In the span of a few hours last Friday, new US forced labor compliance guidance was published, Canada proposed a more robust forced labor import ban and the EU launched its public consultation on Corporate Sustainability Due Diligence Directive guidelines. These developments are discussed in this post.
US Customs and Border Protection Publishes New Forced Labor Enforcement Operational Guidance for Importers
US Customs and Border Protection has published CBP Forced Labor Enforcement Operational Guidance for Importers. Among other things, the approximately 80-page Guidance includes:
A new enforcement process map covering in one document actions relating to the Uyghur Forced Labor Prevention Act, Withhold Release Orders, Findings and the Countering America’s Adversaries Through Sanctions Act (the last is North Korea focused).
Dedicated sections on WRO/Finding and CAATSA enforcement, with step-by-step guidance for importers.
Practical due diligence recommendations for importers.
Appendices that address, among other things, (1) UFLPA high-priority sector supply-chain traceability documentation, (2) supply chain due diligence, tracing and management practices, (3) best practices for importers when submitting documentation and (4) isotopic testing.
The Guidance supersedes CBP’s June 2022 UFLPA Operational Guidance for Importers.
CBP created the Guidance to help importers understand the differences among the various forced labor authorities concerning imports to the United States and their respective enforcement processes. It also explains (1) the steps importers should take prior to importing goods to the United States, (2) what records importers need to provide to demonstrate admissibility should their goods be detained or excluded and (3) how to submit requests to Customs and Border Protection to have cargo released into US commerce.
In addition, the Guidance is intended to help businesses practice reasonable care to comply with US forced labor laws, especially when working with vendors, suppliers, manufacturers and companies that are at risk of using forced labor in their production supply chain.
European Commission Launches CSDDD Consultation
The European Commission has launched a public consultation in connection with the guidelines it is developing pursuant to the Corporate Sustainability Due Diligence Directive. The consultation is open through July 24.
Under the CSDDD, the Commission is tasked with issuing guidelines on model contract clauses, the due diligence process, including risk factors and the sharing of resources and information among companies and other legal entities, third-party verification, industry and multi-stakeholder initiatives, data and information sources, digital tools, engagement by stakeholders and penalties. The current consultation will inform the Commission’s development of guidelines.
In connection with the consultation, the Commission noted that its guidelines are intended to provide practical orientation to (1) companies on how to fulfil their due diligence obligations, (2) EU member state authorities on how to implement and enforce the CSDDD and (3) stakeholders on how to pursue their rights. The guidelines also are intended to be relevant for companies and other stakeholders in non-EU countries that are linked to the supply chains of companies with obligations under the CSDDD.
The Commission expects to adopt guidelines during the first quarter of 2027.
For the consultation, the Commission has issued a questionnaire that solicits responses to more than 50 questions concerning, among other things, the topics below. Respondents do not need to answer all of the questions to submit the questionnaire.
Integration of due diligence into policies and risk management systems
Human rights and environmental impacts
Identification of adverse impacts, including data and information sources
Risk factors
Digital tools
Prioritization
Responsible disengagement
Purchasing practices
Living income and living wage
Value chain investments
Remediation
Conflict-affected and high-risk areas
Sharing of information and resources and collaboration
Due diligence support at the group level
Model contractual clauses
Guidance on fitness criteria for industry and multi-stakeholder initiatives
Commission accompanying measures
Guidance on third-party verification
Meaningful stakeholder engagement
Stakeholder and representative engagement
The questionnaire also allows additional files to be uploaded.
Canada Proposes to Strengthen Forced Labor Import Ban
Bill C-35, An Act respecting the prohibition of the importation of goods produced by forced labour, had its first reading in the House of Commons on Friday.
If adopted, the Act would expand upon and replace Canada’s current forced labor import ban under the Customs Tariff, which was adopted in 2020 in connection with the US-Mexico-Canada Agreement. Among other things, the Act would authorize the Minister of Foreign Affairs to establish a list of goods in respect of which there are reasonable grounds to suspect that they are produced by forced labor. The list could single out particular producers, or the country or region in which the goods are produced, or both.
An importer of goods on the list would be required to provide to Canadian customs authorities prescribed enhanced supply chain traceability information before being able to import the goods. If requested information is not provided, the goods could not be imported. The proposed Act also would create a cost-recovery model when importers are found to have imported goods made using forced labor.
The Bill, which is in response to the findings of the US Trade Representative’s Section 301 forced labor investigation, was expected, since it was telegraphed in a Ministerial statement that came out shortly after the findings were released. The USTR concluded that 60 US trading partners, including Canada, insufficiently banned the importation of goods produced with forced labor (see here for the USTR’s June 2 report). In light of its findings, the USTR has proposed an additional 10% tariff on Canadian imports generally (there are significant exceptions).
In the case of Canada, the USTR recognized that Canada’s Customs Tariff prohibits the importation of goods produced with forced labor. However, the USTR concluded that Canada is not effectively enforcing the prohibition. The report indicates that available data suggests that Canada has only detained 50 shipments on suspicion of forced labor since 2020 and only two were denied entry. By contrast, the USTR report notes that, in 2024 alone, CBP denied entry to 6,386 shipments pursuant to the UFLPA.
The USTR report also asserts that Canada has not taken action to restrict the importation of goods for which there is a known risk of forced labor. The report noted as an example that Canada has taken only minimal action to investigate the importation of goods that are subject to CBP’s WROs or Findings, or to comprehensively address forced labor goods produced in regions of concern. It also cited independent reporting indicating that there is a high risk that Canadian companies are profiting from the importation of forced labor goods, such as seafood, coffee, cocoa and cotton, and that Canada has been described as a “dumping ground” for re-exports of forced labor products barred from entry to the United States. The USTR report concludes that, given these known risks, Canada’s overall low level of enforcement indicates Canada is deficient in compelling observance of its forced labor import prohibition in a manner to produce the desired effect.
Canadian media sources have indicated that Rob Oliphant, Parliamentary Secretary to Foreign Affairs Minister Anita Anand, has described the Bill as “a made-in-Canada solution to an international problem.”
We expect numerous additional jurisdictions to propose forced labor import bans, and to take other actions that purport to address forced labor, in furtherance of the USTR report.
Next Up – EU Forced Labor Regulation Guidelines
The EU’s Forced Labor Regulation requires the European Commission to publish implementation guidelines by June 14. The Commission also is required to publish its forced labor risk database by the same date.
The Commission has indicated that the guidelines will cover three main categories:
Guidance for competent authorities on practical implementation, including methodologies for calculating financial penalties, benchmarks for risk-based investigation assessments and the applicable standard of evidence.
Guidance for economic operators on due diligence related to forced labor, risk indicators, best practices for bringing forced labor to an end and remediating it and due diligence in relation to state-imposed forced labor.
Guidance for civil society, victims and other stakeholders on how to submit information regarding potential violations through the single information submission point.
The guidelines have not been issued as of when this post went live, but they are expected imminently.
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