The European Union Apparel Market Is Facing Serious Forced Labor Allegations

A report issued last week alleges that a “substantial volume” of clothing is tainted with forced labor and is significantly tied to China’s Xinjiang Uyghur Autonomous Region (“Uyghur Region”). The report, written by several researchers from the Helen Kennedy Centre for International Justice at Sheffield Hallam University (“SHU”) in the United Kingdom, claims that the apparel industry, including 39 well-known brands such as H&M and Zara, is at high risk of sourcing materials, particularly cotton and PVC, from the Uyghur Region using forced labor and state-imposed labor transfer programs.

Specifically, four of the investigated leading Chinese apparel companies are claimed to have “significant ties” to the Uyghur region through sourcing, subsidiaries, and/or manufacturing. These companies are found to be linked to various western brands, producing allegedly forced labor-made goods that are ultimately entering the European Union (“EU”) marketplace. The report claims that a substantial volume of these tainted apparel is making its way into the EU without restriction.

Based on these findings, the report concludes that the high number of companies identified in this supply chain mapping study indicates that the EU policy is not protecting its consumers from buying products made with Uyghur forced labor.

Unlike the United States which has been rigorously implementing the Uyghur Forced Labor Prevention Act (“UFLPA”) since 2022, the EU lacks strict regulations in place that target forced labor-made goods. The EU Parliament proposed a draft regulation in October 2023 that puts in place a framework to investigate the use of forced labor in companies’ supply chains, but the regulation is yet to be passed and implemented. Similarly, the EU Parliament published the EU Corporate Sustainability Due Diligence Directive (CS3D) that obligates companies to do their “due diligence” in ensuring child and forced labor is not used in their supply chains. The directives, however, still require formal approval by the Legal Affairs Committee and the European Parliament as a whole, as well as by the Council (EU governments) before it can enter into force.

SHU reports on forced labor have increased rapidly in recent years, all of which document the use of forced labor and the ties of various industries to the Uyghur region in China. These reports have also gained significant attention from legislators, specifically in the United States, where the Department of Homeland Security and the Customs and Border Protection put heightened weight on SHU reports when implementing the UFLPA.

It is unclear whether this new SHU report will lead to increased scrutiny on the movements of apparel into and outside the EU market, but it is recommended that companies do their due diligence starting now to accelerate their efforts to trace their supply chain and to minimize the risk of potential forced labor allegations and product detentions.

If you have any questions regarding the content of this alert or forced labor laws in general, please contact Mark Ludwikowski (mludwikowski@clarkhill.com; 202-640-6680), Sally Alghazali (salghazali@clarkhill.com; 202-572-8676), or other members of Clark Hill’s International Trade Business Unit.

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