Mr. Speaker, it is my pleasure to rise in the House today and participate in the second hour of debate on Bill C-486.
First I would like to reiterate that the government fully agrees with the hon. member of Parliament for Ottawa Centre on the importance of finding ways to address the issue of conflict minerals. Indeed, the first hour of debate demonstrated that there is a shared concern over how the illegal trade in minerals fuels conflicts. The good news is that Canadian companies, civil society, and government have shown significant leadership and have been at the forefront of creating global consensus on responsible mining and sourcing practices in the gold, tin, tungsten, and tantalum sectors. I know that the hon. member for Ottawa Centre appreciates Canada's active engagement, because he cites many of our activities in the preamble to Bill C-486, such as our participation in the development of the supply chain due diligence guidance at the Organisation for Economic Co-operation and Development.
This government believes that the extractive sector has demonstrated that it can be a positive force not only here at home but around the world by helping create sustainable economic growth and development in countries where it is active.
At a recent event co-hosted by Canada and the World Economic Forum, the hon. Minister of International Development and Minister for La Francophonie stated, “Canada is well known as a world leader in responsible resource development. We have robust strategies that support economic growth and diversification, that promote responsible business conduct, that ensure environmental sustainability and that strengthen community engagement so all stakeholders can benefit from natural resource development.”
Our efforts to stop the trade in conflict minerals are a part of the same narrative. Our engagement at the OECD, where we work with relevant actors in government, the private sector, and civil society, is emblematic of the constructive approach our government has taken to enhance the positive contribution of the extractive sector to social and economic development. Indeed, the Government of Canada is committed to working with partner countries to help them develop and manage their natural resources in a responsible and sustainable way that benefits all of their citizens. It is only by putting the right systems in place on the ground that we can hope to address a multi-faceted problem like conflict minerals.
There is more that can and should be done to curb the trade in conflict minerals. The Government of Canada is actively engaged on this issue, and we are always looking at ways to improve our efforts. However, the approach outlined in Bill C-486 is, in our view, fundamentally flawed. To be more specific, the government believes that Bill C-486 is questionable in its efficacy, overly broad in its application to companies throughout the expansive supply chain, and unduly limited in its geographic focus.
Allow me to elaborate on our concerns in more detail.
First, on the question of efficacy, simply put, there is no evidence to date that mandatory reporting on due diligence activities would actually stop conflict minerals from entering international markets. As noted in the first hour of debate, Bill C-486 is modelled after U.S. legislation, specifically section 1502 of the Dodd-Frank Act. This legislation has been around since 2010, but the first reports were not due until June 2, 2014. Why should we blindly follow a model that has not yet proven that it actually works?
Some may argue that we should not sit around and wait for results in order to take action, but what about unintended consequences? One of the concerns related to the U.S. legislation is that companies have simply avoided buying designated minerals from the Great Lakes region as it is estimated that the region may account for as little as 15% of the global supply of tantalum and much smaller percentages of the other minerals.
Companies can and are sourcing these minerals from elsewhere, which is having a significant economic impact on the region in general and the people of the DRC in particular. The risk of Bill C-486 reinforcing this de facto embargo of minerals from this region is real. Some may argue that this is not a problem. Indeed, they might argue that this will only help the fight against conflict minerals. Unfortunately, the reality is that while investment in the region may have declined dramatically, the illicit trade has continued.
Questionable efficacy is not the only problem with Bill C-486. Our second concern relates to the bill's overly broad application.
According to the bill, any company incorporated in Canada that extracts, processes, purchases, trades and or uses any of these minerals from the Great Lakes region of Africa could be required to provide an audited report on an annual basis. To use the example of the gold supply chain, this could include miners, refiners, bullion banks, gold exchanges, alloy processors, manufacturers, importers, wholesalers, artisans, and retailers. Moreover, gold is used in numerous industry sectors, including jewellery, medical supplies, aerospace, automotive, and of course, electronics.
As a result, an extremely wide range of companies of varying sizes, functions, and sectors would potentially be implicated by the bill and saddled with significant costs associated with reporting. Indeed, if one's dentist has an incorporated company, he or she may be required to submit an audited report on the activities undertaken to demonstrate that the use of gold fillings has not inadvertently contributed to armed conflict in the Great Lakes region of Africa.
Interestingly, the implication of the entire supply chain is not an approach favoured by other initiatives, including the U.S. legislation, which is only focused on companies involved in manufacturing processes.
The requirement of an independent third party audit of the report also differs from the OECD due diligence guidance, which recommends audits at the smelter and refiner level, not at every point along the supply chain. Even the proposed directive by the European Union is focused on one particular point in the supply chain, importers of designated minerals. Moreover, while Bill C-486's proposed mechanism is legislative in nature, the approach the Europeans are taking is a voluntary one.
Imposing a potentially significant reporting burden on the entire mineral supply chain may be great news for auditing companies, but is generating a mountain of reports really an efficient way to address the issue of conflict minerals?
Can we really hope to tackle a global issue if we only focus on the Great Lakes region of Africa? This is the third concern I would like to raise with respect to the bill. Taking a narrow approach that only focuses on a particular region risks stigmatizing conflict minerals as an exclusively African problem, and they are not. Trade in conflict minerals is an issue with a global reach in terms of the repercussions on peace, security, and democratic development, as well as on local communities and multinational companies in countries around the world.
Through our participation at the OECD, we are actively trying to expand the promotion and implementation of guidance, which applies to all conflict-affected and high-risk areas in relevant country contexts.
This government believes in working with, not against, our partners in both the public and private sectors to foster an enabling environment for meaningful engagement and change. It is hard to avoid the conclusion that Bill C-486 would hinder these efforts. Canada's continued involvement in international initiatives related to conflict minerals will help identify the most promising and effective way forward. When that happens, we will undertake the necessary consultation and analysis to ensure we can achieve the desired impact on the ground.