Last week, the Australian Senate passed a bill – Customs Amendment (Banning Goods Produced By Forced Labour) Bill 2021 – that would ban imports of goods made with forced labor. There are significant hurdles to the bill becoming law (it still needs approval by the House of Representatives, and then would need implementing regulations that give it effect), but if it eventually did pass, it could have the potential to disrupt Chinese exports of various products to Australia.

The text of the bill is simple and straightforward:

The importation into Australia of goods produced or manufactured, in whole or in part, through the use of forced labour (within the meaning of the Criminal Code) is prohibited absolutely.

An explanatory memorandum for the bill notes that "Section 270.6 of the Criminal Code defines forced labour as the condition of a person (the victim) who provides labour or services if, because of the use of coercion, threat or deception, a reasonable person in the position of the victim would not consider himself or herself to be free to cease providing the labour or services, or to leave the place or area where the victim provides the labour or services."

The memorandum provides some useful background and clearly connects the bill to practices in China. It notes that "[t]he issue of modern slavery has also been highlighted by the well documented human rights abuse of hundreds of thousands of Uyghur people in Xinjiang Province in China" and that "[t]he exploitation of detained Uyghurs as a captive labour force is clear."

The memorandum also points out the origins of this bill in another bill previously introduced to target goods made by Uyghur forced labor. However, a Senate Committee took the view with this earlier bill that "it would be preferable to introduce a global ban on the import to Australia of goods produced by forced labour," rather than focus only on China. The new bill seeks to implement the Committee’s recommendation through an amendment to the Customs Act "to impose an absolute ban on the importation of goods produced in whole or part by forced labour," noting that "[t]he proposed ban is global in nature and does not specify any geographic origin for its application." The discussion of this bill in the Senate, attached at the end of this piece, demonstrates the varying perspectives of the Senators and the different weight they put on China in the context of this debate.

The political situation in Australia makes it unlikely that the bill will become law in the near future. The Senate is controlled by the opposition parties (mainly, Labor and the Greens), while the coalition government controls the House of Representatives and opposes the bill. That makes passage into law a bit of a long-shot at the moment. The supporters of the bill no doubt recognize this and may see Senate passage as more of a long-term political strategy than a pathway to passing the legislation immediately.

At the same time, there has been growing political pressure in many parts of the world related to labor practices in China. It might be a surprise if the current Australian government took action here, but a future government may very well do so. The next Australian election is likely to be in May 2022, and a change in government could prompt a change in policy. And even this government has acknowledged the underlying issues. In March 2021 comments on the prior version of the bill that targeted Uyghur forced labor, the Australian government noted that a review of the Modern Slavery Act, a 2018 law that touches upon forced labor among other issues, in 2022 "will provide Parliament with an additional avenue to examine these issues."

If the Australian bill were to become law at some point, implementing the law would be a challenge. For guidance, Australia might look to the experience of the U.S. government in dealing with goods made with forced labor. In the United States, the approach is that U.S. Customs and Border Patrol can block imports (through a Withhold Release Order) if it has evidence that the goods were made with forced labor, and then it is up to the importer to prove that the goods were not made in this way. This process is not very transparent and there is not much information available about it to the general public, which makes it difficult to evaluate its effectiveness and its impact on trade, but it may be the most sophisticated model out there at the moment.

Implementing such an approach in Australia could take some time. A detailed set of regulations would have to be drawn up, and funds allocated for the effort. In certain circumstances, Australian regulatory actions can take place quickly, but generally speaking the development of new regulations is more deliberate and must follow certain procedures. Australian lawyer Andrew Hudson has described some of the likely considerations as follows:

a significant concern for those in industry is how the service providers in the industry (including freight forwarders and licenced customs brokers) would be able to verify whether relevant goods are the product in whole (or in part) of forced labour. Again, it seems an unreasonable imposition on service providers to expect that they would independently be aware of the origin of the relevant goods and the conditions in which they are produced. It would be even more unreasonable to impose penalties for being involved in the movement of such goods and failing to identify that the goods were the product of such forced labour. Whatever happens, it can only be hoped that any responsibility for service providers at the border is limited to liabilities only for knowingly or recklessly dealing with goods that were the product of forced labour (including those dealings with goods listed by the ABF and other government agencies) to have been the product of forced labour. Otherwise, all responsibility should fall to the importer of the goods.

Implementing this type of law in a manner that avoids excessive disruptions to trade will be a challenge for the Australian Border Force.

Australian Senate Discussion of 2021 Forced Labour Bill

In the Australian Senate discussion during the second reading of the bill, a number of Senators set forth their views on the issue. Senator Patrick, who introduced the bill, expressed a sense of urgency as follows:

The bill is, I acknowledge, something of a blunt instrument, but that's what's needed to thwart modern slavery, especially China's resorting to the massive use of forced labour. If Australia is to be true to the democratic values we hold, we need to leave the Chinese government in no doubt that its conduct is unconscionable and unacceptable. And this action cannot be further delayed. It must happen within the life of this parliament—indeed, within this calendar year. We need to send a very clear political signal to Beijing and to the numerous international brands that have been happy to turn a blind eye to China's massive exploitation of forced labour. We need to send that signal right now, before the Beijing Winter Olympics next February, just six months away, when the Chinese Communist Party intend to bask in a massive international propaganda event.

Senator Abetz supported the bill, but thought a vote was premature:

This is a bill worthy of consideration and support, in principle. Until such time as a detailed examination of its various clauses has been undertaken and we have the whole-of-government response to the Senate committee's report, I believe it is premature to deal with this bill on a vote.

Senator Fierravanti-Wells pointed out the changed nature of the Australia-China relationship:

it can no longer the business as usual with the communist regime in China. The ongoing threats by Beijing are symptomatic of the predicament that we find ourselves in, noting that years of questionable and, if I may say so, defective foreign and trade policy have made us vulnerable to economic coercion.  ... Whilst China's bully tactics on different fronts were clear, there was a reluctance to offend China on the part of those leading our foreign and trade policy, and my criticisms in January 2018, though valid, were not welcome. We were never clear what strategy we were adopting with China. Therefore, when you are dealing with a bully, it is important that you have the political fortitude to stand up to them. As I've said, I think that the Australian public will now expect that. Australians will no longer tolerate business as usual with the communist regime. China is not a democracy. It is a totalitarian regime, and we need to treat it as such.

Senator Rice focused on the broader issue of forced labor around the world:

So it's not a focus just on China. We have to be very careful that we take whatever action we can to make sure that, by having a focus on the actions of the Chinese government, we don't flame anti-Chinese racism here in Australia. ...