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Slavery and Supply Chains: What Businesses Can Do to Fight Human Trafficking [Rush Transcript; Federal News Service]

Speaker: Mark P. Lagon, Director, Office to Monitor and Combat Trafficking in Persons, U.S. Department of State
Presider: Diana Taylor, Managing Director, Wolfensohn & Company
May 14, 2008
Council on Foreign Relations

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DIANA TAYLOR: Morning, everybody. Good morning.

First we'll go through the administrative matters. Participants -- welcome to today's Council on Foreign Relations meeting. Participants around the nation and the world are viewing this meeting via webcast on the council's website, so please completely turn off, not just put on vibrate, your cell phones, BlackBerrys and all wireless devices to avoid interference with the sound system. And I would like to remind the audience that this meeting is on the record. So with that, let's get into the meat of it.

Our esteemed president of the Council on Foreign Relations, Richard Haass, probably put it best when he said human trafficking cuts across many of the most pressing issues of our time, such as immigration, global health, peacekeeping operations, and the illegal trade in weapons and narcotics. It's only beginning to get the attention that it deserves at the highest policy levels.

No one knows for sure what the scope of the problem is. Estimates range anywhere from 4 million to 27 million people -- men, women, children; enforced labor, bonded labor, child labor; in brothels, homes, fields and factories across the world. According to the U.S. government, approximately 800,000 people are trafficked across national borders every year -- which, of course, does not include the millions trafficked domestically within their own countries.

Those who are trafficked are the most vulnerable in society -- the poor, those without options, those who have no other choices. According to the Trafficking in Persons Report of 2007, approximately 80 percent of those trafficked across national borders are women and girls, and 50 percent of those are minors. And when women are trafficked, you can be assured they're going to be into situations of sexual exploitation. The public health issues around this are monumental.

Anyway, so here to talk to us about these issues, and specifically slavery and supply chains, is Ambassador Lagon. Thank you so much, Mr. Ambassador, for coming. And we look forward to your remarks.

MARK LAGON: Thank you for a super introduction, Diana. I thank you for taking the time for presiding today.

It's a delight to be with you at the Council on Foreign Relations, where I've been a term member and a permanent member and an international affairs fellow. It's nice to be back, having presented my work at one time as an international affairs fellow right here.

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 a matter of utmost importance, combatting human trafficking -- or properly thought of, modern-day slavery.

Before we open things up for a real discussion, which is what's really important here, I hope to delve into the issue of trafficking for purposes of forced labor -- that area of human trafficking in particular -- and explore ways in which those in the private sector can work in partnership with those of us in government to confront this massive 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 partnerships.

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. For that reason, included in the criteria of the annual Secretary of State's Award for Corporate Excellence, known as the ACE awards, is an emphasis on exemplary employment practices and provisions for a safe and healthy workforce.

Human trafficking is a dehumanizing crime that literally turns people into mere commodities. Globalization need not, in my mind, turn people into mere commodities. It's not an inexorable truth that happens. And we can do something about it.

But absent vigilance and a proactive effort, the era of globalization has witnessed not only sex trafficking but also slave labor. Goods enter the global marketplace while consumers have little or no knowledge of the supply chains and work conditions that resulted in their production. It's problematic for both the consumer and businesses, which are increasingly faced with the challenge of ensuring that complex supply chains aren't tainted by forced labor.

But American businesses are steadily moving to address this challenge in a quest to be socially responsible corporate citizens.

Let me give you an example. 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 sweat shop. One child, Jivaj, from West Bengal, described his experience with these words: "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 unequivocal opposition to such abusive child labor practices. In a tangible 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 the business.

More importantly, it gives us a glimpse of the nightmare scenario of a different sort, that of labor trafficking. As more labor is outsourced to developing-country markets, there's a greater likelihood that forced labor may occur with corporate headquarters possessing little or no knowledge before it's too late. Multiple layers of contractors, of subcontractors and 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, and yet they still had the problem that they faced.

When I was lucky enough to lead the U.S. delegation to the U.N.'s Vienna forum on fighting trafficking last February, I met with the Gap's vice president for social responsibility. He spoke to me of the need to look at other issues besides the very important one of environmental issues, which he noted were the primary focus of many corporate social responsibility offices. I think that's right.

More recently, the American Center for International Labor Solidarity released a report that alleged labor violations in some operations in the shrimp processing sector in Thailand and Bangladesh.

The most egregious of the violations included forced labor, child labor abuses, and debt bondage. These acute cases of which I'm speaking are not only wage and hour disputes, not only health and safety violations but are indeed forms of human trafficking under the law and under international law.

While the Solidarity Center report was not the State Department report, the findings are consistent with anecdotal accounts of abuses in the sector which my office has received.

Just Monday, I met with the National Fisheries Institute, who initiated a 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 -- the National Fisheries Institute and the businesses within that coalition -- that such matters are important not only to my office but to the American consumer. Importantly, they're uniquely positioned to bring about change, which is what really matters, change in situations where forced labor and trafficking have been identified.

Before further exploring the opportunities for the private sector in the area of combating slave labor, I'd like to give you a little better sense of the scope of work of my office and trends we've been seeing globally in this realm.

The U.S. 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 that I now direct and mandated the annual Trafficking in Persons Report, which, by the way, this year is set to be released in just three weeks. That annual TIP Report is a prime tool for diplomatic engagement and international awareness, that kind of international awareness that's necessary for key efforts at prevention of the problem in the first place.

The bill institutionalized a cabinet-level task force chaired by the secretary of State to improve coordination and implementation of our anti-trafficking effort. I'm involved in the coordination of both domestic and international policy in fighting human trafficking -- be happy to speak to that in the discussion.

The reauthorization of the legislation in the year 2005 gives added attention to labor trafficking distinct from sex trafficking by requiring that the U.S. Department of Labor develop and make available to the public a list of goods from countries that the Department of Labor has reason to believe are produced by forced labor or child labor in violation of international standards.

The list is anticipated to be published next year, though there may be an interim report to Congress before then.

The list of products will serve as an awareness-raising tool to U.S. enforcement agencies, for the public, for governments, for NGOs, and ultimately, importantly, for the businesses community itself. The list is also consistent with U.S. government efforts to deny specific items produced in part or wholly by forced labor from getting access to the U.S. market. It's been the law since 1930.

Last year our Tracking in Persons Report shed light on the alarming trend of trafficking for forced labor purposes, including particularly 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 for migrant laborers seeking a better life 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. The exorbitant commissions can be grossly disproportionate to the services rendered by the recruiter. In some instances, they amount to six months, or a full year, of the worker's actual pay once abroad. To pay the fees, workers either become indebted to the recruiter or take out formal or informal loans in their country of origin with the expectation of payment based on future wages earned abroad.

In many instances, workers arrive at the destination country as migrant workers, only to discover that they've been deceived by fraudulent representations of the recruiter as to the wages they can expect to earn in the new jobs. Moreover, the high debt that they've incurred makes them vulnerable to further exploitation by unscrupulous employers, particularly in destination countries where the 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's not enough to simply monitor the conditions in supply chains. To get at the root of this problem, businesses must begin to ask how the workers arrived in the first place. The implications for companies, as for purchasers, are very real.

To get at the root of this problem, businesses must begin to ask how the workers arrived in their first 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 incentive to exploit slave labor and encourage ethical business behavior.

There have been prominent allegations, concerning a wide range of products that have been potentially polluted, by forced labor in their supply chain, including cotton from Uzbekistan, apparel from India, shrimp from Thailand and Bangladesh and steel derived of Brazilian pig iron.

I believe consumers will increasingly demand, through their own benign market force -- that is to say, what they purchase -- they will demand that products be free of slave labor. If consumers have decided whether or not to buy a brand of tuna, based on whether dolphins are harmed in the catching of the tuna, they'll surely ask more and more over time if human beings are harmed in the production of imported products, particularly if the human beings are harmed by forced labor, by veritable enslavement.

Fortunately the news is not at all entirely bad. There are challenges, but there has also been marked 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 indeed the move by the pig iron producers of Brazil. The Charcoal Citizens Institute has established an effort to monitor the pig iron production chain for evidence of force labor. They're also notable corporate actors for using their individual expertise, their corporate strengths, their 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 garnering positive publicity, and earns 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 that HP was about to use.

Against the wishes of the factory's owners, their auditors insisted on seeing the residential facilities on factory grounds where the workers were housed. They found documents withheld, a common indicator of human trafficking. The workers were enduring forced overtime and no more than 15-minute breaks per day, not even enough 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 that they were helping nix a contract worth many millions of dollars. But the company took their recommendation to cancel the contract until conditions were changed.

And another example. LexisNexis is going beyond ensuring that they're not purchasing products from corporations and foreign governments that turn a blind eye towards human trafficking. In fact, they're 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 that manages the National Human Trafficking Resource Center and its hotline for the U.S. Department of Health and Human Services.

A business is providing a core competency to a leading anti- trafficking NGO which, as the most nimble actor, is staffing the hotline and resource center for a government entity. That's a marvelous picture of cooperative partnership. LexisNexis also plans to provide the same NGO with advanced LexisNexis products which allow them to research trafficking tips, better locate trafficking victims and determine linkages between trafficking rings.

And there are other notable initiatives undertaken by those in the private sector to combat human trafficking, which I'd be happy to talk about in our discussion, but our time is limited.

Let me conclude with a larger thought. 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 enormous advances for the world, reaching many people.

But without rule of law, and without good corporate citizenship, it can lead to modern-day slavery.

I'm hopeful that we'll continue to see increased partnership with the private sector and civil society so that we might extend the manifold positive gains of globalization and curb the extreme forms of exploitation that I've been describing today. The field is wide open for opportunities and I'm really eager to help build partnerships with you.

Thank you for your attention, and I look forward to discussion. (Applause.)

TAYLOR: Since I'm the moderator, I got the first question. (Laughs.)

Okay. Thank you so much and it's very -- it's good to know that there's a department within the State Department that's so involved in this issue.

During your remarks, you talked about the demand side of this problem. And it sounds very nice that people are going to buy products based on whether or not there's been human trafficking involved and wouldn't buy products where there wasn't, which brings up the question of how do they know whether there's been human trafficking involved and also the question of people -- especially when economies are going south -- are looking at buying the cheapest product as opposed to the product that has, you know, all these green things. They have a limited amount of money.

And so how do you answer that and the corporation that says, well, you know, these people wouldn't have jobs at all if it weren't for what we're doing for them? How would you --

LAGON: You raise a really important point. I traveled to West Africa and looked at the sector of cocoa production, in which there's a good amount of child labor and, within it, some of the worst forms of child labor. So the question arises, if you were trying to clean up a form of human trafficking, the worst forms of child labor in a place like Cote d'Ivoire, do you have collateral damage against a bunch of people who are impoverished who might desperately need the work? Do you create disruptive effects on the sector?

You know, I think we need to take great care because, of course, government regulation and economic sanctions are a blunt instrument and you don't want to suggest that an entire sector is dirty. This Department of Labor report that I discussed, it will not mention specific companies, but it will mention countries from which imports come that may be tainted by slave labor.

This is tricky business. What happens for a company that isn't mentioned, but they export, I mean, they import something that's in the same sector?

I think we need to use the carrots rather than the stick. I think that we need to see companies feel that they can certify themselves, that they have clean supply chains, and try and communicate that as something, in addition to price, that would attract consumers.

But this is a problem that we need to get our head around. And I think we need some of the know-how from the business community, not just the money of the business community, to solve the problem.

TAYLOR: So we were talking before. There was sort of a code that was put together by ECPAT, I believe that it's called, and I don't know what the acronym is. But basically it says to companies, what they can do within their companies, to figure out what's happening and combat trafficking in persons in the hospitality industry; training employees to know what the signs are that somebody is being exploited within their environs.

And I think that there is one U.S. company, that's signed up for this, and it's Carlson, which happens to be run by a woman.

Can you --

LAGON: That helps, by the way.

TAYLOR: Yeah.

Can you explain a little bit what's going on in this country, and what our corporations are doing along these lines? And why wouldn't more corporations have signed up for this code?

LAGON: Yeah. Let me talk about the specific area that you asked about. This talk that I gave focused on the forced labor side of human trafficking. But this code of conduct has more to do with sex trafficking.

In particular, there's a, you know, horrifying form of sex trafficking, which is that when minors are pulled into prostitution, when they're exploited sexually. And those who are in the hospitality sector -- travel, tourism, hotels -- have a role to play to prevent this kind of grim phenomenon of child sex tourists, those who travel abroad looking for an opportunity to exploit children in prostitution.

Some great leaders in a partnership, ECPAT, which is a leading organization about child sexual exploitation being eradicated, the queen of Sweden, Carlson group, you cite, have come together pushing for a code of conduct.

Not enough actors abroad or at home have signed the code. Hundreds have.

I've actually travelled to coastal Kenya and to Cape Town, South Africa, and talked to hotel and hospitality industry people about fighting child sex tourism, and the larger hotels signing the code and then helping the smaller operation hotels also do it.

But you know, as I've talked to you about before, there's a perception on the part of industry -- oh, the discussion of human trafficking is kind of a downer. You don't -- you know, you don't want to include something in our in-flight magazine because it's not going to put people in the mood for travel if we're talking about child sex tourism. The fact is that there is a keen interest for business to demonstrate that it's on the right side of a moral issue. You can't expect businesses to do something that may require time and money if there isn't an interest as well as an ethical aim. And so I think the reputation of businesses of being clean is important.

You rightly note that it is women who play a leading-edge role. I was, you know, enormously impressed by the head of the Cape Town, South Africa, tourism association, who seems to be a human rights advocate. And she is determined that when Cape Town hosts the 2010 World Cup games, that it doesn't become an orgy of sexual exploitation in the form of human trafficking.

TAYLOR: So let's get a little bit to the sexual exploitation side of this. There has been a heated debate among NGOs and women's organizations around prostitution and how it should be treated. Everyone has agreed that trafficking, slavery is wrong, and that smuggling people across borders for use as sex slaves is wrong, and forced labor is criminal and should be prosecuted. However, there is this debate over prostitution. Some activists say that routing it out will close the market for sex slaves. Others say that efforts to end trafficking should be concentrated on the underlying causes of that trafficking, which (is in general ?) the economic, social and political reasons that people end up in the hands of traffickers in the first place. Could you comment on the two sides of that issue?

LAGON: You bet. I think there is -- this is a debate that often has too much heat and not enough light.

But I would like to explain the premise of the U.S. government. We believe that legalized prostitution helps create an enabling environment for the deeper problem of sex trafficking. People of decent, you know, moral standing believe that the more practical thing to do is to bring prostitution out into the open, regulate it, allow unionization.

It's my view and it's, in fact, been, you know, policy of the U.S. government for about six years that prostitution is a driver for sex trafficking and that it's dehumanizing and degrading by nature. And I see an inspiring coalition of people who range across the political spectrum who have been trying to raise awareness about that idea, from feminists on the left with Equality Now or the Coalition Against Trafficking in Women to the Christian conservative groups on the right.

I want to just go right at a question about whether there is a "witch hunt" to prevent funding to go to any NGOs who had the, quote, "wrong position" on prostitution. The actual policy of the U.S. government is to not give funding to NGOs to fight human trafficking if they are active proponents of legalized prostitution because of that enabling environment. An organization that has a neutral position is, you know, welcome to get money and frequently does. I've been involved in making decisions over and over again on grants. The question is whether a group is actively promoting the legalization of prostitution.

And I'd be -- I expect further questions, and I'd welcome it. But I think it shouldn't be a hot moralistic debate, a breast-beating one, but a question of practicality, of what's the best way to squeeze out the problem. And that's the way I look at it.

TAYLOR: Let's talk about the best way to squeeze out the problem for a second here in the United States. If you go on Craigslist and you look under erotic services, there are thousands and thousands of entries there in every region of the United States.

What do you do about that? And the travel magazines and travel companies are saying, you know, have this great trip to whatever place it is and, you know, you're guaranteed to score. And how do you -- I mean, that's here in this country.

LAGON: Well, this is very pertinent to the question of corporate social responsibility and how we can bring to bear the strengths in the business community to fight something. By the way, something that's really commendable is an effort by an NGO coalition, National Organization of Women and Coalition Against Trafficking Women, right here in New York, to try and get ads in the back of New York Magazine, that were very explicit about commercial sex, out of the magazine.

Craigslist has ads for sexual services. And it's not entirely clear that the individuals who have ads up, who are sort of -- you know, I will come meet you at a place to be determined, it's not in a brothel, but it's, you know, a place you'll -- the service will be delivered -- it's not clear that they're all adults. It's quite ambiguous. Some of them are under 18. Craigslist has taken a good step by putting up a disclaimer that suggests that they don't know whether the women involved are adults; but that's small potatoes. They need to go farther. That's one of the reasons why, on a trip to San Francisco on Friday, I'm going to be meeting with Craigslist.

Information technology has been, in fact, a driver of sex trafficking and sex tourism. Here's where you can go travel to use people as commodities, many of whom are sex trafficking victims. But information technology can also be an important tool for building awareness, for law enforcement tools, and we need to, instead of trying to deny the ways in which information technology fuels the problem, use it as a tool to fight the problem.

TAYLOR: Thank you.

And with that, I'd like to open it up to the audience.

Yes, in the back? And actually, if you could stand up, take the microphone, state your name and your affiliation and then your question, that would be great. Thank you.

QUESTIONER: Hello. My name is James Tunkey, and I'm the CEO of a company called I-OnAsia. I have an investigator's background. And I have a comment and a question for you.

My comment is that the corporate social responsibility industry is big business, and it's really driven by a fear of lining up in front of Congress or on the cover of Time magazine.

What do you say to heads of corporate responsibility inside of companies who believe that hiring an audit firm to go out for them and do audits is all that they need to do, and who don't -- who rely on very open public audits to do this work. It appears to me that there are many out there who think that's all that they need to do, and I would go further and say that it seems to me that there's a number of a real perverse incentives in this whole racket. It seems to me that people who are providing the audits really are in many ways a public relations protection racket and the audits themselves are so open that they don't actually achieve their goals. How would you respond to that?

LAGON: That's a great question. I wouldn't say that audits are a problem. I wouldn't reject them. I think it's great to try and build accountability, but I don't think they're enough. And I think, you know, the way to establish in the minds of business leaders that it's worthwhile to go farther, to establish that your supply chain is clean or to proactively fight human trafficking. You know, LexisNexis has done even more than I've described. I mean, it's underwritten a fantastic foundation in Cambodia, the Somaly Mam Foundation, fighting human trafficking.

I think the way to convince businesses to do that is for there to be exemplars. And I see my role is not to affect regulation and squeezing businesses and things that may have collateral damage, but -- nor to necessarily point the finger at bad actors and, you know, hope that consumers somehow, you know, pursue boycotts, but rather to raise up examples of those who are going farther than audits, that see that there's an interest in showing that they're better corporate citizens, to do something specifically aimed at helping fight human trafficking.

You know, business is in a position often not just to prove that it's not part of the problem but indeed to be part of the solution.

Poverty and desperation are drivers of human trafficking but without corruption and criminal behavior you wouldn't have people sucked into this situation. A company can help find victims. It can help that longer-term rehabilitation, retraining. It can help be a partner to governments in the developing world to develop rule of law to fight the problem. And while they're at it -- while they're cleaning up corruption and problems of rule of law they'll probably make a more benign environment in those developing countries in which to profit.

TAYLOR: Isobel.

QUESTIONER: Hi, Isobel Coleman with the Council on Foreign Relations. Could you talk a little bit about the TIP Report which is coming out next month and the inevitable policy jockeying that goes on on the rating of countries? Traditionally, in years past, several Middle Eastern countries which are key allies of the United States have been named and given bad ratings in the TIP Report.

Could you talk about how -- behind the scenes, how those countries sort of jockey for a better rating or not and the role of corporations in influencing any of that decision and how the policy decisions are worked through interagency both within the State Department and with other governmental organizations?

LAGON: Great question, and I welcome it.

I mean, our principal tool that our office has is the production of this international report. It is used for leverage with governments because it is the single one of the multiple human rights reports that has grades for countries, four different grades they can get. Countries complain because it's an irritant on our relationship but many are deeply interested in how they can get higher rankings and it becomes a form of leverage.

It's also a great tool for raising awareness around the world about the problems of sex trafficking and forced labor.

Each year, embassies come in with information they've garnered from governments and NGOs about the phenomenon of human trafficking and what governments are doing to fight it around the world. It comes out in early June each year. In the meantime, there's a process of my office writing the narrative about prosecutions against the bad guys, protection of victims and efforts at prevention, particularly through public awareness in each country. And we propose a ranking level.

Within the State Department we have a debate about whether that ranking level is right. Often the regional specialists who deal with the larger relationship with countries -- Brazil, Russia, India, you name it -- will argue about the broader context of what is possible in terms of the capacity of a country, other issues that we're dealing with. I will not deny the larger context is taken into account. It goes up to the most senior level of our department on some of these -- some friendly disputes about the rankings.

I'd say -- you asked about the role of the business community. I've seen precious little lobbying by businesses that we should go easy on a country. I've actually been surprised by that. It's almost been nonexistent in my experience.

But governments themselves go through elaborate campaigns as the report is being put together in the spring to talk. I've suddenly become a much more popular person in the spring for meetings.

There have a number of Persian Gulf states on the lowest tier of the report and they deserved it. I've got to say that in a number of Persian Gulf states to be a woman or to be a migrant laborer is a situation in which you're going to be treated as less than human. If you're a woman migrant laborer, you're really in a vulnerable position to not be accorded full human dignity.

But the report has gotten the attention of those governments and we've had some key successes in countries like the United Arab Emirates, which has improved. It's eliminated or tried to eliminate the phenomenon of camel jockeys, children who are migrants who are forced to be camel jockeys. It's tried to clean up a kind of boisterous -- a Dubai commercial sex scene.

And you know, we have tried to leverage change, including last year Kuwait knew that they might be raised from the lowest tier in a short term reassessment in September if they finally opened a shelter for victims of human trafficking that they'd been promising to do for four years.

And they did, which is a way of saying that our report does nudge people. And it appears as a carrot as well as a stick.

QUESTIONER: Hi. I'm Kate Hunt, the U.N. representative of CARE International, a humanitarian development organization. I know this isn't the key theme of your discussion. But there have been a lot of references to the root causes in the supply chain.

And I'm wondering if you could tell us a bit how you integrate your work with anti-poverty programs that provide particularly education opportunities for kids. Because that we find, in all of our studies, to be a major driver of children into labor.

LAGON: I'm very glad you asked that, and there are many layers of it.

Let me start by saying, there's a lot of discussion about how poverty is the driver for human trafficking. And as I alluded to earlier, I think it's important that we realize how it is a driver, but that there are catalysts that go along with it -- lack of rule of law, corruption, frankly sadistic people who are willing to abuse people. Poverty alone is not the problem.

I think we'd be best off if we target certain areas of development work that really would have more fruit borne in fighting human trafficking. Clearly we need to create greater economic prosperity and opportunities worldwide, so that people aren't so desperate that they might believe a recruiter when they say, you're going to a wonderful job in another country if you just give me this exorbitant fee.

But I think targeting things like what you cite, in particular the education of girls, is essential. You know, I'm very fond of a program I was exposed to, as a Capitol Hill staffer and as an official on U.N. policy at the State Department before this job, of, you know, the Dole-McGovern program, funded for the Food and Agricultural Organization, of feeding girls in schools.

Which in traditional societies around the developing world, in which girls are typically not sent to school, when parents, when a father is shown, well maybe another mouth will be fed, they end up sending a girl to school. And that ends up being the lowest rungs of a ladder for a life of opportunity.

I think to diminish the vulnerability of a women, to both sex trafficking and labor trafficking, education is a really important thing. And so that's one area in particular.

As we try and develop our programs on -- we're quite involved, in my office, in giving grants to NGOs and international organizations, from UNICEF to the International Organization for Migration, to fight human trafficking.

We've increasingly, in the interagency group that I chair, built a coordination mechanism so that we talk about the foreign assistance given by my office, by the Population and Refugee Bureau of the State Department, by the Agency for International Development and by the Department of Labor. So the left hand knows what the right hand is doing and we make self-conscious decisions about who's spending what on child labor, on sex trafficking, on various things so we have complementary programs. And then from that context, we discuss the larger development agenda and where human trafficking fits in. I'd say there the leadership of Henrietta Fore succeeding Randy Tobias has really led us in the direction of vast improvement on coordination.

QUESTIONER: (Name and affiliation inaudible.) I'm looking for the numbers, what's happened in terms of human trafficking. Has it increased significantly over the years, or have we just discovered them more now we've got the ability to have cell phones, the Internet to tell these stories around from various countries? Or do you have an increase because of the ease with which you can have traffic, you know, transport around the world, both with supplies and also with, you know, certainly sex? So where does it go? Is it worse now or better now than it was 10 years ago?

LAGON: Good question. I think that some elements of globalization are making it worse. This is a problem that we have some good estimates cited by our -- Diana, about -- we think there are about 800,000 victims each year, U.S. government estimate, although it's across borders, and millions more within countries like Russia, Brazil, India, who never cross borders. That's an important thing to know.

Trafficking in persons -- or human trafficking, a little easier way of putting it -- connotes that the movement or the smuggling of the person is the key thing. It's not. There's a reason why slavery is a better expression, not just because it, you know, gets the moral adrenaline going. What's distinctive by the legal definition of human trafficking -- under U.S. law and a U.N. treaty -- is the control and the level of exploitation. And so it's not just the crossing of borders.

We're trying to get a better sense of the scale of the problem.

But one thing I caution is that we not spend so much of our resources making sure we have the perfect global number when we can learn about more discrete patterns of human trafficking. If we can learn about the flow of people from South Asia to the Persian Gulf or if we can learn about particular phenomenon, it's a better focus of the U.S. government effort on getting data.

QUESTIONER: Alice Tepper Marlin, Social Accountability International. Thank you for that excellent presentation.

LAGON: Thanks for coming.

QUESTIONER: I wanted to ask you -- in addition to talking about codes specifically on this one issue, to speak a bit more about broader corporate codes because there are hundreds of companies that have incorporated forced labor prohibitions into their own codes or joined multi-stakeholder organizations -- SAI, FLA, Ethical Trading Initiative -- whose codes include provisions against forced labor.

I think for this group it would be useful to look at any corporate code that your company may have and see whether the forced labor provisions in it are adequate and complete including items like possession of documents and to point out that the Department of Labor, Department of State and USAID have been active in supporting all of those groups.

And speak a little bit about what they do beyond auditing, going into integrated scorecards and development activities to help suppliers exporting to the U.S. to improve conditions and prevent child labor.

And one other thing -- it's a bit -- long question. But it's a very interesting policy issue. And that's the relationship between sugarcane in Brazil, one more sector, in addition to those you mentioned, in which child -- in which forced labor is endemic, and because of the relationship to the ethanol issue, makes for a rather complicated policy decision --

LAGON: Yeah.

QUESTIONER: -- not only on labor but on energy that we'd very much appreciate your addressing. Thank you.

LAGON: Let me start with the last. That's something that we were looking at in this upcoming report.

We have a lot of difficult energy decisions we need to face about dependence on oil. And so we're confronted with an interesting moral dilemma if you see that there seems to be not just exploitative labor practices, but the most acute exploitative labor practices -- slave labor -- that may be related to ethanol, in Brazil. And this is something we need to get at. And I hope we'll be talking about it more when we unveil our annual report on June the 4th. So I'm glad you asked that.

With regard to codes, a few things I'd say. And I won't present myself as the world's expert on codes. But there are lots of codes. I had a consciousness-raising experience when I went to this conference hosted by Coca-Cola in Atlanta on forced labor and how CSR could confront it, about, you know, the view of business is, oh, my goodness, there are all these codes and, you know, the venn diagram of them is all these crosscutting, overlapping circles. But I think it's important that codes that exist incorporate, you know, the issues that I'm raising.

Again, I want to present myself not as an office that dictates regulations, but that's a resource, and I hope will be a resource over the years for things that ought to be included in codes.

Now, if you want to look for a source that's not the State Department and not the U.S. government, I would highly commend principles that have been put out by the International Labor Organization, that's tried to form a business alliance against forced labor. And it has 10 principles that are quite good for trying to close the window of vulnerability, particularly in the area of migrant laborers becoming forced laborer human trafficking victims. And I commend those principles to you. There's a reason that they're going to be in the next annual report.

TAYLOR: I just want to bring it back just quickly to the current administration's policy. The Bush administration's been accused of conflating sort of the two issues of trafficking and prostitution. In other words, their attitude seems to be that if you are a prostitute, you have been trafficked. How can these two issues be differentiated to help serve the best interests of those who have been trafficked against their will for multiple labor purposes versus those who engage in prostitution of their own accord?

LAGON: This is a subtle issue. I have to say, you know, that on a conceptual level, you need to stop for a moment and think, when a woman or a girl is sold as a sex commodity, sometimes it's hard to draw lines between good prostitution and bad prostitution.

And I think that the degree of voluntarism becomes murky.

I'm sponsoring research by Harvard scholars around the world to ask the question of when people are drawn into the world of prostitution because under our law and as an international norm, there's a sense that a minor really doesn't have that voluntarism. And I think -- you know, there was a recent study that just indicated that in the sex industry in Chicago, the average age of entering it is a little over 16. So it's worth looking at.

Again, I try and offer a subtle position on this, not a direct equation, prostitution equals sex trafficking. But think of the situation as a world of prostitution and a sex industry driven by the demand of men seeking to use females -- as there is a demand, where do pimps turn to to boost the supply to meet that demand? They turn to foreign sources and they turn to those who are under 18. And so I think there is a clear connection.

And what I'd urge is those who have fought over this issue -- and I know people who share my premise have been just as involved in making this an issue of heat rather than light -- let's think about this. We all agree that the women or girls who are in a situation of prostitution ought not to be ostracized, ought not to be punished. We need to think about the customers who create the demand and we need to think about the exploiters. And perhaps we may have some disagreements of just how much an overlap there is between prostitution and sex trafficking, but that's a common approach. The most important thing is we ought not to punish those who are in prostitution. That's something we can agree on and that can help to find a way of moving forward, I hope.

TAYLOR: I think you had your hand up before.

QUESTIONER: Thank you, Diana.

My name is Adam Green. I'm with the U.S. Council for International Business, and we organized the forum at Coca-Cola that Mark has been referencing.

A quick comment, then a question.

The comment was, at the forum -- it follows on the question you just raised -- it became clear that to engage the business community in a lot of these efforts, we really need to unpack the different issues and separate human trafficking from migration, from forced labor, from child labor, prostitution. And the forum really tried to focus specifically on forced labor, and even in that carve out things that aren't forced labor like mandatory overtime and things like that, and be very specific and only look at forced labor, because all these issues are -- are very different and you need a very different solution and engage in different ways to get there.

The question is, how -- what programs have you seen that effectively bring different factors together to resolve an issue? One of the -- one of the things we've struggled with is if industry tries to come in and solve forced labor on its own, it will really not work, because even in the pig iron example you had, it's the charcoal camps that feed the pig iron industry, and as companies dug back down into that supply chain they discovered that the local authorities knew full well where the camps were, which ones were good, which ones were bad. And after spending a lot of time and a lot of effort to discover this, find that locally it's all well known and a functioning part of the local economy. And so you end up hitting a brick wall, which is the lack of political will at the local level and corruption.

So are there areas where you've seen different actors come together to try to solve something collectively?

LAGON: It's a great question. It's good to see you again.

You know, I'm terribly interested in ways that government works with civil society organizations. An important third actor besides government and business are civil society groups that can help the victims, help identify the problems. Often government around the world are allergic to NGOs and civil society organizations. And not just in dictatorial governments; let's face it, in a Japan, in an India, in a Mexico, there's an underdeveloped comfort with government working with NGOs. That's one thing that I think has been quite helpful.

I'm -- well, look, I mentioned the shrimp processing sector in Thailand. I've seen it myself. I mean, I've seen the Burmese migrant victims of forced labor with my own eyes in a shelter outside of Bangkok.

Let's look at a case recently of improvement. There was a raid in September 2006 of a forced labor camp in the shrimp sector. It -- a labor-oriented NGO pulled labor inspectors from the Thai government into an effort to have a raid. The raid happened.

Only the women who were among the victims were treated as victims. The men were deported. The law enforcement was an ancillary actor. There was no punishment for months and months. And the people ran the factory and the factory was never closed.

In March of this year, however, because of a developed dialogue between government, NGOs, business and within government -- importantly, law enforcement with labor inspectors -- there was a raid of another factory in the shrimp processing sector, but this time the men were treated as victims as well as the women. There was a closer cooperation of law enforcement with labor inspectors and prospects for accountability. And so those are some lessons I'd draw.

You asked me an important question. I just want to leave you with some idea of what human trafficking is. I mentioned before the word "trafficking" might connote movement when the real thing is the exploitation and control. You're right that we need to unpack what we're talking about.

I do not want to be ever accused of suggesting that cheap labor, petty exploitation, not paying full, you know, wages, is by nature human trafficking or forced labor. However, I do want to say something so people understand. Human trafficking includes forced labor. The worst forms of child labor and particularly forced labor are human trafficking. So when we're talking about forced labor it's one of the forms of human trafficking. It's wholly subsumed within human trafficking.

So while we should unpack that, please understand -- don't say, "Well, that's not a human trafficking problem. That's forced labor." It happens to be both.

QUESTIONER: Thank you.

QUESTIONER: (Name inaudible) -- New York Life International. It seems that the successes have been very episodic and that really the root solution is getting countries to either enforce or change their national labor laws. Speaking about the BRIC economies, what have you seen happen recently and what do you think we can expect to see happen over the next let's say 10 years?

LAGON: I'll talk about a couple of the BRIC economies. Yes, the first step is to get a law on the books that establishes that human trafficking is a serious crime and in particular labor trafficking. Something we see around the world, however, is a problem of implementation.

In the annual report, there's a pattern over the years of a country rising up in the tier ranking because it's passed a law, and then a couple of years later it drops down because it hasn't implemented the law. We're seeing that there is a problem of countries not convicting those who are responsible for forced labor.

Let me just give you a thumbnail sketch of India and Brazil, since you mentioned the BRIC countries.

In India, there are three kinds of human trafficking: sex trafficking, child labor and bonded labor. There has been success, some real progress in India on helping victims, victim protection, working with NGOs in the area of sex trafficking and child labor. There's been rather limited success in holding the exploiters to account in all three of those areas of human trafficking. And noteworthy, despite laws on the books in India about bonded labor from the 1970s, it's an area of rather limited recognition of the problem, or action.

In Brazil, it's a really interesting mixed bag. This is a government in which the president, Lula, has said specifically that slavery is a problem, and it's a hot word in the history of Brazil. To connect today's forced labor with the legacies of slavery is really quite a striking thing on the part of Lula. They even have a "dirty list" of companies that have not cleaned up their supply chains and are held up, you know, in an ostracizing fashion.

Victims of human trafficking have been rescued by the thousands. And yet the problem remains law enforcement. The punishment for those who are responsible for forced labor has been minimal for some of the very reasons you mentioned, which is local authorities and local business wanting to smooth out the problem and not have anything more than a fine or a suspended sentence. That's a reason for more action.

Do you have any --

TAYLOR: Oh. Do you have to -- do you have time for one more question?

LAGON: The boss says -- (makes sound). (Laughter.)

TAYLOR: No? Okay.

Thank you very much.

LAGON: I'm delighted to spend time here. Thank you.

TAYLOR: It was great. Thank you. (Applause.)

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