Bill S-211 designated to tackle child and forced labour will likely be passed in 2023 federal budget and enacted as early as January 1, 2024.
Another bill (S-204) currently at second reading in the Senate, could implement import restrictions from the Xinjiang region of China.
Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff, is intended to serve as a transparency tool by requiring large companies to publish an annual report and to adopt preventive measures in relation to their supply chains.
Companies subject to the Act are those that distribute or import goods into Canada, those that conduct business in Canada or those that have their head office in Canada. Of these, only large companies are covered, i.e., those with more than $20 million CAD in assets or more than $40 million CAD in revenues, or those with at least 250 employees.
The annual reporting requirements include measures taken by companies to “prevent and mitigate the risk” of foreign distributors or suppliers using forced or child labour or their producers using forced or child labour at any stage in the production of goods imported into Canada. The annual reports will have to be formally approved by senior management of the reporting companies. All reports will have to be made public and available on the company’s website.
The Customs Tariff is currently the only enforcement tool in Canada to prohibit the importation of goods produced by forced labour. It already prohibits the importation into Canada of “Articles extracted, manufactured or produced, in whole or in part, by forced labour“. Bill S-211 proposes to add “child labour” to the current prohibition as there are more than 3.3 million children still working in forced labor from which, nearly two-thirds are in the manufacturing and private sector.
Bill S-211 also aims to make companies more accountable in order, more particularly, that they require traceability of the goods they import (most notably those from high-risk regions). It also proposes to clarify the definitions of applicable concepts (“forced labor”, “child labor”, etc.). In the event of non-compliance with the obligations mentioned, companies are exposed to criminal liability. If the company, directors, officers and/or agents make a false or misleading statement regarding forced labor or child labor, or fail to comply with the listed obligations, they are liable to a fine of up to $250,000.
Companies will therefore be required to review their operations to ensure that they are minimizing the risk of forced or child labour in their supply chains, and to gather the necessary data to meet their reporting obligations.
Imports of goods into Canada that a border services officer has reasonable grounds to believe are produced at any stage by forced labour will be detained or confiscated at the border for inspection. If, in the opinion of the border services officer, the goods have been produced by forced labour, the officer will apply the tariff classification set out in Chapter 9897 of the Customs Tariff and will prohibit the entry of the goods into Canada. In some cases, searches and seizures may take place, and even be carried out after importation into Canada at the offices of the companies themselves. Companies will be able to appeal any forfeiture, search, or seizure under the Customs Act.
If you, your association, or your company have any questions regarding customs, importation, or trade compliance, please do not hesitate to contact one of our legal counsels.
DS Lawyers has an experienced team offering a variety of advice in the field of trade and customs law.