Forced Labor: North America

Among other key provisions, the 2020 USMCA committed Canada, the United States and Mexico to effectively enforce forced labor import bans and promote compliance, including the use of inspections.  

Canada

Canada has taken a different approach from the United States.  The Canada Border Services Agency (CBSA) is tasked with the enforcement of imports into Canada. Effective July 2020, if CBSA determines that an import is in non-compliance and produced with forced labor, the agency will re-classify the import as a prohibited good. As of the time of this writing, there are very few reports of import transactions that have been detained by CBSA.

CBSA has also recognized that imports from the Xinjiang Uyghur Autonomous Region (XUAR) are at risk for forced labor and has announced measures to address the human rights abuses in the region, including a Business Advisory on XUAR related entities and a XUAR Integrity Declaration for Canadian companies. Canada has also conducted a study regarding XUAR forced labor and supply chain risks, which includes the commodities that may be produced with forced labor in XUAR.

Two important pieces of legislation currently before the Canadian Parliament may strengthen Canada’s enforcement capability in the months ahead.

Mexico

Mexico has recently taken steps to comply with its forced labor obligations under USMCA. Mexico recently announced a resolution to ban the importation of goods produced with forced labor effective May 18, 2023, Administrative regulation that sets forth the goods which importation is subject to regulation by the Ministry of Labor and Social Welfare. This resolution  provides a process for Mexican citizens or entities to submit a petition to prohibit the import of goods produced with forced labor. The petition will be reviewed and may be investigated by Mexico’s Ministry of Labor and Social Welfare (Ministry). The government of Mexico can also independently initiate an investigation. Importers of the subject goods will have the opportunity to submit information to rebut the allegations. The decision must be made within six months after the petition is filed, which can be extended to one year. A determination that forced labor is used will result in inclusion on the Ministry’s website and an import ban on the covered goods, effective 90 days after the decision is published.

It remains to be seen how Canada and Mexico will enforce these new laws. However, it is clear that the U.S. is pushing its trading partners towards increased forced labor enforcement. Importers should take immediate action to prevent supply chain disruption. For many companies, complying with these prohibitions and new regulations can be a herculean task. If your company is doing business in the North American market,– we are here to help.