On April 16, 2024, the Government of Canada tabled the 2024 Budget, Fairness for Every Generation (“Budget 2024”) which identifies several important initiatives with international trade & investment implications.
We highlight some of these below.
New Forced Labour Legislation in 2024
Budget 2024 reaffirms the government’s intention, first announced in Budget 2023, to introduce legislation in 2024 “to eradicate forced labour from Canadian supply chains” and to strengthen the import ban on goods produced with forced labour. While few details are available, this legislation is likely to be mandatory human rights due diligence (mHRDD) legislation, which will require companies to proactively assess, mitigate, and prevent forced and child labour risks in their supply chains, thereby complementing Canada’s recently enacted forced and child labour reporting legislation.
Protecting Canadian Businesses & Supply Chains
Budget 2024 identifies the intention of the Canadian government to protect Canadian businesses and critical supply chains through:
- New funding for the Canada Border Services Agency (“CBSA”) to create a Market Watch Unit to monitor and update trade remedy measures annually with the stated goal of protecting Canadian producers from unfair foreign trading practices such as dumping.
- Reciprocal treatment: Canada is concerned about the impact of protectionist and non-market policies on Canadian businesses. Therefore, in developing its trade policies, Canada intends to mirror the treatment for foreign businesses that is afforded to Canadian businesses and exports abroad.
- Friendshoring: Budget 2024 notes Canada’s active efforts to work with its allies to develop and strengthen shared supply chains, as well as Canada’s commitment to designing its policies and programs with friendshoring as a priority.
- Fighting trade-based financial crime, which refers to the use of trade to disguise the proceeds of crime and to mask illegitimately obtained funds that are directed towards terrorism and other criminal activity. Budget 2024 notes the government’s intention to create a Trade Transparency Unit within the CBSA and to give the agency enhanced powers to combat trade-based financial crime through amendments to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (“PCMLTFA”).
A Continued Focus on Sanctions
Budget 2024 expresses Canada’s “unwavering support for Ukraine” and its commitment to using sanctions to respond to Russia. Although not addressed in detail, Budget 2024 proposes:
- Potential amendments to Canada’s sanctions regime to reflect any consensus emerging from discussions among G7 countries about mechanisms to hold Russia to account for its invasion of Ukraine, including as concerns the use of Russia’s immobilized assets.
- Ensuring that federal funds do not flow to sanctioned Russian banks by prohibiting students from receiving Canada Student Financial Assistance while studying at Russian post-secondary institutions.
More generally, Budget 2024 proposes:
- Continued efforts to combat sanctions evasions by modernizing Canada’s anti-money laundering and anti-terrorist financing framework. This will include initiatives such as enhancing the ability of reporting entities under the PCMLTFA to share information with each other to detect and deter sanctions evasion and other financial crime.
Trade Agreements
Budget 2024 identifies numerous priorities concerning Canada’s trade agreements:
- Implementing the revised Canada-Ukraine Free Trade Agreement and the United Kingdom’s accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.
- Continuing to negotiate free trade agreements with Indonesia and the Association of Southeast Asian Nations to provide additional trade and investment opportunities for Canadian businesses in the Indo-Pacific region.
- Upholding Canada’s existing 15 free trade agreements with 51 countries.
Conclusion
The proposals discussed above are largely schematic and further details are expected in the coming months. What is clear, however, is that trade and investment measures will continue to occupy an important place in Canada’s foreign and domestic agenda. As such, businesses should anticipate a rapidly evolving landscape of important new market opportunities but also significant compliance challenges.
