In February 2001, the Ethical Trading Action Group (ETAG) - a broad coalition of church, labour, and non-government organizations (NGOs) concerned about “sweatshop” labour practices, or ethical sourcing, in the manufacture of apparel - launched a new initiative to support labour standards in the international apparel industry. The initiative proposes that the Canadian government amend the current Textile Labelling and Advertising Regulations of the Textile Labelling Act to require manufacturers to disclose the addresses of all manufacturing sites involved in the production of a garment on the labels of apparel sold in Canada. Through this proposal, the group is seeking to facilitate the verification of the international labour standards and practices in place at manufacturing sites that supply apparel to the Canadian market.

A study was commissioned by the Competition Bureau, on behalf of the Minister of Industry, to assess this proposal and to identify the implications of the implementation of these amendments for consumers, governments, the domestic apparel industry, international trade and trade agreements. In addition, the study, which was released by the Conference Board on May 30, 2003, tried to identify and assess a number of alternative policy options. As such, the Conference Board was seeking to clarify the policy objectives of the ETAG initiative, set evaluation criteria and test whether these criteria would be met, and to propose alternative policy measures that would effectively address the initiatives’ policy objectives.

· Drafting a Discussion Paper summarizing the issues and the results of the Conference Board study. This paper is posted on the PPF web-site, and can be found on the stakeholder consultation website at: stakeholderconsultations@ppforum.ca.

· Written submissions were solicited from interested organizations and individuals. Eighteen submissions and three letters of support were received as a result of this process, and the submissions were posted on the stakeholder consultation web-site.

· The Convening Paper (this document) was drafted to summarize the issues, concerns and areas of commonality and consensus that emerged from the written submissions. This paper will form the basis for discussions at a multi-stakeholder roundtable to be held on November 28, 2003 in Toronto, Ontario. Participation at this roundtable is by invitation only.

· A final report on the written submissions and roundtable discussions as well as strategic recommendations will be submitted to the Commissioner of Competition.

The submissions phase of the Public Policy Forum consultation provided the stakeholder community with an opportunity to comment on the findings and recommendations contained in the Conference Board report. For the sake of comparability and clarity, stakeholders were asked to structure their submissions around five key questions:

1. Using the information provided by the Conference Board report and your own experience and observations, do you believe that regulated public disclosure of factory locations is critical to the success of voluntary or other initiatives designed to curb unfair labour practices in the apparel industry? Please explain.

2. In light of the Conference Board’s observations and given that unfair labour practices are an issue in sectors other than apparel manufacturing (footwear, toys, novelties, etc.), what would be the most appropriate means to achieve mandatory disclosure of factory locations if that were determined to be a desirable objective?

3. In the absence of the regulated disclosure of factory locations, what role should the federal government play in ensuring the success of initiatives designed to improve labour conditions in the apparel industry, over and above its current activity?

4. What role could and should non-governmental organizations (such as ISO and the ILO) play in promoting resolutions to the challenge of unfair labour practices in the apparel industry?

5. What role could and should the apparel industry play in promoting resolutions to the challenge of unfair labour practices in its supply chains?

It is important to note from the outset of this section, that the summary which follows is an amalgam of the key issues and ideas that emerged throughout the submissions as a body. Every effort has been made to capture the key concerns of various stakeholders, however, the purpose of this section is not to relay the individual concerns of every stakeholder, but rather to provide a sense of the areas of commonality and difference, and to provide a useful vehicle to inform the discussion on the 28^th of November.

In general, stakeholders accepted the proposition that the Canadian public is interested in buying apparel that is produced using fair labour practices. There was also general support for the notion that the issues of Corporate Social Responsibility and Corporate Citizenship are increasingly important for the Canadian public, and that they have a high expectation of industry to act on these expectations.

In reviewing the submissions, three broad categories of comments could be identified:

Principles - The first category of comment dealt with the underlying reasons why actions such as the institution of amendments to the Textile Labelling Act are/are not necessary and/or useful.

Objectives and Goals - A second category of comment concerned the ends which the proposed amendments are meant to achieve

Issues and Concerns - the third category of comment dealt with specific thoughts and concerns on the Proposed Amendments to the Textile Labelling Act.

In looking at the submissions as a group, four principles emerged which seemed to inform stakeholders' views and comments.

That all appropriate information should be made available in a timely and accessible manner to those with a legitimate interest in that information.

·    For some stakeholders, mandatory public disclosure of the location of factories is a key component of a transparent process.

·    For other stakeholders, the mandatory, blanket public disclosure of information about supply chains is not deemed to be appropriate, given a number of concerns outlined below.

That all bodies should be held responsible and held to account for the impact of their choices and actions.

· Again, for some stakeholders mandatory disclosure of factory locations was deemed to be a key tool to allow third party monitoring of a company’s labour practices and the labour practices of factories in its supply chain.

· For others, mandatory disclosure was deemed as being potentially damaging to the Canadian textile sector, without significantly enhancing the legitimate ability of third party organizations to monitor their labour practices.

That rules and regulations should not have a differential impact on similar individuals or organizations.

· Some stakeholders suggested that the proposed legislation would have a differential impact on:

o     The textile industry - putting them at a disadvantage in relation to companies in other sectors that do not have to meet the same disclosure requirements.

o     Canadian companies - putting them at a competitive disadvantage internationally.

o     SMEs - putting them at a competitive disadvantage vis-à-vis larger companies who have a much greater capacity to deal with an increased regulatory burden.

· Other stakeholders suggested that the mandatory disclosure of factory locations would not compromise the equity of these groups in a serious manner.

This objective is understood to mean that all interested Canadians should have access to the ‘good’ or ‘useful’ information that they need to make informed purchasing decisions. For many stakeholders, part of the issue of informed choice includes the need to educate the public about issues relating to the improvement of international labour standards.

For most stakeholders, the principles of transparency and accountability are key to the notion of informed choice.

There were a number of issues or concerns about which stakeholders expressed differing or contradictory views. The primary concerns that were expressed included:

One of the general issues around the proposed amendments was the actual cost both to industry and to public of implementing and maintaining a database of the type which is suggested. Some potential issues include:

A final area of concern for many stakeholders was the need for a credible, third party, multi-stakeholder body to monitor and potentially to enforce compliance with Canadian and International regulations.

One group of stakeholders argued that such bodies already exist and that companies can choose to make use of these bodies as part of their voluntary codes of conduct. For other stakeholders, the public monitoring and enforcement of activities is the only way to ensure the accountability of the process.

Some stakeholders have suggested that there is no need to address the issue of the possible proprietary nature of supply chain information. In their view, companies have chosen to reveal some or all of their factory locations in other jurisdictions, which, in their view, indicates that there is no competitive disadvantage to doing so (and hence that this information cannot be proprietary in nature).

Other stakeholders perceive the issue of the use and distribution of supply chain information as being a key failing of the proposed amendments. In their view, this information would seriously damage to capacity of smaller importers to earn a living, as the nature of their business, in effect, is to identify supply chains that can be leveraged to the advantage of Canadian retailers and consumers. If their clients have access to these supply chains, then it creates the possibility for the retailer to bypass the importer entirely and deal directly with factories in that supply chain.

For larger retailers, the argument was advanced that supply chains can be so complex that it is extremely difficult to pin-point at any one time which factories are producing which goods for which markets. As such, it would be difficult to provide consumers with accurate and meaningful data.

A primary concern for some stakeholders (primarily those associated with groups of investors) is the need to identify risk-factors that may affect a particular company’s stock price. In their view, issues such as the use of suppliers who violate international labour standards present just such a risk for investors, therefore it is necessary to have mandatory disclosure of all factory locations for publicly traded companies so that investors can gain an accurate understanding of the extent of the risk posed by a company’s supply chain.

Concern was also expressed that current practices on disclosure can lead to the situation in which a ‘good’ company is punished in the market for a single publicized incidence of malfeasance, while a company with a generally poor labour standards is left unblemished. As such, in the view of these stakeholders, it is necessary to implement a system which will systematize the kinds of information which are available about a company’s labour practices and supply chain.

An important area of concern for some stakeholders was the issue of public reporting on the performance of companies on certain Corporate Social Responsibility related objectives, including but not limited to labour rights. In order for such reporting to be useful, however, it must be based on comparable standards and metrics that allow for comparisons across sectors and jurisdictions. As such, some stakeholders argued that such standards would need to be international in scope and developed on a multi-jurisdictional basis.

In reviewing the submission, several potential areas of activity for the federal government received a high level of multi-stakeholder support.

All parties expressed a strong degree of support for ongoing engagement and participation by the federal government with the International Labour Organization (ILO). All stakeholders expressed support for increased use of multilateral agencies such as the ILO to help to address the issue of labour rights in a cross-jurisdictional manner. Some stakeholders see the ILO as a primary vehicle for the Canadian government to continue to address the issues in a meaningful way at the international level. Other stakeholders were less optimistic about the ability of the ILO to effect real change, and saw increased support for the ILO as one, but not the most effective tool, along with mandatory disclosure, to begin to address the issue of international labour standards in a meaningful way.