In a move to protect workers’ rights and tackle the issue of forced labour, the European Union (EU) has proposed new rules that would ban products made with forced labour from being sold in the EU. The proposal was announced by the Executive Vice-President and Commissioner for Trade, Valdis Dombrovskis on Wednesday 14 September 2022, who described it as a proposal that “will make a real difference in tackling modern-day slavery”. If approved, the new rules would apply to all domestic products, exports and imports. This follows an announcement by the EU earlier this year for a proposal on Corporate Sustainability Due Diligence that would require EU businesses with more than 500 employees and revenue of €150 million to conduct better due diligence on their entire supply chains to prevent human rights and environmental abuses. We took a closer look at what the proposal is and how this will affect businesses and workers.
1. What is the EU proposing to do about products made with forced labour?
The proposal aims to have all goods produced under forced labour conditions banned from the EU market, no matter where they were manufactured. This would apply to all goods, including those produced in the EU for domestic consumption and exportation, as well as imported items.
2. Who will benefit from this regulation?
The regulation seeks to protect workers worldwide, including in countries where forced labour is prevalent. It is hoped that this will also help raise awareness and pressure companies to improve their supply chain practices. The proposal is also expected to give consumers more confidence in their purchases, knowing they have not contributed to modern slavery.
3. How will this impact businesses in the EU and beyond?
The proposed regulation would require businesses to take measures to ensure that their supply chains are free from forced labour. Businesses found to be in breach of the regulation could face severe penalties, including a ban on selling their products in the EU. This would have a significant impact on businesses, particularly those that rely heavily on imported goods. The proposal also includes the ability for civil society to make submissions regarding cases of forced labour, a core demand of trade unions during the Commission’s call for evidence.
4. What are some of the potential implications of this proposed ban?
The proposed ban on products made with forced labour could have several implications, both positive and negative. On the positive side, it would help protect workers’ rights and ensure that businesses operate ethically. It will also help businesses improve their reputation and build a positive brand image, resulting in increased public trust and credibility. However, there are also potential negative implications, such as increased business costs and the risk of trade disputes between the EU and countries that export products made with forced labour.
5. How will this proposed regulation be enforced?
The EU Member States will implement the ban through a comprehensive, risk-based enforcement strategy. Customs authorities will be investigating any products for which there are suspicions of forced labour, and can request further information from companies while carrying out inspections. If forced labour is found, the products will be ordered to be removed from the market and it will be prohibited from being exported. Companies will be required to dispose of any goods found to have been produced through forced labour. The EU will issue guidance to facilitate the implementation of the prohibition by businesses and Member State authorities.
7. What do experts think about this move by the EU?
The proposed regulation has received mixed reactions from experts. Some have praised it as a vital step forward in protecting workers’ rights, while others have raised concerns about the potential implications for businesses and workers. The proposal’s enforcement provisions, requiring confirmation of risk, were deemed less effective than the similar US legislation, where enforcement (i.e., prohibiting imports) is based on reasonable suspicion. Overall, there seems to be cautious optimism that the proposal could help to improve labour standards across the EU and beyond.
8. How might this proposal change over time, if at all?
The final version of the proposal may differ from what is currently being proposed, depending on the outcome of the discussions between the European Parliament and the Council of the European Union. However, the overall aim of the proposal is likely to remain the same.
9. What can businesses do to prepare for this change?
If this proposal is approved, businesses will need to take measures to ensure that their supply chains are free from forced labour. This may involve conducting audits of suppliers and putting in place policies and procedures to prevent forced labour from occurring. Businesses should also be aware of the potential penalties for breaching the proposed regulation, which could include a ban on selling products in the EU.
10. How can Impactt help?
We believe putting worker welfare at the heart of supply chains is better for business. With over 25 years of experience, we’re in the perfect position to support businesses, big and small, with ethical assessments, in-depth investigations, human rights impact assessments and risk mapping to uncover the root causes of any potential issues. We utilise learnings and outcomes from our work to help drive change at scale and real, positive impact for entire sectors and industries and even influence national policy.
Our unrivalled, practical and pragmatic solutions ranging from strategy development and training to remediation, capacity building, programme development, and so much more, help our clients to improve business partnerships and worker relationships to inspire real, tangible positive change for both workers and the business.
We’re highly experienced and well-equipped with expertise and on-the-ground knowledge to help you navigate this ever-changing landscape of forced labour regulations. Get in touch today to find out how Impactt can help you and your supply chain prepare for the new EU regulations.