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Slavery and Supply Chains: What Businesses Can Do To Fight Human Trafficking

Ambassador Mark P. Lagon, Director of the Office to Monitor and Combat Trafficking in Persons
Council on Foreign Relations
Washington, DC
May 14, 2008

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Good Morning. It is a delight to be with you at the Council on Foreign Relations, where I’ve been a Term and permanent Member, and an International Affairs Fellow. I’d like to thank my friend and former boss from Secretary of State Powell’s Policy Planning Staff, Richard Haass, for his invitation to address you this morning on this matter of utmost importance—that of combating human trafficking, or modern day slavery.

Before we open things up for a real discussion, I hope to delve in to the issue of trafficking for purposes of forced labor in particular and to explore ways in which those in the private sector can work in partnership with those of us in government to confront this human rights challenge.

Our success in confronting exploitation and coercion in the context of labor and supply chains will be found in our ability to work 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.”

Further, the Secretary has stated, “We value business as a powerful partner in promoting accountable, non-corrupt government, the rule of law, and transparency that attracts trade and investment.” Hence, included in the criteria of the annual Secretary of State’s Award for Corporate Excellence, known as the ACE, is an emphasis on exemplary employment practices and provision for a safe and healthy workforce.

Human trafficking is a dehumanizing crime which turns people into mere commodities. Globalization need not turn people into mere commodities, and we can do something about that. But absent vigilance and proactive effort, the era of globalization has witnessed 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.

Last Fall, Gap withdrew a line of embroidered blouses and ordered an internal investigation after news reports revealed apparent child labor abuses 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.”

In the aftermath of these revelations, Gap publicly reiterated their unequivocal opposition to such abusive child labor practices. In a public-private partnership, Gap is now collaborating 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 in a business. But more importantly it gives us a glimpse of a nightmare scenario of a different sort—that of labor trafficking.

As more labor is outsourced to developing country markets, there is a greater likelihood forced labor may 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.

When I led the U.S. delegation to the UN Vienna Forum on Fighting Trafficking last February, I met with the Gap’s Vice President for social responsibility. He spoke of the need to look at other issues besides the very important one of environmental issues, which he said were the primary focus of many corporate social responsibility offices.

More recently, the American Center for International Labor Solidarity, released a report alleging labor violations in some operations the shrimp sector in Thailand and Bangladesh—the most egregious including forced labor, child labor abuses, and debt bondage. These acute cases of which I am speaking are not only wage and-hour disputes, not only health-and-safety violations, but are indeed forms of human trafficking. While this was not a State Department report, the findings are consistent with anecdotal accounts of abuses in this sector which my office has received. Just Monday, I met with the National Fisheries Institute, who initiated the meeting in light of the Solidarity Center report, because their membership is keenly interested in working conditions at plants from which they purchase products. They recognize that such matters are important not only to my office, but to the American consumer. Importantly, they are also uniquely positioned to bring about change, in situations where forced labor and trafficking may have occurred.

Before further exploring the opportunity that the private sector has in the area of combating slave labor, I’d like to give you a sense of the scope of work of my office 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 authorized the creation of the office I direct and mandated the annual Trafficking in Persons Report, set to be released in just three weeks, 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.

The 2005 reauthorization of the legislation gives added attention to labor trafficking – distinct from sex 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.

Last year, our Trafficking in Persons Report shed light on the alarming trend of trafficking for forced labor purposes—including through the use of debt to keep people in conditions of involuntary servitude. Debt is increasingly employed by traffickers as an instrument of coercion, especially against migrant laborers from developing countries. In many regions of the world, such workers are required to pay extremely high “commissions” to local recruiters in order to secure a job abroad. Such exorbitant commissions can be grossly disproportionate to the services rendered by a recruiter -- in some instances, amounting to six months to one year of the worker’s actual pay received once abroad. To pay such fees, workers either become indebted to the recruiter, or take out a formal or informal loan in their country of origin, with the expectation of payment based on future wages earned abroad. In many instances, however, workers arrive at the destination country only to discover that they have been deceived by the fraudulent representations of the recruiter as to the wages they can expect to earn in their new jobs. Moreover, the high debt they have incurred makes them vulnerable to further exploitation by unscrupulous employers, particularly in destination countries where enforcement of labor laws is weak and complaints of forced labor are likely to go unheeded.

Many multinational producers of goods have come to rely on low labor costs in their supply chains. 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 supply chains. To get at the root of this problem, businesses must begin asking how the workers arrived in the work place. The implications for companies, as the purchasers, are very real.

Demand is of course also a factor in labor trafficking. Denying products made with forced labor access to markets is one key measure that will ultimately reduce the incentives to exploit slave labor and encourage ethical business behavior.

There have been prominent allegations concerning a wide range of products that have potentially been polluted by forced labor in their supply chain, including cotton from Uzbekistan, apparel from India, shrimp from Thailand and Bangladesh, and steel derived from Brazilian pig iron. I believe consumers will increasingly demand through their own market force – what they purchase – that products will be free of slave labor. If consumers have decided whether of not to buy a brand of tuna based on whether dolphins are harmed, they surely will ask more and more if humans are harmed – particularly if they are through forced labor, enslaved.

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. 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.

At a conference hosted by Coca-Cola in Atlanta on corporate social responsibility efforts to fight forced labor – where I was pleased to give the luncheon address -- a top corporate manager at Hewlett-Packard talked about doing an investigation in Southeast Asia of a factory HP was about to use. Against the wishes of the factory’s owners, their auditors insisted on seeing residential facilities on factory grounds where workers were housed. They found whose documents withheld (a common indicator of human trafficking). The workers were enduring forced overtime work and no-more-than 15 minute breaks per day (which was not enough time to get to the commissary and back). When the audit team informed the company that the site did not comply with the company’s zero tolerance rules against forced labor, they realized they were helping nix a contract worth many millions. But the company took their recommendation to cancel the contract until conditions were changed.

Lexis Nexis is going beyond ensuring that they are not purchasing products from corporations and foreign governments that turn a blind eye towards human trafficking. In fact they are supporting one of the leading anti-trafficking NGOs in Asia. At home, LexisNexis plans to develop a database of social service providers to assist the anti-trafficking NGO which manages the National Human Trafficking Resource Center and its hotline. They also plan to provide this same NGO with an advanced LexisNexis product that will allow them to research trafficking tips, better locate trafficking victims, and determine linkages between trafficking rings.

There are other notable initiatives undertaken by those in the private sector to combat human trafficking—but our time now is limited so allow me to conclude with a few thoughts and an invitation.

Our message must be unambiguous and clear; both the public and private sector have zero tolerance for labor trafficking 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 am hopeful that we will continue to see increased partnership with the private sector and civil society so that we might extend the positive gains of globalization and curb the most extreme forms of exploitation before it occurs. The field is wide open, and we welcome new partners.

Released on June 25, 2008

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