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Canadian importers largely silent about their potential links to forced labour

Since July 2020, when Canada’s prohibition on importing goods produced by forced labour came into effect, investigations by media and civil society groups have repeatedly found instances of companies sourcing products allegedly made with forced labour abroad — including products banned from entering the U.S. market for this reason. We reported many examples, for instance, in our 2021 report on Canadian business ties to forced labour abroad.

This topic has been thrust into the media spotlight again several times since then. Corporate law blogs have also reported extensively on Canada’s import ban and on anticipated legislation that will require firms to disclose the steps they’re taking, if any, to reduce the risk of forced labour in their supply chains. It is reasonable to expect, therefore, that the business community in Canada is broadly aware of this issue, and that firms with particularly high-risk supply chains would be able to show what they’re doing to avoid sourcing products made with forced labour.

oil palm harvesting
Oil palm harvesting. Importers in Canada continued to source palm oil products from Sime Darby, one of the world’s largest producers, while these products were banned in the U.S. due to forced labour. Photo by Lucy McHugh/CIFOR, Creative Commons BY-NC-ND 2.0.

Between August and October 2022, we wrote to 30 importers in Canada that have sourced goods from manufacturers suspected to have employed forced workers1We identified these importers by searching the Panjiva global trade database for shipments to Canada from manufacturers of concern. These were manufacturers sanctioned by the U.S. over their alleged use of forced labour or named in the Australian Strategic Policy Institute’s March 2020 report, Uyghurs for Sale, as having allegedly employed ethnic minority workers in or from East Turkestan / Xinjiang, China, through coercive state-run “poverty alleviation” programs. Each record showed a shipment arriving at a U.S. port that was destined to a recipient company (“consignee”) in Canada. The records we found likely represent a small portion of imports into Canada from these suppliers, because Panjiva provides access to records of only some shipments sent to Canada through U.S. ports. Records of shipments arriving at Canadian ports aren’t publicly accessible. Also, we could only identify shipments containing a given manufacturer’s product when the manufacturer was listed as the shipper or, in rare instances, in the description of goods shipped.. We offered each importer the opportunity to provide comment on its business with the given manufacturer in light of the allegations. Links to our correspondence with the importers that replied, including their response, can be found in the summary table at the bottom of this page.2We informed each company that its response would be made public. Overall, our primary findings from this exercise are as follows:

  • Most of the companies contacted — 19 in total — did not reply. This includes companies that have sourced substantial volumes of goods from the manufacturers in question. We received no reply from Olera Ingredients & Distribution, for instance, which was sent shipments of more than $6.5 million worth of palm oil from Sime Darby Plantation in 2021 and 2022, when this product was banned from importation into the U.S.3The U.S. government lifted the ban in February 2022, citing “satisfactory evidence that Sime Darby Plantation Berhad, its subsidiaries, and joint ventures no longer produce palm oil and its derivative products using forced labor.”
  • Of the companies that did reply, most provided few details about their past or ongoing business with the manufacturer.
  • Some companies reported efforts to look into the allegations of forced labour. This consisted of communication with the manufacturer in most cases. For example, staff from Superior Glove Works told us they “were in communication” with their supplier upon learning of the allegations. From this they “understood that not all claims were substantiated” and that “substantiated claims had been addressed.”
  • Ansell, Home Depot, The Brick and Whirlpool Corporation reported a general policy of monitoring some or all of their suppliers’ practices through independent audits, but only The Brick specified whether the supplier in question had been audited.4From The Brick’s response to us in October 2022: “The Brick has conducted audits or has reviewed third party audits of Hefei Meiling and is satisfied that no forced labour is used in the production of Brick product.”
  • Several companies — Danby, Home Depot, The Brick, Whirlpool Corporation and Wipeco Industries — said they had stopped buying products from the manufacturer in question. In some cases it was unclear if this decision was made based on the forced labour allegations.
  • One importer, Ansell, said it had reduced its purchases from the supplier in question while that supplier was being investigated by American authorities.
  • One importer, Supermax Healthcare Canada, declined to say whether it has continued to source from a supplier whose products have been banned from the U.S. market since October 2021. It revealed only that it has “increased the diversification of [its] suppliers.”5Supermax Healthcare Canada stated in November 2021 that it would “consider all options available to rectify the situation, including sourcing from an alternative supplier” if the forced labour allegations were substantiated by independent audits that were underway. The company’s letter sent to us in October 2022 indicated that these audits were still “ongoing” at that time.

It’s important that the public be able to assess how importers are responding to such situations, because right now Canada’s only active strategy to fight forced labour in global supply chains is to encourage voluntary action by companies. Canada’s ban on importing products of forced labour has gone almost entirely unenforced:6This ban is modelled after a similar provision in U.S. law. In both Canada and the U.S., border authorities are expected to block products of forced labour from entering the domestic market by detaining shipments of these goods as they arrive at the border. In other respects Canada’s enforcement framework differs dramatically from that of the U.S. Since the ban was adopted, Canadian authorities have reported only one shipment of goods being detained, and the decision was later reversed. authorities have not permanently blocked a single product from entry, and as of March 2022 they had yet to “effectively operationalize” the ban.

Unfortunately, in most cases we didn’t receive enough information from these importers to gain a meaningful understanding of how they investigate and act on reports of forced labour in their supply chains.

The silence of the 19 importers who didn’t reply at all should give pause to proponents of Bill S-211 who’ve argued that once firms face public scrutiny over potential abuse in their supply chains, they will feel compelled to take meaningful steps to end it. It would simply be too embarrassing for a firm to report that it’s taken meagre steps to address the problem, the theory goes.

Yet here we’ve informed companies that their sourcing from manufacturers accused of using forced labour will be publicly reported, and more than half opted not to provide any information about how they’re handling the concerns raised. Whatever reputational concerns may have come into play, they did not result in so much as a reply. It seems all the more tenuous to expect that, under Bill S-211, such concerns will be sufficient to drive fundamental changes in business practices.

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