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On June 2, 2026, the Office of the United States Trade Representative (USTR) concluded that Canada has not effectively enforced its prohibition on imports produced with forced labour. The USTR determined that this deficiency is “unreasonable” and “burdens or restricts” US commerce, characterizing Canada as a “dumping ground” for the re-export of forced labour goods barred from entry into the United States. As a result, it has proposed the imposition of a 10% tariff on goods from Canada, not otherwise exempt.1,2
Canada has responded swiftly. On June 12, 2026, the federal government introduced Bill C-35, An Act respecting the prohibition of the importation of goods produced by forced labour, which received first reading in the House of Commons.3 The proposed legislation (the Act) aims to address USTR’s concerns about the effectiveness of Canada’s current enforcement regime in preventing and responding to forced labour.
Bill C-35 contains several key features that will be particularly relevant to commercial importers and other supply chain participants, including the following:
Prohibition on Importation
The Act would prohibit the importation of goods produced wholly or in part by forced labour.4 The Act incorporates the Customs Act as the primary enforcement mechanism for the new regime, such that any contravention of the Act or its regulations is treated as a contravention of the Customs Act. Canada Border Services Agency (CBSA) officers would be empowered to determine whether imported goods are produced wholly or in part by forced labour, including through the detention of goods for up to 90 days (or a longer prescribed period) to facilitate that determination.
Decisions of CBSA officers are not subject to appeal or redetermination under the Customs Act, although they would remain subject to judicial review before the Federal Court. The Governor in Council would also have the authority to designate provisions of the Act for the purpose of applying administrative monetary penalties under the Customs Act.
Establishment of Designated Goods List
The Act would authorize the Minister of Foreign Affairs to establish, by regulation, a list of goods in respect of which there are reasonable grounds to suspect that they are being produced wholly or in part by forced labour. The list may identify goods by reference to specific producers or entities, as well as by country or region of origin, thereby enabling a flexible and targeted approach to identifying high-risk supply chains. In compiling this list, the Minister may rely on information shared by a range of government departments and agencies, including Public Safety Canada and the CBSA.5
Inclusion on the list would trigger significant compliance obligations. Importers of listed goods would be required, upon request, to provide prescribed information to the CBSA demonstrating that the goods are not produced, in whole or in part, by forced labour. This would effectively require the submission of enhanced supply chain traceability documentation, including evidence relating to sourcing and production processes. Failure to provide the required information would result in the goods being deemed prohibited and denied entry into Canada.
Cost Recovery and Compliance Incentives
The proposed Act would also introduce a cost-recovery mechanism designed to reinforce compliance. Where goods are determined to have been imported in contravention of the prohibition, importers and owners would be jointly and severally liable for costs incurred by the government in connection with enforcement activities. These costs may include expenses related to the examination, detention, investigation, storage, transportation, or disposal of the goods.6
Viewed as a whole, Bill C-35 represents a significant shift toward front-end risk identification combined with importer-driven verification. The regime places greater responsibility on importers to demonstrate compliance, supported by enforcement measures that both restrict market access and internalize the costs of non-compliance. In these respects, the proposed Act would complement — and go beyond — Canada’s existing transparency-focused regime under the Fighting Against Forced Labour and Child Labour in Supply Chains Act, marking a clear move toward a more enforcement-driven approach to addressing forced labour risks in global supply chains.
Footnotes
1. Office of the United States Trade Representative, Report on Canada’s Enforcement of Forced Labour Import Prohibitions, June 2, 2026.
2. This additional duty would not apply to goods that satisfy the rules of origin under the Canada-United States-Mexico Agreement (“CUSMA”). Those goods would continue to be able to enter the United States without being subject to the additional 10% duty.
3. Bill C-35, An Act respecting the prohibition of the importation of goods produced by forced labour, 1st Sess, 45th Parl, 2026 (first reading June 12, 2026).
4. Bill C-35, section 4. Section 2 defines ‘forced labour” as “forced or compulsory labour” in Article 2 of the Forced Labour Convention, 1930 (No. 29) of the International Labour Organization.
5. Bill C-35, section 6.
6. Bill C-35, section 10.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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