Foreign Affairs Committee on Nov. 21st, 2022

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Yes. Thank you.

One thing I'm interested in is how we can make this legislation stronger and make sure that it is not just giving businesses or companies an opportunity to report on forced labour within their supply chains but actually making them responsible for ensuring that it is not there. What countries have been doing that best? Which countries do you think have been models for us? We have heard that other countries have moved faster. Is it the French? Is it the Germans?

I'm wondering who has moved furthest, because that's where I would like us to go.

[Stephen Brown]

Different countries have actually taken different models. Some countries in Europe, for example, have placed very onerous responsibilities on companies, but they have a cap at very large companies.

I think the legislation in front of us today takes an interesting approach in that it covers a broad range of companies, including mid-sized companies. However, if we look at the results and at our neighbours to the south, the results speak for themselves. They've seized 1,300 shipments and they're continuing to do more.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Thank you.

I'm not sure if Mr. Thomas is able to finish his thoughts. We were having some struggles with his mike. If he can, though, I would like him to comment.

[The Chair, Liberal, Ali Ehsassi]

Yes. I can assure you that he is now properly connected. He should be audible.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Perhaps I could give him the last little bit of time.

[Kevin Thomas]

Can I proceed now?

[The Chair, Liberal, Ali Ehsassi]

Yes. Please do.

[Kevin Thomas]

Great.

Before I speak to the contents of the current bill, maybe I can provide a brief example to demonstrate the challenge that Ms. McPherson just mentioned of only requiring modern slavery reporting versus requiring an obligation to perform human rights due diligence.

Last year, on behalf of its shareholders, we began engaging a Canadian-headquartered multinational renewable energy company after it was reliably identified as having supply chain links to forced labour in the Xinjiang region of China. Actually, shipments of its product were even reportedly detained by U.S. customs officials, as we were just talking about, on suspicion of these links. We had a clear case of very material risk to the company and its investors.

Despite those credible allegations, the company said, “There's no forced labour in our supply chain. We don't believe there's forced labour in our industry.” In fact, the company, and many of the investors we reached out to, said this company has a modern slavery statement. It's right there on its website, and it says everything is fine. They have zero tolerance for forced labour anywhere in their supply chain.

But this statement didn't include any detailed information that would help the investors know whether the company is taking meaningful and effective action to implement these commitments. There's no indication of how they identify human rights impacts, which stakeholders are consulted, how many instances were investigated and acted on and what corrective actions the company has taken.

In fact, our review, when we looked closer, found that the company didn't have any system for investigating or addressing human rights impacts in the Xinjiang region, and for good reason: Investigators can't even get into that region to check allegations of human rights abuses. When we continued to try to push the company on this and develop a due diligence system, they said, “Just trust us.”

I tell you that story because it's indicative of the primary challenges we have as pension plans, banks, and asset management firms here in Canada when we're trying to meet our fiduciary duties, to assess risk. We can't properly assess it without this kind of—

[The Chair, Liberal, Ali Ehsassi]

I'm sorry, but we are considerably over the time slot that was provided.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

Mr. Chair, I'm wondering if we could let him finish. We did invite him to come and I'm prepared to give him my time, but I—

[The Chair, Liberal, Ali Ehsassi]

That's fair enough, but we're also eating into every other member's time as well.

[Heather McPherson, NDP, Edmonton Strathcona, AB]

We would have normally given him the time to speak, though, I think.

[The Chair, Liberal, Ali Ehsassi]

I'm terribly sorry for this technical difficulty, Mr. Thomas.

We have received your statement. We will ensure that it's translated and sent to all of the members. If there's anything additional that you would like to explain to members of the committee, we would welcome that as well.

Thank you.

[Kevin Thomas]

I appreciate that, Mr. Chair. Thank you.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Thomas.

We will now go to the second round, and each member has three minutes.

Mr. Epp, the floor is yours.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you, Mr. Chair, and thank you to the witnesses.

I'm going to begin with a statement to Mr. Dumas.

I appreciated your comments clarifying child labour. With my own background, growing up on a family farm, my parents did not interfere with my education, and the four daughters on our own farm were raised with love and an encouragement to work. So I understand those nuances.

I have not brought tomatoes to this committee yet, but I will today, because that is my background.

I'd like to go to Mr. Brown, please.

The world produces about 37.2 million tonnes of processed tomato products. China did 6.2 million tonnes last year, of which five million came from Xinjiang province. There are certainly allegations of forced labour from the Uighur population, particularly in the tomato industry. I'm wondering if you have any comments or any specific knowledge regarding exactly the extent of that.

I grew up hand-picking tomatoes and my kids grew up on a machine. My understanding is that most of the production is hand-harvested and forced in China.

Do you have any comments specifically on the tomato industry?

[Stephen Brown]

Thank you very much for your question.

As many people have heard, we hear anecdotal evidence of some of the practice of slavery happening right now in East Turkestan.

In terms of specific data, I don't have any to provide to you right now, but I can follow up with your office afterwards.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

Regarding the exemption to import prohibition from companies, how would you work with that if COFCO, which happens to be one of the main tomato purchasers in Xinjiang, is a state-owned enterprise?

[Stephen Brown]

That's an excellent question. It comes back to the main request that we have for amending the bill. I think anything coming out of East Turkestan, any product that's being produced, any business having operations there, should have a responsibility to prove that their products do not contain forced labour.

Right now the situation in East Turkestan is such that it only makes sense to assume that everything being produced there is a result of forced labour, and therefore it shouldn't be on the shelves of Canadian grocery stores.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

In my remaining time, I'd like to go Mr. Thomas, please.

Can you talk a little bit more about the impact of threshold for reporting in this legislation, and what are the opportunities to get at the intent of this legislation with companies? I'm thinking about small tomato importers in Canada that might not meet that threshold.

[Kevin Thomas]

The thresholds are important, because we want to make sure that companies have the capacity to institute due diligence systems. There's no point in asking your corner store to develop that kind of thing just because it's incorporated under the CBCA, so I think those thresholds are appropriate.

We've consulted with a lot of businesses in the retail sector, particularly around the thresholds, and we found that they're more or less in the right place. We're not really concerned about that as a problem in the legislation.

We are concerned that there's a requirement that there be a due diligence system, and that's the part that we haven't seen in the legislation. So far, there is a reporting requirement, but the answer could simply be no. The key here is making sure that there's a positive obligation to due diligence.

[Dave Epp, Conservative, Chatham-Kent—Leamington, ON]

Thank you.

Thank you, Mr. Chair.

[The Chair, Liberal, Ali Ehsassi]

Thank you, Mr. Epp.

We now go to Mr. Sheehan for three minutes.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much, Mr. Chair.

Thank you to all the witnesses today for their excellent testimony and also their advocacy on this important subject, and thanks to the committee for undertaking this important work.

Since I only have three minutes, I'm going to ask Martin Dumas a question.

The bill before us sets out a transparency framework for businesses and government institutions but has not set out a due diligence framework. It's a two-part question.

If Canada were to adopt this transparency-based approach, how would it compare to other international jurisdictions? Also, in your opinion, is there any way that we could include not only a general set of transparency obligations that cover entities, but also due diligence obligations for a subset of the universe of covered entities under the bill?

[Martin Dumas]

I'm not sure how much better we'll do in terms of transparency than other countries. However, I do know that even if we want to achieve a very high level of transparency, it will be very difficult in practice to get assurance that the monitoring will actually be done on the ground.

As I was saying earlier, if we want to ensure that children aren't involved in the manufacture of particular products, we need to gain the trust of the local community to prove it. Personally, I've been there, and that's how it works. Otherwise, it's very easy to hide child labour. To gain that trust, we have to target the worst forms of child labour. Otherwise, we won't have access to barriers that are sometimes even guarded by armed men. So to overcome the difficulty of obtaining this evidence, there has to be a local consensus on what forms of child labour are unacceptable.

If we're looking at a definition of child labour that is too broad, we're demonstrating a certain western paternalism. That's what should be avoided. We must avoid having a form of transparency that would be overly paternalistic. I would caution the committee on that.

For the more administrative aspects, the same reasoning must be followed. If we want to improve the effectiveness of our monitoring and transparency, we must first ensure that the forms of child labour we are targeting are the worst. That is how we will improve our model in all areas, both administratively and in terms of effective monitoring afterwards.

Otherwise, I think it's a bit of a smoke and mirrors game.