Canada Looks Poised to Pass Law on Forced Labor
Canada could require that companies report on their efforts to stop goods made with forced labor from entering their supply chains, adding to momentum among Western governments to tackle the practice.
Pending legislation would compel many companies to report on steps taken to prevent or reduce the use of forced labor in their supply chains by detailing, among other things, parts of the supply chains where forced labor might be occurring and the company’s due-diligence procedures.
The bill, known as S-211, passed Canada’s upper chamber last year and has moved through several key steps in the House of Commons. It could become law as soon as March, according to the office of Sen.
the lawmaker who sponsored the legislation.
Sen. Miville-Dechêne called the bill a “first step in this struggle against modern slavery.”
“It looks far away, but it’s not,” she said. “We are accomplices. We are consuming products that contain forced labor.”
With the passage of S-211, Canada would join several other Western governments in trying to stop businesses’ use of forced labor.
The U.S. has taken one of the most aggressive tacks with a law that bars most imports from China’s Xinjiang region, and has allocated more resources to its enforcers. But other jurisdictions have recently taken up the issue as well.
The European Union is proposing to block forced labor-tainted goods from its common market. France has a law requiring its biggest employers—those with more than 5,000 employees in France or 10,000 worldwide—to perform due diligence on their supply chains with the goal of preventing human-rights abuses.
A German law that went into force Jan. 1 requires companies to do due diligence on their supply chains to look for environmental and human rights violations, including the use of forced labor. Australia and the U.K. also have their own legislation, called the Modern Slavery Act in both countries, and the U.K. government last year said it would toughen its law.
Canada’s legislation would apply more broadly than, for example, France’s law, having an impact on some companies with as few as 250 employees. It falls short, however, of mandating that companies take specific due-diligence steps.
The Canadian proposal has attracted both support and criticism. Businesses subject to the legislation wouldn’t have to stop forced labor-linked goods from entering their supply chains, but only report on their efforts, if any.
Violators—those that either fail to report, or report false information—would be subject to a fine of 250,000 Canadian dollars, equivalent to about $186,000.
Canada pledged in the United States-Mexico-Canada trade agreement, which became effective in 2020, to block the import of goods made with forced labor. So far, the country has intercepted one attempted import, a shipment of women’s and children’s clothes in 2021, and later released the shipment after the importer appealed, a government spokesman said.
The U.S., in contrast, has blocked shipments worth hundreds of millions of dollars from the Xinjiang region of China alone, according to government data, and in recent months has blacklisted companies over forced labor concerns several times.
Despite calls for more action from Canada, the law as drafted would do “more harm than good,” the Canadian Network on Corporate Accountability, an advocacy group whose membership includes trade unions and nongovernmental organizations, said in a letter to lawmakers posted on its website this month.
“At worst, the bill is damaging because it creates the appearance of action to end modern slavery, without actually having any such effect,” the group said.
S-211 wasn’t directly championed by the government of Canadian Prime Minister
Ms. Miville-Dechêne, its sponsor, is an independent member of Canada’s Senate, a body whose members aren’t elected and that normally confines itself to reviewing bills and offering suggestions. Mr. Trudeau’s government has promised to take action, but so far hasn’t put forward its own legislative proposal.
A spokesman for Canada’s Minister of Labor said the government is committed to introducing its own legislation, but currently has no time frame for it.
The S-211 bill is supported in Canada’s House of Commons by
a member of Mr. Trudeau’s Liberal Party. Mr. McKay said he expects the bill, a version of which has been introduced several times in recent years, will clear its final hurdles soon.
“We can say with some confidence that this legislation will pass and go to royal assent this spring,” he said, referring to Canada’s final step in the legislative process.
Mr. McKay added that he hopes the bill might lead to future legislation that could require enhanced due diligence by companies.
The growing complexity of laws on reporting and due diligence in supply chains can particularly affect compliance for companies in sectors with complex supply chains, such as electronics, medical devices and industrial machinery, said
director of corporate responsibility at Assent Inc., a supply-chain management company based in Ottawa.
Ms. Carpenter said that, despite criticism that the bill focuses on reporting, S-211 is a “major step” for Canada.
Companies have already begun to anticipate the new requirements, and many multinationals that operate in Canada are already complying with related laws in other jurisdictions, said
a Toronto-based lawyer at the Dentons firm.
The bill is written to go into force the Jan. 1 after its passage, which means the earliest it would come into effect is 2024.
Write to Richard Vanderford at Richard.Vanderford@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8