Eradicating Forced Labor in Transnational Value Chains: The Geoeconomics of the EU Forced Labour Regulation and Corporate Due Diligence
Modern slavery continues to be hidden in plain sight. The difficulties of confronting forced labor within global supply chains are revealed through its ability to elude emerging, unilateral regulatory efforts. Trade restrictions placed on nations in response to state-imposed forced labor often introduce severe diplomatic consequences. Rigorous international collaboration and technological developments are thus increasingly demanded in order to address the ongoing humanitarian crisis.
Modern slavery remains one of the most severe human rights violations in the global political economy. According to the International Labour Organization (ILO), over 27 million people worldwide are trapped in forced labor, generating an estimated $236 billion in illegal annual profits. Rather than operating purely in hidden, illicit black markets, forced labor is embedded within legitimate global supply chains—from agricultural harvesting and textile manufacturing to mineral extraction and electronics assembly.
For decades, international attempts to curb forced labor relied on voluntary corporate social responsibility (CSR) guidelines and non-binding disclosure codes. Today, a major shift toward binding trade prohibitions and extraterritorial supply-chain liability is underway, led by measures such as the European Union’s Forced Labour Regulation (EUFLR) and the Corporate Sustainability Due Diligence Directive (CSDDD). This paper analyzes how unilateral trade bans and mandatory due diligence frameworks are restructuring global supply chains, reshaping North-South economic relations, and combating systemic state-imposed forced labor.
From Voluntary Reporting to Mandatory Market Exclusion
Early legislative efforts to address modern-day slavery—such as the UK Modern Slavery Act—focused on transparency, requiring companies to publish annual statements outlining steps taken to address forced labor in their supply chains. However, these disclosure regimes were criticized for lacking direct enforcement mechanisms or import restrictions.
The regulatory environment has shifted from reporting requirements to market exclusion in three main ways. First, the EU Forced Labour Regulation (EUFLR), unlike disclosure directives, the EUFLR prohibits any product made wholly or partially with forced labor at any point in its supply chain from being imported, exported, or sold within the EU single market. Second, the Universal Scope Across Supply Tiers. The prohibition applies to all companies regardless of size, sector, or country of origin, covering every stage from raw material extraction to final assembly. Third, through enforcement powers, National competent authorities possess sweeping powers to investigate suspected supply chains, issue product bans, force the removal of non-compliant goods from the market, and mandate their destruction.
The Geopolitics of State-Imposed Forced Labor
A significant challenge in eradicating modern slavery involves state-imposed forced labor, where sovereign governments utilize state apparatuses to exact work under menace of penalty. Examples include state-directed labor programs in agricultural harvesting, forced prison labor, and systemic state coercion targeting ethnic or political minorities.
Enforcing trade restrictions against state-imposed forced labor introduces severe diplomatic complexities:
1. Jurisdictional and Audit Resistance:
Sovereign states accused of state-imposed forced labor frequently deny entry to independent third-party auditors, preventing multinational corporations from conducting verified supply chain mapping.
2. Economic Retaliation:
Imposing product bans against key industrial sectors can trigger counter-sanctions, trade disputes, and diplomatic retaliation from affected host governments.
3. Supply Chain Disruption:
Highly concentrated sourcing networks—such as those for rare earth refining, solar panel component manufacturing, or cotton production—mean that enforcing forced labor bans can temporarily disrupt critical green technology transition inputs.
Corporate Due Diligence and the Compliance Shift
For multinational corporations, compliance requires moving beyond superficial vendor questionnaires toward full supply-chain traceability. Under the EU CSDDD and EUFLR frameworks, companies must map their tiers of suppliers, conduct risk assessments, establish grievance mechanisms, and verify working conditions deep within intermediate tiers.
This shift creates a clear divergence in corporate strategies:
- Responsible Remediation: Working with suppliers in high-risk regions to improve working conditions, establish fair wage contracts, and eliminate abusive recruitment fees.
- Strategic Disengagement: Abruptly severing ties with high-risk regions or suppliers to avoid regulatory penalties, which can inadvertently leave vulnerable workers without income or legal protection.
For developing nations, strict compliance standards carry the risk of economic exclusion if domestic suppliers lack the capital or capacity to satisfy complex European due diligence protocols.
Policy Recommendations for International Governance
To eliminate forced labor from transnational supply chains without destabilizing trade with developing nations, international institutions and state actors should pursue four policy measures:
1. Harmonize Global Forced Labor Investigation Standards:
Regulatory bodies in the EU, US, UK, and allied economies must align evidence thresholds, investigation protocols, and product ban lists to prevent non-compliant goods from being rerouted through alternative secondary markets.
2. Provide Technical and Financial Assistance to Developing Exporters:
Development finance institutions should fund capacity-building programs for small and medium-sized enterprises (SMEs) in host nations, helping them meet international labor verification standards.
3. Establish Standardized “Responsible Disengagement” Guidelines:
Frameworks must define when a corporation should work to remediate labor violations locally versus when it must exit a market, ensuring that disengagement does not worsen worker vulnerability.
4. Expand Digital Traceability and Open-Source Supply Chain Mapping:
Multilateral organizations should support open-source, blockchain-enabled, and satellite-monitored supply chain mapping projects to independently track raw materials from origin to market.
Conclusion
The transition from voluntary corporate disclosure to enforceable trade bans marks a milestone in the global fight against modern slavery. By leveraging access to the world’s largest single market, frameworks like the EU Forced Labour Regulation turn international human rights standards into binding economic requirements. Eradicating forced labor requires sustained diplomatic engagement, robust third-party verification, and equitable capacity-building to ensure that global trade operates without exploiting vulnerable populations.
Bibliography
European Commission, 2022. Proposal for a Directive on Corporate Sustainability Due Diligence and amending Directive (EU) 2019/1937. COM(2022) 71 final. Brussels: European Commission.
European Parliament and Council of the European Union, 2024. Regulation on prohibiting products made with forced labour on the Union market (EUFLR). 2022/0269(COD). Brussels: European Union.
International Labour Organization (ILO), 2022. Global Estimates of Modern Slavery: Forced Labour and Forced Marriage. Geneva: International Labour Office.
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