Subcommittee on International Human Rights Committee on April 20th, 2021

[Mark Agnew, Vice-President, Policy and International, Canadian Chamber of Commerce]

Mr. Chair, thank you for the opportunity to appear at this committee.

My name is Mark Agnew. I'm the vice-president of policy and international at the Canadian Chamber of Commerce.

As many of you will know from the local chambers in your communities, our organization represents companies in all sectors, small, medium and large.

Although not bringing the expertise that my colleagues from the mining sector have, the Canadian chamber has been engaged since the creation of the CORE was announced in early 2018. Our members have sought to work as constructively and collaboratively as possible with the CORE, as well as its predecessor organization, the CSR counsellor's office, on matters related to RBC, responsible business conduct, policy.

As you'll hear in more detail from my colleagues, the Canadian business community supports and values protecting human rights abroad. We also see an opportunity to make RBC measures a brand differentiator for Canada. Investors are also demanding accountability, and we are seeing that under the proliferation of ESG and CSR frameworks more generally.

The chamber and our members have been engaged in the development of the office, as I mentioned a moment ago, and we support the September 2019 order in council for a few different reasons, which I'll mention here briefly.

First, even after two years of start-up, the CORE is still very much in its infancy, in terms of building the structures, the processes and getting staffed up with folks settled in their new roles. Granting quasi-judicial powers to compel witnesses and evidence would represent, in our view, a quantum leap that would in effect require a completely new organization.

Second, we cannot underestimate the extraterritoriality issues at play here. To ensure that investigations could happen fairly, there would need to be full access to the local communities, foreign governments and contractors abroad, which in some jurisdictions particularly would be a very difficult proposition.

Third, the office already has sticks at its disposal. Canadian businesses greatly value the work of Global Affairs Canada and the trade commissioner service. Certainly losing that support due to a CORE recommendation to the minister would cause problems for the companies that rely on those services to support their market activities. This should not be underestimated in terms of the value that it provides to companies.

As a footnote, I was reminded, in speaking to my colleague before, that it was actually the Mining Association that advocated for these punitive measures as part of the 2014 CSR strategy.

Finally, the chamber believes that expanding the office to compel witnesses would actually neuter its ability to collaborate with industry vis-à-vis the mediation services or providing informal advice, as mentioned in the current OIC.

I would like to bridge over for a moment to the process to develop a responsible business conduct strategy that's been going on with Global Affairs Canada. Given the friction that we've admittedly seen over the last three years in relation to the CORE, I think the strategy has a chance to help clear the air and set down some markers that will allow us to look forward, instead of relitigating the same issues ad nauseam that we've seen since 2018.

One element should be to put some markers around the various RBC frameworks, and I would add ESG and CSR frameworks, in existence, and package them together in a more coherent way for companies from a Government of Canada perspective. There are many moving parts to this, whether it's the CORE, industry-developed standards, or changes that were brought into effect under the CUSMA around the implication of goods made with forced labour. It can be difficult for companies to navigate this, particularly small and medium-sized enterprises.

The chamber also recognizes the government's intent to eventually apply the CORE to all sectors. However, not all sectors have been in the room, nor are they necessarily aware of the plethora of frameworks that are out there. We encourage the government to use the RBC strategy as a chance to consult and engage with sectors that are not currently under the CORE to understand what obligations would be applied to them in the future.

Last, I would like to underscore the importance of ongoing industry and government collaboration, given the relationship that industry impacts abroad have on the Government of Canada's foreign policy, and vice versa, the foreign policy's impact on the ability for Canadian companies to operate abroad. From our perspective, it's critical that the RBC strategy has a collaboration and support pillar to ensure that there is a strong Canadian brand overseas.

Thank you very much for your time. I look forward to your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Agnew.

We'll now move to Ms. McDonald and Mr. Killeen.

[Lisa McDonald, Executive Director, Prospectors and Developers Association of Canada]

Thank you, Mr. Chair and committee members, for the opportunity to speak today.

My colleague, Jeff Killeen, is with me. He is the director of policy and programs at PDAC.

With over 7,200 members around the world, PDAC is the leading voice of the mineral exploration and development community and our work centres on supporting a creative, responsible mineral industry.

PDAC and the mineral industry have been a continuous constructive partner in the development of the CORE since the initiative was first announced in 2018. Through numerous submissions and engagements, PDAC has remained confident that the CORE can play a vital role in promoting safe and responsible business practices and provide a transparent process for Canadian companies that operate abroad.

Exploration is the vital first stage of the mineral industry ecosystem where prospectors and small exploration companies predominate in the search for economically viable deposits that have the potential to become a producing mine.

Companies involved in mineral exploration, both domestically and abroad, understand they are guests in the communities in which they operate and business must be conducted in a responsible, respectful manner.

Canada's excellence in mineral exploration extends beyond scientific and financial expertise and includes global leadership in responsible, social, and safety practices. In 2009 PDAC developed e3 plus, a framework for responsible exploration, as a resource to help exploration companies improve their social, environmental and health and safety performance, which was the first comprehensive guidance on responsible exploration ever produced.

Together with the Mining Association of Canada's towards sustainable mining initiative, our industry has made tremendous strides in the area of responsible business conduct over the last decade.

Successful development of a prospective mineral project relies explicitly on obtaining a social licence to operate. In this context, Canadian mineral exploration and mining companies continue to evolve best practices with respect to engagement and disclosure in step with rapid growth in public demand for responsible investment funds. This evolution is necessary for Canadian companies to remain competitive as ESG, environmental, social and governance, performance becomes increasingly important to investors.

The COVID-19 pandemic has reminded us of the resilience of the mineral industry as many companies quickly adapted to find ways to continue operating safely. Direct industry support, such as personal protective equipment donations, monetary contributions and other goods and services, exceeded $150 million through the first six months of 2020.

The mineral industry will continue to play a substantial international role as the world heals from the effects of COVID-19. Roughly half of all Canadian exploration and mining companies operated abroad in 2019 with foreign assets in over 96 countries valued at over $178 billion. This represents more than two-thirds of the total value of Canadian mining assets. Moreover, Canadian-headquartered companies account for a material portion of exploration activity in almost every country and collectively represent approximately 30% of global exploration spending.

PDAC is very appreciative of the level of engagement and consultation provided by the CORE in working to define such things as the operating procedures and related frameworks. Given the fulsome engagement process conducted to date, and in light of the $16 million in funding announced in yesterday's budget to support implementation of the CORE's mandate, PDAC recommends that the CORE should move forward with the currently defined collaborative approach before considering any expansion of its mandate. It is only through this practice that the CORE can assess its efficacy.

Respecting human rights must be a top priority for all Canadian companies operating abroad, whether based in the resource extraction sector or otherwise.

We look forward to ongoing collaboration with the CORE to ensure that Canada's mining and exploration sector can continue to be a global leader in sustainable and responsible practices.

Thank you again for your time and for considering my comments. We welcome any questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Ms. McDonald.

Now we'll hear from Ms. Dovgal.

[Margareta Dovgal, Task Force For Real Jobs, Real Recovery]

Hello. Thank you for having me here today.

My name is Margareta Dovgal. I'm the director of research at Resource Works, which is a B.C.-based non-profit advocating for responsible natural resource development. My background is in energy, climate and innovation policy. I work to communicate the facts about Canadian resource industries to decision-makers and the public.

Last year Resource Works convened a national coalition, the Task Force for Real Jobs, Real Recovery, which brought together 38 organizations spanning the country, including all resource sectors, labour and many indigenous organizations. We set out to determine how we can leverage Canada's natural resource industries for economic recovery from COVID-19 and how we can maintain and create jobs for Canadians.

We found that the right deployment of natural resource industries can help supercharge our economy. Unsurprisingly, Canada's role in the global mining supply chain, including in mining exploration and supplying to projects around the world, is an integral part of our recovery opportunity. We released our recommendations aimed at the federal government in August 2020 as a report, “Securing Canada's Economic Future”, which can be found on our website at realrecovery.ca.

Several themes relevant to your work here emerged through this research. For context, I was the report's editor and lead author.

First, we found that Canada's natural resource industries lead the world on sustainability and corporate social responsibility, CSR. They are optimally positioned to meet the evolving demands of global investors. With respect to this subcommittee's study into the CORE, it's important to note that our resource industries have actually developed standards and practices that have been adopted internationally. This is true of forest management, chemistry, oil and gas and, of course, mining, with Canadian companies leading the global implementation of TSM, towards sustainable mining.

Moreover, our government's work, such as on the CSR checklist for Canadian mining companies operating abroad, is regarded very favourably by host governments in Asia and in Central and South America. As Canada's mining sector has long said, the pathway to better social and environmental performance is through collaboration and co-operation with international partners, not extraterritorial measures or an overly prescriptive approach that reduces host states' autonomy. Our own domestic regulatory experience has actually shown that reducing adversarial processes leads to better outcomes.

We've also found that resource companies are often subject to much-heightened scrutiny. The fact is that modern life is resource intensive. We must carefully balance producing what we need, at the scale we need, with protecting the environment, both locally and globally. There is an opportunity before us now to meet rapidly increasing demand for metals and minerals as the world electrifies, while mitigating environmental impacts. This requires an honest recognition of what it takes to live in an industrialized society with a high quality of life enjoyed by all.

It occurs to me that we've seen something similar play out on climate activism. Canada is a jurisdiction where the screws of public opinion can get tightened easily. This has played out in national debates about energy export infrastructure, which occasionally failed to acknowledge that Canada is one of the world's most ethical and sustainable major producers of energy, which the world continues to desperately need. The vibrant debate we have about resource development in this country is not a reflection of inferior performance; it actually results in the most innovative and responsible practices, which our companies take abroad.

Canada is a solutions provider for better international performance in resource development. I would credit the fact that this conversation here is occurring at all to an inclusive democratic stage for debate, in contrast to many of our multinational mining competitors. Take artisanal cobalt mining in Congo, where Chinese multinationals dominate the space and child labour and extremely dangerous labour practices are common under their purview. In contrast, high labour standards are a leading reason that Canadians are welcomed by host countries.

As global demand for critical minerals grows, Canadian companies have an opportunity to provide sustainably sourced materials for electric vehicles, batteries, wind turbines and solar panels. This direction is recognized in the recent Canada-U.S. joint action plan on critical minerals.

Finally, Canada's role as a major resource economy provides us with a foundation for resource prosperity. That's great for paying the bills, such as for national child care or the wage subsidy. Our resource industries also establish us as a global supplier of choice not only for resource products, but also for resource equipment, technology and services. Canadian innovation and expertise in emissions reduction, remediation and manufacturing is needed around the world. That is what we bring when our companies invest abroad.

Any measures that this committee recommends should take into account the impacts on Canadian mining investment abroad. Canada's reputation as a sustainable producer gives us a competitive advantage. These investment opportunities represent an essential opportunity for decarbonization through critical minerals, Canada's strategic and geopolitical partnerships and our own recovery from the COVID-19 pandemic.

Thank you.

[The Chair, Liberal, Peter Fonseca]

You're right on time. Thank you, Ms. Dovgal.

Now we're going to move to our final witness statement, which will be from the Mining Association of Canada. We have Mr. Gratton and Mr. Chalmers. Then we'll move to questions from members.

Members, we will only have the one round of questions because seven minutes for each of the parties will take up all of our time. If you are thinking about sharing any of your questions because the other members may not be able to get in, you may want to do that amongst yourselves.

Here we go.

[Pierre Gratton, President and Chief Executive Officer, Mining Association of Canada]

Thank you.

Canadian mining has a significant international presence, as Lisa just mentioned, with 650 companies in almost 100 countries. However, we are no longer the world's top mining country. Indeed, Australia's two biggest companies exceed the net asset value of the entire Canadian industry, while China's control of the production of many mineral commodities is well known.

However, Canada's role as a global leader in sustainable mining and responsible business practices continues to grow. Central to this work is a program that's been mentioned already, our towards sustainable mining initiative, a globally recognized tool for driving responsible behaviour in our sector. Other countries have taken note of our leadership, and this program is now in the process of being implemented in Finland, Norway, Spain, Botswana, Brazil, Argentina, the Philippines and Australia. We spoke to the Colombians just this morning, and they intend to do the same.

Turning now to the CORE, a central focus has been on the CORE's powers, specifically whether the power to compel evidence and testimony would make for a more effective office. We believe that such an approach, while seemingly strong, would more likely lead to undesirable outcomes for all parties. We have based this belief on the experience and advice of professionals who have worked in this field, such as Meg Taylor, former World Bank compliance adviser/ombudsman, or the CAO.

In the first 10-year review report published by the CAO, Ms. Taylor found that every party wanted a quick judgment but would only accept the findings if the CAO said that they were right. When a judgment was made, such as in the case of the Marlin mine in Guatemala, the CAO was drawn into the conflict, losing its status as a neutral party. The end result was that the cycle of conflict continued. Ms. Taylor further found that her mechanism was much more effective if it focused on how to change the dynamics of the conflict rather than imposing judgment.

If one's interest is to reduce conflicts, we believe joint fact-finding and other collaborative approaches will be more effective. We have long supported the use of penalties, such as the withdrawal of trade commissioner support or access to government financial support, should companies not co-operate in these circumstances.

We believe an ombudsperson with the powers to compel would lead all parties to lawyer up and disputes to be more protracted and conflictual. There are also issues of extraterritoriality that have never been honestly aired or considered.

A few years ago, former minister Jim Carr asked Barbara McIsaac to advise on whether the office as currently constituted had the power to compel, and if not, what would be required to provide such powers.

During the last several weeks of this study, the legal advice provided by Ms. McIsaac has been raised several times and has been characterized as strongly supporting the granting of such powers, but this is simply not accurate.

Ms. McIsaac clearly states that whether the CORE should have these powers is a question of policy, while her mandate was to assess whether the powers could be granted and what implications that might have.

Ms. McIsaac also states that she was struck by the fact that there was a “consistent view”—between NGOs and industry—“that the most important consideration should be that, at the end of the day, the process...should result in real change on the ground.... They differed on how that would best be achieved.”

Ms. McIsaac says that without a way to compel, the CORE's effectiveness may be compromised, but goes on to say, “On the other hand a process which includes powers to compel runs the risk of becoming overly confrontational and caught up in procedural wrangling and court challenges.”

Finally, she observes that there is no way to overcome the extraterritorial limitations of these powers. They could not be used to compel evidence and testimony of local communities, independent suppliers and contractors or state actors. The recent recommendation by this committee to increase the powers of the CORE in the context of supply chains into China makes me wonder how the ombudsperson would obtain the evidence of Chinese nationals to determine the existence of forced labour in the manufacturing of garments and appliances by Canadian companies.

The office should be given a chance to demonstrate whether it can be effective. If further changes are to be considered, they should be done via a transparent process that allows all stakeholders to equally express their views, with equal opportunity to consider proposed government policy options, including legal opinions.

Finally, there has been much talk about the sectors the CORE applies to. Global Affairs Canada is establishing a new responsible business conduct strategy that recognizes the need to expand these kinds of mechanisms to all Canadian businesses operating abroad.

The subcommittee's report on the human rights situation of the Uighurs supports this because, of the three sectors under the CORE's mandate—mining, oil and gas, and garments—only Canadian garment companies have a presence in the region. However, other Canadian businesses from sectors outside the CORE are present, such as those that sell household appliances or those in the solar and renewable energy sectors.

Thank you. We look forward to your questions.

[The Chair, Liberal, Peter Fonseca]

Thank you, Mr. Gratton.

We will proceed to questions from the members. We are going to commence with the Liberals.

We have the honourable John McKay for seven minutes.

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

Thank you, Chair, and thank you to all the witnesses this evening.

Let's go to the core issue—pun intended—and the core issue is whether the ombudsperson will have the ability to compel witnesses and documents.

The position of MAC, PDAC and others seems to be that if those powers are not available, somehow or another the investigation will be improved, that the ombudsperson conducting any investigation will somehow or another have a more useful and a more able investigation without these powers. It seems to me that's a logical contradiction. It's also an experiential contradiction, because no court process is effective and no quasi court process is effective unless there lurks in the background the ability to compel documents and compel witnesses to co-operate. It's a little like posting a speed sign on Highway 401 and having no ability to enforce the speed limit.

I'll start with Mr. Gratton, because he and I have been at this for quite a while.

Why is it, therefore, that PDAC and MAC somehow or another believe that the CORE will be more effective in her investigations without these powers than with these powers?

[Pierre Gratton]

Well, John, I've also given you this answer before, but I can do it again. I also gave it in my testimony.

First of all, you describe a court process. We don't see this as a court process.

There are courts, and people have access to courts, and there are rules that courts follow that are more expensive and more protracted, but things like due process are guaranteed in the court process. This is not that. This is something else. This is, as we have understood it to be, a model for mediation, for joint fact-finding and for bringing the parties together to resolve disputes and conflicts. For very serious crimes, that's where the law comes in. This is something different.

That's why, in our minds, if you're trying to reduce conflicts in something that's of a non-criminal nature, you want to try to bring the parties together. You want to try, and you do that through an impartial process that the ombudsperson negotiates. As I said before in my testimony, we're relying on the experience of those who have done this before and who have found that when they went down the road you're proposing, the results weren't what they had hoped them to be. They actually found that they made the conflicts worse, and that the collaborative approach was better.

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

Pierre, with the greatest respect, not all parties are equally willing. In fact, some parties will be quite reluctant to engage in any process, whether it's mediation, conciliation or anything resembling a meeting of minds. However, their willingness to engage might well be enhanced if in fact the CORE, the ombudsperson, had the ability—and that ability was lurking in the background—to say “we can compel both documents and testimony”.

In fact, you have described a variety of situations where the evidence will be extraterritorial. I agree. It will be sometimes less than optimum. I agree. Why would we allow a process to develop that will be necessarily less than optimum in a situation that will always—always—be extraterritorial and be fraught with difficulties and conflicts?

[Pierre Gratton]

Unless I misunderstood you, I think you just supported my position.

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

I don't think that's right. I think you must have misunderstood me.

[Pierre Gratton]

What you're saying is that, if it's extraterritorial, then it's fraught with these types of difficulties, and that's been our point. It's very hard to do a proper assessment using the powers of compelling testimony and witnesses.

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

Why wouldn't you have the ability to compel testimony and witnesses in situations that are fraught with difficulties?

[Pierre Gratton]

Well, you just raised the extraterritorial issue. That's why I'm confused by what you're saying.

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

I get that.

[Pierre Gratton]

If you're trying to uncover what happened in a particular part of the world that is not Canada—say it's the Philippines, say it's Peru or say it's Colombia—and you want to find out what happened and you need to compel the testimony of non-Canadians, I don't think you're going to be able to do that.

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

Well, maybe you won't be able to, but simultaneously—

[Pierre Gratton]

Then you won't get the full story.

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

—you will be able to compel the testimony of others.

Your position is that you would prefer not the full story over a more fulsome story.

[Pierre Gratton]

No, quite the contrary, I think if you take a more collaborative approach, you're more likely to get people to sit down and—

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

That's an argument of faith and hope and, with greatest respect, in these kinds of situations, faith and hope don't go very far.

[Pierre Gratton]

I guess we just have to agree to disagree.

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

It wouldn't be the first time, Pierre. It wouldn't be the first time.