Canada-China Relations Committee on Nov. 29th, 2022

[Dr. Laura Murphy]

Sure. The import ban is a critical tool that the Government of Canada already has to address forced labour in the Uighur region, and it is not being enforced. You're right that this is a real problem. What's happening in Canada now is that Canada, the EU, and the U.K. have become dumping grounds for forced labour made goods made in the Uighur region, because the U.S. is sending those products back away from its borders—and as you know, Canada is the closest place those products can go.

It's critical that the import ban be enforced. Having an entities list of companies that are known to be engaged in forced labour, internment, or this kind of surveillance state, would be a useful tool. Dr. Dufour can probably talk more about the legislative aspects of it, but we need to be able to say that there are some companies that are simply beyond the pale tin being integrally involved in these programs, and they cannot be invested in.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Two of them that come to mind, Mr. Chair, if I might interrupt, are Hikvision and Huawei, both of which have been listed through executive order by the U.S. government.

I'd be interested to hear from the other witnesses, what is the best way to prevent investments in firms that are complicit with the genocide, or complicit with using forced labour?

[The Chair, Liberal, Ken Hardie]

Dr. Dufour. I believe Dr. Murphy handed it off to you, so perhaps you can respond.

Dr. Dufour, can you hear us?

[Dr. Geneviève Dufour]

Yes, I hear you clearly.

I think the member's comment stemmed from Ms. Murphy's answer.

[The Chair, Liberal, Ken Hardie]

Mr. Chong, go ahead.

[Michael Chong, Conservative, Wellington—Halton Hills, ON]

Maybe Mr. Tohti would have an answer. What is the best way to prevent investments in firms complicit with the genocide, or complicit in the use of forced labour?

[Mehmet Tohti]

Thank you for the question.

As Professor Laura Murphy said, we are not acting. The government is not imposing the existing law, and so far CBSA has not seized a single shipment entering Canada of goods made using Uighur forced labour.

We are strengthening the Chinese regime by directly investing our public funds into the Chinese companies that profit from the genocide and the forced labour, while at the same time we are allowing those companies to raise funds through stock markets.

Also, we are purchasing those products in the Canadian market as well, so we are fully supporting China in its ongoing policy of using slave labour to produce products while at the same time committing genocide. The money we send to China does not strengthen the people; it strengthens the Chinese Communist Party and Xi Jinping. We are seeing that the Chinese government is using all sorts of violence against the peaceful protesters. That strength comes from our invested dollars. We have to use a legislative approach or we have to just simply copy what the U.S. did.

[The Chair, Liberal, Ken Hardie]

Thank you, Mr. Tohti.

Thank you, Mr. Chong.

For the benefit of the rest of the people asking questions, it would be useful if you directed your question to the individual you wished to hear from.

We'll now go to Mr. Oliphant for six minutes or less.

[Rob Oliphant, Liberal, Don Valley West, ON]

Thank you, Mr. Chair.

I'd like to thank all the witnesses.

I'm probably going to focus a little bit on Professors Murphy and Dufour because I'm trying to sort out in my head a spectrum of activity. First of all, I don't think there's going to be any disagreement around this table that we have a problem in our world with the integrity of supply chain and the contribution of commerce and trade to internment, forced labour and surveillance of Uighurs, as well as other people.

I'm trying to understand the best approach out of that. There's a spectrum, from disclosure—and I did a bill on pension fund disclosure in 2009—through to due diligence, through to the French model of the duty of vigilance. I'm trying to understand that, because even though you mentioned the Netherlands and another country, I believe France is the only country that has actually instituted that concept of duty of vigilance and I've also read reports that it may not be effective.

Perhaps the two of you could comment on a range of options we could recommend as well as the effectiveness and the practicality of enforcing each one.

Thank you.

Professor Murphy can go first and perhaps Professor Dufour after that.

[Dr. Laura Murphy]

Thank you for that.

I keep deferring to Professor Dufour because her point was about the duty of vigilance, so I'll leave that piece to her.

I'll say that there have to be layered approaches to this. I think you're right that there is a spectrum, of course, but there are also multiple different angles from which you can address this. On the one hand, you might directly, as we were talking about, have a ban on investments in particular companies, but there also must be mandatory human rights due diligence for all companies operating in Canada to investigate their supply chain—to know it all the way down to their raw materials.

At this time, that is not mandatory; that is a voluntary protocol that a company can choose to follow, and the vast majority of companies do not choose to do that. In fact, they intentionally don't want to know what's happening at the roots—at the most upstream parts of their supply chains—because we know that's where the most abuse and exploitation happen.

I think we need a full mandatory human rights due diligence policy that includes transparency, traceability and accountability for companies that do not do this. This is another problem with a lot of international anti-slavery or forced-labour laws—there's no accountability if a company does not do what they're supposed to do. There's no enforcement and there's no penalty for doing it. Those penalties also need to be sufficient to deter companies from just ignoring the law and paying the fine as a cost of business.

I think those pieces are the critical ones, but I'll leave it to Professor Dufour to talk more about the duty of vigilance law internationally, which I don't know as much about.

[Dr. Geneviève Dufour]

Thank you.

You're right. Until recently, France had set the bar as far as duty of vigilance legislation was concerned. It was the first country to enact this type of legislation regardless of sector, so it captured all sectors. However, the law applies only to companies of a certain size that operate transnationally. Since then, other countries have enacted duty of vigilance laws, including Norway and the Netherlands. Germany's duty of vigilance law, which I consider to be the most progressive of any country's legislation, will come into effect a month from now, on January 1 of next year.

It will apply to a significant number of businesses and capture numerous types of human rights, including the gamut of basic labour rights. Companies will be required to pay workers decent wages and to adhere to environmental standards. The law will also address the excessive use of security officers by certain companies and industries. In addition to a broad range of measures to ensure good working conditions for employees, the law contains environmental, anticorruption and other standards.

It's quite the law because it imposes pretty extensive due diligence requirements on companies. Not only will companies that break the law face penalties, but so will company directors and any employees who were aware of the violation.

[Rob Oliphant, Liberal, Don Valley West, ON]

May I interrupt?

Does the French law, or perhaps the Norwegian or Dutch law, apply equally to investors—such as institutional investors or investment bodies—and the people making and selling things, or companies that are engaged? There's a different approach to that, I think. I thought the French law only applied to actual enterprises with 5,000 employees in France or 10,000 employees worldwide, which is different from an investment fund.

[The Chair, Liberal, Ken Hardie]

Give us a very brief answer, please, Dr. Dufour. Thank you.

[Dr. Geneviève Dufour]

I think Germany's law goes a lot farther. The law will capture an increasing number of companies on a gradual basis. Initially, it will apply solely to large companies, but will eventually capture almost all companies. Those changes will come into effect according to an established schedule.

[The Chair, Liberal, Ken Hardie]

Thank you very much.

Next, we have Mr. Bergeron for six minutes or less.

[Stéphane Bergeron, Bloc, Montarville, QC]

Thank you, Mr. Chair.

Thank you to the witnesses for their insights, which are giving us a lot to think about.

Professor Dufour, as I listen to you, I get the sense that Canada is light years behind those who are leading the way. As you no doubt know, Bill S‑211 is at committee stage, and is close to being passed. Yesterday, those of us on the Standing Committee on Foreign Affairs and International Development met for clause-by-clause consideration of the bill.

In our public meetings, we heard from a number of witnesses that the bill didn't go far enough because all it did was require companies to report practices that could involve the use of forced labour, nothing more. It's clear from the efforts being made around the world that, basically, all we are doing if we pass the bill is making ourselves feel better.

What do you think?

[Dr. Geneviève Dufour]

Thank you for your question.

Well, I would say that California did this in 2010, and it's almost 2023. You're right, we are behind. There's no doubt that, in the early 2010s, it was innovative to say that you were finally going to force corporations to respect environmental standards and human rights. That's when the idea started to take hold. Measures captured only forced labour or applied solely to certain sectors, such as mining in some countries. A U.S. law concerning operations in the Congo comes to mind.

People realized that the laws weren't effective, either because they were sector-specific or because they captured only part of the problem, forced labour in this case. We need companies to do this work in a holistic way. They are on the front lines and have the ability to ensure better compliance with human rights and environmental standards. They are the ones buying, importing and selling the products, so they have to play ball.

You are absolutely right. We are light years behind where we should be at this stage of the game. That's why we feel the bill isn't ambitious enough.

[Stéphane Bergeron, Bloc, Montarville, QC]

Thank you.

[Dr. Geneviève Dufour]

It lacks teeth, on top of it.

[Stéphane Bergeron, Bloc, Montarville, QC]

I completely agree.

We can't ignore what we're hearing today and what a number of witnesses have recently reported. For instance, Hong Kong Watch and Sheffield Hallam University released a report indicating that a number of institutional investors, particularly public pension funds, have investments in the People's Republic of China, thereby supporting companies that use forced labour and subject workers to wholly unfit conditions. It's becoming clear that companies aren't the only ones to blame for supporting forced labour and the Uighur genocide; even public pension funds are involved.

I'd like to say to our Uighur friends that not only do those investment and pension funds contribute to the genocide and forced labour, but also, those funds may be at significant risk, simply from an investor's point of view—as a Quebecer or Canadian. It's a ticking time bomb of sorts.

As I understand it, investment and pension funds in some Scandinavian countries had investments in Ukraine, and in the wake of the sanctions imposed by the west, Russia froze those investments. The people paying into those funds are losing money.

Isn't there a risk that, if China invaded Taiwan, it would do the same? Investors in Quebec and Canada could lose their investments.

[Mehmet Tohti]

Thank you for that question. It is an excellent and eye-opening question and I hope that the Canada pension plan and other provincial plans, including the Quebec pension plan, will listen to this question.

Yes, you are absolutely right. The Quebec pension plan has investments of around $2 billion to $3 billion in Chinese companies associated with either the genocide directly or forced labour, and there is a list of companies the Quebec pension plan invested in, and we know which company they invested in and we know what those companies are doing.

It's exactly the same at McGill. McGill University invested nearly $100 million and we identified seven companies directly associated with the Uighur genocide. Some companies helped to build surveillance technology for the Chinese government and some are part of the integral joint operational platform. Some companies are part of birth prevention measures that the Chinese government implemented on Uighurs, and for that reason it is alarming.

We met with the Canada pension plan board and they basically defended their position by saying that they did not invest in China or a country, but rather that they invested in companies. The problem is that those companies are under the direct control of the Chinese Communist Party. They are receptive to every demand of the Chinese government. For that reason, there isn't any difference.

We sent letters to the pension boards, the federal and provincial pension boards. They are not receptive. They are not responsive, and there's a strong need for the Parliament of Canada to do something to address this issue. Otherwise if there is any madness—and I can simply expect that to happen—if any madness happens from Xi Jinping, if they just press the button to invade Taiwan, all investments will be wiped out. We are talking about nearly $100 million.

[The Chair, Liberal, Ken Hardie]

Mr. Tohti, I'm sorry, but I have to interrupt you, sir.

Mr. Bergeron's time has come and gone, and then some.

Now it is time to welcome Mr. Boulerice to our committee this evening.

Sir, you have six minutes or less.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you, Mr. Chair.

I'm very happy to be here today.

This is a very important issue that deserves our full attention. I want to thank the witnesses for being with us and shedding light on the matter.

I want to come back to Bill S-211. According to some critics, the bill doesn't go far enough to address forced labour. We can all agree that Canada is a laggard in this area.

Nevertheless, doesn't the bill have some merit, since it will force companies to show some transparency and report information?

I would like to hear from Ms. Dufour and Ms. Murphy on that.

[Dr. Geneviève Dufour]

Yes, of course. I am not against virtue.

The bill is a first step, but as has been pointed out, Canada is extremely behind, and it's not clear why. Why didn't we introduce a bill that was much more ambitious, one that tackles the problem on a broader level, one that would've put us above the rest? We call ourselves a progressive country, a country that wants to meet its sustainable development goals, a contrary that cares about protecting the environment, so why is this all we did?

This isn't the only aspect where we are lagging behind, by the way. Other countries are adopting tools to promote human rights, such as government contracting and responsible procurement mechanisms.

We are way, way behind, and there's no reason for it.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Thank you.

Would you like to respond, Ms. Murphy?