EU Ban on Products Made with Forced Labor

This proposal is based on the introduction of a system of regular investigations carried out by national authorities, who will be empowered to withdraw products that are found linked with forced labour.  

What is the EU Ban on Forced Labor Regulation?

The EU Regulation on the Ban on Products Made with Forced Labor has been proposed and aims at prohibiting the import and sale of products which have been found using forced labor on the EU markets. The Regulation also aims to cover domestically-produced goods as their sale or export would be prohibited if they are found to have been made with forced labour in their supply chain. The only products excluded would be the ones that have already reached consumers.  

Who is impacted?

All companies, referred to as economic operators, that sell products in the EU market or export from it is currently in the scope of the proposed Regulation. The Regulation is not specific to either an industry, a material or a country of origin, and thus the textile industry and the textile brands are in scope of this Regulation.  

Critical Dates

• The EU Commission proposed this Regulation on the 14th of September 2022.  
• The Spanish and Belgian Presidency are prioritising the regulation and the potential timeline to reach an agreement is March 2024. 
• If adopted, the the guidelines and Forced Labor Risk databases provided by the Comission should be available by March 2024 and the regulation in Force as in March 2026. 

DISCLAIMER: At TrusTrace, we want to keep you informed on laws and regulations, but this information should not be considered or used as legal advice. 

Requirements

Supervisory Authorities 

The Regulation puts obligations on the Member States to assign one, or several, National Competent Authority (NCA), which will have the power to investigate and punish companies which do not comply with the obligations set in the regulation.

Two-tiered investigative process

The NCA’s investigation will be split into two phases.

1. The Preliminary Phase of Investigation:
   By following a risk-based approach, the NCAs determine whether there is a ‘substantiated concern’ (or well-found suspicion) that the product has been made with forced labor. NCAs should base their assessment on all relevant information available to them, such as, information requested from other relevant authorities and a database of forced labor risk areas or products. This database will be maintained by the Commission. 
   
   The economic operators will be requested by the NCAs to provide information on actions which have been taken to identify, prevent, mitigate or bring to an end risks of forced labor in their operations and value chains, with the respect to the product concerned. NCAs will be required to focus on economic operators which are involved in the steps of the value chain as close as possible to where the risk of forced labor is the most likely to occur, and to take into account the size and economic resources of the economic operator, the quantity of products concerned, and the scale of the suspected forced labor. NCAs will have the power to carry out all necessary checks and inspections including investigations in third countries, outside EEA. 
   
   If within 30 working days following receipt of the information from the economic operators, the NCAs find that there is a ‘substantiated concern‘ of forced labor, they may progress to the full investigation phase. 
   
   
2. Full Investigation Phase
   During the full investigation phase, all available information available to the NCAs will be examined. This information includes, but is not limited to:
   • 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 Member States.  
   • Submissions made by third parties including civil society.
   • Information on whether a company carries out due diligence in relation to forced labor in its operations and supply chains.  
   • Information obtained during checks and inspections both inside and outside the EU. 
     

Consequences

If products or components of a product were found to be made using forced labor, NCAs will issue a decision containing:

• • A prohibition to place or make the product concerned available on the Union market and to export them.  
  • An order for the economic operations involved in the production of such product to withdraw form the Union market the relevant products that have already been placed or made available on the market.  
  • An order for the economic operators to dispose of any product remaining with them, with accordance with the relevant law regarding waste management.  

In addition to these decisions, the companies which do not comply with their obligations will face ‘effective, proportionate and dissuasive’ penalties which will be established by the Member States in the national legislation.  

Comparison with the U.S. Forced Labor Prevention Act

Under this regulation, the Member State Customs Authorities will need to have access to the detailed information and proof on the “natural and legal persons” from the NCA in order to enforce the laws. This includes all details in the value processes including manufacturing to be able to stop products made with forced labour at the EU market ports. There’s no restriction on countries of origin.

This is in contrast to U.S. Forced Labor Prevention Act, where any suspicion on incompliance based on national intelligence and country of origin in the production can trigger detainment from the US Customs and Border Protection.

Risk Management Recommendations

To identify risks in the value chain, companies must collect evidence that due diligence is conducted and their suppliers are not exploiting forced labor, including child labor, at any point of their supply chain production. Mapping all of your suppliers, including their locations, the nature of their businesses and proof of humane and fair working conditions is critical to show you’ve taken the responsible to know your supply chain and mitigate risks concerning forced labor.

While many brands are already collecting this information, it is often scattered across departments, technologies and mediums. As the due diligence laws are more or less looking for the same kind of data and systems to be in place, it’s recommended to have a digital transparency platform in place that will collate all required information and allow it to be retrieved with ease by the responsible departments like compliance, sourcing/supply chain and sustainability.

How TrusTrace can help

With TrusTrace supply chain traceability software, brands can achieve a full transparency of their supply chain down to the origin of the product. Before even placing a PO, brands can ensure the suppliers have the right profile ensuring their products have been developed without the use of forced labor. As the suppliers are directly onboarded, a better communication with the supplier is enabled and which offers a further decrease in the risk of forced labor. Various different documents can be stored on the system to quickly be able to disclose any proof if needed. Learn more about TrusTrace products.

Book a demo to find out more about how TrusTrace can support you with due diligence and certification collection upstream of your value chains.

DISCLAIMER: At TrusTrace, we want to keep you informed on laws and regulations, but this information should not be considered or used as legal advice. Learn more about TrusTrace and supply chain traceability.