The European Council and Parliament have reached a provisional deal on regulation banning products made with forced labour from being sold in the EU.

The draft law would prohibit the import and export of any product made using forced labour, which affects an estimated 27.6 million people worldwide, according to the International Labour Organization.

The European Commission will lead investigations into forced labour taking place outside the EU, the draft text says, while member states will head up investigations into cases in their territory and make final decisions about whether products should be banned.

Criteria for identifying violations include the scale and severity of the suspected forced labour, the quantity of products placed on the EU market, what share of the final product was made with forced labour and how close firms are to the suspected risk in their supply chains.

Where the supply of critical products made with forced labour is at risk, authorities can decide not to order the disposal of the product but instead ask the firm to withhold it “until it can demonstrate that there is no more forced labour in their operations or respective supply chains”.

The draft also clarifies that where only parts of products violate the regulation, the part rather than the whole product can be disposed of – unless this is impossible, as in the example of tomatoes produced using forced labour being used in a sauce.

A coalition of business associations and civil society organisations, including the European Solar Manufacturing Council and the Responsible Business Alliance, have also called for the regulation to specify that companies can provide remediation provisions for people affected by forced labour, with the EU able to reverse product bans if firms can show they’ve take action.

The regulation is expected to have a significant impact on Europe’s struggling solar firms, which source many components from China’s Xinjiang region, identified by rights groups and UN reports as a hotspot for forced labour.

Pierre-Yves Dermagne, Belgian deputy prime minister and minister for the economy and employment, says the first step in eradicating modern slavery and forced labour is by “breaking the business model of companies that exploit workers”.

“With this regulation we want to make sure that there is no place for their products on our single market, whether they are manufactured in Europe or abroad,” Dermagne says.

The regulation, first proposed in 2022, now needs to be endorsed and formally adopted by the Council and the Parliament.

The news follows the stalling of the EU’s Corporate Supply Chain Due Diligence Directive last week, which failed to secure a majority in the member states’ vote.

This legislation also has a focus on removing labour abuses from supply chains and requires companies to mitigate, prevent and stop negative human rights and environmental impacts throughout their value chains.

It is also akin to the US’ Uyghur Forced Labor Prevention Act, which came into force in 2021 in response to reports detailing the detention of hundreds of thousands of Uyghurs, Kazakhs and other predominantly Muslim ethnic minorities in state-run camps in the Xinjiang region of China.