Canada has announced new measures to address human rights abuses in Xinjiang, China, where it says there are “credible reports of human rights violations affecting Uyghurs and other ethnic minorities … including mass arbitrary detention, forced mass arbitrary separation of children from their parents, suppression of religious and cultural practices, repressive targeting and surveillance measures, forced labour, forced sterilization, torture and other forms of mistreatment”. Canada’s action reflects similar action taken by other countries, including the U.S. and the UK.
This bulletin highlights the obligations resulting from these recent measures that are of particular importance to businesses and importers. To learn about Canada’s other efforts to combat forced labour, see our previous bulletin titled Slavery in the Supply Chain: New Canadian Rules on the Way?
Measures to Address Forced Labour in Xinjiang
The new measures include:
• Xinjiang Integrity Declaration: In order to receive any support from the Trade Commissioner Service, Canadian businesses must sign a Declaration that they (1) are not sourcing directly or indirectly from Xinjiang or from entities relying on Uyghur labour; (2) commit to operate in a manner that meets or exceeds international human rights standards such of the OECD and the UN.; and (3) are aware of, and have taken measures to abide by, Canadian laws and expectations concerning the prohibition of forced labour.
• Business Advisory on doing business with Xinjiang-related entities: Global Affairs Canada has issued an advisory to help Canadian businesses and other stakeholders understand the risks of having supply chains associated with entities that engage in forced labour. The advisory also provides examples of best practices that can be adopted while conducting due diligence of supply chains, such as:
• Examining potential indicators of forced labour, for example, a lack of transparency on the origins of goods, internment terminology and factory locations
• Having knowledge of end-users when exporting products and services – especially high-technology products - which may be used to arbitrarily track ethnic minorities
• Collecting information by conducting third-party audits and working with relevant industry groups and non-governmental organizations
The existing measures include:
• Prohibition on the Importation of Goods Produced with Forced Labour: Since July 1, 2020— as part of the implementation of the Canada-United States-Mexico Agreement (CUSMA) — tariff item No. 9897.00.00 of Canada’s Customs Tariff has prohibited the importation of goods that are mined, manufactured or produced wholly or in part by forced labour. The prohibition applies to all goods, irrespective of their country of origin. The intention behind the law is to combat forced labour, particularly in Xinjiang, but more generally to prevent goods produced, even partly, by forced labour from entering Canadian and global supply chains.
• Export Controls: Effective September 1, 2019, the Minister of Foreign Affairs will not issue export and brokering permits under the Export and Import Permits Act (EIPA) if it is determined that there is a substantial risk that an export would result in a serious violation of human rights. Substantial risk is determined based on an assessment of information such as the nature of the goods being exported, their end-use, and the country of destination, among other things. The effect would be to deny permits for any exports that could be misused for government surveillance, repression, arbitrary detention or forced labour in Xinjiang or other destinations.
What Canadian Businesses Should Do
The measures require Canadian importers to be more diligent in scrutinising their supply chains. It is no longer sufficient to buy only from suppliers that do not use forced labour, businesses need to ensure that their suppliers are not purchasing raw materials from suppliers using forced labour. For example, given that the Xinjiang region produces around 80% of China’s cotton, Canadian fabric and garment importers will have to work hard to ensure that cotton fabrics and garments they purchase from China, or any other country, contain no Xinjiang sourced cotton.
Conducting any human rights due diligence is further complicated by the fact that, according to both Canadian and U.S. governments, there is evidence that forced labour is in use across China to produce goods in a variety of industries. Those goods are often used in third-country production of finished products.
Failure to comply with these measures could result in seizures, along with and civil and criminal penalties. In addition, Canadian importers should be aware of the reputational risk of being associated with forced labour goods, and the risk of causing damage to their Canadian customers by supplying tainted products.
Fasken will continue to monitor significant legislative and policy developments concerning measures to prevent goods produced by forced labour from entering Canadian and global supply chains, and provide updates where necessary.