On April 23, 2024, the European Parliament approved the EU Forced Labour Regulation, which contains rules banning the import, sale, and export of products produced by forced labour in the European Union (“EU”) market.

  • The Regulation stipulates the prohibition of the sale, import, and export in the EU market of all products produced by forced labour at any point in the supply chain.
  • This regulation, which will take effect from 2027, grants EU authorities strict powers and measures to prevent products involving forced labour from entering, being distributed in, and being exported from the EU market.
  • The Regulation establishes a framework for the implementation of this Regulation through investigations, new information technology solutions, and cooperation with other countries and authorities.

In this context, the Regulation envisages the establishment of a new “Forced Labour Single Portal” to assist with the implementation of the new rules.

  • This portal will include a database on high-risk products, regions, and sectors, as well as decisions on the prohibition of a product and the lifting of such prohibitions.
  • The database will also encompass the risks of forced labour in specific geographies, products, or product groups, particularly state-imposed forced labour risks.
  • The data will be based on information from international institutions such as the International Labour Organization (“ILO”) and the United Nations, as well as research/academic institutions.

Scope of the Regulation

  • The Regulation covers all companies offering goods to the EU market, including online sales, regardless of the sector or origin.
  • Indeed, this regulation encompasses a wide network of all products and their components, irrespective of the sector, origin, or stage of the supply chain where forced labour occurs.
  • Under the Regulation, forced labour is defined according to ILO standards, including its 11 indicators and the definition of state-sponsored forced labour.

Investigations and Requirements

Under the Regulation, national authorities or, if third countries are involved, the European Commission, have the authority to investigate suspicious goods, producers, and supply chains suspected of forced labour.

  • Authorities will conduct risk-based investigations focusing on serious cases, including state-imposed forced labour, and determine which products and companies to investigate. In addition to the authorities, individuals and organizations can also submit cases of alleged forced labour with evidence under the Regulation.
  • Companies facing investigations have a limited timeframe to respond to the allegations and must comply with significant requirements.
  • If an investigation is launched against a company, the company has only 30 days to respond to the initial investigation and 30-60 days to provide additional information.

The requirements for companies are quite stringent, requiring companies to provide full evidence of forced labour due diligence and demonstrate how their actions comply with relevant international standards, including the EU Forced Labour Guidelines and the OECD due diligence guidelines. Authorities can also request information from other relevant stakeholders and other firms related to the product, including suppliers.

If a product produced in an EU country is found to have been produced under forced labour conditions as a result of an investigation by its national authorities, it will not be allowed to be sold in the EU market, including online. Measures such as the withdrawal of these products from the market, donation, recycling, or destruction of the products are mentioned. If findings indicate forced labour in third countries, the relevant goods will be withdrawn from the EU market and online marketplaces, and shipments will be stopped at member state borders, as customs authorities will have the authority to detain such products.

Thus, the competent authorities of the member state will conduct investigations into suspected cases of forced labour within their territories. The European Commission will be responsible for conducting investigations where the risk of forced labour is outside the EU. Investigation decisions will emphasize relying on factual and verifiable information obtained from international organizations, cooperating authorities, and whistleblowers.

The final decision on banning, withdrawing, and destroying a product produced with forced labour in the EU market will be made by the authority conducting the investigation, and companies failing to comply with the Regulation rules may also be fined. However, if these companies eliminate forced labour in their supply chains, the possibility of banned products returning to the market will be reconsidered.

Under the regulation, authorities are required to reach a decision on whether the ban has been violated within nine months. The decision, along with information identifying the product, supplier, and production site where applicable, and evidence of forced labour, will be published on the Forced Labour Single Portal. However, companies have the right to challenge the legality and accuracy of this decision in court.