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THE STANDING SENATE COMMITTEE ON HUMAN RIGHTS

EVIDENCE

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OTTAWA, Monday, February 7, 2022

The Standing Senate Committee on Human Rights met with videoconference this day at 5 p.m. [ET] to study Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff.

Senator Salma Ataullahjan (Chair) in the chair.

[English]

The Chair: Good evening, honourable senators. I am Salma Ataullahjan, a senator from Toronto and chair of this committee.

Today, we are holding the first meeting of 2022 of the Standing Senate Committee on Human Rights partially by video conference.

Before we begin, I’d like to share several helpful suggestions that we feel will assist you in having an efficient and productive meeting.

Participants are asked to have their microphones muted at all times, unless recognized by name by the chair, and will be responsible for turning their microphones on and off during the meeting.

Before speaking, please wait until you are recognized by name. I will ask senators to use the “raise hand” feature in order to be recognized. Once you have been recognized, please pause for a few seconds to let the audio signal catch up to you.

Should any technical challenges arise, particularly in relation to interpretation, please signal this to the chair or the clerk and we will work to resolve the issue. If you experience other technical challenges, please contact the committee clerk with the technical assistance number provided. Please note that we may need to suspend during these times as we need to ensure that all members are able to participate fully.

Finally, I would like to remind all participants that Zoom screens should not be copied, recorded or photographed. You may use and share official proceedings posted on the SenVu website for that purpose.

We are beginning our review of Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff.

I would like to introduce first witness: The Honourable Senator Julie Miville-Dechêne, sponsor of the bill. At this point, I invite Senator Miville-Dechêne to make her presentation.

[Translation]

Hon. Julie Miville-Dechêne, sponsor of the bill: Thank you, Madam Chair. Thank you to the chair, Senator Salma Ataullahjan and committee members for undertaking the study of this important bill, which seeks to combat disgusting human rights violations at home and abroad.

This bill addresses the forced labour and many types of child labour that can be found in the supply chains of companies that do business in Canada.

Without realizing it, we regularly use products made, in whole or in part, by those who are known as “modern slaves.” An estimated 25 million adults and children are victims of forced labour around the world, while 152 million children are forced to work. This forced labour harms their development, and, in half of cases, it is dangerous and represents the worst types of child labour.

In recent years, there has been much talk about the allegations of forced labour in the internment camps for members of the Uighur minority in China. That situation is horrible, but the reality is that this scourge is also common elsewhere in the world. Furthermore, the pandemic and the economic shocks that it has triggered have caused child labour to increase for the first time in 20 years.

In recent years, other countries have chosen to take action against this scourge, but no law exists here to force companies to do better. Through its inaction, Canada is complicit in these unacceptable practices. It is therefore time to shed light on the human cost of low prices.

Bill S-211 is the essential first step in the fight against forced labour. It will require large companies and roughly 100 federal institutions to publish an annual report on their efforts to prevent and decrease the risks of forced labour and child labour in their supply chains.

The companies in question must have assets worth at least $20 million, revenue of at least $40 million or a staff of at least 250 employees. Note that these criteria are the same as those set out in the Extractive Sector Transparency Measures Act.

Under this legislation, companies are required to report on, not to eradicate, forced labour in their supply chains. In other words, for companies, the obligation is to achieve transparency, not results. Sanctions are set out for entities that fail to report or that provide false or misleading information. In this respect, Bill S-211 is more binding than other laws seeking transparency on modern slavery in the United Kingdom and Australia.

Above and beyond fines, this bill’s strength is that it relies on the fact that the reputation of companies is at stake. Their reports will be made public and examined by government, investors, human rights advocates and consumers.

[English]

I have consulted extensively on this bill, which was first introduced in the House of Commons in 2018. Since then, I have made several significant improvements. The most important is probably the fact that the government — that is to say, federal departments and institutions — is now covered by the law and subject to the obligation to report. The Canadian government buys a lot of goods abroad and must have exemplary practices. We were reminded of this recently when the Canadian government signed contracts worth $220 million with a Malaysian company suspected of using forced labour to produce medical gloves.

We have more clearly defined what constitutes child labour under the law, for example, by including work that prevents children from attending school.

Boards of directors now have an obligation to approve forced labour reports in the same way that they approve financial statements.

We have strengthened and harmonized the contents of the reports by requiring that due diligence processes and remediation plans be included. These adjustments better align Bill S-211 with the requirements in the U.K. and Australia in particular.

The bill also bans the entry into Canada of goods made using child labour.

The good news is that some Canadian companies are already at the forefront of responsible sourcing. Others have a longer way to go. I’m aware of the difficulty of investigating multiple subcontractors and suppliers in different countries.

Faced with the issue of forced labour, countries such as France and Germany have chosen a more restrictive and punitive model, which notably gives victims the right to sue large companies that have not shown due diligence.

Like the British and Australian legislation, the bill I am proposing aims first for transparency. I believe Bill S-211 is a pragmatic and reasonable approach, a legislative compromise, that seeks to rally all stakeholders to finally move forward on this issue.

It will soon be four years since a modern slavery bill was first introduced in Parliament. Considering the importance we give to human rights in official Canadian speeches, it is high time that our laws finally reflect our words.

I’m ready for your questions. Thank you.

The Chair: Thank you, senator. We will now proceed to questions from senators.

As was our previous practice, I would like to remind each senator that you have five minutes for your question and that includes the answer. If you want to ask a question, please raise your hand as I see Senator Omidvar has already done. Once your question has been answered, please lower your hand.

Senator Omidvar: Thank you, Senator Miville-Dechêne, for your persistence in bringing this bill forward for the third time. Many commendations to you.

My question is about the stick in your bill, the penalty of $250,000, to be levied against those who don’t comply with the law based on their income, their asset level and the number of employees they have. Again, it is $250,000. My questions are as follows. How did you come to this number? Do you believe this number should be higher, given the fact that the limit you have set is the floor and not the ceiling? There are many companies who have assets of way more than $40 million that are encompassed in this law. How does this fine measure up against the fines levied by other like-minded jurisdictions? Will we be ahead of the pack, in the middle of the pack or behind the pack?

Senator Miville-Dechêne: We are well ahead of the pack if you compare our legislation to those in the U.K. and Australia, which are transparency legislations. In fact, in both of those jurisdictions, there are no fines. There are no consequences if the companies do not report, and this has been signalled as a flaw. In the U.K. now, they’re thinking about amendments and about putting in some form of punishment. According to the research, the Clerk and everything I’ve consulted, this type of fine is in the range of fines that are levied in such bills. However, you’re right to say that it’s not such a high fine.

I would say that the real power of this bill is reputation. Yes, if you have to go to court for a fine, it’s one thing. We also can fine the responsible people in charge of the particular company. People who lead the company, members of the board, could be responsible. This is another important feature of the bill because not only could we fine the company, we could go after a board member who would have provided false information. This is an important aspect of the bill.

Finally, one of the real strengths of this bill is that it goes after the reputation of the enterprise. If you go to court and you are fined, this doesn’t help your reputation. You have investors and consumers who look at that. Don’t forget, the groups who are defending human rights will go into those reports, will follow the proceedings and will denounce.

To be more clear, I will say to you that some of the features of this bill come directly from the law on transparency in the extractive sector, and this particular fine was there. Some of the bill was really inspired from this other bill, which was passed by the government to fight corruption in the mining and oil sector. You remember, probably like me, a few scandals abroad with our own Canadian mines. In that sense, the fines in Bill S-211 are the same.

Senator Omidvar: Thank you very much.

Senator Griffin: Thank you, Senator Miville-Dechêne.

It’s great to see this bill back in this parliament. I listened very intently to the speeches given in the chamber by yourself and other senators, such as our chair. I have also spoken to John McKay, MP about this, who had a previous iteration of this bill in the House of Commons.

What is the main advantage or advance in your bill over what he would have proposed in his private member’s bill? What makes this one better?

Senator Miville-Dechêne: Well, I had a little bit more time than he did to rewrite some parts of it.

I would say two things. First is the fact that we include government institutions, because I was consulting very broadly. Many enterprises were telling me, why would we have such a law for the companies and the government would not be subjected to it? We all know that the government has to show the example. The fact that the institutions of the government were not included was really a weakness. We have talked about it. We agreed that this was making the bill stronger.

I would also say that we’ve made the bill stronger in terms of responsibility of the board. The board has to approve the report. This is the highest form of approval. The form of approval is as important as it would be on financial matters. It brings those human rights to the same level of the board approving financial reports and, in that sense, I would say that that is really a strength.

We’ve also improved the definition of child labour. I don’t know if you can see it here. That’s quite important. I was not at ease at the beginning of the process with the definitions that were put in the bill.

In the case of child labour we have not only referred to the convention on the worst form of child labour, which is well known. Obviously, we don’t want any of this child labour in the supply chains of our companies. We’ve also added a very clear definition of what can constitute child labour.

We all know that enterprise companies and their lawyers read the laws. This is a great indication of what to look for. If I may, I will read it to you so you can see how clear it is:

. . . child labour means labour or services provided or offered to be provided by persons under the age of 18 years and that . . . .

We say here:

(c) interfere with their schooling by depriving them of the opportunity to attend school, obliging them to leave school prematurely or requiring them to attempt to combine school attendance with excessively long and heavy work . . . .

It’s a definition that doesn’t go only to the danger of working, but also to the absence of schooling, to the mental development of the children.

I can tell you a bit more about this definition. We have tried to decolonize the first definition. We were a little bit too broad in telling the world that our way, our laws on children were the best and that everybody should — not “copy” them; this is not the way we were saying it, but it kind of gave this message. Now we came back to the principle that children have to be able to go to school and they cannot be in dangerous jobs also.

One last thing that we’ve made better is that we have rethought all the criteria that companies have to meet in their report, and we have harmonized them with what is demanded in the U.K. and in Australia. That’s important because many of those big companies report in many different jurisdictions. We’re not only focusing on Canadian companies here. We’re focusing on all companies doing business in Canada. We have multinationals that can report in the U.K., Australia and in other countries.

I would say that those are the main differences.

Senator Griffin: Thank you very much for that fulsome answer. Thank you, chair. That’s all from me.

The Chair: Senator Hartling, you have your hand raised. The deputy chair has joined us, Senator Bernard. I would go to Senator Bernard and then come to you.

Senator Bernard: Chair, please carry on. I will go on the end.

The Chair: Senator Hartling, you have the floor.

Senator Hartling: Good evening, everyone.

Thank you, Senator Miville-Dechêne, for your passion on this bill. I think you’ve been eating, living, sleeping, dreaming about this. You must be glad to be here tonight. I’m proud that you were so persistent. You have learned so much. The bill has changed and you have made it even better.

You started to talk a little bit about this. What have you learned from the implementation to similar legislation in other countries that informed your decision? Were there some takeaways where you said, okay, we must look at this and change this to make this better for Canada or make it different?

[Translation]

Senator Miville-Dechêne: We literally scoured the globe to see what other countries were doing legislation-wise.

I think this bill is a good compromise when you look at what’s out there. Countries like France have regimes that are much more punitive than ours, but they target very few companies. The legislation covers just 300 or so companies, those having more than 5,000 employees. Can you believe it? Basically, only multinationals are covered. All that to say, yes, some countries have adopted a more punitive model, but it applies to very few companies.

As I see it, we are just beginning this process, and the point is to convince companies to be more vigilant and to start taking a close look at their supply chains. Introducing less stringent legislation that gives companies time to adjust is the right thing to do, in my view. Given where the thresholds have been set, no doubt, the legislation will cover way more than 300 companies. It’s hard to estimate, but it may cover 8,000 to 10,000 companies. It will depend on how many entities meet the exact criteria. The legislation will help foster widespread awareness of this important issue throughout the corporate world.

Examining other jurisdictions showed us the importance of something else: companies are in competition with one another. Obviously, when a Canadian company, say, does a good job of scrutinizing its supply chains, pays its employees a decent wage and does not use forced labour, it tends to have higher labour costs. That company has to compete with companies that are able to offer extremely low prices. Elsewhere, you can buy a T-shirt for four dollars because some companies use underpaid workers, children or forced labour. It’s not black and white, but certainly, companies are under pressure. When one company is being vigilant and upholding human rights, but the other is merely looking to produce something at the lowest possible price, it’s a case of unfair competition. This legislation can also be useful to companies that do things right. I think that makes a good case for the bill.

We also learned that we needed to give companies time. The first report they submit, in year one, won’t be perfect. Companies will hire consultants and learn as they go. The important thing to understand about this bill is that it imposes a reporting obligation, not an obligation to clean up the supply chain in one year by getting rid of all unacceptable practices. It’s important to understand that. Down the road, in a few years’ time, it may prove necessary to change tack because the approach isn’t working; Canada can decide that it needs a more punitive model because companies are simply flouting the rules. That is how we arrived at this compromise vis-à-vis the legislation in other jurisdictions.

[English]

Senator Boyer: Thank you, senator, for your refreshing of this bill and bringing it back to us with your perseverance.

I want to ask a quick question about the comprehensive review that’s in Bill S-211. You’ve noted that the time period is five years. We know that with the pandemic and other legislation that it has been difficult to get those comprehensive reviews done and done on time. Why did you pick five years as opposed to, say, three years that Australia has used?

Senator Miville-Dechêne: I would have liked to take three years, to be frank. However, there are two things to consider. First, I think it would be very difficult to judge if the law is working after only three years based on what I have been told about the other countries, because it takes time for companies to turn around and do a good job of it. Five years is generally the time of reviews in Canada, when there are reviews. And exactly what you’re saying: it is really difficult to have a comprehensive review in five years. So I thought this was reasonable, considering how many times I’ve seen those reviews pushed back. Three years was impossible, I think, considering the time it will take to implement that law.

Senator Boyer: Thank you. Would it be preferable to do a ministerial or an independent review rather than a comprehensive review? Would that make it quicker?

Senator Miville-Dechêne: Probably. I’m not exactly sure. You may know more than me about this. I know that a comprehensive review in the calendar and all that is probably difficult to organize. So it could be discussed. I’m not closed to it at all.

Senator Boyer: Thank you very much. That’s all.

Senator Bernard: Senator Miville-Dechêne, thank you very much for all of your work on this bill. I apologize for having to step off a bit earlier.

I just have one quick question. As we know, a lot of the children who are forced into this labour are racialized children. I’m wondering if you could share with us if there are any other ways that you decolonized this bill. In this iteration of the bill, were there other changes that accounted for the impact on racialized people?

The Chair: Senator Miville-Dechêne, before you answer, I would like to let you know you have about three and a half minutes to answer this question. We have to switch to the next panel. Thank you.

Senator Miville-Dechêne: I know I was a bit long in my answers. I’m sorry. I’m so passionate about it.

Senator, I don’t think there are other parts that we changed to decolonize the bill. If you see anything that strikes you as having to be amended, changed, please tell me. Obviously, you’re absolutely right to say, yes, there is forced labour and child labour in Canada somewhat. We know that this forced labour is mostly in agriculture. We know that they come mainly from South America, Mexico, so there is also there a form of racialization—the mines in Africa, the clothes in South Asia. Probably most of the forced labour and child labour is towards racialized workers, considering that most of the problem is in Africa and Southeast Asia.

So you’re absolutely right to point that out. If you think there is anything in the bill that could speak to that, please tell me.

The Chair: Senator Bernard, do you have a follow-up question?

Senator Bernard: Not at this moment.

The Chair: I would like to thank you, Senator Miville-Dechêne, for your testimony and your passion that came through the screen, too. I could feel how passionate you are about this, and I’m so happy to have been the critic on this bill. Your assistance with this study is much appreciated.

Our next witnesses are from Employment and Social Development Canada. We have Mr. Andrew Brown, Assistant Deputy Minister, Labour Program, and accompanying him is Rakesh Patry, Director General, International and Intergovernmental Labour Affairs, Labour Program. I understand, Mr. Patry, that you will be making the presentation, so the floor is yours.

[Translation]

Rakesh Patry, Director General, International and Intergovernmental Labour Affairs, Labour Program, Employment and Social Development Canada: Thank you, Madam Chair. Thank you for the opportunity to address the Standing Senate Committee on Human Rights on issues of forced labour and child labour in supply chains.

I would like to begin by acknowledging that I am participating in this briefing from the traditional unceded territory of the Algonquin Anishinaabe People. I would like to recognize the dedication of senators and the All Party Parliamentary Group to End Modern Slavery and Human Trafficking.

[English]

Supply chains are complex, with multiple tiers, companies, suppliers and subcontractors spread across the world and increasingly extended to the informal economy. This limits transparency and makes it difficult to trace the origins of products and the robustness of labour and human rights protections at each stage of the production process. With increased global awareness on the issue, civil society organizations, unions and international organizations continue to call for governments to act.

This issue is also a key area of focus in a variety of multilateral fora, including in the United Nations, the International Labour Organization, the Organisation for Economic Co-operation and Development and the G7.

In addition, many countries have introduced or announced planned measures to address labour exploitation and human rights abuses in supply chains. The Government of Canada has advanced a range of initiatives to address forced labour and supply chain exploitation in recent years.

Following the 2018 House of Commons report by the Subcommittee on International Human Rights, the government conducted public consultations in 2019 with a diverse range of stakeholders on possible measures to address labour exploitation in supply chains. While stakeholders had differing views on how to tackle this issue, they all agreed that Canada should take further action.

Examples of some initiatives undertaken since that time include implementation of the National Strategy to Combat Human Trafficking, a multi-departmental horizontal initiative focused on sex and labour trafficking led by Public Safety Canada.

This is important work contributing to federal action on forced labour, as it was estimated in 2018 that forced labour-related trafficking accounted for nearly 40% of global trafficking cases.

The government also introduced the prohibition on the importation of goods produced in whole or in part by forced labour, which came into force under the Canadian Customs Tariff on July 1, 2020. The Canada Border Services Agency, CBSA, enforces the Customs Tariff, and the Labour Program, within the Employment and Social Development Canada portfolio, provides support to CBSA by conducting research and analysis on the risk of forced labour for specific complaints or allegations.

Public Services and Procurement Canada is strengthening the federal contracting regime, having updated its Code of Conduct for Procurement to include expectations for suppliers and subcontractors on human and labour rights. Canada is also party to a number of conventions aimed at addressing situations of child labour and forced labour. In addition, the government continues to negotiate enforceable obligations to address child and forced labour into Canada’s free trade agreements. Canada also funds capacity-building projects to assist countries in respecting these labour obligations.

The government also promotes responsible business conduct, and Global Affairs Canada is developing an enhanced and expanded Responsible Business Conduct strategy for Canadian companies that will include, amongst other items, tools and measures to support Canadian companies in mitigating supply chain risks in their international operations.

While there has been good progress on these issues, more work clearly remains.

The government is committed to addressing this issue in a comprehensive manner, and the mandate letters issued to four ministers reflects this priority. Policy work is under way to examine legislative elements appropriate for the Canadian context and that can complement initiatives already in place. It is also important to consider international standards and good practices in other jurisdictions in moving forward.

We recognize the invaluable role of civil society organizations and experts on this issue and the important perspectives of industry stakeholders. We thank them for sharing their knowledge, skills, expertise and, particularly, their awareness-raising efforts.

The Labour Program will continue to work with other government departments and stakeholders to determine the best approach to address these issues in a manner appropriate to the Canadian context. We look forward to hearing the remarks from others in the committee. Thank you, chair.

The Chair: Thank you for your presentation. Now we will proceed to questions from senators. I see that Senator Miville-Dechêne has her hand up, so as the sponsor of the bill, senator, you can ask the first question.

Senator Miville-Dechêne: Thank you very much for permitting me to ask a question.

Thank you, Mr. Patry, for being here. However, you obviously know that one of the reasons why there is a private member’s bill on this particular issue is that the government has not acted in the past four years. There was this great report on child labour, and yes, there was consultation. Yes, there were a lot of words, but the government did not act. I know there is a promise to act, but we are here because of those two things.

First of all, you’ve probably read the bill. Do you know who could be the “designated person”? Does it always have to be a person or an organization?

[Translation]

An organization or agency is necessary to enforce the act. According to the bill, a private bill, that organization will be designated by the minister. You are quite familiar with the sector, so do you know which authority would be able to enforce the legislation? Which authority could be designated to examine the reports and set up the repository for the reports? The government will have to designate a single repository for all the reports. What do you think the enforcement piece will look like?

[English]

Mr. Patry: Thank you for the question, senator, and thank you again for your efforts and the work you have undertaken on this important issue.

I would say two things. First, yes, we recognize that the government has not moved forward to date on supply chain legislation. The consultations were held, as we noted, in 2019, and a report has been produced on that. There is a clear commitment from the government reflected in the form of mandate letters to the Minister of Labour as well as three other ministers to move forward and develop legislation on this front and, therefore, a commitment from the government to do so.

In terms of your specific question around responsibility, I think this is one of the things that would need to be determined and ascertained in terms of any legislation. I don’t know if I would be in a position to comment specifically on which government entity should have the responsibility for this, but what I would say is that when we look at other countries that have developed legislation as well, this has certainly been one of the key areas that they have tried to determine within their context.

This is probably one of four major areas that need to be ascertained or determined when developing legislation. There’s a question of whether, as you’ve noted, you adopt transparency or due diligence legislation, which is really the first step.

The second piece is around what the scope of potential legislation should cover, and other countries have wrestled with this as well. Do you limit it to forced labour, to child labour? Do you broaden it to human rights or environmental considerations? There is a question of whom it applies to, the entities that need to be determined.

The final point really is that big one around what enforcement looks like. Who has the authority to conduct that enforcement? But I think that there are legal constitutional questions that would need to be determined to figure out which ministers have the authority to do this. It depends on whether you’re looking at fines or whether you’re looking at something along the lines of administrative or monetary penalties. Fines have an implication of criminal law attached to them as opposed to administrative and monetary penalties, which could provide additional flexibility for government in terms of who imposes that.

I apologize that I don’t have a specific answer for you as to which entity in government would ideally be the lead on that, but it certainly is one of the major issues that would need to be determined. Thank you.

Senator Miville-Dechêne: Thank you.

The Chair: Thank you, Mr. Patry. Would it be possible for you to find out which government entity we could reach out to? Is that some information you could find out for us and share with the committee later on?

Mr. Patry: Thank you, chair. I would think that this would be a question that the Department of Justice and likely its constitutional division would need to ascertain to figure out where the powers would likely lie for a bill like this. But I think it would depend on the provisions of the bill, what powers were being given to the government or the minister. If it is Bill S-211 as an example, I would think that the Department of Justice would need to weigh in or the Privy Council Office through its machinery of government operations.

The Chair: Thank you.

Senator Bernard: Thank you for your presentation, Mr. Patry. I want to pick up on that question around progress or the lack of progress. In your presentation, you highlighted a number of initiatives but alluded to the fact that not much progress has been made. Can you help us to understand what some of the barriers to progress are and what your sense is in the terms of the capacity of this bill to help address those barriers?

Mr. Patry: Thank you for your question, senator. I would say a couple of things about that. The first is when you note that progress may not have been made, I think that is specific to the issue of supply chain legislation. It is important to note that a great deal of progress has been made on other fronts in tackling issues around forced and child labour around the world.

The issue of forced and child labour is a multifaceted one, and you cannot have solely one tool to try to address it. I believe supply chain legislation, as we’re seeing happening around the world, is increasingly an important tool in addressing that. But what I would also say is that it requires a variety of tools. Even if we bring in supply chain legislation in Canada, as other countries have done, it requires multiple elements to tackle it.

As an example, we have introduced a ban on importation of goods produced with forced labour, as we noted, and Canada is only the second country in the world to do this, after the United States. We’re increasingly seeing other countries looking at this as a complementary model, even countries that have supply chain legislation.

Perhaps one of the most effective tools we have is the work we do within our free trade agreements. We require our partner countries in free trade agreements to have enforceable labour provisions that require them to introduce laws to address child and forced labour and to enforce those laws, and we have the potential penalty of sanctions against those countries if they fail to do so. This really allows you to tackle the issue at source within those partner countries in giving them the tools and encouraging them to use the tools to address this.

I outlined a number of other initiatives that are ready that we have introduced, but I should particularly point out the work that our colleagues at Global Affairs Canada are doing around responsible business conduct strategies for Canadian companies operating overseas.

It’s really a suite of tools to try to address in this. Supply chain legislation will prove to be an additional important tool in addressing it, but I wouldn’t want to leave you with the impression that nothing is being done on this front. There is a great deal happening both within Canada and in multilateral fora, and this would be an important addition to those elements. Thank you.

Senator Boyer: Thank you very much for your presentation, Mr. Patry. I am interested in the report that you mentioned and the stakeholder consultation from 2019. I’m wondering if there was an opportunity for any Indigenous consultation or for racialized Canadian communities to have input in that. If you can comment on that, I would appreciate that.

Mr. Patry: Thank you very much for the question, senator. During the consultations in 2019, there was not specific outreach to racialized groups or to Indigenous communities. I think that that is an important element that we would have to factor into future efforts, and certainly if the government were to move forward on supply chain legislation, that would be a critical component from which to ensure that we have feedback. We do have regular engagement in different fora with Indigenous communities, and I think the opportunity certainly exists to reach out more to Indigenous and racialized communities, particularly on this issue.

Senator Boyer: Thank you. I look forward to seeing that actually happen.

Senator Omidvar: Thank you, Mr. Brown, for being with us. I want to ask you about implementation, which is not what we normally do in studies, but this bill has a series of moving parts with different ministries and stakeholders. There is a reporting obligation. There are fines. There’s a three-year review.

Can you comment on the relative difficulty or ease, from your view as a public servant, in bringing this bill to implementation?

Mr. Patry: Thank you, senator. We have consulted closely with many other countries that have introduced this type of legislation and spoken to government officials in those countries. All of them say that this is an incredibly complex piece of legislation with, as you noted, senator, many moving parts. I think certainly one of the greatest challenges it has faced is that the issue of forced labour is not like many other violations, particularly in production of goods where it’s black and white, whether you’re violating certain provisions or not. It is a complex issue to ascertain whether forced labour or child labour is being used in the production chain. We know that companies face challenges in seeing deep down into further levels or tiers of their supply chains, so work has to be done in assisting companies to be able to do this kind of investigation and ensure that they have that line of sight into their supply chains.

But you have hit on one of the key problems for most of the countries that have introduced this legislation, and I think it’s part of the reason why we have yet to see reports coming out on the efficacy of these types of legislation.

I have no doubt that in time this will prove to be an incredibly effective tool, and maybe it already is. But I think the challenge that many are facing is it is a complex reporting piece with multiple moving parts, and depending on the structure of your government, depending on authorities given to different ministries, departments and ministers, it can be difficult to figure out who should have the responsibility for what. I think this goes to the piece I touched on earlier, those four critical components of any legislation, and ensuring that you get those four pieces right and figure out which ministers and which departments are best equipped to deal with that.

In some countries, we have seen the creation of independent agencies or ombudspersons or commissioners to handle these reports and to receive the reporting of it. I think the feedback we’ve gotten from other countries is an approach like that is probably required to ensure that implementation is strong.

Senator Omidvar: Thank you.

Mr. Patry: Thank you.

The Chair: Before we go to second round, I will turn to one of our new members. Senator Gerba, it is a pleasure to have you on this committee. You have the floor.

Senator Gerba: Thank you, Madam Chair.

[Translation]

Mr. Patry, I gather transparency is a central issue, with companies having to submit reports. Do you think the reports they submit under this legislation will need to be validated or reviewed by an outside body or authority, similar to how independent auditors validate the information in a company’s financial statements? Do you think it will be necessary for an outside body of some sort to review and validate the information to ensure companies are being honest and transparent in their reporting? Above all, the idea would be to ensure that the information was validated in terms of what’s happening in those countries, what’s happening here and what’s being reported.

Mr. Patry: Thank you for your question, senator.

[English]

I think this is one of the major issues that all governments that have introduced this type of legislation are facing and trying to cope with, namely, validation of the reports that come in. This goes back again to the question of transparency versus due diligence legislation and what you’re asking companies to report on. But once you do receive the reports, there is a major challenge in terms of trying to determine whether the companies have effectively reported and how to validate the information they have provided. This is a major struggle, I think, for every government that has introduced this type of legislation.

We’re seeing in many countries a bit of a cottage industry of advisers cropping up that assist companies in preparing these reports, validating them and providing the information. But I think governments are going to face a similar challenge in terms of allocating the proper resources that would be required to ensure that you go through each of these reports, ensure they are authentic, and validate the information in them, particularly if you’re going to be levying fines on companies for either failure to report or failure to do something within their supply chains.

Senator, you’ve hit on an important issue that other governments are wrestling with as well. Since this is a fairly new form of legislation that we’re seeing around the world, there will be some growing pains as governments try to work through this and wrestle with what is the best format by which to validate reports.

Senator Gerba: Thank you.

The Chair: We’ll start our second round of questions. We have the sponsor of the bill, Senator Miville-Dechêne. The floor is yours.

[Translation]

Senator Miville-Dechêne: Mr. Patry, I’ll be asking my question in French, and it has to do with the border.

As you know, my bill seeks to broaden the range of products that would not be allowed to be imported by adding goods produced with child labour.

My question is simple. I have been following the situation for months and noticed that, unlike the U.S. government, the Government of Canada has not put out a clear explanation as to what constitutes forced labour or a list of countries with which it is difficult or dangerous for companies to do business.

I know it was done in China’s case, but you don’t have the same regime of transparency that the Americans do. I bring it up because that, too, represents transparency in relation to practices that are considered risks, whether it be in Mexico or elsewhere. This could really help companies, as well as what goes on at the border. You can say that the situation in Canada marks an improvement, but the fact remains that only a single vessel has been intercepted since the legislation came into effect over a year ago — just one, in Quebec. The U.S. is doing a whole lot more. Obviously, more information is flowing, and the Americans are intercepting more shipments when they suspect violations. The owner of the shipment then has to show otherwise.

[English]

Mr. Patry: Thank you for the comments, senator. I appreciate that.

It’s important to note, as I said at the outset, that Canada is only the second country in the world, after the United States, to introduce a ban on importation of goods produced with forced labour. There are important distinctions and differences between the way the United States has approached this ban and the way Canada is currently addressing it.

First, the United States has a long head start. They brought in this ban in 1930, so they have been implementing it for 90 years. Over the last decade, they have ramped up their interdictions more noticeably, particularly over the last five or six years.

The evidentiary threshold that the United States uses is considerably different than Canada’s. It’s important to note that what the United States now has in place is essentially a two-tiered system.

The first — and what you often see reported in the media and which gets a great deal of publicity — is not actually a ban on the goods but something called a withhold release order. This basically allows U.S. Customs and Border Protection to say to an importer, “We suspect that these goods are produced by forced labour. You need to prove to us that they are not; otherwise, you won’t be able to bring them in.”

This is very different than a finding, which is essentially the ban that actually seizes the goods or stops them completely. In the case of findings, I believe the U.S. has only issued two. It’s a withhold release order with a lower evidentiary threshold that allows them to do this.

The Canada Border Services Agency is the group with the responsibility for interdicting goods and enforcing the ban as it currently stands. But the CBSA operates on a shipment-based approach as opposed to a region-wide, sector-wide, countrywide kind of approach for these shipments. The evidentiary threshold for ascertaining whether or not a specific good is produced with forced labour can be difficult for Border Services officers. As I said, unlike other goods that we interdict, it’s not a weapon or drug, where it’s clearly indicated or marked that it’s prohibited. Forced labour can be a bit more challenging. Therefore, you have to conduct extensive research in terms of ascertaining whether or not that particular shipment or good was produced with forced labour.

We are working closely with the Canada Border Services Agency in increasing and improving the operationalization and implementation of the ban. However, it does take considerable research to look into these specific goods.

Senator Miville-Dechêne: This is exactly my question. Maybe our threshold or our system is not the right one for forced labour, which is so difficult to find. It’s not something that can be seen from far away on a ship. We’ll see how it turns out.

[Translation]

Senator Gerba: I’m not sure whether Mr. Patry will be able to answer my question. According to a UNICEF report, sub-Saharan Africa is the region with the greatest number of children being subjected to forced labour, with 72% of children working directly to support their families in some way. I am African, and I have lived that reality. I worked to help my family.

Through this bill, is it possible to introduce mechanisms to support families with no alternatives, families who expect children to work? Regardless, school isn’t an option for these children.

Can the bill be leveraged to encourage companies to assume more social responsibility? For instance, companies could be rewarded somehow for actively working to address the problem at the source.

[English]

Mr. Patry: Thank you for the question, senator. There is a great deal that is under way across government and through international organizations in trying to address issues of child labour around the world, including in sub-Saharan Africa.

The pandemic has exacerbated the situation. In the last couple of decades, we have seen reductions happening and progress being made on issues in tackling child labour. The most recent report that has come out from UNICEF and ILO has shown that, for the first time in many decades, we have regrettably seen an increase in numbers. The numbers as of, I believe, 2017 were approximately 152 million children around the world trapped in child labour. That number has now increased to 160 million. It’s a regrettable increase that we are seeing. However, efforts are under way through international organizations, and Canada supports many of these development initiatives to try to address this work.

In terms of what corporations can do on this front, I don’t know if this is something you can bring into supply chain legislation. What I would say is that government, international organizations and industry need to work together in tackling many of these issues. There are tremendous efforts under way in many organizations to tackle this.

I’ll point to one example of an initiative through the ILO and International Finance Corporation that the Government of Canada funds and supports. It is called the Better Work program, where we work with the garment sector to try to ensure that the production of these goods is fair; that labour rights and minimum age of employment, as well as freedom of association and collective bargaining, are respected; that a decent salary is paid; and that industry participates in these initiatives with the government, the ILO and the IFC. Efforts like Better Work could be a cooperative way of working together, but I’m not sure this is something you can weave into supply chain legislation.

Senator Gerba: Maybe we can add an incentive so the companies can see the advantage of making reports, in becoming more transparent and letting us know what is happening there in their companies.

Mr. Patry: I would add, if I could, that Global Affairs Canada does have responsible-business-conduct strategies in place. Global Affairs also works with Canadian companies operating overseas to promote principles of responsible business conduct, as does Export Development Canada. There are efforts to work cooperatively with these Canadian companies overseas to show them how they can support the communities they work in and how to source ethically and responsibly.

The Chair: We’ve gone over our time with these witnesses. However, Senator Omidvar, I’m going to let you ask your question, because I think it’s important. You have the floor.

Senator Omidvar: I want to pursue Senator Gerba’s line of questioning regarding the big stick in this legislation, which is the monetary fine, but I’m interested in carrots.

I wonder, in your experience, Mr. Patry or Mr. Brown, whether products that pass the test can be given positive branding, like with fair trade coffee. Are you aware of other product lines that fall under other pieces of legislation that have positive branding because they have passed the test and are in compliance with the law, because that speaks to their reputation? Reputation is at the heart of this legislation.

Mr. Patry: Thank you for the question, senator. You raise an excellent point and one that has been discussed among various governments and international organizations.

The challenge that governments have goes back to the previous question around certification of the reports themselves. Given the challenges we could potentially face around certifying or validating the information in the reports, the issue is the complexity. If a government is certifying a product as being free of forced labour or child labour, the degree of effort and complexity that would have to go into ensuring that that really is the case would prove to be challenging.

I’m not aware of any other jurisdiction that has brought in something like this as of yet. I think they have looked at it and considered it, but I think the complexity has proven challenging.

Senator Omidvar: Thank you for taking my question, sir.

The Chair: Thank you, Mr. Patry and Mr. Brown, for answering our questions.

Colleagues, we’re going to be hearing from our last panel for today on Bill S-211, An Act to enact the Fighting Against Forced Labour and Child Labour in Supply Chains Act and to amend the Customs Tariff.

Our witnesses are Michael Harvey, who is the Vice-President, Policy and International, of the Canadian Chamber of Commerce; Ben Chalmers, who is the Senior Vice President of the Mining Association of Canada; and Geoff Smith who is the Vice President, Government Relations, also from the Mining Association of Canada.

Michael Harvey, Vice-President, Canadian Chamber of Commerce: The Canadian Chamber of Commerce is Canada’s largest business association representing companies of all sizes and in all sectors of the economy.

Ensuring Canadian businesses’ supply chains are not propagating forced labour or child labour globally is a goal strongly supported by our members. The chamber applauds the efforts of Senator Miville-Dechêne in championing these issues.

The chamber has made a written submission with a number of suggestions made by our members. Today, I would like to concentrate on two broad points. As committee members know, the awareness of potential forced labour and other human rights violations across the supply chain is driving companies to ensure they can clearly demonstrate that they have implemented effective polices and procedures to mitigate this risk. This change in the business environment is occurring quickly due to societal expectations that are being expressed through demands by consumers, investors and regulators.

The first point I would like to underline is the need for clear government guidance in this shifting context. As Mr. Patry mentioned, Canada and the United States are the only countries in the world that have instituted a legal ban on the importation of goods made in whole or in part with forced labour. This ban is a product of the provisions of the Canada–United States–Mexico Agreement, or CUSMA.

Two years later, we are just coming to an understanding of how the federal government will enforce the prohibition on the importation of goods produced by forced labour. It was only on January 20 this year that the Canada Border Services Agency, or CBSA, updated its guidance to importers about the evidence they will be expected to produce if their goods are detained because the CBSA suspects that the goods were produced by forced labour.

We are therefore looking at new legislative requirements since recent major legislative change has not been clearly implemented.

Please note that in this context, Canadian companies, particularly small and mid-sized enterprises, or SMEs, do not have the same resources as government officials to be able to accurately assess international suppliers’ risk levels. Government officials have unique resources, such as policing and intelligence sources, as well as in-market knowledge from Canadian diplomatic missions abroad. This information needs to be leveraged to support companies so they know where risks exist.

The chamber therefore recommends that this legislation have a provision added to require the minister to maintain a public registry of overseas suppliers known to be using forced or child labour. The legislation should include clear criteria for what would cause a supplier to be named in this registry, as well as redress mechanisms if a supplier feels it has been wrongly listed.

The second broad point is that we believe the goal of the bill — which is to ensure companies are transparent about the measures they are taking to prevent and reduce the risk that forced labour is present in their supply chain — would be better served by a “name and shame” approach than by the creation of criminal liability, including personal liability, as currently contained in the bill.

Leading companies are currently producing robust and transparent supply chain transparency reports. The risk is that the fear of potential criminal liability will lead them to produce narrower and less transparent reports than they currently do. We understand there is a push for the legislation to “have teeth.” We respectfully submit that transparently calling out companies for not reporting properly would cause sufficient reputational damage that these companies would want to avoid. The creation of a summary conviction offence with significant fines is not necessary in a context where businesses are already aware of the risks should they be unable to explain the origin of their goods and where government still needs to improve its guidance to companies to ensure they avoid difficulties.

To sum up, the chamber supports the goal of greater transparency around the elimination of the risk of forced labour in supply chains. Our request is that government understand the inherent difficulties and do its part to provide clarity and predictability to the enforcement regime as we work together towards this shared goal.

Thank you for receiving the Canadian Chamber of Commerce as a witness.

The Chair: Thank you, Mr. Harvey.

Mr. Smith, you have the floor.

Geoff Smith, Vice-President, Government Relations, Mining Association of Canada: Thank you for the opportunity to be here today. I’m Geoff Smith, the Mining Association of Canada’s Vice-President, Government Relations, and joining me is our Senior Vice-President, Ben Chalmers.

Madam Chair, modern slavery is far more pervasive than Canadians think. All over the world, people can become entrapped working in a range of industries. From the outside, a job can look normal. In reality, people are unable to escape in the face of violence, debt, loss of personal identification and threats of deportation. Worse, one in four of those in forced labour are children, and three quarters are women and girls.

Canadian mining has a significant international presence, with 650 companies in over 100 countries. However, Canada is no longer the world’s top mining country. Indeed, Australia’s two biggest companies exceed the net asset value of the entire Canadian industry, while China’s control of the production of many mineral commodities is well known.

However, Canada’s role as a global leader in sustainable mining and responsible business practices continues to grow, and this includes in the area of child and forced labour.

Central to this work is our association’s Towards Sustainable Mining or TSM, a globally recognized standard for driving responsible behaviour in our industry. Other mining associations in other countries have taken note of Canada’s leadership, and our standard is now being implemented by 10 associations in 10 countries on six continents.

Five years ago, we saw an opportunity to contribute to global efforts to prevent modern slavery by adding standards to TSM aimed at prohibiting and preventing child and forced labour. This contribution is made more meaningful due to how TSM is spreading globally.

Turning to Bill S-211. Like with the version of the bill introduced in the previous Parliament by Senator Miville-Dechêne, Bill S-216, the Mining Association of Canada supports its intent and efforts to eradicate child and forced labour from global supply chains. We were pleased to contribute a quote to Senator Miville-Dechêne’s press release announcing the introduction of Bill S-216, commending her for her leadership in bringing the bill forward.

Nonetheless, we do have some comments on the content of the bill and suggestions on how to improve it.

First, our experience with the Extractive Sector Transparency Measures Act, or ESTMA, is directly relevant to Bill S-211.

Passed through omnibus budget Bill C-43 in 2014, ESTMA requires extractive entities active in Canada to publicly disclose on an annual basis certain types of payments made to governments in Canada and abroad.

We encourage the committee to examine subsection 10(1) of the ESTMA that lays out the process and criteria by which the Minister of Natural Resources can determine the reporting requirements of another jurisdiction to be an acceptable substitute for those of the ESTMA. This substitution or equivalency provision has contributed to the act’s effectiveness in meeting objectives, including those related to corporate transparency.

We encourage you to consider an amendment to Bill S-211 that would add this flexible yet effective and proven approach to annual reporting that improves compliance by reducing unnecessary burden. It works.

Like Bill S-216, mandatory reporting mechanisms are the primary instrument in Bill S-211 to increase transparency. They must therefore be effective but also offer a level playing field for entities required to report. Clause 11(2) of Bill S-211, a new section, is a positive improvement that adds flexibility by enabling single or joint reporting and allowing parent company reporting of subsidiaries.

We also applaud the inclusion of government entities in Bill S-211. Respecting human rights abroad should be the obligation of both the private and public sector.

In addition to adding an equivalency provision, another part of the bill where we feel there is room for improvement is the reporting deadline.

The new bill includes a change establishing a reporting deadline of May 31 for the filing of reports regardless of a company’s fiscal year end. Bill S-216 required reporting no later than 180 days after the end of the financial year. This change was made to simplify the process of producing the minister’s annual report to Parliament. However, the objective of determining reporting requirements should be to facilitate high-quality reporting on an equal playing field for all entities and not the ease with which the minister or regulator will be able to compile an annual report to Parliament.

By anchoring reporting to a fixed calendar date, the bill creates a new disparity among entities who report on different schedules, for example, entities using a December 31 fiscal year end versus March 31 will have three additional months to prepare and report.

Lastly, we raise one likely housekeeping issue with the definition of “offered to be provided” found within the definition of “child labour” in clause 2. Our membership and other stakeholders seek clarity on what is intended to be captured by “offered to be provided” under the definition of child labour in Bill S-211. Are companies obligated to monitor what suppliers are offering in terms of services as opposed to those services for which they have contracts or have agreed to retain?

Some clarity on this point is needed. We suggest an amendment to Bill S-211 that would insert the International Labour Organization’s definition of “child labour.” It is a well-known and internationally accepted definition, and the one that we used when we added “child and forced labour” to TSM. 

In conclusion, Madam Chair and senators, the Canadian mining industry is absolutely committed to the international effort to prevent and eradicate instances of child and forced labour in the global mining industry and the wider mining supply chain, and we view this bill as an important step to help Canada catch up to its peers.

We look forward to your questions and to engaging with you on our suggested improvements to Bill S-211.

The Chair: Thank you, gentlemen, for your presentations.

Senator Miville-Dechêne: Thank you for giving me some time.

[Translation]

My first question is for Mr. Harvey, from the Canadian Chamber of Commerce. You provided a short written submission, and I wanted to ask you about the revenue thresholds for companies. You criticize the fact that the thresholds are too low. You maintain that the legislation should apply only to companies with $100 million in revenue — so roughly 3,000 very large companies across Canada, or perhaps fewer — and that the revenue threshold of $40 million is too low.

I’m curious as to how you can make that argument or justify that recommendation, given that Canada has actually signed many conventions to stop child labour and forced labour, calling for the end of such practices. On top of that, reducing the number of companies subject to the legislation diminishes the ability to change attitudes and mindsets.

A UN committee even recommended that every company operating in a country should be subject to rules prohibiting the use of child labour and forced labour. How do you reconcile your recommendation with Canada’s international commitments?

Mr. Harvey: Thank you for your question, senator. My Nova Scotia accent comes out when I speak French. I hope you’ll forgive me. First, let me say that this isn’t about whether small and medium-sized businesses should import goods produced with forced labour. Obviously, they shouldn’t, and it’s already prohibited in Canada. As Mr. Patry mentioned, only two countries in the world essentially prohibit the importing of goods produced with forced labour.

The bill before us today concerns the obligation companies will be under to report on the steps they have taken to prevent the use of forced labour in their supply chains. In our view, $100 million in revenue is an appropriate threshold for companies to have to show that their supply chains do not include these types of products, through the annual reporting required by the legislation. In no way, does that mean that small and medium-sized businesses should not be paying close attention to whether they are importing goods produced with forced labour, since the practice is already prohibited in Canada under the Canada–United States–Mexico Agreement.

Senator Miville-Dechêne: I have a short follow-up question. How many Canadian companies generate more than $100 million in revenue?

Mr. Harvey: Sorry, I don’t know the answer to that. That information is available for public companies, but not for the private sector, as far as I know.

Senator Miville-Dechêne: Thank you.

[English]

The Chair: Senator Miville-Dechêne, I could put you on a second round since the only senator who has her hand raised is Senator Omidvar.

Senator Omidvar: My question is on the same topic as Senator Miville-Dechêne’s question, and it is to Mr. Harvey.

You said in your remarks that there should be a different threshold for small- and medium-sized businesses, but Senator Miville-Dechêne has stated that only 3,000 companies would fall under the jurisdiction of this law. There is a criterion: They would have to be listed on a stock exchange, or there is a size threshold.

I would like to dig deeper on the “small- and medium-sized” statement that you made. How many small- and medium-sized companies do you believe will be impacted by this bill, and which sectors or regions? Do you have a sense of that?

Mr. Harvey: I don’t have a great sense of that. It all depends upon what the threshold is.

As I said in my answer to Senator Miville-Dechêne, we’re saying, first, that all companies are affected by the interdiction of importation of goods made with forced labour that Canada and the United States have implemented, the only countries in the world to have done so. This legislation is talking specifically about reporting requirements.

It obliges companies to prepare these reports every year. We’re saying that we would just put the threshold at another level, at fewer companies — bigger ones. These reporting requirements have a cost. All companies importing goods have to do due diligence on their supply chain; otherwise, they wouldn’t be able to explain anything to CBSA if any of their goods got stopped at the border, according to the latest guidance given by CBSA.

Canada’s interdiction on importation of goods made with forced labour is applicable to all Canadian companies. We’re saying that the threshold for this legislation, which is quite an onerous reporting requirement, could be put at a different threshold.

Senator Omidvar: I wonder if you could help me understand this. My view of businesses and especially the bigger ones that you mentioned is that they have the systems, structures and policies to prevent bad corporate behaviour throughout their system. Whether they do so, I don’t know, but they have the systems, policies and structures.

It is possibly the smaller businesses that do business overseas that may need this legislation and be required to report as a way of raising their awareness. Can you help me square that circle in my mind?

Mr. Harvey: That’s where I go back to the comment I made about the need for more government assistance. As you say, the larger companies have greater resources. The smaller companies really need this help from government, say lists of suppliers that are suspected of using forced labour. I believe it was Senator Miville-Dechêne who made a similar comment to Mr. Patry — not exactly the same — but to say that it would be helpful if companies had government assistance to say where they should be careful and assistance on training and due diligence. It would be helpful if companies had more access to the intelligence that the Government of Canada has through its diplomatic service and policing and intelligence services.

I wouldn’t say that what they need is legislation to force them to do reports, necessarily; they need help to get them to the level of transparency necessary, and that’s really a question of government accompanying small- and medium-sized companies. I’ve seen very good work by EDC in helping those small- and medium-sized companies doing work abroad to understand responsible business conduct and practices. It’s that kind of work where the Government of Canada can help our SMEs to raise their game where they need to raise their game.

Senator Omidvar: Thank you. That was very helpful.

[Translation]

Senator Miville-Dechêne: My line of questioning will be similar, Mr. Harvey, because I’m having some trouble with your rationale. My bill will apply to 2% of companies, at most. Small businesses aren’t really affected. The bill covers only medium-sized and large businesses, as well as a tiny fraction of small businesses — those with more than 250 employees. At the end of the day, the number of businesses affected is quite low.

According to your brief, you support the idea behind the bill, but you point to about 10 areas where it misses the mark. As I see it, it’s important to mention something here, child labour. We’ve made every effort with this bill to come up with a sensible definition of child labour, which refers to labour that not only constitutes the worst forms of child labour, but also deprives children of the opportunity to attend school. You argue that the definition is too broad, so I’d like to hear your rationale for that.

In order for legislation like this to work, it has to apply to a certain number of companies. The idea that the problem is fixed if shipments are stopped at the border isn’t really a solution, Mr. Harvey. Currently, shipments aren’t being intercepted. Many companies in Canada are bringing in goods produced with forced labour, approximately 1,200. That problem doesn’t go away when you block shipments at the border — hence, the idea of imposing a reporting requirement on a certain proportion of companies, medium-sized businesses, in particular. According to the experts, those are the entities where forced labour is the most prevalent in supply chains, companies that aren’t quite large corporations and that can’t afford to carry out the necessary assessments.

Mr. Harvey: I’m looking at what we said about child labour in our brief, and I don’t think we indicated that the definition was too broad. I think it was actually one of our members who pointed out the fact that the definition wasn’t totally aligned with the International Labour Organization’s definition. They weren’t saying that the definition should be narrower. That isn’t how I understood it, but I would be completely open to discussing it at a later time and I could invite the person. In any case, the idea wasn’t to push for a narrower definition. At least, that wasn’t how I took it.

Senator Miville-Dechêne: Could you answer my other question?

Mr. Harvey: On the matter of medium-sized businesses, our view is that they need supports. In Canada, these restrictions on the import of goods produced with forced labour are new. Implementation of the new regulations has only just begun. These companies need support to help them understand this new landscape, which is changing rather quickly.

Senator Miville-Dechêne: Thank you.

[English]

The Chair: I haven’t asked any questions, so I will do so. Also, if others wish to ask further questions, we have enough time for that.

My question to you, Mr. Smith, is that this bill will impact different companies in different ways. How do you think this bill will impact the mining industry?

Mr. Smith: As outlined in the opening remarks, I think the bill covers some ground that I think many of our members and our sector are already quite comfortable with in terms of reporting.

In terms of our associations and the Toward Sustainable Mining program, we have already implemented protocols relating to child and forced labour. I think that we see this as a continuation, at minimum, in the spirit of those efforts, and something that in terms of Bill S-211 that we are quite comfortable with. I don’t know if my colleague Ben would like to perhaps add something to that.

Ben Chalmers, Senior Vice-President, Mining Association of Canada: Only that when we introduced these aspects to our Toward Sustainable Mining program in 2017, it was already along these lines to respond to encouragement from our customers to help ensure that their supply chains didn’t have these risks, so we came at this from a collaborative approach back then, and we’ve embedded it into our own reporting obligations. Mr. Smith is right. This is very much aligned with what we already expect of our members and what our members themselves have committed to as being part our association.

The Chair: My other question is to both witnesses. This bill grants persons who are designated by the minister powers to enter places of business, prohibit access to all or part of a place and do anything in that place and to remove anything for the purpose of examination. What negative effects could this have on a legitimate business operation? Could we think of any other less intrusive means that you think would be sufficient to verify compliance? Mr. Harvey and then Mr. Smith? I would like both to answer.

Mr. Chalmers: I can go first if it’s helpful.

The Chair: Yes, thank you.

Mr. Chalmers: This is something that is already contained in ESTMA, in the Extractive Sector Transparency Measures Act. They included similar powers, and that was a result of a negotiation. ESTMA was modelled on a negotiation between ourselves and Publish What You Pay.

It is a heavy-handed provision. In ESTMA, we hope that it will be used as a very last resort.

One of the keys I think to the success we have seen under ESTMA is that the first several years of implementation were focused on compliance, encouragement and education. I think that is what is needed here most as we move into this for the first little bit, the first number of years, to encourage companies to comply with legislation and to educate them where they don’t comply before moving into a compliance regime, which is actually just starting now with ESTMA. I would point out that the compliance with ESTMA is very high. I don’t have the exact numbers, but I was just speaking with people at Natural Resources Canada that said there had to be very few enforcement actions to date because of the approach I think they took with that education and compliance encouragement at the beginning.

The Chair: Thank you, Mr. Smith. Is there anything you would like to add to that?

Mr. Harvey: No, just the broader comment that we think that the goal of the bill is transparency. In the context of the bill where the goal is transparency, we don’t really need criminal legislation. A name and shame approach — where if someone is not transparent enough, that gets published and that harms the corporate reputation of the company in question — we think is sufficient at this stage.

The Chair: Thank you.

Senator Omidvar: My question is to Mr. Smith. Thank you so much for being with us today. I noted with some interest that you mentioned ESTMA, the Extractive Sector Measures Act.

Mr. Smith: Extractive Sector Transparency Measures Act.

Senator Omidvar: I learn a new acronym on the Hill every day. This was passed in 2016 I think you said, if I got that right.

Mr. Smith: Yes.

Senator Omidvar: So this is now some eight years after. And the aspiration of this bill is fairly similar to the aspirations of ESTMA. Is there anything you have observed and learned through these last eight years on ESTMA that could and should be taken into account as we consider this legislation?

Mr. Smith: Indeed. Just to clarify, the bill was passed in 2014, and it came into effect in 2017. I think that in itself — Mr. Chalmers has outlined that period of ensuring awareness and compliance — has allowed the act to flourish in terms of compliance. I think what we would really like to restate as a takeaway is the flexibility in reporting that ESTMA has allowed.

I outlined in the opening remarks how the Minister of Natural Resources is given the power to determine whether a company that is reporting data and has reported similar data to meet the requirements in another jurisdiction or standard, that is deemed to be equivalent. That has enabled companies to reduce the burden; it has been more efficient. In terms of the uptake that we’re aware of, I think it has really helped fulfill the act’s purpose. That is a key takeaway we would like to draw senators’ attention to, and in the remarks, we did specify for you the section of ESTMA that, in terms of the reporting, we would love for you to have a closer look at.

Senator Omidvar: Thank you. This is a question to the clerk of the committee. I guess we can see it in the blues. Thank you. I retract my comment.

Mr. Smith: Subsection 10(1).

Senator Bernard: Thank you for being with us this evening, gentlemen.

I have a question I want to ask Mr. Harvey from the Canadian Chamber of Commerce. You mentioned in your remarks, and again in your response to a question, about the strategy of “naming and shaming” versus criminal liability.

We like to make evidence-based decision making. I’m wondering if you could offer us some evidence, some examples, of how effective “naming and shaming” would be in a similar context to this, what this bill is hoping to achieve.

Mr. Harvey: I come up with the best answer to that, senator. I guess what the bill is hoping to achieve is transparency. And I think that in the context where we are looking for transparency, the best thing is to accompany, assist, push those companies that need to work that are in that medium level that Senator Miville-Dechêne mentioned. The best way to do that is to say where there are any problems in the reporting, and then that will help those companies.

In a context where the threshold is at a certain level, and, at the same time, there are criminal sanctions for making mistakes, I think that that creates an environment where people go in the direction of “lawyering up” rather than transparently working to improve. And I think that we would get the best results in terms of improving the transparency of work in supply chains, encouraging creating programs to help, pushing companies to improve. The criminal liability I think you would find is not a significant help, but I don’t know if I have statistics. I’m sorry.

Senator Bernard: I wasn’t looking for statistics so much as examples, perhaps even in other industries, where that was effective.

Mr. Harvey: I’ll give a little bit of personal experience. I worked for seven years for a Canadian gold mining company called Goldcorp. I was working in our Mexican operation. I was very much the people who were taking the corporate standards and then applying them on the ground, making sure that the corporate standards that were put together in Vancouver — and those corporate standards came from different things. They came from legislation that was mandatory that then got turned into operational procedures. They came from commitments that the company had made to non-mandatory arrangements, such as Towards Sustainable Mining was a very key element of what we were implementing. And other elements were internal things like internal codes of ethics. We took all of these commitments we had made to ourselves, to industry associations or that we were forced to make by legislation, and we turned those into our operational procedures.

What was important was on-the-ground work and not exactly where the demand had come from, and it was difficult sometimes when it was regulatory, in that, all of a sudden, it became more of a lawyer issue than a transparent issue of working with authorities to move forward on what we were trying to approve.

When you start talking about things like criminal law, it becomes much more difficult to speak openly to authorities about the work you’re doing to improve a situation. I hope that helps.

The Chair: Did that answer your question, senator?

Senator Bernard: Yes, thank you.

Senator Miville-Dechêne: For Mr. Harvey, I just want to say that my bill talks about penal sanctions but for enterprises that do not report, not for companies who make a mistake, for companies who do not report or who transmit false information, knowing it’s false. This is the threshold. You’re not punished for a mistake. You’re punished for things that are much, much stronger.

Coming back to Senator Bernard’s question, I want to ask if you knew that the U.K. Modern Slavery Act is a “name-and-shame” law? There’s no penalty. Did you know that only a third of the companies who should report — well, now it’s only two thirds of companies that report completely — and one third of companies do not report seven years later, because why? It’s in a system where there’s only “name and shame.” So the “name-and-shame” approach has some limitation because, unfortunately, some companies do act when there’s a punishment. I’m asking you, did you know that the U.K. experience, which is a pure “name-and-shame” experience, has many faults and has been shown to not work very well because there are no penalties, especially in the number of companies reporting, which is quite low?

Mr. Harvey: Yes, senator, understood. However, the United Kingdom does not have the express ban on the importation of goods made with forced labour that we have in Canada. I would think in a context like Canada, if companies weren’t reporting like that and started to get known to CBSA, they would find pretty quickly that their shipments were getting blocked a lot more often, so I don’t think the problem would be the same.

The Chair: Thank you. Senator, does that answer your question?

Senator Miville-Dechêne: Not exactly, but this is your answer. Maybe if there’s still some time —

The Chair: I wanted to ask a few questions, very quick ones. I will come back to you. I think we will have enough time.

My question to you, Mr. Smith, is that Natural Resources are involved with ESTMA. What are the other departments and would the same ones be involved with Bill S-211?

Mr. Chalmers: I can probably answer that, if it’s okay. The only department involved with ESTMA is Natural Resources Canada. The legislation only applies to mining firms and oil and gas firms so it’s all within the jurisdiction of the Minister of Natural Resources. We would certainly expect that our industry would be captured by this bill, so I think Natural Resources Canada would have a role to play. Given how much the senator has drawn on ESTMA for this bill, I would expect that Natural Resources Canada would be a very good source of learning for other departments that would be more involved in implementing this, because they have had so many years of working with a similar jurisdiction and similar requirements that this bill would bring.

The Chair: My next question, Mr. Smith or Mr. Chalmers. Clause 11(3) sets out required information that a business would have to include in an annual report, including information on its structure, activities and supply chains. What types of information related to a business structure or activities may be sensitive or difficult to disclose?

Mr. Chalmers: It’s a difficult question for us to answer because the nature of our business is quite different than many of the other sectors that would be caught by this legislation. Canadian mines typically export metals and minerals. We don’t import nearly as much. Our Canadian mines abroad would be looking at disclosing and conducting the due diligence for reporting for how they ensure there is no forced labour or modern slavery associated with their operations abroad. So we would probably be a relatively unique case in how this bill applies to us versus how it applies to other sectors.

But we have not seen challenges with the kinds of information that is required under ESTMA in terms of the corporate boilerplate background info.

The Chair: You said we’re “unique.” Could you clarify what you mean by that?

Mr. Chalmers: Mr. Harvey has talked a lot about the customs tariff and the way in which companies need to be assessing their supply chains for goods that are brought into Canada. Canadian mines would certainly have to look at goods and services brought in from other countries, but we’re primarily an export organization. Where our business is operating in places that would have higher risks of modern slavery, we’re not producing goods to bring into Canada. We’re mining metals and minerals and selling them on the open market.

We need to make sure that our operations are doing the due diligence on the mining operations that our companies own and operate abroad, or I should say they’re doing their own due diligence on these operations, which is a little bit different than conducting due diligence on supply chains for goods that are brought into Canada.

The Chair: Thank you. Mr. Harvey, would you like to respond to this question?

Mr. Harvey: Ben summed it up for mining. Really, it’s a lot more difficult for people importing goods, and it’s how deep these things go into the supply chains. In mining, you control your own mine, whereas when you’re buying goods, you’re buying it from somebody who controls an operation, and that’s a different thing. That’s where I’d insist on the point I made that a lot of companies could use assistance from the Canadian government that has this information from diplomatic sources, intelligence, policing, that often has deep knowledge about the countries where goods are being bought from. And that knowledge should be brought to bear so that Canadian companies who are importing can better understand the risks they’re undergoing when they purchase in certain regions.

Often, once you get the information that a certain region is riskier, that increases the obligation on you to do better due diligence. Overwhelmingly, a company does a due diligence on its supply chain to see where the risks are. The first thing you do is look at whether or not you’re in a high-risk area. If you’re buying goods from Nova Scotia, where I grew up, it’s a low-risk area, but if you’re buying goods from certain other countries, that’s a very high-risk area, and the level of due diligence is much higher. That’s where I say we really need the Canadian government to work with companies, to raise the level of their game in that sense.

The Chair: Thank you, Mr. Harvey.

Mr. Smith: I think where our minds are at, as an association, is more on the mechanics of getting this right. We saw the government’s platform during the election. That had a commitment to move, and we know that some have issues with the speed at which movement has happened, but overall we know that the world is moving in a direction where there is going to be more transparency in these areas. I think, as is reflected in our opening statement, it is the mechanics that we’re focused on. We bring our experience in this area to bear under ESTMA and our Towards Sustainable Mining program. We are determined to get to work and would love to meet with as many of you who would like to meet with us individually to work on the mechanics and make sure we can get this right. That’s where our real focus is.

The Chair: Thank you, Mr. Smith.

Senator Miville-Dechêne: I just wanted to say something to Mr. Smith.

[Translation]

Mr. Smith, I heard what you said about the reporting deadline, and I understand. I realize it’s a tricky and challenging issue. There’s no easy fix because there are benefits to having a fixed date. There are, however, drawbacks, as you pointed out. The deadline means some companies have less time to carry out the necessary assessments. I take your point. Now, let’s turn to the other question you had.

[English]

You were asking why in clause 2, under the definition of “child labour,” we are talking about services that are provided or “offered to be provided.” You seem not to understand why it was written as “offered to be provided.” I will look into that thoroughly, but I would say that it only means that a child can offer their own services to an enterprise, but it doesn’t mean that the company would be considered liable if they don’t hire this person because this bill is for entities. It’s not about child labour. So even if the provider or if a child knocks at the door of an enterprise and says, “I want to work here,” this wouldn’t put the enterprise in danger, if that is what you mean. But I see there may be something that is not clear, and I will look into it.

Mr. Smith: Thank you, senator. I think that this is — not to underscore it — some minutia, but this is something that I think we can clarify in the legislation versus, perhaps, down the road in regulation. Our preference would be if we could do that now, why not?

Senator Miville-Dechêne: As you know, transparency legislation is, in a sense, softer legislation to try to advance and increase awareness. Would you prefer a due diligence legislation at this point?

Maybe I should explain. Due diligence — if a company has slaves and they have not exercised due diligence, they could be sued in Canadian court. That’s what the French laws and I think the Dutch laws are saying.

Mr. Harvey: In Canada, if I understand correctly what the Supreme Court decided in the Nevsun case, you can be sued in Canadian court, though obviously it’s a Supreme Court decision, and law students will be studying that one for a long time, I imagine.

Senator Miville-Dechêne: Exactly. It’s not easy. It’s not set in stone, I think.

Mr. Harvey: What I would insist on is that we already have legislation in Canada that prohibits the importation of goods made with forced labour. We are one of two countries in the world, along with the United States, to have that.

On the question of whether or not we prefer legislation such as that presented or the due diligence legislation, we prefer the legislation that’s been presented by you. We think that’s a better approach, but it’s not a context where we didn’t have any legislation before. We have a prohibition on the importation of goods made with forced labour in Canada. That is fairly new, as we said, so it’s all being worked out in terms of exactly how it’s implemented. In that context, as I said, we would like to see maximum government assistance to help companies to get their standards up.

Senator Miville-Dechêne: Thank you.

The Chair: Seeing no other senators with their hand raised, I think that would bring us to the end of our meeting.

Gentlemen, I want to thank each and every one of you for taking the time to appear before us. If you feel there is something that you would like to add to your testimony, you can always send a written submission to us. Thank you for taking the time.

(The committee adjourned.)