At a meeting of EU ambassadors on Wednesday, no majority could be established for the law, which had been previously agreed, due to Berlin and Rome’s last-minute objections reflecting concerns that the new legislation would hurt their industrial base.

The aim of the due diligence law is for companies to take responsibility for any human rights abuses or environmental damage found in their supply chains. It would also enable campaigners to take businesses to court for harm they cause.

Xinjiang, where the Chinese government has been accused of using forced labour and ordering the mass detention of local Uyghurs, has become a significant issue for German chemical maker BASF and carmaker Volkswagen. Both companies have come under intense criticism from human rights activists and investors for their plants in the region. Beijing denies repressing the Uyghurs.