Forced Labour Trade Bans and Human Rights Due Diligence (HRDD): Why Responsible Contracting Matters
RCP Policy Brief
February 2025 – In this Policy Brief, "Forced Labour Trade Bans and Human Rights Due Diligence (HRDD): Why Responsible Contracting Matters," RCP analyzes how international supply contracts can help companies comply with or prevent infractions of forced labor bans in the United States (US) and European Union (EU) markets. Specifically, it reviews Section 307 of the 1930 US Tariff Act, the 2022 Uyghur Forced Labor Prevention Act (UFLPA), and the 2024 EU Forced Labour Regulation (EUFLR).
This Policy Brief makes two central arguments:
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To avoid violating forced labor bans, companies should carry out effective human rights due diligence (HRDD) to identify, prevent, mitigate, and remediate instances of forced labor in their supply chains.
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Responsible contracts are critical for effective HRDD and can help ameliorate the risk of forced labor in supply chains. Companies should review their contracts to ensure they are due diligence-aligned. This means moving away from the traditional risk-shifting approach toward a shared-responsibility approach.
Recommendations
The brief recommends that companies wanting to reduce their exposure to trade ban enforcement while increasing the resilience of their supply chain should:
✔ Implement HRDD processes across their operations and supply chains
✔ Familiarize themselves with the core principles of Responsible Contracting and work with legal counsel to integrate the principles into their contracts as part of their HRDD.
✔ Review the table below to understand how responsible contracts enable effective prevention and remediation, which can:
(1) reduce the risk that an investigation would escalate and result in the issuance of a ban (pre-ban) and
(2) expedite resolution after a ban has been issued (post-ban).
Addressing Forced Labor Through HRDD and Responsible Contracts
Human Rights
Due Diligence (HRDD)
Conducting effective remediation to eliminate forced labor indicators and address rights holder
grievances can:
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Expedite the
modification or lifting of a WRO with respect to future shipments. (Goods that have been sized because they're made with forced labor are never allowed into the US).
Same as above.
Responsible Contracts
Conducting effective remediation to eliminate forced labor indicators and address rights holder
grievances can:
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Lead to the authorization to resume shipping and importing of goods into the EU.
Conducting effective preventive measures as part of HRDD can:
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Reduce the occurrence of forced labor, thus reducing the risk of enforcement.
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Potentially prevent escalation of investigation when forced labor is indicated
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Allow imports to continue.
Conducting effective
remediation measures as part of HRDD can:
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Potentially prevent escalation of investigation if forced labor is indicated; and
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Allow a company to continue to import even if the goods were found to have been made with forced labor.
Pre-Ban: Before an investigation is launched and a ban is issued
Conducting effective preventive measures as part of HRDD can:
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Reduce the
occurrence of forced labor, thus reducing the risk of enforcement.
Conducting effective
remediation measures as part of HRDD can:
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Effective remediation will not impact enforcement, as tainted goods cannot enter the US market, regardless of remediation efforts. However, remediation may help to expedite a ban modification as discussed below.
US Tariff Act & Uyghur Forced Labor Prevention Act
Post-Ban: After a ban has been issued
Phase of Action
Pre-Ban: Before an investigation is launched and a ban is issued
Traditional contracts incentivize suppliers to hide problems by making them solely responsible for upholding human rights and environmental (HRE) standards and by
prioritizing traditional remedies, such as order cancellations,
suspension of payments, and termination.
Responsible contracts foster
trust and transparency and enable prevention by:
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Committing the parties to work together to address forced labor risks as they arise; and
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Committing the buyer to support the supplier via responsible purchasing practices.
Responsible contracts
support effective remediation by:
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Setting out a roadmap for remediation; and
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Placing human rights remediation ahead of traditional contract remedies.
Latest Tools
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UN Global Compact Decent Work Toolkit for Sustainable Procurement: Chapter on Responsible Contracting In Sustainable Procurement (Feb. 2025)
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The Zero Draft Responsible Investor Model Clauses (RIMCs) (Feb. 2025)
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RCP Policy Brief: "What the EU Corporate Sustainability Due Diligence Directive (CSDDD) Says About Contracts" (July 2024)
RCP in the Media
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Susan Maslow, RCP Senior Legal Advisor, co-authored an article in Business Law Today announcing the public consultation on the Zero Draft of the Responsible Investor Model Clauses (RIMCs). Read here.
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