Foreign Affairs Committee on Sept. 26th, 2022

[The Chair, Liberal, Ali Ehsassi]

Welcome to meeting number 27 of the Standing Committee on Foreign Affairs and International Development.

Today's meeting is being held in a hybrid format pursuant to the House order adopted on Thursday, June 23, and members will be present in person or on the Zoom app. The proceedings will be published on the House of Commons website. For your information, the camera will always show the person speaking rather than the entire committee.

As always, interpretation is available by clicking on the globe icon at the bottom of your screen. Moreover, when speaking, please speak slowly and clearly. When you're not speaking, your mike should be on mute.

I'd like to take this opportunity to remind all participants that screenshots or taking photos of your screen are not permitted.

Pursuant to the order of reference of Wednesday, June 1, the committee is commencing consideration 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.

Concerning the drafting of amendments, I'd like to remind members to contact Alexandra Schorah, the legislative counsel, as soon as possible should there be any amendments to the draft.

It is now my honour to welcome to sponsors of this bill.

The sponsors of this bill, as everyone is very well aware, are the Honourable John McKay, member of Parliament from Scarborough—Guildwood, and the Honourable Julie Miville-Dechêne.

Senator, welcome to our committee.

Now you each have five minutes. We will start with the Honourable Mr. McKay.

[John McKay, Liberal, Scarborough—Guildwood, ON]

Thank you, Mr. Chair.

We'll try to be as even as possible between the upper house and the lower house for the splitting of time.

Colleagues, the senator and I are happy to be here in a position surrounded by members who have dedicated themselves to the advancement and protection of humanity. I have no doubt that this committee, on both the advice of the Senate and the unanimous vote in the House, will see fit to move this bill forward to the Governor General.

It's a pleasure to appear here with my friend Senator Miville-Dechêne, my co-worker in shepherding this bill through the Senate over the past two years. During that time, we've had many consultations with stakeholders and have gotten the bill to this stage.

I also want to thank the committee for its work in producing a report entitled “A call to action: ending the use of all forms of child labour in supply chains”. Having been here for quite a number of years, as have others, I note that it's gratifying for any one of us to see a committee report get dusted off, used and translated into legislation.

As well, I want to note that both the Liberal and the Conservative parties made platform commitments to move forward with supply chain legislation. Frankly, colleagues, we have some catching up to do over other countries that have moved ahead, and Senator Miville-Dechêne will speak to their experiences.

Trade agreements routinely include transparency provisions. The previous British High Commissioner and the current High Commissioner have both approached me about this bill and see it as a reciprocal obligation in the Canada-U.K. discussions on trade.

In other words, colleagues, there's a lot of momentum, and you, as a committee, are poised to be in the penultimate point of completion. I propose to go through the bill shortly, but let me give you the justification for a bill such as this.

The first is morality, and the second is economics.

Surely in the 21st century it should be clear that we cannot base our prosperity on forced labour and child labour. It was immoral in the 18th century, and it's immoral in the 21st century. Whether your values come from scripture or from human rights documents, the conclusion is the same: Forced labour is contrary to human dignity.

The second and less obvious reason is economics. When we buy a good produced by a slave, we are not buying a good produced by a worker. We are not only impoverishing others, we are impoverishing ourselves.

We are, in addition, putting ourselves in economic peril. Surely COVID has exposed our vulnerabilities to overly long supply chains that stretch into opaque jurisdictions.

Post COVID, nearshoring, reshoring and friendshoring have been a way to reduce our trade vulnerabilities, and this bill meets and speaks to that initiative.

Business schools have for years taught supply chain management as “just-in-time” or “just in case”. This bill proposes to modify supply chain management to become “just a minute”. Fundamentally, those who manage timelines and risks in supply chains will be first to ask, “Hold on for a second, wait a minute. Who made this?”

My friend Senator Miville-Dechêne and I have been on this journey for a number of years now, but we've also been accompanied by one of my daughters, Rachel, whose job for the last year and half has been to get her corporation ready for the implementation of this bill.

Rachel's obligations are not unique. I am quite sure that dozens of other companies are aware that this bill is close to receiving royal assent.

The company she works for has approximately 4,000 suppliers, which supply 80% of the corporation's goods. We've talked extensively about the challenges to a corporation, even when the corporation is seeking to comply and indeed is eager to comply.

Ironically, she has less concern with her American suppliers, primarily because of the Dodd-Frank legislation and robust American border initiatives. We have reciprocal obligations in CUSMA, in Canada-EU and will shortly have in Canada-U.K. All of our major trading partners have expectations that a bill like this will pass and pass quickly.

The proposal is simple. You cannot buy another human being. You should not buy the product of another human being in chains.

Society can only flourish in a state in which people can develop their talents and define themselves in freedom. This is the simple request of this bill, and it's what we ask of you.

It's time for me to stop and pass it over to my friend Senator Miville-Dechêne, who will outline the provisions of the bill, the improvements and the status of international legislation.

Thank you, Mr. Chair.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. McKay.

Senator, the floor is yours for five minutes.

[Julie Miville-Dechêne, Senateur, Quebec (Inkerman), ISG]

Thank you, Mr. Chair, for inviting me to testify.

I am pleased, of course, to be able to share with the committee the results of two and a half years of work in the Senate on Bill S‑211 and the lessons learned.

As my colleague John McKay told you, we've consulted many stakeholders, including in the business community, human rights organizations and key players abroad. As you know, a bill on this topic has been introduced three times, which has allowed us to improve this one significantly.

We'll begin with the most important thing: the Canadian government will also be subject to the reporting requirement. That encompasses departments and some one hundred federal institutions. The Canadian government must have best practices. We saw this last year, when the government signed a $220‑million contract with a Malaysian company suspected of using forced labour to manufacture medical gloves.

We also defined more clearly what constitutes child labour under the law. We did not want to target only the worst forms of child labour, but to bring the bill in line with the International Labour Organization's definition, which includes work that keeps children out of school.

Reports on forced labour will have to be approved by the company's board of directors, similar to financial reports. This change follows the contemporary trend of requiring the same level of rigour for corporate financial and non-financial disclosures. In addition, federally regulated companies will be required to report on their efforts to combat modern slavery in their annual reports. That's a first.

We have also strengthened and harmonized the elements of the reports, including requiring that due diligence processes and remediation plans be included.

As you know, Bill S‑211 proposes a transparency approach, like the U.K. and Australian legislation, but has more teeth, because it imposes penalties of up to $250,000 if reports contain false or misleading information.

During Senate consideration, some asked why we didn't go further to combat forced labour more aggressively. These stakeholders wanted legislation that required companies to conduct due diligence on their operations and held them accountable for any human rights violations in their supply chain. I, personally, have no objection in principle to this approach. Whether it is a transparency law or a due diligence law, the objectives are the same: to limit and, if possible, eradicate forced and child labour. The differences are more in the area of political pragmatism.

In two years, I did not feel that there was sufficient consensus in the Senate and among stakeholders to pass a much tougher law in Canada. I therefore favoured a staged approach—a legislative compromise that would finally allow us to move forward, given the inexcusable backlog that Canada has in the fight against modern slavery. Bill S‑211 is an important first step, but no one believes that it alone will solve the problem of modern slavery, which is the product of a combination of causes, including poverty, inequality and insecurity.

It is true that countries such as France and Germany have chosen a more punitive model of law, which provides recourse against companies that have not done their due diligence. However, it should be noted that, in France, for example, only very large companies—those with over 5,000 employees—are targeted. Only 265 companies are affected. In comparison, Bill S‑211 would affect approximately 3,000 large companies and part of the 20,000 medium-sized companies in the country.

In short, the choice is clear: we can be very severe and target only a very limited number of companies, or we can try to gradually change the mentalities of companies where the risks of forced labour in their supply chains are greater, that is, medium-sized companies.

As with any complex situation, it is an imperfect choice, but one that allows us to start somewhere and stop being silent accomplices to these iniquitous human rights violations. I am talking about children working in mines, fields and plantations instead of going to school; women and men enslaved to make our clothes, our machines and our cheap food.

Members of Parliament can make this bill even better. Considering the importance that Canada places on defending human rights in its speeches, it is time to act, so that our laws finally reflect our words.

Thank you.

[The Chair, Liberal, Ali Ehsassi]

Thank you very much, Senator.

I will now open the floor to questions.

Mr. Genuis, you have six minutes.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you, Chair.

To the witnesses, thank you for your testimony and for your work on this.

Our Conservative Party was proud to support this bill and also to work with you, Mr. McKay, to expedite it through the House at second reading. We look forward to the study on this, and further refinement, and seeing this important tool going forward.

I want to start by asking a question about specifically forced labour involving Uighurs. We have a presence on the Hill today from the National Council of Canadian Muslims and many people here to advocate specifically on the issue of forced labour in support of this bill but also other measures, such as Bill S-204.

I think the amendments in this bill are very important, but I believe what we also need is to have either a complete prohibition or at least a reverse onus targeting specific regions where we know there's a very high level of forced labour, which in the case of the Uighur region is specifically coordinated by the state. Do you think it would be in the scope of this bill to add an amendment that would involve the prohibition of any imports from specific designated regions?

[John McKay, Liberal, Scarborough—Guildwood, ON]

Let me take a stab at that, and then we'll tag-team on this.

Is it within the scope of the bill? I think it's a bit of a stretch. I'd like to think my way through that before I give a definitive answer as to whether it's within the scope of the bill. But I think it does speak to a larger issue, and that larger issue is that the American authorities are very aggressive in intercepting goods coming in from that particular region of the world. With similar legislation, we don't seem to be. I don't know whether we have a problem with legislation or whether we have a problem of enforcement.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Or both.

[John McKay, Liberal, Scarborough—Guildwood, ON]

When the Americans are intercepting 1,400 containers and we have intercepted one, that's an issue.

[Julie Miville-Dechêne]

I'm not sure either whether that idea is included in the scope of the bill.

I'd remind you that we already have a law that prevents goods manufactured using forced labour from entering Canada, which clearly stems from the free trade agreement. As my colleague Mr. McKay noted, that law is not really enforced. Not only has only one ship been stopped, but it was released because it was decided that there were no grounds for prosecution.

Clearly, in the House, you're free to do what you want, but the goal of this bill is a legitimate one, namely to target Canadian companies so they do everything they can to eliminate forced labour from their supply chains.

As you know, forced labour exists not only in China for the Uighurs, but also in several parts of the world. What's happening in China is terrible, but it's not unique. I am thinking of forced labour, in particular.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

Thank you.

I agree, obviously, that forced labour is a problem in many parts of the world. I think we need multiple different tools. Personally, I think there are big problems with Canadian enforcement, but the U.S. also has a legislative tool—the Uyghur Forced Labour Prevention Act, which was passed with strong bipartisan support in the United States—that we don't have here.

In terms of the specific text of the bill, I've been hearing a lot of feedback and suggestions for amendments. I'll raise one area for amendment to seek your feedback on it. There seems to be some ambiguity for those who are reading the bill about what would qualify as an “entity”, in particular whether the financial thresholds are for Canadian assets or assets held globally. Does a company qualify or not under this bill based on what their Canadian assets are or based on what their global assets are?

Then I have a related question. For entities that don't qualify above the threshold, one proposal I heard is that the government could publish a list of problematic source companies. That would allow small businesses that don't have the resources and aren't required to do the level of supply chain research that's envisioned in the bill to nonetheless do what they can by consulting that government public entities list.

That seems like a good idea to me. I wonder if you could comment on, (a), the threshold, and (b), a possible amendment that would require the government to publish a list of known problematic sourcing companies that would allow all businesses to avoid them.

[John McKay, Liberal, Scarborough—Guildwood, ON]

I'll respond on the first part of the question, and Julie can respond on the second.

I'm looking at the definition of “entity”, which states that it is a “place of business in Canada, does business in Canada or has assets in Canada and that, based on its consolidated financial statements, meets at least two” out of the three criteria—$20 million in assets, $40 million in sales or 250 employees.

So if it's consolidated financial statements, I would interpret that to mean that a company that's doing less than $40 million in Canada, has less than $20 million in assets, or has fewer than 250 employees, but in its consolidated financial statements, as it presented them to Canada for the purposes of taxation or whatever, would be caught up in that definition.

[Julie Miville-Dechêne]

In terms of lists, it's a good idea for small businesses. That said, in all the discussions I've had with medium and large businesses, they asked that the government give them the tools they need to apply the provisions of Bill S‑211. That was said very clearly in the Senate by the Canadian Chamber of Commerce.

In this respect, I must say that the United States is way ahead. They publish lists of places, businesses and products, such as tomatoes and cotton, that are likely to be linked to forced labour. They also update those lists. In fact, it's one thing to publish them, but they also need to be updated.

We should be doing the same. Should it be included in the law or in the regulations? One thing that's clear is that the government cannot ask businesses, some smaller than others, to do all that without some guidance.

[Garnett Genuis, Conservative, Sherwood Park—Fort Saskatchewan, AB]

I would just note that if the U.S. has put forward a list, we could probably.... It makes it a lot easier for us to do our list based on that—

[The Chair, Liberal, Ali Ehsassi]

Mr. Genuis, I'm afraid you're well over six minutes.

We will now go to Mr. Sarai.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Thank you, Chair.

I want to thank my colleague MP McKay and also Senator Miville-Dechêne for their long and relentless advocacy on this important work.

We heard Minister O'Regan say in the House before the summer recess that the government would support this bill and would work with all parliamentarians on any amendments that would strengthen it, as well as bring forward further legislation. That was good to hear.

Mr. McKay, forced labour is a complex issue that spans many jurisdictions, borders and supply chains. Could you maybe elaborate on this complexity and on the work you've both done on this issue?

[John McKay, Liberal, Scarborough—Guildwood, ON]

You're right to point out the complexity. Sometimes the length of the supply chain is quite extensive. It does go into, as I said earlier, opaque jurisdictions. So what will constitute that....

I suppose this is one of the reasons I want to stay with these larger companies, because the smaller companies I think will be really challenged to trace their stuff. On the other hand, the irony is that if the smaller company is selling a product to a larger company, the larger company, in trying to comply with this legislation, is going to ask the smaller company if they've done whatever—or however the regs work out. There would be the ironic effect that the small companies selling to larger companies will be dragged into the legislation.

That might militate against the complexity of the legislation, because the smaller companies may have much closer connections to the actual creation of the product. It also may help get you past some of the opaqueness of the jurisdictions that are inevitably sourced.

[Julie Miville-Dechêne]

I would add that, the farther a company is from the supply chain, the greater the risk of finding forced labour. Forced labour is often most common in relation to agriculture and raw materials, so it's even harder to find for companies that are far from that.

However, I believe that one thing must be kept in mind: this is a bill aiming for transparency, and we don't claim to think that it could instantly apply to all companies and resolve things in the first year. It's a bill that requires that companies begin a process. They have no obligation to show results now, but they have a duty of take action, meaning they must make efforts but, in particular, they must report on those efforts. In doing so, we take into consideration that it's often very hard to dig into those supply chains.

[Randeep Sarai, Liberal, Surrey Centre, BC]

Is there a will...or is there a passage in this that will help work with others, whether it be our free trade partners like the United States or the European Union, or CPTPP in Southeast Asia and others, to help facilitate that? Obviously, a supplier or importer here in Canada might not be able to check along, but if there are rules and regulations in the region of where the source is coming from, they can rely on that, because they have better ways to assess those.

Is there any collaboration with our European friends or Americans or maybe others in Southeast Asia in order to implement it better?

[John McKay, Liberal, Scarborough—Guildwood, ON]

I would say that we—we being Canada—are the hole in the building blocks here. Certainly, Great Britain has had legislation like this for quite a number of years now. The Americans are quite aggressive. The Aussies have passed significant legislation that is helpful. They will be helping us as opposed to us helping them.

I think, though, over time, particularly if this passes and particularly if the enforcement issues at the borders start to ramp up, we will catch up. Right now, as the senator has rightly said, we're the laggards.

[Randeep Sarai, Liberal, Surrey Centre, BC]

What I'm trying to see is this. If a source company and their product is approved by Australia or the U.K., I'm wondering if that's something a Canadian importer would be able to rely on and say they've checked: This source is relied upon. The European Union has approved this source, the United States has or Australia has. We can then use that same verification in order to import it here.

Is that a possibility, that it could be in collaboration with those?

[John McKay, Liberal, Scarborough—Guildwood, ON]

It's more than a possibility that there will be a lot of interchange in terms of reliability. There are companies out there right now, apparently, who will give you a risk assessment, if you will, as to the risk of slavery in that particular supply chain. I think it's going to happen.

[The Chair, Liberal, Ali Ehsassi]

Thank you.

We will now go to Mr. Bergeron.

[Stéphane Bergeron, Bloc, Montarville, QC]

Thank you, Mr. Chair.

I'd like to welcome my colleagues, Mr. McKay and Ms. Miville‑Dechêne, and note their work. I think it was high time to legislate on this matter.

We were very pleased to see the measure put in place by the federal government to prohibit any goods manufactured using forced labour by the Uighurs, in the People's Republic of China, from entering Canada. The problem is that the ability to conduct checks is very limited in that measure. It must be hoped that, with Bill S‑211 and, eventually, the other bill requested by the National Council of Canadian Muslims, controls can be tightened at the border to be able to truly conduct checks.

I have a brief question. What prevents companies from simply deciding to relocate their activities to avoid being subject to this legislation?

[Julie Miville-Dechêne]

Thank you for your question, Mr. Bergeron.

Nothing prevents companies from relocating, but, at this time, there's already a movement in many countries to adopt laws to prevent forced child labour in supply chains. Those companies obviously have no interest in moving to the United States, since similar laws in the U.S. are even stricter. I believe it's a global movement.

I'd like to add that it's also a matter of reputation, an aspect that we didn't raise in our opening remarks. A transparency bill is very dependent on companies not wanting to have meaningless reports that say nothing and therefore clearly show that they're making no efforts. There are now investors and consumers who look at those things. In surveys, most consumers say they don't want products manufactured by children.

Since there's already a series of reforms and societal movements at this time, I don't think this type of transparency bill would lead companies to relocate.