Question Period Note: FORCED LABOUR (GLOBAL SUPPLY CHAINS)

What is the Labour Program of ESDC doing to combat forced labour in global supply chains?

• The Government of Canada is committed to upholding human rights and international labour standards and has a variety of measures in place across government to address forced labour issues.

• The Government of Canada includes comprehensive and enforceable labour provisions in free trade agreements, has engaged in public consultations on possible measures to address labour exploitations in supply chains, and addresses this issue in international fora, including the International Labour Organization.

• To operationalize the recent forced labour import prohibition that flows from the Canada-United States-Mexico Agreement, ESDC-Labour collaborates actively with the Canada Border Services Agency (CBSA) and monitors and researches evidence related to problematic supply chains.

• Analysis is a complex and lengthy process however significant progress on specific cases is being made. ESDC-Labour is working with the CBSA to identify trade patterns and specific shipments potentially affected by forced labour for consideration and possible enforcement.

Forced Labour Ban
• Under the Canada-United States-Mexico Agreement (CUSMA) Labour Chapter, the three partner countries included an obligation for each party to prohibit the importation of goods produced in whole or in part by forced labour.

• In order to meet its CUSMA obligations, Canada amended the Customs Tariff and its Schedule (No. 9897.00.00), to add this import prohibition, which applies to all goods, irrespective of their country of origin. Goods that are mined, manufactured or produced wholly or in part by forced labour are exempted from the provisions of tariff item No. 9897.00.00 when imported solely for personal use and are not for sale or for any business or occupational use.

• The Customs Tariff already included a prohibition on the importation of goods made with prison labour.

• Long before the entry into force of the forced labour ban in Canada, the Labour Program had taken actions to explore possible approaches to forced labour enforcement and engage with the CBSA to plan next steps, develop knowledge of prominent cases of forced labour in supply chains, and build its capacity to conduct in-depth research and analysis on specific forced labour cases so that effective support can be provided to the CBSA.

• Labour Program and CBSA officials continue to work together to operationalize this new prohibition.

• The Labour Program’s role mostly focusses on reviewing commercial import allegations (or complaints) and researching relevant facts. The Labour Program may also proactively research potential violations to the import prohibition. It is expected that the use of technology will facilitate this work as well as the monitoring of suspected forced labour in global supply chains. The Labour Program will then produce a report on the forced labour allegation signalling to CBSA the likelihood that the goods were produced by forced labour and/or prison labour.

• As part of the newly announced Canadian approach to protect human rights in China and address the risks of forced labour being used in global supply chains, the prohibition on forced labour is described as providing Canada with “…a basis for enforcement against goods produced by forced labour originating in or transferred from Xinjiang’’. The forced labour prohibition is therefore a key feature of Canada’s approach, which is complemented by a number of other measures, including an integrity declaration for companies to sign in exchange for benefiting from the support of the Trade Commissioner Service; a business advisory on doing business with Xinjiang-related entities; enhanced advice on due diligence and risk mitigation related to supply chains and forced labour; and stricter export controls.

• The ongoing dialogue with the U.S. has been productive as Canada is developing its approach to the ban’s operationalization. This collaboration is expected to strengthen over time, particularly in light of 1) the recent announcement of measures to address human rights abuses in Xinjiang, which highlights the key role of the prohibition on the importation of goods made with forced labour in Canada’s comprehensive approach to defending the rights of Uyghurs; and 2) the U.S.’s January 13, 2021, decision to detain cotton products and tomato products produced in China’s Xinjiang Uyghur Autonomous Region.

• In addition to working closely with the CBSA, ESDC-Labour collaborates with Global Affairs Canada as well as with Public Services and Procurement Canada, notably to facilitate the assessment of labour practices and identification of potential risks areas in supply chains, including government procurement. ESDC-Labour also provides information on its role in the operationalization of the ban to industry members (e.g., customs brokers, associations of importers/exporters) that are seeking clarifications or wish to express their views.

• Jurisdictions that have recently taken measures to prohibit the import of goods made with forced labour have had an enforcement regime in place for several years, after extensive research, analysis and validation processes. They take their responsibility to ensure due diligence in their analysis seriously and so does Canada.

• For this reason, ESDC-Labour is performing its due diligence through exhaustive research and analysis and this must be exercised independently before the department is in a position to provide a fact-based analysis of specific goods to the CBSA, for its consideration and possible enforcement. Research and analyses can take up to six months to complete.
• To our knowledge, the U.S. does not publish a list of companies importing goods suspected of being made with forced labour. However, the U.S. does publish a list of specific decisions (i.e. Withhold Release Orders) after thoroughly researching cases relating to foreign suppliers. The U.S. also publishes an annual report that lists goods produced with or sectors that use forced and child labour. The U.S. report does not list companies producing or importing these goods.
• At this time, the Government of Canada is not planning on publishing a list. In general, the Government does not make information about which companies are importing goods publicly available.
Supply Chain Legislation

• During the consultations, participants indicated a clear message: that labour exploitation through global supply chains is unacceptable and the Government should take further action to address it. There were differing views, however, on how to address it. Civil society organizations and labour organizations strongly supported comprehensive legislation, while some industry organizations and businesses suggested that Canada continue to study and learn from other countries to address the root cause of labour exploitation, harmonize to the extent possible with other countries’ legislation to minimize reporting requirements in different jurisdictions, and consider non-legislative measures. The Government has not released a What We’ve Heard report and the Labour Program has not received direction on next steps regarding whether the Government may wish to pursue such legislation.

• As a result of the COVID-19 pandemic, there is significant pressure on governments and industry to have supply chains running at full capacity as soon as possible. Key stakeholders and civil society organizations in Canada and internationally have raised concerns that COVID-19 has exacerbated pre-existing inequalities and has increased the risk of violations of fundamental labour and human rights for the most vulnerable in supply chains around the world. Within Canada, stakeholders such as the Canadian Labour Congress, World Vision Canada and Unicef Canada, continue to call for additional measures to address labour and human rights abuses within supply chains as part of pandemic responses.

• Pre-pandemic, some governments adopted legislative or regulatory initiatives to curb the potential for such abuses. Governments that have introduced legislation addressing labour and human rights violations in global supply chains include France, Australia, the Netherlands and the United Kingdom. More recently, the European Union announced, as part of their COVID-19 recovery package, a proposal to introduce supply chain legislation in 2021.

Modern Slavery Bill

• Senate Bill S-216, An Act to enact the Modern Slavery Act and to amend the Customs Tariff was tabled on October 29, 2020 by Senator Miville Dechêne (Independent Senators Group). A former Bill (S-211 under the same title) was first tabled on February 5, 2020. The Bill imposes an obligation on certain entities to report on the measures taken to prevent and reduce the risk that forced labour or child labour is used at any step in the production of goods in Canada or elsewhere by the entity or in the production of goods imported into Canada. The Bill also provides for an inspection regime and gives the Minister of Public Safety and Emergency Preparedness the power to require an entity to provide certain information. Finally, the Bill also amends the Customs Tariff to allow for a prohibition on the importation of goods manufactured or produced, in whole or in part, by forced labour or child labour as those terms are defined in the Modern Slavery Act (this proposed measure has already effectively been implemented by the government). The Labour Program is working closely with Public Safety and other departments to monitor the Bill as it progresses through the Parliamentary process.

Forced Labour Prohibition

• 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.

• Since establishing that goods have been produced by forced labour requires significant research and analysis, ESDC-Labour will continue to be the lead department for labour-related programs, and the CBSA will continue to support ESDC-Labour’s research into suspected cases of companies importing goods produced by forced labour.

• The International Labour Organization’s Indicators of Forced Labour can be considered as a reference to support the identification of forced labour practices in supply chains.

• ESDC-Labour is actively monitoring and researching evidence related to problematic supply chains. Documented evidence of goods being produced with forced labour is transmitted for the CBSA’s consideration.

• The CBSA may use this information to identify and intercept shipments containing goods that have been identified as suspected to have been 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. Generally speaking, it can take six months or longer to conduct thorough analysis of a single complaint or allegation.

Supply Chain Legislation

• In spring 2019, the Government of Canada conducted public consultations with a range of stakeholders on possible measures to address labour exploitation in supply chains. Depending on the legislative model used, supply chain legislation could mandate businesses operating in a certain jurisdiction to identify, prevent, mitigate and account for human rights (including labour rights) violations in their operations and supply chains.

Modern Slavery Bill

• On October 29, 2020, Senate Bill S-216 entitled An Act to enact the Modern Slavery Act and to amend the Customs Tariff (formerly Bill S-211, under same title) was introduced in the Senate. On March 30, 2021, after Second Reading, it was referred to the Standing Senate Committee on Banking, Trade and Commerce.
• The Bill would impose an obligation on organizations that meet certain criteria (e.g., are listed on a stock exchange in Canada, or meet certain thresholds, such as annual revenues) to report on the measures taken to prevent and reduce the risk that forced labour or child labour is used at any step in the production of goods in Canada or elsewhere by the entity or in the production of goods imported into Canada. The Act would provide for an inspection regime and designates the Minister of Public Safety and Emergency Preparedness as being responsible for its implementation.