A new law against modern slavery

In 2024, the new law against modern slavery must force Canadian companies to publicly declare what they are doing to counter forced labor and child labor. However, it does not require any concrete action and focuses above all on a vital need in commerce: protecting one’s reputation.

Concretely, the Law on Combating Forced and Child Labor in Supply Chains must apply from 1^er January to businesses with 250 or more employees, at least $20 million in assets or $40 million in revenue. All companies listed on the stock exchange will also be subject by default, as will government institutions.

The organizations concerned will have to explain each year their efforts to combat forced labor and child labor. “The report must be presented to the minister no later than May 31 each year and must also be published on the company’s website,” explains Jean-Guillaume Shooner, partner at Stikeman Elliott and specialist in international trade. Federal corporations will also have to send the report to each shareholder, at the same time as the annual financial statements.

In the event of an infraction, the law also provides for the imposition of maximum fines of $250,000 on the companies themselves, but also potentially on their managers or directors.

No concrete measures to take

Federal law does not impose any “threshold” that could be used to determine whether a company’s efforts to combat forced and child labor are sufficient.

“There is no obligation to take specific measures on the supply chain,” says Paul Lalonde, partner at Dentons and specialist in international trade law. Companies will have an “obligation to say” what they do or do not do, period. “It’s completely legal to say: ‘I’m not doing anything to fight against child labor,’” illustrates Alexis Langerfeld, doctoral student at the Center for Economic Law Studies at Laval University.

As the document will be consultable by everyone, a company which makes such a declaration would nevertheless risk suffering the repercussions. And in principle, the Minister of Public Security could require certain information.

The law could also give pause to companies that source from Canada. The issue of closed work permits, for example, is increasingly raising questions about the free will of agricultural workers in particular, who are forced to work for a single employer, under penalty of being kicked out of the country if they resign. “It’s certain that companies like Metro will ask themselves questions,” says Claudia Rebolledo, professor at HEC Montréal and specialist in supply chains.

Other laws go further

The new law against forced labor and child labor is in line with a trend in Western countries, which are adopting rules of the same type one after another. However, some governments go further.

Full professor at the Institute of Applied Ethics at Laval University, Ivan Tchotourian emphasizes that Germany does not let companies self-regulate. “We really ask the company to have a concrete plan,” he explains. We will define precise standards to be achieved, which Canada does not do. »

Consequences at customs

Canada had already added new border measures after the Canada–United States–Mexico Agreement, ratified in 2020 to replace the North American Free Trade Agreement (NAFTA). New rules include banning imports of goods produced using forced labor or discriminatory practices and adding child labor to the definition of forced labor.

Specialists note, however, that Ottawa has only used this ban once to seize merchandise, clothing imported from China, which it ultimately returned to its importer after its challenge. In comparison, the United States seized goods worth a total of nearly $1 billion just between June 2022 and April 2023, according to an article from Borden Ladner Gervais.

Hence the idea of ​​the new federal law: since the government doesn’t wield much of a stick, it might as well force companies to make declarations about their supply chain.

Ottawa already has a tool to shine the spotlight on companies that are not doing enough in this area. The Canadian Ombudsman for Corporate Responsibility is responsible for investigating complaints about human rights violations by domestic companies abroad.

The organization particularly looked into the cases of Levi Strauss, Walmart, Hugo Boss and Nike. He has just announced the opening of an investigation into Guess and possible links of the champion of faded jeans to the forced labor of Uyghurs in China.

The Nova Scotia fish company High Liner was also able to measure the reputational impact that the importation of goods resulting from modern slavery can have.

Last October, a journalistic investigation by the organization The Outlaw Project, published in the Globe and Maildemonstrated that seafood it imported came from a Chinese factory using Uyghur forced workers.

The government didn’t have to get involved for High Liner to quickly cut ties with the company.