INTRODUCTION

Child labour is defined as work that is mentally, physically, socially or morally harmful to children, and that interferes with their ability to attend school.[1] Whether or not work can be called child labour depends on a child’s age, the type of work and the conditions under which it is carried out. Some form of child labour is outlawed in virtually every jurisdiction in the world.[2] The international community has made it a priority to eliminate the “worst forms of child labour,” which includes hazardous work likely to harm children’s health, safety or morals, and slavery-like practices such as forced labour.[3] Nevertheless, the use of child labour, including in its worst forms, remains widespread—in 2016, 152 million, or one in 10, children engaged in some form of child labour.[4] While there has been measurable progress in reducing the prevalence of child labour, it has been uneven, and the decline of child labour has stalled.[5]

Child labour is integrated into supply chains—networks of businesses, people, activities, information and resources involved in producing or distributing goods or deliver services from a supplier to a consumer—and reduces the cost of production.[6] Child labour most often occurs at the lowest tiers of the supply chain, out of sight of buyers, inspectors and ultimately, consumers.[7] In recent years, jurisdictions around the world have moved past voluntary corporate social responsibility initiatives, using legislation to motivate the private sector to take action and equip civil society with the tools to hold the private sector to account.

In light of these developments, the Subcommittee on International Human Rights of the House of Commons Standing Committee on Foreign Affairs and International Development (the Subcommittee) undertook a study on child labour in supply chains in November and December 2017. The purpose of this study is to examine options to eliminate the use of all forms of child labour in the mainstream private sector. The Subcommittee considered child labour in all of its forms.  Unless otherwise specified, in this report, the term child labour is used in the most expansive form possible, encompassing otherwise permissible work that interferes with a child’s education, work in hazardous conditions, and slavery-like practices such as forced labour. The Subcommittee received testimony from a diverse group of witnesses. This group included a representative of the International Labour Organization (ILO) and representatives of several non-governmental organizations (NGOs) dedicated to eliminating the use of child labour in supply chains. Some of these NGOs were established by groups of business enterprises. In addition, representatives from Global Affairs Canada (GAC) and Employment and Social Development Canada (ESDC) appeared as witnesses. Representatives from other government departments responded to written questions submitted by the Subcommittee. Additionally, in a demonstration of the importance of the subject of this study to a broad spectrum of Canadians, the Subcommittee received numerous written briefs.

This report begins with a discussion of the scope and prevalence of child labour in supply schains and an analysis of its root causes. This discussion includes consideration of two case-studies: first, garment supply chains in South and Southeast Asia, and second, fishing and seafood processing in Southeast Asia. The report then continues with an assessment of current voluntary measures taken by corporations to address child labour in their supply chains, followed by an outline of supply chain legislation in other jurisdictions. The report concludes with lessons drawn from measures taken by other jurisdictions and how such legislation could be applied in the Canadian context.

On the basis of witness testimony, the Subcommittee makes seven recommendations to the Government of Canada. The Government of Canada should systematically focus on eliminating all forms of child labour, including by enhancing its support for programs that target root causes, particularly among groups and within regions in which progress has stalled. In particular, the Government of Canada should support projects that aim to improve quality and access to education, for both children and adults, with a specific emphasis on vocational training and entrepreneurship.  The Government of Canada should also take opportunities to partner with other states to provide training for law enforcement and the judiciary to bring those responsible for child labour to justice. The Government of Canada should also include discussions and thorough assessments of the use of child labour in countries with which Canada is negotiating a trade agreement. In addition, the Subcommittee recommends that the Government of Canada incent the private sector to properly monitor their supply chains for child labour and to share best practices, including by developing tools to enable the private sector to do so. The Subcommittee echoes testimony and written briefs by recommending that the Government of Canada develop legislative and policy initiatives that motivate businesses to eliminate all forms of child labour in their supply chains. In doing so, the Government of Canada should learn from other jurisdictions that have implemented broad legislation imposing either disclosure or due diligence requirements on businesses. The federal government should involve provincial and territorial leadership, the private sector, civil society and the broader public as much as possible to draft and implement legislation that is constitutionally sound, effective, and well-understood. Last, the Subcommittee recommends that the Government of Canada consider how to use Canada’s import regime as well as its public procurement policies to incent businesses to reduce the use of child labour in their supply chains.

Canada is viewed worldwide as a pioneer in the protection of human rights, yet it risks falling behind as other jurisdictions implement concrete measures to tackle child labour in supply chains. The Government of Canada must prioritize the elimination of all forms of child labour in supply chains, and ensure that it engages with key stakeholders, including the private sector, civil society, other governments, and international organizations, in the development of measures to fight this scourge.

THE SCOPE AND PREVALENCE OF CHILD LABOUR IN SUPPLY CHAINS

Together, ILO Convention 182, the Convention concerning the Prohibition and Immediate Action for the Elimination of the Worst Forms of Child Labour (Worst Forms of Child Labour Convention) and the ILO’s Convention 138, the Convention concerning Minimum Age for Admission to Employment (Minimum Age Convention) form the framework for defining child labour by  establishing minimum ages for employment and acceptable working conditions.[8] Canada ratified these conventions in 2016 and 2000, respectively.[9] The minimum age of employment is tied to the end of compulsory schooling, and is generally set at 15 years old.[10] States where “the economy and educational facilities are insufficiently developed” may set their minimum age of employment at 14 years old.[11] Children over 12 years of age may engage in light work which does not interfere with their education. In some cases, such work may even be beneficial to their development. All working children under 12 years of age are considered to be engaged in child labour.[12]

Unlike the Minimum Age Convention, the Worst Forms of Child Labour Convention does not make age distinctions in its definitions. Its provisions are applicable to all persons under the age of eighteen. The Worst Forms of Child Labour convention calls for the elimination of children’s participation in hazardous work, defined as work that exposes children to abuse; takes place underground, underwater, at dangerous heights or in confined spaces; involves the use of dangerous equipment or heavy loads; exposes children to health hazards such as toxic substances or extreme temperatures; or involves work under difficult conditions including long hours or unreasonable confinement at a work site.[13] In 2016, one in 10 children engaged in some form of child labour while one in 20 children were engaged in the subcategory of child labour known as hazardous work.[14]

The Worst Forms of Child Labour Convention also calls for the elimination of slavery or slavery-like practices, including the sale or trafficking of children, or subjecting children to debt bondage and forced labour.[15] Human trafficking is defined in the Protocol to Prevent, Suppress and Punish Trafficking in Persons of the United Nations Convention Against Transnational Organized Crime as “the recruitment, transportation, transfer, harbouring or receipt of persons, by means of the threat or use of force or other forms of coercion, of abduction, of fraud, of deception, of the abuse of power or of a position of vulnerability or of the giving or receiving of payments or benefits to achieve the consent of a person having control over another person, for the purpose of exploitation.”[16] Exploitation includes forced labour or slavery-like practices, among other forms.[17] Forced labour is “all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered himself voluntarily.”[18] In 2016, 4.3 million children were involved in forced labour, though Mr. Benjamin Smith, the Senior Officer for Child Labour with the ILO, cautioned that this is an underestimation given difficulties with detection.[19] The most common form of forced labour is debt bondage, which can be intergenerational—children may work with their parents, or be sent to work in the shops, factories or home of a creditor to whom their parents are indebted.[20] These forms of exploitation are generally understood as falling under the umbrella of “modern slavery,” a term which does not have an internationally accepted definition.[21] While the Worst Forms of Child Labour Convention also prioritizes the elimination of children’s involvement in prostitution, pornography and drug trafficking,  these important issues lie outside the scope of the Subcommittee’s study.[22]

Children work because their survival and that of their families depend on it. Mr. Smith and Dr. Aidan McQuade, Special Advisor to Anti-Slavery International, emphasized that when poverty or vulnerability leave a family without any alternatives, a child’s ability to earn an income or otherwise contribute to a household may outweigh the perceived benefits of education.[23] Witnesses agreed that poverty is a root cause of child labour.[24] Vulnerability also arises from social norms that entrench inequality, social exclusion, discrimination and conflict.[25] Ms. Cindy Berman, Head of Modern Slavery Strategy for the Ethical Trading Initiative (ETI), noted that the poorest families “come from communities that are subject to discrimination on the basis of their caste, race, ethnicity, or [religion].”[26]

Displacement also heightens the risk that a child will engage in child labour. Displacement interrupts education, and can lead to family separation, thereby creating child-headed households. Displacement also makes children more vulnerable to traffickers.[27] Mr. Simon Chorley, Deputy Director of International Programs at UNICEF Canada, noted that this is the case in refugee camps such as those in Jordan, where adults are not permitted to work or to leave the camp, and where unaccompanied children are vulnerable to traffickers. Displacement following natural disasters or disasters caused by human activity has led to spikes in child trafficking. Mr. Chorley noted such increases among the Rohingya after fleeing persecution in Myanmar for Bangladesh, and following typhoon Haiyan in the Philippines.[28]

The Government of Canada has signed on to numerous international obligations and political commitments to act to end child labour, forced labour, and other forms of exploitation. The rights of children to be educated and free from exploitation are protected through a wide variety of United Nations (UN) conventions, including the Convention on the Rights of the Child.[29] In September 2015, Canada was among 180 countries to adopt a non-binding commitment to achieving the 2030 Agenda for Sustainable Development, which is listed as a series of Sustainable Development Goals and Targets.[30] Target 8.7 is to “take immediate and effective measures to eradicate forced labour, end modern slavery and human trafficking and secure the prohibition and elimination of the worst forms of child labour, including recruitment and use of child soldiers, and by 2025 end child labour in all its forms.”[31]

Child labour has been in decline since 2000. By 2016, total child labour was reduced by 38%, from 246 million to 152 million children. Hazardous child labour was reduced by 58%, from 171 to 73 million. However, progress has been uneven, and the decline has slowed since 2012.[32] Some groups have been left behind. Sub-Saharan Africa, for example, witnessed a rise in child labour between 2012 and 2016, unlike the rest of the world.[33] Twenty percent of all children in sub-Saharan Africa are involved in child labour.[34] Virtually no progress was made globally between 2012 and 2016 to end child labour amongst children under 12 years of age, even though they compose half of all children in child labour and one quarter of children engaged in hazardous work.[35] The decline in the number of children in child labour and hazardous work among girls was only half that of boys from 2012 to 2016, even though Ms. Kennedy noted that girls involved in vulnerable situations share the same root causes of poverty, family debt, lack of education and lack of economic opportunity.[36] Furthermore, there has been no change in the number of children subject to forms of modern slavery.[37]

Ms. Becker noted that child labour persists due to companies’ “weak human rights policies, insufficient assessment and monitoring of risks in their supply chains, weaknesses in preventing or mitigating human rights abuses, insufficient monitoring, and lack of public reporting on the steps they're taking to address these abuses.”[38] Mr. Smith of the ILO posited, “[i]t may be that we’ve reached the low-hanging fruit, in a sense, and now we’re dealing with child labour that is really entrenched.”[39] Other witnesses agreed—past measures, including international obligations and national prohibitions, have been insufficient to eradicate child labour.[40] Mr. Smith warned, “without accelerated progress…we won’t reach the sustainable development goal target of the elimination of all forms of child labour by 2025.”[41]

Children’s Participation in Supply Chains

In the words of Mr. Michael Messenger, President and CEO of World Vision Canada, children are pulled into child labour by an “insatiable [consumer] demand for new, low-cost goods and corporations’ desire for rapid production and cheap labour.”[42] A large proportion of child labour occurs at the input level of supply chains.[43] Child labour, in all of its forms, is most often used in the informal economy, at the lowest rungs of a supply chain, and largely out of sight of buyers or labour inspectors.[44] According to the ILO, in 2016, 69% of children engaged in child labour worked with their family in small operations. Twenty-seven percent of children in child labour were paid workers working for non-family employers. The remaining 4% of children were self-employed.[45] Integrating children into supply chains is also the safest way for traffickers to profit from their exploitation. Mr. Peter Talibart, a labour lawyer at a London (U.K.) law firm, estimated that global profits from human trafficking could amount to US$400 billion annually, and will continue to grow.[46]

Child labour is heavily concentrated in the agricultural sector, be it for subsistence or commercial farming. According to the ILO, 71% of all child labour occurs in the fishing, forestry, livestock herding and aquaculture industries.[47] In particular, the use of child labour has been widely documented in the harvesting of cocoa, coffee and tobacco, and cotton picking and spinning for garment manufacturers. According to Ms. Jo Becker, Advocacy Director for Children’s Rights at Human Rights Watch, agriculture is one of the most hazardous sectors of work for children, who work for long hours with sharp tools and heavy machinery, and who may be exposed to toxic pesticides and extreme heat.[48]

The potential complexity and often borderless character of supply chains means that Canadian consumers and companies could unknowingly purchase and sell goods made using child labour. A recent World Vision Canada study concluded that 1,200 companies operating in Canada imported goods at risk of being produced by child labour or forced labour in 2015, worth a total of approximately C$34 billion.[49] This represents a 31% increase since 2012.[50] To better understand how child labour is used in supply chains, the Subcommittee requested testimony regarding high-risk supply chains in the garment industry, and the fishing and seafood industry.

Garment Supply Chains in South and Southeast Asia

Children work at all stages of garment supply chains, including producing cotton seed, growing cotton, spinning yarn in mills, sewing, weaving, embroidering, and finishing garments in factories and home workshops.[51] Mr. Smith observed that there are over 100 million cotton farms in the developing world smaller than 0.01 square kilometers in size, and are operated by families. He noted that transparency regarding labour practices decreases drastically among suppliers who are closer to the input level of the garment supply chain—including cotton farms, spinning mills and ginning facilities. He also noted that, in general, far less information is available about garment supply chains destined for domestic markets, which in countries such as India can account for the vast majority of production.[52] In India, the cotton-spinning sector employs half a million workers, mainly young women working in poor conditions.[53] The Subcommittee learned that, over the past 20 years, there has been improvement in imposing the minimum age of employment in garment supply chains. This improvement has mostly taken place at the top of supply chains, among producers of ready-made garments destined for export. However, challenges remain in eliminating hazardous labour.[54]

Mr. Chorley discussed textile supply chains in Bangladesh and Vietnam, the second and fifth largest exporters of garments worldwide. Despite these countries’ progress in eliminating the use of child labour in international supply chains, domestic supply chains continue to have a “very worrying prevalence of child labour.”[55] Mr. Chorley found that in one particular area of Dhaka, almost 60% of 169,000 workers polled were less than 18 years old. He concluded that lack of decent working conditions for adults encourages children, particularly those between the ages of 15 and 17 years, to work. Contributing factors include the lack of maternity protection, limited child care options or breastfeeding support; long hours and low wages; poor health, water, sanitation and hygiene conditions; and the unavailability of high-quality education.[56] Ms. Becker reported similarly difficult working conditions in Cambodia, where the majority of women work over 60 hours per week and face punitive measures if they refuse to work overtime.[57]

Seafood and Fishing Industries in Southeast Asia

The Subcommittee heard testimony on the fishing and seafood processing sector in Southeast Asia, particularly Thailand. According to Ms. Berman from ETI, progress is being made in reducing the use of child and forced labour in this sector, albeit slowly.[58] Ms. Berman noted that, in the case of the fishing and seafood industry, “the worst exploitation is to be found in deep-sea paired trawlers that are far from land, some of them 24-7 operations that don't dock, even at port.”[59] Many vessels never return to land for inspection.[60]

In 2016, Human Rights Watch interviewed 250 current and former workers in the Thai fishing industry. Many described situations of forced labour, including debt bondage, wage withholding programs, and the seizure of identity documents. Some individuals reported working up to 23 hours per day.[61] In a 2017 project in Thailand, the ILO found “little evidence of child labour” after interviewing 434 seafood fishermen in 11 provinces.[62] Research focused on shrimp and seafood processing hubs, by contrast, has demonstrated that child labour is present, and that children in the processing industry face hazardous conditions and are twice as likely as children working in other industries to sustain injuries.[63] Migrant children, mostly from Myanmar and Cambodia, work longer hours than Thai children. One third of migrant children do not attend school as a result of a combination of challenges including household debt, childcare commitments for siblings or parental mobility.[64]

In Ms. Berman’s assessment, Thai labour laws are insufficiently enforced, particularly in relation to fishing vessels operating outside Thai waters or otherwise beyond the reach of Thai authorities. The worst offenders, she suggested, are Thai companies.[65] Mr. Smith reported that the Thai government has “increased attention” to the issue of child labour. In 2015, a minimum age of 18 years for employment in seafood and fishing industries was established, and child labour has become a priority for labour inspectors. The Thai government has committed to conducting its first-ever national child labour survey in 2018.[66]

ERADICATING CHILD LABOUR BY SUPPORTING AND PROTECTING FAMILIES

To eradicate the use of child labour, Mr. Smith noted that what “works best is really to work with governments, with communities themselves, to empower people to look after their own interests and their own children.”[67] This approach is the driving force underlying four ideas espoused by witnesses, the first being that decent work can allow a family to support a child in school. In particular, providing decent work and improved quality of life for female caregivers—whose employment is paired with domestic and child-rearing duties—is “essential.”[68] Second, that social protections and programs can stave off the difficult economic choices created by insurmountable poverty, vulnerability or crisis.[69] Third, that when children have access to education and other opportunities, they are not only less likely to voluntarily engage in child labour, they are also less vulnerable to trafficking.[70] Finally, witnesses argued that governments must put greater focus on law enforcement and combatting corruption to put an end to human trafficking and forced labour affecting both children and adults.

Decent Work for Adults

The position held by GAC, that “the key to ending child labour is really ensuring that women—and men, but mostly women—have access to decent work,”[71] echoed the statements of several witnesses.[72] To have decent work is to have the opportunity to work for a living wage with security in the workplace and in the absence of exploitative conditions such as those that characterize forced labour.[73] Mr. Chorley described UNICEF (United Nations Children’s Fund) programming at factories to ensure better working conditions and health care for female workers.[74] Mr. Rakesh Patry, Director General of the Labour Program at ESDC, noted that challenges remain in ensuring adequate labour inspections, and that there are even greater obstacles to protecting workers’ right to freedom of association.[75] Workers’ mobilization could achieve better working conditions and could also empower workers to systematically monitor whether child or forced labour is being used across the supply chain in which they participate.[76] Ms. Kate Kennedy, Managing Director (North America) for the Freedom Fund, also briefly mentioned the prospect of giving women access to small business ownership by providing inexpensive capital and vocational training.[77]

Social Protections for Adults and Children

Witnesses noted that one of the most significant factors in the decline of child labour has been the enhancement of social protection systems. These systems include access to childcare, medical care and social programs, including, but not limited to, those geared specifically towards reducing child labour and promoting education.[78] For example, witnesses credited cash transfer programs with contributing to the elimination of child labour.[79] In such programs, governments identify the neediest families and provide them with monthly stipends to meet basic needs, thereby reducing children’s need to work. Stipends are sometimes conditional on a child’s attendance in school.[80] Ms. Becker noted that these programs are relatively low cost. In Morocco, she noted, cash transfers of US$7 per child per month were enough to “dramatically reduce child labour rates and increase school enrolment."[81] In the Philippines, Mr. Messenger informed the Committee of a program run by World Vision Canada, in which child labour in the sugar cane industry was reduced by 74% over a three-year period. This was accomplished by “increasing economic alternatives, advocating for laws and policies, providing education and vocational training for children who had fallen behind in school, and empowering children to speak out.”[82] Mr. Edwin Wilson, Executive Director of the International Justice Mission (IJM) Canada, reminded the Subcommittee that when social programs are premised on citizenship, there is a risk that the most vulnerable communities may be excluded.[83]

Access to High-Quality Education

Witnesses agreed that one of the most significant factors in the decline of child labour to date has been improvement in access to, and the quality of, education.[84] Witnesses discussed practical considerations caregivers take into account when deciding whether to send a child to school or to earn an income. Free lunches at schools are often enough to lower child labour rates, because families know that if they send their children to school, they will have at least one good meal a day.[85] Conversely, practical barriers can discourage school attendance. Often, schools are located at long distances from home.[86] The cost of transportation to and from school and other associated school costs, such as uniforms, may be prohibitive.[87] Girls, particularly teenage girls, may stop attending school because of a lack of safe, clean and private sanitary facilities. Dr. McQuade added that the quality of education is often poor, and children may be ill-treated at school, including through corporal punishment.[88]

Law Enforcement

Witnesses told the Subcommittee that a stronger emphasis on law enforcement is necessary to stymie human trafficking and forced labour orchestrated by organized crime, issues that affect children as well as adults. IJM Canada emphasized that legal prohibitions are already in place, but that without strong public justice systems, they are meaningless.[89] Ms. Petra Bosma Kooman, Director of Public Relations at IJM Canada and Ms. Kennedy highlighted that trafficking thrives where there are corrupt public officials.[90] Ms. Bosma Kooman argued,

It is governments that have the authority and the obligation to enforce national laws against these crimes. It is local and national police, prosecutors, and judges, not corporate executives, who can investigate, arrest, prosecute, and punish those whose presence is inevitable in every single slavery situation—the perpetrators.[91]

Addressing Child Labour through Canadian International Assistance

ESDC and GAC collaborate closely to fulfill the Government of Canada’s commitments to ending child labour, particularly hazardous child labour and forced labour in supply chains.[92] Through its Labour Program, ESDC provides technical expertise on labour law, working to improve global labour standards through bilateral partnerships and multilateral forums.[93] GAC advances the Government of Canada’s agenda in relation to child labour and forced labour through multilateral engagement, trade co-operation and international assistance programming.[94]

The Government of Canada negotiates comprehensive and enforceable labour obligations in all free trade agreements. These obligations include the abolition of child labour, the elimination of forced labour, and the effective enforcement of domestic labour laws.[95] The Government of Canada has met resistance to the inclusion of such obligations, and enforcement can be difficult when partner countries lack enforcement capacity. In response to this issue, free trade agreements incorporate “a small technical assistance program” to improve labour inspections and to share knowledge regarding child labour or freedom of association. The Government of Canada has found this approach to be effective, leading to “tangible improvements” regarding core labour rights in partner countries.[96]

Witnesses were particularly interested in how the Government of Canada could more effectively marshal its international assistance programming to accelerate the elimination of child labour in all of its forms.[97] Dr. McQuade views Canada as “an enormously important aid donor.”[98] According to Mr. Claude Beauséjour, Director, Education and Preventing Violence and Harmful Practices Division at GAC, the Government of Canada’s international assistance programs “have been focused on the root causes of what leads to child labour and on work on any other harmful practice that leads to child labour or modern slavery.”[99] To date, the Government of Canada has funded ILO projects that promote gender rights and tackle child labour in the garment and footwear industries in Vietnam, and an ILO pilot project for the elimination of child labour among refugees and host communities in Jordan.[100] Ms. Chris Moran, Director General, Trade Portfolio Strategy and Coordination at GAC, highlighted that investments in projects not officially labelled as child labour initiatives—such as humanitarian assistance to refugees—also contribute to countering factors which enable economic exploitation by providing decent work and livelihood opportunities, food security, better access to finance, education, vocational training, and healthcare. Ms. Moran also noted that under Canada’s Feminist International Assistance Policy, the Government of Canada’s focus on ending all forms of violence includes “preventing and protecting children from the worst forms of child labour as well as countering human trafficking, a criminal activity that fuels forced and child labour.”[101]

The Government of Canada continues to provide assistance to the UN Office on Drugs and Crime, which is the primary UN agency devoted to countering human trafficking.[102] IJM Canada argued that training and professionalizing law enforcement officials in at-risk countries would be the most effective way to combat child labour through international assistance programming.[103]

Witnesses emphasized that the Government of Canada should take a “holistic” or “system strengthening” approach to “provide solutions that are truly sustainable.”[104] Mr. Patry recognized the invaluable contributions of social partners and civil society organizations, particularly in the areas of research and advocacy.[105] Witnesses named a wide variety of potential partners who could play a role in monitoring risk, at both the individual level, the industry level or even more broadly. These partners include teachers, child welfare workers, the health and justice sectors, and faith-based communities, as well as cooperatives and trade unions.[106] UNICEF Canada noted that the Government of Canada should allocate resources to address these actors’ limited capacity.[107]

The Subcommittee recommends:

Recommendation 1 – Prioritizing the Elimination of Child Labour and Forced Labour in Canada’s International Assistance

That the Government of Canada make the elimination of all forms of child labour and forced labour a specific goal in its international assistance spending, and a metric through which to evaluate its international assistance policy. We encourage the Government of Canada to actively support programming to address the root causes of child labour and forced labour, particularly among groups and regions where progress has stalled.

Recommendation 2 – Improving Access to Quality Education for Children and Adults

That the Government of Canada continue to work with its international partners to increase the quality and accessibility of education for children and adults affected by child and forced labour, with a specific emphasis on vocational training and entrepreneurship.

Recommendation 3 – Supporting Law Enforcement and Judicial Systems

That the Government of Canada invest in the provision of training and resources for law enforcement, as well as the capacity of judicial systems to bring those responsible for the proliferation of child labour to justice, where states are open to such assistance.

Recommendation 4 – Including Discussion of Child Labour and Forced Labour in all Free Trade Negotiations

That the Government of Canada include discussion of child labour and forced labour in its free trade negotiations, including an assessment of progress made in eliminating the use of child labour in the supply chains of the country in question.

CORPORATE SOCIAL RESPONSIBILITY

The Hon. Mr. Christopher Evans, Director, Perth Headquarters, of the Western Australia division of the Walk Free Foundation, observed that the Government of Canada and Canadian industry have recognized that business also has a role to play in the protection and promotion of human rights.[108] The term “corporate social responsibility” (CSR) is used to refer to this idea.[109] As explained by Mr. Talibart, “[c]ompanies now have a greater consideration for the future, the environment, and global sustainability. The old idea that directors were serving the immediate financial interests of current shareholders has been consigned to the past.”[110]

Corporate Social Responsibility Guidelines and Voluntary Initiatives

Among the CSR guidelines produced by the international community for states and businesses are the UN Guiding Principles on Business and Human Rights (UNGPs). The UNGPs, unanimously endorsed by the UN Human Rights Council in 2011, affirm the state duty to protect against human rights abuses by third parties, including business. The UNGPs indicate that states may require businesses to communicate how they have addressed their human rights impacts. They also suggest operational due diligence measures.[111] Another set of guidelines, the Children’s Rights and Business Principles, developed in partnership by UNICEF, the UN Global Compact and the NGO Save the Children, addresses CSR from a child rights’ perspective.[112] Canada encourages Canadian companies to abide by the Children’s Rights and Business Principles.[113] The Organisation for Co‑operation and Economic Development (OECD) Guidelines for Multinational Enterprises (MNEs), another important international CSR standard, are non-binding recommendations for responsible business conduct addressed by governments to MNEs operating in or from adhering countries. The OECD Guidelines for MNEs include a chapter on human rights that is consistent with the UNGPs.[114] The OECD has also published a series of supply chain due diligence guidance materials for the financial, mineral, garment and footwear sectors. According to Ms. Moran, Canada has been active in supporting the development and dissemination of these materials.[115]

Canada endorsed the UNGPs and the OECD Guidelines for MNEs, among other CSR standards, in its Enhanced CSR Strategy to Strengthen Canada’s Extractive Sector Abroad (Extractive Sector CSR Strategy).[116] As explained by Ms. Moran, the Extractive Sector CSR Strategy

articulates Canada's expectations for our extractive sector operations abroad…and specifically, engagement to promote internationally recognized guidelines, foster networks to convene key stakeholders on CSR issues, strengthen the environment for responsible business and anti‑corruption measures, and provide effective and easily accessible dispute resolution mechanisms.[117]

The Extractive Sector CSR Strategy outlines a “government expectation” that Canadian companies operating abroad respect human rights, consult host governments and local communities, and work in a socially and environmentally responsible manner.[118] In cases where international standards such as the UNGPs are more stringent than local laws, Canadian companies are expected to abide by the more rigorous requirements, “specifically on children’s rights and child labour impacts.”[119] Ms. Moran noted that the principles underlying the Extractive Sector CSR Strategy “could be applied to other sectors.”[120]

Canadian extractive sector companies are also expected to participate in the dispute resolution mechanisms through the Office of the Extractive Sector CSR Counsellor and the National Contact Point (NCP), which is guided by the OECD Guidelines for MNEs. The CSR Counsellor facilitates dialogue between parties at the early stages of a dispute, and Canada’s NCP “provides a multi-sectoral, accessible platform for dialogue and resolution between parties seeking solutions that may include changed or improved practices, compensation, and apology.”[121] After the conclusion of the Subcommittee’s hearings, the Government of Canada announced the future creation of the Office of the Canadian Ombudsperson for Responsible Enterprise, which would be empowered to investigate companies of its own accord. The initial mandate will cover the extractive sector and the garment sector, and expand after the first year.[122]

Extractive sector companies that fail to respect and apply the standards endorsed by the Extractive Sector CSR Strategy and/or participate in the dialogue resolution mechanisms may face withdrawal of trade commissioner services and other support from the government.[123] However, Ms. Moran noted that most Canadian companies in the food and garment industries – two of the most at-risk sectors for child and forced labour – import their goods from suppliers abroad. Therefore, the utility of the Canadian Trade Commissioner Service, which promotes Canadian exports and attracts inward investment to Canada, is limited.[124] Failure to comply with the expectations outlined in the Extractive Sector CSR Strategy may also be taken into account during the consideration of requests for financing support by Export Development Canada.[125]

Various industries have also developed their own CSR tools and mechanisms. For example, the Mining Association of Canada (MAC) established the mandatory “Towards Sustainable Mining” (TSM) initiative, which requires members to take measures to prevent the use of child and forced labour in their supply chain.[126] Independent verifiers assess whether member-operated mines have such measures in place.[127] According to Ms. Moran, the TSM initiative “is unique in the world and has established itself as a best-in-class CSR standard for the mining industry.”[128] Mr. Smith shared that companies can develop codes of conduct by exchanging information on CSR best practices. The “Child Labour Platform” hosted by the ILO facilitates such exchange between companies from a variety of sectors, including large corporations such as Coca-Cola and Primark.[129] Dr. McQuade praised the cocoa production sector for developing child-centred and community-based anti-child labour initiatives. He observed that chocolate brands “recognized explicitly and publicly that child labour, and to a lesser extent child slavery, is a major problem in their supply chain,” and that “[m]ost other businesses are still in a state of denial.”[130] Ms. Becker referred to a Swiss jewellery company that, through a three-year investment in several Latin American artisanal mines, has helped to “improve standards, reach fair trade certification, and then source from those mines... [knowing] exactly where their gold is coming from… [and] exactly what kind of conditions it’s produced under.”[131]

The Subcommittee recommends:

Recommendation 5 – Building Capacity of Canadian Businesses to Monitor their Supply Chains

That the Government of Canada develop a strategy to incent businesses to thoroughly and continually monitor their supply chains for the use of child labour and forced labour, and to share best practices. The strategy should include tools, guidance and other forms of support, particularly for small and medium enterprises.

The Limits of Voluntary Initiatives and the Need for Legislation

Despite the progress made by the Government of Canada, the private sector, and the international community, in reducing child labour rates, witnesses identified some persistent challenges, as well as limitations of existing initiatives. Ms. Becker noted that international human rights standards such as the UNGPs are not legally binding, observing that “some companies take them seriously, but many do not.”[132] Mr. Smith and Mr. Chorley noted that corporate social audits usually extend only to the first tier of production, while child labour tends to be present further down the supply chain.[133] Mr. Smith and Dr. McQuade emphasized that social audits “can tell you what’s happening today, but [do not] tell you about yesterday or tomorrow.”[134]

Witnesses were dissatisfied with existing levels of voluntary disclosure with respect to CSR initiatives. According to World Vision Canada, most Canadian companies “are disclosing very little, if any, meaningful information about the policies, practices, and due diligence that they have in place.”[135] While a lack of transparency does not necessarily imply complacency, it does make “constructive dialogue and accountability about these issues next to impossible.”[136]

The voluntary nature of CSR initiatives allows companies to remain non-committal or to fail to meet their public commitments without consequence.[137] The result is an “uneven playing field” between companies that conduct supply chain due diligence and those that do not. According to Ms. Becker, socially responsible companies are “almost penalized” for their choice.[138] Ms. Berman elaborated:

…responsible business needs government to regulate in order for it to not be undercut by unscrupulous competitors. We know that there's a race to the bottom. In terms of labour standards, there is just-in-time instant production, and the prices of goods are getting lower and lower. Without government intervention to set a regulatory framework, it is extremely difficult for business to self-regulate.[139]

Furthermore, the Subcommittee learned that voluntary CSR initiatives have not penetrated corporate culture in major emerging economies in the “global south.” In 2013, the ILO found “little documentation of efforts among companies based in Brazil, South Africa, and India to address any adverse impacts they might have with regard to child labour in their own supply chains.”[140] Mr. Smith noted that most CSR initiatives “consisted of philanthropy and [were] unconnected to supply chains.” He attributed this to lower levels of scrutiny by governments, consumers and civil society.[141]

There are cases where the private sector has led the way without the pressure of legislation imposed upon them. Mr. Lewchuk stated that some large companies or “pioneers,” such as Mondelez International, are working to improve the integrity of their supply chains. He explained that “Mondelez International and others have run some really good programs in which they have worked with local farmers and their families to reduce child labour by setting up co-operatives, microfinance”, addressing issues “in the deep-down tiers of the supply chain.”[142] Mr. Chorley also underlined the importance of the private sector in the elimination of child labour. He noted that companies are attempting to fill gaps left by the absence of legislation, particularly in the extractive sector. He provided a specific case in the Democratic Republic of the Congo, where civil society pressure has resulted in companies beginning to “map their detailed and complex supply chains, from artisanal mine, through the traders, through the smelters, up to the suppliers.”[143]

Witnesses looked to supply chain legislation and related measures to formalize the expectation that companies make efforts to monitor their supply chains. They noted that motivating larger companies to inform themselves about their suppliers’ practices can have a “cascading effect” on a supply chain’s lower tiers.[144] Broadly applicable legislation would also provide the opportunity for smaller companies to learn from CSR “pioneers” by opening space for a discussion of best practices.[145]

SUPPLY CHAIN LEGISLATION IN OTHER JURISDICTIONS

The Subcommittee heard testimony describing likeminded jurisdictions’ efforts to galvanize the private sector to eliminate the use of child and forced labour from supply chains. In 2010, the U.S. state of California passed transparency legislation that requires certain large companies to disclose what efforts, if any, they have made to end the use of child and/or forced labour in supply chains. The U.K. enacted comprehensive legislation on modern slavery in 2015. Australia has committed to passing similar legislation. More recent legislative initiatives in France and, potentially, the Netherlands go further, requiring large companies to identify risks and develop due diligence strategies, and including an array of options for the public or the government to hold businesses to account.[146] While there are significant differences in the approaches chosen in other jurisdictions,  one shared feature is that, to date, no legislative initiative has defined the term supply chain, or circumscribed what forms of business relationships are covered. Transparency and due diligence legislation has already affected Canadian companies operating in those jurisdictions.[147]

Supply Chain Transparency Legislation with Reporting Requirements

The California Transparency in Supply Chains Act (2010) (CTSCA) requires retailers and manufacturers doing business in California with worldwide gross receipts of over US$100 million to make a one-time disclosure regarding their “efforts to eradicate slavery and human trafficking from [their] direct supply chain for tangible goods offered for sale.”[148] Human trafficking is defined in another California law as the deprivation of liberty to obtain forced labour. “Severe human trafficking” is defined as the use of force, fraud or coercion to subject a person to involuntary servitude, peonage, debt bondage or slavery.[149] Disclosures must be posted on company websites and must address verification, audits, certification, internal accountability, and training efforts. Failure to produce disclosures may result in an injunction by the California Attorney General.[150]

Section 54 of the U.K.’s Modern Slavery Act, 2015 (MSA) requires companies to post annual disclosures online outlining their efforts to address modern slavery in their global supply chains. The MSA targets “slavery, servitude and forced or compulsory labour,” as defined in the European Convention on Human Rights, as well as human trafficking for the purposes of listed forms of exploitation, including “seeking services” from children and other vulnerable persons.[151] The provision applies to public and private companies and partnerships wherever they are incorporated or formed, and in whatever sector they operate, if they run a business or part of a business in any part of the U.K. and have a global turnover of over £36 million (approximately C$60 million). The MSA does not set minimum requirements, but suggests that companies disclose policies, due diligence processes, key performance indicators and training with respect to modern slavery. The MSA empowers the Secretary of State to request a court order requiring disclosure from a company that has not complied with section 54.[152]

After conducting departmental and parliamentary inquiries, the Australian government has announced its intention to introduce supply chain legislation similar to the MSA. A parliamentary committee recommended that Australian legislation include a broad but clear definition of modern slavery that includes references to human trafficking and slavery offences in their criminal code, and specific mention of child labour and the worst forms of child labour.[153] The proposed legislation would require businesses with an annual revenue over approximately C$100 million to report annually on their efforts to address modern slavery in their operations and supply chains. The Australian government is considering options for monitoring, including creating a central repository of statements and/or supporting civil society monitoring efforts.[154]

Legislation with Due Diligence Requirements

France enacted the Corporate Duty of Vigilance Law in March 2017, which creates a “duty of vigilance” for multinational firms carrying out all or part of their activity in France.[155] This legislation goes further than the MSA and other transparency legislation by specifically requiring large corporations to establish a due diligence plan to identify risks and prevent violations of human rights and fundamental freedoms or serious harm to health, safety or the environment. The plan must be made public. The legislation allows interested parties to apply for a court order requiring non-compliant companies to pay a penalty, as well as those affected by a company’s non-compliance to bring a civil action against the company.[156]

In February 2017, the lower chamber of the Dutch Parliament adopted the Child Labour Due Diligence Bill. The bill is currently before the Dutch Senate. The law would require companies that provide goods and services to Dutch consumers, including companies registered outside the Netherlands, to identify whether there is a “reasonable suspicion” that child labour is present in their global value chains and – if this is the case – to develop a plan of action to combat it. Companies would be required to certify that they have conducted the required due diligence. These declarations would be published through a government registry. Stakeholders who can provide concrete evidence that a company’s goods or services were produced with child labour would be able to submit a complaint to that company. If the issue is not resolved, the stakeholder would be able to submit the complaint to Dutch authorities. Failure to conduct the required due diligence would result in a modest fine, or in criminal penalties including substantial fines if such a failure is repeated.[157]

Learning Lessons from Other Jurisdictions

Given that legislation in other jurisdictions is relatively new, its effectiveness is not yet clear.[158] Nonetheless, the Subcommittee heard that like‑minded jurisdictions are learning from one another. For example, the Subcommittee learned that the U.K. legislation avoids several key criticisms of the California legislation[159] and that subsequent private members’ legislation in the U.K. is seeking to further refine and strengthen transparency requirements.[160] Over the course of the past two years, Australia’s parliament carefully studied the U.K. legislation and its critiques before arriving at its final recommendations.[161] Witnesses who appeared before the Subcommittee or who submitted briefs have also drawn lessons about the merits and drawbacks of other jurisdictions’ approaches.[162] In particular, witnesses considered what kinds of human rights violations businesses should report on, and which businesses should be subject to transparency legislation. Witnesses also discussed the merits and drawbacks of including positive due diligence obligations, as well as measures that would need to be in place to ensure high-quality disclosures. Mr. Messenger underlined the effectiveness of “publicly shining a light on companies’ practices,” noting that “the U.K. legislation has led to 39% of companies implementing new policies and systems to prevent labour exploitation, and 50% of companies collaborating more with other stakeholders to take action.”[163]

What Human Rights Violations should be the Focus of Legislation?

Given the connection between decent work for adults and the vulnerability of children to exploitation, witnesses argued that supply chain legislation should address not only child labour but also all forms of forced labour affecting adults as well as children.[164] Witnesses cautioned that a narrow approach—such as legislation targeting only human trafficking—would fail to recognize the connection between labour rights and other internationally recognized human rights.[165] Instead, Human Rights Watch argued, legislation should seek to eliminate dangerous working conditions, abuse by employers, violations of the rights of free association and collective bargaining, and reduction or non‑payment of wages.[166] Likewise, witnesses agreed that imposing reporting or due diligence requirements on companies for both child labour and adult forced labour would not add an excessive burden, as, in Mr. Talibart’s words, “the solution for one is also going to be the solution for the other.”[167] Mr. Simon Lewchuk, Senior Policy Advisor for World Vision Canada, emphasized that guidance and clarity on the definitions and scope contemplated by legislation would be “absolutely key” to its success. He noted, for example, that the lack of an internationally recognized definition of “modern slavery” has created challenges for companies attempting to comply with the MSA.[168]

To which Companies should Transparency Legislation Apply?

The matter of which companies should be subject to supply chain transparency legislation is “contested.”[169] Witnesses disagreed on whether legislation should be broad-based or focus on specific sectors. Ms. Berman argued against narrow legislation because labour-related human rights violations occur across many sectors.[170] By contrast, other witnesses saw the benefit of focusing on industries at greater risk of having child and/or forced labour in their supply chains, including agriculture, mining and apparel, as a first step.[171]

With respect to what type of companies should be subject to legislation, witnesses proposed thresholds based on turnover that ranged from C$35 million to C$100 million.[172] Mr. Evans noted that, since such legislation would require transparency or due diligence down the supply chain, buyers would require the participation of their smaller suppliers; therefore, “it doesn't really matter where you start.”[173] Mr. Messenger emphasized that caution should be taken not to impose an “undue burden” on smaller companies.[174] He argued that legislation should be focused on larger companies because they can have a greater impact, through their global reach, and because they have a greater ability to marshal resources towards compliance.[175]

Should Positive Due Diligence Obligations be Included?

As the French legislation has only been in force for several months, and the Dutch bill has yet to pass, their effectiveness has not been assessed. Some witnesses, however, already view mandatory due diligence legislation as an “improvement” over legislation creating reporting requirements[176] since a company could fully respect reporting legislation by stating that it is doing nothing to address modern slavery.[177] Ms. Becker argued that efforts to meet reporting requirements would not lead companies to fully investigate their supply chains down to their input-level suppliers, where the risk of the use of child or forced labour is greatest. She argued that, to date, companies have simply accepted assurances from their direct suppliers, and that, without due diligence obligations, they would continue to do so.[178]

Several witnesses argued for due diligence obligations, including the establishment of risk assessment protocols to identify, mitigate and prevent the risk of the use of child or forced labour, and to establish remedies when incidents occur.[179] Ms. Berman, UNICEF Canada and Human Rights Watch suggested that the UNGPs be considered the baseline for due diligence.[180] According to Ms. Berman, as a pre-existing internationally agreed-upon framework, the UNGPs can fill the need for “a level playing field and clear rules of the game.”[181]

Witnesses noted that companies would require support to meet any due diligence obligations.[182] Dr. McQuade also cautioned that forcing companies to take initiatives that could affect community development would call for coordination with development assistance programming and civil society.[183]

How to Ensure High-Quality and Comparable Disclosures?

Supply chain transparency and due diligence legislation rely on consumers, civil society and the private sector to reward responsible behaviour and punish unacceptable behaviour. The success of such legislation thus relies on the availability of comparable corporate disclosures.[184] Witnesses criticized the U.K. legislation because, while it suggests potential elements of a disclosure, it does not make any specific element mandatory.  The legislation is also criticized for its failure to establish a single repository for annual reports. As a result, witnesses noted, statements can be superficial, difficult to compare, and relatively inaccessible.[185] World Vision Canada provided the Subcommittee with a legal memorandum which states the importance of having disclosure rules that apply uniformly, that mandate regular updates in reporting, and that publicize a list of companies subject to the law.[186]

Witnesses supported the creation of a well-publicized, searchable repository of statements maintained by a government authority.[187] Authorities could identify companies governed by the legislation, and, through the repository, identify minimally-compliant companies, and non-compliant companies. Standardization would also be necessary—for example through the creation of benchmarks or a questionnaire.[188] Witnesses stressed that responsible authority should be sufficiently resourced to maintain the repository.[189] A central repository of statements made under the MSA is currently managed by the Business & Human Rights Resource Centre, an NGO governed by a coalition of stakeholders representing civil society, business and workers.[190]

SUPPLY CHAIN TRANSPARENCY IN THE CANADIAN CONTEXT

Witnesses expressed their concern that Canada risks “falling behind” if it does not implement effective supply chain legislation in the near future.[191] Government officials informed the Subcommittee of the Government of Canada’s efforts to date. Ms. Moran acknowledged that addressing child and forced labour in global supply chains is

a complex endeavour that goes much beyond promoting CSR standards for Canadian enterprises operating abroad, advocating for policy changes in foreign capitals, or providing development assistance. Our international efforts need to be complemented by domestic interventions with and led by companies, civil society organizations, consumers, and investors, along with governments at all levels.[192]

For over a year, the Government of Canada has been actively studying the development of supply chain legislation in other jurisdictions. Canada is taking a “whole-of-government” approach to the study, given the multi-faceted impact of potential supply chain legislation.[193] Employment and Social Development Canada (ESDC) spearheads an informal interdepartmental working group “to study the issue of transparency or due diligence throughout global supply chains”[194] and “explore how such measures could build on Canada’s current approaches.”[195] According to Mr. Patry, the other departments and agencies in this group are: Global Affairs Canada (GAC), Public Services and Procurement Canada, the Department of Justice, Public Safety Canada, Natural Resources Canada, and Innovation, Science and Economic Development Canada.[196] The interdepartmental working group has consulted with civil society.[197] Mr. Patry took the position that it would be “premature” for the interdepartmental working group to come forward with a recommendation for a Canadian approach to supply chain transparency.[198]

It is ESDC’s position that supply chain transparency is a “joint and shared responsibility” between federal and provincial governments. Mr. Patry noted that when the federal government ratifies international obligations that could fall under provincial jurisdiction, such as ILO Conventions, the onus is on the federal government to consult properly with provinces.[199] Any measures taken by the federal government to address child labour or forced labour in supply chains must respect Canada’s constitutional division of powers. For this reason, legislation from other jurisdictions cannot simply be transposed into the Canadian context. Even so, Mr. Talibart emphasized that constitutional limitations should not prevent the federal government from acting on this issue.[200] He noted,

…given the high likelihood of a cascade effect on provincial systems, and the desirability of making a strong statement to the global community Canada should produce the best and most visible law possible at the federal level. Even if limited in application by our constitution, this would be a public statement of paramount importance and set the tone for future Canadian legislation on this issue.[201]

Constitutional considerations shaped witnesses’ views on what types of measures were possible at the federal level. There was not a clear consensus on how to draft federal supply chain legislation that would be effective and that would withstand constitutional scrutiny while meeting Canada’s international obligations. Witnesses discussed three types of measures that could be adopted at the federal level. First, witnesses considered enacting disclosure requirements applicable to a large set of companies; second, they considered restricting the import of goods at risk of having been made with child or forced labour; and finally, witnesses considered adopting transparency requirements within the public procurement context.

Broadly Applicable Disclosure Requirements

Section 91 of the Constitution Act, 1867 enumerates federal powers, including the power to regulate trade and commerce (section 91(2)) and set criminal law (section 91(27)).[202] Section 92 of the Constitution Act, 1867 grants provinces the jurisdiction to pass laws concerning “property and civil rights in the province” (section 92(13)).[203] Typically, due diligence reporting by corporations falls under provincial jurisdiction.[204] For example, provincial securities regulators recently published corporate governance guidelines that call for public companies to establish and publish a Code of Business Conduct and Ethics and disclose how compliance is monitored.[205] Canadian courts have recognized that the same subject can have both federal and provincial aspects, and that federal and provincial laws can operate concurrently and both be valid, as long as their “pith and substance” or “dominant purpose” falls under the appropriate head of power and the measures do not have more than an incidental impact on the other level of government’s jurisdiction.[206]

Witnesses suggested that connecting disclosure requirements to a criminal offence may successfully engage a federal head of power.[207] For example, sections 279.01-279.04 of the Criminal Code already prohibit human trafficking, the receipt of a financial or material benefit from human trafficking and the withholding of identity documents to facilitate human trafficking. To date, the Department of Justice is unaware of any prosecutions related to international supply chains.[208] International Commission of Jurists (ICJ) Canada noted that several amendments to definitions in the Criminal Code would be required in order to more effectively target the forms of child and forced labour that exist in supply chains.[209] Ultimately, witnesses recommended against taking a criminal law approach, noting that it would be relatively onerous and “inelegant.”[210] The Department of Justice also foresaw significant practical obstacles to investigation and enforcement.[211]

The federal Extractive Sector Transparency Measures Act (ESTMA) was cited as a “useful precedent” for supply chain transparency legislation.[212] The ESTMA requires mining companies over a specified size (defined in assets, revenue and employees) in Canada to disclose any payments to government officials over C$100,000, including payments made by subsidiaries. The ESTMA’s stated purpose is to “implement Canada’s international commitments to participate in the fight against corruption,” including forms of corruption defined by Canada’s Criminal Code and the Corruption of Foreign Public Officials Act.[213] The ESTMA includes criminal penalties for non-compliance.[214] In a legal opinion drafted for World Vision Canada, Dentons Canada LLP noted that the addition of a criminal penalty to commercial legislation would be insufficient to give the law a valid criminal law purpose (i.e. preserving public peace, order, security, health or morality).[215] However, the author noted that since the targeted ill is itself a criminal offence, disclosure requirements could constitute a constitutionally valid attempt to achieve transparency in supply chains.[216]

There is a stringent test for whether the federal government can use its general power to regulate trade and commerce in a way that might impact provincial jurisdiction over property and businesses. This test, most recently laid out by the Supreme Court of Canada in its 2011 Reference Re Securities Act decision, includes consideration of whether there is a general regulatory scheme under the oversight of an agency; whether the law concerns trade as a whole as opposed to a specific industry; whether the provinces, acting alone or together, would be constitutionally able to enact the same measure; and whether the legislative scheme would fail if a single province failed to enact it. Not all of these factors would need to be met in each case.[217] ICJ Canada expressed concern that broad federal disclosure or due diligence requirements would not meet this test.[218] However, ICJ Canada did note that the federal government could have the power to impose disclosure obligations on importers or exporters and corporations established pursuant to the Canada Business Corporations Act, and corporations in federally regulated industries such as banking or transportation.[219]

Import Restrictions

Witnesses strongly recommended that the Government of Canada consider banning the import of goods produced or manufactured using child labour, forced labour, or the labour of trafficked persons.[220] Dr. McQuade argued that import restrictions are the most direct way to eliminate the competitive advantage created by child labour, which is generally low-cost.[221] Witnesses also called on the Government of Canada to create a public list of goods prohibited based on the use of child or forced labour. They noted that prohibitions should be accompanied by a statement identifying specific problems, and the steps that can be taken by businesses and states to address human rights abuses.[222]

Witnesses suggested that Canada follow the example of the U.S., which prohibits the import of goods mined, produced or manufactured with child or forced labour.[223] Such merchandise is subject to seizure, and may lead to criminal investigation of the importer. The Commissioner of U.S. Customs can exclude goods based on a complaint by any person if the information provided could reasonably indicate that a good was produced with forced labour. The agency acts on information concerning specific manufacturers/exporters and specific merchandise, and does not target supply chains or industries in problematic countries or regions.[224] The Subcommittee learned that the law is not thoroughly enforced,[225] but that it was strengthened in 2016 to close loopholes.[226]

According to Dentons Canada LLP, the federal government could ban or regulate the importation of goods using its power to regulate international trade and commerce. However, restrictive measures would have to be compatible with Canada’s international trade obligations.[227] Selective import restrictions are generally prohibited under the General Agreement on Tariffs and Trade (GATT), a foundational treaty of the World Trade Organization, to which Canada and 163 other members are party.[228] A specific exception exists to allow import restrictions on goods made with prison labour. No such explicit exception exists for child labour or the worst forms of child labour. Even so, the GATT provides a potential defence for import restrictions that are necessary to protect public morals or human life and health, which includes the health and safety of adults and children.[229]

Responsible Sourcing in Public Procurement

Noting that the impact of supply chain transparency legislation is likely limited to public-facing companies with brand recognition, Ms. Berman asserted that public procurement requirements could also reach smaller companies and suppliers.[230] Ms. Berman and others argued that a change in public procurement policy for goods, services and works would set a powerful example for other states.[231] This approach is already taken in the U.S., where federal procurement regulations prohibit awarding a contract unless the company certifies that it will not sell a product suspected of being produced with forced or child labour and discloses its compliance plan.[232] The Subcommittee learned that private members’ legislation has been introduced in the U.K. House of Lords to extend the obligations of the MSA to public bodies, thereby barring non-compliant companies from procurement processes.[233]

The Subcommittee learned that Public Services and Procurement Canada (PSPC) has taken steps towards responsible sourcing. PSPC is currently analysing the results of a request for information, which closed in January 2018, seeking input from the apparel industry to develop guidelines and an approach for the ethical procurement of apparel. PSPC proposed a model whereby suppliers would self-certify that they and their direct Canadian and foreign suppliers comply with local laws and international standards on labour and human rights, including freedom from child labour, forced labour and human trafficking. PSPC anticipates that this new certification process for apparel suppliers will come into effect by the end of 2018. Mr. Patry also noted that PSPC plans to include similar provisions in its procurement Code of Conduct.[234]

The Subcommittee recommends:

Recommendation 6 – Advancing Initiatives to Motivate Businesses to Eliminate Child and Forced Labour in their Supply Chains

That the Government of Canada develop legislative and policy initiatives that motivate businesses to eliminate the use of any form of child labour in their global supply chains, and that empower consumers and investors to engage meaningfully on this important issue. The Government of Canada should draw on lessons learned by jurisdictions that have implemented supply chain legislation. The federal government should involve provincial and territorial leadership, the private sector, civil society and the broader public as much as possible to draft and implement legislation that is constitutionally sound, effective, and well-understood.

Recommendation 7 – Examining Canada’s Import Regime and Procurement Policies as Levers to Eliminate the Use of Child Labour

That the Government of Canada consider how to use Canada’s import regime as well as its public procurement policies to incentivize businesses to eliminate the use of any form of child labour in their supply chains.

CONCLUSION

As other jurisdictions take action against the use of child and forced labour in supply chains, Canada must follow suit – or risk falling behind its peers on this critical issue. The Subcommittee learned that the Government of Canada is already doing important work to combat all forms of child labour, including by addressing its root causes via development initiatives and insisting on the inclusion of labour obligations in all free trade agreements. In addition, the Government of Canada supports Canadian businesses operating abroad to build their capacity to monitor their supply chains for child and forced labour. The Subcommittee was also encouraged to learn that the Government of Canada has formed an interdepartmental working group to study measures other jurisdictions have taken to combat child and forced labour in supply chains, and how such measures could be applied in Canada.

While existing initiatives are promising, there is room to strengthen their efficacy and impact through proactive and inclusive leadership on this issue. The Government of Canada must prioritize the elimination of all forms of child labour in supply chains. To do so, the Government of Canada should financially support development projects that address the root causes of child labour and forced labour, particularly among groups and in regions in which progress has stalled. In particular, the Government of Canada should support projects aiming to enhance access to quality education, and build justice systems capable of holding perpetrators to account.  The Government of Canada must more thoroughly address the use of child labour and forced labour in supply chains when negotiating trade agreements. The Government of Canada should develop a strategy to support private sector efforts to monitor supply chains for child labour and forced labour, and to share best practices. Finally, the Government of Canada should urgently advance initiatives to motivate businesses to eliminate the use of all forms of child labour in their global supply chains. Canada is in a position to learn from the experiences of like-minded jurisdictions and to apply those lessons in the Canadian context, be it with respect to transparency legislation, import restrictions or responsible procurement policies. The federal government should involve provincial and territorial leadership, the private sector, civil society and the broader public as much as possible to draft and implement legislation or regulations that are constitutionally sound, effective, and well-understood. The regulatory process must be clear and transparent, particularly for the private sector.

While Canada has taken the first steps towards the elimination of child labour in global supply chains, the time to take more decisive action, in the form of legislation and other measures, is now. There is no single “silver bullet” in the fight against child labour, which takes many forms. Nonetheless, taking concerted action to implement the Subcommittee’s recommendations would be an important step forward in achieving the ultimate goal of eliminating all forms of child labour worldwide.