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
  • A consultation process was recently completed to update the Code of Conduct for Procurement in order to outline Canada’s expectations for suppliers regarding human and labour rights. The updated Code of Conduct for Procurement will be finalized shortly
  • We have informed all of our suppliers of their obligations now under the Canada- United States-Mexico Agreement which prohibits the importation of goods that have been produced in whole or in part by forced labour
  • We have also undertaken an assessment of areas of risk within government procurement, and are analyzing the results to identify next steps to further protect procurement supply chains

If pressed on the supply chain of garments:

• The Ethical Procurement of Apparel Policy, which was implemented in 2018, is a self-certification regime
• The certification is subject to verification by Canada at any time during the period of the contract. Should PSPC receive credible evidence of a breach, it would investigate the claim and take the appropriate contractual actions. If the certification is found to be untrue Canada may declare a bid non-responsive or may declare a contractor in default
• As of today, the Department has not received complaints or credible evidence of a potential issue with apparel contracts
• A number of policy options are being explored to mitigate forced labour risks in the procurement process, and address risks involved in all tiers of the supply chain of the goods procured by PSPC, including apparel

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 identified areas that warrant attention in order to maximize the impact of future efforts to further decrease risks of forced labour in supply chains
• The results of the risk assessment is a key step in developing an evidence-based approach to address human trafficking in federal procurement supply chains

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 will be 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
• In March 2021, a communiqué was posted on Buyandsell.gc.ca informing suppliers of the prohibition on the importation of goods made by forced labour that stems from the Canada-United States-Mexico Agreement

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 procurements linked to Malaysia:

• The Government of Canada is aware of the recent media reports on human rights abuses in the production of disposable gloves in Malaysia, and takes these seriously
• Specifically, the Government of Canada reached out to its nitrile glove suppliers that may be sourcing their gloves from manufacturers in Malaysia, to remind them of their obligations with regards to ethical practices and human rights
• PSPC is also a member of an international working group looking at human trafficking and forced labour in the Personal Protective Equipment/Medical Supply Chain. This working group is formed of representatives from the USA, United Kingdom, Australia, New-Zealand and Canada
• In addition, the Government of Canada has favoured a made-in-Canada solution to accelerate domestic production of 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, and we are working on a number of additional measures to enhance the integrity of our procurement system

A Request for Proposals was launched in late 2020 to select a supplier to conduct a risk assessment to identify which goods purchased by Public Services and Procurement Canada are at risk of having been produced using human trafficking, forced labour, and/or child labour. The contract was awarded in February 2021 to Rights Lab, a multidisciplinary group with significant expertise in human trafficking, based in the University of Nottingham, in the United Kingdom. The risk assessment was received by PSPC in late May and the results are being analyzed.

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 action, under the National Strategy to Combat Human Trafficking (National Strategy), 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 the 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 exploitation 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.

Malaysian personal protective equipment

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

Note: all questions regarding the import prohibition of goods that are mined, manufactured or produced by forced labour should be directed to the Canada Border Services Agency.

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 two 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 has been 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 that are suspected of being produced by forced labour will be detained at the border for inspection by a CBSA 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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