European Commission Publishes Proposal on Prohibiting Products Made with Forced Labour

IPC is monitoring a proposal recently published by the European Commission (EC) that would prohibit products in the European Union market made with forced labour. The current proposed draft would ban both imported goods and goods made in the EU with forced labour.

A forced labour ban is not a new topic for the EU. Forced labour is defined in the International Labour Organization’s (ILO) Forced Labour Convention as “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered themselves voluntarily.” The ILO is committed to eradicating forced labour by 2030, and this proposal was foreshadowed by EC President Ursula von der Leyen in her 2021 State of the Union Speech.  The initiatives on forced labour are also in line with the European Union’s proposal for a Corporate Sustainability Due Diligence Directive (CS3D).

The ban as drafted will prohibit all products made with forced labour from the EU market; apply to all economic operators; encompass the entirety of the supply chain; and extend to all products, including their components. The potential impacts of a forced labour ban on industry could be significant. In particular, the EC has stated that small- to medium-sized enterprises (SMEs) will not be given exemptions given the severity of the issue. The proposal also puts the enforcement emphasis on larger economic operators in early stages of the EU value chain, including importers, manufacturers, producers, and product suppliers.

The proposed regulation would serve as a direct legal obligation to all Member States. As currently drafted, the regulation requires them to designate competent authorities responsible for implementation and enforcement; they are encouraged to focus on economic operators where the greatest risks of forced labour exist, but also to consider the size and economic resources of the operator.

Prior to the proposal’s release, the Commission conducted a stakeholder consultation to understand the potential impacts and implications of such a ban. In general, there was a consensus that forced labour is a complex issue that needs to be ended; however, several entities mentioned that it should be enforced through Member States’ criminal laws. Stakeholders also raised concerns on the lack of a dedicated impact assessment for the proposal. The EC has reasoned that given the severity and urgency of the issue, it is forgoing a dedicated impact assessment but will consider impact assessments from other policies with due diligence obligations, like the CS3D.

Unlike recent policy initiatives in the United States, the EC’s proposal does not focus on forced labour in any one region — the ban would apply across all regions and all products. Competent authorities will rely on an established database of forced labour risk areas or products during the initial phase of investigations. Stakeholders also encouraged the use of a database to understand where products are coming from and where in the supply chain high forced labour risks may exist.

While the proposed regulation is still in its initial phases, it will need to be discussed and agreed upon by the European Parliament and the Council of the European Union before it can enter into force. The regulation would apply 24 months after its entry into force. The Commission would also issue guidelines within 18 months of the law’s entry into force. There is political support for due diligence and, specifically, due diligence for forced labour issues, so we expect timely discussions and meetings by EU policy makers. IPC will continue to monitor the proposal and welcomes your insights.

Please contact me at SuhaniChitalia@ipc.org to discuss this policy.