Article 11 and Integration into the wider compliance environment

Feedback Forced Labor Ban

Consequently, German industry insists that Article 31 should be made contingent upon the comprehensive completion of what we understand is the core precondition for a workable anti-forced-labor regulation in Article 11. It is the position of BDI that the database should be developed, field-tested and businesses given adequate time of six months to make the necessary technical arrangements before the forced labor ban comes into effect. We strongly object to all plans that fail to provide for the time necessary to make adequate preparations for regulatory compliance. In short, it is unacceptable that the regulation would enter into force at the same time that the database would be made publicly available.

Article 11 and Integration into the wider compliance environment

Article 11(1) explicitly states that the database is to be non-exhaustive. For economic operators this means that violations of Article 3 – and the ethical, reputational, legal and economic associated with such a violation – become harder to gauge. In order to (a) increase the likelihood of keeping goods created with forced labor from the EU’s single market, (b) to decrease the compliance risk as well as compliance costs for economic operators, and (c) minimize the risk of regulatory arbitrage or fragmentation, BDI suggests that the entry into force of the forced labor ban is coordinated sensibly with the proposal for a European Corporate Sustainability Due Diligence (CSDD) process. Otherwise, the requirements under Articles 4 and 5 for provision of information within the envisaged time frames will not be factually possible. Therefore, the enactment and transposition into national law of a EU directive on Corporate Sustainability Due Diligence has to be concluded at least with the scope of forced labor prevention, before any import ban on such products can effectively executed. Ideally, any forced labor ban would also be coordinated with the Commission’s efforts regarding Corporate Sustainability Reporting. In terms of compliance, DG TRADE, DG GROW, DG FISMA and DG JUST regulate the identical business habitat. We encourage the Commission to set up a working timeframe for the above-mentioned regulations and delegated acts to come together in a way that companies can built their compliance architecture efficiently. Regardless of jurisdiction and competence, we insist that it is in the EU’s best economic interest to do more than just regulate business behavior, but to enable companies to abide by the highest standards at the lowest costs possible.