AUSTRALIAN PARLIAMENTARY INQUIRY INTO MODERN SLAVERY Prepared in collaboration with 1 Position Overview 1.1 Human rights protection has traditionally been a matter for the State. However, 1due to globalisation, the liberalisation of trade and the immense economic power of corporations, it is now well recognised that there is a crucial link between the way in which businesses conduct their operations and human rights. In the list of the world’s top 100 economic entities, 31 are nation states and 69 are corporations.1 1.2 STOP THE TRAFFIK Australia is part of a global coalition that aims to stop and prevent human trafficking and slavery. In Australia, this coalition consists of 30 organisations. We collectively aim to work with corporations to increase transparency in their supply chains and introduce measures to eliminate human trafficking, slavery and slavery like practices. Our efforts are particularly focused on the cocoa, tea, garment and fishing industries, although our work is not confined to these sectors. 1.3 We very much welcome the Joint Standing Committee’s inquiry and applaud the Australian government’s efforts to identify international best practice in preventing human trafficking, slavery and slavery like practices. Human Trafficking, Slavery, and2 Slavery-like practices in corporate supply chains. 2.1 The United Nations defines trafficking in persons as ‘the recruitment, transportation, transfer, harbouring or receipt of people through the use of threats, force, coercion, abduction, fraud or deception, for the purpose of exploitation.’ This definition has thus far also been employed in the Australian context.2 2.2 From the outset, we consider it pertinent to note that the term “Modern Slavery” has gained popular usage. We are of the view that it is important that it is made clear in any Modern Slavery Act that the term “Modern Slavery” is derived from this United Nations definition. This likewise applies to the use of this term throughout these submissions, as with the use of the term “slavery”. 1 https://blogs.worldbank.org/publicsphere/world-s-top-100-economies-31-countries-69-corporations 2 See for example, Division 271 of the Criminal Code 1995 (Cth) enacted in fulfilment of Obligations under the Protocol to Prevent, Suppress and Punish Trafficking in Persons Especially Women and Children (2000). 2 2.3 The vast proportion of those living in slavery reside in several of Australia’s neighbouring nations, including India, China, Pakistan, Thailand and Bangladesh. The International Labour Organisation estimates that of the 21 million people in situations of forced labour, 11.7 million are located in the Asia Pacific region.3 2.4 Due to cheaper production costs, a great deal of labour in these countries is dedicated toward producing consumer goods sold in Western Nations, including Australia.4 It is estimated that slavery in these global supply chains generates about $US150 billion in revenue annually,5 with $US 51 billion in profits generated from forced labour in the Asia Pacific region. 6 2.5 Australia is therefore inevitably implicated in slavery through the consumption of imported goods. There is little way of knowing with certainty the extent of slavery which touches Australian consumer goods. Whilst statistics can provide an indication as to the extent of slavery in developing nations, they are unable to demonstrate the extent to which developed nations are touched by slavery as a result of importing goods from offshore manufacturing and labour. 2.6 The only way in which Australian consumers can develop an awareness of the potential connection between the products they consume and human trafficking and slavery is if corporations are required to be transparent with regard to the way in which their products are produced and made available for sale within Australia. 3 http://www.ilo.org/global/topics/forced-labour/policy-areas/statistics/lang--en/index.htm 4 http://www.globalslaveryindex.org/findings/ 5 International Labour Office, Profits and Poverty: The Economics of Forced Labour, Geneva, 2014, 13. 6 http://www.ilo.org/global/topics/forced-labour/policy-areas/statistics/lang--en/index.htm 3 Other Jurisdictions 33.1 Problems surrounding the lack of transparency in corporate supply chains have been recognised in other jurisdictions, and various mechanisms have been put in place to address these. A comprehensive outline of the global mechanisms in place to combat modern slavery is not within the scope of these submissions. However, we have provided a brief overview of some of the most relevant schemes in place to assist in identifying international best practice. 3.2 STOP THE TRAFFIK encourages the Joint Committee to similarly consider the approaches of other jurisdictions in determining the framework to be adopted in Australia. We are of the view that this inquiry represents an opportunity to identify international best practice, and for Australia to lead the way when it comes to implementing the measures that reflect this. United States 3.3 In 2010, the State of California introduced the California Transparency in Supply Chains Act of 2010 (“the California Act”), which requires companies with worldwide gross sales of $100 million or more who do business within California to report on their efforts to ensure their supply chains are not implicated in human trafficking and slavery. 3.4 One criticism of the California Act is that it, “does not require the companies that are subject to it to be made public, leaving both consumers and corporations un aware of which businesses are subject to the law. This lack of information hinders the law’s ability to achieve true transparency and to disseminate information at the scale it had originally intended”7. 3.5 In 2012, then President Barack Obama passed the Executive Order on Strengthening Protections Against Trafficking in Persons in Federal Contracts. This Exective Order instituted a number of measures in Federal Contracts to strengthen protections against trafficking in persons in federal contracts. The Order requires that for work exceeding $500,000 that is performed abroad, federal contractors and subcontractors must maintain compliance plans that demonstrate a commitment to non-engagement with human trafficking. 3.6 The Dodd-Frank Wall Street Reform and Consumer Protection Act 2010 (“the Dodd-Frank Act”) directs the United States Security and Exchange Commission to issue regulations that require companies to report on their use of any “conflict minerals”. Where it has been identified that a company uses minerals of this kind, the company may have to conduct due diligence on its source and supply 8 chain to ensure that it is not implicated in sourcing the minerals from armed groups. 7 KnowTheChain, ‘SB 657 Five Years of the California Transparency in Supply Chains Act’ <https://knowthechain.org/insights-brief />. See also Jonathan Todres, ‘“Why California Transparency Law Isn’t so Transparent’’ CNN.com, 16 June 2015 <http://edition.cnn.com/2015/06/16/opinions/california-transparency-supply-chains-law-trafficking/>. 8 https://www.dol.gov/ilab/child-forced-labor/Dodd-Frank-Wall-Street-Reform-and-Consumer-Protection-Act.htm 4 3.7 In 2001, the Harkin-Engel Protocol introduced a voluntary certification initiative in the cocoa industry, designed to combat child labour in this sector. The implications of this protocol are discussed in detail in the case study below. Denmark 3.8 In Denmark, the Danish Financial Statements Act makes it compulsory for companies with more than 500 employees within the country’s jurisdiction to report on their Corporate Social Responsibility policies. The Act does not require companies to take any specific measures, however it requires that companies disclose any measures they have taken to ensure human rights protections in their supply chains. The Netherlands 3.9 On 7 February 2017, the lower house of the Dutch parliament passed the “Child Labour Due Diligence Law”, requiring that companies submit a report outlining that they have conducted due diligence on their supply chains to ensure non-engagement with child labour. Companies are also required to produce a plan of action which outlines how they intend to combat child labour. 3.10 This law differs from the UK Modern Slavery Act (discussed below) in that companies are only required to submit a report once, with long-term validity. The UK Modern Slavery Act on the other hand provides for annual reporting. 3.11 Where a company fails to report. A nominal penalty of merely 4,100 euros may apply. 3.12 Any person or legal entity may file a complaint with the public authority on the basis of concrete evidence that a company is involved in child labour. If the public authority is of the view that the complaint is well-founded, legally-binding instructions and/or a plan for execution may be issued to the company. These may also be issued in the event of a failure to report. 3.13 A more substantial fine can be applied should the company be found to be non-compliant more than twice in five years.9 There is also the potential for the responsible director/s to be imprisoned for up to six months. This law will not come into effect until 1 January 2020, and is still awaiting approval10 by the Senate. France 3.14 On February 21, 2017, the French Parliament passed a law requiring large French corporations to create and implement a “vigilance plan” aimed at preventing potential human rights violations—including those associated with subsidiaries and in company supply chains.11 The law provides that any person with an apparent interest in doing so may demand that a company comply with the due diligence requirements set out in the law, and if the company fails to, a court may fine the company up 9 https://www.mvoplatform.nl/news-en/frequently-asked-questions-about-the-new-dutch-child-labour-due-diligence-law 10 http://www.lexology.com/library/detail.aspx?g=153b6746-8734-43b0-8462-4bfd9dc25f5a 11 http://www.lexology.com/library/detail.aspx?g=153b6746-8734-43b0-8462-4bfd9dc25f5a 5 to 10 million euros.12 If a company causes harm as a result of a failure to comply with the due diligence requirements then a fine of 30 million euros may apply.