On 23 April 2024, the EU Parliament agreed on a new regulation that bans selling, importing, and exporting products made using forced labour. The regulation received overwhelming support, with 555 members in favour, six against, and 45 abstentions. These regulations are meant to make it tougher for products linked to forced labour to be sold within the EU, aiming to eliminate any links to modern slavery and human rights abuses in both imports and exports within the EU.
These regulations are also intended to stop the concerning rise of inexpensive products made from forced labour spreading in the EU market. According to the International Labour Organization, around 28 million people worldwide are in forced labour situations, generating a total of $236 billion (€217 billion) annually.
Who Will Be Subject to The New Regulation?
The key prohibition in this regulation prohibits any “economic operator”, which applies to any business or group of people who sell, import or export products in the EU, from selling, importing or exporting products made with forced labour.
EU Efforts Against Forced Labour
Authorities in each of the 27 countries in the bloc or the executive Commission can investigate questionable products, supply chains, and manufacturers, aiming to complete initial investigations within 30 working days. This regulation empowers authorities in member states and the European Commission to look into cases where forced labour might have been used, as well as suspicious products, supply chains, and manufacturers.
The European Parliament stated that investigations into suspected cases of forced labour will rely on factual and verifiable information gathered from various sources. These include international organisations, cooperating authorities, and whistleblowers. The Commission can ask for help from other Union bodies, offices, or agencies to carry out tasks like investigations. These tasks include processing information, supporting investigations, and cooperating with Member States and international authorities.
Various risk factors and criteria will be considered, such as how much forced labour is controlled by the government in specific industries and locations. This points to the fact that when the government forces people to work, it creates a big risk across a whole area. It’s challenging, and sometimes even impossible, to uncover the full extent of such practices particularly in regions where freedom of expression is restricted.
Which Stages of the Supply Chain Are Included?
To make sure this regulation is effective, the ban applies to products made with forced labour at any point of their production, manufacture, harvest, and extraction. This ban should include all types of products and their parts, and it should apply no matter where the products come from, whether they’re made in the EU or brought in from other places, and whether they’re sold within the EU or exported. This regulation, however, does not cover transportation services.
What Are the Consequences of Using Forced Labour?
If products are confirmed to be made using forced labour, they will be removed from the market in the EU. Additionally, if these products are found already being sold in the EU, they will either be donated, recycled, or disposed of.
Moreover, the regulation prohibits products declared to be made using forced labour from being sold online in EU member countries, with shipments coming into the EU being stopped at the borders to prevent the circulation of products made through exploitative labour practices.
However, there are ways for banned products to be allowed back into the market. This can happen once the company shows that it has removed forced labour from its supply chains. For certain products that are considered risky, importers will have to give detailed information about the manufacturers.
If a component of a product breaches this rule, only that component needs to be replaced, not the whole thing. So, the authorities need to consider how much of the product might have been made with forced labour. Here are two examples to explain this:
- If a component of a printer was made with forced labour, only that component needs to be replaced, not the whole printer. The manufacturer must either find a new supplier for that component or ensure it’s not made with forced labour. So, in this case, only the component needs to be replaced.
- If the chilli used in making sauce was made with forced labour, the whole batch of sauce must be discarded. In this case, it’s impossible to discard part of the product.
In some cases where there’s a supply risk to critical products, the authorities might decide not to impose disposal. Instead, they might direct the company to keep the product until they can prove it wasn’t made with forced labour.
This legislation will affect all businesses, including small and medium-sized enterprises (SMEs). It applies to all products sold on the EU market, whether they’re made in the EU or imported, regardless of the industry.
Companies that do not enforce the regulation will face fines imposed by the member states, with the intention of making the fines fair and discouraging non-compliance.
Public Database on Forced Labour Risk
Forced Labour Single Portal
The Commission will establish a regularly updated database of specific economic sectors in specific geographic areas where the government uses forced labour. The database will be populated with reliable information from various sources. These include the International Labour Organization (ILO), the United Nations (UN), and other research or academic groups.
The database should be accessible to the public via the Forced Labour Single Portal. If there is solid evidence that products from certain industries in certain places are likely made with forced labour by government authorities, those industries and areas should be listed in the database created by this regulation.
Single Information Submission Point
The Commission will create a special central system (called the Single Information Submission Point) where people can submit information. This system will be in all official languages of the EU, easy to use, and free of charge. It should be made available to the public at the latest 18 months after the date of entry into force of this regulation.
Anyone, whether a person or a group without legal status, can report suspected violations through this central system. They need to include details about the companies (economic operators), or products involved, explain why they believe there’s a violation, and provide any evidence or documents they have, if possible.
What’s Next
The regulation is pending formal approval by the EU Council. Once approved and published in the Official Journal, EU member countries will begin enforcing the law within three years.
What Should I Do Now to Prepare?
Use data-driven assessment tools and technology to create clear visibility, identify risks, and promote sustainable practices throughout your supply chain, including lower tiers.
This is crucial for any sustainability efforts, from statements about modern slavery to reporting on environmental, social, and governance (ESG) factors. It can also lead to other advantages like improved operational efficiency, stronger risk management, and a supply chain that’s better able to withstand challenges.
How Trustnet.Trade Can Help
With the EU’s stringent new regulations against forced labour, all businesses must now guarantee their supply chains are free from exploitation. Trustnet.Trade simplifies this process by offering comprehensive compliance solutions.
Screen your business partners for sanctions, embargoes, and forced labour risks in real-time. Trustnet.Trade’s advanced platform helps you identify, categorise, and monitor suppliers globally, ensuring adherence to the German Supply Chain Due Diligence Act and EU regulations.
Take proactive steps with Trustnet.Trade’s easy-to-use tools, templates, and continuous monitoring. Strengthen your supply chain resilience and demonstrate your commitment to ethical practices.