Canada Joins Efforts to Tackle Forced Labour
The ugly truth about forced labour in business supply chains has caught up with Canada. This week both houses of the Canadian Parliament passed the Fighting Against Forced Labour and Child Labour in Supply Chains Act, and joined the growing ranks of countries adopting laws that seek to protect human rights in business supply chains. The sponsor of the Bill, Liberal John McKay, called it a modern slavery law and said in a statement it has "serious teeth that will turn Canada from a laggard to a leader in the global fight against slavery and the worst forms of child labour." The Bill was passed but far from unanimously, 270 to 57 votes.
The Act faced criticism from the Bloc Québécois and NDP, who argued that it does not hold companies accountable and lacks the power to address harmful practices. It does not go far enough for these two blocs, and this is consistent with civil society responses to the vast majority of like laws elsewhere; they never go far enough to potentially create real impact. The Canadian Network on Corporate Accountability (CNCA) urged MPs to vote against the bill, stating that it does not require companies to take action against human rights abuses in their supply chains or global operations. According to the CNCA, the law creates the impression that the government is taking action on human rights, but in reality, it does not provide affected individuals with access to remedies such as bringing grievances to Canadian courts. Unlike Germany, a third party cannot bring a complaint against a company. As a result, Bloc Québécois and NDP MPs voted against the bill on Wednesday. There is little evidence that Nay votes were against the Bill for going too far.
It is widely rumoured that the sitting Government - assuming an incrementalist posture - will soon(-ish) augment this Act with a forced labour act, that will go further in requiring companies to act on claims. Well, this Act is a step forward and IF there are further Bills to incrementally move this forward, it becomes a good leaping-off point.
As we all know, no country, no matter how kind and benign we know them to be, hosts the issues of forced labour and child labour in business supply chains. According to research conducted by World Vision, over 1,200 Canadian companies in 2015 imported goods that were at risk of being produced by forced labour or child labour. In 2016, around $34 billion worth of goods at risk of being produced by forced labour or child labour were imported into Canada. To address this issue, the Canadian government has introduced several initiatives that aim to promote responsible business practices, including the establishment of the Canadian Ombudsperson for Responsible Enterprise and the publication of the Corporate Social Responsibility Toolkit and An Implementation Guide for Canadian Business. However, none of the bills introduced to implement the recommendations of the House of Commons Subcommittee on International Human Rights of the Standing Committee on Foreign Affairs and International Development (SDIR) relating to business supply chains have been passed.
So now the freshly minted Act, awaiting Royal Assent (The King’s stamp of approval). The Act contains 28 clauses in five parts (and amends the Customs Tariff.). Herein the main provisions of the Act.
Part 1: Definitions and Purpose
The first two clauses of the bill provide definitions for key terms such as "child labour," "forced labour," and "importer." Clause 3 states that the purpose of the bill is to prevent and eliminate the use of forced labour and child labour in the production of goods imported into Canada.
Part 2: Obligations of Importers
Part 2 of the bill, which includes clauses 4 to 11, sets out the obligations of importers. Clause 4 requires importers to exercise due diligence to prevent and reduce the risk of forced labour and child labour in their supply chains. Importers must also prepare and maintain a forced labour and child labour compliance plan that outlines their policies and procedures for identifying and addressing the risk of forced labour and child labour in their supply chains.
Clause 5 requires importers to submit their compliance plans to the Minister of Public Safety and Emergency Preparedness upon request. Importers must also provide the Minister with any information or documentation related to their compliance plan.
Clause 6 empowers the Minister to issue orders to an importer if there are reasonable grounds to believe that the importer has failed to comply with the bill's obligations. The Minister may also order an importer to take corrective measures to address the risk of forced labour and child labour in their supply chains.
Clauses 7 to 11 set out the consequences for non-compliance. An importer who fails to exercise due diligence or comply with an order issued by the Minister may be subject to penalties, including fines and the seizure of goods.
Public Registry and Reporting
Part 3 of the bill, which includes clauses 12 to 19, establishes a public registry and reporting requirements for importers. Clause 12 requires the Minister to maintain a public registry of information related to importers' compliance plans. The registry must be accessible to the public and include information such as the name and address of the importer and a summary of their compliance plan.
Clause 13 requires importers to submit an annual report to the Minister that describes their compliance with the bill's obligations. The report must include information such as the importer's policies and procedures for identifying and addressing the risk of forced labour and child labour in their supply chains, the results of their risk assessments, and any corrective measures taken to address non-compliance.
Clause 14 allows the minister to appoint designated persons to enforce the Act and gives them broad powers under clause 15 to enter any place where they have reasonable grounds to believe information relating to an entity's reporting obligations is kept. These powers include the ability to examine documents and computer data, take photographs, and remove items for examination, as well as prohibit or limit access. All persons in the place must provide reasonable assistance and access to any data or information required. A warrant issued by a justice of the peace is required for designated persons to enter a home or dwelling-house without consent, according to clause 16.
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Reporting Requirements (Clause 7)
Clause 7 sets out the reporting requirements for entities subject to the Act. An entity must prepare an annual report for each fiscal year in which it carries on business in Canada and meets one of the following criteria:
The report must include a description of the entity’s policies, practices and due diligence measures to prevent and reduce the risk of forced labour and child labour in its supply chains, as well as any steps taken to remediate any incidents of forced labour or child labour that the entity identified. The report must also identify the entity’s suppliers and the goods or services they provide.
The entity must post the report on its website and provide a copy to the Minister of Public Safety and Emergency Preparedness. If the report is not provided within the required time period, the entity may be subject to a penalty.
Enforcement (Clauses 14 to 24)
The Act provides for a range of enforcement measures, including compliance orders, fines and imprisonment for individuals who knowingly or recklessly make false or misleading statements in their reports. In addition, the Act allows for a civil cause of action for damages resulting from a contravention of the Act.
The Act also creates the office of the Commissioner of Forced Labour and Child Labour in Supply Chains, who will be responsible for the administration and enforcement of the Act. The Commissioner will have the power to conduct investigations, issue compliance orders and refer matters to the Attorney General for prosecution. The Commissioner may also enter into agreements with other federal departments, provincial and territorial governments, and international organizations for the purposes of the Act.
Amendments to the Customs Tariff (Clauses 25 to 27)
Clauses 25 to 27 of the Act amend the Customs Tariff to prohibit the importation of goods produced wholly or in part by forced labour or child labour. The amendments empower the Canada Border Services Agency to seize and detain such goods. The amendments also provide for a penalty system for contraventions of the Tariff, including monetary penalties and imprisonment.
Conclusion
The Act represents a significant step forward in the Canadian government’s efforts to eliminate forced labour and child labour from supply chains. The Act imposes reporting requirements on certain entities and creates a range of enforcement measures, including fines and imprisonment, for non-compliance. In perhaps its biggest weakness, the Act does NOT require companies to take action against human rights abuses in their supply chains or global operations.
The Act is similar in many respects to legislation adopted in other countries, including the United Kingdom, France and Australia. However, the Act is interesting for its focus on child labour as well as forced labour – you will recall the Dutch have one only about child labour - and in its requirement that entities identify their suppliers and the goods or services they provide. It does not require companies to act, however, on reports although one gets a sense that if the reports become public, and a company is shown not to act, some opprobrium might be a decent incentive to act in a more timely manner. Let’s see.
The Act’s reporting requirements will be troublesome for SMEs (hence my SME Playbook on Human Rights Due Diligence, available in Amazon) that lack the resources to conduct thorough due diligence on their supply chains. However, the Act provides for a range of tools and guidance to assist businesses in meeting their obligations, including the Canadian Ombudsperson for Responsible Enterprise and the Corporate Social Responsibility Toolkit.
The Act’s impact on the incidence of forced labour and child labour in Canadian supply chains remains to be seen, of course. It will come into force at the start of 2024, but it will take several years before we see how well it gets traction amongst Canadian businesses. However, the Act has at the very least the potential to raise awareness among Canadian businesses of the risks associated with forced labour and child labour in their supply chains, and to encourage the development of more responsible business practices. Overall, a win and a decent platform from which further initiatives will arise and satisfy the blocs of Nay voters on this law.