The EU Forced Labor Ban is coming. Is your supply chain ready?

Last week, the European Council announced its negotiating position to ban goods made using forced labor from the EU market. This was the final step necessary to kick off trilogue discussions, which began on January 30th, 2024.

The Council’s proposed measures include a few notable additions to the EU Commission’s proposal, which was first shared in September 2022, and the Parliament position, which was shared in November 2023:

Inclusion of products offered for “distance sales”

The Council’s mandate clarified the regulation’s scope by including products offered for distance sales - i.e. goods sold without face-to-face contact with the consumer, or DTC goods. This substantially expands the scope of the legislation, and sets it apart from the US forced labor ban due to the existing - and heavily debated - de minimis loophole, excluding any imports valued at less than $800 from duties, taxes and rigorous scrutiny by US customs. This de minimis loophole primarily impacts DTC goods entering the US, exempting them from detentions under the existing forced labor law.

Establishment of Union Network Against Forced Labor Products

The Council’s negotiating mandate also proposes the establishment of the Union Network Against Forced Labour Products, to ensure better administrative coordination between the authorities and the EU Commission. This will facilitate streamlined investigations and decisions regarding which products to exclude from the market.

Single Portal for Forced Labor

The proposed single portal would provide easily accessible and relevant information as well as tools for companies, industries and the general public. The portal would be a database to submit product information, file claims regarding suspicion of forced labor, track the outcome of ongoing investigations into forced labor claims, and review guidelines for compliance.

What was in the EU Commission’s proposal?

The EU Commission first shared its proposal in September 2022, prohibiting products made with forced labor - as defined by the ILO - from being placed on, made available on, or exported from the EU market. Unlike the US forced labor ban which includes a rebuttable presumption of forced labor, the proposed EU forced labor ban does not target a specific region or set of regions, and the burden of proof is on the competent authorities to investigate claims of forced labor. This can range from requesting further information from companies to carrying out inspections either within the EU or in third countries.

In the event that forced labor is found, the competent authorities will order the withdrawal of the relevant products and issue a ban for said products to be placed on or exported from the EU market. Companies impacted by the ban would be required to dispose of the goods in question.

The Commission will also play a significant role in both investigations and decisions regarding forced labor claims, in cooperation with the national competent authorities in the EU’s 27 member states. In the event that investigations result in site visits to third countries, the Commission will coordinate with the third country governments to conduct inspections on suspected cases of forced labor. If the third country governments are non-cooperative, the Commission may base its decision on other relevant evidence.

What’s next?

Trilogue discussions officially began on January 30th, and are expected to conclude by mid-February. The EU is on a tight timeline to adopt this legislation before the coming elections, however legislators and member states have emphasized the importance of adopting this regulation during the current legislative mandate.

The EU’s forced labor ban will establish yet another legislative requirement for supply chain mapping and due diligence to combat forced labor in supply chains, joining the ranks of the US forced labor ban, Canada’s S-211, Mexico’s forced labor law, the German Supply Chain Due Diligence Act, the UK Modern Slavery Act and others.

Full visibility into your end to end supply chain is now the cost of doing business. Companies that place products on the EU market should begin mapping their supply chains as soon as possible to identify risk and prepare for what’s coming.

For more information, reach out our team of experts.