On July 1, 2020, the Canada-United States-Mexico Agreement (CUSMA)and the corresponding Canadian legislative amendments that support Canada’s compliance with CUSMAentered into force. This included an amendment to Canada’s Customs Tariff, which bans goods made by forced labour from entering Canada. This amendment complements existing legislative efforts in Canada aimed at supply chain transparency to support the elimination of modern slavery that is currently working its way through Parliament.
CUSMA bans goods made from forced labour
CUSMA’s Labour chapter prohibits the importation of goods produced in whole or in part by forced or compulsory labour, including forced or compulsory child labour. Within the Labour chapter, CUSMA parties further agreed to cooperate on the identification and movement of goods produced by forced labour, as well as to adopt and maintain legislation relating to the elimination of all forms of forced or compulsory labour. Although the agreement does not specifically define the term “forced labour,” the obligation to adopt and maintain legislation on the elimination of forced labour is linked to the International Labour Organization’s (ILO) Declaration on the Rights at Work. The ILO’s Forced Labour Convention, 1930 (No. 29) further defines forced or compulsory labour, which is noted in the Declaration on the Rights at Work as “all work or service which is exacted from any person under the threat of a penalty and for which the person has not offered himself or herself voluntarily.” Although not expressly stated, this definition of forced labour is also applicable to the chapter’s other forced labour obligations.
As of July 1, 2020, to implement these commitments, Canada’s Customs Tariff was amended to prohibit the commercial importation of goods that are mined, manufactured or produced wholly or in part by forced labour into the country. More specifically, tariff item 9897.00.00 now bans “goods mined, manufactured or produced wholly or in part by forced labour.” A similar ban was already in place in the United States that prohibited the importation of goods made with prison labour or forced labour.
This new import prohibition provides those importing goods into Canada with good reason to review their supply chains and related internal policies to ensure that no aspects of goods being imported into Canada are made using forced labour. Aside from reputational risk, companies that import such goods, even inadvertently, can be subject to Administrative Monetary Penalties now that the import ban has entered into force, and potentially additional legal consequences depending on the particulars of a situation.
Bill S-211: An Act to enact the Modern Slavery Act and to amend the Customs Tariff
Canada is also considering further supply chain legislation to tackle modern slavery. Bill S-211, An Act to enact the Modern Slavery Act and to amend the Customs Tariff, was introduced to the Senate on February 5, 2020. It the second attempt to pass modern slavery legislation in Canada after a nearly identical bill, Bill C-423, was first introduced in 2018. If passed, Bill S-211 would require a wide range of mid to larged-size businesses to report on an annual basis the actions they have taken to mitigate forced and child labour throughout their supply chains.
The scope of businesses covered by Bill S-211 closely mirrors the Extractive Sector Transparency Measures Act, which has been in force since 2015 and serves to reduce corruption in the extractive industry through increased transparency measures. Under the current iteration of Bill S-211, if businesses produce, sell or import goods into or within Canada and meet one of the following criteria, they will be subject to the Bill’s reporting requirements:
- Businesses listed on a stock exchange in Canada
- Businesses that have a place of business in Canada, do business in Canada or have assets in Canada, and meet at least two of three possible financial or employment thresholds for one of the two most recent financial years:
- They have at least $20 million in assets
- They have generated at least $40 million in revenue
- They employ an average of at least 250 employees
The Bill’s scope also includes any entities that are controlled by a business that falls within the above definition and provides that future regulations may further specify certain businesses that must provide an annual public report.
Bill S-211 follows a 2018 report from the House of Commons’ Standing Committee on Foreign Affairs and International Development entitled a Call to Action: Ending the Use of All Forms of Child Labour in Supply Chains urging the Canadian government to take substantive legislative or policy steps to eliminate child labour in global supply chains. Following this, in 2019, the federal government held a public consultation with various stakeholders to address labour exploitation in global supply chains.
Canada’s modern slavery legislation would follow in the footsteps of California’s Transparency in Supply Chains Act 2010, the UK’s Modern Slavery Act 2015, France’s Corporate Duty of Vigilance Law 2017, Australia’s Modern Slavery Act 2018 and the Netherlands’s Child Labor Due Diligence Act (not yet in force).
Takeaways on the current modern slavery landscape in Canada
What is clear from the entry into force of the CUSMA and related Canadian legislative amendments banning goods made from forced labour, Bill S-211, and the creation of the Canadian Ombudsman for Responsible Enterprise (CORE) is that environmental, social and governance (ESG) considerations are becoming increasingly relevant in today’s business landscape. Particularly so in relation to supply chain transparency and issues of forced and child labour.
Thank you to our summer student Hannah Bourgeois for her contribution to this blog post.