TABLE OF CONTENTS 1.Introduction: political and legal context 2.Issue identification 2.1.Definition of forced labour and availability of data 2.2.Forced labour in the world 2.3.Forced labour in the EU 3.Legislation and other initiatives to address the problem within the EU and elsewhere 3.1.International standards, guidelines and instruments 3.2.EU current and proposed initiatives 3.3.Specific legislation and other policies in EU Member States 3.4.Legislation in other countries 3.5.Private-sector initiatives 4.Consultation strategy and its results 4.1.The targeted consultation 4.2.The call for evidence 5.Presentation of the initiative 5.1.Justification of the measure 5.1.1.Need for an additional measure 5.1.2.Options considered

5.1.3.Choice of legal instrument 5.2.Description of the proposed regulation 5.2.1.Scope and enforcement 5.2.2.SMEs 5.3.Expected outcome 5.4.Costs and benefits 5.4.1.Business compliance costs 5.4.2.Enforcement costs for public authorities 5.4.3.Costs for the European Commission 5.4.4.Benefits 5.5.International cooperation 5.6.Monitoring of implementation



1.Introduction: political and legal context Despite clear international commitments to abolish forced labour, the phenomenon is still widespread. The most recent report on Global Estimates of Modern Slavery indicates that the global number of people in a situation of forced labour in 2021 was 27.6 million, which represents an increase of 2.7 million since 2016. According to data from the International Labour Organization (ILO), 880 000 people were in forced labour in the European Union (EU) in 2012. Within the EU there are strong commitments, as well as dedicated measures and initiatives aimed at combatting forced labour. Respect for human dignity and the universality and indivisibility of human rights are enshrined in the Treaty on European Union, and forced labour is explicitly prohibited by the EU Charter of Fundamental Rights. All EU Member States have ratified the fundamental ILO Conventions on forced labour (see section 3.1). The EU Anti-Trafficking Directive requires Member States to ensure that trafficking in human beings, including trafficking for forced labour, is punishable by law. The EU public procurement Directives require EU Member States to take appropriate measures to ensure that contractors and suppliers effectively comply with the obligations stemming from the ILO Conventions, including those on forced labour. EU external policy also contributes to the eradication of forced labour through its various instruments. This includes trade policy: for instance, EU trade agreements include legally binding and enforceable commitments requiring the parties to work towards the ratification and effective implementation of all fundamental ILO Conventions, including those on forced labour. Those Conventions include an obligation to suppress the use of forced or compulsory labour in all its forms, which applies to countries benefiting from the special incentive arrangement for sustainable development and good governance (GSP+) under the EU’s Generalised Scheme of Preferences (GSP). All 71 beneficiary countries of EU GSP are required not to commit serious and systematic violations of the principles laid down in the fundamental ILO Conventions. Promoting responsible and sustainable supply chains is also one of the pillars of the recent EU trade strategy. The Commission also works to enhance the contribution of the private sector to the fight against forced labour (see chapter 3 for details). The EU actively promotes the effective implementation of international standards on responsible business conduct and has put in place or proposed mandatory standards on responsible sourcing in some sectors (e.g. certain minerals and batteries). The Corporate Sustainability Reporting Directive, includes detailed reporting requirements on human rights and labour rights, including the elimination of forced labour, covering all large and all listed companies. On 23 February 2022, the Commission put forward a proposal for a directive on Corporate Sustainability Due Diligence, which would require large companies above certain thresholds operating in the single market to put in place due diligence procedures in order to ensure compliance with international human rights standards, including on forced labour. On 13 July 2021, the Commission and the European External Action Service published a guidance document on due diligence to help EU companies address the risk of forced labour in their operations and supply chains, in line with international standards. The European Parliament has called for EU measures to combat forced labour. In 2016, Parliament called on the Commission to develop legislation to prohibit imports of goods produced with any form of forced labour or modern slavery. In 2020, Parliament called for a ban on the importation of products linked to severe human rights violations such as forced labour or child labour . On 16 May 2022, the European Parliament’s Committee on International Trade (INTA) voted on a motion for a resolution on ‘a new trade instrument to ban products made by forced labour’. The resolution, adopted by Parliament’s plenary on 9 June 2022, called for the Commission to propose a trade instrument that would ban the import and export of products made or transported by forced labour and which should be complemented with measures for intra-EU trade. It referred to the need to build on ILO forced labour indicators and stressed the importance of ensuring compatibility with World Trade Organization (WTO) rules and with due diligence legislation, as well as proportionality, non-discrimination, and cooperation with non-EU countries. The resolution also called on the Commission to avoid unnecessary burdens for SMEs (but not to exempt them) and give companies the opportunity to demonstrate the absence of forced labour in their products; to create guidelines for companies, and set up a risks database and a coordination system at EU level to support Member States’ authorities; to include in the new instrument an export ban and a ban on products transported by forced labour; and to create and maintain a public list of sanctioned entities, regions and products.

President von der Leyen announced in her State of the Union address on 15 September 2021 further EU legislative action to tackle the use of forced labour in the supply chains of companies operating in the single market, notably a ban on products made by forced labour. As a follow-up on this commitment, and to strengthen the efforts and complement the EU toolbox on this issue, on 14 September 2022 the Commission adopted a proposal for a regulation to ensure that products made with forced labour are not placed or made available on the EU market. The main objectives of the initiative were laid down in the Commission’s Communication on Decent Work Worldwide, published on 23 February 2022, which reaffirms the EU’s commitment to promoting decent work within the EU and abroad, and sets out EU actions in this regard. This staff working document provides supporting information on the legislative proposal. In particular, the document provides information and data that substantiate the need for action in this field as well as elements supporting the policy choices made by the Commission. Chapter 2 outlines the problem of forced labour on the basis of the data and statistics available. Chapter 3 presents an overview of legislation and other initiatives to address the problem of forced labour. Chapter 4 summarises the results of the consultation processes carried out in preparation of the legislative proposal. Chapter 5 presents the main elements of the proposal, the policy options considered and the expected costs and benefits.



2.Issue identification 2.1.Definition of forced labour and availability of data Forced labour covers a wide variety of coercive labour practices where work or service is exacted from persons that have not offered it themselves voluntarily. Article 2.1 of the ILO Forced Labour Convention defines forced labour as ‘all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself/herself voluntarily’. The ILO has developed a set of eleven indicators with the most common signs pointing to the possible existence of forced labour. Such indicators are: abuse of vulnerability, deception, restriction of movement, isolation, physical and sexual violence, intimidation and threats, retention of identity documents, withholding of wages, debt bondage, abusive working and living conditions, and excessive overtime. Forced labour constitutes a serious violation of human dignity and fundamental human rights. The ILO has declared the elimination of all forms of forced or compulsory labour as a principle concerning fundamental rights and classifies ILO Convention No 29 (‘ILO Convention No 29’), the 2014 Protocol to Convention No 29 and the ILO Convention No 105 on the abolition of forced labour (‘ILO Convention No 105’) as fundamental ILO Conventions (see section 4.1 for details). While some studies and databases on forced labour are available, the information and data is relatively limited. The ILO publishes a comprehensive study that estimates the presence of forced labour in the world every 5 years. However, estimates for a specific geographical area such the EU are rarer. The latest estimates on forced labour looking specifically at the EU were published by the ILO in 2012. One major reason for the limited data is that forced labour is often found in criminal environments, developing countries, state-imposed settings or in processes relating to intermediary products (i.e. products used as input for a final product for example in manufacturing). There is also a general lack of awareness by consumers, businesses and governments about forced labour and its presence in our daily lives. Some initiatives to enhance the availability of data on forced labour have been developed in recent times. The ILO has published guidelines for the measurement of forced labour. The ILO has also encouraged its members to collect data on forced labour in their respective countries (including by means of standard questionnaires, manuals and sampling tools for statistical surveys) and provided recommendations for the collection and analysis of forced labour statistics, in order to facilitate their international comparability. The ILO’s Forced Labour Observatory provides comprehensive global and country information on forced labour related to international and national legal and institutional frameworks, enforcement, prevention, including fair recruitment and due diligence, protection, access to justice, remedies, and cooperation. The Observatory aims to provide an overview of the situation of forced labour in the world, with country profiles available for all 187 ILO member states. 2.2.Forced labour in the world The most recent report on Global Estimates of Modern Slavery elaborated by the ILO, Walk Free Foundation, and International Organisation for Migration (IOM), estimates the global number of people in forced labour at 27.6 million in 2021. According to the report, forced labour exists predominantly in the private economy (86% of the total, affecting 23.7 million people) as compared to state-imposed policies (14% of the total, affecting 3.9 million people). Women and girls make up 11.8 million of the total in forced labour. More than 3.3 million of all cases of forced labour involve children. The Global Estimates report registers an increase of 2.7 million in the number people in forced labour between 2016 and 2021, which translates to a rise in the prevalence of forced labour from 3.4 to 3.5 per thousand people in the world. The increase in the number of people in forced labour was driven entirely by forced labour in the private economy. The report differentiates between the different forms of coercion that victims of forced labour are subjected to. The withholding of wages is the most common form of coercion, with 36% of the victims having experienced it. One in five victims experiences abuse of vulnerability through threat of dismissal. Other forms of coercion include forced confinement, physical and sexual violence and deprivation of basic needs. The length of time that victims are subjected to forced labour varies from a few days to weeks, months or even years. While forced labour is a worldwide phenomenon, regional differences can be observed (see figure No 1). The ILO estimates that Asia and the Pacific alone account for more than half of the global total (15.1 million), followed by Europe and Central Asia (4.1 million), Africa (3.8 million), the Americas (3.6 million), and the Arab States (0.9 million). Figure No 1: Presence of forced labour by region Source: 2022 Global Estimates of Modern Slavery. ILO, Walk Free, and IOM. As a proportion of the population, the Arab States rank first (with 5.3 cases of forced labour per thousand people), followed by Europe and Central Asia (with 4.4 cases per thousand), the Americas and Asia and the Pacific (both 3.5 per thousand), and Africa (2.9 per thousand). Migrant workers are especially vulnerable. In 2021, adult migrant workers were three times more likely to be in forced labour compared to non-migrant workers. The COVID-19 crisis has exacerbated the situation of many people trapped in forced labour, especially in countries with a weaker social safety net and with large informal economies. As one of the main drivers of forced labour, socio-economic vulnerability has increased significantly and has pushed many people into forced labour. Due to the loss of employment, a weak or non-existent safety net, and rising health costs, many have found themselves in a precarious situation. Debt bondage, already a major contributor to forced labour before the COVID-19 pandemic, has become even more prevalent, as many individuals take on debt to cover their loss of income and increasing expenses. The pressure on companies to reduce costs in the face of falling revenues caused by the pandemic, has pushed them to make greater use of forced labour. The strain on public finances from COVID-19 has led to weaker supervision and enforcement of rules. International conflicts such as Russia’s unprovoked and unjustified military aggression against Ukraine have caused a sharp rise in energy and food prices, which are also likely to augment the risk factors associated with forced labour.

According to the Global Estimates report five economic sectors alone account for 87% of all forced labour: services (including trade, transport, hospitality, but not including domestic work), manufacturing, construction, agriculture (not including fishing), and domestic work. The U.S. Department of Labor’s Bureau of International Labor Affairs (ILAB) publishes a list of goods (and their source countries) which it has reason to believe are produced by child labour or forced labour in violation of international standards. Based on the latest update published in September 2022, the list covers 122 products from 41 countries made with forced labour. The findings of the US reports have been corroborated and complemented by reports from academia, civil society and others . 2.3.Forced labour in the EU Forced labour is also present in the EU. According to ILO estimates from 2012, 880 000 persons are victims of forced labour in the EU. While most cases involved EU citizens, victims also came from Africa, Asia, and Central and South-Eastern Europe, often as migrant workers. Out of the 880 000 forced labourers, 30% were estimated to be victims of forced commercial sexual exploitation, while the remaining 70% were victims of other types of forced labour exploitation. Most victims were women (58%). The European Union Agency for Fundamental Rights (FRA) interviewed 237 adult migrant workers, both third-country and EU nationals, who were victims of forced labour or worked in high-risk sectors in seven EU Member States and the United Kingdom. The workers were mainly active in the following sectors: domestic work (21%), hospitality (16%), construction (15%), and agriculture (14%). The FRA study showed that, similarly to other regions in the world, common pathways to forced labour include false promises by recruitment agencies and high recruitment fees, leading to debt bondage, confiscation of identity, documents, and threats of violence. Forced labour is a form of trafficking in human beings pursuant to article 2(3) of Directive 2011/36/EU on the prevention and combatting trafficking in human beings and protecting its victims. According to the third Commission report on the progress made in the fight against trafficking in human beings, labour exploitation affects 15% of all victims of trafficking within the EU, with an increasing number of victims remaining undetected. EU Member States reported a total of 14 145 registered victims of human trafficking for 2 years (2017 and 2018). The reportidentifies a number of sectors with a high risk of labour trafficking, including agriculture, construction, hospitality and cleaning, domestic work, forestry, textiles and garments and food manufacturing. In a focused study of exploited workers, most of them under conditions of forced labour as defined by the ILO, 25% of the victims interviewed individually were recognised as being trafficked by victim support organisations or authorities. Incidences of forced labour have also been reported in the EU agricultural sector. Victims are lured by recruitment agencies or criminal groups, who promise them well paid employment. They are often subjected to debt bondage (through recruitment fees), wages and documents being withheld, and threats of violence. For instance, in 2019 Bulgarian and French law enforcement authorities, supported by Europol and Eurojust, dismantled an organised crime group which trafficked Bulgarian citizens for labour exploitation and forced labour in the agricultural sector in France. Forced labour in the EU agricultural sector was also reported in several Member States. Victims usually come from poorer Member States and non-EU countries. In addition to the existence of people in forced labour in the EU, it is necessary to consider also the presence of forced labour in the supply chains of companies operating on the EU market. Forced labour may take place at a single stage in the supply chain (e.g. harvesting), at several stages (e.g. harvesting and processing), or throughout the entire supply chain (e.g. from harvesting to cotton production to the finished textile product sold to the end consumer). Reports suggest that, when forced labour is used in the production of a product, it generally takes place at an early stage in the supply chain, for example in mining and harvesting, making it harder to detect for companies that produce or market the final product. When the final product reaches consumers, they are often not aware there is a risk it has been produced with the use of forced labour at some stage in the production process. This means that EU consumers may indirectly sustain forced labour by unwittingly consuming products made with it. Usually, the more components a supply chain has, the more difficult it is for companies and consumers to detect forced labour, particularly if it has occurred at an early stage in the production process. Companies might believe that their suppliers are free from forced labour, without realising they might be sourcing materials from businesses producing with forced labour. For complex goods that require many different components and production steps, identifying forced labour can be especially challenging. Hence, the measures to monitor the supply chain and due diligence are important. Without more precise details on the extent of the problem in relation to specific products, it is difficult to quantify the production or trade potentially affected by forced labour. By extrapolating from the U.S. data from the ILAB list, we can get an indication of goods imported into the EU that could potentially be produced with forced labour. Thus, for some products like fireworks, bricks and toys imported into the EU, a significant amount could be tainted by forced labour. Other products like garments, footwear, textile, electronics and timber are also at an increased risk. The examples above are not exhaustive and are provided exclusively for illustrative purposes, without prejudice to any forthcoming assessment by the EU or national authorities. Any potential decision concerning specific products will need to be based on the rules and procedures set out in the future EU Regulation adopted the basis of the Commission’s legislative proposal.



3.Legislation and other initiatives to address the problem within the EU and elsewhere 3.1.International standards, guidelines and instruments Due to the global presence of forced labour, international organisations have a key role to play in eradicating forced labour and have developed universal standards and guidelines on how to best tackle the issue. International Labour Organization (ILO) The 1998 ILO Declaration on Fundamental Principles and Rights at Work affirms the obligations and commitments arising from ILO membership, namely to respect, promote and realise fundamental rights, including the elimination of forced and compulsory labour. The ILO classified the following legally binding instruments on forced labour as fundamental: the ILO Forced Labour Convention, 1930 (No 29) supplemented by its Protocol of 2014, and the ILO Abolition of Forced Labour Convention, 1957 (No 105). A further Forced Labour Recommendation No 203 was adopted in 2014 to supplement the above standards. ILO Convention No. 29 establishes the international definition of forced labour and commits its members ‘to suppress the use of forced or compulsory labour in all its forms within the shortest possible period’. Ratifying members must make the illegal extraction of forced or compulsory labour a penal offence punishable by ‘adequate and strictly enforced’ penalties. Of the 187 ILO members, 180 members have so far ratified ILO Convention No. 29, including all EU Member States. ILO Convention No. 105 mainly concerns forced labour imposed by state authorities and prohibits specifically the use of forced labour as punishment for the expression of political views, for the purposes of economic development, as a means of labour discipline, as a punishment for participation in strikes, and as a means of racial, religious or other discrimination. 178 ILO members have ratified Convention No. 105, including all EU Member States.

The 2014 Protocol requires members to take effective preventive, protective and remedial measures to comply with the requirement of Convention No. 29 to eliminate forced labour. Each member country must apply the Protocol in a way that takes its national circumstances into consideration. The Protocol also encourages the development of a comprehensive national strategy on forced labour and requires countries to develop a national policy and plan of action on forced labour. The measures adopted must include supporting due diligence by both the public and private sectors to prevent and respond to risks of forced or compulsory labour. The Protocol also requires cooperation among members. The Protocol has been ratified by 59 ILO members, including 19 EU Member States. The Recommendation No. 203 provides non-binding practical guidance on strengthening national law and policy for the prevention of forced labour, the protection of victims, victims’ access to justice and remedies, enforcement and international cooperation. It builds on the Protocol and should be read in conjunction with it. The ILO 2015 Handbook on Combating Forced Labour is aimed at assisting businesses and employers’ organisations in understanding and tackling forced labour by providing tools and practical guiding principles, as well as checklists and guidance for assessing compliance. In addition to some service sectors, the handbook lists the following product sectors in which cases of forced labour are frequently reported: agriculture, forestry, and fishing; construction, manufacturing, and utilities; garments and textiles under sweatshop conditions; and mining and logging. The handbook also presents statistics and an overview of the key issues across sectors and geographic regions. The ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration) was adopted in 1977 and amended in 2017. It contains principles and social policy guidelines on decent work relating to social security, forced labour, transition from the informal to the formal economy, wages, safety and health, access to remedy and compensation of victims. In line with the MNE Declaration, all companies are to carry out due diligence to identify, prevent and mitigate adverse impacts on human rights, and take immediate measures to eliminate forced labour in their operations. Governments should develop national policies and plans for systematic action. Finally, the ILO takes part in numerous projects to monitor and improve labour conditions in collaboration with the private and public sector. ·Organisation for Economic Cooperation and Development (OECD) The OECD Guidelines for Multinational Enterprises specify and develop the concept of human rights and environmental due diligence. They were first adopted in 1976, and last updated in 2011. Consistent with applicable laws and internationally recognised standards, the guidelines provide non-binding principles and standards for responsible international business conduct. The implementation of the Guidelines is supported by a system of national contact points (NCPs). These are agencies established by the 42 adhering governments to promote and implement the Guidelines. The role of NCPs is to help companies and other stakeholders to take appropriate action based on the Guidelines. Whenever practical issues arise, the NCPs can also serve as a platform for mediation and conciliation. The 2011 version of the Guidelines introduced a new and comprehensive approach to due diligence and responsible supply chain management. A stocktaking exercise was launched in 2020 by the OECD Working Party on Responsible Business Conduct. The purpose was to get a clearer picture of whether the Guidelines for Multinational Enterprises are still fit for purpose. The stocktaking report was published in 2022 and the OECD is aiming for a targeted update of the guidelines in early 2023. The OECD has adopted Due Diligence Guidance on Responsible Business Conduct, providing practical support for companies on implementation of the Guidelines for Multinational Enterprises. The due diligence guidance gives practical explanations and aims to promote a common understanding of due diligence among governments, companies, and stakeholders. The guidance was adopted by 51 countries (OECD members and other relevant countries). It covers all sectors of the economy and calls on companies to review and update their corporate policies on issues such as labour, human rights, disclosure, and corruption. The guidance identifies the following due diligence steps for companies: (1) integrating due diligence into policies and management systems, (2) identifying and assessing adverse impacts on human rights and the environment, (3) preventing, ceasing or minimising actual and potential adverse impacts on human rights and the environment, (4) assessing the effectiveness of measures, (5) communicating, (6) providing remediation. The OECD has also adopted sectoral guidance to help companies create supply chain resilience and manage uncertainty. Sectoral guidance has been issued to promote a common understanding of due diligence among stakeholders in the extractive sector, mineral supply chains, agricultural supply chains, garment supply chains, and the financial sector. The guidance for some sectors serves as the basis for EU regulatory measures fostering due diligence of supply chains. ·United Nations (UN) The UN ‘Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework’ provide guidance for governments and companies on preventing, addressing and remedying human rights abuses relating to business operations. They were endorsed by the UN Human Rights Council in 2011 and provide the first internationally agreed framework on business and human rights. Following the review of the first decade of implementation, in November 2021 the UN published a ‘Roadmap 10+’ with forward-looking recommendations for the next decade of business and human rights. ·Alliance 8.7 Alliance 8.7 is a global partnership that is committed to achieving target 8.7 of the 2030 Sustainable Development Goals outlined by the UN in 2015. Sustainable development goal 8 is about ‘decent work and economic growth’ and target 8.7 calls for immediate and effective measures to eradicate forced labour and other violations of human rights. The Alliance is made up of 26 member countries (including 3 EU Member States - Germany, France, and the Netherlands) and 375 partners (international/regional and civil society organisations, etc.) It also brings together organisations to generate data and research. The 2017 Global Estimates of Modern Slavery and Child Labour was the result of the collaborative effort between Alliance partners. 3.2.EU current and proposed initiatives The commitment of the European Union to responsible business conduct is demonstrated by a number of EU legislative initiatives promoting supply chain sustainability. The legislative proposal for a ban on products made with forced labour builds on such initiatives, which include legislation and proposals on human rights and environmental due diligence, sustainability reporting, market prohibitions applying to certain products, and rules for the implementation of certification schemes. The future EU Regulation prohibiting the placing on the market of forced labour products should contribute to reinforce the application of the initiatives described in this section and apply in a manner that is coherent and complementary to them. ·Regulation (EU) 2017/821 laying down supply chain due diligence obligations for Union importers of tin, tantalum and tungsten, their ores, and gold originating from conflict-affected and high-risk areas The Regulation aims to ensure that EU importers of tin, tungsten, tantalum and gold (‘3TG’) meet international responsible sourcing standards in line with the OECD guidance mentioned in Section 3.1. It also aims to ensure that global and EU smelters and refiners source 3TG responsibly. In addition, the regulation intends to help break the link between conflict and the illegal exploitation of minerals. Under the regulation, EU importers of minerals must identify and assess the risks in their mineral supply chain, implement a strategy to respond to these risks, carry out an independent third-party audit of supply chain due diligence and report annually on their policies and practices for responsible sourcing. The competent authorities in EU countries must carry out checks to ensure that EU importers of minerals and metals comply with their due diligence obligations.

·Regulation (EU) No 995/2010 laying down the obligations of operators who place timber and timber products on the market The Regulation prohibits illegally harvested timber from being placed on the EU market and sets out preconditions for the marketing of timber and timber products in the EU. The regulation requires ‘operators’ who place timber products on the EU market for the first time to exercise ‘due diligence’ to ensure they supply products made of legally harvested timber. To this end, operators must use a due diligence system. Operators may set up their own due diligence systems or use one created by a monitoring organisation. Monitoring organisations are recognised as such by the European Commission. Their role is to assist operators in complying with the Regulation. Furthermore, to facilitate the traceability of timber products, all traders who buy and sell timber on the market must keep records of their suppliers and customers. The Regulation applies both to EU-harvested and imported timber. It considers timber or timber products to be legally harvested if they have a forest law enforcement, governance and trade (FLEGT) licence (under Regulation (EC) No 2173/2005), or a Convention on international trade in endangered species of wild fauna and flora (CITES) permit (Regulation (EC) No 338/97). The regulation will be repealed with the entry into application of the deforestation regulation referred to above. ·Proposal for a directive on Corporate Sustainability Due Diligence The Commission adopted its proposal for a corporate sustainability due diligence directive (CSDDD) on 23 February 2022. It sets rules aimed at making companies address adverse environmental and human rights impacts of their own operations, subsidiaries and value chains, inside and outside the EU. This proposed directive would introduce a corporate due diligence duty. This means mandatory due diligence requiring large companies above certain thresholds operating in the EU across all sectors to identify, prevent, mitigate, bring to an end, or minimise their adverse human rights and environmental impacts. The proposal also strengthens civil liability and access to remedy for those affected by such impacts, and establishes a public enforcement regime relying on supervisory authorities. Furthermore, the proposal also includes clarified and harmonised duties for the directors of the EU companies covered. These duties include setting up and overseeing the implementation of the due diligence processes and integrating due diligence into the corporate strategy. According to the proposal, directors should also be required to take into account the human rights, climate change and environmental consequences of their decisions when fulfilling their duty to act in the best interest of the company. The scope of the proposed directive covers EU limited liability companies and regulated financial undertakings with more than 500 employees and a net worldwide turnover of more than EUR 150 million. It also covers EU limited liability companies with more than 250 employees if they have a net worldwide turnover of more than EUR 40 million at least 50% of which was generated in one or more high-impact sectors, defined as sectors with high risk of adverse impacts based on various studies and for which OECD guidance exists. Non-EU companies are also covered by the scope of the proposal if they generate more than EUR 150 million turnover in the EU or, in case they operate in a high-impact sector, if they fulfil the lower, EUR 40 million net turnover threshold. Small and medium-sized enterprises (SMEs) are excluded from the scope. Once adopted, the due diligence legislation will also support the implementation of the prohibition of products made with forced labour. Due diligence is an important tool for companies to monitor their supply chain and take appropriate steps to identify, prevent and remediate forced labour when it is found. ·Proposal for a regulation on the making available on the Union market as well as export from the Union of certain commodities and products associated with deforestation and forest degradation Under the proposal for a regulation (2021/0366/EU) on the making available on the Union market as well as export from the Union of certain commodities and products associated with deforestation and forest degradation (repealing Regulation (EU) No 995/2010) operators would be required to submit a due diligence statement before placing products on the EU market or exporting from it, confirming that the products are both legally produced and deforestation-free. The European Parliament and the Council reached a provisional political agreement on the proposal on 6 December 2022. ·Proposal for a Regulation concerning batteries and waste batteries In December 2020, the European Commission adopted a proposal to modernise the regulatory framework for batteries and secure the sustainability and competitiveness of EU battery supply chains, which would replace the 2006 Batteries Directive, would establish mandatory requirements for sustainability (such as carbon footprint rules, minimum recycled content, performance and durability criteria), safety and labelling for the marketing and putting into service of batteries, and requirements for end-of-life management. It would also introduce due diligence obligations for economic operators sourcing raw materials. The European Parliament and the Council reached a provisional political agreement on the proposal on 9 December 2022. ·Corporate Sustainability Reporting Directive In 2021, the Commission put forward a proposal for a corporate sustainability reporting directive, which would amend the existing Non-Financial Reporting Directive (Directive 2014/95/EU). In addition to extending the scope to cover all large and all listed companies, the proposal requires the auditing of reported information. It also empowers the Commission to adopt sustainability reporting standards, for greater comparability. The European Parliament and the Council reached a political agreement on the Corporate Sustainability Reporting Directive in June 2022. ·Regulation (EC) No 1007/2009 on trade in seal products The Regulation sets out harmonised rules for placing seal products on the EU market. Seal products may only be placed on the market in the EU if they come from hunts carried out by Inuit or other indigenous communities. The hunt must be traditionally conducted by the community. Moreover, it should contribute to the community’s subsistence in order to provide food and income and not be primarily conducted for commercial reasons. Finally, it should pay due care to animal welfare, while taking account of the community’s way of life and the subsistence purpose of the hunt. When placed on the market, a seal product must have a certificate confirming that all the above conditions have been complied with. Bodies authorised by the Commission issue the certificates. ·Council Regulation (EC) No 2368/2002 implementing the Kimberley Process certification scheme for the international trade in rough diamonds The Regulation sets up a certification system for importing and exporting rough diamonds. Its main purpose is to implement the Kimberley Process certification scheme which aims to ensure that rough diamond purchases are not used for financing violence by rebel movements seeking to undermine legitimate governments. In order for a rough diamond shipment to be imported into the EU or Greenland, it must be transported in a tamper-resistant container and accompanied by a forgery-proof government-validated Kimberley Process certificate from the exporting country. If those conditions are fulfilled, the EU authority in the country will provide a confirmed certificate to the importer; otherwise, the shipment will be detained. Rough diamond traders must ensure that they only sell diamonds purchased from legitimate sources not involved in funding conflict. They must guarantee in writing that the diamonds are conflict-free based on personal knowledge and/or written guarantees provided by the diamond suppliers. ·Directive 2011/36/EU on preventing and combating trafficking in human beings and protecting its victims Directive 2011/36/EU lays down a legal framework for combating trafficking in human beings. Forced labour is a form of labour exploitation, punishable under that Directive. Moreover, the Directive establishes the liability of legal persons and lays down administrative and criminal penalties for the forms of exploitation referred to in the Directive, where committed by someone with a leading position in the organisation for their own benefit or where the offence was made possible by a lack of supervision or control. The proposed regulation on prohibiting products made with forced labour will complement that Directive. It will not prevent the competent authorities, including law enforcement authorities, from responding to alleged or confirmed offences involving trafficking in human beings committed for the purpose of exploitation, including forced labour. ·Directive 2009/52/EC providing for minimum standards on sanctions and measures against employers of illegally staying third-country nationals

The Directive prohibits the employment of non-EU citizens who are in the EU on an irregular basis, including victims of trafficking in human beings. The proposed regulation on prohibiting goods made with forced labour from the EU market will complement the Directive. ·Regulation (EU) 2019/125 concerning trade in certain goods which could be used for capital punishment, torture or other cruel, inhuman or degrading treatment or punishment The Regulation prohibits the import into, export from and transit through the EU of goods listed which have no practical use other than for the purposes of capital punishment or torture. The regulation requires prior authorisation, case by case, for exports of goods which could be used for the purposes of capital punishment or torture, but may have other legitimate uses. EU Member States’ authorities have the responsibility to decide, on a case-by-case basis, whether to grant an authorisation to export or dismiss an application for the regulated goods. They may refuse to grant an export authorisation when there are reasonable grounds to believe that the goods might be used for torture or other cruel, inhuman or degrading treatment or punishment, including judicial corporal punishment, by a law enforcement authority or any natural or legal person, or used for capital punishment in a third country. ·Directive 2014/24/EU on public procurement The Directive requires Member States to take appropriate measures to ensure that in the performance of public contracts economic operators comply with applicable obligations in the fields of environmental, social and labour law established by EU law, national law, collective agreements or by the international instruments on environmental, social and labour law provisions listed in an Annex to the Directive. Such instruments include the ILO fundamental conventions. ·EU Guidance on forced labour due diligence for EU businesses84 On 13 July 2021, the Commission and the European External Action Service published an ‘EU Guidance on due diligence for EU businesses to address the risk of forced labour in their operations and supply chains’. The guidance document explains the practical aspects of due diligence and includes specific considerations to address the risks and impacts arising from forced labour. It also provides an overview of EU and international instruments on responsible business conduct that are relevant for combatting forced labour. 3.3.Specific legislation and other policies in EU Member States EU Member States are also committed to fighting against forced labour. All of them have ratified the ILO Forced Labour Convention (No 29) and the Abolition of Forced Labour Convention (No 105), while 19 of them have ratified the Protocol of 2014 to the Forced Labour Convention. The majority of EU Member States have developed national action plans for the implementation of the UN Guiding Principles on Business and Human Rights, and some of them have adopted or are considering national cross-sectoral due diligence legislation (see below table 1). The legislation and additional measures currently in place or being proposed by Member States promote due diligence for human rights in general or against child labour or forced labour in particular. This can vary from obligations for directors as in Ireland, where directors have to take employees’ interests into account, to a general due diligence requirement for human rights, health, personal security and environmental impacts through the whole supply chain, as in France. The national measures and initiatives described in this section are an important contribution to the fight against forced labour in the EU and will support the efforts of business and other stakeholders in promoting responsible business conduct and supply chain responsibility for the respect of human rights, including to promote freedom from forced labour. Table 1: Overview of Member States’ measures in the field of due diligence for human rights Member State Has adopted cross-sectoral due diligence legislation Preparing or considering cross-sectoral due diligence legislation Has adopted a national action plan on business and human rights Austria (AT) No Yes No Belgium (BE) No Yes Yes Bulgaria (BG) No No No Croatia (HR) No No No Cyprus (CY) No No No Czechia (CZ) No No Yes Denmark (DK) No Yes Yes Estonia (EE) No No No Finland (FI) No Yes Yes France (FR) Yes - Yes Germany (DE) Yes - Yes Greece (EL) No No No Hungary (HU) No No No Ireland (IE) No No Yes Italy (IT) No Yes Yes Latvia (LV) No No No Lithuania (LT) No No Yes Luxembourg (LU) No Yes Yes Malta (MT) No No No Netherlands (NL) No Yes Yes Poland (PL) No No Yes Portugal (PT) No No No Romania (RO) No No No Slovakia (SK) No No No Slovenia (SI) No No Yes Spain (ES) No Yes Yes Sweden (SE) No No Yes Sources: www.globalnaps.org ; https://www.business-humanrights.org/en/ Below is a non-exhaustive list of the related measures taken by some of the Member States. In June 2021, Germany adopted the law on cross-sectoral mandatory human rights supply chain due diligence. The law will apply to human rights issues and to a limited number of environmental issues, if – because of them – human rights are violated (e.g. in the case of polluted water) or because the company’s activities are not in accordance with certain international environmental agreements. The law applies, from 2023 onwards, to companies with more than 3 000 employees, and from 2024 onwards, to companies with more than 1 000 employees and covers only direct suppliers unless the company had indications about harm occurring among its indirect suppliers. The law does not impose a product ban per se, as it is mostly focused on companies’ liability and compensation for victims. Offending companies may be barred from public procurement. Also, under Germany’s Corporate Governance Code (2019), management boards and supervisory boards – in line with the principles of the social market economy – are required to take account of the interests of the shareholders, the company’s workforce and the other groups related to the enterprise (stakeholders) to ensure the continued existence of the company and its sustainable value creation (the company’s best interests). France put in place a cross-sectoral due diligence requirement for human rights, health, personal security and environmental impacts through the whole supply chain (Law No 2017-399 of 27 March 2017). The law applies to any company located on French territory that for two consecutive financial years has employed at least 5 000 employees, or at least 10 000 employees in its own company and in its direct or indirect subsidiaries with a registered office in France or abroad. Such companies have to draw up and implement a vigilance plan based on the UN Guiding Principles on an annual basis. The due diligence duty covers the whole supply chain and parent companies are liable for damage that due diligence could have prevented. The law establishes a reasonable vigilance measure to identify risks and prevent serious breaches of human rights and fundamental freedoms, health, security of persons and the environment. The company is responsible for any breaches and for repairing the consequences of failure to comply with their obligations. Moreover, in 2019, France amended the commercial and civil codes to require companies to be managed in a way that takes account of social and environmental challenges (Loi PACTE). In the Netherlands, Dutch law explicitly states that shareholder interests do not take priority over the interests of other stakeholders. Four political parties submitted a draft law on responsible and sustainable international business conduct in the Dutch parliament. Applicable across industry sectors, the law would introduce due diligence obligations for any company that knows or has reasonable grounds to suspect that its activity may have adverse effects on human rights, labour rights or the environment outside the Netherlands. In addition to the legislation focusing on human rights due diligence, other pieces of legislation have indirectly tackled forced labour. This includes national measures to implement EU legislation such as the Public Procurement Directive (2014/24/EU), which explicitly refers to the ILO Convention in its Annex, and the Directive for Non-Financial Disclosures (2014/95/EU), which refers to ‘ILO Conventions’ in its recitals. This overview does not include these pieces of national legislation. In Austria, in March 2021 a political party presented a proposal for a supply chain law, which is to be introduced to the Environment and Justice Committee. In Belgium, in April 2021 the Belgian parliament voted to consider a bill placing duties of care and responsibility on companies throughout their supply chains.

In Denmark, in January 2019, three Danish political parties presented a parliamentary motion calling on the government to introduce a bill on human rights due diligence for all large companies and companies in high-risk sectors. In Finland, in June 2020 the government released a study on possible regulatory options for mandatory due diligence. In 2022, a memorandum was published examining the possible content of a due diligence obligation in national legislation. In Italy, the national action plan on business and human rights commits the government to a review of existing law to assess legislative reform introducing human rights due diligence for companies. In Luxembourg, the 2018 coalition agreement committed the coalition partners to supporting government initiatives to strengthen companies’ human rights responsibilities. In May 2021, the Ministry of Foreign Affairs commissioned a study on legislative options for introducing mandatory human rights due diligence at national level. 3.4.Legislation in other countries The following section outlines a non-comprehensive list of initiatives in non-EU countries to eliminate or curtail the presence of forced labour. Some are focused on forced labour, while others are more general, introducing due diligence obligations that include forced labour considerations (cross-sectoral or sector-specific). ·United States Section 307 of the Tariff Act Section 307 of the 1930 Tariff Act (19 U.S.C. §1307) prohibits the importation of any product that was mined, produced, or manufactured wholly or in part by forced labour, including forced or indentured child labour. This prohibition, enforced by US Customs and Border Protection (CBP), was tightened substantially in 2016 with the elimination of an exception for cases of ‘consumptive demand’ (where the US did not produce enough of the good concerned to meet domestic demand). Under Section 307, if CBP receives a report of likely importation of forced labour goods into the US, it must initiate an investigation if warranted on the basis of the information received. If CBP finds that the information ‘reasonably but not conclusively indicates’ that the imports in question may be the product of forced labour, it issues a ‘withhold release order’ (WRO) and the goods are not released to the importer pending further investigation. To release a shipment that has been subjected to a WRO, specific information must be provided in a detailed statement to CBP regarding the goods’ production and supply chain, proving that the goods were not made with forced labour. CBP makes a determination on a case-by-case basis. When CBP determines ‘probable cause,’ a ‘formal finding’ is issued, which can result in the goods being seized (not just excluded from the US). From 2016 to 2021, there were 36 WROs (23 of them in 2020-21) and 2 findings. Uyghur Forced Labour Prevention Act In 2021, the US Congress passed a compromise version of the Uyghur Forced Labor Prevention Act, H.R. 6256 (UFLPA), which President Biden signed into law on 23 December 2021. The UFLPA instructs US CBP to presume that ‘any goods, wares, articles, and merchandise mined, produced, or manufactured wholly or in part in’ the Xinjiang Uyghur Autonomous Region were made with forced labour and are not allowed into the United States. The presumption also includes goods produced by entities, to be identified, that work with the Xinjiang government to recruit, transport, or receive forced labour from Xinjiang as well as entities that participate in ‘poverty alleviation’ and ‘pairing-assistance’ programmes in Xinjiang. This means that under UFLPA, imports from Xinjiang are automatically barred from entry into the United States without a WRO from the CBP or any specific indication of forced labour in the supply chain. The UFLPA should not be confused with WROs, since the UFLPA does not require the CBP to issue WROs and findings in order to detain and seize goods. Instead, the rebuttable presumption applies from the onset and, if importers cannot rebut the presumption, their goods may be detained, excluded, seized and forfeited. The CBP issued operational guidance for importers on 13 June 2022 and, on 17 June 2022, the Forced Labor Enforcement Task Force published its enforcement strategy . The strategy and operational guidelines (largely overlapping) shed light on how the CBP will enforce the UFLPA. In particular, they include the type of information CBP considers relevant when enforcing the legislation. Other acts The US Federal Acquisition Regulation from 2001 is a principal set of rules on government procurement in the United States. It prohibits contractors, contractor employees, subcontractors, subcontractor employees and their agents from engaging in trafficking, using forced labour, charging recruitment fees, withholding documents and forced labour actions. In 2010, the California Transparency in Supply Chains Act was enacted which requires companies to make certain disclosures and provide consumers with information on their efforts to eliminate slavery and human trafficking from their supply chains, so that consumers can make better and informed purchasing choices. This requirement only applies to companies which (a) identify themselves as a retail seller or manufacturer in their tax returns, (b) satisfy the legal requirements for ‘doing business’ in California and (c) have annual worldwide gross receipts exceeding USD 100 million. ·Canada Importing goods made with forced labour has been illegal in Canada since July 2020, as part of the implementation of the US-Mexico-Canada Agreement. Canadian authorities are empowered to detain shipments suspected of being made by forced labourers but have to gather ‘legally sufficient and defensible evidence’ in order to bar the goods from entering Canada. The Canada Border Services Agency (CBSA) has provided guidance to importers about the evidence they will be expected to produce if their goods are detained because the CBSA suspects that the goods were produced by forced labour. To establish that the goods at issue were not produced with forced labour, an importer will be expected to have documentation in support of the importers’ complete supply chain, described as ‘the entire system of producing and delivering the goods from the initial stage of sourcing raw materials to delivery of the product in Canada.’ Records maintained should include documentary evidence to establish the origin, purchase and transportation of all materials (including raw materials) from suppliers involved in the mining, manufacture, or production of the good and its components. ·United Kingdom Under the UK’s 2015 Modern Slavery Act introduces compliance disclosure and transparency requirements for organisations with an annual turnover of at least GBP 36 million (approximately EUR 42 million) that sell goods or services in the UK. Specifically, such organisations are required to annually publish a slavery statement demonstrating what they are doing to ensure that there is no slavery or human trafficking in the business or the supply chain. This also applies to organisations based outside the UK selling goods and services into the UK. As the UK’s official accompanying guidance on the disclosure/transparency requirements states, organisations must ‘paint a detailed picture’ of all the steps that they have taken. This compliance obligation has been in force since 29 October 2015 and many organisations that fall under it have already published their statements in the last few years.

·Australia The Modern Slavery Act came into force on 1 January 2019. It requires entities either based or operating in Australia with an annual consolidated revenue of more than AUD 100 million, to report annually on the risks of modern slavery in their operations and supply chains, and on how they are preventing and addressing those risks. The Act defines ‘modern slavery’ with reference to the Commonwealth Criminal Code and international law. It captures conduct that would constitute slavery and slavery-like offences, whether or not the conduct took place in Australia. Slavery and slavery-like conduct would include forced labour, deceptive recruitment and debt bondage. Each year, reporting entities must submit a ‘modern slavery statement’ to the Minister for Home Affairs, through a publicly accessible registry. The Act gives the government the power, in certain circumstances, to publicly name entities that fail to comply. The government can also require entities that fail to comply to take remedial action. ·Norway In 2021, Norway introduced the Act on Business Transparency and Work on Basic Human Rights and Decent Working Conditions. Companies covered by the Act need to complete due diligence assessments to get an overview of the consequences their business, supply chains and business partners have on fundamental human rights and working conditions. The Act applies to public limited companies, listed companies and other accounting entities. Also included are companies which meet at least two of the following three conditions: ·over NOK 70 million in sales revenue ·over NOK 35 million in balance sheet total ·over 50 person-years in the average number of employees in the financial year Companies must also be based within Norway and offer goods or services in or outside Norway or be a company that offers goods and services in Norway and is taxable in Norway according to Norwegian law. 3.5.Private-sector initiatives In an effort to combat forced labour, a number of private-sector initiatives have been developed. They include a variety of actors among companies, trade unions, civil society organizations, academia and other stakeholders. Through these frameworks, participants cooperate and pull together knowledge and resources to bring meaningful change in workers’ conditions along the supply chains. The initiatives often contain codes of conduct grounded in international conventions, capacity-building programs, monitoring of non-compliance and reporting processes. They can be sectorial or more comprehensive. Some focus on forced labour, while others have a wider scope and cover, for example, environmental, economic and safety conditions. Whilst it is important for the private sector to address the problem through various initiatives, action at EU level is needed to tackle the issue comprehensively and to draw up a common framework for combating forced labour. The structures and efforts put in place by these initiatives may facilitate the efforts of economic operators to prepare the implementation of the future regulation on forced labour products. A non-exhaustive list of some private sector initiatives is outlined below, in no particular order. Inclusion or exclusion of specific initiatives in this section should not be understood as endorsement or disproval of the respective initiatives by the European Commission, ·The Responsible Business Alliance (RBA) Established in 2004 (initially known as Electronic Industry Citizenship Coalition), RBA is a non-profit organisation made up of companies in the electronics, retail, automotive and toy sectors. The RBA set out a responsible labour initiative, stakeholders work together to ‘to improve working and environmental conditions and business performance through leading standards and practices’. RBA members, as well as their Tier 1 suppliers, are required to operate in line with the RBA Code of Conduct. The Code sets out social, environmental, and ethical industry standards with reference to international norms such as: the Universal Declaration of Human Rights, ILO International Labour Standards, OECD Guidelines for Multinational Enterprises, ISO standards, Social Accountability International standards and others. More than 500 members are part of the RBA and its responsible minerals, labour and factory initiatives, with a combined revenue of USD 7.7 trillion. ·Amfori Business Social Compliance Initiative Amfori is a business initiative that brings together retailers, importers, brands and associations from various countries. One of its key features is the business social compliance initiative (BSCI) focused on ‘improving social performance in global supply chains’. In order to achieve this goal, members must comply with the Amfori BSCI Code of Conduct that sets up values and principles to be implemented in supply chains. The Code refers to international conventions such as ‘the Universal Declaration of Human Rights, the Children’s Rights and Business Principles, UN Guiding Principles for Business and Human Rights, OECD Guidelines, UN Global Compact and ILO Conventions and Recommendations relevant to improve working conditions in the supply chain’. The Code is built around 11 principles which cover, for instance, bonded labour, decent working hours and fair remuneration. Amfori has more than 2 400 members, mostly headquartered in Europe (89%). The largest sectors represented are general merchandise (25.8%) and the garment and textile industry (21.8%). By type, importers account for 66% of the members, followed by brands (19%), retailers (11%) and holdings (4%). ·The ethical trading initiative (ETI) ETI is an ‘alliance of companies, trade unions and NGOs that promotes respect for workers’ rights around the globe’ ETI’s vision is built on the principle of ethical trade which requires retailers, brands, and suppliers to take responsibility for improving the working conditions of their employees at any stage of production in the supply chain. ETI’s members collaborate to deal with issues that are too complex to be addressed by individual companies on their own. All ETI members are required to adopt the ETI Base Code of labour practice that is founded on the ILO Conventions and is an internationally recognised code of good labour practice. The Code contains nine clauses referring to the ILO Conventions most relevant to labour practices. ETI members have a combined turnover of over GBP 166 billion and their union members represent nearly 160 million workers. ·ILO Global Business Network on Forced Labour (ILO GBNFL) The ILO GBNFL ‘is a global business network coordinated by the ILO’. Its members include ‘businesses of all sizes and sectors, employer and membership organisations, industry trade groups and sectoral associations’. Businesses collaborate with each other to face the challenge of eradicating the root causes of forced labour. The ILO GBNFL operates internationally across all sectors to develop new tools and solutions in relation to forced labour and supports micro, small and medium-sized enterprises in facing this challenge. The ILO GBNFL is a partner of Alliance 8.7. Within this partnership, member companies are given direct access to the Alliance 8.7 community and participate actively in work to deliver on Sustainable Development Target 8.7 and eliminate all forms of forced labour. The ILO GBNFL is focused on four key areas. The first involves connecting business actors across various sectors and geographical locations in order to improve coordination and collaboration in facing the common challenge of forced labour. The second key area is convening, by supporting businesses to establish dialogue with government bodies in pursuit of novel ways to eradicate forced labour. The third focus area is innovating, by identifying gaps and devising original solutions to forced labour. Finally, the last key area is supporting by sharing data, information, and resources across various businesses.

·The Consumer Goods Forum (CGF) The CGF is a global organisation that associates consumer goods retailers and manufacturers. Through common collaboration members aim to ‘secure consumer trust and drive positive change, including greater efficiency’. The CGF established coalitions of action built around four key pillars: environmental and social sustainability; health and wellness; food safety; and data accuracy and the end-to end supply chain. Within each coalition, members focus on a key subject and propose strategies that are then implemented into agendas and require ‘company commitments and reporting processes to ensure action and transparency’. Within the human rights coalition, the CGF is advancing towards the eradication of forced labour. This process is regulated by the CGF’s Social Resolution on forced labour that is built on the UN Guiding Principles on Business and Human Rights, the ILO Declaration on Fundamental Principles and Rights at Work, and the UN sustainable development goals. The CGF’s 400 members directly employ 10 million people, with a further 90 million related jobs estimated along the supply chain. ·Fair Labor Association (FLA) The FLA is a non-profit association based on the ‘model of collaboration with companies, civil society organisations, and universities’. FLA’s key mission is to guarantee fair working conditions for all workers. It proposes original business policies and practices that serve to improve conditions for workers across all sectors and geographical locations. The FLA operates by establishing standards, accreditation, and monitoring noncompliance. The FLA assesses companies’ business practices against international standards for global supply chains in agriculture and manufacturing. In addition, the FLA also follows its Fair Labor Code, common to both sectors. The Code sets standards for workers’ rights in factories and on farms. ·Global Business Coalition Against Human Trafficking (GBCAT) GBCAT is a business coalition aimed at tackling forced labour and human trafficking by ‘advancing cross-industry progress’. GBCAT operates in compliance with its Operating Charter, which lays down how GBCAT is governed and specifies members’ rights and obligations. GBCAT operates in three main focus areas that serve to address the subject of modern slavery, namely: ·survivor empowerment and employment, which targets survivors of human trafficking; ·building capacity among SMEs (‘mapping of existing resources for SMEs and corporate suppliers’, ‘developing a toolkit on preventing and addressing forced labour’, and ‘SME partnership on implementation’); and ·navigation and guidance, which assists businesses of all sizes in navigating existing resources. ·Forest Stewardship Council (FSC) FSC is a non-profit multi-stakeholder organisation operating internationally. FSC sets standards for sustainable forest management taking into consideration economic, social and environmental conditions. FSC’s mission is to shift ‘the global forest trend toward sustainable use, conservation, restoration, and respect for all’. One of FSC’s focus areas is to protect workers’ rights in line with international labour standards guaranteeing basic rights, such as the elimination of forced labour, fair pay or freedom of association. In 2017, FSC’s Board of Directors decided to apply ILO Core Labour Conventions to all its members, followed by the ILO’s Core Conventions and the ILO Declaration on Fundamental Principles and Rights of Work in 2021. FSC provides resources to assist its members in ensuring workers’ rights and identifying and eradicating any forms of forced labour. More than 1 500 companies are licensed to promote FSC-labelled products. ·Fair Wear Foundation (FWF) The Fair Wear Foundation is a non-profit multi-stakeholder organisation that brings together ‘brands, factories, workers, trade unions, NGOs and other industry influencers’. Fair Wear’s main goal is to guarantee universal workers’ rights in the garment industry. Fair Wear believes this can be achieved by improving companies’ ‘internal mechanisms’, ‘mitigating and remediating risks and violations of labour rights’ in supply chains, establishing ‘an enabling environment for the effective enforcement of labour rights’, and ‘shifting power imbalances’ by empowering workers to fight for their rights. Fair Wear member companies are required to comply with the Fair Wear Code of Labour Practices based on standards provided in ILO Conventions and the UN Declaration on Human Rights. Moreover, Fair Wear member businesses need to carry out due diligence on their supply chains following the OECD due diligence guidance for responsible supply chains in the garment and footwear sector and to satisfy the requirements in the OECD Guidelines for Multinational Enterprises. Currently 149 brands are members of the Fair Wear Foundation. ·Better Cotton Initiative (BCI) BCI is a multi-stakeholder sustainability initiative for cotton, and it is the ‘world’s largest cotton sustainability programme’. The initiative encompasses various stakeholders including leading retailers and brands, manufacturers, civil societies and development organisations. BCI has established the better cotton standard system (BCSS) view to stimulate constant improvements in the environmental, economic and social aspects of cotton production. Currently ‘nearly a quarter of the world’s cotton is produced under the BCSS’, comprising the better cotton principles and criteria, which, in turn, are based on seven leading principles, one of which is decent work. Within the decent work principle, BCI has come up with the decent work strategy to address the main challenges of ensuring workers’ rights. The strategy was developed in accordance with the requirements laid down by the ILO in its Declaration on Fundamental Principles and Rights at Work. Its objective is to uphold four principal standards: ‘freedom of association and the right to collective bargaining, the elimination of forced labour, the abolition of child labour, and the elimination of discrimination in employment and occupation’. The BCI members come from civil society, producer organisations, suppliers and manufacturers, retailers and brands, and associates, totalling 2 400 members. ·Social Accountability International (SAI) SAI is an international non-governmental organisation founded in 1997 as a multi-stakeholder initiative encompassing the ‘private sector, governments, NGOs, labour unions, and academia’. SAI’s main mission is to ‘is to advance human rights in workplaces globally’. SAI has introduced various training courses set up capacity-building programmes, and offers members a number of tools and services, such as the multi-industry SA8000 standard, which is based on global standards as described in the ‘Universal Declaration of Human Rights, ILO Conventions and national laws’. It includes forced labour. Together, the SAI certification system and, the SA8000 standard constitute a framework for doing businesses in a proper and equitable manner. Moreover, to promote sound supply chain management, the SAI has set up the Social Fingerprint System to support companies in handling their supply chains.



4.Consultation strategy and its results The consultation included publication of the call for evidence, the targeted consultation and other outreach activities and ad hoc feedback. The aim of the consultation strategy was to receive input from relevant stakeholders from both EU and non-EU countries. The main stakeholders consulted included companies (including SMEs) and their representative organisations and other operators in supply chains that may be affected by forced labour, trade union organisations, EU Member States and non-EU countries, international organisations (notably ILO and OECD), business and civil society organisations/non-governmental organisations (NGOs).

4.1.The targeted consultation Between 19 May and 23 June 2022, the Commission consulted relevant Member States’ authorities and stakeholders through meetings with existing platforms and networks. The initiative was presented at 14 such meetings, including the European Product Compliance Network, the civil society dialogue hosted by the Commission’s Directorate-General for Trade (DG TRADE), the Commission Expert Group on Trade and Sustainable Development, and at the exchange of views with European social partner organisations. Some written feedback was received after these meetings. Representatives of Member States and more than 450 other stakeholders participated in the targeted consultation. In general, all stakeholders agreed that forced labour is a complex issue and that it needs to be tackled and brought to an end; however, some indicated that this should be achieved through Member States’ national criminal laws. Both representatives of Member States and other stakeholders underlined that the planned EU instrument has to be WTO-compatible and based on international standards, for example, on ILO’s definition of forced labour and referring to the ILO indicators of forced labour. Many stakeholders questioned the absence of an impact assessment. The majority of stakeholders stressed that the new instrument should be compatible and interlinked with the CSDDD proposal, and should not duplicate it, especially where implementation and enforcement are concerned. A few stakeholders suggested that companies’ and partner countries’ efforts and commitments to addressing forced labour should be acknowledged and rewarded. Many stakeholders expressed a wish for proportionality, with no additional burden for companies, particularly SMEs, and for guidance, particularly on risk identification. Some stakeholders expressed concerns about possible differences in implementation of the new instrument in different Member States. Stakeholders stressed the importance of transparent and unambiguous requirements, and highlighted the challenges of traceability. Some asked for increased cooperation with trade unions to help ensure the new instrument was transparent and effective. They also suggested that the new instrument should require government labour inspection systems as an essential and compulsory method of identifying, addressing and preventing forced labour. 4.2.The call for evidence The call for evidence document was published on the Better Regulation portal (also known as ‘Have Your Say’ Portal),) to give stakeholders an opportunity to comment on the need for action and the envisaged initiative; and to provide input on any further issues to be considered when developing this policy field. The target audience included experts and representatives of interested parties, such as business associations, importers or manufacturers, consumers, NGOs, trade unions, retail businesses, and national representatives, including national authorities in charge of enforcing relevant rules. The call for evidence was open for public comments and feedback from 23 May 2022 until 20 June 2022. In total 107 responses were received, 76 of which had additional information or a position paper attached to them. The respondents were mainly business associations, representatives of NGOs and companies/business organisations, followed by trade unions, EU citizens, public authorities, academic/research institutions, and non-EU citizens (see figure 2). Figure 2: Feedback received to the Call for Evidence by category of respondent Source: European Commission’s ‘Have Your Say’ portal Out of the 107 submissions, 49 could be attributed to a specific sector. The dominant sectors were agriculture (12), the textile industry (clothes, shoes and other apparel) (12) and the solar industry (7), the remaining 18 coming from other sectors. Stakeholders from 22 countries on five continents provided their feedback. Most of the responses were received from stakeholders based in Belgium (33 – including those who provided their feedback through their representation in Belgium), Germany (19) and the USA (12). In total, 83 out of 107 submissions were received from stakeholders based in the EU, while the remaining 24 were provided from outside the EU. Additionally, several instances of feedback and position papers were submitted bilaterally after the deadline for the call for evidence, and a few bilateral meetings were organised ad hoc at the request of the stakeholders. A number of concerns, suggestions and questions were raised in the submissions from stakeholders. These varied strongly depending on the type of stakeholder, industry they operate in, as well as the country in which the organisation resides. Stakeholders from civil society stakeholders and the private sector often had contrasting views on the issues at hand. Many issues raised in the targeted consultations also came up in the replies to the call for evidence. Most stakeholders agreed that the Commission proposal should use the ILO definition of forced labour (Article 2.1. of the Forced Labour Convention No 29): ‘all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself/herself voluntarily’. An overwhelming majority expressed the importance of eradicating forced labour from EU and global supply chains and offered their support for the Commission’s efforts.

One of the most widely shared concerns by stakeholders was the lack of an impact assessment to accompany the proposal. Views were expressed that such a major regulation needed a detailed analysis, and that future implications should be carefully considered. Some stakeholders, notably from trade unions, NGOs, and civil society organisations, agreed with the Commission’s position that the urgency of the issue of forced labour allowed no time for an impact assessment. Many stakeholders referred to systems and regulations in place in other countries to ban products made with forced labour. Of the submissions that mentioned non-EU-country initiatives, the majority mentioned the US, followed by Canada. Company/business organisations and business associations complained about a lack of transparency of those non-EU-country measures. They noted that it was often unclear which shipments were seized and the reasoning behind it, making it difficult for importers to provide the necessary evidence. NGOs saw it as problematic that importers could re-export products to other locations after they were refused admission to the US market, as those products were often re-routed to the EU, Japan or other countries. The new proposal would need not only to ban goods found to be produced with forced labour from the single market but also to prevent them from being re-routed to countries that do not have a ban in place, or do not have the capacity to investigate and/or enforce. NGOs also underlined the importance of increased cooperation with authorities in non-EU countries to ensure that products that were not allowed to enter their markets, did not end up on the EU single market and vice versa. Regarding public authorities in Member States that will be in charge of enforcement, most stakeholders agreed that the same standards should be in place for all 27 Member States, and that the risk of fragmentation should be avoided. National authorities needed clear guidelines, and the necessary resources (training and staff) to monitor and enforce effectively. The EU should play a coordination role. On the issue of SMEs, views were also divergent. Representatives of civil society stressed that SMEs should not benefit from exclusions or special provisions, as they did for the CSDDD. As they make up the majority of companies in the EU, their full inclusion is crucial for the new instrument to have a meaningful impact. On the other hand, a significant number of stakeholders identifying as business associations or companies/business organisations advocated for SMEs to receive special attention, by either providing them with detailed guidelines, specific provisions or even exclusions from the instrument. The main argument put forward to support the need to give special attention to SMEs was that smaller companies have fewer resources to conduct in-depth due diligence and less market power to put pressure on suppliers to make additional efforts or provide access to their production sites and employees. Regarding the scope of the instrument, views were split between whether each specific consignment should be looked at individually or the instrument should focus on specific products, product groups, industries, production sites, or regions and countries. Representatives of NGOs (especially from the USA), advocated for a similar ban as under the US Uyghur Forced Labor Prevention Act, where all products originating from the Xinjiang Uygur Autonomous Region are automatically presumed to be made with forced labour, unless the importer can prove otherwise to the US CBP. In the same line, there were disagreements between what evidence is needed by authorities to withhold a shipment at the port of entry. Stakeholders from civil society expressed the desire for rebuttable presumptions for specific products, industries, production sites, regions and countries that have a significant incidence of forced labour. National authorities should also be allowed to initiate investigations if they have reasonable suspicion that the products contain elements of forced labour in the supply chain. In addition, a complaint mechanism should be put in place to allow civil society and trade unions to submit complaints for investigation. The private sector would prefer a country- and product-agnostic approach, where investigations are initiated based on reasonable suspicion. Submissions also diverged in terms of the burden of proof, and if it should be on the importer to prove that their goods do not contain traces of forced labour, or if it should be the responsibility of the competent authorities to prove that forced labour was used in the production of the investigated shipment. In any case, most stakeholders agree that specific processes and investigative standards should be in place, to ensure predictability and uniformity. The ability to release the goods after they have been suspended was also discussed in depth. Private-sector organisations wanted the authorities to have to provide clear reasons why the goods were suspended and what the concrete steps would be to release them. Civil society organisations, such as NGOs and trade unions, demanded that goods should be released only if the importer provided evidence (accepted by public authorities and civil society organisations), that forced labour was not used across the supply chain. If elements of forced labour were found to be present, the importer could still have goods released if they proved that forced labour was no longer present in their supply chain and that affected victims had received redress. Submissions from the private sector often mentioned that combating forced labour should be a task for public authorities and governments. According to them, the public sector could not simply shift responsibility for monitoring and enforcement onto companies. They emphasised that progress had been made by including labour-related provisions in free-trade agreements and in the EU’s Generalised Scheme of Preferences, as well as by implementing trade defence instruments. The EU should therefore focus on using the economic and diplomatic tools at its disposal to drive positive change in non-EU countries, instead of focusing on the regulation of private enterprises. Some stakeholders criticised the possible inclusion of products produced exclusively in the EU in the proposal. When forced labour is detected, companies may disengage from suppliers using forced labour, or chose to engage in order to address the issue. A majority of stakeholders agree that disengagement should be avoided and only be the last resort if no dialogue is possible (e.g. in cases of state-sponsored forced labour). The initiative should not lead to unintended consequences, such as companies disengaging entirely from certain suppliers, leaving employees with no employment. The approach should rather focus on dialogue to make sure practices that fall under forced labour cease and that employees have access to decent work. NGOs and trade unions also put a heavy emphasis on remedies being provided to victims of forced labour. This means redressing not just the initiating factors that lead to forced labour, such as taking on debt to pay for recruitment fees, but also all the negative economic, physical and psychological consequences that arise afterwards. The value of a database with forced labour risk indicators was also discussed. Public authorities could provide a registry of sanctioned and banned entities and products. This would help companies, especially SMEs, as they could avoid problematic suppliers. A number of stakeholders also asked for customs to disclose their data for transparency reasons. Civil society organisations called for importers to be required to map and provide details on all of their suppliers. Multiple stakeholders (companies/industries) presented the company- or sector-specific initiatives they had put in place to pro-actively address forced labour in their supply chains, and the results they had achieved. In addition, users of third-party certification schemes asked that these should be recognised as evidence. These efforts, and the experience the private sector has in this domain, should be taken into account and stakeholders should be actively involved in discussions on how to best address the issue. The relationship to other regulations was often brought up by stakeholders. Private-sector respondents often mentioned the issue of coordination with existing EU and national regulations, to avoid duplication of effort by companies and increased red tape. Other respondents rather saw the initiative as filling in the gaps left by other regulations, such as the exemption of SMEs from the CSDDD. The CSDDD was mentioned by 59% of submissions. Other regulations referred to (albeit to a much lesser extent) included: the Conflict Minerals Regulation, the Batteries Regulation, the Timber Regulation, the Corporate Sustainability Reporting Directive and the Deforestation Regulation. Commenting on the role of international organisations, stakeholders largely supported using the ILO’s definition of forced labour and the 11 indicators of forced labour. Stakeholders also often referred to the OECD Guidelines for Multinational Enterprises, and the OECD Due Diligence Guidance on Responsible Business conduct, as well as the UN ‘Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework’. They often noted that they adhered to those guidelines and guiding principles and asked for the proposal to be in line with the OECD and UN guidance.



5.Presentation of the initiative 5.1.Justification of the measure 5.1.1.Need for an additional measure The phenomenon of forced labour requires targeted measures to address it effectively. The EU has adopted or is in the process of adopting legislation that requires companies to appropriately address human rights impacts, including forced labour, in their business operations (see Section 3.2). However, current legislation does not prevent products made with forced labour from entering or being made available on the single market, except for specific sectors and commodities, such as conflict minerals or from being exported from the single market. While the Commission’s proposal for a directive on corporate sustainability due diligence addresses corporate behaviour and due diligence processes for the companies falling in its scope, it does not provide for measures specifically intended to prevent the placing and making available on the EU market of products made with forced labour. Without a general ban on products made by forced labour, with a clear enforcement responsibility, the single market risks to be the destination of such products. The continued existence of forced labour (see section 2) illustrates the need for additional measures, also aimed at products, to prevent the placing and making available of products made with use of forced labour. A new tool is therefore needed to address the risk of forced labour products in the single market, in line with the commitment of the Commission President in the State of the Union address.

Action at EU level is required in order to provide a common EU framework for tackling forced labour, rather than having national measures, which would result in different requirements and provisions in the Member States. These would, in turn, create barriers in the single market and a greater administrative burden for economic operators, going fundamentally against the principles and the spirit of the single market. Furthermore, the lack of a common framework would undermine the enforcement efforts carried out by Member States at national level. 5.1.2.Options considered In developing an instrument at EU level several options were considered. They are presented below, along with the arguments in favour or against them. ·Option 1: An instrument building on a risk matrix of goods and regions directly included in the legal instrument, combined with upfront import prohibition for the respective products. Whereas this option would have the advantage of providing a clear identification of goods and regions subject to the prohibition upfront, it has a number of disadvantages. First of all, the instrument would not capture all forced labour products, as only those included in the risk matrix would be restricted. This, in turn, would perpetuate the risk of accepting certain products made with forced labour on the EU market, as long as they were not included in the risk matrix. Such a tool would also entail a reversed burden of proof for those who wished to make available on the EU market products covered by the risk matrix, as they would need to prove the absence of forced labour in order for their products to be allowed on the market. This would mean considerable costs for the economic operators concerned and may raise questions about due process. Furthermore, for such a tool to be functional, all economic operators importing into the EU would need to provide detailed information on the product, producer and supplier to customs authorities from the application of the legal act, a requirement that is not currently covered under the Union Customs Code. Based on these elements, this option was discarded. ·Option 2: An instrument where due diligence carried out under EU and national legislation would be the only tool to alleviate the concerns about forced labour; investigations would be launched only on products made available by companies covered by those rules where due diligence had not been carried out appropriately. Since the scope of the proposed due diligence legislation does not cover SMEs and certain large companies, these companies would be exempted from the obligations under the forced labour legislation. This option would have the advantage of taking into consideration the situation of SMEs by exempting them from investigations and of significantly reducing compliance costs for companies subject to CSDDD requirements as their compliance would be ensured by carrying out due diligence. However, this option has two major inconveniences. First, exempting SMEs would undermine the effectiveness of the proposal and could create loopholes in enforcement, as it cannot be excluded beforehand that products made with forced labour are placed on the market by SMEs. Addressing these loopholes by imposing an obligation to carry out due diligence in line with the CSDDD requirements for all companies placing and making available products on the EU market or exporting products and that are not covered by the CSDDD proposal was not considered a viable option. If this option had been considered viable, it would have been already taken up in the CSDDD proposal. Second, restricting investigations only to cases in which due diligence has not been carried out would not guarantee that the objective of the proposed regulation is achieved either. While due diligence can be enough to identify and address forced labour in the supply chain, it is not sufficient to stop products made with forced labour from entering the market in cases where due diligence is not carried out correctly or sufficiently. For these reasons, this option was also discarded. ·Option 3: Introducing a threshold for the volume and/or value of products, below which authorities would not launch forced labour investigations under the proposed regulation. As SMEs are likely to make smaller quantities available on the market, this kind of de minimis clause could have the advantage of serving to take their situation in consideration and largely exempting them from investigations. However, establishing de minimis thresholds relevant for all product sectors would be a complicated process likely to involve considerable administrative difficulties.

It would also not be a guarantee that SMEs would always fall outside the scope of the proposed regulation, since smaller economic operators could also make considerable volumes of products available on the market, depending on the sector. Therefore, this option was also discarded. ·Option 4: An instrument covering all products made in part or in whole with forced labour, and all economic operators placing products on the EU market or making them available, with no pre-eminent role for due diligence. Covering all products made in part or in whole with forced labour and all economic operators making products available on the EU market or exporting from it is necessary to effectively preventing products made with forced labour from entering the EU market. Any other approach (e.g. covering only some products, sectors, regions or operators or introducing thresholds for volumes of products) would either defeat the purpose of the regulation or be impractical, for the reasons explained for each of the previous options. First, it is necessary to consider all products, sectors and regions and all economic operators within the scope of the instrument as the supply chain of any product originating from any sector or region can be potentially tainted by forced labour. Although the ILO statistics clearly show that the bulk of the problem lies outside the EU, it was decided that the proposed regulation will also cover products produced inside the EU. This is to send a strong signal that the EU treats forced labour seriously no matter where it occurs. To be fully consistent in its approach, the proposal also prohibits the export of products made with forced labour from the EU. Furthermore, all products must be covered irrespective of the size of the economic operators that make them available because it cannot be excluded that products from forced labour are made available by SMEs. The choice of this option is also supported by the fact that policies addressing large enterprises inevitably impact SMEs in their supply chains, as they would also likely need to carry out due diligence procedures to gain access to financing and meet demands from their larger business partners that exercise due diligence. This is why many SMEs have voluntarily put or are putting in place measures and some due diligence processes in their supply chain. However, SMEs need support in complying with the proposed regulation and several measures to this end are included in the proposed act (see Section 5.2.2). Finally, it is not possible to consider only products made available by companies required to carry out due diligence as due diligence alone is not sufficient guarantee that products made with forced labour do not enter the EU market. However, the due diligence process can be very useful to companies in identifying the risks of forced labour and addressing those risks effectively. Therefore, the due diligence efforts carried out by economic operators to address forced labour impacts should be taken into account in the design of the measure. For the reasons above, this is the option selected for the proposed regulation. 5.1.3.Choice of legal instrument In the targeted consultations, economic operators and other stakeholders signalled the importance of harmonised and uniform rules across Member States. A regulation would be the best means to achieve that and ensure that a common framework is put in place quickly and efficiently. Based on these arguments, a regulation was chosen. 5.2.Description of the proposed regulation 5.2.1.Scope and enforcement The Commission proposal for a regulation on prohibiting products made with forced labour on the EU market, adopted on 14 September 2022, is the result of the choices explained under point 5.1. The objective of the proposal is to effectively prohibit the placing and making available on the EU market and the export from the EU of products made with forced labour, including forced child labour. The prohibition covers domestically produced and imported products. Building on international standards and complementing existing horizontal and sectoral EU initiatives, in particular the corporate sustainability due diligence and reporting obligations, the proposal lays down a prohibition supported by a robust, risk-based enforcement framework. The enforcement would have to be compliant with international law, including WTO law. In order to comply with the proposed regulation, economic operators need to refrain from placing or making available on the market products made with forced labour. That would mean not using forced labour in their own production sites and ensuring that their suppliers are not using forced labour either. Due diligence measures are one way of addressing the risk of forced labour. The guidelines set out in the proposed regulation will provide more details on the measures and possibilities available to companies to address this issue. The starting point for these guidelines will be the ‘EU Guidance on due diligence for EU businesses to address the risk of forced labour in their operations and supply chains’. However, it is important to clarify that the proposed regulation does not impose due diligence obligations on companies, nor does it extend the requirements included in the proposed CSDDD to companies that are not covered by it. Thus, the proposed regulation does not introduce any specific requirements for economic operators to carry out due diligence on forced labour or any other human rights aspects. The economic operators are free to choose how they monitor the risk of forced labour in their supply chain. Companies that fall within the scope of the proposed CSDDD will need to addres