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DRAFT FORCED LABOUR BAN

CANADA TAKING STEPS TO APPEASE UNITED STATES & AVOID TARIFFS

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Our firm has recently written on Canada’s forced labour laws here and here. In a further update to Canada’s legislative regime designed to combat forced labour, Bill C-35 was introduced on June 12, 2026, with the aim of prohibiting the importation of goods produced by forced labour (the “Bill C-35”).

In this report, we review the political background that gave rise to this draft forced labour legislation and outline its contents.

Political Background

Canada previously enacted the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Fighting Forced Labour Act”), which came into force on May 11, 2023. The Fighting Forced Labour Act requires certain entities to file annual reports with the Government each year detailing steps taking to prevent/reduce the risk that forced labour was used in their respective supply chains. Failure to comply with these reporting obligations, or providing false/misleading information in a report, is an offence punishable by a fine of up to $250,000. Canada also prohibits the importation of goods produced wholly or in part from forced labour under tariff item no. 9897.00.00 and s. 136 of the Customs Tariff.

Canada’s forced labour laws were recently criticized by the Office of the US Trade Representative (“USTR”) in its Section 301 Investigative Report on Forced Labour, which indicated that Canada “is failing effectively enforce its forced labor import prohibition” and “has not taken action to restrict the importation of goods for which there is a known risk of forced labor”. This was also promptly followed up by a Federal Registry Notice proposing additional 10% tariffs on Canadian products (amongst other countries).

Forced Labour Prohibition

Bill C-35 contains a prohibition on the importation of “goods that are produced wholly or in part by forced labour” at s. 4. This will largely be achieved by the Minister of Foreign Affairs creating list of goods where there are “reasonable grounds to suspect” they are produced with forced labour (the “Prohibited List”). The Prohibited List will include the identity of the producer, or the country or region where the goods are produced (or both).

A person importing goods set out in the Prohibited List will be required under s. 8 of Bill C-35 to produce certain prescribed information to the CBSA at the request of a customs officer. Failure to provide the prescribed information will result in the goods being deemed to be prohibited from importation under s. 9.

Bill C-35 also provides customs officers with detention powers under s. 5(3) – allowing officers to detain goods for up to 90 days for the purpose of making a determination under s. 5(2) regarding whether the imported goods are produced with forced labour. Interestingly, there are no statutory appeal rights, with s. 5(5) specifying that the only avenue for challenging a custom officer’s determination being an application for judicial review under s. 18.1 of the Federal Courts Act! It is anticipated the standard of review will be whether the CBSA’s determination was “reasonable”.

Takeaways

Bill C-35 strengthens the existing prohibitions on the importation of goods produced by forced labour. Whether the US Administration will actually forgo additional tariffs as a result remains to be seen. Canadian companies should monitor the progress of Bill C-35 to understand when it comes into effect, and which goods are on the Prohibited List.

For help with forced labour supply chain issues, please click here.