Canada Introduces New Legislation to Strengthen the Ban on Importing Goods Made with Forced Labour
On June 2, 2026, the United States Trade Representative (“USTR”) made findings under Section 301 of the Trade Act of 1974 that 60 countries failed to “impose and effectively enforce a prohibition on the importation of goods produced with forced labour”. The United States found that this failure is “unreasonable or discriminatory and burdens or restricts U.S. commerce”, and have proposed actions to be taken against these countries.
With respect to Canada specifically, although Canada’s Customs Tariff already prohibits the importation of goods that are “mined, manufactured or produced wholly or in part by forced labour”, the USTR determined that Canada failed to “effectively enforce its forced labour import prohibition.” Further, the USTR found that Canada “has not taken action to restrict the importation of goods for which there is a known risk of forced labour.” In light of these findings, the USTR proposed additional duties of 10% on goods from Canada. The proposed additional duties will not apply to products that are compliant with the United States-Mexico-Canada trade agreement.
In response, Canada is introducing a new legislation (Bill C-35) that will implement safeguards to stop the importing of goods made with coerced labour into Canada. As stated in the announcement made by the government of Canada, the new legislation will:
Authorize the Minister of Foreign Affairs to establish a list of high-risk goods—identified by region, entity, or individual—where there are reasonable grounds to suspect they are produced by forced labour;
Establish requirements for importers of certain high-risk goods to provide enhanced supply chain tracing information to the CBSA, in accordance with the regulations;
Introduce a deeming provision, meaning goods identified as high-risk would be deemed prohibited from importation when mandatory information requirements are not met;
Allow the CBSA to designate a customs officer to determine whether imported goods are produced wholly or in part by forced labour and detain goods for a period of up to 90 days; and
Create a cost-recovery model when importers are found to have imported goods made using forced labour.
The new legislation therefore will outline mandatory requirements for importers of certain high-risk goods, the imports of which will be deemed prohibited if importers fail to meet the requirements.
Our team will continue to monitor further developments with respect to this new legislation and we will report updates on our website.
Takeaway
Businesses in Canada should review their policies in relation to forced labour and child labour in their supply chains and reach out to our team with any specific questions related to their business.
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Exporting from Canada: Understanding the Benefits Offered by Free Trade Agreements (“FTA”)
Since 2025, changes in U.S. tariff policies spurred a need for Canadian businesses to diversify trade and expand into other markets. Traditionally, Canada’s trade performance relied heavily on proximity to and stable trading relationship with the United States than on firm-level efficiency and competitiveness (see report by Deloitte). Once the United States imposed tariffs on Canadian imports, it revealed that overreliance on the U.S. market meant Canadian companies were among the least prepared to react quickly when trade rules suddenly changed. This highlighted a need for Canadian companies to adopt new strategies such as diversifying trade.
This year in 2026, Canadian businesses will likely continue to face challenges due to ongoing U.S. tariffs, the CUSMA review, and increasing diversion of unfairly priced goods into the Canadian market. Most recently, the United States proposed new tariffs of 10% additional duties on imports from Canada. As such, adopting strategies to reduce reliance on a single market (i.e., the United States) and expanding sales by growing exports to other markets will help Canadian businesses protect themselves.
What the FTAs can offer
As Canadian businesses prepare to enter into other markets, they should consider the many trade compliance requirements. As mentioned in our blog, compliance considerations include obtaining export permits and considering sanctions imposed on specific markets.
That said, beyond compliance requirements, Canadian businesses interested in exporting their products abroad can take advantage of numerous competitive benefits available under 15 different free trade agreements (“FTA”). Under the FTAs, benefits that may be available to businesses include:
Reduced or eliminated customs tariffs and duties;
Eased sourcing and exporting which may result in having more globally integrated supply chains;
Access to additional markets which reduces reliance on a single market;
Reduced trade barriers that allow access to new customers in other countries.
The number of FTAs and thereby the number of markets into which Canadian businesses can enter may expand. Since 2025, Canada has made significant efforts to help Canadian businesses find new international markets for Canadian products. In January 2025, Canada’s FTA with Ecuador was concluded. Additionally, Canada has either agreed to formally launch or formally launched negotiations to enter into FTAs with the Mercosur Bloc (Argentina, Brazil, Paraguay, Uruguay), the United Arab Emirates, Thailand, and India.
FTAs offer preferential duty treatments and Canadian businesses are encouraged to explore how these FTAs can be used to reduce or eliminate customs tariffs and duties as they enter into a new market.
Takeaway
Canadian businesses should review the free trade agreements in place to identify new opportunities and reach out to our team to help understand how they can benefit from preferential tariff treatments offered by such FTAs.
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Exporting from Canada: Compliance Considerations for International Trade
Canadian businesses looking to export abroad must comply with additional trade compliance responsibilities. To ensure that exporting activities comply with various Canadian laws and regulations, Canadian exporters should be aware of the following.
1. EXPORT DECLARATION REQUIREMENTS
To export from Canada, exporters are required to report exports of certain goods according to Canadian laws. If reporting of goods is required, exporters in Canada must submit export declarations to the Canada Border Services Agency (“CBSA”) on the Canadian Export Reporting System (“CERS”) or on the G7 Electronic Data Interchange Export Reporting (“G7 EDI”).
To determine whether or not exporters should report the goods, exporters must consider the following factors:
Whether or not the goods fall under the definition of “Restricted Goods”;
Whether or not the goods fall under the definition of “Special Goods”;
Whether or not the goods fall under an exception found in the “exceptions to reporting by the exporter” section; and
Whether or not the goods are can be considered “Regular Goods”.
While exporters may delegate the reporting of goods to a third party, such as a customs service provider, the ultimate responsibility falls on the exporter to ensure that true, accurate and complete information is provided in accordance with Canadian laws and regulations.
Failure to properly meet export reporting requirements may result in enforcement actions by the CBSA. Enforcement actions may be in the form of detention of exports, seizures and ascertained forfeitures of exports, or monetary penalties.
Takeaway
Given the above, we advise exporters in Canada to seek legal assistance to understand export declaration requirements in Canada.
2. EXPORT CONTROLS
In Canada, export control laws require a permit or a license for certain goods to be exported. This is to ensure that exports of certain controlled goods are conducted lawfully and in a manner consistent with Canada’s national interests and international obligations.
Export and Import Permits Act
Under the Export and Import Permits Act, the Minister of Foreign Affairs issues to any resident of Canada a permit to export items included on the Export Control List or to a country included on the Area Control List.
Exporters should ensure that any exported goods are compliant with the requirement of Canadian laws regulating exports. Failure to comply with export control requirements as outlined in Canadian laws and regulations may lead to fines of up to $250,000 and/or imprisonment for up to 10 years.
To understand export permit requirements for the goods, Canadian exporters must consider factors such as the nature, characteristics, origin, or destination of the goods being exported. Exporters may obtain certainty as to the control status of their goods by applying for an advisory opinion (“AO”) or by applying for an export permit.
Products subject to export controls include:
Military and strategic goods and technology;
Softwood lumber;
Firearms;
Sugar and sugar containing products;
Peanut butter;
Logs; and
U.S.-origin goods and technology.
Controlled Goods Program
Under the Defence Production Act, controlled goods are goods that have military or national security significance. In Canada, individuals and organizations must register in the Controlled Goods Program to examine, possess or transfer such controlled goods.
Upon registering in the Controlled Goods Program, registrants must comply with additional requirements of the Defence Production Act. This includes conducting and submitting reports on security assessments of personnel, preparing for inspections, developing security plans, and reporting security breaches.
Takeaway
It is important for individuals and organizations to have a clear understanding about the application of export controls. We recommend consulting with our team to learn more about the legal obligations.
3. SANCTIONS AND RESTRICTED MARKETS
Canada has trade and economic sanctions imposed on specific countries, organizations, and individuals. Sanctions restrict or prohibit certain activities with targeted countries, organizations, and individuals. As such, exporters are responsible for being aware of any applicable sanctions if they are exporting to or otherwise doing business in or with any of the named countries.
Canada imposes sanctions under the following regimes:
The United Nations Act;
The Special Economic Measures Act; and
The Justice for Victims of Corrupt Foreign Officials Act.
There are also regulations under the above regimes which must be reviewed to understand whether or not an activity or transaction is permitted under Canadian sanctions.
Currently, Canada imposed sanctions in relation to the following countries:
Belarus;
Central African Republic;
China;
Democratic People’s Republic of Korea (North Korea);
Democratic Republic of the Congo;
Guatemala;
Haiti;
Iran;
Iraq;
Lebanon;
Libya;
Moldova;
Myanmar;
Nicaragua;
Russia;
Somalia;
South Sudan;
Sri Lanka;
Sudan;
Syria;
Ukraine;
Venezuela;
Yemen; and
Zimbabwe.
We advise Canadian individuals and entities to conduct due diligence before engaging in activity abroad or engaging in transactions involving individuals or entities from foreign countries. Violating Canadian sanctions can result in the following:
Under the United Nations Act, maximum penalty on summary conviction of $100,000 fine and/or a 1-year prison term with convictions on indictment that may result in a maximum 10-year prison term;
Under the Special Economic Measures Act and the Justice for Victims of Corrupt Foreign Officials Act, maximum penalty on summary conviction of $25,000 fine and/or a 10year prison term with convictions on indictment that may result in a maximum 5-year prison term.
Takeaway
Given the above, we advise seeking legal advice for assistance in the interpretation of the Canadian sanctions regime to assess their full impact
Please contact us at bahriye.ceyhancavdar@ceyhankim.com or bomin.kim@ceyhankim.com for specific questions related to your business.