EU Reaches Provisional Deal on Forced Labor Ban
European Union policymakers arrived at a provisional deal on Tuesday to prohibit from the 27-member bloc’s single market the sale and availability of goods made with forced labor.
The deal struck between the European Council and the European Parliament introduces “significant” modifications to the original proposal, including a “clarification” of the responsibilities of the European Commission and national competent authorities in investigating would-be breaches of the rule and deciding if the products in question should be banned, withdrawn or otherwise cast off.
More from Sourcing Journal
“It is appalling that in the 21st century, slavery and forced labor still exist in the world,” said Pierre-Yves Dermagne, deputy prime minister and minister for the economy and employment of Belgium, which will hold the European Council’s presidency until the end of June. “This hideous crime must be eradicated and the first step to achieve this consists in breaking the business model of companies that exploit workers. With this regulation, we want to make sure that there is no place for their products on our single market, whether they are manufactured in Europe or abroad.”
While the proposal makes no mention of China because of the World Trade Organization’s rules on non-discrimination, it’s clearly stoked by mounting concerns over what many have described as the genocidal persecution of ethnic minorities in the Xinjiang Uyghur Autonomous Region, which Beijing has vehemently denied. But where the United States has chosen to target products from Xinjiang using a rebuttable presumption of guilt, the EU will cast a wider net, include itself in the bargain and require proof of malfeasance.
Both branches agree that the European Commission, their administrative engine, will establish a database with “verifiable and regularly updated” information about forced labor risks that can buttress the work of those assessing potential violations, including reports from international institutions such as the International Labour Organization. This forced labor single portal will also include guidelines, best practices, a whistleblower portal and accompanying measures for micro, small and medium-sized enterprises that, while not exempt from scrutiny, will receive special considerations because of their more finite resources. A Union Network Against Forced Labour Products would “help to improve cooperation between authorities.”
The agreement defines the “risk-based” criteria to be applied by the European Commission and competent national authorities during their assessments, such as the scale, severity and state complicity of the suspected forced labor; the number or volume of products being made available on the European market; the share of the parts of the product likely to have been made with forced labor; and both economic operators’ supply chain proximity to the suspected forced labor risks and their leverage to tackle them.
As for who will be in charge of investigations, if the alleged violation occurs outside the EU, then the European Commission will take point. Where the supposed breach occurs in the territory of a member state, its competent authority will call the shots, with one caveat: if it discovers new information about the suspected forced labor, it must inform its counterparts in similarly afflicted member states. Likewise, it must alert the European Commission if the offending activity occurs outside the EU.
The authority helming the investigation will also be the one that will decide the product’s ultimate fate. This decision will apply in all other member states based on the “principle of mutual recognition.” In cases where the product is deemed critical, the competent authority can choose not to require its disposal but instead order the economic operator to suspend its circulation until no more forced labor is taking place.
Another of the provisional agreement’s clarifications is that if a violating part of a product is replaceable, the order of disposal doesn’t extend beyond that part. This, however, applies only if the part can be removed, such as a component in a car. If, on the other hand, the tomatoes used to make a sauce are grown and harvested using forced labor, then the entirety of the sauce is considered tainted.
For the regulation to enter into force, the European Council and European Parliament will each have to give their final signoff. EU countries will have three years after it’s endorsed to start applying the new rule.
The European Parliament noted that because the forced labor regulation focuses on products, it will not yoke companies that don’t harbor forced labor in their supply chains with additional due diligence requirements. That would fall under the corporate sustainability due diligence directive, which was also provisionally agreed between the European Council and European Parliament but “has so far not been given a final O.K. from the Council.”
“This law is groundbreaking in the field of human rights,” said Dutch Member of the European Parliament and co-rapporteur Samira Rafaela. “It will prevent forced labor products from entering our market. And it has several references to remediation. It is a step forward in achieving fair trade and cleaning up supply chains, while prioritizing human rights. To combat forced and state-imposed labor, we must work with like-minded partners and become a strong ally in the global fight against forced labor.”
Civil society groups admitted to mixed feelings. While such a regulation is vital to rooting out modern slavery, they say, it could go further than proposed.
“Without an obligation to remedy harm, workers affected by forced labor will remain vulnerable,” said Helene de Rengervé, senior EU advisor at Anti-Slavery International. “Without lower evidentiary thresholds, it will be difficult for workers in forced labor and their allies to bring up complaints against abusing companies. And, as it stands the regulation will not sufficiently address state-imposed forced labor at scale to aid the 3.9 million people forced to work by the very institution supposed to protect them, their government.”
The EU’s forced labor regulation is a “step in the right direction,” agreed Ruslan Myatiev, director of Turkmen.News in Turkmenistan, where a state-sponsored forced labor system underpins the country’s cotton industry. “What is unfortunately missing is an obligation on companies to publicly disclose their suppliers and raw material sourcing, which would drive accountability.”
But Ana Hinojosa, former executive director of U.S. Customs and Border Protection and an advisor at supply chain forensics firm Oritain, warned of pitting “perfect” against “pretty good” at the cost of potential delays in implementation that “could result in effectively winning a battle but losing the war.”
“I have lived in the EU and been exposed to the decision-making process,” Hinojosa told Sourcing Journal. “It is very difficult, and the progress made to date is very commendable. For interested stakeholders seeking to get everything they want out of this proposal, I would just caution against trying to put in so many additional steps and processes before enforcement, that it waters down the regulators’ ability to take action.”
Writing on LinkedIn, Xinjiang expert Adrian Zenz questioned if the regulation can take a swing at Uyghur forced labor.
“That’s because the burden of proof of forced labor remains on investigating authorities,” he wrote. “While the legislation would include a database mechanism that can specify regions at high risk of state-imposed forced labor, I have not yet seen an effective way in which such a database mechanism by itself can counter systemic state-imposed forced labor as is found in Xinjiang without being complemented with a reversal of the burden of proof.”
Such a reversal is necessary, he said, because of the unique character of state-sponsored forced labor, which is “extremely problematic to assess in specific instances” due to the challenges of conducting due diligence among members of a threatened group in a “pervasive police state.”
“The presence of a database entry alone can trigger an investigation, but how is the Commission going to follow this through by proving the presence of forced labor in products from Xinjiang at evidentiary standards typical for company-based forced labor, given local contextual dynamics?” Zenz asked.
Solve the daily Crossword
