Proceedings of the Standing Senate Committee on
Issue 17 - Evidence - May 14, 2015
OTTAWA, Thursday, May 14, 2015
The Standing Senate Committee on Human Rights met this day at 8:31 a.m.
to monitor issues relating to human rights and, inter alia, to review the
machinery of government dealing with Canada's international and national
human rights obligations (topic: Corporate Social Responsibility (CSR) and
Senator Salma Ataullahjan (Deputy Chair) in the chair.
The Deputy Chair: Good morning, senators. Welcome to the
thirty-first meeting of the Second Session of the Forty- first Parliament of
the Standing Senate Committee on Human Rights.
The Senate has tasked our committee with examining issues related to
human rights, both in Canada and internationally.
The chair of this committee, Senator Mobina Jaffer, could not be here at
this time. My name is Salma Atuallajhan. I'm deputy chair of the human
rights committee, and it is my honour to welcome all of you to this meeting.
Before I continue, I would like my colleagues to introduce themselves,
starting to my left.
Senator Eaton: Nicole Eaton, Toronto, Ontario.
Senator Rivard: Good morning. My name is Michel Rivard, and I am a
senator from Quebec.
Senator Hubley: Senator Elizabeth Hubley, Prince Edward Island.
Senator Nancy Ruth: Nancy Ruth, Toronto, Ontario.
Senator Eggleton: Art Eggleton, Toronto. Toronto is dominating
The Deputy Chair: Thank you. Garment manufacturing is an important
source of jobs in the developing world. The great flexibility and
decentralization of that industry, together with its generalized recourse to
subcontracting, complicates the implementation of adequate health and safety
standards. In many countries that export clothing, like Bangladesh, India
and Vietnam, thousands of salaried workers are exposed to dangerous working
conditions and other risks to their health and safety.
We heard this morning about the fire in the Philippines, where the
workers could not get out because the windows had bars on them, and they
still don't know how many people died.
On April 24, the Rana Plaza building in Dhaka, Bangladesh, collapsed, and
approximately 1,130 workers were killed, and more than 2,500 people injured.
This was the worst of a series of fatal accidents that took place in the
garment manufacturing industry in Bangladesh. Among those were also the
November 2012 fire, where over 100 people were killed, and the fire in
October 2013, where 7 died and 50 were injured. Human rights obligations
exist in the private sphere, including in situations of employment. Safe and
healthy working conditions, a living wage and reasonable hours of work are
protections that have been won by employees advocating in many communities
across the globe for their human rights in the workplace.
When workers' health and safety are not protected, when wages do not
allow for a reasonable standard of living and when workers are intimidated
for trying to unionize, a number of rights recognized in international human
rights conventions, to which Bangladesh is a party, are engaged.
Unfortunately, although Bangladesh has ratified a number of international
human rights conventions, such as the ILO's Labour Inspection Convention, in
1972, the Rana Plaza collapse and other similar events demonstrate that
there is significant room for improvement in implementation and that
effective enforcement is still required.
To begin our hearing, I would like to welcome, from Foreign Affairs,
Trade and Development Canada, Duane McMullen, Director General, Trade
Commissioner Service Operations and Trade Strategy; and Jeff Nankivell,
Director General, Programming, Asia Pacific.
Gentlemen, I will ask you to make your presentation, to be followed by
questions from the senators.
Duane McMullen, Director General, Trade Commissioner Service
Operations and Trade Strategy, Foreign Affairs, Trade and Development
Canada: Thank you very much for the opportunity to speak here today.
I am pleased to tell you about the Government of Canada's overall effort
to support responsible business practice among Canadian firms operating and
sourcing abroad, including lessons learned from our experiences with the
Our department works with colleagues across government to promote
responsible business principles and practices to Canadian businesses
operating abroad. They contribute to business success in challenging
environments and bring benefits to local economies and communities in which
they are active. Our approach to corporate social responsibility, or CSR,
supports and aligns with other efforts of my department and those of the
Government of Canada as a whole.
Our overarching position is that the Government of Canada expects
Canadian companies operating internationally to respect all applicable laws,
to operate transparently and in consultation with host governments and local
communities, and to conduct their activities in a socially and
environmentally responsible manner. Companies are also expected to respect
human rights and to meet widely-recognized international standards for
responsible business conduct by integrating CSR principles throughout their
business practices. This includes undertaking due diligence and sourcing
This position is clearly articulated within Canada's CSR strategy for the
Canadian extractive sector abroad, which was originally launched in 2009 and
recently enhanced in November 2014. The lessons learned from the CSR
strategy, along with Canada's experience and leadership in responsible
resource development, guide our broader efforts for CSR in other sectors.
They inform how my department advises and supports all Canadian companies
abroad, including our efforts in responsible sourcing.
When doing business internationally, Canadian companies can find
themselves operating in countries that lack the capacity to help business
operate responsibly. The Government of Canada helps to fill this gap through
a variety of initiatives that assist Canadian companies in the various
challenges they face in operating responsibly abroad.
The activities undertaken by the Government of Canada to promote and
advance CSR can be grouped in four areas: promoting and advancing CSR
guidance, fostering networks and partnerships, facilitating dialogue towards
dispute resolution and strengthening the environment affecting responsible
To help companies understand good CSR practices, the Government of Canada
promotes the use of several CSR guidelines that are relevant to any sector
and size of company.
Canada's missions abroad, including the Trade Commissioner Service, are a
key channel for engaging on responsible business practices. Through various
events, Canada's missions have a tangible impact by bringing a variety of
stakeholders together to discuss CSR, share best practices and build
networks and relationships. We have over 950 trade officers with more than
400 of them working in 60 developing countries. They provide advice to
Canadian companies active abroad on how to operate both successfully and
Providing guidance and facilitating partnerships can help companies work
well with local communities, yet problems can arise. To help resolve
disputes, the Government of Canada has two dialogue facilitation mechanisms
— one focused on the extractive sector and one for all sectors. The CSR
counsellor provides targeted services for the extractive sector, while
Canada's national contact point for OECD guidelines is aimed at helping
consenting parties dialogue on the full range of CSR issues and sectors.
Finally, in order to foster an enabling environment, when looking at
responsible sourcing, my department and the broader Government of Canada
engages with a variety of stakeholders at home and abroad. We collaborate
interdepartmentally on a variety of issues related to ready-made garments
and their supply chains and engage multilaterally on these challenges, such
as through the OECD national contact points and the OECD advisory group on
responsible supply chains in the textile and garment sector, as well as
working with G7 partners.
We also engage with industry, civil society and labour partners to
explore how to encourage good practices in responsible sourcing. An example
of coordinated efforts on this front has been collaboration to improve
working conditions in the ready-made garment sector in Bangladesh, where a
wide variety of stakeholders are undertaking efforts to collectively improve
working conditions in the sector, including the private sector.
The Government of Canada will continue to assist Canadian companies with
responsible business practice wherever they are active and in whatever
sector, providing them with the necessary tools and advice for successful
and responsible operations.
Thank you again for the opportunity to present to you today. I look
forward to your questions.
Senator Eaton: It is interesting, when you go into another
sovereign country and a Canadian company is perhaps only one of the many
companies that will use that factory to make garments or shoes, what kind of
authority do you have? Is it mostly moral authority? You arrive in country
X, you are a big customer, but you are only one customer. You see that their
labour practices are not what we would consider to be good labour practices.
Is there anything you can do?
Mr. McMullen: Certainly. One thing we have learned through this
process is that each country faces different challenges and the environment
is different. For example, in Bangladesh it became obvious — too late — but
the main challenge there was building safety and fire safety. In other
countries, say, for example in Jordan, initially the key challenge turned
out to be migrants' labour and working hours. Each country has a different
As we speak to Canadian business, the job of our offices abroad is to
recognize what the unique challenges in that country are and to make sure
that the companies themselves are aware of those challenges. We give advice
to those companies about how they can mitigate those challenges.
For example, in a country where there might be some kind of labour issue
within a factory, the Canadian company is but one of many other customers of
that factory. That kind of problem is solvable, but not necessarily
overnight. One of the roles of our missions abroad is to build coalitions in
countries, so if there are Canadian customers then there must be American
and European customers. We would work with our colleagues in other embassies
or high commissions in that market to make the companies aware of those
issues, so that it is not just Canada that is trying to influence the
situation in that factory.
For Canadian brands, as well as for European and American brands, they
value their brand reputation. They don't want to take a risk that there is a
fire in the factory, for example, that kills a lot of people, like in the
news that we saw this morning from the Philippines. But if they are not
aware of the risk, then they can't take measures against it.
In the case of Bangladesh, as an example, where we have done a lot of
work since the fire and the building collapse, with building safety as a
problem, the efforts are to work with the local government, the supply chain
and companies to do a number of things. For example, to certify factories,
so that suppliers know that if I use that factory then it has been validated
by external trustworthy sources that that is an acceptable factory to use.
Senator Eaton: Are the standards you try to get Canadian
manufacturers and other countries that are using that factory almost to the
Canadian or European standard? Surely companies go looking to countries like
the Philippines, Bangladesh and Vietnam because they make a much cheaper
product than if they were manufacturing it here.
Mr. McMullen: Standards are different. We try to respect the
sovereignty of each country to set its own standards. We expect Canadian
companies will at least meet those standards, but there are also
international guidelines that we expect Canadian companies to meet that can
be above the standards within a specific country.
Companies will go abroad to other markets not necessarily because the
labour cost is low or because standards are different. It may well be labour
availability is a factor or we in Canada have a quota system on imports. So
you will go to a country not necessarily because it is the country you want
to go to, but it has quota available. Then you try to figure out how you can
produce within that country, in a way that meets international standards
because you need access to that quota.
Senator Eggleton: You appeared here a year ago and much of the
discussion at that point in time was with the RANA Plaza in Bangladesh and
the catastrophe of over 1,100 people being killed and many more injured. Of
course, that occurred two years ago.
What improvements have actually happened in the area? A year ago we
talked about the need for safe and healthy working conditions, living wages,
reasonable hours and the right to organized unions without intimidation.
What has actually happened in Bangladesh with respect to these issues?
Jeff Nankivell, Director General, Programming, Asia Pacific: Thank
you, senator. I will speak to this issue.
My responsibilities are as the director general responsible for Canada's
development assistance programming in Asia-Pacific. In that capacity, the
government and the Department of Foreign Affairs and Trade and Development
has been engaged in the efforts in Bangladesh to improve the situation for
the workers in the ready-made garment sector.
It has been two years. A lot of work has been done by a lot of partners.
Through our development assistance programs, for a year and a half now, we
have been engaged in a major effort through the International Labour
Organization where Canada, the Netherlands and the U.K. have each put in $8
million, working with the ILO in a project, which is providing technical
support in the fire and safety regime; rehabilitation and skills training
for workers affected by the RANA plaza tragedy; fire education and training,
and occupational health and safety information; and other areas related to
improving the factory inspection systems. These efforts are alongside
efforts that have been undertaken by major players in the industry, the
Alliance and the Accord, two international coalitions of buyers and
Of those targeted, there are 3,500 sport-oriented factories that are the
baseline in terms of improving the inspection regime. Up to now, about three
quarters of those factories have been inspected. Some of those inspections
have been done under the auspices of the Accord, some under the Alliance,
and about 750 throughout the ILO project supported by Canada. Forty-eight
factories were recommended for closure. Of those, 14 were closed fully, 13
were partially closed and 21 underwent remedial measures and are now
A major area of engagement for us and our international partners has been
to get the government to hire more inspectors. In the last two years, 180
new labour inspectors have been recruited. Twenty per cent of them are
women. Technical support has been provided for their training. There are
other results related to the re-employment of Rana Plaza survivors and
training and rehabilitation for those injured.
That said, there is still more that needs to be done, particularly in the
area of ensuring that systems are in place to guarantee the rights of
workers and that unions are able to organize. The payments to the Rana Plaza
tragedy survivors have not been fully dispersed, and there is still a need
to expand and make more coherent the database of all of the factories that
are doing work for final export, which will require inspection. There is a
continuing job of remediation to be done.
Senator Eggleton: I take it the inspections are relevant to the
safety and health aspects of the workplace?
Mr. Nankivell: Yes. The focus has been on fire safety and the
structural integrity of buildings.
Senator Eggleton: What about wages? There was a lot of controversy
about how poor the wages were. Has anything been done about that?
Mr. Nankivell: Yes. The government has increased wages and the
industry has accepted the minimum wage increase, which has gone from $40 to
$73 a month.
Senator Eggleton: That is in effect?
Mr. Nankivell: Yes.
Senator Eggleton: Okay. As to this question of unionization, has
there been any progress on that?
Mr. Nankivell: Yes. There has been progress. There have been more
unions formed and more workers are joining unions. I mentioned the role that
the International Labour Organization has been playing in Bangladesh. As you
know, it is a tripartite organization that is equally representative of
international labour organizations, international employers and governments.
The ILO has been engaging with international labour organizations to work on
the labour organization side of this equation.
That said, everyone acknowledges there is more work to be done there. Not
all organizations that represent themselves as unions would be recognized in
Canada as unions. There are issues in a country like Bangladesh, which does
experience, on a fairly broad scale, corruption in various walks of life. In
government, in industry and also in civil society organizations, there are a
number of challenges to overcome.
Senator Eggleton: Yes. Presumably, it is still not easy to
organize a union. There is probably still intimidation. If there is
corruption, there is probably that, too.
What about this Accord and Alliance? These are two organizations — one
more European-based and one more North American-based as I recall — of the
business community. What are they accomplishing and what are Canadian
businesses, particularly, accomplishing?
Mr. Nankivell: In the measures that I have mentioned, the progress
that I have mentioned that has been made, they have played a large role in
this. I gave a percentage on factory inspections. Of the 3,500 factories
that were targeted, 1,291 were inspected with support from the Accord, which
is the European-based coalition of companies. Loblaw is one Canadian company
that is a member of the Accord. Six hundred and sixteen factories were
inspected under the auspices of the Alliance and, as I mentioned, through
the ILO project, 757 factories.
These three initiatives — and ILO is working with a Government of
Bangladesh initiative — are working in coordination on common standards and
kind of a division of labour in terms of facilitating these factory
inspections and reporting and going into a common database.
In terms of the Canadian company engagement, I can't speak for the
Canadian companies. I would encourage the committee to speak with them. As I
mentioned, Loblaw has been prominent in the Accord. If you give me a minute,
I can get the names of some of the Canadian companies that are members of
the Alliance, which, as you mentioned, is a North American-dominated
initiative, where the Accord is led primarily, but not exclusively, from
Senator Eggleton: The last time you were here, we were told that
the Government of Bangladesh had not ratified a couple of conventions of the
ILO. You mentioned, Madam Chair, the one in 1972, but there is one in 1981
and another protocol in 2002, which I take it would be helpful in overcoming
some of the loopholes in their system. Have they ratified either one of
these now, a year later than the last time we reviewed this?
Mr. McMullen: We would have to get back to you on that.
Since the Rana Plaza collapse, we have been working closely with the
Government of Bangladesh. They passed a national tripartite act on fire and
building safety, so they have given some legislative framework to the hiring
and training of inspectors, as my colleague Mr. Nankivell has mentioned.
They have adopted a national occupational health and safety policy that
requires labour management and occupational health and safety committees in
all enterprises and are providing training on occupational health and
safety. We have provided that to 114 master trainers who are currently
training 7,500 factory supervisors for 500 factories, and that is impacting
Senator Eggleton: This is all to implement this new policy?
Mr. McMullen: Yes. The fourth pillar of our CSR policy, as I
mentioned, is working to build the capacity of the host government to be
able to improve its own infrastructure and institutions for managing these
kinds of issues.
Senator Eggleton: That is what part of the $8 million is going
for, I assume?
Mr. McMullen: Yes.
Senator Eggleton: Okay. Thank you.
Senator Rivard: Thank you kindly, Madam Chair. This is the first
time I've had the honour of sitting on this committee, so, unfortunately, my
questions may have already been asked.
In your presentation, you said you had over 900 trade officers, with 400
of them working in 60 developing countries. Are we to understand that those
400 officers working on the ground aren't necessarily Canadians stationed in
Asia but, instead, local officers of those countries, be it Bangladesh or
somewhere else, trained by Canada? They aren't actually 400 Canadians.
Mr. McMullen: Yes, that is correct. Approximately half of our
trade commissioners abroad are officers hired locally, but they are
particular experts in the local business community, business practices and
the local environment. The Canadians will tend to stay for two to four years
in country and have a really good understanding of the Canadian context, but
we rely heavily on our local staff who are permanently in the country to
give us advice about local conditions. They are an invaluable part of our
Senator Rivard: Am I correct to assume that you are active in
places where Canadians have business interests, not just as owners or
shareholders of manufacturing companies there, but also as owners of
businesses here who import products from factories in those countries? Is
that your area of activity?
Mr. McMullen: We focus on helping Canadian companies to be aware
of the risks that they run in other countries. We'll see a lot of Canadian
companies when they're new to international trade. They'll make the
assumption that things work abroad like they work in Canada. So in Canada
you don't think twice about buying from a factory in Manitoba or about
whether the labour conditions good or if the factory is safe. You just
assume those things.
But these can be very dangerous assumptions to make for a Canadian
company operating in a challenging environment. One of the roles of our
trade officers abroad is to make the Canadian companies aware of those
risks. What could happen if those risks materialize? The Rana Plaza disaster
is a very good tragic example of that. What they can do to avoid running
into those risks?
For example, in the case of Bangladesh, there are now two very good
private-sector driven sets of standards, the Alliance and the Accord, that
can allow a company to share in the work that other companies have done in
terms of validating safety practices, validating work practices, and to know
that if they hire a company that has a factory in one of the certified
enterprises then they can feel confident that they aren't running those
kinds of risks with their purchases.
Senator Rivard: Do inspectors notify factory owners before the
site visit? Do they check fire safety systems? Do they serve as external
inspectors for private firms whose shareholders have decided to carry out
surprise inspections? I would think there is a requirement to notify and to
conduct surprise inspections to check that rights and regulations are being
Mr. McMullen: I'm not aware of the specific practices that either
the Alliance or the Accord undertakes. I know it is frequent and that major
issues frequently are identified when they visit a factory. The goal is not
necessarily to immediately shut down the factory. Hundreds of workers could
lose their jobs. The goal then becomes remediation. How do we work with that
factory to resolve the issues in a timely manner so that a factory can
continue to operate?
The first line of approach for both the Alliance and the Accord is to be
a partner with the factory, to try to improve conditions. Our experience
generally, not just in Bangladesh, but in other markets, is that you achieve
much greater results when you're seen as somebody who is an ally, who can
help you through issues rather than somebody who is trying to catch you and
put you out of business.
Senator Rivard: When you identify a major issue that can
jeopardize safety, you, of course, alert the company in question. If,
however, that company does business with a Canadian company, do you bring
the issue to the attention of both parties?
If the Canadian customer is aware of a potentially dangerous situation,
they can put pressure on the supplier. Do you work solely at the local level
to remedy the problem?
Mr. McMullen: Certainly, if we discover or learn of a major issue,
then we would bring that to the attention of the Canadian company that was
working with the local supplier and to the standard setting bodies or
inspectors that also try to remediate those problems.
Senator Hubley: When you appeared before this committee last May,
your colleague, Peter MacArthur, outlined some meetings that would be
happening on this topic in the weeks after this meeting. There was one in
mid-May with the Canadian High Commissioner who was meeting with the
British, the EU, the Netherlands and three different ministers of the
Bangladesh government, pressing them on the issue. He also said there was an
OECD meeting in Paris at the end of June and the European Union's
Sustainability Compact review of Bangladesh in mid-July.
Do you know what has come out of those meetings? We've talked about the
Accord and the Alliance: Is that something that has come out of those
meetings or is that different?
Mr. McMullen: First, those meetings did happen. The Accord and the
Alliance pre-existed those meetings. Those are private-sector associations,
voluntarily driven, in effect meant for many companies to come together to
be able to assure themselves that they were working with subcontractors that
were providing acceptable conditions.
As I mentioned, our work is aimed at helping the Alliance and the Accord
further articulate those standards to make them more practical and to allow
remediation efforts because we want to minimize the harm. We don't want to
put people out of work. The ready-made garment sector in Bangladesh and in
many countries is a critical part of their economy and provides a
significant employment. We want to be able to protect that. How will I
describe it? It's a delicate dance between the various stakeholders to look
at the problem and think about ways to resolve those problems.
As I mentioned earlier, in our work with the Government of Bangladesh —
not just Canada's work, but it's a multilateral effort — they have passed
legislation on fire and health and safety policy. They have now mandated
occupation and health and safety committees made up of management and labour
in all enterprises and they are training master trainers who are training
individual factory supervisors on how to implement those new laws.
As my colleague mentioned, much work remains to be done, but we have made
Mr. Nankivell: If I can add just a few words on this. The process
that's going on in the country, our high commissioner in Bangladesh is
engaged in what they call the three-plus-five process. This is the deputy
ministers of the Departments of Commerce and Labour and Foreign Affairs of
the Government of Bangladesh meeting with five heads of mission of buyer
countries, which are currently Canada, the U.S., the Netherlands, the EU as
an organization, and there is a rotating seat for any new member. They have
been meeting about every two months as a group and the agenda kind of moves
along. The most recent meeting was in February.
To give you a flavour of it, the issues that are on the agenda at the
moment in that group include: pursuing the remaining 1,300 factory
inspections that have not been done of the original targetted 3,500;
finalizing the implementing rules of the amended Labour Act of Bangladesh
that Mr. McMullen mentioned; establishing an early dispute resolution
mechanism when there are disputes involving workers, trade unions and
employers; and finally the factory remediation issues, particularly how to
improve access for financing for the smaller players in the industry to be
able to get the working capital to upgrade their premises to meet the
standards that are now increasingly being imposed.
Senator Hubley: I have another question on consequences. In
several instances, you expect Canadian companies to apply. You have an
expectation that the work that you will do, that the people will follow
If they don't, are there any further consequences that we can bring to
bear on companies that would perhaps go around some of the work that's
taking place, say in Bangladesh, to use in another factory that perhaps
doesn't have the standards that it should?
Mr. McMullen: There are in effect two consequences for Canadian
companies that don't meet our expectations. The first consequence is that
they will receive no public support from us. We will tell them why and we
will explain why. This can be a fairly significant consequence abroad
because many of these markets are very difficult. If our embassy or high
commission is not able to work with local government officials on the
various problems that these companies face, they can't successfully do
business in that market.
There are the red-tape challenges. The dealing-with-government challenges
can be pretty significant in these markets. And if they don't get an
intervention from an embassy or high commission they can often be impossible
A second challenge is that for companies that need international
financing, if they can't show that they are operating to these standards
they cannot get financing. The International Finance Corporation has
standards. Export Development Canada adheres to those standards, the Ecuador
Principles. If you are not able to show that you are in compliance with
those principles that are broadly aligned to the kinds of guidelines and
standards that we mentioned, you cannot get financing. That can also be a
Beyond the deterrent of what if there is a disaster, what if there is a
fire or a building collapse or a major strike and the government intervenes
in a heavy-handed way and your brand is implicated in that, that can be
devastating for a business. We explain to companies the kinds of things that
can happen to their brand and their businesses if they are tied up in that
kind of a tragic situation and they're usually very interested in taking the
measures to avoid the risk of that happening. So it's not just a moral issue
but also a good business practice issue.
Senator Nancy Ruth: I have a series of questions that are a bit
all over the map, so perhaps you would just jot them down.
I'm curious, the Montreal company of Gildan has a large T-shirt
manufacturing and dye and export business in Bangladesh. The factory is
quite modern, relative to Rana Plaza for sure. What kind of influence, if
any, does Gildan have on other Canadian people in similar business? That's
In the health and safety section of the building, does the building
inspection really deal with health and safety? Part of my question is the
amount of lighting, the seating that workers have to work at, what
responsibility is there for early blindness, other issues like that.
I remember well in Indonesia when the first computer chips were made, all
the women had their fingers eaten by acid and the Canadian corporations
involved took no responsibility whatsoever for long-term benefits.
Another issue I had is when you talk about dispute mechanisms, does
Bangladesh have a court system that, should disputes not be resolved, would
help in this manner?
Another question had to do with when you talk about Canadian public
support, and you articulated very well the number of fingers that the
government has to push Canadian companies. I wondered about the issue of
quotas. I don't think I quite understood in your opening comments what you
meant by quotas. And is this part of this pressure?
Mr. McMullen: I'm not aware of Gildan specifically having
investments in Bangladesh. I don't doubt that is the case. Many Canadian
ready-made garment manufacturers are finding it increasingly challenging to
source labour in Canada and are also finding that they don't like the risks
of subcontracting in other markets abroad and feel much safer, I'll say, if
they have their own capacity abroad. They feel then they control the
standards, the labour issues, the health and safety issues and so on,
directly under their supervision. Many Canadian companies are increasingly
For both the Accord and the Alliance Canadian companies, French, Italian,
German, American companies, are working together to come up with shared
standards and guidelines in these areas where the local government is
deficient. I think Canadian companies have a strong influence in what I'll
call multinational, largely private-sector driven entities but also
including participants outside the private sector. But Canadian companies do
have a disproportionate influence in those bodies.
In terms of building inspections, does it include matters such as
lighting and seating arrangements? I'm not sure. That's information we can
find, so we can look that up and provide that to you.
Senator Nancy Ruth: I'm talking about health and safety, so that's
part of that.
Mr. McMullen: Health and safety within the building inspections.
The main issue in Bangladesh was the actual safety of the building and fire
protection, fire escape procedures. As my colleague Mr. Nankivell has
mentioned, it's a huge challenge to properly inspect over 3,500 factories,
and there is a big division of labour, but there are still over 1,000
factories that haven't been inspected, although that work is ongoing.
In terms of dispute resolution, we respect the sovereignty of countries'
court systems, so I'll say punitive measures tend to be up to the country
itself to impose. We try to work on dispute resolution, on remediation, when
guidelines are not met, how you bring things into compliance rather than how
to punish for non-compliance. We leave the local countries to deal with the
punishment aspect. In many cases Canadian companies will decline to use a
subcontractor if standards are not being met.
The quota system is a complicated topic, but many countries, including
Canada, have quotas on the amount of ready-made garments that can come from
various countries and the quotas are below what the Canadian market would
What that causes in the ready-made garment sector, including in the
footwear sector, is they tend to look at countries that have un-utilized
quota. If they can establish production in that country, then they can
produce more T- shirts or more shoes or whatever it is, but these countries
often have, I'll say, a very challenging institutional environment. They
don't have a government that's capable of enforcing building safety or hours
of work or various labour codes. In those cases you need stakeholders to
come together and define those standards and make sure those standards are
enforced. Otherwise you get into problems like we've had in Bangladesh and
Senator Nancy Ruth: I'm wondering if Mr. Nankivell could answer my
question about Gildan in Bangladesh. I went through the factory once, they
provide one meal a day and they have nursing staff for the employees and
their families. They have labour standards way beyond anything else I saw in
Bangladesh. I'm curious to know what impact their standards have on other
Canadian companies working there.
Mr. Nankivell: I can confirm, as you have, senator, that Gildan is
active in Bangladesh. On visits to Bangladesh I've met with representatives
of Gildan in a setting where there were representatives from other companies
and organizations. They are a voice for quality.
I think our observation is that the higher-standard producers, some of
which are foreign invested and some of which are locally invested factories,
and as you would expect there is a whole range. With 3,500 factories for
export, there is a great range. But the ones that are implementing higher
standards, the more they can demonstrate that they can do this and be
profitable in exporting to markets like Canada, Europe and the U.S., the
faster the improvements will come right across the board.
It's probably the single-most important factor in quickly raising the
industry standard. I should roll that back a bit. It may not be the single
most important factor; I think implementation and enforcement of actual laws
about building safety, fire safety, health standards at work, are the
important factors. But close behind that would be the incentives that
business owners would feel that it's better for their business to operate in
a safer way that's better for workers. They can retain workers.
Anyone operating a factory in a labour-intensive industry anywhere in the
world will tell you that a significant challenge that they face is worker
turnover. Every time you bring in new workers, you have to train them and
you want to retain them for as long as you can. The higher quality factories
have much higher retention rates and they reap the benefits from that. It is
a very important element in the overall picture and it's one working through
the development assistance programs. An important factor for us and our
partners working on strengthening capacity for the industry in a holistic
way is to work with the leading employers to ensure that they are able to
communicate the benefits of the example that they set.
Senator Ngo: As you know, the garment factories are known to
employ underage workers. As per your presentation, you say that we have 900
trade officers around 60 countries, and 400 of them, more than half, rely on
the local officers. How do you ensure that these inspectors, the local
officers will guarantee that these companies respect the UN Convention on
the Rights of the Child?
Mr. McMullen: First it's a practical impossibility for our offices
abroad to be able to go to — we'll take the case of Bangladesh. Our trade
program in Bangladesh has a couple of people. Our aid program is larger, but
with 3,500 factories, we can't verify that any individual factory is a good
factory or whether or not it's hiring underage workers. We have to rely on
the local government, but also the companies and the Alliance and the Accord
to be able to tell us which factories are good or not. What we will do with
Canadian companies is give them recommendations on — I'll say the
consultants or the sources of information that can allow them to determine
if a factory is good or not. Either they will be able to find out that a
factory has been certified by the Bangladesh government, by the Alliance or
the Accord, or know what they can do to undertake their own due diligence —
if it's a factory that has not been certified to undertake their own due
diligence and to see if that factory would meet standards.
Senator Ngo: Two years ago when the building collapsed we saw a
lot of children there. We cannot say that we have to rely on the government,
the company or the Alliance to report all this. I think we should know that.
How do you do this?
Mr. McMullen: It becomes obvious, I'll say after a disaster
happens, what the problems were. The challenge is to avoid the disaster in
the first place.
You do that through standard setting, inspections and remediation. It's a
much more difficult challenge when looking at a space of say 3,500 factories
to figure out which ones are at risk. You can always find out after a
disaster, but nobody wants the after-the-disaster signaling mechanism. You
want to put measures in place, so the disasters don't happen in the first
In the case of Bangladesh, that requires hundreds of inspectors as well
as the private sector, the Alliance and the Accord, working on factories and
lots of training. That is well beyond the capacity of our missions abroad to
do directly, but we try to facilitate the enabling environment to allow the
local government, industry and labour to work together to have the standards
and inspections in place, so that you don't get those kinds of disasters
Mr. Nankivell: There is also a key role in practical terms of what
our missions abroad can do, and that is to do the analysis on the state of
the country, the state of labour in the country and what are the risk
factors. There are some countries where we can clearly identify that use of
child labour is an issue. There may be some others where it's really not an
issue. We undertake that kind of general analysis so that when Canadian
companies enter into the market then the trade commissioners can advise them
that this is something you're going to have to look out for if you're
looking to meet with potential suppliers in this country and that use of
child labour is a significant issue here.
In some other countries it might be — it's an earthquake zone — that
building structure is something you should be paying attention to because
there is a potential for a disaster. In other places it could be other
aspects of human rights. The rights of children, women and minorities are
things on which we do general analysis in the countries where there is a
Canadian presence. It's the kind of advice that we give to companies and
other organizations when they come into a country, especially for the first
Senator Ngo: I would like to pick up the question from Senator
Eggleton. He mentioned that the labour organization or the unions in some
countries are not allowed. He said that Pakistan has ratified — something
like that. But how about in other countries? Let's say Vietnam, for example.
Union and labour organizations are not allowed. We know that there are a lot
of abuses of workers, wage discrepancies, differences between men, women and
children. What do you do about that, if you don't have the labour and union
organizations in that country?
Mr. McMullen: We would encourage Canadian companies operating
abroad, and it's one of the pillars of our CSR approach, as I mentioned in
the opening statement, that multi-stakeholder dialogue is an absolute
necessity. When that dialogue doesn't exist, we encourage the companies to
For example, if there is a factory that they were operating in and a
union was not allowed — let's say the government wouldn't allow a union, or
the union was created and controlled by the government and really didn't
function as we would think a union would — then we would encourage that
company to create some sort of dialogue mechanism with the workers so they
could get early detection of issues, be able to work to resolve those issues
early and understand where their workers were coming from.
In our experience operating abroad that can be a very effective strategy
for Canadian companies. Canadians are actually pretty good at doing that.
Sometimes you need to remind them that they're good at doing that. It works
well and that's enough to get them to get to work being Canadian and putting
dialogue mechanisms in place.
Senator Ngo: Could you give us one example in Vietnam of a
Canadian company doing that? As far as I know right now, labour
organizations and unions are not allowed by the Vietnamese government. How
do you do that?
Mr. McMullen: Are you aware of any cases from Vietnam?
Mr. Nankivell: I'm not.
Mr. McMullen: We will have to get back to you about the situation
specifically in Vietnam and consult with our colleagues at our missions in
Senator Ngo: Thank you.
The Deputy Chair: I have a few questions before we go to a second
The Alliance and Accord are focused on Bangladesh, but presumably other
countries have similar problems. Why were these initiatives limited to one
country? And what is being done elsewhere?
That also brings me to the point that every country has unique
challenges. Would it be possible to have a broad CSR strategy for the
Mr. McMullen: Each country does have unique challenges. Bangladesh
has been in the news; it has been specific to tragedies in Bangladesh that
sparked the industry efforts on Alliance and Accord. There tends to be
similar types of industry-driven organizations in many other countries.
Because of the companies' need to manage the risks of having problems in
their supply chains, it is a lot easier for the companies. They all want to
certify the same things. Otherwise, you have individual companies doing
their own inspections to verify. When the companies work together and share
that effort, it becomes significantly more effective and significantly
cheaper. It will either happen naturally where the companies will do that,
or it is fairly easy to catalyze the creation of that kind of effort simply
by talking to companies and putting them together in the same room.
My colleague mentioned the three-plus-five process in Bangladesh. It is
very normal for us abroad to work with our like-minded colleagues in other
embassies — European embassies, the U.S. embassy — and we will frequently
use those contacts to bring companies together so that they can share the
work of managing the risks in their supply chains.
Our CSR strategy applies to all companies and all sectors outside of
Canada. It is an obligation that Canada has as a member of the OECD. The
OECD guidelines on multinational enterprises apply to all Canadian companies
operating abroad. We work vigorously on the development of those guidelines
with our OECD colleagues and the implementation those guidelines in the work
of all of our missions abroad with Canadian companies.
We find that Canada, within the OECD, has played a leadership role in the
extractive sector, simply because we have a lot more experience than anybody
else in dealing with Canadian extractive companies in challenging
jurisdictions abroad. In a sector like ready-made garments, other members of
the OECD, for example, Italy and France, have significantly more experience
than Canada operating in different jurisdictions abroad. They are playing a
leadership role in developing standards, guidelines, building industry
coalitions and creating practical user guides. We are also contributing to
that process, but we are benefiting greatly from the work of our like-minded
countries in the OECD on that as well. But Canada's CSR strategy applies to
all countries and all sectors outside of Canada.
The Deputy Chair: So the Alliance and the Accord are limited to
specific safety concerns. That is my understanding; is that correct?
Mr. McMullen: The Alliance is a voluntary industry organization.
It started with the basis of fire safety and building safety. But once you
get the entities talking together, once the dialogue is created and once the
habit of discussions and regular meetings happen as new issues crop up,
those are also incorporated. What we see with both the Alliance and the
Accord is that the guidelines for both of them are becoming broader and
deeper within Bangladesh as they develop more experience.
Again, it goes back to one of the pillars of our CSR approach, which is
the value and importance of creating multi- stakeholder dialogue. Once you
get those people together and talking, things start to work, and you create
something that is better than you had before. You can slowly build on that
to make things even better. Our role as the government is to try to bring
those parties together to be a catalyst to get them working and to keep them
working and being effective.
The Deputy Chair: In relation to other issues such as pay, hours
of work and unionization, companies may be less interested in advocating for
change. How can we address those issues?
Mr. McMullen: That gets to the other aspect of our policy, which
is building the capacity of the local government to be able to effectively
regulate and legislate in areas of its sovereign jurisdiction.
The Deputy Chair: With the improved working conditions, there is
an increase in costs. Is there a risk that business will go elsewhere as
conditions improve? Is there anything that can be done about that?
Mr. McMullen: Yes, of course there is a risk that a given country
can, in effect, price itself out of an industry. That is something always to
be aware of. What is the right balance? That really depends on each
individual country. Clearly, a Canadian level of standard in some areas
could effectively make everyone unemployed in that sector in another
country, and the workers themselves would think that a great injustice had
been done to them. Having multi- stakeholder dialogue that includes the
workers and the local government to be able to find exactly that balance, to
be able to improve standards and to protect human rights and health and
safety but also to protect the employment and the economic benefits is an
ongoing process. We find having an effective multi-stakeholder dialogue is
the best way to find that sweet spot in every situation and to continually
evolve that sweet spot.
Senator Eaton: To follow up on Senator Ngo, in this brief, called
Investor Brief, they were talking about the Bangladesh government's
failure to finalize relevant implementation regulations about health and
safety committees. If they don't implement things like health and safety
committees, if they allow child labour — I do not know Vietnam but obviously
Senator Ngo does — in countries like Vietnam or the Philippines, would
Canada ever counsel the Accord or the Alliance to boycott those countries?
Mr. McMullen: I think counselling a boycott would be an extreme
measure. Problem identification and remediation is always the preferred
approach, working with the companies.
Senator Eaton: But there are cultural differences and different
economic needs, as you said yourself. There might be countries where a
10-year-old kid goes off to work every day. I am sure there are. You know
there are. Is remediation and chat always effective?
Mr. Nankivell: Maybe I can help. It is a very difficult question,
obviously. Great injustices do happen all around the world. Injustices also
happen in Canada in industrial settings. As my colleague mentioned,
counseling a boycott of the production of an entire country is a severe
Senator Eaton: All right, if not the country, do you boycott
Mr. Nankivell: That is precisely the idea behind the Alliance and
the Accord and these other initiatives, to create a system where factories
can be certified. We focused on the Alliance and the Accord. I am not an
expert in this matter globally, but there are also many voluntary codes that
different retailers and manufacturers and distributors adhere to. Big
companies like Apple, Nike and so on, have their own standards and
inspection regimes and so on globally that consumers and shareholders can
take action on through boards of directors and consumer measures, including
boycotts of products. There is a whole range of initiatives at the corporate
level to create this regime of certification so that you can eliminate, as
quickly as possible, the participation of factories where these illegal
practices are taking place. You can get them out of the supply chain, but it
is a big challenge. We are focused on the products coming into Canada in
this discussion, but even in Bangladesh there are unbranded products that
are going to other parts of other markets such as China, Africa, India and
Senator Eaton: When you talk about other countries — and I do not
think this should be focused only on Bangladesh; obviously they had a huge,
terrible accident — like Vietnam, India, and it might move to Africa, can
you foresee where it will move next as labour costs go up? Are you ahead of
the curve or do you march with companies as they slowly move into another
Mr. McMullen: Typically we will get a bit of advance notice when
the market is shifting that way because the companies will show up and they
will be looking for suppliers if they decide to move into a market. They are
always looking to see if there are places where they can put production in
the ready-made garment sector. So you get a bit of advance notice about
that. When that happens, our missions abroad can give useful advice to those
companies, working with our like-minded missions.
I would like to come back, if I may, to the question about child labour
and standards or country boycotts. For example, I think we heard from
Senator Nancy Ruth that Gildan is active in Bangladesh and seems to run an
excellent factory. To boycott Bangladesh would punish Gildan and the workers
in that factory. If they are following all codes and guidelines, that would
be an excessive measure.
Also, child labour itself is a tricky issue. I grew up on a farm in
Canada. I was child labour, arguably.
Senator Eaton: You were probably given three meals a day, you
probably slept in a good bed and your mother probably sent you to school.
Yes, you worked on a farm — after hours and before you went to school.
Mr. McMullen: Yes, exactly.
Senator Eaton: I don't think that is comparable to a child in
Vietnam getting up and perhaps having something to eat, working a 10- to
12-hour day and perhaps sleeping on a mat on the floor.
Mr. McMullen: But in terms of a guideline, it gets to what
guideline would you have in child labour? Would it be child labour is
completely unacceptable in all circumstances, or a child can work if they
are educated, properly fed and housed? These are things that we try to have
multi-stakeholder dialogues work on and develop standards because in some
markets, the child's income can be a critical part of the family income.
Senator Eaton: I agree, so you're culturally sensitive to the
Mr. Nankivell: To add one thing, this is a global issue. It is
worth noting that Canada is active globally on these issues. For example, we
provide core support and are an active member in the International Labour
Organization which is working right around the globe on raising labour
standards. There is a record of progress globally on these issues over the
last few decades. There is still a long way to go, but these are global
problems. They do go right to the heart of culture, economics and politics
in countries and communities around the world. We are active in the ILO and
we provide core support for the capacity building and standard-setting work
of the ILO. We also engage, through the Human Rights Council of the United
Nations, on reviews of countries' human rights records which absolutely
include labour rights and rights of children and other vulnerable groups in
economic settings. There are a number of ways. We are focusing today on
corporate responsibility, but it is a multi-front war and we are active in
other channels, in global channels, on these issues as global issues.
Senator Eaton: Thank you.
Senator Eggleton: I read the media report this morning about the
fire in the Philippines. It may be rather early for you to know the answer
to this but do you know if any Canadian companies are involved with this
company? It is a company on the outskirts of Manila that makes rubber
slippers. Do you know if any Canadian firms are involved?
Mr. McMullen: We saw the media reports also this morning and don't
have any information yet as to whether any Canadian firms are involved.
Senator Eggleton: Okay. If you do get that information, could you
provide it to us?
Let me deal with the issue here in a more generalized way, though. The
death toll currently stands at 72. The remarks in the media are to the
effect that there were iron bars on the windows that prevented people from
If a Canadian company is going into a developing country abroad to
arrange for such contracts for purchasing and importing garments, or in this
case rubber slippers, I would imagine they would go to the factory. They
would want to see the factory and see where their contract is going to be
carried out. Do you provide advice or guidelines to them about what they
should be looking for when they go to that factory? I can't imagine a firm —
whether or not it is a Canadian firm — going to this particular factory and
seeing iron bars that would prevent anybody from escaping in the case of a
fire and thinking it is okay to do business there.
What kind of guidance do you provide to companies who are about to enter
into contracts in these places where health and safety are definitely an
Mr. McMullen: We would advise companies of the risks in that
particular market and we would give them referrals to, let us say, a local
industry initiative such as the Alliance or Accord and recommend that they
perhaps join that Alliance to be able to benefit from the work that
organization has done in inspecting and validating factories and undertaking
remediation efforts. As an alternate, we would also recommend to them
professional and capable inspection organizations that could go into a
prospective supplier and give a support on conditions in that factory. It
can be really hard. If you are, say, an international business traveller and
you spend an hour in a factory, there will be all kinds of things that you
will not see and that you will miss.
Senator Eggleton: If they come in contact with you before they go
and see the place, before they make a contract you would advise them to
check on the health and safety issues, including putting bars up to prevent
people from getting out in case of a fire?
Mr. McMullen: Yes. According to the media article this morning,
everywhere in the Philippines has barred windows as an antitheft device. If
you think about how an organization would set standards, then it becomes
everyone would fail if barred windows were a fail standard because then
there is a theft problem. It then becomes what is the alternate way to
ensure, for example, that there are enough fire escapes and ways out and for
people to get training? You have fire drills so people can escape the
building and have those actually happen. Or, in the case of this fire,
according to the media reports, welding was going on close to where the
rubber raw material was stored and that is how the fire started. How do you
manage industrial processes so that that kind of high-risk activity doesn't
Senator Eggleton: I don't think there is any excuse for that kind
of thing happening that leads to the kind of catastrophe that happened
there. We need to make sure that any Canadian company going there has proper
checking done on these facilities.
The Deputy Chair: I have a quick question, but I don't know if
you'll be able to answer this. Which countries do we import the most
garments from? For the benefit of the study, what are the countries we
should be looking at besides Bangladesh? Would you have an answer for that?
Mr. McMullen: I don't have that with me, but we can provide that
to the committee, madam chair.
Senator Eaton: If a company like Loblaw or Gildan does business
with the factories that have been inspected, looked after and brought up to
the standard of the country, is there a brand, is there something in the
T-shirt? What was the New York diamond company that is owned by Canadians
now that said "these are not blood diamonds''? Do we have something
commensurate for textile workers, "this T-shirt was made in a certified
factory''? Is there a brand or a label?
Mr. McMullen: There are. It's like you can buy fair-trade coffee
and things like that. Those marks exist; they're not widely recognized. The
clothing manufacturers tend to want their particular brand, whether it's
Gildan or Lululemon or Zara. They want that brand to —
Senator Eaton: I understand that, but they don't have an
additional thing saying "manufactured in a certified factory''?
Mr. McMullen: Not that I'm aware of.
The Deputy Chair: Thank you very much for being here. As you can
see, there was a lot of interest and I'm sure you'll hear from us again.
Senators, we will suspend for a few minutes so that we can go in camera
to discuss our future business.