16 September 2022
Erika Szyszczak is a Fellow of the UK Trade Policy Observatory and Professor Emerita of Law at the University of Sussex.
On 23 February 2022, in a Communication on decent work worldwide, the EU announced a new legislative initiative tackling issues of sustainability and working conditions in global trade.  On the same day, the European Commission published a proposal for a Directive on corporate sustainability due diligence.
This was followed on 14 September 2022 with a formal Proposal for a Regulation on prohibiting products made, extracted or harvested with forced labour on the EU market. The proposal will be discussed, and most probably amended, by the Council and the European Parliament over the next year.
The EU is now deploying trade regulation as a way of addressing forced labour. The proposal uses the EU internal and external trade clauses as a legal base: Article 114 and 207 TFEU (Treaty on the Functioning of the European Union). The use of Article 114 TFEU – the legal base for the functioning of the internal market – is justified by the need to: a) reduce obstacles to the four fundamental freedoms of the internal market, and b) remove distortions of competition caused by divergences in national laws, regulations or administrative provisions relating to placing or making available products made with forced labour on the EU market. Article 207 TFEU is the empowering provision for creating a uniform common commercial policy. A Regulation is the necessary legal tool to prevent differences of approach between the Member States but it relies upon national authorities to enforce the provisions.
This is a remarkable development. Internal EU social and labour law policy – as a policy tool to counter the effects of different labour standards on trade between the Member States – has been fragmented and not received universal support, most notably from the UK when it was a member of the EU. Thus, the use of trade provisions to address a social, labour and fundamental rights issue is a different way to overcome differences between the Member States. Here we have a trade measure being implemented to deal with a non-trade issue; this approach risks setting a precedent for further uses of trade measures for non-economic objectives, including potentially for protectionist purposes.
The extent of the use of forced labour is difficult to calculate. The ILO Forced Labour Convention, 1930 (No. 29) defines forced labour as:
“all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily.”
National ways of defining forced labour have used terms such as “modern slavery” or “servitude”, recognise it may take different guises and, especially when taking place in a domestic context, may be hidden. Notable known examples include: abuse of domestic servants, domestic marital/family abuse, forced marriages, use of child labour, trafficking of vulnerable and marginalised people.
Thus, proving that a good is the product of forced labour is difficult. Even with kitemarks, consumers may not be reassured that no workers, at any point in the supply chain, have been exploited.
The European Commission’s proposal recognises that forced labour is a global problem and is prevalent in the Member States.
Article 2 of the proposal contains a set of definitions, drawn from existing international legal measures on forced labour. The proposal covers all products either manufactured in the EU or imported, intended for the EU market or for export. There are no exceptions for small- and medium-sized enterprises. The use of a global non-discrimination approach makes the proposal compatible with World Trade Organization (WTO) law and distinguishes it from the US approach which singles out only forced labour by Uyghurs in China.
The Regulation will be enforced by competent authorities within the Member States. More than one body may be assigned the task. A Union Network Against Forced Labour Products will be established for structured cooperation and coordination between the Member States and the European Commission (Art 24).
To support the national authorities, a database of forced labour risk areas will be created to collect information from international organisations and other third countries (Art 11). Any conflict between national competent authorities is anticipated in the rule that the lead authority is the one which first informed the European Commission and the other authorities of an investigation. Its decision must be recognised, even if it is a negative one. Thus, any decision taken by a competent authority in one Member State will be recognised and have to be enforced by the competent authorities in other Member States (Art 14).
If the competent authority finds a breach of the prohibition on forced labour it must adopt a decision prohibiting the operator from placing or making the products available on the EU market and from exporting them, along with an order to withdraw the relevant products from the EU market (Art 6). The decision will remain applicable until the economic operator shows evidence of compliance with the decision and elimination of forced labour from its operations or supply chain (Art 6.6).
Using the information made available by the economic operator, EU customs authorities may suspend or refuse the release for free circulation or export of products that may be in breach of the prohibition (articles 17-19). Where there is a refusal, Art 20 provides for the disposal of the products.
Once a ban is adopted, the national authorities will decide on penalties and what to do with the goods. It is expected that goods will be destroyed, but they could be made useless and inoperable. Art 1(2) of the proposal states that products which have reached end-users will not be withdrawn.
Overcoming Problems of Proof: A Risk Approach
To overcome issues of proof, Art 4 deploys a risk approach. To assess if forced labour has been deployed, the national authorities shall make an assessment based on all relevant information available to them, including submissions made by natural or legal persons or any association not having legal personality. Risk indicators are set out in Article 23 (b) and (c). The database and information and decisions encoded in an information and communication system (Article 22(1)) –including any past cases of compliance or non-compliance of an economic operator – may also be used as evidence. Information requested by the competent authority from other relevant authorities may be taken into account. It could also be relevant that the enterprises under suspicion may have been requested to carry out due diligence or transparency reviews in relation to forced labour under EU or Member States’ laws.
In their assessment of the likelihood that economic operators have used forced labour, the competent authorities shall focus on the economic operators involved in the closest possible steps of the value chain to where the risk of forced labour occurring is highest, and take into account the size and economic resources of the economic operators, the quantity of products concerned, as well as the scale of suspected forced labour. With increased pressure for supply chain transparency (for various reasons related to climate change, resilience etc) it is likely that such information will be increasingly available and hence introducing such policies becomes easier. The push for greater transparency in supply chains has also been enhanced by the increasing digitalisation of trade flows.
It is therefore sufficient to look at the information available, based upon a suspicion, to establish a risk that the prohibited goods have been put on the EU market. Where certain states or firms are known to use forced labour in a systematic way, the suspicion should be easy to satisfy and the EU could target specific regions and countries. This is acknowledged by Bernd Lange (SPD), Chair of the European Parliament’s Committee on International Trade:
“You can’t check every product 100 percent…
But it can be said, for example, that a product like Christmas tree decorations comes largely from China’s Xinjiang province – where hundreds of thousands of Uyghurs are in re-education camps and also have to do forced labour.” 
The proposal appears to focus on large firms where there is mass production of suspected goods (Art 4(2)). Evidence of forced labour ought to be easier to find, either through whistleblowing, media investigations, social media, or investigations by non-governmental organisations (NGOs). But through distribution and production networks, larger companies can fragment the domestic labour market and can use corporate law to close and recreate companies that become the target of investigations by the authorities, media or trade unions.
The proposal may not have an easy ride through the European Parliament. There are political divisions where some MEPs feel that the economic climate is not the right time to be banning cheap goods from the EU market; others want tougher remedies, for example, by intervening directly or through international organisations such as the ILO, or putting pressure on a foreign country to bring about reforms of labour conditions.  Other positions would like to see a reversal of the burden of proof and force companies to prove they have not used forced labour.
The new law would be useful to target selected states in Asia where cheap and unpaid labour creates competitive problems in the EU. The use of an internal EU legislative instrument is a reflection of the weak levers the EU (and individual states) have to deal with the use of abusive policies in other states. An effective policy is usually the policy that directly targets the problem, but this is hard to achieve with regard to human rights and labour standards. The EU is attempting to address this weakness by including clauses in trade agreements to allow for direct EU channels to ensure that states adhere to international law standards (See UKTPO Briefing Paper 55).
This is in contrast to the post-Brexit UK approach where a revised policy on its Generalised System of Preferences (DCTS) has dropped the requirements that previously required certain countries to sign up to various ILO conventions in order to obtain preferential access.
It is difficult to predict how successful this proposal will be. There are strong moral and ethical grounds for its adoption and it is another building block for the development of a distinctive EU unilateral trade policy. In its current form the proposal is a bold move to tackle forced labour through the trade provisions of the EU Treaty, flowing on from the lead of using human rights, sustainability and labour standards in EU Treaties with third states. In practice, even if adopted, the reliance on national enforcement may create many regulatory gaps that can be exploited and this this may diminish effective enforcement.
 Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee on decent work worldwide for a global just transition and a sustainable recovery, COM(2022) 66 final, 23.2.2022. https://ec.europa.eu/social/BlobServlet?docId=25260&langId=en
 Note on 14 September 2022 the European Parliament adopted a Directive on a minimum adequate wage in the EU which could address some of the issues relating to forced labour within the Member States. https://www.europarl.europa.eu/news/en/press-room/20220909IPR40138/parliament-adopts-new-rules-on-adequate-minimum-wages-for-all-workers-in-the-eu
 The enactment of the Uyghur Forced Labor Prevention Act (UFLPA) on 21 June, 2022, introduced a presumptive ban on all imports to the US from China’s Xinjiang Uyghur Autonomous Region (“XUAR”) and from certain entities designated by the US Department Homeland Security Customs and Border Protection. The UFLPA’s presumptive ban modified Section 307 of the U.S. Tariff Act of 1930, which bans the import of any products mined, produced or manufactured wholly or in part by forced or indentured child labour.
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