Effective December 14, 2027, the regulation will make it unlawful to place on the market, distribute or export any goods produced through forced labor from the EU. Imports of said products are likewise prohibited. This includes any products for which forced labor was used, either wholly or partially, at any stage of their extraction, harvesting, production or manufacturing. The prohibition also applies to any processing or refining carried out at any stage of the supply chain.
The regulation does not define the concept of forced labor, but instead refers to the definition set out in the International Labor Organization (ILO) Convention. According to this definition, forced labor refers to “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 voluntarily.”
The regulation expects distributors and exporters within the EU market to exercise due diligence in identifying, preventing, mitigating or eliminating forced labor.
Businesses will be supported in this regard by a database to be established by the European Commission, which will contain information on products and regions where the risk of forced labor may arise.
Member states’ customs authorities will play an important role in the enforcement of the regulation. In the event of suspected violations, investigations will be conducted by the European Commission or the competent national authorities. If it is determined that a product has been produced using forced labor, they may:
- ban the product in question
- issue an order for the removal of the product from the EU market, and/or
- issue an order for the product's disposal.
The scope of data to be provided to customs authorities during the release for free circulation and export customs procedures will be expanded. For example, more detailed information about the product, as well as detailed data regarding the manufacturer and producer, will need to be provided.
To comply with due diligence requirements and to ensure the smooth operation of supply chains, it may be necessary to review business and corporate governance processes, as well as the supply chains themselves.
KPMG experts are happy to assist you in preparing for compliance with the new obligations.
