Author: Dr. Angelika Hellweger
14 September 2022
3 min read
Angelika Hellweger of Rahman Ravelli details the EU proposal to combat use of forced labour in business supply chains.
The European Commission has put forward a proposal to prohibit products in the European Union (EU) market that have been made with forced labour.
The Commission's Forced Labour Product Ban regulation will cover all products, both those made in the EU for domestic consumption or export and goods imported from outside of the EU. It does not target any specific companies or business sectors. It also does not target certain geographical areas, as the US did with its Uyghur Forced Labour Prevention Act, which was a response to China’s treatment of the Uyghur Muslim minority.
The Commission believes its proposal is necessary to combat the problem of forced labour, which involves an estimated 27.6 million people worldwide.
The EU proposal builds on internationally-agreed definitions of forced labour and places an emphasis on “close cooperation with global partners’’. Following an investigation, national authorities within the EU will have the power to remove from the EU market products that have been made with forced labour. EU customs authorities will identify and stop such products at EU borders.
Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis, said: “Competent authorities and customs will work hand-in-hand to make the system robust. We have sought to minimise the administrative burden for businesses, with a tailor-made approach for SMEs (small and medium-sized companies). We will also further deepen our cooperation with our global partners and with international organisations.”
The proposal is viewed as an attempt to tackle the unsustainable production of goods. The Commission’s Commissioner for Internal Market, Thierry Breton, said: “Being industrial and technological leaders presupposes being more assertive in defending our values and in setting our rules and standards. Our Single Market is a formidable asset to prevent products made with forced labour from circulating in the EU, and a lever to promote more sustainability across the globe.”
National authorities in EU Member States will implement the proposal using what has been described as a robust, risk-based enforcement approach. In a preliminary phase, they will assess forced labour risks using all relevant sources of information available to them; including reports made to them, database information regarding forced labour relating to specific products and geographical areas and findings from companies’ due diligence. Authorities will be expected to focus their enforcement efforts where they are likely to be most effective - which will be on those who are closest in the supply chain to the risk of forced labour.
The authorities will begin investigations into products where well-founded suspicions exist about them having been made with forced labour. They can request information from companies and conduct checks and inspections, including in non-EU countries. If the use of forced labour is discovered, the authorities will have the power to order the withdrawal of products already on the market and prohibit any products being placed on the market or being made available for export. Companies will then have to dispose of the goods. Any ban imposed could be lifted if and when a company can show it has removed forced labour from its supply chain.
In situations where a national authority cannot gather all the evidence it requires to complete its investigation – due, for example, to a lack of cooperation by a company or a non-EU state authority - a decision can be made on the basis of the information available.
The authorities will be required to apply principles of risk-based assessment and proportionality throughout the process. The EU hopes that this will act as an incentive for business to cooperate with investigations. SMEs will not be exempt from the proposal, but authorities will consider a company’s size and resources and the scale of the risk of forced labour before formally beginning an investigation. The Commission has also said that SMEs will benefit from “support tools’’. It will issue guidelines about forced labour due diligence and information on risk indicators of forced labour. The new EU Forced Labour Product Network is intended to be a platform for coordinating activities between competent authorities and the Commission on this issue.
The proposal now needs to be discussed and agreed by the European Parliament and the Council of the European Union before it can enter into force. It is possible that agreement on the final text of the regulation may be achieved next year. It would only start to apply two years after its entry into force, meaning it would not become effective until 2025 at the earliest.
The devising of it follows both a commitment given by European Commission President Ursula von der Leyen in the 2021 State of the Union speech and the Commission’s Communication on Decent Work Worldwide of February 2022. In July 2021, the Commission and the European External Action Service (which is the EU’s diplomatic service) published guidance to help EU businesses act appropriately to address the risk of forced labour in their operations and supply chains.
Angelika is a specialist in international, high-level economic crime investigations and large-scale commercial disputes. She has widely-recognised expertise in representing corporates and conglomerates in Europe, the Middle East, Africa and United States.