The European Commission first introduced the proposal for a Forced Labour Regulation on 14 September 2022, to ban products made from forced labour from entering or leaving the EU. This framework is part of a broader initiative to enhance transparency across cross-border supply chains. After extensive negotiations, the regulation progressed through the EU’s legislative process: the European Parliament adopted its position in November 2023, the EU Council reached a General Approach in January 2024, and a provisional agreement was reached between the European Parliament and the Council on 5 March 2024. The regulation was formally adopted by the European Parliament on 23 April 2024 and has been published on the Official Journal of the Union on 12 December.
Entry into Force
The Forced Labour Regulation entered into force on 13 December 2024 and will become fully applicable in three years, as of 14 December 2027. However, provisions on the designation of competent authorities, the establishment of information and communication systems, the risk areas database, the submission of information on alleged violations and the adoption of guidelines and delegated acts, will apply as of the date of entry into force.
Key Provisions of the Regulation
The Forced Labour Regulation aims to eliminate products made with forced labour—both adult and child labour—from entering the EU market or being exported from the EU. It establishes a comprehensive framework for enforcement through two-stage investigations, digital tools, and cooperation among EU Member States and national competent authorities.
Scope and Due Diligence Obligations
The regulation covers all sectors and applies to businesses of all sizes. It prohibits the sale or export of products made with forced labour, regardless of the industry or company size.
Concerned companies will have to comply with the following due diligence obligations:
- Conduct due diligence in accordance with the guidance and recommendations issued by the Commission;
- Verify that the products or geographical area are not identified in the high-risk database; and
- Check whether any product it intends to place or make available on the EU market, or export from the EU has been subject to a previous decision by competent authorities or a products ban on the Forced Labour Single Portal.
National Enforcement and Investigations
National authorities designated by each EU Member State will have the responsibility to oversee the implementation and enforcement of the regulation. These authorities will investigate cases of suspected forced labour and make decisions based on their findings.
Enforcement Mechanisms and Penalties
When forced labour is detected, the designated authorities will decide on enforcement actions and notify customs authorities. The latter will refuse the product from entering the EU market or from being exported, adding a notice on the documents accompanying the goods that they were made with forced labour.
Competent authorities must ensure that the infringing products are:
- Precluded from being placed or made available on the EU market, or exported from the EU;
- Withdrawn from the EU market if they were already placed or made available;
- Disposed of by customs, or by the competent authorities trough recycling, or charitable donations (for perishable items) or by rendering the goods inoperable when neither recycling nor donation are feasible; and
- Prevented from being accessed to and referred to by relevant third party (e.g., online marketplace).
The costs of the disposal, recycling or donations will be borne by the violating company. By way of derogation to the disposal, and in order to prevent disruptions to a supply chain of strategic or critical importance for the Union, the competent authority may refrain from imposing an order to dispose of the product concerned, and instead order for the product concerned to be withheld for the time necessary to eliminate forced labour with regard to the product concerned, at the cost of the economic operator. If only a component of a product is involved, enforcement will be limited to that component. Companies that take corrective measures and eliminate forced labour from their supply chains may later reintroduce their products into the market.
Failure to comply with the ban may result in penalties determined by individual Member States, to be established by 14 December 2026.
High-Risk Sectors, Products, and Regions
The European Commission will maintain a database identifying sectors and regions vulnerable to state-imposed forced labour. While being listed does not automatically imply forced labour, it will trigger further investigations based on risk factors – in a mechanism similar to the one existing in the EU Deforestation Regulation. National authorities are encouraged to use a risk-based approach when prioritizing investigations, considering factors such as the scale of forced labour, the likelihood of state-imposed labour, and the company’s ability to address the issue.
In addition, the Commission will identify high-risk products, requiring importers and exporters to provide extra documentation, such as details about their suppliers or manufacturers, to customs authorities.
For those geographical areas and products specifically identified by the Commission in a delegated act as high-risk, companies which intend to import, or export must share the following with customs authorities:
- Information identifying the product;
- Information about the manufacturer or the producer; and
- Information about the product suppliers (unless this information has already been provided under customs legislation).
Digital Tools for Oversight and Collaboration
To enhance enforcement and transparency, the Commission will establish a Forced Labour Single Portal to include guidelines, a database of high-risk sectors and products, a whistleblower portal, and information on existing bans.
Alongside collaboration by national authorities in the EU through the new Union Network Against Forced Labour Products, the framework encourages international cooperation through political dialogue, implementation and the development of commitments with non-EU countries through trade agreements and frameworks like the Generalised System of Preferences (GSP).
The regulation further strengthens existing EU mechanisms, such as the Single Entry Point complaint procedure, which allows civil society and businesses to report breaches related to market access and sustainability. This procedure has already led to actions addressing forced and child labour in countries like Peru and Vietnam.
The Forced Labour Regulation and the Corporate Sustainability Due Diligence Directive (CS3D)
Earlier this year, the EU Council approved the Corporate Sustainability Due Diligence Directive (CS3D), which mandates companies to meet human rights and environmental due diligence obligations, including those related to forced labour. While both the CS3D and the Forced Labour Regulation address forced labour, they differ in several ways:
- Scope: The CS3D focuses on broader human rights and environmental issues, while the Forced Labour Regulation specifically targets forced labour.
- Applicability: The CS3D applies to large companies based on turnover and employee size, while the Forced Labour Regulation applies universally to all businesses, regardless of size.
- Enforcement: Non-compliance with the CS3D could lead to penalties or civil liabilities, but it does not prohibit market access. In contrast, the Forced Labour Regulation imposes a direct ban on products made with forced labour.
If companies demonstrate their compliance with their due diligence obligations under the CS3D, this will be taken into account in the context of investigations conducted pursuant to the Forced Labour Regulation.
The Broader Trend in Supply Chain Regulations in the EU
The Forced Labour Regulation is part of a broader trend in the EU towards more stringent and transparent supply chains oversight. Existing initiatives include the Conflict Minerals Regulation, the Kimberley Process Certification Scheme and the newly adopted Carbon Border Adjustment Mechanism (CBAM), Deforestation-Free Regulation, and Batteries Regulation.
All these frameworks have as a common purpose to require from businesses that they trace the sourcing of their products sold or exported from the EU, ensuring supply chain transparency. With an increasing number of regulations already in place or on the horizon, companies will need to optimize their operations to streamline their supply chain due diligence efforts, and ensure compliance with the web of mandatory supply chain due diligence obligations.
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The EU’s Forced Labour Regulation was published contemporaneously with certain additions under the U.S. Forced Labor Prevention Act, also recently profiled by Cassidy Levy Kent. Please do not hesitate to get in touch with Cassidy Levy Kent’s international trade team in Brussels, or your usual contact in any of Cassidy Levy Kent’s offices, with any questions.