Germany is in the final stages of deciding to pass the new Supply Chain Act. This comes after the German government’s efforts over half a decade to impose stronger regulatory policies and due diligence obligations on companies. If this law is passed, German companies will be legally obliged to ensure compliance with human rights and environmental standards along the entire supply chain, including international production sites.
RIGHTS VIOLATIONS IN GLOBAL SUPPLY CHAINS
Human rights violations in global supply chains are a long-standing issue. These supply chains seem to be related to a constant rise in human trafficking, forced labour, and abusive child labour over the years. According to the 2018 Global Slavery Index, 40.3 million people were subjected to modern slavery, with a 71% female and 29% male distribution. 24.9 million people from this group were subjected to forced labour.
It is undeniable that at least some links within the global supply chains support and profit off of human rights violations.This pressing issue poses a growing reputational problem for world governments and corporations. Critics have especiallyfocused on G20 countries, as they account for about 85% of the world’s GDP, and nearly 80% of world trade. This leads to about $354 billion worth of produced and imported products potentially being tainted by modern slavery and other human rights violations.
One of the best examples of a G20 country’s supply chain including human rights violations on a massive scale is China importing coal from North Korea. China imports nearly a billion dollars worth of coal from North Korea, amounting to about 98% of North Korean coal exports. The process of digging coal is considered a dirty, dangerous, and degrading job in North Korea, and the status of the job is inherited rather than chosen. Recent interviews with North Korean defectors revealed workers being unpaid, with no liberty to leave the job, no employment contracts, and experiencing punishments at labour training camps if found unemployed. Other violations rife in global supply chains include unfair wages, child labour, sexual violence, restrictions on trade union rights, and inadequate security.
These violations are cross-continental. In the United Kingdom, Lithuanian migrants working in chicken farms are under threat of violence and intimidation, and elderly Polish men recruited for meat-packaging are subjected to beatings, longer working hours, and withheld wages. In Uzbekistan, the state continues its forced labour system during cotton harvest, despite protests.
THE NEED FOR FAR-REACHING REGULATION
The ongoing COVID-19 pandemic has highlighted global linkages in trade, as well as the fragility of global supply chains. There is an imbalance of power between the Global North and the Global South. In simpler terms, while the Global North accounts for one quarter of the world population, it controls over four-fifths of the income earned across the world. On the other hand, the Global South covers about three-quarters of the world population but only has access to about one-fifth of the world income.
As only essential commodities have been allowed to move during the pandemic, the apparel, fashion, electronics, and other sectors serving non-essential categories of goods now face little to no demand. This is causing increasing unemployment, loss of wages, poverty, and hunger as well. Overall, it is further widening the gap that exists between Global North and South. Given these developments, the timing could not be much better to enforce stringent regulations that impact the entire supply chain.
GLOBAL NORMS AND ASPIRATIONS
Global norms require companies to prioritise human rights and to accordingly assess how their functions pose risk to affected stakeholders. In other words, companies must assess how their work affects local communities beyond merely focusing on corporate reputation, and legal or financial standing. Doing due diligence on the entire supply chain allows a company to assess and minimise the risk of human rights violations and avoid related scandals.
International and regional organisations have played an important role in setting standards for this area, aiming to put an end to modern slavery and related violations. The UN 2030 Agenda for Sustainable Development features 17 Sustainable Development Goals (SDGs), three of which relate to modern slavery. The ILO Protocol to the Forced Labour Convention of 1930 (Po29) offers government-specific guidelines over measures to be taken against human trafficking for the purpose of forced labour. In 2014, the ITUC Congress in Berlin confirmed that the elimination of modern slavery would be one of the three “frontline” campaigns of the global trade union movement. The ILO Forced Labour (Supplementary Measures) Recommendations, 2014 (R203) encourage states to ensure that companies minimise the risk of forced labour in their operations. Additionally, the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy (MNE Declaration) states that governments should develop national policies and plans to prevent and eliminate forced and child labour, in consultation with employers and workers.
DOMESTIC AND INTERNATIONAL IMPLICATIONS OF GERMANY’S NEW LAW
Human rights violations exist throughout the world, and Germany is no different. In January 2018, more than 15,000 workers at 80 companies went on strike, as part of the metalwork union’s campaign to improve work-life balance. In September 2019, villagers living on the edge of one of Germany’s biggest surface coal mines mounted a legal challenge against the energy company RWE for forcing them to sell their properties.
Germany has long been extensively involved in the global supply chain. In Europe, since the mid-1990's, Germany and the CE4—the Czech Republic, Hungary, Poland, and Slovakia—have been in a process of deepening economic integration. This has led to the development of a dynamic supply chain within Europe known as the Germany-Central European Supply Chain (GCESC).
For years, German activists have demanded a supply chain law that would require companies to satisfy human rights and environmental standards. This would include not just Germany, but also countries from which the raw materials are extracted and assembled for their final destination.
If the current bill is passed, government supervision will be essential for effective enforcement, including the imposition of sanctions and fines. It will also be important to include and engage with civil societies and worldwide unions. If it is passed, victims of human rights violations across the supply chain line will finally have the opportunity to sue companies for damages in German courts.
The Supply Chain Act is a matter of global justice and the timing of this discussion could not be better, since it comes during Germany’s presidency of the Council of the European Union. This will highlight to the rest of Europe that Germany is moving ahead with reformist legislation, and that a similar approach must also be adopted at the European level.
According to Johanna Kusch, coordinator of the Initiative for a Supply Chain Law, “The COVID pandemic could have put an end to the debate over this Supply Chain Act but instead, it has made them realise how important these supply chains are to them...People have started asking: what is a supply chain? This has made people much more aware about the people on the other end, the workers who got sick or got fired from one day to the next.” Kusch says that this law is just a stepping stone on the far greater project of fair globalisation, and that if the law is passed, it will bring justice to millions being oppressed for the sake of profit maximisation.
