January 30, 2022 The Honourable Salma Ataullahjan Chair, Standing Senate Committee on Human Rights RE: Bill S-211, Fighting Against Forced Labour and Child Labour in Supply Chains Act Dear Senator Ataullahjan: The Canadian Chamber of Commerce is Canada’s largest business association, representing companies of all sizes and in all sectors of the economy. Our members take seriously their responsibility to conduct their business activities with respect for human rights. They know it is not only the right thing to do, but also increasingly demanded by customers and investors.

Ensuring Canadian businesses’ supply chains are not propagating forced labour or child labour globally is a goal supported by our members. The Chamber applauds the efforts of Senator Miville-Dechêne to champion these issues and is grateful for her openness to suggestions to modify the previous Bill in order to facilitate reporting procedures for businesses. The Chamber believes these changes have significantly improved the Bill. To support the committee in its deliberations on Bill S-211, the Canadian Chamber wishes to offer a number of comments that we request be reflected through amendments.

Interpretation and Scope of Coverage

Section 2 of the Bill describes the scope of entities that would be covered under this legislation. In addition to the what is already listed in the Bill, there is a broad power provided to the government to use regulations to prescribe the definition of entity. We believe this power should remain with Parliament. • The Chamber recommends the removal of sub-point (

c) under the definition of entity. It is unclear how the revenue thresholds are applied in terms of whether they refer to assets and revenue for a company globally or whether they also apply to just activities in Canada. We also believe that the threshold is too low. • The Chamber recommends that the legislation shift its criteria to a threshold of $100 million in global revenue. The proposed definition of child labour is imprecise and not fully aligned with the applicable ILO standards from which many companies and organizations base their supplier codes. Specifically, in

section 2(

b) the definition of child labour includes labour that is "mentally, physically, socially or morally dangerous" to children. This definition is unclear and appears to conflate the distinct concepts of "child labour" and "forced child labour." The definition incorporates the ILO Convention on the Worst Forms of Child Labour (No. 182), but it does not incorporate the ILO's Minimum Age Convention (No. 138). • The Chamber recommends aligning the definition of “child labour” with the applicable ILO standards and/or other commonly-used language such as the Responsible Business

Alliance Code of Conduct,

Section A.2. It also recommends removing

Section 2(

b) as it’s already covered under 2(

d) and would create a vague standard that goes beyond the standard ILO regime. It further recommends removing the term “offered to be provided” due to the impossibility of monitoring offers that do not become effective. Reporting Obligations

Section 9 states that the reporting obligations of the Bill apply to entities that produce, sell distribute or import goods. The definition of “goods” would be crucial for entities determining whether the reporting obligations would apply to them. For example, companies in the logistics or delivery services sector and others, provide services to other parties who are selling or producing goods. • The Chamber recommends including a definition of the term “goods” that is clear in not applying to entities providing logistics, delivery or other services with respect to goods.

Section 11 of the Bill articulates the obligations for companies to report to the Minister various measures being undertaken to combat forced labour and child labour. However, this

section does not envision any caveats around commercially sensitive information. For instance, in articulating Sections 7(2)(

c) and 7(2)(

d) there may be commercially sensitive discussions or processes that the company has underway with respect to yet to be announced business plans that could be captured in the scope of this reporting. Additionally, it can be difficult for companies to get certain commercially sensitive information from their suppliers. • The Chamber recommends adding provisions for companies to identify commercially sensitive information that would not be available to the general public under Sections 8 and 9.

Section 11(2) should state clearly that a parent entity that controls a subsidiary entity that is covered by the law should not be required to produce a report if the subsidiary entity does so in respect of covered activities. • The Chamber recommends adding clarification in

Section 11(2) addressing this point. Alternatively, the definition of “entity” in

Section 2 could be tightened to clarify that it is not intended to cover both parent and subsidiary entity.

Section 11(3) sets forth the supplementary information that must be provided in a company’s reporting.

Section 11(3)(

a) catches within its scope reporting that extends beyond considerations related to forced labour and child labour. The substance of what 11(3)(

a) is seeking to address is arguably already under point 11(3)(

c) where companies have to provide information on activities that carry a risk of forced labour. • The Chamber recommends removing

Section 11 (3)(

a) from the Bill.

Section 11 (5)(

b) requires that the approval of the report be evidenced by “the manual signature of one or more members of the governing body of each entity that approved the report.” A signature seems unnecessary given that the report needs to be accompanied by a statement that the board has approved the report. At a minimum, there is no need for a physical signature now that electronic signatures have become the norm. • The Chamber recommends eliminating the requirement for a signature or removing the word “manual” in

Section 11 (5)(b).

Companies already have obligations in other jurisdictions to undertake similar supply chain transparency reporting. Having additional report requirements creates complications for companies to manage internally in their compliance functions. • The Chamber recommends adding provisions for the Minister to deem a foreign jurisdiction’s reporting requirements to be equivalent for the purposes of meeting the obligations under this Bill. Where equivalency exists, the company should be able to use the report for that jurisdiction to submit to the Minister. The

Section 13 (2) requirement to provide the report to all shareholders is unnecessary as it will already be available on the company’s website as per

Section 12 (1). The Extractive Sector Transparency Measures Act contains no similar requirement and such a provision is burdensome. • The Chamber recommends removing

Section 13 (2). Enforcement Sections 15 and 16 contain extremely broad investigation provisions. They essentially provide for limitless, invasive access to all of a company's systems and records to verify compliance. We consider these provisions unnecessary and incongruent with the spirit of the Bill, which is anchored around transparency. Taking a “name and shame” approach to entities that fail to meet the desired reporting standard would accord with the spirit of

Section 11 which is about greater transparency to increase investor and consumer pressure. • The Chamber recommends adding provisions that if the Minister is reasonably satisfied that an entity has failed to comply with its obligations that the entity be asked to provide within a defined period an explanation for its perceived failure to comply. If any entity fails to provide an explanation or undertake remedial action, then the Minister should be empowered to publish this information on the government’s online registry.

Section 16 specifies that a warrant is required for entry into a dwelling-house, however, a similar condition is not imposed under

Section 15. • The Chambers recommends that if the previous recommendation is not accepted, that the requirement for a warrant be added to

Section 15 for all places of business. Corrective Measures

Section 18 of the bill provides the Minister with very broad discretion to issue corrective measures. However, it is problematic that the Minister’s powers are not defined. • The Chamber recommends that

Section 18 be revised to state that if a court has found an entity to have failed to comply with the legislation, then the Minister can require the entity to file an annual report or a revised annual report, as applicable, within a certain time frame. Offences and Punishment Creating a

summary conviction offence is disproportionate and unreasonable in light of the underlying transparency goal. Further, the scope of personal liability is too broad and unreasonable for legislation with a goal of transparency.

Such broad personal liability could also have the undesired effect of leading companies that are currently producing robust supply chain transparency reports to prepare narrower and less detailed reports in the future for fear of potential liability. • The Chamber recommends against creating criminal liability in the Bill, particularly personal liability.

The legislation should also encourage companies to take corrective action when an error is recognized in a report already made. • The Chamber recommends that the legislation note that companies proactively making corrections to their reports are not considered to an engaging in an action that would constitute a false statement being made. Customs Tariff Changes When the Canada-United States-Mexico Agreement entered into force, the Customs Tariff was amended to prohibit the importation of goods into Canada made with forced labour, regardless of their origin.

There is still no clear understanding of how the federal government will enforce the prohibition on the importation of goods produced by forced labour. In particular, it is unclear how goods would be identified by the Canada Border Services Agency (CBSA) as potentially being produced by forced or child labour. As a result, companies do not know the precise documentation that can be provided to the CBSA to release shipments detained by the CBSA.

If products are stopped at the border by the CBSA further to a complaint, it is not clear whether shipments will be seized until any analysis done by other departments is complete. • The Chamber recommends that the committee urge in its report for the CBSA to urgently provide guidance to companies on the operational requirements around forced labour as a result of the CUSMA, and then subsequently the implementation of this Bill. Entry into force According to

Section 28, the legislation would come into force on January 1 of the year following in which it receives royal assent. This means companies would have at most a year to comply with the legislation after it is passed, but in practice given Parliamentary schedules they would have much less. This is particularly problematic since aspects of the legislation require a significant level of granularity to be developed and disseminated to businesses as it relates to the reporting obligations in

Section 11(1) and 11(2). • The Chamber recommends the legislation be amended to come into effect on the first day of the 24th month after the legislation received Royal Assent. Providing critical assistance to companies Canadian companies, particularly SMEs, lack the same resources as government officials to be able to accurately assess international suppliers’ risk levels. Government officials have unique resources, such as policing and intelligence sources, as well as in-market knowledge from Canadian diplomatic missions abroad.

This information needs to be leveraged to support companies to know where risks exist. • The Chamber recommends that the legislation have a provision added to require the Minister to maintain a public registry of overseas suppliers known to be using forced or child labour. The legislation should include clear criteria for what would cause a supplier to be named to this registry as well as redress mechanisms if a supplier feels it has been wrongly listed.

Collaboration with the United States The United States is currently setting its own policies as it relates due diligence and banning the importation of goods made with forced labour, in particular the upcoming implementation of the Uyghur Forced Labor Prevention Act.

It will be more efficient and less costly if companies can leverage the same corporate systems and policies in their compliance with both countries’ legislation. • The Chamber recommends that Government of Canada be mindful of the operational benefits of consistency with US approaches and maintain active dialogue on human rights and supply chain issues with the Government of the US.

China Chamber members are concerned about being caught in a crossfire of compliance and potential retribution between China, the US and Canada. • The Chamber recommends that the Government of Canada remain aware of Chinese legislation and actions when crafting its own legislative, regulatory and enforcement approaches. Thank you for the opportunity to comment on this proposed legislation. We look forward to continuing to engage the committee in this work and would be pleased to provide further perspectives on the legislation.

Regards, Michael Harvey Vice President, Policy and International Canadian Chamber of Commerce CC: Daniel Charbonneau, Clerk, Standing Senate Committee on Human Rights