On September 14th, the EU Commission issued its Proposal for a regulation on prohibiting products made with forced labour on the Union market. The proposal intends to ban all products made with forced labor from the EU market, without targeting specific companies or sectors.
The proposal comes in the wake of the latest report on Global Estimates of Modern Slavery by the ILO, Walk Free and IOM. The report, which was published on September 12th, focuses on forced labor and forced marriage. According to the report, an estimated 50 million people were living in modern slavery, of which 28 million in forced labor and 22 million in forced marriage.
The report concludes that no country or region in the world can boast to have no forced labor. The majority (85%) of forced labor can be found in the private sector, with the top sectors being services, manufacturing, agriculture and domestic work. Migrant workers are called out to be specifically vulnerable to end up in forced labor, due to poorly managed migration and unethical recruitment practices.
Modern Slavery Acts have been around, in the UK and Australia, for a number of years. More recently, the US has stepped up its enforcement activities on forced labor product bans, first with Withhold and Release Orders (WROs) under the US Tariff Act of 1930 (Section 307), prohibiting the imports of goods and merchandise mined, produced or manufactured wholly or in part in any foreign country by forced labor. For shipments subject to a WRO, companies can choose to re-export the goods, or submit evidence to the CPB (Customs and Border Protection), demonstrating the products were not made with forced labor.
Where the CBP continues with issuing WROs, the Uyghur Forced Labor Prevention Act (UFLPA) came into force in June of 2022. The UFLPA works based on the “rebuttable presumption” that all goods mined, produced or manufactured – in whole or in part – in the Xinjiang region, or produced by entities on the UFLPA Entity List are made with forced labor and are therefore banned from entry into the US. The UFLPA also targets what have been identified as high-risk commodities and sectors, such as cotton, apparel, tomatoes and silica. The process of providing clear and convincing evidence that products were not made with forced labor, and/or in the Xinjiang region, requires extensive due diligence and traceability efforts by importers and the supply chain.
And now the EU is taking next steps on what is called a market ban. While the EU does not expect to target specific companies or sectors, it will perform an assessment of risk, in order to focus efforts. Member States authorities can instigate in-depth investigations based on well-founded suspicions of products made with forced labor. When forced labor is confirmed, the products will be withdrawn from the EU market and banned from entering the EU market. The company will not be able to re-export the products but instead will be expected to dispose of the goods.
It is clear that slavery is not a thing of the past. Instead, past and currents crises have brought on an increase in forced labor, affecting all countries, sectors, gender and ages. As governments are looking at stopping products made with forced labor from ending up within their borders, companies should take steps now by mapping their supply chain and assess it for human rights and forced labor risks.
The “E” in Human Rights
ESG Risk Management along the Supply Chain