Background

The European Commission has proposed a new regulation that would specifically prohibit the placing of products made with forced labor on the EU market. The proposal covers all products, including imports as well as goods made in the EU for domestic consumption and exports, without targeting specific countries, companies, or industries. The proposal would apply 24 months after its entry into force, which will only occur if it is agreed by the European Parliament and the Council of the European Union.
According to a Commission press release, national authorities in EU member states would first assess if there are well-founded reasons to suspect that products have likely been made with forced labor. In making this determination authorities could use different sources of information, including submissions from civil society, a database of forced labor risks focusing on specific products and geographic areas, and the due diligence that companies carry out.

Authorities would start investigations on products for which they determine that there is a substantiated concern of forced labor. In carrying out investigations authorities would examine all the information available to them, including independent and verifiable information on risks that forced labor has been used in the production process; information on market surveillance and compliance of products shared by other EU member states; submissions by third parties, including civil society; and information on whether a company carries out forced labor due diligence in its operations and supply chains. Authorities could request information from companies and carry out checks and inspections, including in countries outside the EU. If authorities cannot gather all the evidence they require (e.g., due to a lack of cooperation by a company or a non-EU state authority) they could make a decision on the basis of the available facts.

In both phases authorities would have to follow a risk-based approach, meaning they should focus their enforcement efforts on the economic operators involved in the steps of the value chain as close as possible to where the risk of forced labor is likely to occur. They should also take into account the size and economic resources of the economic operators, the quantity of products concerned, and the scale of suspected forced labor.

If authorities establish that a product was made by forced labor they would be required to (1) immediately prohibit the placing and making available of that product on the EU market and its export from the EU, (2) require the economic operators to withdraw such product already made available from the EU market, and (3) have such product destroyed, rendered inoperable, or otherwise disposed of in line with national law.

The proposed regulation provides for the creation of a database of forced labor risk areas or products. Furthermore, a new platform (the EU Forced Labor Product Network) would be created to ensure structured coordination and cooperation between competent authorities and the Commission. In addition, the Commission plans to issue guidelines within 18 months of the regulation’s entry into force that could include guidance on due diligence and advice on where and how to detect forced labor in supply chains. 

Sandler, Travis & Rosenberg offers a comprehensive suite of services to help companies address forced labor concerns, including supply chain reviews, due diligence strategies, and proactive remediation. ST&R also maintains a frequently updated web page offering a broad range of information on forced labor-related efforts in the U.S. and around the world. For more information, please contact ST&R at supplychainvisibility@strtrade.com.

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