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Last year, the European Commission set out to advocate for decent work not only within the EU region: worldwide. With measures via policies and initiatives that leverage on the EU’s trade position.
One such measure taken to enforce this commitment is in the form of a legislative instrument that will affect imported products. Parliament has most recently voted in favour of a ban on products made or transported by child labour and forced labour.
This comes as the EU seeks to become a global leader in responsible business and set human rights standards with far-reaching influence. Find out more about it here.
The ban covers all products, regardless of country of production or origin. This includes imported products as well as made-in-EU products. It is specific to goods ‘made’ or ‘transported’ by forced labour, adding another layer of complexity to the due diligence process that extends right through the supply chain.
Imported goods can be seized by authorities if there is sufficient evidence that child or forced labour were involved and the burden of proof lies with the importing party. A range of administrative sanctions and civil liability will be deployed to enforce the ban.
Under the ban of the EU, forced labour is defined as outlined by the International Labour Organisation (ILO) which includes indicators such as restriction of movement, document withholding, and debt bondage. These are modern forms of slavery hidden in manufacturing supply chains, concealed in unfair hiring practices and abuse of lax laws. In some cases, these practices may not even be illegal in the countries where they are practised, but it is up to the importer to benchmark against the ILO’s standards.
The ban was adopted by majority vote in Parliament and is targeted to roll out in September 2022. Parliament also presented recommendations on enforcing the ban based on production site, importer, company, transporter, or region. It complements existing legislation such as the recent Corporate Sustainability Due Diligence Act which holds companies accountable for instances of environmental or human rights abuse in their supply chains.
The difficulty with the ban is that it strikes at the heart of supply chain issues. Companies will have to be responsible for due diligence in every tier of their supply chain. As it is, many companies only deal with first-tier suppliers and consign the rest to oblivion.
Slavery is hard to detect in complex supply chains. Companies should be aware of the modern forms of slavery, starting with the ILO’s standards, and set up mechanisms for prevention and detection.
It goes without saying that insight into your supply chain is crucial to comply with the ban. Companies must ensure traceability down to the level of transportation of goods. This requires working very closely with your suppliers, engaging all tiers, and effectively communicating two-way information.
Creating a supplier engagement program is beneficial in this situation. It should include a full risk assessment and materiality assessment. Supplier cooperation is a critical part of compliance.
The Commission has also proposed assistance to companies especially SMEs in the form of a list of sanctioned companies, producers, and countries that have been identified as high exposure. Companies can expect further guidance from Parliament if the ban is accepted.