Subcommittee on International Human Rights Committee on Oct. 3rd, 2017

[Kathryn Dovey]

I'm happy to clarify. Engaging in the process that's offered by NCPs is voluntary. A case is brought before a particular NCP in one of the 48 countries by perhaps an NGO or a trade union. Then that NCP will contact the company that's concerned, explain what the case is about, and invite them to engage in the exercise, if the NCP has accepted the case. If all goes well and both sides agree, they sit down, sometimes with professional mediators, etc.

You mentioned sanctions, in terms of not participating. That's actually quite unique to Canada. It's a great example of beginning to see the connections between this mechanism and other areas of what we term “economic diplomacy”. That has been used within these cases.

What is also interesting is that we do see some coordination within governments with regard to transferring reports to export credit agencies and other parts of government that might be interested in these cases. However, ultimately, it is a voluntary process for both sides to sit down, and hopefully, reach resolution of the issues involved.

[Tyler Gillard]

If I may add, in respect to the unique Canadian way, with the national contact point, of attaching some sort of sanction for failure to come to the table, that has actually been used successfully with regard to a Chinese state-owned gold mining company registered on the Toronto Stock Exchange but with operations in the autonomous region of Tibet.

As a result of that company's failure to come to the table, the Canadian government stated unequivocally that they would no longer be providing any type of economic diplomatic support, or in this case, also export credit financing. There are a number of levers governments can take to get companies to the table, and Canada is really at the forefront of developing and using those levers.

[Cheryl Hardcastle, NDP, Windsor—Tecumseh, ON]

Mr. Pesce, you've heard those responses. I would submit to you that one reason that Canada is so unique in this is this process of dialogue facilitation. One of the reasons Canada is so unique is that, as you have pointed out, we have a disconnect, so to speak, in our government involvement, and we have not passed laws. That makes us unique. Other countries, like France and Norway, have moved forward with a structure that is a little different. I think that was some of what you were alluding to in your answer to my colleague's question about your visit to Canada, seeing that there is a bit of a disconnect with government officials.

I would like to hear from you a little more about how we can be moving forward, emulating and using some of the examples some of these other countries set. Also, seeing all of this, what do you think is the government's role? I'm hearing so much onus put on our Canadian mining companies and other aspects of industry. The onus is being put on them and it's no surprise that not only do we have a unique situation but there's a disconnect because each industry, each sector, and each personality has its own synergy. I see that as problematic, so I'd like to hear a little more from you on that.

[Dante Pesce]

Our standard recommendation for governments is to set clear expectations regarding the behaviour of companies in house, in Canada, and abroad. The opportunity for Canada is to develop a national action plan on business and human rights that you don't have right now. That action plan gives you the opportunity to conduct a good baseline analysis and to understand where the gaps regarding the role of the state are, where the gaps regarding the role of companies are, and where the gaps regarding access to justice or remedy are.

That is a very good opportunity, because each country will have.... What we recommend is not one-size-fits-all but a smart mix of regulation and incentives that fits the dual purpose of protecting both human rights and investments. If a company doesn't act with due diligence, it will run immediately into problems, and that is going to not only hurt people and cause damage or harm, but also damage the overall reputation of an industry and the reputation and brand of a country. That is the main opportunity that you have right now.

The rationale of inviting our working group to conduct an assessment of your own country and provide recommendations is to create opportunities to take those recommendations and to initiate a process to identify where there are gaps and opportunities to close loopholes, and to provide or develop a more coherent implementation of what you already have in place.

You have some mechanisms: a human rights commission, tribunals, the national contact point, the CSR counsellor, and access to courts. You have a lot. Your industry has some recommendations regarding CSR but is not clear enough regarding human rights based on due diligence. As I said at the very beginning of the hearing, you have a lot in place already. You're relatively well advanced, and the problem I see is that you're not taking full advantage of the good things that you have already in place. They have not been well enough implemented, due to lack of coherence and of course gaps in terms of understanding of some concepts and approaches.

Listening and learning from peers is something that I will also recommend, because many OECD countries are making quite good progress. Everyone is learning by doing. There is no perfect example. There are some more advanced in one aspect, and others more advanced in other aspects. For example, your NCP mechanism is best in class, so if you combine your best-in-class NCP with alignment with your main industry associations and push them to be best in class, then you will have a really powerful joint initiative of the states or governments, the companies, the private sector, and state-owned enterprises. It's a big push by Canada, which is possible but is not the case right now.

[The Chair, Liberal, Michael Levitt]

Thank you, Mr. Pesce.

We're now going to move to Mr. Fragiskatos.

[Peter Fragiskatos, Liberal, London North Centre, ON]

That's correct. I'm going to be splitting my time with Mr. Tabbara. Thank you all for participating today.

I have a question for Ms. Dovey and Mr. Gillard. Sometimes in Canada, particularly—I have to be frank with you—when we hear from colleagues in the NDP and their arguments around this issue, it's almost as if they want extraction to cease so that the Canadian private sector doesn't partake at all.

I'm looking at an analysis put together by a trade analyst in the OECD, Ms. Jane Korinek, who makes the case that in fact, extraction can help to produce meaningful economic development. The OECD has made this argument before, but I want you to put it on the record that extraction actually has a correlation to meaningful economic development in the countries where it takes place, if carried out responsibly.

[Tyler Gillard]

Yes, of course, there's no doubt that the extraction and trade of natural resources can be a great source of wealth and development, revenues for government—much-needed revenues in many of these countries—and of course, a source of jobs. The artisanal and small-scale mining sector, for example, is a job provider—just in central Africa alone—to around 15 million people directly. Indirectly, almost 200 million people are relying on the sector.

It's also a big opportunity to transfer skills to developing countries, as well as infrastructure. Much of the infrastructure that has been built in these areas, including energy and roads, is a direct result of the extraction and trade of mineral resources.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you, Mr. Gillard. I'm sorry. I don't mean to cut you off. It's just a matter of timing, but thank you very much.

I have a final question before I turn it over to my colleague, and I think you're touching on it already. Can you explore the connection between responsible extraction and profitability? I think there's a sense sometimes that profits will be negatively impacted if there are expectations that governments might have when it comes to responsible extraction. In fact, my hunch is that responsible extraction actually can help increase profitability.

[Tyler Gillard]

Was that directed to the OECD?

[Peter Fragiskatos, Liberal, London North Centre, ON]

It's for whoever wants to take it.

[Tyler Gillard]

I'm happy to. We have looked into some of this already. I don't have direct evidence to quote to you, but I'm happy to point you in the right direction.

Indeed, doing things responsibly is good for business. That is clearly our finding. It will help to protect the security of mining operations. Lack of effective community stakeholder engagement can jeopardize and create operational risk for companies, and project shutdowns. From a supply chain perspective, issues around criminal organizations could create legal liabilities as well as affect strategic access. Indeed, it is profitable in the long term.

Of course, it is worth saying that in the short term, cutting corners can be good for business. As with cutting labour laws and evading taxes, you will see an impact on the bottom line, but in the long term it is not good for business.

[Peter Fragiskatos, Liberal, London North Centre, ON]

Thank you very much.

[The Chair, Liberal, Michael Levitt]

Mr. Tabbara.

[Marwan Tabbara, Liberal, Kitchener South—Hespeler, ON]

Thank you. I'll be brief.

My question is directed to Mr. Pesce.

I want to mention that the CSR counsellor has identified the particular difficulty in monitoring some of the compliance of junior mining companies. Can you briefly state to the committee some of the issues surrounding junior mining companies?

[Dante Pesce]

I have to say that I'm not an expert on junior mining companies. However, in general, when companies approach a country and go into the field, they have to rely on information provided by the government. The information in general is weak. They assume that the data they get and the conditions for exploring are basically factual and real.

In reality, when companies approach any region, in my Latin American region, they're basically on their own. The absence of the state is huge. The capacity of the government to provide support is quite limited, and there is a huge mistrust among the local communities regarding big-scale projects.

Basically, when the junior mining companies show up in a place, they're very much on their own. They are somehow forced to start from scratch, finding out who to engage with and how. Basically, they cannot rely on the local authorities, who are perceived to be highly corrupt. The national authorities are perceived to be not competent enough to provide adequate support. That's what I can say on that particular point.

[The Chair, Liberal, Michael Levitt]

Thank you very much.

We're getting tight for time so we're going to move to MP Anderson, please.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

Thank you, Mr. Chair, and that you to our guests for being here today.

One of the things we've been concerned about here is trying to find that balance between the rule of law, human rights, and natural resource development. We've been referred a few times to an Osgoode Hall law school report. I don't know if you're familiar with it, and you don't need to be right now. However, it highlights the violence and conflict in Latin America particularly, and it breaks down the way the violence occurs. It's no surprise, I guess, that local activists are the largest group impacted by the violence.

As I was looking through this, I was surprised to see that police and mine worker numbers were very significant in terms of the violent actions against them. Does this conflict typically have one side or two? Can you talk to the two sides of the conflict coin? If you don't mind being short in your answers, I have a couple of other questions as well. It doesn't matter to me who answers.

Go ahead.

[Dante Pesce]

I have actually engaged with relatives of victims of violence. What happens on the ground is that as you move away from the capital of the given countries, you run into territories where there has been a lot of violence or open war, as in the case of Brazil, or an overall lack of state presence. The state has not been there. Police have not been there. The army has not been there except for repression.

The standard practice is that the police show up when the companies need them to show up, but not when the regular citizens need the state to be there for them.

Basically, the affected communities and the indigenous people consider the police or the army to be subcontractors of the large operations. They don't trust anyone with a uniform to be on their side. It's the same thing with the criminalization of protests. The standard practice is to go very actively after the local human rights leaders and defenders, also union leaders, in a very aggressive way, not all the time, not at all locations, but it happens so often that the general perception is that the judiciary is also co-opted and captured by the commercial or economic interests.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

May I have the OECD answer that as well. We have limited time.

[Tyler Gillard]

Sure.

Again, we haven't carried out any studies on this specifically. All I can say is that obviously there are always two sides to every issue. These are not easy environments to operate in, as Mr. Pesce has alluded to.

Also, community groups are not homogenous by any means and their views will differ radically. Therefore, to achieve any kind of support at a community level doesn't necessarily mean it's going to be possible to get everybody to sign on. Plus I think, of course, that freedom of association and collective bargaining rights always need to be respected.

Nonetheless there is a huge degree of criminality involved in many of these areas. We have seen, for example, in one of our reports, criminal organizations pressuring certain Afro-Colombian and indigenous groups to sign on to certain things or to join certain protests. There are a lot of reasons and it's a very complex situation indeed.

[David Anderson, Conservative, Cypress Hills—Grasslands, SK]

I think I'm running out of time but I want to touch on one thing.

In September 2015, the Liberal Party wrote a letter to the Canadian Network on Corporate Accountability that said, “A Liberal government will set up an independent ombudsman office to advice Canadian companies, consider complaints made against them and investigate those complaints where it is deemed warranted”.

Do you think if they were to keep that promise, it would be a useful thing in terms of corporate social responsibility, or have we gone far enough and that's really not necessary? That's primarily to Mr. Pesce.

[Dante Pesce]

I think, as you're saying, there's good progress but it has to be implemented. What we found on the ground, not only regarding Canada but many other countries, is that at the operational level companies have weak grievance mechanisms. Very often they are not in the local language and not following principle 31 on the efficiency or the quality of the grievance mechanism.

Then, when you have platforms at the Canadian level or any other country level they remain mostly unknown. Just as an example, yesterday I was conducting training for 75 Latin American union leaders. None of them had ever presented anything in their own company and 50% of them work for subsidiaries of multinationals with different origins. They had really no idea of what the best mechanisms were to get their voices heard, not even in their own company at the headquarter level. Those are unionized workers from strong unions. If you go down the supply chain and you go farther away from the large capitals or the larger cities, that diffuses even more.

Anything that can actually strengthen the capacity of human rights defenders, including union leaders, to basically use the mechanisms that are in place and that exist in their favour...but if they don't know how to use them and they don't even know that they exist, of course, they don't use them and the mechanism fails.

The perception that mechanisms are bad because they don't produce the outcome expected.... Well, it's no wonder why they are under scrutiny. If you don't make them accessible and fit for the purpose of accessing a remedy, of course, they remain unused if they are basically unknown.

[The Chair, Liberal, Michael Levitt]

Thank you very much.

With that I'm going to thank all three of our witnesses for your testimony before our subcommittee today. This was very useful and we appreciate your teleconferencing in from all points around the world. Thank you very much.

With that we shall go in camera, please.

[Proceedings continue in camera]