Commission unveils law to prohibit products made with forced labour
On September 14, 2022, the European Commission published its proposal for a Regulation introducing a ban on placing and making available products made with forced labour on the EU market. Under the Regulation, products found to be made by forced labour can neither be sold in the EU, nor exported from the EU. Where products are already on the EU market, they will have to be withdrawn.
The Proposed Regulation does not target specific companies, industries or countries, but applies broadly and generally in respect of all products, whether made in the EU for domestic consumption or export, as well as imports. Enforcement of the Regulation at EU Member State level will be in the hands of (i) national competent authorities (“NCAs”) competent to withdraw products made with forced labour from the market, and (ii) customs authorities designated with the task to identify and block products made with forced labour at the border.
The proposal
The draft law proposes a risk-based approach to identify certain areas and sectors for investigation, to be carried out by national authorities appointed by the member states.
“We will empower member states to investigate products and remove them from the market where necessary,” Dombrovskis explained.
In case a product is found to be made with forced labour at any stage of its production or distribution, it will be disposed of by customs authorities.
Dialogue with companies
To continue being able to place the product on the EU market or export it to third countries, companies need to prove they have eliminated forced labour from their supply chains. They can also ask to have their case reviewed if they deny forced labour occurred.
According to MEP Bernd Lange (S&D), rapporteur of a resolution on forced labour products adopted by EU lawmakers in June, “dialogue with companies is important.”
“We want to have a dialogue with the producer. It makes no sense just saying it is not possible to enter the European market anymore, because we want to improve the situation on the ground,” Lange said.
“We should really try to convince the producer or the supplier to change their production process,” he added.
The forced labour instrument in practice
National authorities in the Member States will implement the prohibition through a robust, risk-based enforcement approach. In a preliminary phase, they will assess forced labour risks based on many different sources of information that together should facilitate the identification of risks and help focus their efforts. These may include submissions from civil society, a database of forced labour risks focusing on specific products and geographic areas, and the due diligence that companies carry out.
The authorities will start investigations on products for which there are well-founded suspicions that they have been made with forced labour. They can request information from companies and carry out checks and inspections, including in countries outside the EU. If national authorities find forced labour, they will order the withdrawal of the products already placed on the market, and prohibit to place the products on the market, and to export them. Companies will be required to dispose of the goods. The Member States’ customs authorities will be in charge of enforcement at the EU borders.
If the national authorities cannot gather all the evidence they require, for instance due to the lack of cooperation by a company or a non-EU state authority, they can take the decision on the basis of the available facts.
Competent authorities will apply the principles of risk-based assessment and proportionality throughout the process. On this basis, the proposal takes into account in particular the situation of small and medium-sized companies (SMEs). Without being exempted, SMEs will benefit from the specific design of the measure, i.e. competent authorities will consider the size and resources of the economic operators concerned and the scale of the risk of forced labour before initiating a formal investigation. SMEs will also benefit from support tools.
The Commission will also issue guidelines within 18 months from the entry into force of this Regulation. The guidelines will include forced labour due diligence guidance and information on risk indicators of forced labour. The new EU Forced Labour Product Network will serve as a platform for structured coordination and cooperation between competent authorities and the Commission.
Next steps
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 will apply 24 months after its entry into force.
