Consultation on a Proposal to Verify Labour Standards in the Apparel Industry — Outcomes and Recommendations

Executive Summary

In 2001, the Ethical Trading Action Group (ETAG) submitted a proposal to the Competition Bureau of Canada. The purpose of this proposal was to promote fair labour standards in the apparel industry both internationally and domestically by amending the Textile Labelling Act to require that the addresses of all manufacturing sites involved in the production of garments be included on the labels of apparel sold in Canada. The Competition Bureau responded to this proposal by commissioning a study of the implications of this proposal. This study was undertaken by the Conference Board of Canada and completed in May 2003.

Following the release of the Conference Board of Canada report, the Public Policy Forum (PPF) was approached to lead a multi-stakeholder engagement process to look at the Conference Board study and craft recommendations to the federal government on the ETAG proposal. In response to this request, the PPF undertook a multi-stage process that included: background research and interviews with key stakeholders on the key issues, a formal submissions phase, the drafting of an interim report, convening and conducting a multi-stakeholder roundtable, and the production of a final report with recommendations.

Two key themes permeated the entire PPF engagement process and dominated the discussion at multi-stakeholder session: the need to build trust between stakeholders and confidence in each other’s commitment to the promotion of fair labour practices in the apparel industry, and the belief that the scope of the consultation was too narrow. With regard to the second theme, many stakeholders stated that the issue of fair labour practices is important not just for the apparel industry, but also more broadly throughout the manufacturing and retailing sectors. As such, they felt any discussion of this nature should involve a wider array of stakeholders from other manufacturing and retail sectors.

In addition to these two general themes, stakeholders identified a number of key principles and objectives. The first and most fundamental principle was that of equality. Concern was raised that the proposed amendments to the Textile Labelling Act would represent an onerous and undue burden for small and medium enterprises, in comparison to the burden on larger businesses and enterprises.

The second principle was that of transparency and accountability. All stakeholders agreed that retailers and manufacturers should be accountable for producing and selling garments produced using fair labour practices. However, there was considerable divergence around the transparency and effectiveness of the reporting mechanisms that some companies have put in place to monitor and enforce this accountability.

The final principle that stakeholders identified was that of informed choice, i.e. the right of Canadian citizens to make decisions about the products they buy and the services they use on the basis of complete and accurate information.

In addition to the overarching themes and principles identified above, stakeholders also introduced a number of additional issues relating to the ETAG proposal including:

• the need for a balanced approach;
• the capacity of Canadian companies to enact change;
• governance and enforcement;
• the changing international environment;
• Canada’s international obligations;
• ongoing inter-sectoral dialogue; and
• freedom of association.

On the basis of its analysis of the submissions and the findings from the multi-stakeholder session, the Public Policy Forum’s final recommendation is that the federal government should not implement the proposed changes to the Textile Labelling Act. This recommendation is predicated on three key observations:

There was no agreement among stakeholders that the proposed approach to disclosure would be useful or fair;

The promotion of fair labour practices is a broad goal that involves all sectors; and

The technical difficulties in implementing the proposal strongly indicate that the expected benefits would be unlikely to materialize.

Over the course of the project, a number of alternatives were also identified which received broad support from many stakeholders. These alternatives were grouped into three primary headings:

What the federal government can do:

I. In the domestic context

• Promoting or encouraging ongoing multi-sectoral dialogue on issues relating to ethical sourcing
• Engaging citizens around the issue of ethical sourcing in order to better determine their level of interest and willingness to support ethical trading initiatives

II. In the international context

• Linking access to the Canadian market to compliance with basic labour standards
• Supporting the protection of labour standards in multilateral trade agreements
• Working with bilateral trading partners to help develop and implement appropriate and effective mechanisms to support basic labour rights
• Creating an organization like the FLA, to help to identify and promote best practices in encouraging and enabling fair labour practices, both domestically and internationally
• Ensuring that fair labour standards are applied in Canada

2. What stakeholders can do

• Continuing to work on the issues of transparency and accountability
• Discussion (bilaterally and multilaterally, both within and across sectors) around the options - other than mandatory disclosure - that were introduced by ETAG at the session.

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