Foreign Affairs Committee on May 28th, 2013

[The Chair, Conservative, Dean Allison]

Pursuant to Standing Order 108(2), our study of corporate practices by companies supplying and manufacturing products in developing countries for Canadian consumers will get started.

I want to thank all our witnesses for being here today as we look at this issue.

We have with us, here in Ottawa, Peter Iliopoulos, who is a senior vice-president of public and corporate affairs with Gildan Activewear Inc. Welcome and thank you for being here.

Joining us via video conference from Toronto, we have Diane Brisebois, who is the president and chief executive officer of the Retail Council of Canada. Diane, welcome. It's good to see you again.

Then joining us from Vancouver, British Columbia, we have Peter Chapman, who is executive director of the Shareholder Association for Research and Education. Peter, thank you, and welcome to you as well.

Why don't we start with your opening remarks, Peter? Then we'll go to Diane for her opening comments, and then we'll finish off with the other Peter's remarks. After that, we will move around the room for questions for the remaining hour.

Peter, I'll turn the floor over to you.

[A voice]

Thank you very much—

[The Chair, Conservative, Dean Allison]

I'm sorry, I want to start with a video conference. We have two Peters—my bad.

Go ahead, Peter in Vancouver.

[Peter Chapman, Executive Director, Shareholder Association for Research and Education]

That makes it all the more complicated, having two Peters.

My name is Peter Chapman. I'm the executive director of the Shareholder Association for Research and Education. SHARE is a Canadian organization that helps institutional investors integrate environmental, social, and governance factors into the investment process. We do this through research, education, and the provision of responsible investment services. Our clients are pension funds, foundations, and endowments, with assets under management of approximately $12 billion.

I would like to speak this morning from an investor perspective about the risks associated with global supply chains such as those that became apparent in last month's tragedy in Bangladesh. In a recent public statement by 15 global pension funds and fund managers, the Rana Plaza building collapse was characterized—as well as earlier incidents—as illustrating the significant reputational, operational, and legal risks that are ubiquitous in global supply chains. It underscores the urgent need for companies to know their suppliers, ensure compliance with safety standards, and fully disclose their supply chains.

My comments will focus in three areas. The first is the importance of corporate disclosure about sourcing practices and monitoring of global supply chains. The second will be the constructive role investors can play in aligning corporate responsibility and long-term wealth creation when environmental, social, and governance factors are considered in investment decision-making processes. The third is the positive investor response to the Accord on Fire and Building Safety in Bangladesh.

Shareholders depend upon the companies they invest in to manage risks related to supply chains. However there's relatively little disclosure by companies today about how they manage such risks. Improvements in disclosure will reduce investor uncertainty and assist investors in managing risks effectively.

To lessen the uncertainty that exists today, shareholders are seeking assurances that the companies they invest in have adopted responsible sourcing practices in their global supply chains, including performing human rights due diligence; negotiating commercial terms with suppliers sufficient to provide for safe, healthy workplaces and a living wage; establishing robust oversight of suppliers; and disclosing information on supply chain practices and outcomes.

To achieve this, clear and comparable reporting requirements by public companies should be established, including reporting on human rights due diligence. The most widely used such standard is the Global Reporting Initiative's sustainability reporting framework. Precedents exist for environmental, social, and governance—or ESG—disclosure requirements in other jurisdictions. For example, the Danish Financial Statements Act requires that the 1,000 largest corporations in Denmark—and all state-owned limited liability companies—report on CSR in their annual reports.

In addition to initiatives by governments, stock exchanges are also playing a role in encouraging greater corporate disclosure of ESG information. For example, in South Africa more than 450 companies listed on the Johannesburg Stock Exchange are required to produce an integrated report including information on social, environmental, and economic performance alongside financial performance. If they do not issue this integrated report, they're required to explain why.

More targeted disclosure is required in some jurisdictions. For example, the Transparency in Supply Chains Act of the State of California requires retailers and manufacturers with more than $100 million in worldwide gross receipts to disclose information on their websites regarding their efforts to verify that slavery and human trafficking are eliminated from their supply chains. Disclosure under this act is intended to assist consumers and investors in distinguishing between companies that are taking adequate steps to address these risks from those that are not.

Forced labour and trafficking are unfortunately still serious risks in some countries and industries—for example, in the harvesting of cotton in Uzbekistan.

In addition to these general disclosure requirements related to ESG issues, investors are urging that apparel brands, retailers, and manufacturers publicly disclose the names and addresses of factories used in the assembly of consumer apparel goods. Some companies have already taken this step.

In recent months the retail giant H&M has voluntarily disclosed the factories it uses, saying:

...we can now incentivize our suppliers for taking ownership over their sustainability and recognize the progress they make. And we can take another step in making our industry more transparent and ultimately more sustainable.

The consensus is growing amongst institutional investors that ESG factors such as supply chain oversight are important components of risk management and a potential source of value creation over the long term. The draft high-level principles on long-term investment finance by institutional investors currently under discussion at the OECD are an example of the expression of widespread concern about the negative impacts of short-termism by institutional investors.

In spite of evidence that ESG factors can have a material impact on investment performance, some fiduciaries in Canada are reluctant to incorporate these criteria into their investment decisions because they fear doing so constitutes a breach of their duty to beneficiaries. Clarifying that pension fund trustees and other fiduciaries may consider environmental, social, and governance factors in their investment decisions will help align investors and publicly traded corporations in the pursuit of corporate responsibility, a step already taken in a number of jurisdictions internationally.

This position was supported in the 2007 “Capital Markets and Sustainability” report of the National Round Table on the Environment and the Economy, which states:

Clearly, pension fund trustees must be made aware—perhaps via regulators issuing guidelines or, where appropriate, enacting regulations and/or legal changes by government—that considering ESG factors in capital allocation decisions is not in conflict with established fiduciary duties and that, in fact, not considering them may actually be a potential breach of such duty.

Fiduciaries and asset managers that evaluate plan investments with a full range of risks and opportunities in mind, including those related to supply chains of companies in which they invest, are better positioned to prevent losses and enhance gains. Governments can assist this process by providing a positive policy environment in this regard.

Finally, I'd like to turn to investor support for the Accord on Fire and Building Safety in Bangladesh. Recently, several international investor groups with combined assets of more than $2.5 trillion have welcomed the decision by apparel companies sourcing from Bangladesh to join the Accord for Fire and Building Safety in Bangladesh, and to work with the International Labour Organization and companies under this collaborative program to conduct robust inspections of the factories they use. We commend Loblaw Companies Limited for its leadership in supporting the accord.

The accord, which sets out a regime of independent inspections, public disclosures of the results, mandatory building renovations to eliminate hazards, and union access to factories to educate workers on their rights, is a major step forward for Bangladesh and provides the conditions for greater investor certainty that occupational safety in Bangladesh will be realized.

We believe that the dispute resolution mechanism in the accord sets it apart from previous failed attempts at voluntary programs in Bangladesh without imposing undue risks for signatory companies. The binding nature of the dispute resolution mechanism in the accord ensures accountability to the commitments contained in it. This accountability gives investors assurance that the signatories are committed to managing the risks associated with sourcing from Bangladesh.

In closing, I would like to thank the committee for this opportunity to participate in your deliberations on the important questions raised by the complex global supply chains of today's economy.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you, Mr. Chapman.

We're going to now move to Diane, from the Retail Council of Canada, for her remarks.

[Diane Brisebois, President and Chief Executive Officer, Retail Council of Canada]

Thank you.

Good morning. My name is Diane Brisebois, and I serve as the president and chief executive officer of Retail Council of Canada.

Mr. Chair and members of the committee, thank you for the opportunity to speak to this matter. I apologize for not being present during the hearings, but as you may have been told, we are just a couple of days from our annual conference, so I had to remain in Toronto.

While my remarks will be short, I will be pleased to answer all of your questions.

Retail Council of Canada is a not-for-profit industry association representing more than 45,000 storefronts in Canada. Its membership includes independent merchants, regional and national chains, mass merchants, big box retailers, and online merchants. Its membership also covers all categories of retail, including general merchandise, grocery, and drugs.

The recent tragic factory accidents and horrific loss of life in Bangladesh have generated shock and outrage, but also a renewed commitment to action. The buyers of Bangladesh-made garments, apparel brands, retailers, and manufacturers recognize the responsibility to initiate action that will have an immediate, positive, and sustained impact on the safety and lives of garment workers in Bangladesh.

Our members believe that any successful effort to address the problem of building safety in Bangladesh will require support, shared responsibility, and action among buyers, factory owners, the Bangladeshi government, factory workers, and other stakeholders. Therefore, Retail Council of Canada is fully committed to working with these groups toward effective global solutions to the building safety problems in Bangladesh, which may also serve as a model to address such problems that may arise in other supplier countries.

Immediately following the tragic factory accident in Bangladesh, Retail Council organized several conference calls with all interested parties and also began to act as a hub for information on current and new initiatives. The role of Retail Council is to provide its members with information with respect to the various initiatives that have been proposed, including the Accord on Fire and Building Safety, and the North American Bangladesh worker safety initiative.

In partnership with other associations in North America, which include the American Apparel & Footwear Association, the Canadian Apparel Federation, the National Retail Federation, and the Retail Industry Leaders Association, RCC is working to develop a common framework for action and is also in the midst of surveying its members on their activities, including vendor codes and safety standards, in order to revise and develop industry guidelines for our members in Canada.

Garment industry jobs have been instrumental in helping or in moving forward the role of women in the economy and even within their own families in Bangladesh. It is important to continue to support the garment workers and to make significant contributions to workplace safety and to facilitate industry support for their economic empowerment.

We look forward to working with the Government of Canada in improving working and building conditions in developing countries. We also commit to keeping this committee abreast of our ongoing activities and progress in this area.

In closing, I give you our commitment that Retail Council will ensure that its ethical trading committee continues to be active, engaged, and assisting all members in the industry.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you, Ms. Brisebois.

We're going to continue with Mr. Peter Iliopoulos of Gildan Activewear Inc., who is here.

Sir, the floor is yours.

[Peter Iliopoulos, Senior Vice-President, Public and Corporate Affairs, Head Office, Gildan Activewear Inc.]

Thank you, Mr. Chair.

Let me begin by expressing my sincere gratitude for the invitation to appear today. We have tremendous respect for the work of your committee. In particular, we are excited about contributing to your examination of the corporate practices of companies manufacturing products in developing countries for Canadian consumers.

My name is Peter Iliopoulos and I am the Senior Vice-President of Public and Corporate Affairs at Gildan.

I would like to start by giving you a brief overview of Gildan's operations.

We are a vertically integrated apparel manufacturer with our primary manufacturing hubs located in Central America and the Caribbean basin. In 2010, we acquired a vertically integrated manufacturing facility in Bangladesh, which is currently servicing our markets in Europe and the Asia-Pacific region.

As part of our vertical integration, we also conduct yarn-spinning operations in the United States. We employ over 33,000 people worldwide. We service our product in two primary markets. We sell T-shirts, sports shirts, and fleece in the wholesale distribution channel. Currently, we have the largest market share in Canada and the United States—ranging over 70% in each of these two markets. We've also expanded our product line to include socks and underwear in order to provide a full product line offering in the retail channel.

With respect to our operations in Honduras, which represent the most significant piece of our overall manufacturing production, we operate four textile manufacturing facilities, two integrated sock manufacturing facilities, and four sewing facilities, which are responsible for producing our activewear and underwear products.

In total, this represents a capital investment of over $500 million in the last five years alone. We have over 20,000 employees in the country. We established our manufacturing operations in Honduras because of its strategic location in servicing our primary market in the United States. Our experience has shown that there is a very skilled workforce in Honduras, resulting in the development of a strong, decentralized, local management team to run our operations in the country.

In Honduras, we can also leverage the CAFTA-DR free trade agreement, which provides goods manufactured in Honduras and the Dominican Republic with duty free access into the U.S. market. With Canada signing a free trade agreement with Honduras in 2011, we are looking forward to the ratification of that agreement as well, which will allow us to effectively service the Canadian retail market, particularly against competing Asian imports.

Our vertically integrated manufacturing facility in Bangladesh employs 2,000 people and represents less than 5% of our overall production capacity. Since our acquisition of this facility in 2010, we have invested over $1 million in building enhancements, the installation of a waste water treatment plant, and an upgrade of equipment. However, our experience in Bangladesh has proven to be difficult, with many outside forces and factors influencing the operational environment at our facility.

Our corporate social responsibility program, the Gildan genuine stewardship commitment, is based on four core pillars: people, environment, community, and product. CSR represents a key component of our overall business strategy, and we believe our practices position us as a leader in the industry. Our social compliance program includes a strict code of conduct based on internationally recognized standards, and it encompasses a very thorough audit process, which includes the conducting of independent and third-party audits at each of our facilities on a regular basis.

Our labour compliance program has been accredited by the Fair Labor Association since 2007. In fact, Gildan was the first vertically integrated apparel manufacturer to be accredited by the FLA. In addition, each of our sewing facilities has been certified by the Worldwide Responsible Accredited Production program. Since 2009, Gildan has been annually recognized by Jantzi-Macleans as one of Canada's 50 best corporate citizens.

The working conditions that we offer our employees at our worldwide locations include competitive compensation significantly above industry minimum wage; 24-hour access to on-site medical clinics staffed with doctors and nurses, seven days a week; free transportation for our employees to and from work; and subsidized meals. We are currently in the process of implementing a best-in-class ergonomics program in collaboration with the Ergonomics Center of North Carolina, which we expect to complete in Honduras by the end of 2014 and subsequently roll out in each of our other locations. Most recently, in the past year, we have inaugurated three schools for back health in Honduras.

To better integrate our production processes and corporate social responsibility practices in Bangladesh, we have leveraged our more than 10 years of experience in Honduras and have sent a team of skilled managers to train the local management team and help them integrate the Gildan standard. Amongst the many safety measures implemented in Bangladesh since the acquisition is the reinforcement of the building structure following the recommendations of an independent, U.S. based engineering firm; annual audits by third-party safety, loss, and prevention specialists; the installation of external fire escapes; and regular inspections and fire drills. In 2012 alone, over 1,300 hours were spent on training related to health and safety.

Overall, the working conditions that we offer our employees, which represent our greatest asset and success factor, are of paramount importance to us.

From an environmental perspective we have a strict environmental policy, environmental code of practices, and environmental management system. Similar to our labour compliance program, we conduct regular environmental audits at each of our facilities. We also operate waste water treatment facilities to ensure the water we discharge into public rivers is clean, as well as biomass steam generation to produce energy, resulting in a significant reduction of our greenhouse gas emissions.

From a community perspective our emphasis has been on partnering with the communities in which we operate with a focus on youth education and humanitarian aid. As one example, in 2005 we spearheaded the development of an industry-wide initiative for the creation of a technical school in Honduras. This represents a $1.5-million investment and has resulted in 6,000 students in the country graduating from this school.

With respect to product sustainability, we ensure that all of our products are OEKO-TEX Standard 100 certified, thus ensuring that no harmful chemicals or materials are found in their composition.

This has been a brief summary of Gildan and our CSR practices. I would like to conclude by addressing the role Canada should play going forward, in particular, in light of the recent tragedies in Bangladesh.

First and foremost, we believe Canada should play a leading role in corporate social responsibility by establishing mechanisms to ensure all products entering the commerce of Canada originate from manufacturers that adhere to internationally recognized labour standards, and health and safety practices, in working conditions. In fact, Canada has typically included labour agreements along with their free trade agreements.

Specifically, we ask that the Canadian government reconsider the existing duty-free access for Bangladesh under the least developed country tariff, as a means of pressuring manufacturers in Bangladesh to improve safety standards in the country to an acceptable level and to ensure that the country is in full compliance with internationally recognized labour standards. Take into consideration that Bangladesh is the second largest exporter of apparel to Canada, after China, and remains by far the largest LDCT beneficiary, with imports into Canada increasing by 27% in 2011 alone, to over $1 billion.

Furthermore, Bangladesh is the third largest supplier of apparel, by volume, to the United States, despite the fact that unlike in Canada they do not benefit from duty-free access, and notwithstanding the fact that many other apparel suppliers have duty-free access to the United States. In addition, local manufacturers in Bangladesh benefit from government subsidies relating to power costs and yarn purchases.

All of the above data supports the hypothesis that Bangladesh is the lowest cost global supplier of apparel, and the imposition of labour and safety standards will not hurt the competitiveness of the country as they can easily compete without tariff concessions.

In closing, I would like to once again thank the committee for this invitation. I look forward to your questions.

Thank you.

[The Chair, Conservative, Dean Allison]

Thank you, Peter.

I think we have time for two full rounds, so let's get started with Mr. Dewar for seven minutes, please.

[Paul Dewar, NDP, Ottawa Centre, ON]

Thank you, Chair. Thank you to all our witnesses.

Chair, before I get into my comments, I note that we’ve had requests from other groups to meet. We've chatted about that. I look forward to making the opportunity for them to present if we can find time for another meeting on this very important issue that I think has seized many Canadians.

On March 25, 1911, there was a factory disaster, a catastrophe in the United States. It was the infamous Triangle Waist Factory disaster. It led to the changes in production of textiles in the United States and in Canada. It changed health and safety. It changed working conditions. In that infamous fire of 1911, 146 people were killed, mostly women.

April 24, 2013, will go down in history as another event that hopefully changed the world for the better, but as we all know now, over 1,100 people died, many of them women and children. On that day, a young girl, Tahmina Sadia, went to work. She didn't want to go to work. In fact, she asked to not go into the building. Reports said that she was slapped by her supervisor and told to go to work. She started working at 11 years of age because she had to. I say that because we're going to get into a lot of technical aspects about standards, which are important; protocols, which are important; and obligations, which are important. But I think it's important for people to go back and read the history of what happened in 1911 and what just happened in April.

This is about people. This is about people who, for reasons of survival, go to work in places they shouldn't have to go to work in. Let's remind ourselves of that.

I'll start with Peter in Vancouver.

We were the party that brought forward this motion for Foreign Affairs to study this issue because of its importance. I'm glad to see the government supported a study on this issue. On May 9, I wrote to our Minister of Foreign Affairs and asked if our government would call on the Bangladeshi authorities to guarantee respect for key labour health and safety standards as codified in the ILO agreements and conventions to which Bangladesh is a signatory.

I also asked him to engage with the international community to develop and implement a common response to holding the Government of Bangladesh accountable for what's just happened, in particular with response to the high-level ILO mission to Bangladesh, that they be a partner to push forward these provisions within the conventions that Bangladesh is a signatory to. I said that because I think Canada can and should play a role here.

You've made some points in your submission. What do you think our government should be doing? Specifically, what should our government be doing to work with the Bangladesh government, and the ILO and other international organizations, to ensure that girls like Tahmina will not suffer from this kind of exploitation? Also, that we do not abandon Bangladesh—no one wants to see that.

What should the Government of Canada be doing to ensure that we do our part?

[Peter Chapman]

Thank you very much for the question.

From an investor perspective, it's very difficult to drill down and deal with individual companies, individual situations, when you hold a company in your common stock portfolio and own a very small fraction of that individual company. It becomes very difficult for investors to engage substantially and individually with many companies in their portfolios.

It becomes very important for investors to see international standards such as the ILO fundamental rights and principles at work, the core labour standards widely acknowledged and supported.

I think, efforts by the Canadian government to support Bangladesh, recognizing and implementing core labour standards, would be a very positive move from an investor perspective because it deals with systemic problems. Risk associated with Bangladesh is very hard to manage on a portfolio basis because individual companies, members of the Retail Council, will have sourcing from many different countries.

A broad, systemic approach to this is very helpful for investors. We also believe that international agreements to which Canada is a party, such as the fundamental rights of the ILO, are one of the bedrock standards for good, responsible investment.

[Paul Dewar, NDP, Ottawa Centre, ON]

In other words, you can't do a loan, obviously. Companies can't do a loan, and there is a role for government here.

I have 30 seconds, Peter, just for your response to the point. Do you think government should be playing a key role here, and that we shouldn't just rely on business to do it on its own?

[Peter Iliopoulos]

Yes, governments should most definitely be playing a very proactive role in leveraging ILO principles. For example, there is also the Better Work program, which the ILO is a part of, that exists currently in Haiti. That could be something that they could look at implementing, but certainly government should be playing a very active role to ensure that these core principles are being respected, especially given that the large level of product that's coming into Canada from Bangladesh, for example, is of critical importance, and everyone has a role to play here. It shouldn't be isolated to one organization, one company, or one association.

As I mentioned during my remarks, we have a very strict code of conduct. We ensure that the standard that we implement is based on the highest level and we do that in uniform throughout all the various locations in which we operate.

[The Chair, Conservative, Dean Allison]

Thank you, Peter. That's all the time we have.

Thank you, Paul.

We're going to start with Ms. Brown for seven minutes, please.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Thank you very much, Mr. Chair.

Maybe we'll get a chance to carry that on, Peter.

First of all, I'd like to say that our hearts go out to the families who have lost loved ones in this terrible catastrophe in Bangladesh. I was in Bangladesh four years ago. I met a lot of people when I was there and I would hate to think that any one of them lost a loved one in this catastrophe. Every one of us wants to see things improve there.

Bangladesh is a country that has great potential. They've done a lot of things right in the last 40 years, but there is still much to be done, so all of us can be participants in that.

I'm not an engineer, but I worked in the drafting department of an engineering company when I was putting myself through my degree. I had the opportunity to look at a lot of building code issues, and so out of my own personal interest I just took a look at where Bangladesh was at with its own building code. I understand that they adopted their first building code in 1993. They updated that in 2006 on the recommendation of the centre for fire science and technology at the Tokyo University of Science, so they've had some good input.

They have a lot of old buildings there, and in my observation, a lot of the rebar they use comes from old ships that have been sunk in the harbour, so probably the standard of rebar that we would expect here is not what we would see there. I also noted that in the magazine Popular Mechanics there was quite an article about why concrete crumbles, and some of the things that we look at here are just not the issues that we see in some of these emerging economies.

Peter, you were saying that when you go into a country you have—in Honduras perhaps this was alone—a U.S. based engineering firm that gives you a report on the buildings that you would go into. Can you talk about the process that you've used? How did you come to use this particular company? What do you look for and what would be your response to a report that's given to you by an engineering company?

[Peter Iliopoulos]

When we acquired the facility in Bangladesh in 2010, as part of the due diligence process that we went through before closing the acquisition, we hired a very reputable U.S. based.... We did an extensive search and review to ensure that we had a very reputable engineering firm based on the highest level of standards, and we're looking at North American standards here. We had this firm conduct a detailed assessment of the facility that we were looking to acquire in Bangladesh.

They did a detailed review of the foundation, the structure, surveys. They looked at the plan, etc., in quite extensive detail, and they came back with certain recommendations. They concluded in this particular case that the building was safe, but they did come back with recommendations to improve the structure of the facility. That was part of our integration plan, once we did acquire the facility, to really implement these recommendations, reinforcing the concrete, adding reinforced steel to ensure that the building is safe.

I mentioned that of paramount importance to us is the health and safety of our employees. We employ 33,000 people worldwide, and we're not going to operate in a facility if we have the smallest of concerns that the structure is not safe. We went through a very extensive diligence process. We do similar-type processes in the facilities that we've constructed in Honduras, for example. That's really part of the process that we look to in terms of establishing either a situation where it's a greenfield project or we're building a facility from scratch, similar to what we did in Honduras, or in the case of Bangladesh, where we went through an acquisition.

Over and above that, what we do in Bangladesh on an annual basis is that we have a review done for safety and fire prevention, again by independent third parties, that come and review the facility to ensure that the standards are up to the highest level.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

When I was there, Peter, I noted that the construction is done with bamboo scaffolding. It was an eye-opener to me because I've worked in workplace safety for a number of years. So when I see people on scaffolding made out of bamboo and wearing flip-flops, you recognize that we're dealing with a completely different set of circumstances.

Do you think that the Government of Canada can have an encouragement to the Government of Bangladesh to change some of these, and how hopeful are you that there are people there who are willing to listen?

[Peter Iliopoulos]

I definitely think there is a role the Canadian government can play. Again, I go back to the example that I referenced. Bangladesh is the second largest exporter into Canada, and just by virtue of that, there's a responsibility that we should take forward to ensure that the product we're sourcing from other countries like Bangladesh is sourced from manufacturers that are operating in ethically sound facilities with the highest level of labour standards and health and safety practices. Most definitely I think there is a role there for the Canadian government to play.

[Lois Brown, Conservative, Newmarket—Aurora, ON]

Are there any comments from our other two guests? Peter in Vancouver....

[Diane Brisebois]

Hello. Thank you. I'd like to comment.

I don't think anyone would deny that the Gildan recommendations are sound. I think it's important, though, to note, as you mentioned, that we're looking at a completely separate set of circumstances. In Gildan's case, as the gentleman mentioned, they acquired an asset in Bangladesh. In most cases vendors, and in fact, retailers are not acquiring assets or buildings or factories but working with factory owners in Bangladesh. It's extremely important that the community come together. You've heard the accord mentioned, which is also an North American initiative. I think that what is most important is to ensure that this time everyone comes together, develops the highest standards, and works with the ILO and other organizations to make sure that, both short term and long term, there are principles and practices in place to make sure that workers are safe and that buildings are safe.

Let me just add one point that I disagree with from the gentleman from Gildan. While he suggests that there probably should be import duties for Bangladesh, I think that in fact that would work against the development of Bangladesh. I don't think we should use tariffs to, in fact, give one supplier or country an advantage over another developing country. We should be very careful when we're looking at different ways the government can be engaged and involved. We, certainly from the Retail Council's perspective, don't believe it's by slapping on tariffs.

[The Chair, Conservative, Dean Allison]

Thank you very much.

We're going to Mr. Rae, for seven minutes, please.

[Bob Rae, Liberal, Toronto Centre, ON]

Thank you.

Mr. Iliopoulos, could you tell me a little bit about the history of Gildan? You were a Canadian-based manufacturer, isn't that right?

[Peter Iliopoulos]

Yes, that's correct.

[Bob Rae, Liberal, Toronto Centre, ON]

When did you decide to basically source your operations outside Canada?

[Peter Iliopoulos]

We originally started back in 1984 when we had textile manufacturing operations and sewing facilities in Canada. Starting in the 1990s, we started production simultaneously in Central America and the Caribbean basin. Our last operations in Canada were closed in 2007, primarily due to the fact that we were dealing with the competition coming from low-cost imports from Asia.

We've designed our supply chain around the western hemisphere production. Our primary market is in the United States. In 2005, the United States signed a free trade agreement with Central America and the Dominican Republic. As I mentioned, we had started our operations earlier in Honduras, the Dominican Republic, and Nicaragua, and one of the key necessities for us was to leverage these existing trade agreements in order to compete against Asian imports.