2024. The new rules will apply from 2027.

What is changing?

The new Regulation prohibits the import and sale (including online) of products made with forced labour, including forced child labour. This covers all stages of the production process including harvest, production, and processing of agricultural products (Art. 3).

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".

The new Regulation establishes information systems and organisational structures to investigate suspected cases of forced labour, and the steps that the EU may take to prohibit and remove from the market products associated with forced labour.

Obligations on businesses

Businesses must not put on the market any products that have been made using forced labour.

The Regulation does not create specific new obligations (“due diligence”) for businesses to ensure that they do not put such products on the market (Art. 2). However, if there is a suspicion that forced labour has been used in a product’s production, businesses that can demonstrate they have made efforts to implement rules or adopt practices to identify, prevent, mitigate, end the use of forced labour will be at a lower risk of investigation. The Commission will publish guidelines to support businesses’ due diligence related to forced labour within 18 months of the Regulation entering into force.

Identifying cases of forced labour

Competent authorities of EU Member States and the European Commission, working in close cooperation, will be responsible for assessing the risk that products have been made using forced labour (Art. 4).

The Commission will establish a database (published on a new Forced Labour Single Portal) which collects information on forced labour risks in specific geographical areas, and for specific products, including where forced labour is imposed by state authorities (Art. 8). It will also set up a single information point where stakeholders can submit information about alleged violations relating to forced labour, provided it is supported by evidence (Art. 9). The Commission will analyse submissions, and will discard any that are evidently incomplete, or unfounded, or made in bad faith. Substantiated submissions will be forwarded for investigation.

A Union Network Against Forced Labour Products, coordinated by the Commission, will be set up to allow Member State competent authorities to share information and coordinate action in relation to forced labour (Art. 6).

Investigations

The European Commission will lead investigations into suspected forced labour taking place outside the EU. Individual EU Member States will lead investigations within their own territory.

Prioritisation (Art. 14)

The Commission will take a risk-based approach to assessing the likelihood of violations drawing on the database, evidence submitted to the information point, and information collected from Member States or through consultations with stakeholders. The Commission will prioritise action according to the:

• scale and severity of the suspected forced labour
• quantity/volume of products involved
• significance of forced labour in production of the final product.

Preliminary phase (Art. 17)

Before starting an investigation, the Commission will ask businesses supplying the suspect products to provide information on actions they have taken to identify, prevent, mitigate, end, or remediate risks of forced labour in their supply chain. The Commission may also request information from other relevant stakeholders. Businesses must respond within 30 working days. Within a further 30 working days, the Commission will decide whether there is a substantiated concern of a forced labour violation.

Investigation (Art. 18)

If there is enough evidence to initiate an investigation, the Commission will inform the businesses concerned, within 3 working days of this decision, about the scope of the investigation and the possibility to submit further information within 30–60 days (this period may be extended on request). The Commission will focus especially on operators closest to where the forced labour may have occurred. The Commission may carry out field inspections in non-EU countries, provided that the businesses concerned give their consent and that the government of the country concerned does not object.

Decisions (Art. 20)

The European Commission will aim to adopt a decision within 9 months of initiating an investigation. Where businesses fail to provide adequate information, the Commission will make a decision on the basis of the facts available. If a forced labour violation is established, the businesses concerned will:

• not to be able to sell the specific products investigated on the EU market or export them outside the EU
• have to withdraw any products from the EU market or from online sales platforms
• have to dispose of the products (for food, by donating to charities where possible).

Any decision to ban a product will be made public via the Forced Labour Single Portal.

Decision reviews (Art. 21)

Businesses can request a review of the decision if they obtain new substantial information that was not presented in the initial investigation. The Commission will decide on that request within 30 days. Where a business can demonstrate that it has eliminated forced labour from its supply chain, the Commission will withdraw its decision, the products will be removed from the Forced Labour Single Portal, and trade in the products can continue. Businesses will have access to a court or tribunal to review the legality of the decisions taken.

If the Commission cannot establish that there has been a forced labour violation, it will close the investigation.

Controls at the EU’s borders

Where the European Commission identifies products or product groups at high risk of being made with forced labour, it will pass this information to EU Member State customs authorities (Art. 26). Customs authorities in any EU Member State may temporarily prevent products identified as being at high risk from entering the EU. Within 4 days, the competent authorities of that Member State will decide whether the customs authorities should let the products enter the market or whether they must be disposed of (Arts. 29 and 30).

Why?

Forced labour is an ongoing problem, including in the agricultural sector, both inside and outside the EU (Euractiv 2024). Because EU Member States have developed different regulatory responses to the problem, EU legislation is required. Coordinating and harmonising approaches across Europe will provide a stronger response in the fight against forced labour and facilitate the free trade of goods within the EU.

Timeline

The new Regulation is expected to be adopted and enter into force in the second quarter of 2024. It will apply 3 years later, approximately mid-2027.

What are the major implications for exporting countries?

Opportunities

EU action on forced labour has been welcomed by stakeholders (e.g. ETUC 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

EU businesses are expected to introduce more rigorous monitoring of the potential risks of forced labour, in response to the new Regulation. The impacts on individual supply chains and businesses will depend on the extent to which there is already attention to forced labour as part of existing due diligence (for example, through voluntary standards). The supply and monitoring of information could create additional costs along the supply chain.

Legal uncertainty

The EU will take a risk-based approach to identifying suspected violations of forced labour rules. Appropriate due diligence is important for lowering the risk of forced labour in the supply chain, but is not enough to ensure that products will not be investigated. There is a potential risk that even businesses that have effective due diligence in place may move away from sectors/regions that are more widely associated with forced labour violations, as identified in the new public database. Some have argued that the database must contain sufficient detail to prevent operators who are sensitive to and engaged in labour rights issues being wrongly excluded from the EU market (FRUCOM 2022).

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 regarding 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).

Recommended Actions

The Commission will develop guidance on due diligence related to forced labour by the end of 2025 to help suppliers and importers put in place monitoring and reporting systems that will reduce the risk of investigations.

Background

The International Labour Organization estimates that 27.6 million people are subject to forced labour (ILO 2022). The European Commission’s 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 this proposed Directive are aimed only at the largest operators, and these rules do not prohibit outright the import or sale of products that have been made with forced labour. Other EU legislation aims to prevent human trafficking (Directive 2011/36/EU) and to prohibit the employment of victims of trafficking (Directive 2009/52/EEC). The new Regulation aims to fill the gaps in the EU’s existing legal framework.

Resources

Sources

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Regulation

Proposal for a Regulation of the European Parliament and of the Council on prohibiting products made with forced labour on the Union market – Analysis of the final compromise text with a view to agreement

What is changing and why?

The new Regulation prohibits the import and sale (including online) of products made with forced labour, including forced child labour. This covers all stages of the production process including harvest, production, and processing.

Businesses must not put any products on the market that have been made using forced labour. The new rules do not set out in detail the specific actions that companies must take to prevent use of forced labour (“due diligence”), but being able to demonstrate efforts to identify, prevent, and mitigate the use of forced labour will reduce the risk of being investigated.

The Regulation puts in place information systems that will help the Commission and EU Member States to collect and share evidence of the use of forced labour, including an online information point where anyone can provide evidence.

The Commission will take the lead in investigating suspected use of forced labour in non-EU countries. It will take a risk-based approach focusing on large-scale and severe cases of suspected forced labour, taking into account the quantity of products involved. The Commission will give companies suspected of bringing products made using forced labour to the EU market a first opportunity to provide information. If there is sufficient evidence, a full investigation will be launched, with a further opportunity for companies to provide information. A final decision is taken by the Commission within 9 months. Products found to violate forced labour rules will no longer be able to be sold on the EU market, and products already on the market will have to be withdrawn and disposed of. Once a company has demonstrated that it has eliminated forced labour from its supply chain, it can restart trading in products.

Based on information provided by the public and by international organisations, EU Member States will have to assess whether there is a risk that products were produced with forced labour. Where they identify a risk, they will launch an investigation.

During an investigation, EU Member State competent authorities will ask businesses for information. Businesses will have to demonstrate that they have made sufficient efforts (“due diligence”) to identify, prevent, mitigate, or bring to an end the use of forced labour. For example, this can include evidence that they have implemented voluntary guidelines or recommendations directed at eliminating forced labour.

After an initial investigation, if there is a “substantiated concern”, an EU Member State competent authority can launch a full investigation. If this full investigation finds that products were made with forced labour, the companies concerned:

• will not be able to sell the products
• have to withdraw any products already on the market
• have to dispose of the products.

Once a company has demonstrated that it has eliminated forced labour from its supply chain, it can restart trading in products.

Actions

The Commission will develop guidance on due diligence related to forced labour by the end of 2025 to help suppliers and importers put in place monitoring and reporting systems that will reduce the risk of investigations.

Timeline

The Regulation is expected to apply from mid-2027.

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