Summary of the Provisional Agreement
As previously described here, here and here, the EU has discussed an Forced Labour Import Ban since September 2022 comprising comprehensive enforcement powers for competent authorities.
The provisional agreement's main content reads as follows:
- Competent authorities must prove the use of forced labour:
Despite calls to introduce a rebuttable presumption regarding the use of state-imposed forced labour, the provisional agreement leaves the burden of proof with the authorities. Hence, authorities must investigate suspected use of forced labour and establish the relevant facts. This is a stark contrast to the US Uyghur Forced Labor Import Ban, which introduced a rebuttable presumption regarding goods originating from the Chinese province of Xinjiang or certain listed entities.
- List of high risk countries will reduce the burden for authorities:
To facilitate public enforcement, the EU Commission will publish a list of economic sectors in specific geographical areas where state-imposed forced labour exists. This list can be supplemented by specific requirements for importers and exporters stipulating disclosure obligations regarding information on the manufacturer and suppliers of in-scope products.
- Ban can be lifted subject to elimination of forced labour:
While the provisional agreement does not stipulate due diligence obligations (unlike the French Duty of Vigilance Law or the German Supply Chain Due Diligence Act), a proper due diligence system will be very helpful to comply with the EU Forced Labour Import Ban. As such, comprehensive due diligence can be used to demonstrate the elimination of forced labour in the supply chain, which in turn, would lift the ban.
National authorities or, in case of third countries involved, the EU Commission will be competent to enforce the import ban and investigate companies supply chains. Companies can be fined for violations.
In case of demonstrable forced labour, the authorities can order the product to be withdrawn from the EU market and to be confiscated at the border. Tainted goods are subject to donation, recycling or destruction.
- Tools and international cooperation:
The EU Commission will establish a Forced Labour Single Portal to help enforce the new rules, which will include guidelines, information o bans and databases as well as publicly available evidence and a whistleblower portal.
The provisional agreement encourages collaboration between competent authorities and with third countries.
Implications for companies
The EU Forced Labour Import Ban would foster another uptick in supply chain due diligence and supply chain compliance increasing the need for supply chain transparency to Tier-N. As a result, human rights compliance and due diligence systems and contractual agreements would therefore have to be adapted. As with the supply chain due diligence measures (e.g., risk analysis), IT tools could support companies to proactively monitor and manage potential risks.
Next steps
To become effective, the provisional agreement must be formally adopted by EU member states and European Parliament. As of today, the final vote in the EU Council is expected for March 13th while the European Parliament would vote in April. Once adopted, the Forced Labour Import Ban would become effective 36 months later.
Please get in touch with a member of Hogan Lovells’ BHR group or your usual Hogan Lovells contact if you wish to discuss this development.
Authored by Christian Ritz, Christelle Coslin, Felix Werner, and Margaux Renard.
