On 19 November 2024, the Council adopted the Regulation on the prohibition of products made using forced labour (the “Forced Labour Regulation” or the "Regulation"), which means that the legislative process has now been terminated.
The Forced Labour Regulation reinforces EU's commitment to tackling human rights abuses and forced labour in global supply chains by prohibiting products made with forced labour from being sold on or exported from the EU's internal market. The Regulation integrates international labour standards, in particular International Labour Organisation (ILO) conventions that aim to eliminate forced labour globally and improve working conditions in production chains.
The Regulation is based on a proposal tabled by the European Commission on 14 September 2022. On 13 March 2024, a provisional agreement was reached between the Council and the European Parliament. The European Parliament, which during the negotiations expressed strong support for tougher measures against products made with forced labour, adopted the agreed text on 23 April 2024.
The Forced Labour Regulation prohibits economic operators from placing and making available on the internal market products produced by forced labour, or the export of such products from the EU internal market. The prohibition applies if forced labour has been used, in whole or in part, at any stage of the production process, which can range from raw material extraction to processing and final production, and applies to all products, including components, regardless of their type, origin or sector. However, products that have already reached end-users in the internal market are not covered by the Regulation. The definition of 'forced labour' is based on ILO Conventions Nos 29 and 105, which state that forced labour refers to any work or service exacted from a person under the threat of punishment and which the person has not offered to perform voluntarily.
According to the Regulation, an economic operator is a natural or legal person or an association of persons regardless of their location and size. As with the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CS3D), the Forced Labour Regulation will affect a range of global companies operating in the EU market.
The CS3D introduces comprehensive due diligence requirements to identify and prevent actual and potential adverse impacts on human rights, including forced labour. The obligations apply to the company's own organisation, subsidiaries and business partners in the supply chain. However, the CS3D does not include specific measures to prevent products produced with forced labour from being placed or made available on the internal market or exported from the EU. The Forced Labour Regulation intends to fill this gap and creates a legal framework that covers, in addition to the company's own operations, the company's entire supply chain. It should be noted that the Regulation does not impose additional requirements on economic operators to demonstrate due diligence in relation to forced labour. Instead, it aims to complement and enhance existing and potential future due diligence obligations, such as those arising from the CS3D. Economic operators are encouraged to closely monitor their supply chains and implement measures to identify and eliminate forced labour risks in their supply chains. Potentially, civil litigation could arise where economic operators could be held liable for damages caused by the breach of their obligations under the Forced Labour Regulation.
In order to ensure compliance with the Forced Labour Regulation, each Member State must designate a competent authority with ultimate responsibility for implementing and monitoring the prohibition. These authorities are empowered to carry out investigations and decide on products to be withdrawn from the market if they are suspected to have been produced with forced labour. To support this work, the Commission will set up a database of areas or products where the risk of forced labour is high. The database will help competent authorities to identify and assess potential infringements.
Based on these risk assessments, the Commission (in the case of forced labour outside the EU) or Member State authorities (in the case of forced labour within their territory) may launch investigations. Member State authorities are also expected to co-operate and exchange information on suspected infringements, both among themselves and with the Commission, especially if forced labour occurs in third countries.
The final decision to ban a product produced with forced labour, or to require the economic operator to withdraw or dispose of it, is taken by the authority that carried out the investigation. The decision then applies in all other Member States under the principle of mutual recognition. To ensure uniform application of the Regulation, the Commission will provide guidance to Member States on how sanctions should be designed.
Where an economic operator infringes the decision, penalties may be imposed in accordance with rules to be adopted by Member States. The penalties shall be effective, proportionate and dissuasive, taking into account, inter alia, the gravity of the infringement, its duration and the existence of previous infringements.
At a global level, the Forced Labour Regulation has wide-ranging implications for both businesses and the global labour market. It is expected to contribute to improving human rights compliance in global supply chains by putting pressure on companies to ensure that their products are not manufactured under conditions where forced labour is used. Companies active in the Single Market will need to adapt their supply chains and take measures to monitor their suppliers, which may entail increased costs. This may be particularly felt by small and medium-sized enterprises. To facilitate this, the Commission will offer support to SMEs in the form of guidelines and tools to carry out adequate due diligence.
For consumers, the Regulation means that they will be able to feel more confident that the products they buy in the EU have not been produced using forced labour. In countries and regions where forced labour is present, the Regulation may have a deterrent effect as companies wishing to trade on the internal market may be forced to improve their working conditions in order not to lose access to the EU market. In the long-term, the Regulation is expected to contribute to the global reduction of forced labour and promote socially responsible trade.
The Forced Labour Regulation will enter into force the day after its publication in the Official Journal of the European Union. Companies have a deadline of 36 months after the publication to start applying the Regulation, which means that companies will have to comply with the requirements of the Regulation from the late autumn of 2027.
On the global level, the Forced Labour Regulation is not the first legislation to prohibit products produced by forced labour. In the United States, similar legislation, Section 307 of the US Tariff Act of 1930, has been in place for almost 100 years, prohibiting the importation of forced labour products into the US market. In 2016, the US legislation was strengthened, giving US Customs and Border Protection ("CBP"), the US customs authority, greater powers to prevent the importation of forced labour products. The CBP has the power to issue an order to detain a shipment, known as a Withhold Release Order ("WRO"), which means that the CBP can detain products it suspects are made with forced labour. If there is evidence that the products are in violation of Section 307, the CBP can adopt a decision, a "Finding", which allows the products to be seized.
In a 2023 report, The Remedy Project, an NGO working in the areas of corporate responsibility, grievance and redress mechanisms, and human trafficking and smuggling, examined the impact of the WROs and Findings of the CBP on businesses using forced labour and on workers who are subjected thereto. The report found that the US legislation has a deterrent effect on forced labour. An example of when the legislation was applied is a case involving the vessel Da Wang, registered in Vanuatu with a Taiwanese crew and migrant workers from a Taiwanese company, on which the migrant workers were subjected to forced labour. The CBP issued a WRO in 2020, and two years later, a Finding, prohibiting seafood from the ship from being sold on the US market. The WRO issued by the CBP brought attention to the working conditions on the Da Wang and international media coverage resulted in the prosecution of nine crew members. In addition, the Taiwanese government launched a four-year action plan to protect migrant workers in international shipping.
As recently as 1 November 2024, the CBP issued a WRO against a company from the Somaliland region of Somalia that imports frankincense. With this WRO, CBP has issued 52 WROs that they monitor and enforce. In addition, they have adopted eight Findings.
In Brazil, the 'Lista Suja', also known as 'The Dirty List', is used to combat forced labour. The list publishes the names of companies and owners who have used forced labour. Unlike the US legislation, this measure mainly targets domestic operators. Companies placed on the list remain there for a minimum of two years and must improve working conditions and compensate the workers involved in order to be removed. Being on the list can have significant economic consequences as financial institutions may refuse to lend money and other companies may refrain from business partnerships. According to the ILO, Lista Suja, along with other measures taken by the Brazilian government, has helped to reduce forced labour in the country.
It should be noted that forced labour also occurs in the EU. An investigation in 2017 revealed that Romanian women in Sicily were forced to work in conditions of sexual and physical violence, substandard working conditions and excessive overtime. In Sweden, in 2023, the Swedish Gender Equality Agency identified 189 people who were exploited as labour and 182 for sexual purposes. The Swedish Gender Equality Agency estimates that the number of unreported cases is large.
Unsurprisingly, reactions to the Forced Labour Regulation have been varied. In a consultation response in 2022 regarding the Commission's proposal for the Regulation, the Confederation of Swedish Enterprise emphasised that one of the more problematic issues was the question of how authorities can work in practice so that the burden of proof does not fall on companies to prove their innocence. In an article from 2023, after the Parliament approved the Commission's proposal, Teknikföretagen (Technology Industries of Sweden) expressed a similar view as they were also concerned that the burden of proof would end up with the companies instead of the authorities. On the other hand, in its consultation response in 2022, the Swedish Institute for Human Rights considered that if there is a suspicion of forced labour, the burden of proof should be reversed, which would mean that companies would have to prove their innocence.
Martin Johansson
Hanna Aghaei
Hanna Azelius
