Chapter 6 Exploitation in product supply chains
The subject of human trafficking and global supply chains was a theme
articulated by many groups and organisations that provided submissions and
appeared at public hearings for this inquiry.
This chapter provides an overview of the current global estimates of
people in forced labour, suggestions received by the submitters on combatting
exploitation in the global supply chain, a brief overview of the steps taken by
other countries to look at exploitation in global supply chains, and
Australia’s efforts to combat trafficking, slavery and forced labour in global
Global estimates of people in forced labour
According to the International Labour Organization (ILO) there are 20.9
million people in forced labour around the world.
n 18.7 million (90%)
exploited in the private economy, by individuals or enterprises: 4.5 million
(22%) are victims of forced sexual exploitation, and 14.2 million (68%) are
victims of forced labour exploitation in economic activities such as
agriculture, construction, domestic work and manufacturing;
n 2.2 million (10%) in
state-imposed forms of forced labour (e.g. prison);
n 11.4 million victims
(55%) are women and girls;
n 9.5 million (45%) are
men and boys;
n 11.7 million (56% of
the global total) are in the Asia-Pacific region;
n 3.7 million (18%) are
n 1.8 million (9%) are
in Latin America and the Caribbean;
n 1.5 million (7%) are
in the European Union;
n Central, Southeast
and Eastern Europe (non-EU) and the Commonwealth of Independent States have 1.6
million (7%); and
n an estimated 600,000
(3%) victims in the Middle East.
Table 6.1 Global estimates of people in forced labour by
Asia and the Pacific
Latin America and the
Central and South Eastern
Europe and CIS
Developed Economies and
Labour Organization, Global Estimate of Forced Labour: Results and methodology,
The United States (US) Department of Labor, Bureau of International
Labor Affairs (the Bureau), publishes a list of goods from countries that the
Bureau has reason to believe are produced by forced labour or child labour in
violation of international standards. According to Bureau’s
n The list of goods includes
123 goods in the ‘child labor’ category: 58 agricultural goods, 38 manufactured
goods and 26 mined/quarried goods, as well as pornography.
n The relatively large
number of agricultural goods produced by child labor is consistent with the ILO
estimate that 60 per cent of child labor worldwide is in agriculture.
n The list of goods includes
56 goods in the ‘forced labor’ category: 26 agricultural goods, 18 manufactured
goods and 11 mined/quarried goods, as well as pornography.
n Agricultural goods
with notable concentrations of forced labor include cotton (eight countries),
cattle (five countries) and sugarcane (five countries). Among manufactured goods,
the highest concentrations of forced labor were found in the production of
garments (eight countries) and bricks (seven countries).
n Goods associated with
a notably high concentration of child and/or forced labor include cotton (17
countries), sugarcane (16 countries), coffee (14 countries), cattle (12
countries), rice (eight countries), fish (seven countries) and cocoa (six
countries) in the agricultural sector; bricks (18 countries), garments (eight
countries), carpets (five countries) and footwear (five countries) in the
manufacturing sector; and gold (19 countries), diamonds (seven countries) and
coal (seven countries) in the mining/quarrying sector.
n Burma and China have
a high number of goods made by forced labor, with 14 and 11, respectively.
n South Asian countries
– the region with over 55 per cent of the world’s forced laborers, according to
the ILO – also had high numbers of goods in the forced labor category.
Overview of international action
A number of countries, most notably the US, have taken comprehensive
steps to combat trafficking, slavery and forced labour in global supply chains.
In the US, authorities at the Federal and State-level have taken steps
to increase the oversight of US-based companies’ global supply chains.
As noted at paragraph 6.4 above, the US Department of Labor, in
accordance with the US Trafficking Victims Protection Reauthorization Act, publishes
a list of goods from countries that the Bureau has reason to believe are
produced by forced labour or child labour.
In October 2010, the California Transparency in Supply Chains Act was
signed into law. This Act took effect on 1 January 2012 and applies to all
retailers and manufacturers with annual global revenues of more than $100
million that do business in California. The Act requires retail sellers and
manufacturers in California to disclose information about their efforts to
eradicate slavery and human trafficking from their direct supply chains.
On 1 August 2011, a similar Bill to the California legislation was
introduced at the Federal level, the Business Transparency on Trafficking and
Slavery Act (H.R.2759). If passed, the Bill will require businesses to disclose,
in annual reports, measures taken during the year to identify and address
conditions of forced labour, slavery, human trafficking, and the worst forms of
child labour within their respective supply chains.
The US has also taken steps to identify exploitation in specific
countries such as the Democratic Republic of the Congo.
On 22 August 2012, the US Securities and Exchange Commission adopted a
rule legislated under the Dodd-Frank Wall Street Reform and Consumer Protection
Act. The rule requires companies to publicly disclose their use of conflict
minerals (tantalum, tin, gold, or tungsten) from the Democratic Republic of the
Congo or an adjoining country.
In addition, on 25 September 2012, President Obama issued an executive
order that prohibits all US Federal contractors and subcontractors from engaging
in any types of trafficking-related activities.
The United Kingdom’s Government is also proposing a similar legislative
mechanism, having introduced to the Parliament the Transparency in UK Company
Supply Chains (Eradication of Slavery) Bill in June 2012. If passed, the Bill
…large companies in the UK to make annual statements of
measures taken by them to eradicate slavery, human trafficking, forced labour
and the worst forms of child labour (as set out in Article 3 of the
International Labour Organisation’s Convention No. 182) from their supply
chains; to require such companies to provide customers and investors with
information about measures taken by them to eliminate slavery, human
trafficking, forced labour and the worst forms of child labour; to provide
victims of slavery with necessary protections and rights; and for connected
British businesses are also being encouraged by the UK Government to
sign a business charter which commits them to:
n develop anti-human trafficking policies and strategies
n review and implement a code of conduct for suppliers
n check supply chains to ensure each step of the process is
n revise recruitment
practices, for example, by requiring recruiting managers to only use specified
reputable recruitment agencies
n increase awareness training
for staff and customers
n develop and share
Brazil has also taken steps to target people and corporations found to
be using slave labour. As noted by the ILO in its report on the Good
Practices of Labour Inspection in Brazil, Brazil established an Employer
Offender Registry in 2004.
Administered by the Ministry of Labour, the Registry is a public list of
people and corporations found to be using slave labour. The Registry is updated
every six months and is available on the websites of the Ministry of Labour and
the NGO Reporter Brazil.
The people and corporations that are on the list cannot receive public
financing. The names are only included on the list after a trial, verdict and
when the accused no longer has a right of appeal.
The ILO report also noted that names can be removed from the list:
Employers that are included on the register are monitored for
a period of two years after which their names are removed if: there is no
reoccurrence of the crime, all fines are paid and, they settle their labour and
The ILO has also released a handbook ‘for employers and business to
strengthen their capacity to address the risk of forced labour and human
trafficking in their own operations and in global supply chains.’
The European Commission has taken similar steps as the ILO and produced
a guide on socially responsible public procurement: Buying Social - A Guide to
Taking Account of Social Considerations in Public Procurement.
World Vision Australia (WVA) provided more detail on other European
countries that have adopted socially responsible public procurement, stating:
n Denmark has ratified
ILO Convention No. 94, which, under Danish law, has binding effect in relation
to government procurement.
n The Norwegian
Government produced a Guide to Socially Responsible Public Procurement on 12
n The Scottish Government
has prepared guidance on ‘Community Benefits on Public Procurement’, which
illustrates the scope to incorporate social benefits in public procurement contracts,
hoping to maximise the impact of public spending.
n A number of local
governments in Sweden include social requirements in contracts, such as
compliance with fundamental ILO conventions. These terms are consistent with
Swedish procurement law.
Suggestions for combatting exploitation in global supply chains
Ms Briana Lee put forward the view that Australia has an obligation
under the Trafficking Protocol to prevent and combat trafficking, stating:
Part of Australia’s obligations under the Trafficking
Protocol is to establish measures to prevent and combat trafficking in persons.
The Trafficking Protocol requires states to takes measures which alleviate the
factors that make persons, especially women and children, vulnerable to
Ms Lee added that ‘part of the way to address the issue of human
trafficking is to reduce the demand for goods produced with slavery, forced
labour or human trafficking.’
Ms Lee called on the Government to ‘take steps to ensure that goods
being imported and sold in Australia are free of slavery, forced labour and
Walk Free, in its submission, suggested that business could play a role
in the fight against slavery, slavery-like practices and human trafficking.
Walk Free also suggested that the Government look at implementing legislation
on transparency in supply chains.
Walk Free did, however, caution against the use of an overly intrusive
regulatory approach, stating:
I fully understand. I am a big supporter though in approaches
that talk about transparency and publishing information and then leave it to
the market, civil society and others to encourage businesses without imposing
Draconian requirements on them. I suggest that is an appropriate model that has
been implemented in America as reasonably commerce-free but the US is willing
to impose these obligations on corporations.
Australian Catholic Religious Against Trafficking in Humans (ACRATH) submitted
that Australia was lagging behind other developed countries ‘in taking actions
to encourage companies to ensure the goods they import and sell are free from
slavery and trafficking.’
ACRATH made several recommendations for actions the Government could
take to combat slave or trafficked labour in supply chains:
n Government could
consider enacting, as USA has done (Trafficking Victims Reauthorisation Act
), legislation requiring it to engage with companies, working with them
towards the elimination of slavery and human trafficking in their supply
n The Commonwealth
Government could require that projects failing to meet a required standard
demonstrating that reasonable action has been taken to ensure that their supply
chain is free from slave and trafficked labour are denied the services of EFIC
[Export Finance and Insurance Corporation].
n ACRATH believes that
this [OECD Due Diligence Guidance for Responsible Supply Chains] could provide
the basis for principles which could be included in mandatory requirements for
companies to address slave and trafficked labour in the supply chain of goods
imported into Australia.
ACRATH also recommended mandatory reporting to ensure transparency in
supply chains under the Competition and Consumer Act in Australia, establishing
a mandatory labelling scheme to address products at risk of involving
trafficked and slave labour in their supply chain, and require suppliers to
provide guarantees that supply chains are free from slavery and human
WVA noted the arguments from some academics, experts and civil society
groups that Australia was lagging behind ‘other comparable countries in
embedding strong corporate citizenship or Corporate Social Responsibility (CSR)
into business, particularly in offshore operations and international supply
WVA made several recommendations, including that:
n The Australian
Government must encourage Australian businesses to comply with internationally
recognised human rights standards and ensure transparent, traceable and
independently verifiable supply chains, free of labour of exploitation.
n The Australian
Government should consider bringing the Commonwealth Procurement Guidelines
into line with other developed countries by specifically addressing child and
n The Australian
Government should consider legislative and regulatory mechanisms that mitigate
the risk of Australian businesses supporting slavery, slavery-like conditions,
and people trafficking and provide support to victims.
Hagar Australia also suggested Australia should look at the steps the US
has taken to ensure supply chains are free of human trafficking:
We believe Australia should follow the lead of the US
administration and place the requirement on suppliers to provide guarantees
they have taken reasonable steps to ensure the products they are supplying are
free of human trafficking. It should not be left to government purchasing
officers alone to have to try and carry out investigations. The government
should commit to public research to identify those types of goods at risk of
having slavery, human trafficking and forced slavery in their production. The
government should also commit to introduce legislation based on the California
Transparency Act, and I also understand the UK is considering a similar act
right now to require retailers and importers operating in Australia to have to
publicly disclose what voluntary efforts they are making to curb the risk of
slavery, forced labour and human trafficking and their supply chains.
Hagar Australia also recommended:
n the Commonwealth
Government should require that products at risk of slavery or trafficked labour
in their supply chains must carry labels identifying themselves as such; and
n the Australian
Government should withdraw its support from companies failing to demonstrate
adequate action to address the possibility of slavery or human trafficking in
their supply chain, through excluding such companies from eligibility for
government procurement contracts.
The Law Council of Australia stated that ‘it would be extremely
advantageous for the Commonwealth to examine its supply chains and procurement
policies and to coordinate a response with States and Territories about those
No Slavery Australia (NSA) recommended establishing a task force to
evaluate the economic cost of slavery on the Australian economy; legislating mandatory
requirements for multinationals trading in Australia to report on their supply
chains; and the development of a labelling and certification strategy for
products and services that have been produced ethically.
NSA also highlighted that there are a number of not-for-profit
organisations that offer third-party certification of Fair Trade products.
The joint submission provided by Stop the Traffik, the Oaktree
Foundation, and the Uniting Church Synods of Victoria and Tasmania stated that,
in the 2009–2010 financial year, Australia imported over $600 million worth of
goods in categories where there is a risk of forced labour or exploited child
labour used in their production. They called on the
Government to take action in line with other jurisdictions, particularly the
n establishing a
commission similar to the Bureau;
n establishing a
consultative committee focussed on eliminating slavery, forced labour and human
trafficking from the production of goods imported into Australia;
n amending the Financial
Management and Accountability Act 1997 and the Commonwealth Procurement
Guidelines to prohibit the acquisition of products produced by forced and
indentured child labour;
legislation that would require retailers and importers operating in Australia
to publicly disclose what voluntary efforts they are making to curb the risk of
slavery, forced labour and human trafficking in their supply chains; and
n negotiating an
agreement with cocoa importers and processors in Australia that by 2018 eighty
per cent of cocoa imported to Australia will have third-party certification that
it is free of forced labour, the worst forms of child labour and human
The Uniting Church in Australia, at a public hearing, commented that ‘this
is a problem that cannot be left to voluntary corporate action and NGOs.’
Dr Anne Gallagher AO agreed that there was some evidence that:
…goods imported into Australia – from seafood to clothing to
consumer electronics to sporting goods – have been produced through the use of
forced or otherwise highly exploitative labour.
While acknowledging that there are considerable difficulties in
combatting trafficking in supply chains, Dr Gallagher said it was essential for
Government to attend to the problem:
While the difficulties of
dealing with trafficking and slavery in supply chains are considerable and
should not be underestimated, it is essential for the Australian Government to
acknowledge and pay attention to trafficking in supply chains. The critical
issue in this regard is improving supply chain transparency – from product
assembly right down to the sourcing of raw materials - thereby disrupting the
economic advantage that such exploitation provides. Consumer action through
investigation, boycotts and petitions is important and should be encouraged.
However, it is foolish and dangerous to imagine they are any substitute for
explicit, demonstrable commitment on the part of both government and
corporations to exploitation-free supply chains.
Australian Government action
On 8 March 2013, the Prime Minister announced that the Australian
Government would ‘ensure that its procurement rules and practices assist in
identifying and stamping out slavery.’
The Prime Minister announced that the Government’s procurement
arrangements would be improved by:
n Processes: the
Department of Finance and Deregulation will ensure that Commonwealth
procurement arrangements adequately identify slavery as an important issue when
considering the ethical behaviour of suppliers.
n Advice to Agencies:
the Department of Finance and Deregulation will issue revised procurement
guidance to reinforce the need for specific actions or behaviours to eliminate
the chances of slavery being used in supply chains.
n Training: the
Department of Finance and Deregulation will strengthen training and development
arrangements for Commonwealth procurement officers to reinforce specific legal
and policy requirements, including reporting of breaches of policy.
At a public hearing the AGD acknowledged that it had not focussed on
combatting trafficking, slavery and forced labour in global supply chains. They
did, however, highlight that Australia has:
…criminalised a range of different offences with respect to
corporations under the slavery and human trafficking offences, so there is
provision already to tackle behaviour by corporations with respect to
procurement overseas and things like that if their supply chain does involve
some slavery or human trafficking.
As noted earlier in this chapter, the ILO and the Bureau estimate that
there are millions of men, women and children throughout the world who are
forced into exploitative labour conditions worldwide in the agricultural,
construction, manufacturing, and mining industries as well as domestic work.
Slavery, slavery-like practices and people trafficking is a fundamental
violation of an individual’s human rights. The cost on its victims, who may have
suffered psychological, emotional, and physical abuse and mistreatment, is
In addition to its direct victims, the flow on effects of these crimes impact
on families, communities, and countries.
The ILO estimated in 2005 and 2009 that the annual profits from all
trafficked forced labourers are around US$32 million (an annual average of
US$13,000 per victim) and that ‘victims of forced labour forgo at least US$21
billion each year in unpaid wages and illegal recruitment fees.’
As part of the United Nations Global Initiative to Fight Human
Trafficking, the United Nations Office on Drugs and Crime published a report
entitled An Introduction to Human Trafficking: Vulnerability, Impact and
Action. While noting the difficulties in assessing the economic costs of
trafficking, the report was able to highlight some of the additional economic
The costs of the crime of trafficking in persons incorporates
many elements, including the value of all resources devoted to its prevention,
the treatment and support of victims and the apprehension and prosecution of
offenders. These costs may be offset in part by the recovery of criminal
proceeds and assets of the traffickers. Trafficking in persons also results in
loss of human resources and reductions in tax revenue. Further, trafficking in
persons redirects the financial benefits of migration from migrants, their
families, community and government or other potential legitimate employers to
traffickers and their associates. All indications are that the income generated
by related organized crime is significant and global. Given the ongoing nature
of exploitation, human trafficking generates a stable and regular source of
income for criminal networks, with a consequent impact on other forms of
criminal activity as well as legitimate business.
AusAID in its Project Design Document, Australia-Asia Program to
Combat Trafficking in Persons, also highlighted some of the additional economic
consequences of trafficking, stating:
The economics of trafficking are significant. Unlike
smuggling of migrants, which produces a one-time profit, trafficking involves
the long-term exploitation of individuals, which translates into continuous
income. … Human trafficking crimes are also closely integrated into legal
business interests such as tourism, employment and recruitment agencies, and
leisure and entertainment businesses throughout the region. Criminal
organisations hide revenues from their illegal activities by directly and
indirectly investing their profits into legitimate financial institutions.
Although some businesses are simply established to launder money and not
necessarily to make profits, this practice may in turn have a negative impact
on the economy, as legitimate businesses may find themselves having to compete
against enterprises being subsidised by laundered proceeds of crime or supported
by the exploitation of trafficked persons. Fair competition may also be
affected when exploited trafficked persons have been used further down the
supply chain to produce value-added materials such as textiles.
As noted in chapter three, it is important to consider a suite of
mechanisms and tools to combat slavery, slavery-like practices and people
trafficking both domestically and internationally. It is therefore important to
consider how Australia can contribute to removing trafficking, slavery and forced
labour in global supply chains.
The Committee appreciates the considerable thought and effort of all
those who provided recommendations on various mechanisms for removing trafficking,
slavery and forced labour in global supply chains.
The Committee notes that many of these recommendations are based on
initiatives that have been recently introduced in other countries. It is
therefore difficult to assess the effectiveness of these mechanisms at this
It is important for Australia to take appropriate and effective action
that will play a significant role in the reduction of goods and services
produced by trafficking, slavery and forced labour. It is also important for
Australia to establish a mechanism that is suitable for the Australia context.
The Committee therefore recommends that the Australian Government
undertake a review to examine the current anti-trafficking and anti-slavery
mechanisms with a view to establishing a mechanism appropriate for the
The review should extensively consult with relevant stakeholders and should
be conducted with a view to: introducing legislation to improve transparency in
supply chains; the development of a labelling and certification strategy for
products and services that have been produced ethically; and increasing the
prominence of fair trade in Australia.
The Committee recommends that the Australian Government, in
consultation with relevant stakeholders, undertake a review to establish
anti-trafficking and anti-slavery mechanisms appropriate for the Australian
context. The review should be conducted with a view to:
legislation to improve transparency in supply chains;
development of a labelling and certification strategy for products and services
that have been produced ethically; and
the prominence of fair trade in Australia.