The EU's Forced Labor Regulation: Not a Silver Bullet

The proposed Forced Labour Regulation forbids the export of products manufactured with forced labor from the EU market, defining forced labor based on an ILO Convention but without expanding on modern uses.

Countries in the European Union have agreed on a law mandating companies to ensure that their supply chains do not harm the environment or utilize forced labor. However, the agreement occurred after significant alterations were made to the original wording. Critics say that the law has been too diluted to be effective.

If adopted, the proposed Forced Labour Regulation will be implemented uniformly across EU Member States, paving the way for sustainable trade and human rights. Drawing on previous initiatives in partner nations such as the United States and international organizations, it emphasizes the EU's commitment to supporting human rights, abolishing forced labor, and enacting international standards for responsible business conduct in a binding legislative act.

It supplements and follows the philosophy of Directive 2011/36/EU, a directive aimed at combating human trafficking that mandates:

• EU Member States to criminally liable individuals for their involvement sentence them to specific sentences

• Allow competent authorities to seize and confiscate proceeds from such offenses.

Legal Basis

The Forced Labour Regulation is based on Articles 114 and 207 of the Treaty on the Functioning of the European Union (TFEU). These articles allow EU legislators to harmonize national laws and regulations to establish and ensure the functioning of the internal market, including export control.

The proposed forced labor regulation affects both the EU’s external trade and internal market. It would ban the import and export of forced labor goods while also preventing competition distortion and barriers to the free movement of goods within the EU by harmonizing Member States’ laws.

Purview of the main prohibition

Firstly, the definition of "forced labor" is based on Article 2 of the 1930 ILO Convention No. 29 on Forced Labour, which defines all work or service that is imposed without voluntary consent. However, it doesn't cover child labor, as the ILO definition doesn't clarify the status of children's work.

Secondly, the proposed Forced Labour Regulation aims to prohibit the export of products from the EU market where forced labor has been used at any stage of their extraction, harvest, production, or manufacture. The regulation doesn't apply to the final product or its components that benefited from forced labor.

Third, the proposed Forced Labour Regulation does not apply to EU imports, exports, or trade of goods produced with the help of imprisoned criminal convicts for state authorities.

The proposed Forced Labour Regulation targets the import, supply, online sale, and export of products made with forced labor within the EU. It covers the internal market and trade with non-EU countries, applying to small and medium-sized enterprises, unlike the EU Directive on Corporate Sustainability due diligence.

Enforcement mechanisms

The European Commission and Member States must be informed of any decision to initiate a formal investigation, find a breach, or close an investigation without an established violation. Any prohibition decision must be recognized and enforced for products with the same identification and supply chain.

Negative caveats

Compromises to the FLR made in subsequent weeks of negotiations on the draft text affect only larger enterprises with 1,000 or more employees and a net turnover of at least €450 million (£384 million; $489 million). The original intention was for it to affect companies with 500 or more employees and a revenue of €150 million.

The draft legislation must be approved by the European Parliament before becoming law, and MEPs are expected to support it. Businesses will then have time to implement the new processes.

Germany and Italy were among the countries that opposed the original text, fearing that it would disproportionately affect their industries due to their substantial concentration of small and medium-sized firms.

There were also concerns that companies would remove themselves from the EU due to bureaucracy and legal risks.

While today's developments are very positive, we know that the quality of the law has been eroded by these post-agreement challenges.