About the author
Jacob Charnick is a consultant at Ardea International.
The European Commission has published its proposal for a new Regulation that will ban products made using forced labour from the EU market. The proposal, released on 14th September 2022, marks the culmination of calls to address the rising cases of forced labour. The International Labour Organization (ILO) estimated that the amount of people currently in forced labour stands at 27.6 million globally.
The proposal seeks to prohibit products made with forced labour from being made available on the EU market. It will also prohibit the exporting of products made using forced labour to third countries. The proposal’s definition of forced labour is drawn from Article 2 of the ILO’s forced labour convention which defines it as “all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily.“
The proposal goes hand-in-hand with the European Commission’s draft proposal for a Directive on Corporate Sustainability Due Diligence which was published on 23rd February 2022. The directive will require companies to be more proactive and transparent on the ways in which they are tackling environmental and human rights risks within their business activities. This compliments the forced labour ban insofar as it requires companies to identify forced labour, which can in turn support preventing it from entering the EU market.
Who does the ban effect?
The ban does not target specific countries or companies. Whilst it is an EU regulation, it will also impact non-member states and economic operators as it will ban any products made with forced labour from being placed on the EU market, including products from third country companies. Similarly, the ban will prevent products made using forced labour from being exported from the EU.
The proposal will apply to products where forced labour has been used “at any stage of their production, manufacture, harvest and extraction”, therefore the ban will be wide-reaching and does not focus on specific products or business sectors.
The onus will be on companies to prove the absence of forced labour within their supply chains. Or, where forced labour has been identified, to demonstrate that this is no longer present, and any violation has been remedied. Member states will be required to designate one or more competent authorities who will be responsible for investigating any substantiated concerns of products on the EU market that were produced using forced labour.
Enforcing the ban
The ban will require EU member states to task competent authorities with the responsibility of enforcing the regulation. The commission has stated that it will provide support to member states through the allocation of a public database, coordination between Member States, and the issuing of guidelines. The Regulation will be directly effective, meaning there is no need for member states to produce legislation to implement it into domestic law.
Where it is established that a product is made using forced labour, it cannot be sold in or exported from the EU. Where a product made from forced labour is already on sale, it must be withdrawn, and the products disposed of. It will be the companies responsible who will ultimately be penalised and charged with any costs incurred in remedying the situation.
Where there is substantiated concern that products on the EU market or exported from the EU market were produced using forced labour, the competent authority of the member state must commence an investigation. Concerns can be submitted by any legal or natural person, or any association not having legal personality. Competent authorities can also refer to a databased of forced labour risk areas or products which shall be produced and updated by the European Commission.
The proposed regulation takes a two-pronged approach to investigating forced labour, as follows:
- A preliminary phase of investigation where the designated competent authority will assess whether there is a substantiated concern or well-founded suspicion of forced labour in products sold or due to be sold in the EU market. Relevant companies will have to respond to requests for information within 15 days. If there are substantiated concerns of a violation, there will follow;
- A main phase of investigation whereby the competent authority will establish whether forced labour was present in the production of the goods in question based on all the information available.
If forced labour is identified within the production line of a particular product or products, member states can then do the following:
- Prohibit the product in question from being made available from the EU market or exported from the EU.
- Order the product in question to be withdrawn from the EU market
- Order the company responsible for the production of the product to dispose of said product.
Competent authorities will also need to inform the commission and other EU member states of any decisions made regarding investigations or the outcomes of investigations into the use of forced labour by a company in the production of products on the EU market.
Steps that Businesses should take
Whilst there is no set date for the enforcement of the forced labour ban, businesses can prepare ahead of time by ensuring that they are conducting due diligence in identifying and remedying forced labour risks within their supply chains. This can include the following:
- Conduct a risk mapping exercise to establish where there are potential risks in the supply chain;
- Identify what, if any, due diligence processes your organisation currently has in place regarding human rights;
- Consider whether the current due diligence framework aligns with international standards such as the UNGPs and OECD guidelines;
- Assess whether additional data or evidence is required in order for the organisation to rebut any suspicions of human rights violations in the supply chain;
- Establish whether the organisation has a grievance mechanism that acts as an early warning mechanism for risk awareness and can serve as a mediation system;
- Ensure your organisation is able to cooperate with the remediation process where it is directly linked to an adverse impact on human rights.
Questions and Answers: Prohibition of products made by forced labour in the Union Market
Just and sustainable economy: Commission lays down rules for companies to respect human rights and environment in global value chains
European Commission presents ban on products made with forced labor in the EU market
European Commission proposes ban on goods made with forced labour
European Commission Proposal for a Regulation of the European Parliament and of the Council on prohibiting products made with forced labour on the Union market 2022/0269 (COD)
EU set to ban forced labour products from the bloc’s market
ILO CO29 – Forced Labour Convention, 1930 (No. 29)
How can Ardea International help?
Ardea International understands that businesses have to ensure that they establish robust due diligence procedures. We support our clients by helping them identify how to manage human rights impacts and risks, ensuring they meet legal compliance obligations and integrate best practices into their policies and procedures.
Ardea International has developed a number of effective compliance solutions, including a human rights and environmental disclosure legal register. The legal compliance due diligence register allows businesses to track incoming legislation as well as current laws they may be subject to. We can also assess your business’s compliance with human rights regulations, including preparedness to comply with new legislation. In addition, Ardea can examine your business’ due diligence procedures and provide priority steps to improve performance.
We have an upcoming workshop on Developing an environmental and human rights mandatory due diligence framework. This course will equip you with an understanding of the key legislative developments and how to develop a due diligence framework to implement in the business.
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