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15 June 2026

The US considers additional tariffs due to failures to prohibit imports of products made with forced labour: A new legal basis for unilateral tariffs?

By Amanda Carlota, Stella Nalwoga, and Tobias Dolle

On 2 June 2026, the Office of the United States Trade Representative (hereinafter, USTR) published its findings of the Section 301 investigation into 60 economies regarding their failure to impose and effectively enforce a prohibition on the importation of goods produced with forced labour (hereinafter, Section 301 Report). The USTR determined that the acts, policies, and practices of all investigated economies were “unreasonable” and burdened or restricted US commerce. As a result, the USTR proposed the imposition of additional tariffs on products from the investigated economies, on top of existing most-favoured nation tariffs.

This article provides an overview of the USTR’s key findings and proposed actions, and examines the possible implications for US trading partners and businesses. 

The Section 301 investigation on forced labour

On 12 March 2026, the USTR had initiated investigations into 60 economies under Section 301 of the US Trade Act of 1974, which authorises the USTR to investigate and address any “act, policy, or practice of a foreign country” that is considered “unreasonable or discriminatory and burdens or restricts United States commerce”. The investigations assessed whether the investigated economies had: 1) Imposed a legal prohibition on the importation of goods produced, wholly or in part, with forced labour; and 2) Effectively enforced the prohibition. Unlike previous Section 301investigations, which focused on specific countries, the investigations targeted 60 economies, which collectively account for 99.4% of US imports. The timing and breadth of the investigations are central to the significance of the USTR’s findings. 

The USTR proposes tariffs on all investigated economies

In the US Federal Register Notice published in relation to the Section 301 Report, the USTR determines that 54 economies, including China, India, Japan, South Korea, Switzerland, and the UK, had “failed to impose and effectively enforce a prohibition on the importation of goods produced with forced labor” and that the remaining six economies, namely Canada, Ecuador, the EU, Indonesia, Mexico, and Pakistan, had “failed to effectively enforce a prohibition on the importation of goods produced with forced labor”. To illustrate the effects of competition from goods produced with forced labour on US exports, the Section 301 Report provides a small number of case studies, including, inter alia, polysilicon and cotton exports from China, both of which are relied upon by third-country manufacturers of downstream products, thereby, allegedly, depriving US exporters of potential exports. Importantly, the Section 301 Report lacks detailed and specific findings for all 60 economies, but mechanically finds, for most of the economies, that the results of the investigation “indicate that the acts, policies and practices” of that economy “related to the failure to impose and effectively enforce a forced labor import prohibition are unreasonable and burden or restrict U.S. commerce”.

The USTR concludes that such failures to prohibit forced labour imports were “unreasonable” because they “undermine the universal objective of eliminating forced labor”, permit firms using forced labor to produce at “lower cost”, and “thereby distort market conditions for firms that do not rely on forced labor”. On the basis of the findings, the USTR proposes “appropriate action”, namely the imposition of additional tariffs on nearly all products from the investigated economies. Goods originating from the six economies that have either imposed a full or partial forced labour import prohibition or committed to prevent forced labour imports through an Agreement on Reciprocal Trade with the US, would be subject to an additional tariff of 10%, while goods originating from the other 54 economies would be subject to an additional tariff of 12.5%. 

The USTR proposes to exempt, inter alia, products already subject to additional tariffs under Section 232 of the Trade Expansion Act of 1962, products whose inclusion could cause economy-wide disruption, and products that cannot be produced in sufficient quantities in the US. The USTR has invited interested parties to submit comments on the proposed actions by 6 July 2026, while a public hearing is scheduled for 7 July 2026.

A substitute for the invalidated IEEPA tariffs?

The timing of the USTR’s findings is particularly noteworthy, as it comes after legal setbacks to the US Administration’s reliance on the International Emergency Economic Powers Act (hereinafter, IEEPA) as a basis for imposing broad additional tariffs on US trading partners. While the Trade Act of 1974 requires the USTR to make a determination within 12 months, the USTR issued its findings in less than three months and has scheduled the related hearing for early July 2026. The accelerated procedure is expected to coincide with the termination of the current additional ‘global’ tariff of 10%, which was imposed under Section 122 of the US Trade Act of 1974 and which is set to expire on 24 July 2026. Therefore, the USTR’s proposed measures could be viewed not only as a policy targeting forced labour, but as part of a wider effort to identify a more durable legal basis for unilateral tariff action. 

The EU’s Forced Labour Regulation: A timing problem?

With respect to the EU, the USTR acknowledged that, on 27 November 2024, the EU had adopted the EU Forced Labour Regulation, which lays down rules prohibiting economic operators from placing and making available on, or exporting from, the EU market, products made with forced labour. The EU Forced Labour Regulation entered into force on 1 January 2025, but will only apply from 14 December 2027. Given that the prohibition does not apply yet, the USTR determined a failure by the EU to “effectively enforce” its forced labour import prohibition. The USTR notes that such failure “afforded a cost advantage” to, inter alia, rice exported from Myanmar to Spain over exports of the same products by the US and, consequently, “distorted competition”. Once the EU Forced Labour Regulation applies, the basis for maintaining Section 301 tariffs against EU products would no longer exist.

Legal challenges to Section 301 actions 

Tariffs imposed pursuant to Section 301 of the US Trade Act of 1974 have already been challenged in US Courts and before the World Trade Organization (hereinafter, WTO). In a case currently pending before the US Supreme Court, lower US Courts had affirmed the USTR’s authority under Section 301 to address unfair foreign trade practices through additional tariffs. 

At the WTO, the proposed tariffs could be challenged under Articles I:1 and II of the WTO General Agreement on Tariffs and Trade (hereinafter, GATT), for being selective tariff increases that discriminate among countries, contrary to the most-favoured-nation (MFN) principle, and for being in excess of the tariff rates to which the US bound itself in its Schedule of Concessions. The US could seek to justify the measures as “necessary to protect” public morals or human life or health under Article XX of the GATT. However, previous WTO disputes involving Section 301 tariffs, such as United States — Tariff Measures on Certain Goods from China, indicate that such justifications would face close scrutiny. Essentially, the US would have to demonstrate a ‘genuine relationship’ of the ends and means between the imposition of the additional duties and the public morals or human life or health objectives purportedly pursued with regard to forced labour. 

Towards tariff mitigation?

The proposed tariff rates appear calibrated to broadly reinstate the tariff levels previously imposed under IEEPA. For businesses, the final tariff burden would vary depending on the applicable US most-favoured-nation tariff and any preferential treatment available under existing preferential trade agreements. Another source of uncertainty stems from the parallel Section 301 investigations relating to structural excess capacity, which could result in further higher additional tariffs placed on products from economies subject to both investigations, such as the EU. The ongoing stakeholder consultation process creates a window for engagement to secure tailored relief or exemptions from future Section 301 actions.

For any additional information or legal advice on this matter, please contact Tobias Dolle 

The ASEAN Trade in Goods Agreement gets an ‘upgrade’: Meaningful change or less commitment to regional integration? 

By Joanna Christy, Paolo R. Vergano, and Tobias Dolle

In May 2026, the Association of Southeast Asian Nations (hereinafter, ASEAN) published the text of the Second Protocol to Amend the ASEAN Trade in Goods Agreement (hereinafter, ATIGA). This upgrade marks a significant step in the ongoing effort to “modernise” and strengthen the region’s core trade framework. In light of escalating geopolitical tensions and persistent global supply chain disruptions, ASEAN sought to enhance the ATIGA to strengthen regional resilience and enhance its capacity to respond to emerging trade challenges. 

This article provides an overview of the key amendments introduced by the 2nd Protocol and examines whether the new commitments are capable of delivering meaningful improvements to intra-ASEAN trade. 

Updating the ATIGA 

The ATIGA is a preferential trade agreement between the eleven ASEAN Member States (hereinafter, AMSs) (i.e., Brunei Darussalam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand, Timor-Leste, and Viet Nam) and was established to support the objective of establishing ASEAN as a single market and production base. The ATIGA was signed in 2009 and entered into force in 2010. It provides a framework governing trade in goods, including tariff liberalisation, rules of origin, and trade facilitation. In 2019, AMSs signed the First Protocol to Amend the ATIGA, which concerned amendments to the rules of origin.

On 16 March 2022, AMSs’ Economic Ministers launched negotiations to upgrade the ATIGA, recognising the need to ensure that the ATIGA remains relevant, modern, and responsive to evolving regional and global developments. Formal negotiations commenced in September 2022 and were concluded in May 2025, leading to its formal signature on 1 December 2025 in Kuala Lumpur, Malaysia. Pursuant to Article 2 of the 2nd Protocol, the Agreement will enter into force 18 months after the date of its signature (i.e., by 1 June 2027). To date, only Singapore has ratified the 2nd Protocol, while the Philippines have reportedly called for earlier implementation, which would require consensus of all AMSs. According to a press release issued by Singapore’s Ministry of Trade and Investment, with the upgrade of the ATIGA, AMSs showed their commitment to enhance market access and trade facilitation, transparency, supply chain connectivity, and sustainability. 

Enhanced trade facilitation?

The 2nd Protocol introduces a range of provisions aimed at facilitating intra-ASEAN trade and reducing administrative burdens for businesses. These provisions cover, inter alia, enhanced Customs cooperation through cooperation on Authorised Economic Operator programmes and improvements to the rules of origin procedures. 

Under the ATIGA, traders seeking to benefit from preferential tariffs are required to obtain a Certificate of Origin (Form D) issued by the competent authority of the exporting AMS. In 2020, ASEAN implemented the ASEAN-wide Self-Certification Scheme (AWSC), allowing certified exporters (i.e., exporters approved by the competent authority in an AMS) to issue origin declarations on their own in lieu of obtaining a Certificate of Origin from the competent authority. The AWSC was incorporated into the ATIGA through the First Protocol to Amend the ATIGA. Building on this, Article 3.16 and Annex 3-E of the 2nd Protocol expand the scope of self-certification by permitting origin declarations to be issued not only by certified exporters, but also by exporters and producers that are not certified. The 2nd Protocol provides that a “Proof of Origin” may take the form on: 1) Electronic Form D; 2) Form D; 3) Origin Declaration issued by a Certified Exporter; or 4) An Origin Declaration issued by an exporter or producer. The expansion to exporters and producers that are not certified is subject to phased implementation, namely by 2030 for Brunei Darussalam, Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Viet Nam, and by 2040 for Cambodia, Lao PDR, Myanmar, and Timor-Leste, subject to the completion of its accession to the ATIGA.

As a result, the broader use of self-certification is expected to reduce administrative burdens and compliance costs for businesses by allowing approved exporters to certify the origin of their goods directly on commercial documents (e.g.,invoices), thereby reducing the paperwork and administrative procedures associated with obtaining a proof of origin.

Enhanced Transparency?

The 2nd Protocol seeks to enhance transparency and predictability in intra-ASEAN trade by introducing more detailed obligations regarding the publication of trade-related regulations and procedures. While these provisions may improve access to information for traders, their practical effectiveness may be limited by the broad flexibility afforded to AMSs through the non-mandatory nature of certain commitments. 

In this regard, under Article 4.6 of the 2nd Protocol on “Transparency”, AMSs are required to publish on the Internet, “to the extent possible”, trade-related information on, inter alia, procedures for import, export, and transit, including descriptions of the practical steps, and the relevant forms and documents required for compliance. This complements the dedicated Chapter 13 of the 2nd Protocol on ‘Transparency’, which requires AMSs to publish trade-related laws, regulations, procedures and administrative rulings of general application (i.e., general administrative interpretations or decisions applicable to all traders) and maintain relevant trade information through online platforms.

This builds on the transparency obligations that were set out in Articles 12 and 13 of the ATIGA, which require AMSs to make their laws, regulations, and administrative rulings publicly available, including through the ASEAN Trade Repository (hereinafter, ATR). Unlike the existing ATIGA framework, which focuses primarily on the publication of legal instruments, Article 4.6 requires AMSs to publish practical information to assist traders in complying with import, export, and transit requirements, reflecting a more trader-oriented approach to transparency. As with most legal obligations in ASEAN, the test of whether the upgraded ATIGA will, indeed, prove to bring about greater trade-related regulatory transparency, will be its actual implementation.

In fact, while Article 4.6 and Chapter 13 aim at enhancing the transparency framework, their effectiveness may be limited by the frequent use of flexible terms that diminish or nullify the mandatory nature (“shall”) of these obligations, such as: “Shall, where feasible”, “shall endeavour”, “shall, to the extent possible”, “publish, preferably at least 60 days before”, “provide, where appropriate”, “Member States may designate the ASEAN Secretariat to engage a third party to support the necessary updates (of the relevant existing and future ASEAN trade-related portals”. As a result, AMSs will have significant discretion in how they implement these provisions, which may lead to different levels of transparency across the region.

ASEAN does not have a good track record when it comes to trade-related regulatory transparency, especially in relation to Customs procedures and non-tariff measures. Article 13 of the ATIGA mandated the establishment of the publicly accessible ASEAN Trade Repository (ATR), which aimed at becoming a centralised and transparent hub consolidating the trade and Customs laws of all AMSs, covering nine mandatory categories, namely: 1) Tariff nomenclature; 2) MFN tariffs, preferential tariffs offered under the ATIGA and other Agreements of ASEAN with its Dialogue Partners; 3) Rules of origin; 4) Non-tariff measures; 5) National trade and customs laws and rules; 6) Procedures and documentary requirements; 7) Administrative rulings; 8) Best practices in trade facilitation applied by each Member State; and 9) List of authorised traders of Member States.

The ATR had painstakingly started to come together and be linked to National Trade Repositories (NTRs) thanks to significant technical assistance investments by the European Union under its legacy support programmes to ASEAN known as ARISE and ARISE Plus, between 2012 and 2023. Since EU funding stopped, nothing has been uploaded by AMSs on the ATR and many of the categories remain empty or incomplete. ASEAN did not take this mandatory ATIGA commitment seriously and it has now essentially repealed it, making the new obligations voluntary in nature, which may well mean no implementation. This would be a serious downgrade of the ATIGA, especially in light of the important role that transparency plays in attracting investment, integrating the economies of AMSs, and moving the ASEAN Economic Community (AEC) and cross-border intra-ASEAN trade to become truly rules-based and shaped by legal certainty and commercial predictability. 

Responding to key trade challenges in the region

The 2nd Protocol introduces new chapters on trade issues that have become increasingly important in facilitating regional trade and addressing evolving business needs. Notably, Chapter 11 on Trade and Environment, reflects ASEAN’s growing emphasis on sustainability and the role of trade in supporting the transition towards a green economy. Pursuant to Article 11.4, AMSs “will endeavour” to facilitate and promote trade in environmental goods. However, the chapter does not define “environmental” goods, nor does it establish a common product list or provide concrete liberalisation commitments, but instead relies on broad cooperation and voluntary initiatives, with its effectiveness largely dependent on the willingness of individual AMSs to advance implementation. A similar reliance on cooperative and best-endeavour language is evident in Chapter 10 on Trade in Humanitarian Crisis Situations and Chapter 12 on Supply Chain Connectivity. 

While these Chapters collectively reflect ASEAN’s recognition of the vulnerabilities exposed by recent global supply chain disruptions and of the need to strengthen regional resilience through cooperation and information sharing, the commitments are framed in aspirational or best-endeavour language, such as commitments to refrain from implementing restrictive trade measures during crisis situations only “to the extent possible”, which may limit their practical effectiveness during periods of acute supply chain disruption when national interests may diverge.

The “ASEAN Way”: Between Flexibility and Commitment

Overall, the 2nd Protocol represents a significant expansion of ASEAN’s framework for trade in goods, reflecting efforts to address current trade challenges and align regional rules with evolving economic priorities. However, despite this expanded framework, many of the new commitments and transparency obligations remain framed in flexible, cooperative, or “non-binding” terms, which may afford AMSs wider discretion in their implementation. Importantly, even some of the existing commitments are softened and the future implementation of certain key transparency tools, such as the ASEAN Trade Repository and the AMSs’ National Trade Repositories, may depend on what AMSs consider “practicable”.

Implementation will be key and the role of the private sector and ‘civil society’ stakeholders, in ensuring that the ATIGA does remain the engine of rules-based regional economic integration, will be critical. In today’s world, ‘business as usual’ is no longer a choice and ASEAN must step up to the challenge. Agreements are only as good as they are properly implemented and that requires commitment and discipline.

For any additional information or legal advice on this matter, please contact Paolo R. Vergano

The European Commission calls on EU Member States to transpose rules on unfair commercial practices and better information: The impact on businesses

By Ignacio Carreño García, Paolo R. Vergano, and Tobias Dolle

On 28 May 2026, the European Commission (hereinafter, Commission) announced that it had sent letters of formal notice to 20 EU Member States (i.e., Austria, Belgium, Bulgaria, Croatia, Cyprus, Czechia, Estonia, Greece, France, Finland, Hungary, Latvia, Luxembourg, Malta, Netherlands, Poland, Portugal, Slovenia, Spain and Sweden) for failing to communicate the complete transposition of Directive (EU) 2024/825 amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and through better information (hereinafter, Directive on Empowering Consumers for the Green Transition or ECGT Directive). 

This article provides an overview of the infringement procedure, the ECGT Directive, and discusses how the new rules will impact businesses in third countries marketing products to EU consumers.

The infringements procedure against various EU Member States

Article 258 of the Treaty on the Functioning of the European Union (TFEU) gives the Commission the power to take legal action against an EU Member State that is not respecting its obligations under EU law. The infringement procedure begins with a request for information (i.e., a letter of formal notice) to the EU Member State concerned, which must be answered within a specified period of time, usually two months.  

EU Member States were required to transpose the ECGT Directive into their national laws by 27 March 2026, in preparation for the rules to apply from 27 September 2026. In the letters, the Commission is giving the relevant EU Member States two months to reply and complete the transposition of the Directive. Should the Commission not be satisfied with the replies, it could send a formal request to comply with EU law (i.e., a reasoned opinion). If an EU Member State were to fail to ensure compliance with EU law, the Commission could then decide to refer the Member State to the Court of Justice of the European Union (CJEU). However, in most infringement procedures, EU Member States comply with their obligations before they are referred to the CJEU. According to the EU law database, at this time, out of the 20 EU Member States, Czechia and Latvia may have already complied, though the notification of transposition measures does not always signify full transposition. 

EU Member States are to apply the transposition measures in relation to the ECGT Directive from 27 September 2026. In line with the case law of the CJEU and under the Principle of Direct Effect, if an EU Member State were to fail to properly implement the Directive into national law by the deadline, individuals could invoke, in certain cases, the rights under the Directive directly against the Member State in national courts.

The rules on empowering the consumer for the green transition

The ECGT Directive is intended to “ensure that consumers are provided with better information at the point of sale on the durability and reparability of goods and the consumer’s legal guarantee rights”. It also intends to “strengthen consumer protection rules against greenwashing and early obsolescence practices” and to “make EU horizonal consumer law better fit for the green transition and will support the changes needed in consumer behaviour to achieve climate and environmental objectives” under the European Green Deal. The Commission’s proposal, published in 2022, had been announced in the 2020 New Consumer Agenda and the 2020 Circular Economy Action Plan. The ECGT Directiveamends two existing EU consumer law Directives, namely Directive 2011/83/EU on consumer rights (Consumer Rights Directive or CRD) and Directive 2005/29/EC concerning unfair business-to-consumer commercial practices in the internal market (Unfair Commercial Practices Directive or UCPD). 

The amendments do not change the scope and the structure of these two existing Directives, but introduce targeted changes to regulate vague and misleading environmental claims and sustainability labels under the UCPD, mandating better and more harmonised information at the point of sale on consumers’ legal guarantee rights, and on the repairability and durability of goods under the CRD. More specifically, the Directive “improves the reliability and transparency of green claims and sustainability labels”, “encourages businesses to adopt more sustainable practices and prevents early obsolescence and greenwashing”.

Key impacts on third-country businesses

EU consumer protection law, including the UCPD and CRD, applies based on the country‑of‑destination principle when a trader directs activities to EU consumers or sells to them (e.g., via a website, advertising, or distribution channels). This applies regardless of whether the trader is established inside or outside the EU. While the ECGT Directive itself does not expressly restate this principle, it inherits it from the underlying framework: the UCPD applies “to unfair business-to-consumer commercial practices” and the CRD applies to “any contract concluded between a trader and a consumer”, regardless of where the trader is established. 

Therefore, third country businesses must ensure that their sustainability claims and marketing practices meet EU standards to avoid, inter alia, penalties for misleading environmental claims. A business located outside the EU must adapt its operations to comply, inter alia, with the following: 1) Generic, unverified environmental claims like “environmentally friendly”, “eco-friendly”, or “biodegradable” are not allowed without a publicly available, recognised third-party certification; 2) Claims that a product has a “neutral”, “reduced”, or “positive” carbon impact, based on greenhouse gas emissions offsetting (e.g., planting trees to offset a flight or manufacturing process), are strictly prohibited in marketing; and 3) Any sustainability label displayed on products or websites must be based on a formal certification scheme or established by public authorities.

In this context, the Commission’s May 2026 FAQ on the ECGT Directive notes that “the display of sustainability labels established by public authorities of non-EU Member States will be prohibited (…) unless these labels are based on a certification scheme”. Because consumer protection laws apply based on where the consumer is located, rather than where the seller operates, EU authorities (and EU Member States’ national consumer protection agencies) can investigate and penalise non-compliant third-country businesses that target EU buyers.

Legal guarantee rights notice and harmonised EU product label from 27 September 2026

On 25 September 2025, in a development linked to the ECGT Directive, the Commission adopted Implementing Regulation (EU) 2025/1960 on the design and content of the harmonised notice on the legal guarantee of conformity and of the harmonised label for the commercial guarantee of durability to better inform EU consumers about their legal guarantee rights and durability guarantees offered by businesses. Implementing the CRD, it establishes a mandatory EU notice, which must be prominently on display in all shops, both online and offline, and a new EU product label for producers that choose to offer consumers a voluntary commercial guarantee of durability for a specific product at no additional cost to the consumer, and with a duration of more than two years.

From 27 September 2026, the new rules shall apply and EU consumers will be able to see the new notice and label in practice. The aim is to empower consumers to make informed choices for longer-lasting products and to become better aware of the legal guarantee rights. The new rules are also intended to stimulate positive competition between companies that are willing to offer such products with longer durability. Third‑country businesses must use the harmonised notice when EU consumer law applies to their sales. They may use the harmonised label if they offer a qualifying durability guarantee, but must comply with the prescribed format.

Conclusion and outlook

Businesses located in the EU, as well as businesses in third countries that service EU consumers, must be prepared for the application of the new rules from 27 September 2026 whenever they target EU consumers with their sales.

For any additional information or legal advice on this matter, please contact Ignacio Carreño Garcia

Recently adopted EU legislation

Trade Remedies

Customs Law

Food Law

Imelda Jo Anastasya, Amanda Carlota, Ignacio Carreño García, Pattranit Chantaplaboon, Joanna Christy, Tobias Dolle, Alya Mahira, Stella Nalwoga, and Paolo R. Vergano contributed to this issue.

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