ountries agreed in the new NAFTA to ban imports of products made in whole, or in part, with forced labour; Canada subsequently entrenched the rule in its own domestic law. Yet at this stage, the enforcement record seems lopsided. If one were keeping score, it would look something like: 2,398 for the United States, 1 for Canada. That’s how many shipments each country, in the last fiscal year, stopped at customs over suspicions they contained forced-labour goods. Canada didn’t actually block anything permanently. The sole intercepted shipment, clothing from China, was let in after an appeal by the importer. The pace in the United States, meanwhile, is still escalating.
U.S. Customs and Border Protection (CBP) is now stopping more items since a new law took effect on June 21 and, at the current rate, could target more than 5,000 shipments over a 12-month span. The U.S. hasn’t yet released a detailed breakdown of how many of these shipments were eventually let in and how many were blocked permanently. The main impetus for the new law is well-documented human rights abuses against Uyghurs, who reside in China’s Xinjiang region. Beyond that, the U.S. also just added 32 products from different countries to an older list of illicit goods; in a separate measure, it recently targeted a sugar company in the Dominican Republic.
Canada Better Wake Up
Canada had better wake up, says one Canadian parliamentarian. Otherwise, he warns, the country faces economic consequences. The glaring disparity, Liberal MP John McKay says, could eventually lead the U.S. to file a complaint under our trade pact and then, potentially, slap retaliatory penalties on some Canadian goods. “There’s going to be some retaliatory measure. And it’s perfectly understandable,” McKay told CBC News in an interview. “It’s perfectly understandable the Americans would be upset with us. Because they’re enforcing their side of the Canada-U.S.-Mexico free-trade agreement and we’re not doing ours,” he said. “It’s not right. It’s economically stupid, but morally it’s not right.”
McKay is pushing a private member’s bill, S-211, through Parliament that would force large companies to file a report every year detailing steps taken to root out forced labour. It’s already passed in the Senate and received second reading in the House of Commons, and McKay hopes it will become law by the spring. He says he can’t understand why Canada Customs has detained, briefly, only one shipment — and wonders whether it’s a lack of resources, or laws, that’s the problem. To be fair, the U.S. had a massive head start in preparing for this: Americans have had their own anti-forced-labour law for almost 100 years.
The Complexity of Trade
One trade expert and industry consultant defends Canada. Eric Miller says importers are working to solve a devilishly complex issue. As an example, he cites a seemingly simple product: a T-shirt. It takes about 100 steps to make one — from harvesting cotton to the final shipment to a store — and he says it’s hard to conduct inspections on every step of the supply chain, as components pass through multiple hands via factories in several different countries. Meanwhile, the companies face threats. In China, for example, firms that co-operate with foreign sanctions face public boycotts and also punishment under a new law. Miller says countries can make all the promises they want in a trade agreement — but it won’t amount to much without systemic change, such as new tracing technology, new laws and more public- and private-sector personnel.
Miller suggests the U.S. would be ill-placed to bring a trade case on this issue, since there’s no evidence Americans are close to solving the problem either. U.S. Customs only physically inspects a tiny percentage of shipments, he says. That leaves it to researchers and reporters to flag myriad ongoing examples of forced-labour imports. “The U.S. does not have this all figured out either,” Miller said. Researchers keep finding evidence to suggest such imports remain plentiful. Take one recent study on the auto industry by a U.S. university and non-governmental organization. It warns that every major car company in the world is exposed to the risk of importing goods produced by forced labour in Xinjiang, with 96 mining, processing and manufacturing companies operating there connected to the global auto sector. Now some companies are pushing the U.S. government to conceal the very records that help researchers identify such imports.
The Political Debate
In Ottawa, there’s a debate about which bill Parliament should pass. MP John McKay’s is the furthest advanced and has government backing. He says his makes sense because it’s more likely to get enforced than other proposals that, in his view, make big promises but risk falling short in implementation. Other bills include Conservative-sponsored legislation in the Senate that would issue a blanket ban on goods from Xinjiang, and proposed NDP legislation in the House that’s stricter than McKay’s bill. Human rights advocate Lori Waller says the Liberal-backed bill is too timid and wouldn’t change fundamental problems. The group she works for, Above Ground, has documented a number of ways current Canadian law makes it difficult to stop shipments at customs. Waller says the NDP bill would impose real requirements on these companies — forcing them to examine supply chains, take action and, if they fail, face lawsuits. McKay’s bill is simpler: It would require large companies to publish a report online each year detailing their efforts to solve supply chain risks, with a maximum fine for non-compliance set at $250,000. “We think it’s pretty limited,” Waller said of the bill. “There’s not a lot of evidence that this has been made a political priority [in Canada].”
This is an excerpt from the 16 December 2022 CBC News Article. Sourced from CSCB.
Questions about your trade and if it might be affected by forced labour laws under USMCA/CUSMA? Please contact us, we’re here to help.