Question Period Note: Labour exploitation in procurement

The global nature of supply chains puts procurements at potential risk of having been produced using forced labour and human trafficking.

• The Government of Canada is committed to addressing the risk of forced labour and human trafficking in federal procurement supply chains through the National Strategy to Combat Human Trafficking
  • Work is underway to ensure we do business with ethical suppliers, including updating the Code of Conduct for Procurement to outline expectations for suppliers on human and labour rights
  • The department has recently launched a Request for Proposals to conduct a risk assessment to identify which goods purchased by Public Services and Procurement Canada (PSPC) are at risk of having been produced using human trafficking, forced labour, and/or child labour
  • The findings of the risk assessment will enable us to develop an evidence-based approach to protect procurement supply chains from exposure to forced labour
  • Additionally, the labour chapter of the Canada-United States-Mexico Agreement established an obligation to prohibit the importation of goods that have been produced in whole or in part by forced labour
  • This import prohibition, which is under the purview of the Canada Border Services Agency, applies to all goods irrespective of their country of origin, and is an additional tool at Canada’s disposal to both combat forced labour in global supply chains and level the playing field amongst suppliers
  • As the labour chapter of the Canada-United States-Mexico Agreement is a border measure, the Canada Border Services Agency is leading the implementation in partnership with Employment, Workforce Development and Disability Inclusion

If pressed on PPE procurements linked to Xinjiang, China:

• In addition to the measures being undertaken as part of the National Strategy, the Government of Canada has favoured a made-in-Canada solution to ramp up domestic production of personal protective equipment (PPE) which reduces exposure to global supply chains that could be vulnerable to forced labour

If pressed on lack of compliance monitoring for existing measures:

• Human trafficking and forced labour are clandestine crimes, often hard to detect as they tend to occur beyond tier one suppliers in the supply chain
• The global context in which most companies operate makes it challenging to directly monitor compliance with local laws and international human and labour rights in other countries
• The Government of Canada recognizes that addressing the risks of human trafficking and forced labour in our supply chains requires sustained effort over time, and we are working on a number of additional measures to enhance the integrity of our procurement system

If pressed on the risk assessment:

• The risk assessment is an important step for my department to understand where supply chains may be vulnerable to risks of forced labour and which goods are at a higher risk
• The assessment will also suggest an overall prioritization approach by sector (e.g. apparel, furniture) to maximize the impact of future efforts
• The risk assessment is a key step in developing an evidence-based approach to address human trafficking in federal procurement supply chains

The complexity of global supply chains enhances the vulnerabilities of those in precarious work situations in Canada and around the world. According to a 2017 joint report by the International Labour Organization (ILO) and the Walk Free Foundation, forced labour is present throughout all regions of the globe and most prevalent in manufacturing, construction, mining, agriculture, and domestic work. In a 2016 report, World Vision Canada found that over 1,200 companies operating in Canada are importing goods that may have been produced by child or forced labour.

Supply chains for PPE are spread across numerous countries with varying business practices and government regulations. Compounded by the global urgency to acquire PPE, this context may enable an environment where workers’ conditions are overlooked.

The Government of Canada is taking actions, under the National Strategy to Combat Human Trafficking to ensure that federal suppliers comply with international labour and human rights. As part of the National Strategy, PSPC is leading the following initiatives:

• Revising the PSPC Code of Conduct for Procurement to include expectations on human and labour rights for suppliers
• Conducting an assessment of the risks of human trafficking and forced labour in federal procurement supply chains
• Examining long-term approaches to address human trafficking for labour exploitations in federal procurement supply chains

As part of planned actions under the National Strategy, PSPC will also create information resources for suppliers to become better aware of potential risks in their supply chains (2021 to 2022); and create requirements for suppliers of high-risk goods to address risks in their supply chain (2022 to 2023).

Moreover, in July 2020, clauses on ‘Ethical Procurement’ and ‘Origin of Work’ were added in new PPE contracts and in all newly issued Request for Proposals for PPE. The ‘Origin of Work’ clause requires bidders to provide the name, address and country of manufacturers of the item, including subcontractors. The ‘Ethical Procurement’ clause, requires bidders to certify that they and their first-tier subcontractors comply with the same human rights and labour standards set out in the Ethical Procurement of Apparel policy.

Canada-Unites States-Mexico Agreement

On November 30, 2018, Canada, the United States and Mexico signed the new Canada-United States-Mexico Agreement (CUSMA), which includes a comprehensive and enforceable labour chapter. The comprehensive labour chapter (Article 23.6 specifically) includes a new obligation for Canada and its 2 CUSMA partners to prohibit the importation of goods produced, in whole or in part, by forced or compulsory labour. Paragraphs 201(i.1) and 204(8) of the CUSMA Implementation Act (the Act) amended the Customs Tariff and the Schedule to the Customs Tariff to include a prohibition on the importation of goods that are mined, manufactured or produced wholly or in part by forced labour. The amendments made under the Act came into force in Canada on July 1, 2020.

Prior to this new commitment, Canada did not restrict the entry of goods manufactured, mined and produced by forced labour into the country. The labour chapter also commits Canada, the U.S., and Mexico to work together to identify the movements of goods produced by forced labour. In order to implement this obligation under the CUSMA, the Government of Canada amended the Customs Tariff and the Schedule to the Customs Tariff to include a prohibition on the importation of goods produced by forced labour.

The Canada Border Services Agency (CBSA) plays a role in the interception of goods that are suspected of being produced by means of forced labour. Employment and Social Development Canada (ESDC) is the Government of Canada’s lead department for labour-related programs. The CBSA is working with ESDC to identify goods that have been produced by forced labour entering Canada. Specifically, ESDC conducts research and analysis on companies that are suspected to be using forced labour to produce goods and are importing them to Canada. The CBSA may use this information to identify and intercept shipments containing goods produced that have been identified as suspected to have been produced by forced labour.

In this regard, it should be noted that the CBSA and ESDC are the lead departments in implementing the measures required to ensure that the Government of Canada is compliant with this CUSMA requirement. PSPC does not have a role in implementing the CUSMA forced labour provisions but is following this work closely to identify potential implications on procurement as these measures are implemented.

Shipments containing goods suspected of being produced by forced labour will be detained at the border for inspection by a border services officer. If in the judgement of the officer the goods were produced by forced labour, the officer will apply the tariff classification under chapter 98, item 9897 and prohibit the goods from entering Canada. Determinations are made on a case-by-case basis, based on all available supporting evidence and analysis.

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