On April 23, 2024, the European Parliament approved the EU Forced Labour Regulation, which contains rules prohibiting the import, sale, and export from the EU market of goods produced by forced labor.

On April 23, 2024, the European Parliament approved the EU Forced Labour Regulation (“Regulation”), marking a significant step in the fight against forced labor in supply chains. The Regulation establishes a ban on the sale, import, and export from the EU market of all products produced by forced labor at any point in the supply chain.

Set to take effect in 2027, the Regulation grants EU authorities strict powers and measures to prevent products produced with forced labor from entering, being distributed in, or exported from the EU market.

The new regulation establishes a framework for implementing the Regulation through investigations, new information technology solutions, and cooperation with other countries and authorities.

To aid in the implementation of the new rules, the Regulation envisions the establishment of a new “Forced Labour Single Portal.” This portal will include a database of high-risk products, regions, and sectors, as well as decisions to ban products and to lift bans. The database will also contain information on forced labor risks in specific geographies, products, or product groups, especially focusing on risks of state-mandated forced labor. The data will be sourced from international organizations like the ILO and United Nations, as well as from research/academic institutions.

Scope of the Regulation

The Regulation applies to all companies offering goods to the EU market, including online sales, regardless of the sector or origin. It has a wide-ranging scope encompassing all products and their components, regardless of the sector, origin, or stage in the supply chain where forced labor occurs.

The Regulation defines forced labor according to the standards of the International Labour Organization (ILO), including its 11 indicators and the definition of state-supported forced labor.

Investigations and Requirements

Under the Regulation, national authorities or, if involved, the European Commission, are authorized to investigate suspect goods, manufacturers, and supply chains on suspicion of forced labor.

Authorities will conduct risk-based investigations focusing on serious cases, including state-mandated forced labor, and will determine which products and companies to investigate. In addition to the competent authorities, individuals and organizations can also submit cases of alleged forced labor with supporting evidence.

Companies facing investigations must comply with strict timelines and significant submission requirements. If an investigation begins, companies have only 30 days to respond to the preliminary investigation and 30-60 days to provide additional information. As explained, companies must provide full evidence of due diligence on forced labor and demonstrate how their actions comply with relevant international standards, including the EU Forced Labour Guidance and the OECD due diligence guidance. Authorities can also request information from other stakeholders and other companies involved with the product, such as suppliers.

If it is determined that a product produced in an EU country was produced under forced labor conditions, its sale in the EU market, including online, will not be allowed. Along with the obligation to withdraw such products from the market, measures like donation, recycling, or disposal are considered.

If findings reveal forced labor in third countries, relevant goods will be removed from the EU market and online marketplaces. Additionally, shipments will be stopped at member state borders, as customs authorities have the power to detain such goods.

Thus, competent authorities in EU member states will conduct investigations into suspected cases of forced labor within their regions, while the European Commission will be responsible for investigations when the risk of forced labor is outside the EU.

Investigation decisions will rely on real and verifiable information from international organizations, cooperating authorities, and whistleblowers.

The final decision to ban, recall, or destroy a product produced with forced labor on the EU market will be made by the authority conducting the investigation, and fines may be imposed on companies that do not comply with the Regulation’s rules.

However, if companies eliminate forced labor in their supply chains, the possibility of lifting the ban on prohibited products will be reevaluated.

Authorities must make a decision on whether the ban has been violated within nine months.

The decision will be published on the Forced Labour Single Portal with information identifying the product, the supplier, and the production site where applicable, along with evidence of forced labor. However, companies have the right to challenge the legality and accuracy of the decision in court.

The European Parliament approved the Regulation on April 23, 2024, by a large majority with 555 votes in favor, 6 against, and 45 abstentions. The Regulation will come into effect once approved by the EU Council and published in the Official Journal of the European Union.