Canada's Export Development Corporation: Financing Disaster - November 11, 1999
In 1999, Amnesty International raised alarms about the killing of four indigenous people protesting a hydroelectric dam in Colombia that has devastated their food source and, if completed, would flood most of their land.
In 1998, an accident at a mine in Kyrgystan resulted in two tons of cyanide entering a river. A lack of an emergency response plan worsened the disaster, leaving two people dead and over 600 hospitalized.
In 1995, a gold mine in Guyana spilt 3.2 billion litres of cyanide and heavy metal effluent into the country’s main waterway, endangering the health of 23,000 people and killing thousands of fish.
A massive mine spill at the Marcopper mine in the Philippines in 1996 forced the evacuation of five villages and caused a “total loss of aquatic life and biological productivity” according to a UN investigation.
EDC provided US$ 1.36 million for the project.
What do these incidents have in common? Canada’s Export Development Corporation, a publicly owned financial institution, provided financing or insurance to ALL the companies involved in these incidents.
Canada’s Export Development Corporation (EDC) assists Canadian companies to export goods and services abroad. It supports and develops Canada’s export trade and Canadian capacity for engaging in that trade. Since 1993, EDC’s services include supporting export sales with buyer financing, guaranteeing investments, the provision of credit and political risk insurance, assisting in joint ventures and other services.
To implement its broader mandate and to keep pace with multiplying opportunities resulting from rapid market liberalization, EDC has grown considerably. From 1993 to 1999, its volume of business more than tripled from $11.7 billion to over $40 billion. It has over 800 staff members and provides services to close to 5000 Canadian companies.
EDC is an important Canadian financier of large infrastructure and resource extractive projects, which by nature are more likely than others to have adverse impacts on the poor, labour, human rights and the environment. However, EDC s and the environment. However, EDC is exempted from the Canadian Environmental Assessment Act.
EDC’s impacts on communities and the environment are difficult to measure, as project information is kept from the public. EDC does not inform the public what projects are under consideration or approved. Basic information such as the name of EDC clients, the type of financing provided and where the project is taking place is not disclosed. Typically, the public only learns of an EDC project when it has become a well-publicized disaster. This level of secrecy is unacceptable for a public financial institution. EDC is exempted from the Access to Information Act.
As a Canadian public financial institution, EDC can borrow with the full faith and credit of the Canadian government. Unlike other financial institutions in Canada, it does not pay taxes. It is the Canadian Parliament, and through it, the Canadian public, that is ultimately responsible for its successes, its failings and its image abroad.
What is an export credit agency?
EDC is an export credit agency (ECA). Almost all industrialized and newly-industrialized countries have one. ECAs provide loans and financing for domestic companies to export goods and services abroad. Often they support questionable projects.
As one activist put it “if you are fighting a project that will destroy a river, a forest or displace a community in a developing country, chances are that the project you are up against is being backed by an export credit agency”.
Conclusion and Recommendations
EDC argues that until a multilateral agreement is in place for all export credit agencies, Canada will lose business to ECAs that do not have environmental, social or human rights policies in place.
Canada’s competitive advantage should not rest on the violation of human rights or the degradation of the environment. If Canadian companies operating abroad take advantage of weak or non-existent environmental, human rights and labour laws, they should not be able to do this with public support.
Three Gorges Dam
China’s Three Gorges Dam is considered to be the world’s single most damaging project under construction today. The corruption-ridden project with flood an area 660 kilometres long, submerging archaeological sites and forcibly re-locating between 1.3 and 2 million people. EDC provided US$ 155.5 million. Neither the US export credit agencies nor the World Bank would support this project.
EDC cannot rely on the regulatory framework of host countries to ensure that projects that it supports are not in contravention of internationally accepted norms and conventions. In part, as a result of services provided by EDC, Canadian companies have business interests in countries which are not prepared to pay attention to crucial human rights and environmental considerations due to limited economic or institutional capacity or a lack of political will.
Both the World Bank and the American and Australian export credit agencies have higher environment, human rights, disclosure and social standards than what the EDC has to date. All public agencies must operate consistently with public policies and values -- policies and values that serve to protect the environment, human rights and social needs of local communities.
Urrà I Hydro Project
Urrà Hydro Project in Colombia has destroyed the traditional food supply of the indigenous Embera-Katio people and flooded their farm land, forcing many off their land. Embera people protesting the dam have been killed by paramilitary groups with alleged links to the Colombian army. The most recent killings of Embera leaders took place in September, 2000.
EDC provided US$ 18.2 million for the construction of the dam.
Canada’s Export Development Corporation should:
Require social, environmental and human rights assessments for all transactions that could have significant potential or known impacts;
Ensure public accountability through the disclosure of project-specific information;
External accountability mechanisms must be put in place to assist in ensuring adherence to all policy commitments;
Fall under the purview of the Access to Information Act;< Information to Access the>
Fall under the purview of the Canadian Environmental Assessment Act.
Candu Nuclear Reactors
EDC has supported the sale of CANDU nuclear reactors in Argentina, China, Romania and South Korea. CANDU nuclear reactors in several countries have experienced a host of problems, including safety mishaps, corruption, exposure of workers to radiation and international security concerns. The federal government is currently being sued for failing to undertake a comprehensive environmental assessment of the CAN$ 1.5 billion sale of CANDU reactors to China in 1996.
What you can do:
Write to the Prime Minister and let him know that you think it is outrageous that a public institution does not have to tell the public which projects it is supporting.
The Export Development Act, the statute governing the Export Development Corporation has been under legislative review for two years. Tell the government we want the Act amended to ensure EDC undertakes environment, social and human rights assessments and increased disclosure, by writing to the Minister of International Trade.
The Canadian Environmental Assessment Act (CEAA) is under legislative review. Write to the Environment Minister to let him/her know that we want the Export Development Corporation under the CEAA.
Find out if projects that are devastating the environment and local people have an EDC link. Write EDC at email@example.com, the Minister of International Trade and the company in question. Check with local groups and government, the media and company subsidiaries. Let us know what you find out: firstname.lastname@example.org.
Mailing address for Members of Parliament : House of Commons, Ottawa, K1A 0A6 - no postage necessary. Don’t know your MP’s name? - check the House of Commons website at www.parl.gc.ca or call Ottawa info at (613) 992-4793.
CONTACT the Halifax Initiative in VANCOUVER, BC at :
Phone:(604)677-0264, Fax:(604)684-1312, or email@example.com