On 14 September 2022, the European Commission proposed a EU new regulation which bans products made with forced labour (COM (2022) 453).
The regulation is part of EU's strategy to promote Decent Work Worldwide, whose objective is to promote decent working conditions across all sectors and policy areas addressing workers in domestic markets, third countries and global supply chains. The proposal aims at harmonizing Members States legislation prohibiting forced labour.
The question has come into focus inter alia after reports from China raising suspicions that tens of thousands of Uighurs from the province of Xingjang are being subject to forced labour.
Scope of the proposal
Under the proposal, products made with forced labour shall be prohibited from being put on the internal market. In case of violation of the prohibition, the Commission proposes that national authorities shall be empowered to withdraw or prohibit products from being released, exported or imported to the internal market. The definition of forced labour in the proposed regulation is aligned with the definition of the International Labour Organization (ILO) and covers all work or service which is exacted from any person under the menace of a penalty and for which the person has not offered himself or herself voluntarily. The proposal is broad in the sense that it covers all products within all industries, whether imported, exported or domestically produced regardless of the size of the companies involved.
National authorities shall be responsible for monitoring companies and ensure compliance with the prohibition. This includes an obligation for national authorities to investigate products suspected of being made with forced labour. As a first step, national authorities are proposed to have the competence to gather information about companies' production from civil society and/or from a database which will be made available to the Member States by the Commission. This database will gather information about the risks of forced labour regarding specific geographical areas and products. As a second step, if national authorities find reasonable cause to suspect that products are being made with forced labour, they shall initiate an investigation of the products concerned and of the economic actors in question.
The proposed regulation obliges national authorities to request information from companies as well as to conduct controls and inspections based on all relevant information available to them. The national authorities must then decide whether there is a violation of the prohibition made through forced labour, and if so, the decision should be accompanied by a ban on releasing the concerned products for free circulation or export and an obligation to recall products that have been released. If a company does not comply with a demand to disclose information, a decision to stop products from being placed on the market can be based on information made available from other sources. Companies will thus not be able to prevent national authorities from removing products by refusing to disclose information.
The proposal obliges Member States to lay down effective, proportionate and deterrent penalties in national law which shall apply in the event of non-compliance with the decisions of the national authorities.
Consequences of the proposal
Companies will have to implement due diligence to ensure that a violation of the prohibitions has not occurred. The obligations under the proposal applies also to small and medium sized companies (SMEs) and the proposed regulation thus differs from the Commission's proposal for a directive that regulates Corporate Sustainability Due Diligence, in which SMEs are exempted. However, to facilitate the due diligence process for SMEs, the Commission proposes to provide guidelines on how to carry out various steps of the due diligence process in relation to forced labour.
The proposal has been welcomed by actors affected by the regulation, stating that supply chain due diligence coupled with remedy approaches could lead to increased supply chain stability and efficiency which is necessary to avoid disparities amongst different companies.
Concerns have nevertheless been raised regarding companies' capacity to investigate the entire supply chain, but also with regard to the fact that the burden of proof is on the authorities and not on the companies.
Next steps
The proposal has been sent to the European Parliament and the Council who will adopt their respective positions. Thereafter, the proposal will be negotiated within the framework of the so-called trilogue, between the Parliament, the Council and the Commission. The regulation is proposed to become applicable 24 months after its entry into force. However, there is presently no indication regarding when the proposal can be expected to be adopted.
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