Question Period Note: FORCED LABOUR (GLOBAL SUPPLY CHAINS)

Is Canada going to mirror the United States and introduce a prohibition on the importation of all goods from the Xinjiang region of China?

• Forced labour in supply chains is a complex problem that requires a lot of work on the part of governments, industry and other stakeholders to address.

• In July 2020, Canada became the second country in the world after the U.S. to ban the importation of goods produced by forced labour, regardless of country origin.

• Canada’s import prohibition under the Customs Tariff is shipment based, and decisions are made on a case-by-case basis under CBSA’s enforcement authority. The U.S. operates under a different regime and evidence threshold. The US also recently introduced its Uyghur Forced Labour Prevention Act, that prohibits all goods from Xinjiang, but allows importers to apply for an exemption if they can prove the goods were not made with forced labour.

• Canada collaborates closely with the United States, and other partners and international organisations to strengthen global efforts to eliminate forced labour.

• Import bans are only one tool in the toolbox to address forced labour. Canada addresses this through a smart mix of measures including federal procurement requirements, a new Responsible Business Conduct Strategy, and enforceable labour provisions in trade agreements.

• This is in addition to our commitment to advance legislation to eradicate forced labour from Canadian supply chains.

• The Government will be working with Parliamentarians to achieve this commitment, further to the unanimous vote in the House earlier this month to study Bill S-211, and the Government’s intent to propose amendments to strengthen the foundation for supply chain legislation.

• With respect to the Xinjiang region in particular, in January 2021, Canada announced several trade measures to address human rights abuses, including forced labour involving Uyghurs and other ethnic minorities in Xinjiang. These include:
o a specialized Xinjiang integrity declaration for Canadian companies;
o a business advisory on Xinjiang-related entities; enhanced advice to Canadian businesses;
o export controls;
o enhanced awareness raising for responsible business conduct related to Xinjiang; and,
o a study on forced labour and supply chain risks, which is published on Global Affairs Canada’s website.

If asked about S-204 (Senate-introduced Xinjiang Manufactured Goods Importation Prohibition Act) or other bills before Parliament aside from S-211 specifically:
• Implicated departments are currently analyzing Bill S-204 [Bills C-262/263] and will monitor its [their] evolution.

• I am not in a position to comment on the Government’s position on this legislative proposal at this time.

Canada’s Forced Labour Import Ban

• Under the Canada-United States-Mexico Agreement (CUSMA), one of the obligations of the Agreement is for each Party to prohibit the importation of goods that have been produced in whole or in part by forced or compulsory labour.
• Consequently, Canada amended the Customs Tariff and the Schedule to the Customs Tariff to include a prohibition on the importation of goods that are mined, manufactured or produced wholly or in part by forced labour. This amendment took effect upon entry into force of CUSMA on July 1, 2020.
• While the forced labour ban was implemented to fulfill a CUSMA obligation, it applies to all imports, regardless of origin.
• The Customs Tariff is under the purview of the Minister of Finance.
• The Canada Border Services Agency (CBSA) is responsible for the administration and enforcement of the Customs Tariff. EDSC-Labour provides support by conducting research and analysis on the risk of forced labour for specific complaints or allegations. The CBSA may use this information and other sources of information to identify and intercept shipments containing goods suspected of being produced by forced labour.
• Establishing the likelihood that goods have been produced by forced labour requires significant research, analysis and supporting information. Research into allegations of forced labour in global multi-tiered supply chains is a complex and lengthy process, and requires that due diligence be applied at every step. The risk analysis to assess the likelihood that a specific shipment may contain goods produced by forced labour is made on a case-by-case basis, based on available information and analysis.
• CBSA, ESDC and other federal departments are working together to advance the operationalisation of the forced labour import prohibition in Canada, and assessing various models used in other jurisdictions to address labour exploitation.

Other Government of Canada Initiatives to Address Forced Labour

• The government has committed to introducing supply chain legislation as reflected in the December 2021 mandate letter commitment of the Minister of Labour, together with Minister of Public Safety, Minister of Public Services and Procurement and Minister of International Trade, Export Promotion, Small Business and Economic Development. Labour officials are working with other relevant government departments to advance policy work on this commitment, including related to various private members bills (Bill S-211 and C-243) that seek to address exploitation in supply chains.
• Canada negotiates comprehensive and enforceable labour provisions in free trade agreements, which require parties to affirm their commitments under the ILO 1998 Declaration on Fundamental Principles and Rights at Work and to ratify and implement the eight fundamental conventions of the ILO, which includes the Forced Labour Convention (No. 29) and the Abolition of Forced Labour Convention (No. 105).
• Canada also provides technical assistance to partner countries to foster compliance with the commitments set out in free trade agreements, including those related to internationally recognized labour rights and principles (such as the elimination of all forms of forced or compulsory labour).
• In 2021, Public Services and Procurement Canada (PSPC) updated it’s Code of Conduct for Procurement to include expectations that federal suppliers respect human and labour rights. PSPC also developed new anti-forced labour contract clauses to enable termination of a contract if goods do not clear customs because of breaches of the forced labour prohibition. Most recently, PSPC commissioned Rights Lab to conduct a risk assessment to determine which goods are at greatest risk of being produced with forced labour and human trafficking to inform further work in this area.
• In April 2022, Global Affairs Canada released an updated Responsible Business Conduct Strategy, which sets out priorities for the Government of Canada to support Canadian businesses active abroad to integrate leading responsible business practices into their operations, including throughout their supply chains, and to help them mitigate potential risks no matter their size, sector, or scope of activities.

Bills S-211, C-243, C-262 and C-263

• In Parliament, Senate Public Bill S-211 (Fighting Against Forced Labour and Child Labour in Supply Chains Act) and Private Member’s Bills C-243 (Ending the Use of Forced Labour and Child Labour in Supply Chains Act), C-262 (Corporate Responsibility to Protect Human Rights Act) and C-263 (Responsible Business Conduct Abroad Act) have been introduced to propose:
o new measures to address exploitation in supply chains (Bills S-211 and C-243 are focussed on forced labour and child labour, and Bill C-262 proposes a broader human rights due diligence regime); and
o the appointment of a Commissioner for Responsible Business Conduct Abroad to ensure entities comply with due diligence reporting obligations (Bill C-263).
• The Bills are at varying stages of the legislative process:
o Bill S-211, which was introduced by Senator Julie Miville-Dechêne, completed review in the Senate and completed Second Reading stage in the House of Commons on June 1, 2022. The Bill was referred to the Standing Committee on Foreign Affairs and International Development (FAAE) with unanimous consent.
o Bill C-243, which was introduced by Liberal Member of Parliament (MP) Marcus Powlowski, completed first reading in the House on February 8, 2022. It is unlikely to begin second reading in the House in September 2022, given its similarity to Bill S-211.
o Bills C-262 and C-263, which were introduced by New Democratic Party MPs Peter Julian and Heather McPherson respectively, both completed first reading in the House on March 29, 2022.

Hon Kilgour et al v The Attorney General of Canada et al. - T-259-32

• On December 6, 2021, the Federal Court of Canada heard the application for judicial review of Kilgour v CBSA (AG Canada) T-259-21. At issue was the CBSA’s response to the applicant’s request to prohibit the importation of goods produced in Xinjiang, China unless there is clear and convincing evidence that the goods have not been produced wholly or in part by forced labour. The CBSA advised that the Agency had no authority to grant the request. The Uyghur Rights Advocacy Project (URAP), a Canadian organization that aims to promote the rights of the Uyghur people, intervened in the case, arguing that the CBSA does have the authority to prohibit generally the import of goods produced in Xinjiang on the basis that those goods have been produce wholly or in part by forced labour.
• URAP also argued that the CBSA’s authority should be interpreted in light of Canada’s international legal obligations, including the ILO Forced Labour Conventions (No. 29 and No. 105) and obligations in the Canada-United States-Mexico Agreement.
• On April 5, 2022 the Federal Court rendered its decision, dismissing the judicial review on all grounds, finding that the CBSA’s interpretation of the Customs Tariff is reasonable. The applicants have filed an appeal. This is now referred to as Reisdorf, Maria et al v AG.

The U.S. Forced Labour Import Ban

• The U.S. forced labour import prohibition, under Section 307 of the U.S. Tariff Act, has been in place since the 1930s and is implemented by the U.S. Customs and Border Protection (CBP).
• However, in 2016 the U.S. Government removed the “consumptive demand exception”, which up until then had allowed for exceptions to the forced labour import ban if there was a domestic need for the product. Enforcement action has increased greatly since 2016, with over 1400 shipments detained in 2021.
• The CBP can issue a Withhold and Release Order (WRO) and detain a shipment when it has reasonable suspicion that the good was made with forced labour.
• The CBP can issue a Finding and seize a shipment when there is evidence that conclusively demonstrates that the good was made with forced labour.
• Under the Tariff Act, the CBP can issue a civil penalty on importers for importing goods contrary to U.S. law. The CBP has so far only issued one penalty (against a company importing stevia products from China, after a WRO was issued against this product).

The Uyghur Forced Labor Prevention Act

• On December 23, 2021, the U.S. passed the Uyghur Forced Labor Prevention Act (UFLPA).
• This new piece of legislation came into effect under U.S. Customs and Border Protection (CBP) on June 21, 2022.
• The UFLPA creates a rebuttable presumption that all goods produced (wholly or in part) in the Xinjiang Uyghur Autonomous Region (XUAR), or goods produced by certain entities, are made with forced labour and are therefore prohibited from being imported into the U.S., unless the commissioner of the U.S. CBP gives an exception.
• To rebut the presumption, an importer must have “clear and convincing evidence” that the import was not made, in whole or in part, with forced labour (notwithstanding the link to XUAR or a listed entity) and that the importer has complied with the US Government’s due diligence guidance.
• The UFLPA lists high priority sectors as cotton, tomatoes and polysilicon. These sectors will require sector-specific enforcement strategies.
• The UFLPA also amends the Uyghur Human Rights Policy Act of 2020 to underscore that sanctions may be imposed due to “[s]erious human rights abuses in connection with forced labor” related to the XUAR. By June 21, 2022 the President is required to submit an initial report to Congress identifying non-U.S. persons subject to sanctions. These individuals will be subject to asset blocking, as provided under the International Emergency Economic Powers Act, as well as the revocation or denial of visas to enter the U.S.
• The CBP released operational guidance for importers on June 13, 2022, and the FLETF released its enforcement strategy on June 17, 2022.

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