The European Parliament yesterday adopted a resolution calling for an import ban on products produced with forced labour from entering the EU market. This is deemed as an important milestone in ensuring that forced labour does not exist in the supply chains of European companies.
Some terms of the resolution include:
1. Products of forced labor from a particular place and exporter/producer shall be prohibited, products of forced labor from a particular region and products of forced labor from a particular transport vessel shall be prohibited if the State supports forced labor;
2. The administrative authorities of EU countries shall take customs restrictive measures on their own initiative or based on the information received. When they consider that there is sufficient evidence that the goods are manufactured or transported by forced labor, they will detain these goods at the EU border;
3. After the goods are detained by the customs, the importer has the opportunity to refute the allegations of forced labor and provide evidence to prove that the goods were not manufactured or transported by forced labor; If the evidence is accepted, the goods can be released. Evidence that there is no forced labour is based on ILO standards;
4. Even if the goods come from a specific area where the State supports forced labor, if the company can prove that forced labor has not been used or remedial measures have been taken, and the indicators of forced labor are no longer violated, the seized goods will also be released;
5. The European Commission, in particular the chief trade enforcement officer, and the administrative authorities of EU countries will be empowered to investigate trade in forced labour products; The investigating authority shall detain the goods at the place of entry through a formal and safe complaint procedure based on information provided by stakeholders, non-governmental organizations or affected workers;
6. The import restrictions of the companies concerned will be lifted only after remedies are provided to the forced labor workers;
7. The investigating authority may require the company to disclose relevant information about subsidiaries, suppliers, sub suppliers, contractors and business partners in the supply chain to establish the supply chain traceability process;
8. In order to help importers identify whether the imported products are forced labor, the EU will establish a public list of companies, regions and producers involved in forced labor
These terms, adopting the "presumption of guilt", which directly regards the products from specific regions as "forced labor products" and detains them in the customs and proposing to establish a blacklist of enterprises and regions involved in "forced labor", are generally same as the Xinjiang-related Act of the United States.
Prior to this, there is hearsay among the market that the EU was "following” the United States, and would legislate to prohibit the entry of forced labor products into the EU, so as to suppress Chinese enterprises.
Judging from the results of U.S. sanctions against Chinese photovoltaic enterprises, it was just a self-harming behavior, especially after the investigation against photovoltaic enterprises in Southeast Asia, resulting in a real crisis in the U.S. domestic photovoltaic industry and led to collective protests by U.S. photovoltaic enterprises. In May alone, the White House has received protest letters from 20 governors, 22 senators and 85 members of the House of Representatives.
Europe is the largest overseas PV market for China (46% of module exports in 2021), and the resolution may impose a even harder impact on China's PV industry once it’s implemented.
However, the decision will be tough to make when facing supply interruption of natural gas and coal and other energy due to Russia-Ukraine conflict.
