September 15, 2022

Companies would be banned from using forced labor to manufacture, sell or export products in the European Union (EU), under measures included in a proposed Regulation issued by the European Commission (“commission”) on 14 September 2022. Forced labor is defined as “all work or service which is extracted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily.” Upon agreement, the Regulation would enter into force in EU member states without requiring national implementing legislation, and would apply 24 months later. 

Highlights

 

  • The Regulation would apply to all products made in the EU for domestic consumption or export, and to imports. Companies would have to withdraw products already on the EU market. No particular industry sectors or companies are targeted.

  • Member states would have to conduct a two-phase investigative process. National authorities would use different information sources (for example, submissions from civil society organizations, an EU database of forced labor risks, and companies’ due diligence) to assess forced labor risks, and would investigate products for which the use of forced labor is suspected. Authorities could request information from companies, and could conduct audits and inspections, including in countries outside the EU. If forced labor is found, the authorities could order the withdrawal of products and prohibit their sale or export (national customs authorities would enforce products entering or leaving the EU). Companies would have to pay for the disposal of products, and may have to provide evidence of compliance (noncompliance would be subject to “effective, proportionate, and dissuasive penalties” under national laws). If all evidence cannot be gathered (for example, noncooperation by companies), authorities could take action based on the available facts.

  • The commission would publish guidelines within 18 months of the Regulation’s entry into force. The guidelines would include information on due diligence risk indicators of forced labor. A new EU Forced Labour Product Network would provide a platform for coordination and cooperation between member states and the commission.

The proposed Regulation follows publication of the commission’s Communication on Decent Work Worldwide (February 2022), Guidance to assist EU business to address the risk of forced labor (July 2021), and the proposed directive on Corporate Sustainability Due Diligence (CSDD) (February 2022). The proposed Regulation would be linked to the proposed CSDD directive as — effective due diligence conducted by companies under the CSDD could be taken into account by national authorities when assessing the use of forced labor for products.
 

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Fiona Webster
by Fiona Webster

Principal, Mercer’s Law & Policy Group

Stephanie Rosseau
by Stephanie Rosseau

Principal, Mercer’s Law & Policy Group


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