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Business As A Partner In Addressing Forced Labor

Mark P. Lagon, Director, Office to Monitor and Combat Trafficking in Persons
Hosted by The Coca-Cola Company
One Coca-Cola Plaza, Atlanta, Georgia
February 19, 2008

Sponsored by the U.S. Council for International Business, the U.S. Chamber of Commerce, and the International Organization of Employers in Cooperation with the International Labor Organizations

Government's Expectations of Business as a Partner in Addressing Forced Labor

Good Afternoon. I'd like start by thanking the U.S. Council for International Business, the U.S. Chamber of Commerce, the International Labor Organization, the International Organization of Employers and of course Coca-Cola for hosting this important forum which provides an opportunity for the private and public sectors to engage on the issue of forced labor, and explore areas where we can find common cause and partner in this work. These are complex issues and we all approach them from diverse vantage points be they government, business or NGO--but what we have in common far exceeds any differences--namely a shared commitment to human dignity.

Our success in confronting exploitation, abuse and coercion in the context of labor and supply chains will be found in our ability to work toward that end in partnership--for as Secretary of State Rice has said, "The solutions to the challenges of the 21st century are not going to be met by government alone. They come from all sectors of American society working together."

I am delighted to be here in my capacity as Director of the State Department's Office to Monitor and Combat Trafficking in Persons. Human trafficking is a dehumanizing crime which turns people into mere commodities. Globalization fuels not only sex trafficking but also slave labor Goods enter the global market place while consumers have little or no knowledge of the supply chains and work conditions that resulted in their production. This is problematic for both the consumer and businesses which are increasingly faced with the challenge of ensuring that complex supply chains are untainted by forced labor. But American businesses are steadily moving to address this challenge in their quest to be socially responsible corporate citizens.

This Fall the Gap withdrew a line of embroidered blouses and ordered an internal investigation after news reports revealed apparent child labor in a Delhi sweatshop. One child, Jivaj, from West Bengal described his experience this way, "Our hours are hard and violence is used against us if we don't work hard enough. This is a big order for abroad, they keep telling us that...I was so tired I felt sick."

Gap has publicly reiterated their unequivocal opposition to child labor. In a public private partnership, Gap is now partnering with the Global March Against Child Labor to establish an independent monitoring system for future production of its products, and to examine industry-wide solutions to child labor issues. While Gap's response was swift, the frenzied media attention presents a nightmare scenario for even the best public relations specialist. But more importantly it gives us a glimpse of a nightmare scenario of a different sort--that of child and forced labor.

As more labor is outsourced to developing country markets, there is a greater likelihood that human rights violations will occur with corporate headquarters possessing little to no knowledge before it is too late Multiple layers of contractors and subcontractors in a production chain present major challenges for accountability. Gap for example reportedly has 90 people located around the world whose job is to ensure compliance with their Code of Vendor Conduct.

The reality, which many of you know well, is that most major companies--whether they are part of the apparel industry or food production or other sectors--could find themselves in Gap's shoes overnight. Is this the natural product of globalization? Is it the fruit of capitalism run amok? I think not. Many of you have dedicated your time and professional energy to advancing the field of corporate social responsibility--a field which seeks to take steps to better the lives of employees and the communities where your companies operate. You recognize what our nation's founders recognized--namely that liberty, and I would argue capitalism, must be tempered by virtue and with it the common pursuit of human dignity. You acknowledge that any challenge to public image or profitability associated with securing supply chains and guaranteeing the absence of forced labor in production is minimal when compared to what is at stake legally and ethically if such ends are not pursued. Corporate social responsibility often involves doing what's right beyond what's required by the letter of the law. But forced labor is not just a moral matter but legally prohibited--under U.S. law and international law, not least under the 2000 Palermo Protocol to the UN Crime Convention dealing with Trafficking in Persons.

The 'case study' of the Gap gives us a glimpse of the complexity of the challenge and the need for creative thinking on the part of business and government for that matter. One of today's sponsors, the ILO, is leading the way in bringing together businesses, NGOs and governments to tackle forced labor. My office funded one of their programs in China which mobilized business actors to join the international community's efforts in preventing exploitative and abusive practices in supply chains. They have witnessed tangible results. The Chinese Government has for the first time presented a plan for ratification of the International Labor Organization Forced Labor Conventions. This is a remarkable development, and evidence of the power of collaboration, given that men trafficked for labor are presently not considered victims of trafficking under Chinese law.

Before further exploring the responsibility and the opportunity that the private sector has in these areas, I'd like to give you a sense of the scope of work of my office, recent legislative developments related to forced labor, and trends that we are seeing globally in this realm.

The United States Government has confronted human trafficking on a multitude of levels. In late 2000, the Congress passed and the President signed into law the Trafficking Victims Protection Act. This legislation created the office I direct and mandated the annual release of the Trafficking in Persons Report, which is our prime tool for diplomatic engagement and international awareness needed to achieve prevention. It institutionalized a cabinet-level taskforce, chaired by the Secretary of State, to improve coordination and implementation of our anti-trafficking efforts.

This legislation, which has been reauthorized twice, directs the work of my office, including our annual report. The 2005 reauthorization gives new attention to labor trafficking by requiring the U.S. Department of Labor to develop and make available to the public a list of goods from countries that the Department has reason to believe are produced by forced labor or child labor in violation of international standards. The list is anticipated to be published in 2009, though there may be an interim report to Congress before then. The list will serve as an awareness-raising tool for U.S. enforcement agencies, for the public, for governments, for NGOs and ultimately for the business community. It is also consistent with U.S. government efforts to deny specific items produced, in part or wholly, by forced labor access to the U.S. market given the U.S. Tariff Act of 1930.

The House of Representatives passed its version of the latest reauthorization late last year. That bill places more emphasis on forced labor, in addition to sex trafficking -- emphasis on victimization in the United States, emphasis on tracking imports, and emphasis on assessing other nations in my office's annual global report. As a former Senate staffer, given what I've been hearing, I have every reason to believe the Senate version of the reauthorization, to be introduced imminently, will do the same.

Even before this recent Congressional action, last year, our Trafficking in Persons Report shed light on the alarming trend of trafficking for forced labor purposes--specifically the use of debt as a tool of coercion. Illegal debt is increasingly used to keep people in servitude and is employed by traffickers as an instrument of coercion, especially among migrant laborers--many of whom are legally contracted to perform low-skilled work for the production of export items in more developed countries, only to later be subjected to fraudulent misrepresentation of work conditions, debt bondage and ultimately forced labor. Many, though not all, of the products resulting form this extreme exploitation end up in the United States.

From our admittedly anecdotal observations (though others are doing serious research, like the ILO and the NGO Verite), a significant percentage of workers in key labor source countries are paying pre-departure fees that are equivalent to at least 10 months of their salaries to be earned from a two-year contract. This money is extracted by unscrupulous labor recruiters who often also receive commissions from the employers--a form of 'double-dipping.' The value of the service these recruiters provide is nowhere near the amount the workers are forced to pay, all in advance and usually through the use of high-interest informal loans. Given what we know about the unique vulnerabilities of some migrant laborers, and the exploitative recruiters that often prey on them, it begs the question: what percentage of the $300 billion that migrant workers remit home annually is being siphoned off by predatory recruiters, by traffickers? [1]

Many multinational producers have come to rely on low labor costs in their supply chains. Two of the three cases studies before you (Jordan and Brazil) show evidence of the phenomenon in which debt from recruiters' excessive fees fed directly into forced labor and made workers vulnerable to further exploitation in destination countries where rule of law may be weak and labor rights not fully respected. As we better understand the processes which allow human trafficking to flourish, it becomes clear that it is not enough to simply monitor the conditions of work in your supply chains. To get at the root of this problem you must begin asking HOW the workers arrived in the work place. The implications for companies, as the purchasers, are very real.

The ILO has a worthy structure for dealing with these recruitment problems. They have developed a "Multilateral Framework on Labor Migration" for governments, employers and workers to address the conditions that lead these migrant workers into forced labor. There is a dialogue underway among labor source governments and labor destination governments in Asia and the Middle East called the "Colombo Process." It just met in Abu Dhabi and became known as the "Abu Dhabi Dialogue." While the framework shows promise, it critically needs the involvement of both the ILO and the corporate world. Ultimately the U.S is committed to addressing forced labor with an equal sense of urgency and attention, including the prosecution of labor crimes with equally tough penalties as sex trafficking crimes. Fines, other administrative sanctions, and suspended sentences do not reflect the gravity of these slavery-like offenses--and they do not sufficiently deter them.

It is important to bear in mind that the work of our office is motivated by mistreatment of real people. Let me share one case of forced labor that I encountered in Southeast Asia this past summer.

On my trip, I learned that an estimated 800 Burmese men, women, and children, desperate for employment, had been lured to a shrimp processing plant in the middle of a jungle in a neighboring country. The factory complex was surrounded by high walls and barbed wire. Workers weren't allowed to leave the compound. They couldn't have or use cell phones They also weren't paid.

I met a woman who tried to escape this labor camp in a victim shelter. Aye Aye Win was caught, dragged back, beaten, tied to a stake in the middle of the common yard, refused food and water, and had her head shaved. All this to demonstrate to her colleagues what would happen to those who dared to try to escape.

This is forced labor. This is slavery. And what makes it particularly unacceptable is that the demand for shrimp is strong in part because it is the number one type of seafood consumed by Americans.

It is the responsibility of the "buyer"--in this case the larger companies that package the shrimp for export to international seafood wholesalers--to ensure that the products they provide for consumers are not derived wholly or in part from forced labor. Again, we must ask the question, how did Aye Aye Win and others like her end up where they are?

Demand is of course also a factor in labor trafficking. Denying products made with forced labor access to markets reduces incentives for exploitative employers and encourages ethical business behavior. This is only possible when governments and businesses share information on export products and production chains.

Screening based on this premise is unlikely to disrupt the breadth of business activity. The small interruptions of imports would be well worth the strengthening of consumer confidence that supply chains are pure of the products of slave labor.

Fortunately the news is by no means all bad. There are challenges, yes, but there is also progress.

Some businesses are taking an active role in attempting to cleanse production chains of forced labor. As my valued colleague Jeff Krilla addressed this morning, a promising example of such a voluntary effort is the move by the pig-iron producers of Brazil--the Charcoal Citizen's Institute--to monitor the pig iron production chain for evidence of forced labor.

There are also notable corporate actors who are using their individual expertise, corporate strengths and core competencies to counter trafficking and affect change. This effort benefits the victims but it also benefits the companies in that it builds trust and legitimacy, often garners positive publicity and earns the support of increasingly socially-conscious buyers and investors.

Another company, Columbia Gem House, stands out for its assurances that its vendors do not employ child labor, slave labor, or any unfair labor practices to produce the gemstones it sells. In conjunction with a local mine and church group, Columbia Gem House has helped to create a school in southern Malawi, build teacher housing units, and refurbish the local hospital with anti-AIDS and malaria drugs.

While many of these activities exemplify good corporate citizenship, generally speaking, they are also preventative anti-human trafficking measures.

Microsoft, for example, is a corporation that believes that supporting anti-trafficking initiatives is both ethical and smart public relations. Microsoft has a regional initiative to combat human trafficking, both in the area of forced labor and the sex trade, in Asia, which supports the efforts of local NGO partners and provides basic information training to trafficking victims and those "at-risk" of trafficking. Microsoft is also conducting law enforcement training on computer crimes involving the commercial sexual exploitation of children.

Manpower is a corporation that is actively engaged in promoting the End Human Trafficking Now Campaign designed to energize the business community globally to play a critical role in eliminating human trafficking. As you know, David Arkless will be speaking later this afternoon and sharing more information on Manpower's commendable efforts.

Whether in human resources or extractive sectors or high technology industries, the commitment to CSR in the area of human trafficking ultimately rests with individuals--ranging from CEOs to middle-level management to line officers personally investing themselves.

The field is still wide open. There are steps, both big and small that companies can and must take to combat forced labor.

We know that different industries have unique and invaluable corporate strengths to contribute. As a starting point, I hope that each of the businesses represented here today will ensure that you have a code of ethical conduct, centered on zero tolerance for trafficking in persons, any form of commercial sexual exploitation of children, and forced labor. Such policies should be well publicized within the organization and--of paramount importance--distributed to all contractors and suppliers. I urge you, if you are not already doing so, to train your staff, including auditors, human resource and compliance officers, to recognize, monitor and report on human trafficking.

The anti-human trafficking movement is burgeoning in international organizations, non-government organizations, and the public - if the movies we see, the Dateline NBC profiles, and the UN conference I attended last week are any evidence. Taking such steps can only win kudos. I intend to call attention to good corporate citizens, to raise you up as exemplars for others, from our website to our annual report to my remarks to groups and the press. I pledge to make your good work well known.

I appeal to you on the diplomatic front as well. Many of you represent multinational companies. Do not underestimate the power of your "economic voice" in letting foreign business and political leaders know that your company cares about human trafficking and chooses to do business in countries where strong anti-trafficking policies are in place.

Our message must be unambiguous and clear; both the public and private sector have zero tolerance for forced labor of any kind. The unprecedented movement of labor and capital in chains of production of exportable goods promises many advances. But without rule of law and good corporate citizenship, it also could lead to modern day slavery. I hope this conference paves the way for increased partnership with the private sector, the ILO, and civil society so that we might extend the positive gains of globalization and curb the potential for the most extreme forms of exploitation before it occurs. We're not talking about holding you responsible for situations of cheap labor. We're talking about standing together morally and developing strategies practically to stop slave labor in the dark shadows of the world economy. We can afford to. We must afford to.

[1] UN International Fund for Agricultural Development, together with the IDB (October 2007)

ENDS

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