On 19 November 2024, the Council of the EU adopted the Regulation banning products that are made using forced labour.
Overview
This piece of legislation is the keystone of many policy instruments that have addressed the topic. As a follow-up to basic ILO Conventions no. 29 and 105 which are directed towards and apply to member states (and not to individuals or corporations), this Regulation will affect the operations of private businesses. According to official sources, over 80% of forced labour occurs in the private sector, mainly in the industries of textiles, mining, agriculture and services.
The Regulation supplements and gives teeth to previous legislative initiatives, both within the EU and trade agreements with third countries, as well as private agreements that global organisations have made over the past 20 years with the trade union movement (so-called transnational or international framework agreements, of which about 150 currently exist).
The Regulation does not – and could not – find its basis in social policy considerations, but it is based on principles of common commercial policy and the improved functioning of the internal market, underpinned by the fundamental respect for human dignity, as set out in Article 21 TEU and Article 5 of the Charter of Fundamental Rights.
How will the Regulation operate?
The basic rule in Article 3 of the Regulation is simple: ‘economic operators shall not place or make available on the Union market products that are made with forced labour, nor shall they export such products’. An economic operator may be, for the purposes of the Regulation, an individual, company or business placing or making products available in the EU or exporting products from the EU.
To achieve its goal of eradicating products made with forced labour, the Regulation establishes a structured framework to prohibit the use of forced labour in the production of goods available in the EU and within supply chains. It empowers the EU to prohibit and remove a product from the internal market if it is made by forced labour, regardless of whether it is produced within the EU or imported into the EU market.
The Regulation is not expected to impose additional or more onerous due diligence obligations on businesses. The Regulation instead provides the following:
- The EU Commission will set up a central database for identifying forced labour risks areas or products, based on publicly available data. It will use a single information submission point to allow centralised reporting of forced labour made products (placed on the EU market, including online or other means of distance sales, or exported from that market).
- An ‘EU Network Against Forced Labour Products’ will also be established, as a platform for coordination and cooperation and for streamlining enforcement of the Regulation, comprised of national representatives and customs authorities.
- To help businesses and national authorities in detecting violating products and ensuring proper enforcement of the Regulation, the EU Commission will issue guidelines (within 18 months from the Regulation’s entry into force) on due diligence (including the full supply chain), best practices for ending forced labour, the practical implementation of the Regulation, and risk indicators of forced labour etc.
In addition, the EU Commission will also have investigative powers to detect violating products, by prioritising on the basis of the scale and severity of suspected forced labour, the quantity or volume of products placed on the market, and the share of the product suspected to have been made with forced labour. The actual investigations will be conducted by national authorities (when the forced labour is suspected to take place in the EU), or by the EU Commission (for external situations). A detailed procedure for such investigations with economic operators is being set up and will also allow for field inspections in exceptional situations.
Following such investigations, competent national authorities will be authorised to issue decisions or orders to ban, withdraw, or order the disposal (through destruction or recycling) of violating products. These decisions or orders shall also be recognised and enforced by the competent authorities in other member states. Any such decisions or orders will be subject to appeal or judicial review, and once final, they can be enforced through penalties, which need to be effective, proportionate and dissuasive.
Next steps
The next and final step in the legislative process is the publication of the Regulation in the Official Journal, and its entry into force the day after publication. The Regulation will apply 3 years later, i.e. presumably by the end of 2027 or early 2028.
For further information, please contact:
Pieter De Koster, Partner, Bird & Bird
pieter.dekoster@twobirds.com
