The Council of the European Union and the European Parliament have reached a provisional deal on regulations banning forced labor in European Union supply chains. The legislative proposal supports the EU’s goals of prohibiting the use of forced labor in manufacturing, applying to both manufacturing within Europe and also to goods imported from abroad. This agreement marks a historic step in EU forced labor policymaking.

The provisional agreement, adopted March 5th, includes the following key features:

  • Establishment of a Forced Labor Database: To aid the effective implementation of this regulation, the European Commission will create a database offering verified, up-to-date information on the risks of forced labor across various locations and industries. This tool is expected to bolster the efforts of the Commission and national authorities in identifying and addressing potential violations.
  • Risk-based approach for  assessment Criteria: The agreement outlines specific criteria for assessing the likelihood of forced labor. These include the scale and severity of the suspected forced labor, the quantity of products involved, the proportion of the product likely to be made with forced labor, and the proximity and influence of economic operators over their supply chains.
  • Guidance for Compliance: The Commission will release guidelines to assist companies and national authorities in adhering to the regulation’s requirements. These guidelines will cover best practices for ending and remedying instances of forced labor and will offer support specifically tailored to micro, small, and medium-sized enterprises.
  • Investigation Procedures: The provision determines which authority will lead investigations into suspected forced labor, depending on whether the risk lies within or outside the EU. It also mandates the sharing of information between member states and the Commission to facilitate these investigations.
  • Enforcement and Decision-making: The final decision to ban, withdraw, or dispose of products made with forced labor will rest with the authority that conducted the investigation. Notably, if a product or part of a product is found to be in violation, only the affected part may need to be disposed of or replaced, thereby minimizing waste and encouraging companies to ensure clean supply chains. Companies that do not comply with the regulation will be subject to fines. If companies are able to eradicate forced labor, good will then be allowed to enter the EU stream of commerce.

The provisional deal marks a critical milestone in the EU’s commitment to eradicating forced labor from the global supply chain. However, it awaits formal endorsement and adoption by both the Council and the European Parliament. The Council is set to vote on adoption on March 13th, while the Parliament will vote in April. If both institutions vote to adopt the agreement, the Regulation will enter into force on the day following the Parliament’s affirmative vote. Member States will then have three years from the date the Regulation enters into force to begin applying the new rules. This allows ample time for companies to start developing an internal anti-forced labor program. Although the scope of the proposed legislation feels similar to the Uyghur Forced labor Prevention Act (UFLPA), the UFLPA only left importers with 6 months of time to react and create a compliance program.

Read the press release from the Council here and the Parliament here.

Crowell & Moring, LLP continues to monitor developments in forced labor regulation and their potential impact on customers and businesses going forward.

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Photo of John Brew John Brew

John Brew is the co-chair of Crowell & Moring’s International Trade Group and a partner in the firm’s Washington, D.C. office. He has extensive experience in import and export trade regulation, and he regularly advises corporations, trade associations, foreign governments, and non-governmental organizations…

John Brew is the co-chair of Crowell & Moring’s International Trade Group and a partner in the firm’s Washington, D.C. office. He has extensive experience in import and export trade regulation, and he regularly advises corporations, trade associations, foreign governments, and non-governmental organizations on matters involving customs administration, enforcement, compliance, litigation, legislation and policy.

John represents clients in proceedings at the administrative and judicial levels, as well as before Congress and the international bureaucracies that handle customs and trade matters. He advises clients on all substantive import regulatory issues handled by U.S. Customs and Border Protection and Immigration and Customs Enforcement, such as classification, valuation, origin, marking, tariff preference programs, other agency regulations, admissibility, import restrictions, quotas, drawback, audits, prior disclosures, penalties, investigations, Importer Self Assessment and Customs-Trade Partnership Against Terrorism programs, importations under bond, the Jones Act, vessel repairs, and foreign trade zone matters.

Photo of Pierfilippo M. Natta Pierfilippo M. Natta

Pierfilippo M. Natta (“Pier”), is an associate in Crowell’s International Trade Law practice. He focuses on assisting clients with complex international trade matters, ranging from implementing sanctions and export controls programs to forced labor investigations and general trade disputes. Pier works on developing…

Pierfilippo M. Natta (“Pier”), is an associate in Crowell’s International Trade Law practice. He focuses on assisting clients with complex international trade matters, ranging from implementing sanctions and export controls programs to forced labor investigations and general trade disputes. Pier works on developing Business and Human Rights legal guidance for clients and his practice covers a global reach including US, EU and Asia. His investigatory work has primarily focused on South-East Asia.

Pier applies his international trade knowledge to help clients identify manage and remediate risks. He has advised U.S. and global companies on developing programs specific to UN, US, and EU sanctions. More recently, Pier and the Crowell team are working to develop Crowell’s Business and Human Rights sub-practice which includes Crowell’s anti-forced labor investigatory work.

Photo of Carolyn Krampitz Carolyn Krampitz

Carolyn Krampitz is a German-qualified lawyer admitted to practice in Germany, before the European Court, and in Illinois as a Foreign Legal Consultant in the laws of Germany and the European Union.

Carolyn has significant experience in EU and German international trade laws.

Carolyn Krampitz is a German-qualified lawyer admitted to practice in Germany, before the European Court, and in Illinois as a Foreign Legal Consultant in the laws of Germany and the European Union.

Carolyn has significant experience in EU and German international trade laws. She has been advising public and private companies since 2008 on how to develop corporate trade compliance when dealing with transborder business issues into or out of Germany and the European Union.