Public Safety has just provided the following clarification concerning the application of the reporting requirements in the Supply Chains Act (Bill S-211) to customs brokers and couriers: While a broker or courier would not be required to make a report under the Act, the person that the broker is acting for is required to report if they meet the criteria of an “entity” as per section 2 and are subject to reporting requirements as per section 9.
The purpose of the Supply Chains Act is to implement Canada’s international commitment to contribute to the fight against forced labour and child labour through the imposition of reporting obligations on entities producing goods in Canada or elsewhere or importing goods produced outside Canada.
The Act applies to organizations that meet the prescribed definition of “entity”, as outlined in section 2 of the Act. If an organization determines it is an “entity” for the purposes of the Act, it must then determine if it is a reporting entity required to submit a report to the Minister of Public Safety.
Reporting requirements are for entities that produce goods in Canada or elsewhere, entities importing goods produced outside Canada, as well as entities that control another entity that produces or imports goods. Entities should apply the ordinary sense of these words to judge whether they engage in these activities and are therefore required to report.
An entity is considered to be importing goods into Canada if the entity is responsible for accounting for those goods under the Customs Act. Although the term “importer” is not explicitly defined in the Act, it should be understood as the person that caused the goods to be brought into Canada. While a broker or courier would not be required to make a report under the Act, the person that the broker is acting for is required to report if they meet the criteria of an “entity” as per section 2 and are subject to reporting requirements as per section 9. Determining who qualifies as an entity “importing goods into Canada” depends on several factors, including but not limited to who arranged for and placed the purchase order, who paid for the goods, when did title pass, who cleared the goods, what were the terms of delivery, and who was responsible for marketing and distributing the goods.
An entity buying a good in a domestic transaction and who is not causing the importation is not, generally, an importer. Purchasing goods produced outside Canada from a third party, where that third party is considered to be the importer for the purposes of the Customs Act, does not count as importing goods. The Supply Chains Act is not intended to capture services that solely support in the importation of goods.
It is the responsibility of the entity to assess how the Supply Chains Act applies to their specific circumstances. If an entity is unsure whether they meet any of the prescribed application criteria, they are encouraged to seek advice from their legal counsel.
Amendments to section 17 of the Customs Act, once in force, will focus on liability for duties and taxes to the “importer of record”. An “importer” under the Supply Chains Act does not include a person acting as an “importer of record” as defined under the Customs Act.
Further guidance and details can also be found on the Public Safety Canada website: Forced Labour in Canadian Supply Chains (publicsafety.gc.ca).