European Parliament voted in favor of regulation to ban products made with forced labor

Scope of Regulation

The Regulation applies to all products, sectors and companies, whether produced in the EU, imported or meant for export. The ban extends to goods for which forced labour is used in any stage of the extraction, harvest, production or manufacture, including working or processing related to a product at any stage of its supply chain. The Regulation applies to any ‘economic operator’ who makes goods available on the EU market. This also includes businesses established outside the EU, who sell products online to European consumers. Furthermore, online marketplaces have a certain responsibility for the goods listed on their website. If goods made with forced labour are listed on their website, this will be considered as “illegal content”.

Forced Labour Single Portal

The EC is tasked with setting up the  “Forced Labour Single Portal” (portal). This portal is used by the EC to include information important for both economic operators and the competent authorities. The portal will include guidelines, information on bans, and will serve as a database of high risk area’s and sectors and a whistleblower portal, which will be publicly available.

Risk-based approach investigations  

The authorities tasked with investigation will follow a risk-based approach, when assessing whether to investigate a possible violation of the Regulation. They will also prioritize their investigations with regard to the following factors:

·        Scale and severity of the suspected forced labour, also taking into account possible state imposed forced labour;

·        The quantity or volume of the products made available in the EU;

·        The share of the part suspected to have been made with forced labour in the final product.

For assessing the likelihood of a violation, the competent authority will base their decisions on all relevant and verifiable information, including a database set up by the European Commission with information of forced labour risks in specific geographic area’s and risks with respect to specific products or product groups.

Next legislative steps

On 23 April 2024, the European Parliament plenary vote resulted in favor of the revised Regulation, and the revised Regulation is expected to be adopted at the end of May 2024. The Regulation will officially enter into force and the new rules will apply as of 1 January 2027.

How can you start preparing?

As an investigation could have grave effects, goods can be banned from being sold on the EU market and companies can be fined. It is important as a company, to do your due diligence and preventing forced labour from being included in your supply chain.

This new Regulation on forced labor is one of many to support the movement towards a sustainable European economy in 2050. As the amount of legislation supporting this movement is substantial , we advise you to: ‘Think big, but start small’ in order to be prepared on time. How can you start:

1. The first step is to assess whether you are involved in the value chain of a production process. This includes parties such as importers and exporters. This means you are ‘in scope’ of this legislation; and
2. The second step is to identify the risks on forced labour within your company and in your value chain. This will be followed by setting up internal control mechanisms. These help you to screen processes and supply chains and prevent risks to unintendedly be involved in forced labour.

We have proven experience in advising in human rights with Richard Karmel – Human Rights global lead partner within Mazars, co-leading the UNGP UN Guiding Principles Reporting Framework. With Richard Karmel as Human Rights global lead, Mazars has a long history of performing supply chain due diligence with a specific focus on human rights, including preventing the risk forced labour. We can support you on several levels such as challenging your risk assessment by our Human rights specialists, support in defining the internal control mechanisms, or performing supply chain due diligence.