International Trade Committee on Oct. 18th, 2010

[The Chair, Conservative, Lee Richardson]

Ladies and gentlemen, we're about to begin and resume the Standing Committee on International Trade. This is meeting number 28 of this session.

Today we are going to deal with two matters. First of all, we're going to continue our reference for Bill C-8, an act to implement the free trade agreement between Canada and the Kingdom of Jordan.

To that end, we are pleased to have with us witnesses today from the National Labor Committee, from the United Steelworkers, and from the Forest Products Association of Canada. I'm going to start by introducing them. We will have just about an hour for our witnesses and then I believe we're going to go in camera for committee business in about an hour from now.

With that, let me first introduce Charles Kernaghan. Mr. Kernaghan is the executive director of the National Labor Committee. He's joined by Tim Waters. Tim, of course, is the political director of the United Steelworkers. Joining the committee again, we also have with us Andrew Casey, who is the vice-president of public affairs and international trade for the Forest Products Association of Canada.

We're going to ask our witnesses to give us a little perspective on where they're coming from and what their views are on this potential Canada-Jordan free trade agreement, with its accompanying labour agreement and an agricultural agreement as well.

It's the usual format. I'm going to ask Mr. Kernaghan to start. He will be followed by Mr. Waters and then Mr. Casey. They'll give up to 10 minutes each of discussion and then I'll open it to questions.

Without further ado, Mr. Kernaghan, would you begin?

[Charles Kernaghan, Executive Director, National Labor Committee]

Thank you very much for the opportunity to testify.

I'm going to mention our experiences with the U.S.-Jordan free trade agreement. I had never heard of the U.S.-Jordan Free Trade Agreement until mid-2005, when guest workers started calling us from Jordan, begging for help and saying: they are beating us; they've stripped us of our passports; they're raping our women; they're starving us; they're not giving us our wages. It just came out of the blue. It was shocking.

We went to Jordan and investigated. We put out a major report in May of 2006. It documented that the garment industry in Jordan, under the free trade agreement with the United States, was entirely foreign guest workers, because the Jordanians wouldn't work in a factory. At least 90% of the workers were foreign guest workers from Bangladesh, India, Sri Lanka, Nepal, China, and so on. They got to Jordan and were stripped of their passports, which is the crime of human trafficking. They were locked into the factories. They were working 12, 14, 15, and 16 hours a day. They were working seven days a week.

We put out that report and there was a very decent impact. Some factories were cleaned up. But what we also pointed out was that the big winner in this was China, because the vast majority of the textiles come from China and 63% of the value of the garment is in textiles. So the U.S.-Jordan free trade agreement actually benefited China more than anyone else: we estimate about $100 million a year in tariff breaks for their textiles to enter the United States.

I want to just give you an update of a factory right now. Yesterday and today, we've been investigating this factory in Jordan. It's called the Classic Fashion Apparel factory. It's a big operation, with six factories in the Al-Hassan industrial zone--

[The Chair, Conservative, Lee Richardson]

Excuse me, Mr. Kernaghan. Could I just interrupt you for a moment?

I'm sorry to interrupt you. We do have simultaneous translation and remarkable translators, but you are speaking rather quickly.

[Charles Kernaghan]

Okay.

[The Chair, Conservative, Lee Richardson]

Thank you.

[Charles Kernaghan]

At this Classic factory--there are six factories in the Al-Hassan industrial zone--there are 4,500 workers, all of them guest workers from Bangladesh, Sri Lanka, India, and Nepal. With regard to production, 60% is for Walmart. Hanes is another big producer. Now, Walmart is the biggest retailer in the world, and Hanes is the most recognized label in the United States.

The workers in these factories are working from 7:30 in the morning until 10 or 10:30 at night--14 to 15 hours a day--Saturday through Wednesday. On Thursday, they work this incredible shift of 24 and a half hours. They start at 7:30 in the morning on Thursday and work through the night until 8 a.m. on Friday morning--24 and a half hours. They are at the factory for 99 and a half hours a week. The workers are being cheated out of at least 40% of their wages. For the official 92-hour workweek, they should be earning about $78; instead, they are being paid $40 to $45.

The workers who don't meet their mandatory production goal are slapped and beaten. As a matter of fact, they deport the workers who don't reach their goal.

Right now, today, 300 Sri Lankan women in this factory have fallen behind their production goal for the last month. Management has stripped them of their passports--again, this is human trafficking--and they are about to be deported for not reaching their goals. As I said earlier, they are also beaten if they don't reach their goals. Right now, we estimate that in this factory there are about 2,000 workers who have been stripped of their passports. This is going on in broad daylight.

These workers have been trafficked to Jordan and are being held under miserable conditions. Their dormitories are very primitive and dirty, and they are infested with bedbugs. The workers are working 14 and a half or 15 hours a day and they can't sleep at night because they are tortured by these bugs. We have pictures of this that we have sent to scientists at the University of Ohio, who have confirmed that these bedbugs were gorging themselves on the workers' blood.

The women are locked in. They have no freedom of movement. They are locked in their dormitory compound after their work. They are prohibited from leaving. Even on Friday, the Muslim holiday, they cannot go out to shop.

The Jordanian ministry of labour has put Classic on their golden list of companies, meaning that it is among the best factories in the country and that it respects all the local and international labour laws. Of course, that is not at all true. When the workers signed their three-year contract to go to Jordan, they were told they'd get free food, free health care, free housing--all of it decent. That is not true. They charge the workers $28.20 per month for food. The workers are paid late. They have no health care. The workers told us at our discussions yesterday that they have absolutely zero confidence in the ministry of labour.

We've seen that with a Canadian apparel company, the Nygard company. It was producing at a factory called IBG. In April, when we investigated that factory, 1,200 workers had been stripped of their passports. They were working from 7 in the morning until 11 at night: 16 hours a day, 7 days a week. For the 110 hours of time they were at the factory, they were paid less than half of the minimum wage: about 34¢. They faced sexual harassment, filthy dormitories, and bedbugs--the whole works.

We think the ministry of labour has not been able to monitor these factories. The fact that the workers are guest workers makes them very easy to exploit. They don't know the Arabic language. Their passports are frequently taken away.

I think Jordan has an enormous distance to go in order to clean up Jordan so that free trade agreements can go forward.

We know that someone from the U.S. Trade Representative's office is heading to Jordan this week. We keep engaged with the Jordanian government, but at this point it has been a massive failure as far as labour rights go.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Kernaghan.

Next we have Tim Waters, political director, United Steelworkers.

[Tim Waters, Political Director, United Steelworkers]

Thank you. I'll try to talk a little more slowly.

I'll read a short statement from the union, but just for a bit of background, when Bill Clinton left office in the United States, one of the final things he did was to negotiate the U.S.-Jordan Free Trade Agreement. A lot of organizations like ours that had generally protested trade policy in the U.S.actually worked to get the Jordan free trade agreement passed, simply because it had worker rights and human rights protections in the core text of the agreement.

It was not like the NAFTA agreement, which offered protections in side letters and side deals that were never binding. They were actually in the core text of the Jordan agreement, so we championed the bill and it passed overwhelmingly through the U.S. Congress. Bill Clinton signed it on his way out the door. Then everybody kind of went home and forgot about it until five years later, as Charlie mentioned, when we began to hear what this trade deal really was about.

Let me read a short statement. Then I'll wrap up.

As I said, the United Steelworkers union originally supported the U.S.-Jordan Free Trade Agreement when it was being negotiated in 2000. It's a decision that our union has come to deeply regret, as the U.S.-Jordan free trade deal has descended into human trafficking of tens of thousands of foreign guest workers into Jordan, where they're stripped of their passports and are all too often held under conditions that can only be described as slave labour.

I've travelled to Jordan three times and have met with hundreds of guest workers who toil under abusive conditions in factories that are all set up for the sole purpose of exporting to the U.S. marketplace. By the way, it's exactly what they're trying to do here now.

We heard testimony after testimony there from workers in several industrial parks, all confirming the existence of excessive mandatory overtime, grueling workloads, the shortchanging of legal wages, deplorable working and living conditions, and the routine violation of every single labour law in the country of Jordan, not to mention the ILO's internationally recognized worker rights standards, which I know are championed here in Canada.

Our international president, Mr. Leo Gerard, joined our Canadian national director, Mr. Ken Neumann, in writing to the minister of labour of Jordan on November 30, 2009, raising a number of critical issues with regard to the guest workers' continued appeal for help. Part of that letter addressed promises made to the Canadian government to jump-start this current trade deal that we believe are untrue. They were untrue then, in our opinion, and are still untrue, and in the letter, which I have left copies of for you to access, we've asked for clarification. They have yet to respond to this letter.

I'm not going to go through cases; there are some in the testimony. But I have attached a copy of the letter. Let me just say that in our opinion, and by its very definition, what's going on in Jordan is a serious violation of human rights. Set aside the profit for multinationals. Set aside the amount of money that has gone to the Chinese from this deal. Set all of that aside for a moment. This is about human trafficking.

In all of those factories I was in, I saw almost no Jordanian workers. They did this deal and then brought all the workers in from the Philippines, China, Bangladesh, and Sri Lanka. At the airport, they seize their passports and they lock them in factory compounds. It's the basic definition of human trafficking. They're unable to move freely in the country and the laws don't apply, so all of a sudden they're there, and they have no country and they have no laws. If they move about without papers, they're arrested and thrown into a Jordanian prison, where they have no rights.

In my opinion, and in the opinion of the United Steelworkers, this is a question of the human rights of these people. You have an interesting opportunity right now to help 30,000 workers in these factories simply by saying that you won't do a deal with these people until there are certain guarantees to protect the human rights of the people who are brought in to service these factories.

You have a unique opportunity. Jointly, we ask that the country of Canada take exception to what's going on there, to the violation of the rights of these many people, and put your foot down and say that this is going to end right here, right now.

Thank you.

[The Chair, Conservative, Lee Richardson]

Thank you, Mr. Waters.

We'll hear from one more witness before we go to questioning. That would be, of course, Andrew Casey, the vice-president of public affairs and international trade for the Forest Products Association of Canada.

Welcome back, Mr. Casey.

[Andrew Casey, Vice-President, Public Affairs and International Trade, Forest Products Association of Canada]

Thank you, Mr. Chairman.

Thank you again to the committee for inviting us to appear on Bill C-8, an act to implement the Canada-Jordan free trade agreement.

It was our pleasure to be here when you were studying the Canada-Colombia Free Trade Agreement. I'm going to make a similar case today as to why we support this particular bill and this agreement. Even though the numbers may not be staggering, I think it sets a precedent for this industry from our standpoint, which we'd like to see carried forward in a number of other areas in the world.

By way of introduction, the Forest Products Association of Canada is the national voice, the national trade association, for Canada's lumber, pulp, and paper producers. We have about 22 members in our association and that membership represents the lion's share of Canada's forest products industry nationally from coast to coast in communities across the country.

The industry represents about 12% of Canada's manufacturing GDP and about 2% of GDP in general. We continue to employ over 220,000 Canadians directly. If you add our indirect employment of another 340,000 or so, we get up in and around the 600,000 job mark. That is, of course, spread across the country in pretty much every single province.

I want to mention one other aspect of this that leads you to a place where I want to go, which is the community aspect. Obviously, a lot of those jobs are located in rural parts of the country, and they're also centrally located in a number of small communities across the country. The past two to three years have obviously been extremely difficult for this industry, as members around this table and members in the Commons know. Daily, we've seen members from all parties get up and express support for the industry. For that, we're appreciative. Many of you have communities that have been subjected to the hardship this industry has been subjected to over the past couple of years, so you're no stranger to it.

Thankfully, we're starting to see a light at the end of the tunnel, to use an overused expression, or a light around the corner, or whatever you want to call it, but things are looking up. We're seeing the markets in China start to grow. We're seeing an increase in pulp sales and wood sales to markets such as that and we're feeling somewhat optimistic. Of course, we still need the U.S. housing market to rebound for it to really be rock solid and for us to feel comfortable moving ahead.

That said, one of the things the industry needs to do—and has been doing for the past couple of years—is preparing for when those markets do return. We've identified a four-part plan, if you will, a strategy on where we need to go.

A big part of that, of course, is to become more productive and more competitive ourselves. It is incumbent upon our companies to do a lot of that, and they've been doing this over the past couple of years. Some of the restructuring you've seen--the difficult decisions that have been made in terms of closing mills--is part of the restructuring and part of that new competitiveness going forward.

Another element of it is to better our environmental and sustainable resource management track record further. We are leaders in the world. That has increasingly become a market advantage for the industry. We need to continue along that path and use this to our best advantage in the marketplace.

A third part of our strategy going forward is looking to maximize the resource. You've seen terms likes “added value”, but this is more a question of maximizing the tree and what we extract out of that tree. Right now, we use about 95% of the tree, but we'd like to it up that closer to 100%. This takes you into a world where you're into the bioeconomy, with bioenergy and biochemicals that can be extracted from the tree, a world where you still have the wood/pulp base as your economic base for the products, but then you go beyond that by expanding into the bioeconomy side of things.

A fourth part of the strategy going forward--and that's where this free trade deal comes into play--is that we need to expand and diversify our existing markets. Obviously, the U.S. market is our most important market. It will remain so for quite some time. It represents about 70% of our product exports. We export about $24 billion a year in total, so it's a fairly significant portion of our product that goes to the U.S.

But we can't depend solely on the U.S. marketplace. The softwood lumber dispute has shown that there are times when the relationship can be a little frayed. For that reason, the industry has looked to other marketplaces such as China and India. In this case, believe it or not, we see some potential in the Middle East, and maybe just in that context, it will open up the Jordan bracket.

You've probably seen the numbers. I think Canada's total exports to Jordan represent something like $60 million a year. As for our percentage, I think we happen to be the largest single exporter to Jordan at around $11 million a year. Those aren't big numbers, obviously, for an industry exporting $24 billion a year outside of our borders, but there are two important opportunities, one on the paper side and one on the lumber side.

The Jordan forest products market represents a general marketplace of about $370 million. Unfortunately, we account for only about 3% of that marketplace. It's also a market that's growing. Depending on the product lines, you're looking at 16% to 100% growth over a year-to-year basis, so we see enormous potential there.

Certainly, on the paper side, there's some potential to get rid of the tariffs and make us more competitive vis-à-vis some of our main competitors coming out of Indonesia and Germany. On the lumber side, we're seeing a very important marketplace in the form of plywood. Again, the reduction or elimination of tariffs would give us a leg up on some of our major competitors, primarily, again, coming out of Indonesia and of course China.

Again, as I've said, at $11 million, what we're sending there now is not a big number. Even if that were doubled it wouldn't be a big number in the grand scheme of things. But the reality is that a lot of these products come from certain parts of the country and can sometimes come from one particular company. So when you narrow it down, all of a sudden what seems to be a fairly insignificant number can be a very significant number for one or two companies.

We certainly feel that's the case here with the Jordan deal, where most of the products come from the two provinces of British Columbia and Quebec. If we can increase market share in that regard, that would be an important step in expanding existing markets and maybe even diversifying existing markets.

I'll leave it at that.

I am ready to answer any questions, and I can do so in French, if you prefer.

Thank you again for the opportunity to appear today, Mr. Chair.

[The Chair, Conservative, Lee Richardson]

Thank you.

Thanks to all of you for those opening remarks. We're going to begin questioning. Considering the hour, I'm going to ask that we stick pretty close to seven minutes for each of the parties for the opening round. That might give us time for a quick, rapid-fire round after that. If you want to make sure to get somebody in, I suggest that you split your time.

We'll start with the Liberal Party and Mr. Cannis, the vice-chair.

[John Cannis, Liberal, Scarborough Centre, ON]

Thank you, Mr. Chairman.

Welcome to our guests.

I'll just throw my questions out to our guests. They will be directed specifically to individuals and we'll just try to rebut as quickly as we can for the sake of time.

Mr. Kernaghan, I listened very carefully to your comments. I can appreciate your frustration.

I was curious when you talked about how the violations unfold, how these people are not let out, and how their passports are taken. You've “estimated”, to quote you. I'm just curious how you estimate. How do you go about getting this information? Do you have one-on-one interviews with these workers?

This is for my own curiosity. If they're picked up from the airport, as has been described, and put into these compounds, do you have access to them? Can you give me an idea of how you go about gathering your data?

[Charles Kernaghan]

I've been to Jordan many times. We generally go to the poorest neighbourhoods surrounding these free trade zones or industrial parks. We meet with the workers in locations where business people would never show up. They are just not the kinds of places they would go. All of our research is done face-to-face with dozens and dozens of workers from these factories.

[John Cannis, Liberal, Scarborough Centre, ON]

So they do go out, then?

[Charles Kernaghan]

Well, they can leave.... The particular factory I was talking about is a different case.

[John Cannis, Liberal, Scarborough Centre, ON]

Okay.

[Charles Kernaghan]

At this Classic factory, the women are locked in, but the men can leave. Of course, they're working until 10:30 or 11 at night, so it's very difficult to meet with them.

But they can leave at 11 after their shift and meet us in some rundown tea shop. In those places--and Tim has been there--we've interviewed hundreds of workers. We've just sat there for several hours. They bring with them the labels, all the documentation, and the notices that are up. I've travelled a lot around the world, and these conditions are very bad.

[John Cannis, Liberal, Scarborough Centre, ON]

They're appalling, from what you've said.

You talked about how China is taking advantage and how they're the big winner. Is that because there was a policy some years ago of the textile industry being duty free, for example, into Canada from the least developed countries? Is that how China is benefiting? Is it because they set up shops there? Is that what you are driving at?

[Charles Kernaghan]

When the United States government negotiated the free trade agreement, they had to know that the Jordanians wouldn't work in the factories, because they just don't. The women aren't allowed to. So there were guest workers from the very beginning. The owners of the factories are not Jordanian. They're from India, Sri Lanka, and China. They knew the textiles were going to come from China, because they're cheaper.

[John Cannis, Liberal, Scarborough Centre, ON]

They're cheaper.

Mr. Waters, you and your organization initially supported, as you said... Under the Clinton administration, you had set down firm guidelines.

We're embarking on this, and obviously we should learn. Obviously, we have set guidelines as well, or we want to. Can you recommend, based on your experience, what Canada can do to make sure the guidelines are enhanced, for example, or fine-tuned?

[Tim Waters]

Well, you have a unique opportunity. When this happened in the U.S., we had no idea that all the workers in these factories would be Indian and Chinese. We thought it was a Jordanian deal.

Just as when you do a trade deal with somebody, you don't expect them to import the workers. The new human trafficking is the movement of workers. My advice would be that you take them at their word and not do the deal until they clean it up. And if they're....

[John Cannis, Liberal, Scarborough Centre, ON]

What you're saying is that it's okay if the rest of the world goes and puts on paper firm guidelines and agrees to the wording, and it's firm and it's strong and so on, and says, “Canada, you continue being the boy scout, and we'll continue doing business”. The farmer and the machine supplier and so on can keep on supplying and exchanging, but it's “Canada, you hold true, don't stay away...”. Is that what you're telling the Canadian worker to do?

[Tim Waters]

With all due respect, I don't think that argument holds, simply because you can't say that since everybody else is wrong and everybody else is doing it, then we should too.

[John Cannis, Liberal, Scarborough Centre, ON]

No, but I have to tell my constituents something. I'm asking you to help me get a message to them.

[Tim Waters]

Yes, sir. You asked for my opinion on this. What I'm saying is that you have a unique opportunity and a unique position.

Had we known what was going to happen, we never would have supported this, okay? We supported it only because we took it at face value. We took it with the language of the deal written into the deal. We took that at face value.