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EU set to ban forced-labour products with China in its sights

Provisional deal empowers Brussels to investigate and destroy products and could raise trade tensions with Beijing

The European Union has agreed to ban products made with forced labour in a move that could raise trade tensions with China. Photograph: Olivier Matthys/EPA

Tue Mar 5 2024 - 12:30

The European Union (EU) has agreed to ban products made with forced labour in a move that could raise trade tensions with China.

Under the deal, struck on Tuesday morning, Brussels would monitor reports of forced labour around the world and seize and destroy products breaching the ban.

The US in 2022 blocked all imports from Xinjiang, where it alleges Beijing compels Uyghur Muslims to work. The EU imports large amounts of solar panels from the region and Volkswagen operates a car assembly plant there.

VW denies any wrongdoing but is conducting an inquiry after media reports its joint venture used forced labour to build a test track. Human rights groups estimate that more than 1 million Uyghurs and other Muslims were detained over a period of several years, while thousands have been reported to have been transferred out of the region to work in factories.

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“It is appalling that in the 21st century slavery and forced labour still exist in the world. This hideous crime must be eradicated and the first step to achieve this consists in breaking the business model of companies that exploit workers,” said Pierre-Yves Dermagne, deputy prime minister of Belgium, which holds the EU’s rotating presidency.

The deal requires final approval from member states and the European Parliament.

EU officials said they could not target China alone since that could breach World Trade Organisation anti-discrimination rules.

But Anna Cavazzini, a German Green who chairs the European Parliament’s internal market committee, said: “People worldwide suffer from forced labour, in places such as Xinjiang, with the solar cells or T-shirts they produce often ending up in our stores and then in our homes. This is now a thing of the past. The EU will use the might of its market to fight forced labour worldwide.”

The EU has recently stepped up action against China as its trade deficit hit record levels. It has opened an investigation into imports of electric vehicles that could lead to tariffs, and took its first action under new anti-subsidy powers, which could block a train maker from a contract in Bulgaria.

According to the International Labour Organisation, there were 27.6 million people in forced labour in 2021, with 17.3 million in the private sector, 3.9 million exploited by governments and 6.3 million sex workers.

The European Commission would establish a database with information about forced-labour risks in different regions and industries, and use it to assess which products must be investigated.

The provisional agreement has thresholds for action and gives Brussels wide discretion on launching investigations into non-EU countries. Only if there is a large volume of goods with widespread forced labour would there be a probe. Seized goods would be donated to charity, recycled or destroyed.

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If forced labour is used in “critical products”, a company could simply be obliged to withdraw them from sale until it can demonstrate that there was no more forced labour in their operation.

If it only involves a part in a product, such as a car, the part is destroyed rather than the entire vehicle.

The US has impounded thousands of VW-made cars at its ports after a supplier found a Chinese subcomponent in the vehicles that breached its anti-forced labour laws.

Samira Rafaela, a Dutch Liberal MEP who worked on the proposal, said the law was “ground breaking”.

“It is a step forward in achieving fair trade and cleaning up supply chains while prioritising human rights.”

Legislators now face a race against time to finalise and vote on the deal before EU elections in June, after which there is a six-month hiatus as a new commission takes office.

There is the possibility that some governments might try to unpick the deal: Germany and others recently stymied a law to clean up supply chains after provisional agreement. – Copyright The Financial Times Limited 2024

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