On October 16, 2023, the Committee on International Trade (INTA) and the Committee on Internal Market and Consumer Protection (IMCO) of the European Parliament adopted their position (the Committee Position; see here and here) on the Proposed Regulation on prohibiting products made with forced labour from circulating on the EU market (the Proposed Regulation). Published by the European Commission (Commission) in September 2022, the Proposed Regulation seeks to effectively prohibit the placing and making available on the EU market of products made with forced labour, as well as the export of such products from the EU.
The Proposed Regulation covers all types of EU and non-EU products (including components), regardless of their sector or origin. National competent authorities (NCAs) will be able to investigate whether forced labour has been used, in whole or in part, at any stage of the supply chain of these products. In case of infringement of the forced labour prohibition, these authorities are to prohibit the placing of the products in question on the EU market or their export from it. Companies will have to withdraw any products already placed on the market and dispose of them. Noncompliance will result in fines for the companies involved.
The Committee Position includes some important amendments to the Proposed Regulation: among other things, it provides for investigatory powers for the Commission, in addition to those of national competent authorities, reverses the burden of proof in investigations relating to high-risk areas or products, provides for the communication of Commission or NCA decisions to the public, and updates certain definitions in the initially proposed text.
1. Background
The origins of the Proposed Regulation, which follows similar international and national legislation enacted by other countries and organizations,1 date to the Commission President's State of the Union address on September 15, 2021, when this initiative was first announced. The general elements of this proposal were laid down in the Commission Communication on Decent Work Worldwide in February 2022.
The Proposed Regulation complements current and proposed EU legislation. Notably, Art. 5(2) of the EU Charter of Fundamental Rights explicitly prohibits forced labour. Forced labour is also punishable under Directive 2011/36/EU on combating human trafficking and protecting its victims. The Proposed Regulation is intended to supplement this Directive, which establishes the liability of legal persons, accompanied by administrative and criminal sanctions, in cases of labour exploitation (including forced labour). Furthermore, the Proposed Regulation also relates to the Commission proposal for a Corporate Sustainability Due Diligence Directive (CS3D, discussed in more detail in our client alert). As explained in Section 8 below, compliance with due diligence requirements set out in the CS3D will impact the operation of the Proposed Regulation.2
2. Subject matter and scope
The Proposed Regulation prohibits market operators (including individuals, entities and associations) from (a) placing or making available on the EU market products that are made with forced labour and (b) exporting such products from the EU market.3
The prohibition covers products, including their components, for which forced labour has been used in whole or in part at any stage of their extraction, harvest, production or manufacture. This includes working or processing related to a product, at any stage of its supply chain.4 All types of EU and non-EU products are covered, regardless of their sector or origin.5 Products originating in a particular country can be covered even if forced labour did not take place in that specific country.
assessment will be based on all relevant factual and verifiable information available to these authorities. Individuals or entities (including associations) will also have the opportunity to submit The Proposed Regulation, however, does not cover the withdrawal of products that have reached the end users in the EU market, irrespective of whether the products have reached these end users as consumers or in the course of the users' industrial or professional activities.6
The Committee Position updated the definition of forced labour to cover "all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself or herself voluntarily, including forced child labour; whereby forced labour can occur along the value chain."7 This is in accordance with the definition of Art. 2 of the Convention on Forced Labour, 1930 (No. 29) of the International Labour Organization (ILO).
The Proposed Regulation also provides for certain obligations as regards state-imposed forced labour. This is defined as the use of forced labour (i) as a means of political coercion or education or as a punishment for holding or expressing political views or opinions ideologically opposed to the established political, social or economic system; (ii) as a method of mobilizing and using labour for purposes of economic development; (iii) as a means of labour discipline; (iv) as a punishment for having participated in strikes; or (v) as a means of racial, social, national or religious discrimination.8 This definition is based on Art. 1 of the Convention on the Abolition of Forced Labour, 1957 (No. 105) of the ILO.
3. Investigations
The Proposed Regulation requires EU Member States to designate NCAs responsible for enforcing its provisions, by carrying out investigations and issuing decisions.9 The Commission's initial proposal was that the Proposed Regulation would be enforced only by NCAs, with the Commission having mainly information-gathering functions. The Committee Position, however, provides that in addition to the NCAs, the Commission will also have investigatory and decision-making powers and will be responsible for enforcing the Proposed Regulation.10
In particular, based on the Committee Position, the Commission and the NCAs will be responsible for investigating suspected violations of the prohibition of placing or making available on the EU market products that are made with forced labour or of exporting such products from the EU market (the forced labour prohibition). These investigations will be divided into two phases: (a) a preliminary phase and (b) a main investigation phase.
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