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EU Forced Labour Law

EU Takes a Stand: Products Made with Forced Labor Face Ban from Single Market

Executive Summary

  • The EU Parliament's recent regulation banning products made with forced labour from its market highlights its commitment to human rights and ethical trade.

  • Authorities are granted power to conduct thorough investigations into suspected cases of forced labour, with strict consequences for non-compliant companies, such as product withdrawal, financial penalties, and mandates for ethical disposal.

  • Companies intending to reintroduce products must prove the elimination of forced labour from their supply chains through rigorous due diligence.

  • The European Commission will offer comprehensive guidelines and support, particularly tailored for SMEs, to ease compliance.

  • A proposed database on forced labour risks aims to identify high-risk sectors and geographic areas, fostering transparency and ethical sourcing practices in supply chains.

  • We provide customers with extensive support to prepare for this regulatory change.


Introduction

On April 23, 2024, the European Parliament approved a regulation empowering the EU to ban products made with forced labor from its single market. This significant step reflects the EU's commitment to upholding human rights and combating modern-day slavery. The regulation underscores the importance of transparency, accountability, and cooperation in addressing forced labor within global supply chains.


Background

Forced labor remains a pervasive issue worldwide, with approximately 27.6 million individuals subjected to exploitative conditions. The EU's proposed regulation aims to tackle this issue by prohibiting the sale, import, and export of goods produced through forced labor. The regulation aligns with international standards and EU legislation, emphasizing the need for comprehensive due diligence and cooperation among stakeholders.


Main Points


Investigations and Consequences

  • Empowerment of member state authorities and the European Commission to conduct thorough investigations into suspected cases of forced labor in products.

  • Initiation of investigations based on factual and verifiable information from various sources, including international organizations, cooperating authorities, and whistle-blowers.

  • Stringent consequences for confirmed cases of forced labor, including swift withdrawal of products from the EU single market and interception of shipments at borders.

  • Imposition of financial penalties on manufacturers of banned goods as a deterrent.

  • Mandate for non-compliant companies to dispose of their products in accordance with ethical and environmental standards, which may involve donation, recycling, or destruction under supervision.


Reintroduction of Goods

  • Withdrawal of products made with forced labor from the EU single market, with a potential pathway for reintroduction under specific conditions.

  • Requirement for companies to demonstrate elimination of forced labor from supply chains through rigorous due diligence processes.

  • Thorough scrutiny and verification processes to ensure compliance with ethical labor practices before allowing products back into the market.

  • Involvement of audits, inspections, and ongoing monitoring to prevent future instances of forced labor and maintain ethical standards.

Criteria for Investigations

  • Decision to initiate investigations based on a comprehensive evaluation of risk factors and criteria, including prevalence of state-imposed forced labor and geographic areas.

  • Emphasis on credible and verifiable information from international organizations, civil society submissions, and other relevant sources.

  • Aim to ensure targeted and effective investigations focused on areas with the highest risk of forced labor exploitation.

  • Prioritization of resources and interventions to combat this violation of human rights based on various indicators and risk factors.


What support may the new law offer companies?

Under the proposal, companies may receive significant support from the European Commission in implementing due diligence measures related to forced labor. The Commission would issue comprehensive guidelines tailored to different company sizes and economic resources, facilitating compliance with the prohibition. These guidelines would cover due diligence practices, risk indicators for identifying forced labor, and how to engage with competent authorities. Moreover, specific assistance would be provided to SMEs and other stakeholders, including guidance on submitting information and navigating the various obligations under Union law. Additionally, the Commission aims to minimize administrative burdens on SMEs and support collaborative efforts within supply chains through measures such as a centralized support hub and assistance for multi-stakeholder initiatives.


Database on Forced Labor Proposed

The European Parliament also proposes the establishment of a comprehensive database that provides updated information on forced labor risks in specific geographic areas and economic sectors. This database would be based on independent sources such as reports from the International Labour Organization, civil society, and business organizations. Additionally, it would include information on decisions made by competent authorities regarding remediation of forced labor cases. If there is clear evidence that certain economic sectors in specific geographic areas are at high risk of state-imposed forced labor, they should be identified in this database. The Commission would have the authority to supplement the regulation by identifying these high-risk sectors and areas. In such cases, economic operators would be responsible for proving that forced labor was not used at any stage of production.


Conclusions

The EU's decision to ban products made with forced labor represents a significant commitment to ethical trade practices and human rights protection. By implementing robust investigation procedures and imposing consequences on non-compliant companies, the EU demonstrates its determination to eradicate forced labor from global supply chains. However, effective enforcement and international cooperation will be crucial in ensuring the regulation's success and fostering a more just and equitable global economy.


Our Recommendations


For EU Companies:

  • Conduct Supply Chain Audits: Evaluate supply chains to identify potential risks of forced labor at any stage of production.

  • Implement Due Diligence Measures: Establish robust due diligence procedures to ensure compliance with the EU Forced Labor Regulation. Read about our best practice recommendations for Due Diligence.

  • Stay Informed: Keep abreast of updates and guidance regarding forced labor risks and enforcement measures. Just leave your e-mail address at www.customsmanager.info to always stay updated.

  • Collaborate with Competent Authorities: Cooperate with national competent authorities during investigations and provide necessary information promptly.

  • Consider Ethical Sourcing: Prioritize suppliers with transparent and ethical labor practices to mitigate risks of forced labor in the supply chain.

For Non-EU Companies:

  • Understand EU Regulations: Familiarize yourself with the requirements of the EU Forced Labor Regulation to ensure compliance when exporting products to the EU market.

  • Conduct Risk Assessments: Evaluate supply chains to identify and address potential risks of forced labor in production processes.

  • Establish Transparency: Provide transparent information about product origins, manufacturing processes, and labor practices to EU customers and authorities.

  • Seek Guidance: Seek guidance from legal experts or consultants well-versed in EU regulations and forced labor compliance.

  • Adopt Ethical Standards: Align with international labor standards and ethical sourcing practices to demonstrate commitment to responsible business conduct.

 

More Information and Links


1. What is the EU Forced Labor Regulation (EUFLR) and when was it agreed upon?

2. Who does the EUFLR apply to?

3. What are the key takeaways regarding the scope of the regulation?

4. How will the EUFLR be enforced?

5. What criteria will be used to assess and manage risks under the EUFLR?

6. How will investigations into suspected violations be conducted?

7. What happens if forced labour is identified during an investigation?

8. How does the legislation protect the rights of economic operators during investigations?

9. What is the process for making final decisions on violations?

10. What are the consequences of non-compliance with the EUFLR?

11. What are the possible impacts of the regulation?

12. How does the legislation encourage due diligence efforts among businesses?

13. What is the "Forced Labour Single Portal," and how will it support operators and Member States?

14. What are the next steps for the legislation?

15. What support is available for companies regarding forced labour obligations under the legislation?


Due Diligence Collection & Resources

For all updates we have published on Due Diligence, please refer to our collection:


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