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30 Jun 2023

Tom Wills, Business & Human Rights Resource Centre

How import bans can help tackle forced labour in global supply chains

Conflict, geo-political instability, trade tensions, and inflation are contributing to an ongoing cost-of-living crisis. This, combined with the consequences of climate change, means forced labour risks for vulnerable workers are increasing globally. According to a recent ILO report, some 27.6m people were estimated to have been trapped in forced labour in 2021.

Such findings suggest too many companies continue to turn a blind eye to this reality, effectively defaulting on the UN Guiding Principles-grounded human rights responsibilities.

In the absence of effective voluntary action from companies, recent regulatory efforts to locate human rights more centrally within corporate activity may represent a watershed moment for corporate accountability globally. In respect of forced labour, import bans are emerging as a particularly important tool by which states can ensure companies step up. The concept is simple: where there is evidence of forced labour in a supply chain authorities can block tainted goods from being imported and sold.

The US Tariff Act is the most established of these laws and has been used extensively since 2016 to impound goods suspected of being produced as a result of forced labour. In 2021, the US also passed the Uyghur Forced Labour Prevention Act (UFLPA), which established a rebuttable presumption that goods from the Xinjiang region of China, where forced labour risks are particularly high, are prohibited from entering the US.

The US isn’t alone. In the last two years Canada and Mexico have enacted their own forced labour import bans, while the EU is currently developing a ‘Forced Labour Regulation’ which seeks to achieve similar aims. Forced labour import bans are also being proposed by lawmakers from Australia to the UK.

This legislative trend offers an opportunity for jurisdictions to learn from each other. How can these bans get companies to minimise the risk of forced labour? And how can they ensure victims receive remedy where companies fail?

Although these laws are fairly new, some key precepts are emerging which policy-makers, including those in the EU developing the Forced Labour Regulation, should bear in mind.

Reversing the burden of proof: Companies hold a wealth of information about their goods, suppliers and internal processes. When authorities identify forced labour risks in a supply chain (either following a credible complaint or from their own investigations) companies should prove they aren’t linked to that abuse – rather than remaining cloaked in innocence until authorities are able to prove otherwise. The UFLPA is the only existing ban designed in this way, with importing companies required to prove to the satisfaction of US authorities their goods aren’t sourced from Xinjiang.

Providing remedy for victims: It’s not enough for import bans to solely block the trade of goods produced by forced labour. This approach risks encouraging companies to cut and run when issues come to light, leaving victims of forced labour high and dry. Instead, when companies are found to have forced labour in their supply chains, they should be required to remediate victims and change their purchasing practices. This may include reimbursing workers’ recruitment fees, ensuring passports are returned, and paying compensation; it must also involve ensuring the conditions through which forced labour was able to occur are brought to an end.

Supporting corporate transparency: Forced labour import ban legislation should contain a transparency component, requiring companies to proactively disclose supply chain information. To be effective, any law will require civil society groups to act as watchdog, highlighting where forced labour risks exist and where companies are failing to address them – but they need access to information to perform that role effectively. Current laws fail to deliver on transparency and disclosure, leading 87 investors to call on the EU to ensure the forthcoming Forced Labour Regulation meets this shortcoming by “requiring all companies to map and publicly disclose their suppliers”.

Employing ‘blanket application’ where necessary: Rather than focusing only on individual products or shipments which may feature forced labour, authorities should have the power to impose more comprehensive import bans – over whole companies, sectors or regions – in limited situations where there is clear evidence of widespread forced labour. This would give authorities the necessary tools to tackle the most severe and intractable forms of forced labour, including countries and regions where state-imposed forced labour is widely known to be happening.

A harmonised approach internationally: Effectively transforming business practices requires businesses to fully understand their duties and responsibilities, wherever they are operating and across their full supply chain. A harmonised approach, where companies are held to a similar minimum standard regardless of where they’re operating, is the solution. If jurisdictions diverge, goods produced as a result of forced labour will inevitably be dumped on those markets with lower standards.

Waiting for companies to voluntarily rid their supply chains of forced labour has failed, and legislators around the world are grasping the need for more assertive approaches. Forced labour import bans which include the above elements at a minimum have a powerful ‘stick’ potential - using the threat of removing market access to push companies to clean up their supply chains and deliver remedy to exploited workers.