We’ve previously written about the EU’s upcoming regulation banning the sale of products made with forced labor. The first draft of the English version of the regulation has now been published, giving us a more granular view of what the new regulation entails. Hogan Lovells broke down the key points of the regulation in a memo stating that the current draft of the legislation would:
- “ban (i) products made with forced labour from the EU market, and (ii) the export from the EU market of any product made using forced labour;
- explicitly not place additional due diligence obligations on economic operators;
- have effect from 2027 at the very earliest (i.e. after a three-year grace period from adoption);
- direct the European Commission to create a public database with information on forced-labour risks in different regions and industries, which will support the work of the competent authorities in assessing potential violations of the proposed regulation; unlike the comparable U.S. Uyghur Forced Labor Import Ban, the burden of proof will be on the enforcement bodies;
- where an investigation finds forced labour in supply chains, customs authorities at EU borders will be involved in ensuring relevant products are not placed on the EU market;
- for certain products and product groups (to be identified in due course), additional information will need to be supplied to customs authorities on import into the EU. However, we do not see any new general requirements or burdens being imposed on every European importer.”
The law isn’t quite finished yet, with legal-linguistic revisions and final Council approval still pending. Between the new Forced Labor Regulation, the EU Deforestation Regulation (EUDR) – even though it has been delayed – and the Corporate Sustainability Due Diligence Directive (CSDDD/CS3D), the EU is getting serious about supply chain management. This law and others will not only have impacts on EU companies, but on the global networks that comprise their supply chains. If your company is part of these networks, be prepared for requests for data and potential human rights audits.
Our members can learn more about supply chain management here.
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