Canada’s New Forced Labour Bill (C-35): What Chinese Investors Need to Know

Key takeaways

• Importers face a higher burden: Companies will be required to proactively demonstrate that goods are not produced with forced labour.
• Targeted risk listings: Certain goods, producers, or regions may be flagged, triggering enhanced disclosure requirements.
• Expanded CBSA powers with limited appeal rights: Goods may be detained and decisions must be challenged quickly.
• Broader business exposure: Retailers and distributors—not just importers—may face compliance and enforcement risk.

Why is Canada overhauling its approach?

Canada is poised to expand its enforcement of forced labour rules, which could have important implications for Chinese investors.

On June 12, 2026, the Canadian government tabled Bill C-35 — An Act respecting the prohibition of the importation of goods produced by forced labour — representing the most significant overhaul of Canada’s forced labour import rules since they were first introduced in 2020.

The timing is no coincidence. Following a Section 301 investigation, the Trump administration concluded that Canada’s existing framework was insufficiently robust and threatened to impose a 10% tariff on Canadian imports unless meaningful reforms were made. Canada responded swiftly, announcing plans to strengthen its forced labour regime on June 3, and tabling Bill C-35 just nine days later.

For Chinese investors and businesses with supply chain exposure to Canada, this legislative shift carries real and immediate implications.

Overview of key changes

There are a few key aspects of Bill C-35 for importers, distributors and retailers:

• a prohibition on the import of goods that are produced wholly or in part by forced labour;
• the establishment of a list of goods, identifying the producer and/or the country or region of production, which are suspected to be produced wholly or in part by forced labour;
• shift of evidentiary burden to importers to proactively demonstrate that such goods have not been made in whole or in part using forced labour; and
• new powers granted to the CBSA to administer and enforce the import prohibition, and limits to the review of those decisions.

Each of these aspects is considered in greater detail below.

New import prohibition under Bill C-35

As noted above, pursuant to the Customs Tariff, it is currently prohibited to import goods that are produced wholly or in part by forced labour or child labour. Bill C-35 would repeal this prohibition and implement its own prohibition, prohibiting the importation of goods that are “produced wholly or in part by forced labour”.

The term forced labour in Bill C-35 is defined to align with the term “forced or compulsory labour” as found in Article 2 of the Forced Labour Convention, 1930 (No. 29) of the International Labour Organization (the “Forced Labour Convention”).

This new prohibition is narrower in scope than the existing prohibition under the Customs Tariff in one key respect: it does not explicitly address child labour.

As a result, goods produced using child labour (but not forced labour) may fall outside the scope of the import prohibition under Bill C‑35.

Importantly, the terms “forced labour” and “child labour” for the purpose of the current prohibition under the Customs Tariff are expressly aligned with the Fighting Against Forced Labour and Child Labour in Supply Chains Act (the “Supply Chains Act”), which implements Canada’s modern slavery reporting obligation and specifically requires reporting on efforts to mitigate the risk of both forced and child labour in supply chains.

That linkage had provided a degree of statutory alignment between Canada’s import prohibition regime and its supply chain reporting framework, ensuring consistency in terminology across both regimes. Bill C-35, if implemented, would move away from this alignment and require companies reporting under the Supply Chains Act to report on a broader set of risks than would be subject to the import prohibition.

As discussed in more detail below, contraventions of Bill C‑35 are deemed to be contraventions of the Customs Act, therefore existing customs enforcement mechanisms including potential exposure to administrative monetary penalties, seizure of goods, and related compliance measures, may apply.

While Bill C‑35 does not introduce standalone criminal offences, in more serious cases involving knowing or wilful non-compliance, criminal penalties under the Customs Act (including fines and potential imprisonment) may also be available. 

List of Goods, Producers, Countries and/or Regions

Bill C-35 also empowers 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 wholly or in part by forced labour.” This list would include either the identity of the person who produces the good, the country/region where it is produced, or both of those data points, to support the compliance activities of importers to Canada.

Though a good identified on this list is not prohibited outright, it can only be imported where the importer provides a set of prescribed information to the CBSA regarding the good.

The list of prescribed information is to be set out in forthcoming regulations, but Global Affairs Canada’s news release on Bill C-35 indicates that the regulations will require importers to provide “enhanced supply chain tracing information.”

This will likely include information that rebuts the grounds the Minister used to determine that the good is suspected to be made in whole or in part with forced labour for purposes of the listing. If the CBSA determines that an importer does not provide the prescribed information, the import of the goods is deemed to be prohibited.

This framework is similar in nature to the rebuttable presumption proposed in Bill C-251. As we discussed in our client alert, Modern Slavery Alert: Public Safety Canada issues its 2025 Report as Bill C-251 seeks to upend Canada’s Modern Slavery Regime, Bill C-251 was a private member’s bill that would, if passed, allow the Minister of Public Safety to designate goods originating from certain entities or jurisdictions as being produced wholly  or in part with forced labour, requiring importers to rebut that presumption in order to import such goods by demonstrating to the CBSA that it has certain supply chain monitoring measures in place and has undertaken all required due diligence.

By contrast, Bill C-35 provides for listings at the level of specific goods, rather than a blanket designation of all goods from a given entity or region. Still, a sufficiently broad listing could nonetheless have a similar practical effect.  We note that, with the government’s introduction of Bill C-35, it is unlikely that Bill C-251 will progress into law.

CBSA powers and limits on review

Bill C-35 proposes much greater powers, coupled with a reduced ability to challenge the CBSA’s decisions regarding forced labour. As set out in Bill C-35, a CBSA officer may assess and determine whether imported goods are produced wholly or in part by forced labour, whether or not the goods are identified on the list. To support that determination, the officer may detain goods for up to 90 days, or longer if prescribed by regulation.

Importers of the goods and the owner of the goods at the time of importation are jointly held liable for costs incurred for the detention, storage, transportation or disposal of any goods found by the CBSA to have been produced wholly or in part by forced labour. Depending on the nature and volume of the import, these costs could be significant and will place greater emphasis on the decision between commercial parties as to who is responsible for importing the goods and when in the delivery process title to the goods changes hands.

Importantly, these decisions by a CBSA officer are not subject to the traditional administrative review mechanisms that are available under the Customs Act. As set out in subsection 5(5) of Bill C-35:

Any power, duty or function exercised or performed under this Act, including under subsection (1), is not subject to any appeal, review, re-determination or further re-determination under the Customs Act but, for greater certainty, is subject to judicial review under section 18.‍1 of the Federal Courts Act.

This is a significant departure from past practice, and it places pressure on importers subject to a decision by a CBSA officer to respond quickly and proceed directly to litigation if they have any concerns about these decisions.

Judicial review under section 18.1 of the Federal Courts Act must be initiated within 30 days of the relevant decision. This is a limited amount of time for a customs matter, which may be first seen by a third-party customs broker or other compliance staff, to rise up to legal decision-makers within a business, who will then likely need to engage external legal counsel and promptly file an application for judicial review.

It will likely lead to many instances where applications for judicial review are made pre-emptively just to ensure that the importer’s rights to challenge a decision are preserved. It could also reduce the ability for importers to engage directly with CBSA officials to understand their decision and address any misconceptions without proceeding to litigation.

Impact on retailers and distributors

The new forced labour regime under Bill C-35 impacts not only importers into Canada, but also non-importing companies that acquire imported goods for distribution or sale in Canada, including distributors and retailers.

Section 15 of the Customs Act requires any person, including downstream parties such as distributors and retailers, who have goods in their possession and who “believes on reasonable grounds” that the importation of those goods may be prohibited, to “forthwith” report those goods to a CBSA officer. 

In addition, section 155 of the Customs Act provides that “[n]o person shall…have in his [or her] possession, purchase, sell, exchange or otherwise acquire or dispose of any imported goods in respect of which the provisions of this or any other Act of Parliament that prohibits, controls or regulates the importation of goods have been contravened.” Penalties for failing to comply with the Customs Act can be significant: pursuant to subsection 160(1), punishment for contravening sections 15 or 155 includes fines of up to CAD$500,000, up to five years in jail, or both.

These issues also pose reputational risks for importers and non-importers alike, who may be subject to scrutiny in the media and other public fora, especially in cases where they may be dealing in or with goods, producers, regions or countries that are identified in the list proposed under Bill C-35.

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Bill C-35 completely changes Canada’s approach to addressing possible modern slavery in its supply chains. Though it narrows the scope of the existing prohibitions on modern slavery, it greatly enhances the administration and enforcement tools available to the CBSA and reduces administrative oversight.

Bill C‑35 was introduced and received first reading on June 12, 2026, and is unlikely to advance to second reading until Parliament resumes after the summer recess. While there may be pressure to advance the legislation in light of potential U.S. trade measures, timing remains uncertain, and many key elements, particularly importer information requirements, will depend on forthcoming regulations.

What Chinese investors and businesses should do now

While Bill C‑35 is still progressing through Parliament, companies should begin preparing:

• Map supply chains to identify upstream risks
• Assess exposure to high-risk jurisdictions or suppliers
• Strengthen documentation and audit mechanisms
• Review importer-of-record structures and contractual risk allocation
• Prepare for enhanced CBSA scrutiny and faster response timelines

Early action will be critical as regulatory details are finalized.

Closing Thoughts

Bill C-35 marks a fundamental shift in Canada’s posture on forced labour enforcement — moving from a largely passive ban to an active, importer-accountable regime with meaningful teeth.

Driven by U.S. trade pressure and domestic criticism, this legislation signals that supply chain compliance is no longer a peripheral concern but a core business risk.

For Chinese investors and businesses with Canadian supply chain exposure, early and proactive compliance planning is essential.

McCarthy Tétrault’s International Trade and Investment Law Group advises clients across a variety of industries on modern slavery and trade-related matters and has significant experience in assisting clients to develop strategies and policies around modern slavery and supply chain compliance more generally. We will continue to monitor and report on any further developments in this space. 

About McCarthy Tétrault LLP

This blog is prepared by McCarthy Tétrault LLP’s International Trade & Investment Law Group based on the client alert published June 15, 2026. It is intended for general informational purposes only and does not constitute legal advice. For guidance specific to your circumstances, please contact our team.