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Slavery in the Supply Chain: New Canadian Rules on the Way?

Fasken
Reading Time 5 minute read
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The impacts of slavery, forced labour, and child labour are alive and well in Canada. In the clothes you wear, the home appliances you buy, and the ingredients you use in your favourite family dinners. Anything can be tainted by the labour of the enslaved, imprisoned, children, and those working to pay off debt assumed by their parents, grand-parents, or even great-grandparents – all are sources of labour used around the world. A 2017 study by the International Labor Organisation (“ILO”) estimated that 25 million people were in forced labour worldwide.1 In the same year, the ILO estimated that 157 million children were engaged in child labour and, of those, 75 million were engaged in hazardous work.2

While Canada has effective procedures to seize and destroy counterfeit handbags at the border, it presently has no equivalent procedures for goods made with forced or child labour.

That situation may change if the Modern Day Slavery Act becomes law. Introduced by Senator Julie Miville-Dechêne, the Modern Slavery Act is a private member’s bill working its way through the Parliamentary system that appears likely to become law.

Canada already lags efforts by the U.S., UK, and Australia to combat forced and child labour. The U.S. Customs and Border Protection Agency has taken more enforcement actions in 2020 against forced and child labour imports than in all of the previous twenty years; prohibiting imports from certain companies, seizing goods at the border, and issuing penalties against importers. The UK’s 2015 anti-slavery legislation now requires large companies to report their efforts to eradicate slavery and human trafficking in their business, including their supply chains. In Australia, large companies are now required to submit annual reports on their efforts to eliminate forced labour from their supply chains.

The Canadian Act would oblige large Canadian businesses to file public, annual reports on what they are doing to prevent and reduce the risk that forced or child labour is used in any step in the production of goods, whether in Canada or overseas. The Act also provides for an inspection regime and gives the Minister the power to require an entity to provide certain information.

Child labour is labour or service provided or offered by persons under the age of 18 years, wherever provided, under circumstances that are contrary to Canadian law or would be if done in Canada. The definition also includes the practices listed in article 3 of the Worst Forms of Child Labour Convention, 1999, that is: (a) slavery or similar practices such as the sale and trafficking of children, debt bondage and serfdom and forced or compulsory labour; (b) child prostitution; (c) the use of children in illicit activities such as drug trafficking; and (d) work which, by its nature, is likely to harm the health, safety or morals of children.

Forced labour is defined as labour or service provided or offered to be provided by a person under circumstances that (a) could reasonably be expected to cause the person to believe their safety or the safety of a person known to them would be threatened if they failed to provide or offer to provide the labour or service; or (b) constitute forced or compulsory labour as defined in article 2 of the Forced Labour Convention, 1930, which is, with certain exceptions, work or service exacted from a person under the menace of any penalty and for which the said person has not offered himself voluntarily.

All listed entities on Canadian stock exchanges will be required to report on the steps taken during that year to prevent and reduce the risk that forced labour or child labour is used in any step of the production of goods in Canada or overseas. In addition, any entity that has a place of business, or does business, in Canada, will have to report if it has assets in Canada and meets two of the following three conditions: (i) it has at least $20 million in assets; (ii) it has revenues of at least $40 million; or (iii) it has at least 250 employees. Those thresholds for reporting reflect those found in Canada’s Extractive Sector Transparency Measures Act. Finally, the Bill provides for a regulatory power to require additional entities to report.

The entity reports will be public and will have to include information on: the entity’s structure and the goods that it produces or imports; its anti-forced or child labour policies; its activities that carry a risk of forced labour or child labour being used and the steps taken to manage that risk; any remediation measures taken; and its internal training on forced and child labour. The goal is that by forcing the largest entities to publicly report on their efforts to eliminate forced and child labour in their supply chains, those entities will insist that their suppliers take action to eliminate such practices.

The Act would also amend the Customs Tariff to prohibit the importation of goods manufactured or produced, in whole or in part, by forced labour or child labour. Currently, only goods made by “prison labour” are prohibited, and that provision is rarely enforced.

Failure to comply with the Act’s provision will be an offence, and company officers and directors who directed, authorized, assented to, acquiesced in or participated in the offence may be prosecuted individually.

The imposition of a reporting requirement on Canada’s largest companies is intended to have a cascading impact on their entire supply chains. Reporting companies will begin imposing and enforcing forced and child labour prohibitions on their suppliers, and those suppliers will, inevitably, seek to do the same thing to the sub-suppliers. This could be an important first step in the fight against forced and child labour in Canadian supply chains, and may have a real impact in reducing these practices. The reports that entities will be required to publish will be scrutinized by civil society, and those companies found lacking will be subject to public critique and pressure to change. While most private member’s bills never become law, there is a growing sense that the Modern Slavery Act may do so. That is a combination of the fact we are in a minority parliament, there appears to be solid cross-party support for the initiative, and there is little political capital to be made from opposing a measure to eliminate the abomination of forced and child labour.

1 Global Estimates of Modern Slavery, ILO, 2017: https://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/documents/publication/wcms_575479.pdf

2 Global Estimates of Child Labour: Results and Trends, 2012-2016, ILO, 2017:   https://www.ilo.org/wcmsp5/groups/public/@dgreports/@dcomm/documents/publication/wcms_575499.pdf

 

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