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EU move to ban forced labor goods poses a test for SE Asia

April 4, 2023

The proposed legislation is causing consternation in Southeast Asia, where local businesses are currently working to adapt to the EU regulations on the environment and sustainability.

Garment workers make clothes at a factory in Phnom Penh
The vast majority of the raw materials used by Cambodia's garment factories are imported from China, where information on sourcing is obscureImage: Wu Changwei/Xinhua/picture alliance

Last September, the European Commission proposed legislation that would ban the import of products made with forced labor. It's a complicated move that some say doesn't go far enough — and others see as another thick layer of bureaucracy that foreign companies must now adapt to amid numerous other EU regulations on the environment and sustainability.  

An estimated 28 million people in the world are suffering under forced labor conditions, more than half of whom are in the Asia-Pacific region. The number of people in forced labor has risen by more than a tenth from 2016, according to a 2022 report by the United Nations' International Labor Organization.

When EU officials first proposed the legislation last year, it prompted accusations that the EU really intended to target imports from China's Xinjiang region, where the Chinese Communist Party has led a brutal crackdown on Muslim Uyghurs for years. There are also widespread reports of modern slavery in the region's cotton fields, mines and textile factories.

All about China?

Three months before the European Commission proposed this legislation, the European Parliament called for similar laws to tackle human rights violations in Xinjiang.

The US government has deemed Chinese authorities' actions in the Xinjiang region to be a "genocide," a term also adopted by the Dutch parliament. In 2021, Washington introduced legislation that effectively bans most imports from Xinjiang.

Last August, the UN special rapporteur on contemporary forms of slavery, Tomoya Obokata, published a report that stressed "it is reasonable to conclude that forced labor among Uyghur, Kazakh and other ethnic minorities in sectors such as agriculture and manufacturing has been occurring in the Xinjiang Uighur Autonomous Region of China."

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However, Brussels has opted for a blanket ban on imported goods that used forced labor because of concerns that specific legislation against China would irk Beijing, with which many in the EU want to remain on good terms. Analysts have also said a China-specific ban could have run afoul of the World Trade Organization's anti-discrimination laws.

But supporters of the proposed legislation have stressed it is intentionally universal in nature and that the EU is abiding by international norms. The United Nations' Agenda 2030 commits the world to ending forced labor by that year.

Henrike Hahn, a German Green lawmaker and member of the European Parliament's China delegation, pointed out that the EU will use internationally recognized definitions of forced labor set out by the International Labor Organization, a UN body, rather than its own classifications. 

"Correspondingly, this legislation is not focused on one region in particular but applies to corporate- or state-driven forced labor across Southeast Asia and globally," she added.

New rules a corporate headache

Nonetheless, the move is causing some consternation in regions like Southeast Asia, where local businesses are already having to adapt to EU regulations.

Incoming EU legislation on deforestation and sustainable products has led to a major dispute with Malaysia and Indonesia, the world's two largest producers of palm oil, whose imports the EU wants to phase out by 2030.

"Countries in Southeast Asia are looking at the various sustainability-linked initiatives coming out of the EU with some degree of concern," said Chris Humphrey, executive director of the EU-ASEAN Business Council, which represents European businesses in Southeast Asia.

While responsibility will fall on the EU member states to investigate whether imported goods are tainted by forced labor, it will add pressure on local businesses to have a more detailed picture of their own supply chains. Many of the goods exports from Southeast Asian states to EU markets are processed from raw materials imported from elsewhere or include components sourced from other firms.

Cambodia, for instance, exported around €4.3 billion ($4.7 billion) worth of goods to the EU last year, most of which was garment and footwear products, according to local government data. But the vast majority of the raw materials used by Cambodia's garment factories are imported from China, where information on sourcing is obscured.

Many small companies will be unable to investigate their entire supply chains, experts have said. 

"There is a clear need for enhanced communications and capacity building support on these initiatives and how they might impact on businesses operating in the ASEAN region," Humphrey added.

EU officials have said those conversations are ongoing.

"We had several conversations with Southeast Asian colleagues about these proposals, which we will continue in the weeks and months to come," Igor Driesmans, the EU ambassador to ASEAN, told DW.

"We are key trading partners who share an interest to improve livelihoods and help to protect and prevent major human rights abuses and violations by supporting the setup of the necessary regulatory frameworks within which the business can operate in a sustainable, environmentally friendly and humane manner," he added.

"Our recent proposals are meant to do just that."

Not far enough

Observers expect the European Commission to make significant alterations when it publishes its draft report, which could be later this year. It could still be several years before the legislation is enacted.

On March 3, the European Parliament's Committee on the Internal Market and Consumer Protection proposed a number of amendments, including potential forms of remediation for workers affected by forced labor.

For the legislation to be successful, it will require enormous resources to investigate supply chains across the region, said Sallie Yea, an associate professor focusing on human trafficking and modern-day slavery at La Trobe University in Melbourne, Australia.

Questions about the capacity of businesses — particularly small and medium enterprises — to manage this shift remain unanswered.

"Like many other demand-side responses to forced labor, bans on imports fail to address the structural causes of vulnerability to forced labor in the region, including displacement due to climate change and conflict," said Yea.

Hahn, the MEP, noted that the proposed legislation wouldn't give the national authorities of EU member states the power to hold goods that enter the EU until they can prove they are not linked to forced labor. Instead, the proposed system is "retroactive" and the burden of proof falls on national authorities or civil society organizations to investigate.

"There are still too many holes in the system we have to work on," she said.

Edited by: Srinivas Mazumdaru

Editor's note: A previous version of this article included an incorrect thumbnail image for a related video on cocoa farmers in Africa.