Question Period Note: Labour exploitation in procurement

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

Notes:

• all questions regarding the import prohibition of goods that are mined, manufactured or produced by forced labour should be directed to the Minister of Public Safety, as the Minister responsible for the Canada Border Services Agency (CBSA)
• Supermax forced labour allegations is now a standalone QP note

• 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
  • A risk assessment of forced labour in goods procured by Public Services and Procurement Canada has been undertaken, and we are identifying next steps to further protect procurement supply chains from exposure to forced labour, human trafficking and child labour
  • In line with our commitments under the National Strategy, Public Services and Procurement Canada updated the Code of Conduct for Procurement to clearly outline Canada’s expectations for suppliers and their sub-contractors regarding human and labour rights
  • We have developed anti-forced labour contract clauses that enable the Department to terminate contracts where there is credible information that goods have been produced using forced labour or human trafficking
  • PSPC is currently conducting research to map international due diligence obligations for businesses to report on actions taken to address the risks of forced labour and human rights violations. This research will inform the development of due diligence tools and resources targeted at safeguarding federal procurement supply chains
  • As a compliment to these activities, and in keeping with commitments under the National Strategy to Combat Human Trafficking, PSPC is also planning a series of industry engagement sessions, with a focus on high-risk goods. The sessions will seek to discuss experiences and best practices with suppliers, industry representatives, and non governmental organizations in relation to addressing forced labour in supply chains

If pressed on the risk assessment and delays in posting the risk assessment:

• The risk assessment is an important step to understand where supply chains may be vulnerable and the results are key in developing an evidence-based approach to address human trafficking in federal procurement supply chains

If pressed on possible allegations of forced labour with suppliers:

• Forced labour is a significant and unacceptable problem in global supply chains and we take all allegations of such conduct very seriously
• The Government of Canada is committed to ensuring that it does not do business with companies that employ unethical practices, either directly or within their supply chains

If pressed on compliance with expectations set out in the updated Code:

• The Department takes all allegations of forced labour seriously, and under the updated Code of Conduct, the Department seeks to leverage existing contractual relationships to promote compliance and achieve favourable outcomes

If pressed on the anti-forced labour contract clauses:

• Work is underway to expand the anti-forced labour contract clauses to other contractual instruments used by my department such as bid solicitations, standing offers, and supply arrangements

If pressed on the supply chain of garments:

• The Ethical Procurement of Apparel Policy of 2018 is a self-certification regime and this certification is subject to verification by Canada at any time during the period of a contract
• Should Public Services and Procurement Canada receive credible evidence of a breach, it would investigate the claim and take the appropriate contractual actions
• As of today, the Department has not received any credible evidence of a potential issue with apparel contracts

If pressed on global supply chains:

• 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
• Goods that are mined, manufactured or produced by forced labour are prohibited from entering Canada pursuant to the Customs Tariff
• This import prohibition, which is under the purview of the Canada Border Services Agency, applies to all goods regardless of their country of origin, and is an additional tool at Canada’s disposal to combat forced labour in global supply chains

If pressed on procurements linked to Xinjiang, China:

• We are aware that the United States Customs and Border Protection agency issued a Withhold Release Order against cotton products and tomato products from Xinjiang believed to be produced using forced labour in their production
• The Government of Canada announced new measures on January 12, 2021, to address human rights abuses in Xinjiang, China, including the adoption of a comprehensive approach to defend the rights of Uyghurs and other ethnic minorities

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, and we are working on a number of additional measures to enhance the integrity of our procurement system

In May 2021, Rights Lab provided its risk assessment report to Public Service and Procurement Canada (PSPC). This work had been contracted to identify which goods purchased by PSPC are at risk of having been produced using human trafficking, forced labour, and/or child labour. Rights Lab is a multidisciplinary group with expertise in human trafficking, based in the University of Nottingham, in the United Kingdom.

The report contained recommendations that are informing the development of an evidence-based approach to addressing labour exploitation in federal procurement supply chains. The department is undertaking activities to respond to the recommendations.

As part of planned actions under the National Strategy to Combat Human Trafficking, 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). PSPC requested a risk assessment for force labour undertaken by Rights Lab (May 2021). It updated the Code of Conduct for Procurement with clear expectations for suppliers (August 2021) and implemented new contracts clauses on anti-forced labour for all new goods contracts (November 2021).

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 personal protective equipment. 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 Policy on Ethical Procurement of Apparel.

Malaysian personal protective equipment

The Government of Canada is aware of the media reports on human rights abuses in the production of disposable gloves in Malaysia. PSPC is a member of an international working group looking at human trafficking and forced labour in the Personal Protective Equipment/Medical Supply Chain. Suppliers sourcing gloves in Malaysia have been asked to provide information on due diligence processes and mitigation measures put in place to meet their labour and human rights responsibilities. Suppliers were also requested to detail how they identify, prevent, mitigate and improve on accounts of human rights concerns and ensure practices are in place to ensure protection of workers in their supply chain. Sedex Members Ethical Trade Audit report were also requested if available.

Canada-United States-Mexico Agreement

PSPC does not have a role in implementing the Canada-United States-Mexico Agreement (CUSMA) forced labour provisions but is following this work closely to identify potential implications on procurement as these measures are implemented.

Prior to CUSMA, Canada did not restrict the entry of goods manufactured, mined and produced by forced labour into the country. The CUSMA labour chapter commits Canada, the U.S., and Mexico to work together to identify the movements of goods produced by forced labour.

CBSA and Employment and Social Development Canada (ESDC) are the lead departments in implementing measures to ensure that the Government of Canada is compliant with this CUSMA requirement. The CBSA plays a role in the interception of goods that are suspected of being produced by means of forced labour. ESDC is the lead department for labour-related programs.

Sinopharm

Sinopharm International Corporation was awarded a contract for nitrile gloves in April 2020, the contract was further amended in June and December 2020 for additional quantities. In December 2020, it was brought to PSPC’s attention that there were possible forced labour issues with suppliers in Malaysia. In January 2021, after reminding the nitrile glove suppliers of their obligation with regard to ethical practices, PSPC issued a communication to contracted suppliers, including Sinopharm International Corporation, to provide attestation of actions against forced labour.

Sinopharm International Corporation’s manufacturer, INTCO, located in China, was not part of the January 2021 ethical concerns in regard to forced labour in large manufacturing plants. INTCO signed and provided to PSPC a declaration of no forced labour on April 12, 2021. INTCO also has the international certification ISO13485, the internationally agreed standard that sets out the requirements for a quality management system specific to the medical devices industry.

Sinopharm International Corporation completed final contract delivery requirements in December 2021. There are no outstanding contract requirements to be fulfilled.

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