Banning Goods Made With Forced Labour, At Border Itself Seems More Advisable Than Banning After Entering Eu Market !
Karma Management has now become Karma Management Global Consulting Solutions Pvt. Ltd. which was incorporated in the year 2004, having now successfully completed almost 18 years of its existence.
As late as April 2021, Karma Global took a very bold step of venturing into foreign shores in terms of shoving up its business in countries like US, UK, UAE, Canada, Philippines and South East Asia.
It has already made its mark in terms of providing excellent services in the areas of payroll, outsourcing , recruitment and talent acquisition, and regulatory compliances in these foreign countries as per feedback and testimonials shared by Global Clients.
Karma Global thus entails the compliances of global clients in these countries as well , and in keeping with the global scenario, it does keep a very hard track on the status of global compliances all around the world and especially so, it keeps an update on what is happening as far as people, wages, work and benefits are concerned across the globe.
Let Us Look Closely At How Banning Goods Happened And What Is The Impact ?
What is forced labour?
Forced labour is defined by the International Labour Organization (ILO) as “all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily.”
It refers to situations in which persons are coerced to work through the use of violence or intimidation, or by more indirect means such as manipulated debt, retention of identity papers or threats of denunciation to immigration authorities.
Why is this initiative needed?
Forced labour, including forced child labour, continues to be a major global issue, with the ILO estimating the global number of people in a situation of forced labour at around 27.6 million. Combating forced labour and promoting responsible business practices are priorities of the EU’s agenda on business and human rights.
The continued existence of forced labour illustrates, however, the need for additional measures, also aimed at products. The Commission is therefore proposing to complement this set of existing and pending measures with legislation that specifically prohibits the placing of forced labour products on the EU market.
What is the planned scope for this new legislative instrument?
The legislative proposal will effectively prohibit the placing on the EU market of products made with forced labour, as well as their export from the EU.
Forced labour takes place in many industries and in every continent in the world, including Europe. The majority of it takes place in the private sector, some of it is imposed by States. The aim of the proposal is not to target specific countries, companies or industries, but rather to effectively ban the selling of forced labour goods in the EU, irrespective of the source. Therefore, the proposal covers all products made available within the EU market, meaning both products made in the EU for domestic consumption and for export, as well as imported goods.
Are some sectors more affected by forced labour than others?
Forced labour is found in a large number of sectors. Some service sectors, textiles, mining and agriculture are among the sectors where forced labour has frequently been reported. All industry sectors are covered by this initiative.
Who will enforce the forced labour instrument?
EU Member States will be required to designate competent authorities responsible for implementing and enforcing the Regulation, with the necessary powers and resources. The Commission will support Member States for instance by ensuring the availability of a public database, efficient coordination among the Member States’ competent authorities and by issuing guidelines.
Member States’ customs authorities will be in charge of enforcement at the EU borders. They will rely on the decisions by Member States’ competent authorities to identify the products concerned and carry out controls for imports and exports.
How will the forced labour instrument work in practice?
The investigative process will be carried out in two phases. In the preliminary phase, the authorities assess if there are well-founded reasons to suspect that products have been likely made with forced labour. If they determine that there is a substantiated concern of forced labour, they will proceed to the investigation phase.
Which tools will be made available for authorities and companies?
The Regulation also provides for the creation of a database of forced labour risk areas or products. Furthermore, a new platform (EU Forced Labour Product Network) will be created to ensure structured coordination and cooperation between competent authorities and the Commission.
The Commission will also support companies by issuing guidelines, which could include guidance on due diligence and advice on where and how to detect forced labour in their supply chains.
Are SMEs excluded from these rules?
The Regulation focuses on products, irrespective of the size of the companies involved. However, the Commission is well aware of the particular situation of SMEs and has taken this into account both in the design and enforcement of the Regulation. For example, competent authorities will take into account the size and resources of the companies when carrying out their assessments and investigations. The Commission also anticipates that there will be a need to support SMEs with guidelines, which could include guidance on how to carry out various steps of due diligence in relation to forced labour, and how to ensure consistency with requirements under other relevant EU legislation.
What happens if companies do not comply with the new rules?
If the authorities have established that a product was made by forced labour, it cannot be sold in the EU, or exported from the EU. In case the product is already on the market, the company in question will be required to withdraw it from the market. It will also be required to dispose of the products. The economic operator concerned will bear the costs of disposing of the prohibited product. This will provide a strong deterrent and incentive for companies to comply. Furthermore, if a company does not follow the decision of a Member State under this Regulation, they face penalties under national law.
What are the benefits for citizens?
Social justice is an issue close to the heart of European citizens. According to the 2021 Eurobarometer on social issues, nine in ten Europeans consider a social Europe to be important to them personally. One of the most key issues singled out by respondents was fair working conditions. At the same time, 71% of respondents see a lack of social rights as a serious problem. There is therefore an expectation that the EU should act in order to ensure the respect of labour rights and other human rights.
Once the new Regulation will be in force, European consumers will feel more confident that the products that they are buying have not been made using forced labour.
What are the benefits for companies?
Businesses will benefit from increased public trust and credibility to customers, as well as lower reputational and brand risk. Social sustainability will be enhanced and a coherent set of rules across the EU will be easier for companies to follow.
What are the costs for companies?
Companies of all sizes have increasingly invested in transparency of their supply chain, which is a key tool for identifying whether or not there is a risk of forced labour. The costs will vary depending on the size of the company, the sector and on the supply chain for a given company. Normally, the costs will relate to the procedures needed to monitor the supply chain, administrative costs for engaging with competent authorities and customs authorities.
What is the expected impact on forced labour worldwide?
The new instrument will introduce a prohibition on placing on the EU market products made with forced labour, no matter where they are made. The prohibition will therefore contribute to the international efforts to eradicate forced labour. As for companies, the Regulation will act as an additional incentive to ensure that their supply chains are forced-labour free.
Now The Main Topic Of Banning On The Border Lines Itself Rather Than Withdrawing From Eu Market
The European Commission’s proposal on banning goods made by forced labour is a step in the right direction. But these products must be stopped at the border as opposed to withdrawing them after they have already entered the EU market
Recent statistics from the International Labour Organisation show that the number of victims of forced labour has been on the rise since 2016, amounting to nearly 28 million people worldwide. They are usually the most vulnerable: migrant workers whose documents have been confiscated and are forced to work long hours in unsafe conditions with little to no pay, often producing goods aimed at Europe.
It is high time for the European Union, as one of the largest trading blocs in the world, to stand among the United States and other global partners in taking firm action against forced labour.
In the US, the Tariff Act of 1930 prohibits the import of goods manufactured wholly or partly by forced labour. However, the rule only began to have teeth in 2015, when Congress closed a major loophole in the law. This has allowed the US Customs Border Protection (CBP) to initiate investigations and seize and detain imports suspected to be tainted with forced labour.
For example, in 2019, the CBP banned the import of disposable rubber gloves manufactured by WRP Asia Pacific in Malaysia due to the company’s treatment of migrant workers. The workers were forced to pay exorbitant recruitment fees – a far too common practice that often leads to debt bondage and forced labour. A year later, under pressure, the company started a remediation programme aimed at repaying the recruitment fees demanded from the workers.
It is now up to the European Parliament to strengthen the proposal so that we can be certain that no products tainted with forced labour enter the EU market. The ban will be a crucial tool, together with the corporate sustainability due diligence legislation, to strengthen corporate accountability and uphold human rights in global value chains.
European Union’s Earlier Action Plan
On 14 September 2022, the EU Commission published its proposal for a Regulation introducing a ban on the placing and making available on the EU market or export from the EU market of products made using forced labour .
Following on from Commission President von der Leyen’s announcement of the proposed ban in her State of the Union Address last year, under the Proposed Regulation, products found to have been made using forced labour cannot be sold in, exported from or imported into the EU.
The proposal combines the EU’s human rights agenda priorities of combating forced labour and promoting corporate sustainability due diligence standards. It further adds to the series of EU measures that will impact supply chains, including new proposals for rules on foreign subsidies, corporate sustainability reporting and due diligence, carbon taxes, deforestation , and the single market emergency instrument.
Scope – Key steps and the main takeaways
The European Parliament and the Council of the European Union will scrutinize further the proposal with a view to agreeing on a final version of the text. Once adopted, the regulation foresees an implementation period of 24 months after its entry into force.
The Commission will also issue guidelines within 18 months form the entry into force of this Regulation. The guidelines will include force labour due diligence guidance and information on risk indicators of force labour.
In terms of cross-border trade, customs authorities in EU member states may play a key role in the enforcement of the regulation.
Customs clearance delays can be expected in certain cases and customs authorities may request additional information about the products and their manufactures and suppliers.
European and international companies are advised to conduct a full assessment on their operations along the supply chain with a view to complying with the EU regulation on prohibiting products made with forced labour.
Dentons’ Trade team will continue to monitor the EU legislative process and report as events unfold.
Karma Global’s integrated regulatory compliance services runs on an expert machinery that is agile and consistent and is simplified for the global clients in a manner that they can easily grasp the subject matter as against the tangled complexity and risk , which gives the global clients the power of confidence and control.
Karma Global is well aware that the lengthening list of supranational regulations is burden enough for any multinational business, while each jurisdiction implements its regime with its own unique local twists , creating a maze of localized regulations.
Also, it is universally known that compliance timelines are always tighter given the stipulated dates. Sometimes simple oversights on the part of the employers can threaten to damage reputations and jeopardize operations and therefore, such Organizations like Karma Global make it a point to reach out to employers and establishments struggling with compliances in order to keep pace with them so that staying compliant and in good standing with the Government’s rules, across the entire operational footprints is made simpler and easy by Karma Global Tech Firm.
For global clients facing urgent one-off regulatory challenges – perhaps a major hurdle that puts the global clients in an embarrassing situation, Karma Global has all the capabilities , competencies and expertise to scale-up quickly and easily thanks to a flexible structure and global resource base with international, regional and local hands to deal with any compliance complexities
Proprietory blog of Karma Global
This blog has been collated and compiled by the internal staff of Karma Global with the knowledge and expertise that they possess, for its monthly newsletter Issue 06 of December 2022 and in case of specific or general information or compliance updates for that matter, kindly reach out to the
Marketing Team – Kush@karmamgmt.com / yashika@karmamgmt.com