Fernanda Manzano Sayeg

Brazilian exports may be significantly affected in the near future in the United States and in the European Union (EU) due to human and labor rights violations.

It is estimated that millions of people are currently working under abusive conditions around the world. According to the International Labor Organization (ILO), there are 160 million child laborers and 27.6 million forced laborers.

Recently, the U.S. Department of Labor (DOL) published the 10^th edition of the "List of Goods Produced by Child or Forced Labor," in which it identified foreign industries that allegedly have involvement with child and forced labor. The DOL tracked complex global supply chains in order to identify final products and intermediaries that at some point had involvement with forced or child labor.

The DOL has also published the 21^st edition of its report "Findings on the Worst Forms of Child Labor", which analyzes 131 countries and territories with child labor situations. In this report, the DOL describes progress by some countries to uphold their international commitments to eliminate these practices, as well as specific recommendations for eliminating child labor.

In order to eliminate child and forced labor around the world, the DOL has developed portals and apps that contain information on goods produced with child or forced labor and the latest information on government efforts to address this issue by product and by country. It has also provided companies with detailed guidance on how to develop social compliance systems in their global supply chains and avoid abuses of labor conditions.

In the European continent, there is also a major concern to ban forced labor that will significantly impact exporters, including Brazilian companies. The European Commission has proposed a new regulation that bans products made with forced labor from entering the EU market, which has yet to be approved by the European Parliament and the EU Council.

Under the proposed regulation, national authorities in EU member states would assess whether there are well-founded reasons to suspect that certain marketed products have been produced using forced labor. If case the EU authorities identify a well-founded concern, they should initiate investigations and request information from companies, as well as to conduct checks and inspections at factories. If the authorities could not gather all the evidence they require (for example, due to a lack of cooperation from a company or a non-EU state authority), they could make a decision based on the best available facts.

If European authorities conclude that a product has been involved in forced labor, they should immediately prohibit the commercialization of the said product in the EU market, as well as to require its disposal or destruction.

The proposed regulation also provides for the creation of a database platform called the "EU Forced Labor Products Network" to ensure structured coordination and cooperation between the competent authorities and the Commission.

The United States and the European Union are developing their own rules on these issues because of the absence of clear multilateral trade rules on labor standards, which include the use of child labor or forced labor in the supply chain, as well as how workers are treated, such as the right to organize unions and strike, minimum wages, health and safety conditions and working hours.

For some decades, members of the World Trade Organization (WTO) have been trying to reach consensus on creating basic rules on key labor issues, such as banning the import of goods that are produced with forced labor, child labor and under discriminatory working conditions.

The measures adopted by the United States on forced and child labor are already affecting the entry of Brazilian exports of various products in the country. The same is likely to happen in the European Union after the regulation that are in the approval phase come into effect. Such measures create non-tariff barriers to imports, aiming to protect values considered important to society.

It is important that any restrictive measures that a government adopts, whether on the grounds of child labor and forced labor or otherwise, are duly justified and established in accordance with WTO rules and principles, such as national treatment and non-discrimination.

The uncertainty on the compatibility of the labor standards with the World Trade Organization (WTO) rules has attracted increasing attention and generated calls for the reform of the organization. While multilateral rules are not created, and considering a scenario of increasing restrictions on exports due to labor conditions, it becomes increasingly relevant that exporting companies adopt due diligence and risk management systems so that their goods are not affected and, consequently, that they can continue to export to other markets.

Fernanda Manzano Sayeg has a Masters and Doctorate degrees in International Law, is a partner at Borges Furlaneto & Sayeg Advogados - BFSA Trade Law and professor of international trade law at USP and FECAP.