Dams and Landslides

SCFAIT hears presentations on Bill C-31: Minutes of Proceedings

October 18, 2001

Standing Committee on Foreign Affairs and International Trade met to call to order the discussion on Bill C-31 and hear presentations from witnesses, including Patricia Adams.


The Standing Committee on Foreign Affairs and International Trade met at 9:12 a.m. Thursday, October 18, 2001, in Room 371, West Block, the Vice-Chair, Jean Augustine, presiding.

Members of the Committee present: Jean Augustine, Aileen Carroll, Bill Casey, John Duncan, John Harvard, Stan Keyes, Francine Lalonde, Diane Marleau, Keith Martin, Pat O’Brien, Pierre Paquette, Bernard Patry, Svend Robinson.

Acting Member present: Mac Harb for George Baker.

In attendance: From the Parliamentary Research Branch of the Library of Parliament: James Lee, Gerald Schmitz and Peter Berg, Research Officers.

Witnesses: From the Department of Foreign Affairs and International Trade: Marie-Lucie Morin, Director General, Trade Commissioner Service Planning and Policy; Sara S. Hradecky, Director, Export Financing Division; Wayne Robson, Deputy Director, Export Financing Division; Martin Jensen, Officer, Export Financing Division. From Probe International: Patricia Adams, Executive Director. From the North-South Institute: Heather Gibb, Senior Researcher. From the NGO Working Group on the Export Development Corporation, Halifax Initiative Coalition: Émilie Revil, Coordinator. From Canadian Ecumenical Justice Initiatives: Kathy Price, Latin America Human Rights Researcher and Policy Advocate, Kairos.

The Order of Reference dated Tuesday, October 2, 2001, being now read as follows: ORDERED, — That Bill C-31, an act to amend the Export Development Act and to make consequential amendments to other Acts, be read the second time and referred to the Standing Committee on Foreign Affairs and International Trade.

The Committee resumed consideration of Bill C-31, An act to amend the Export Development Act and to make consequential amendments to other Acts.

Patricia Adams, Heather Gibb, Émilie Revil and Kathy Price, each made an opening statement and answered questions.

[The full transcript of the Committee’s meeting on October 18, 2001 is available on the parliamentary web site http://www.parl.gc.ca/InfoComDoc/37/1/FAIT/Meetings/Evidence/faitev33-e.htm][PDF]

The Vice-Chair (Ms. Jean Augustine): We are considering Bill C-31, an act to amend the Export Development Act and to make consequential amendments to other acts.

We have with us several witnesses today from Probe International, North-South Institute, the NGO Working Group on the Export Development Corporation, Halifax Initiative, as well as the Canadian Ecumenical Justice Initiative.

I’m not too sure whether or not you’ve had a discussion earlier as to who wants to begin or whether the chair will just start and go from my left.

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So welcome all. We’ll start then with Patricia Adams from Probe International.

Ms. Patricia Adams (Executive Director, Probe International): Thank you, Madam Chairman.

I thank you especially for the opportunity to appear before this committee once again to address this very important subject of changes to the legislation governing the Export Development Corporation.

Probe International, the organization I represent, has investigated the environmental, the financial, and the social consequences of EDC’s activities for the past 20 years. Our foundation routinely uses regulatory proceedings and the courts to constitutionally challenge environmentally deleterious laws, to establish liability, and to stop environmental damage.

From this base of experience, we have evaluated Bill C-31 and have concluded that it is a bad law. Rather than holding EDC to account for the environmental consequences of its operations, Bill C-31 will give EDC legal protection to destroy the environment. The public wants EDC to stop supporting environmentally damaging projects. This law would not accomplish that.

Government lawyers insist that this law would be actionable, but because the drafters of this bill have built in so many thresholds, they have almost totally protected EDC from action. If Bill C-31 passes intact, EDC will be legally permitted to follow its own self-styled environmental review procedures, in which EDC writes the rules, establishes the criteria, defines the terms, assesses itself, and then decides whether or not it is justified in supporting a project that will destroy the environment.

Under these circumstances in which EDC is in charge of the legal and the environmental goalposts, it is highly unlikely that any EDC activity would ever be defined as a legal infraction, let alone an environmental infraction that would give cause for action by citizens.

In the end, Bill C-31 will create a paper exercise in environmental review in which EDC will be able to produce without challenge—because EDC sets the standards—its own view of the environmental risks and benefits of a project.

Probe International runs into these self-serving assessments all the time. This is where benefits are inflated and costs are discounted. When laws provide for unchallengeable, self-serving assessments, then no project is too environmentally egregious to justify.

The Three Gorges dam on China’s Yangtze River, which will force the relocation of nearly two million people, is a classic case of this.

Bill C-31 is the culmination of a three-year review in which the government was told over and over by the public that it wants EDC to be subject to the Access to Information Act. But Bill C-31 leaves this badly needed reform out. The public, once again, is left to the mercy of a self-serving EDC policy that directs EDC to release only bare-bones details of its activities and compromised environmental assessments.

The disclosure of other documents will be left to the discretion of EDC’s corporate clients. The corporate beneficiaries of EDC’s largesse will determine EDC’s disclosure practices, not the public or this legislature. Because Bill C-31 fails to subject EDC to the Access to Information Act, EDC will continue to be able to hide its damaging and costly mistakes from public view, and possibly put lives at risk.

In my written brief to you I explained why this is so, in light of the disturbing case of the Chamera dams in India.

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In 1984, EDC and CIDA committed $645 million to build the Chamera I dam, on India’s Ravi River. Probe International filed an access to information request to CIDA because CIDA is subject to the act, and we recently received approximately 2,000 pages of documents, including correspondence, internal memos and e-mails, reports to the National Hydro Power Corporation of India, and performance and safety reports about this troubled project that were prepared by an independent monitor. Those documents revealed safety problems that should have been in the public domain from the moment they were known to project authorities.

For example, as early as 1993, RSW, the engineering firm hired to monitor construction of the project, submitted one disturbing report after another in which they warned the integrity of the dam structure was jeopardized by the inherent weakness of rock at the right abutment of the dam. Then on May 24, 1996, a major landslide occurred. RSW reported that the landslide revealed that the “depth of the overburden immediately downstream from the dam is much greater than generally reported”.

RSW continued, “in view of the forgoing, the Monitor considers the signs of instability extremely serious”. Any further signs of structural unsoundness, slides, increasing seepages into the dam and downstream of the dam, and vortices on the reservoir,

must be considered as being potentially catastrophic requiring the immediate, controlled lowering of the reservoir and, eventually, the shutting down of the power plant and the notification of NHPC Management, Government of India and all concerned administrative authorities in the area.

RSW reminded CIDA that it warned of this geological instability in 1993—three years earlier—and felt it was “regrettable that the opinion expressed in this report had received so little attention at that time”.

RSW then warned CIDA, and I quote:

Degradation of the already precarious situation could lead to a catastrophic event involving not only a major shortage in power production but, more important than all, potential losses of lives in the communities installed downstream of the dam.

Probe International has sent copies of these documents to Indian citizens’ groups who are now reviewing them with independent engineers to assess the risk to residents downstream.

Why is this case relevant to Bill C-31? Because we would never have received these documents if CIDA, which is subject to the Access to Information Act, had not been involved.

In 1999, EDC’s board of directors approved another loan, this time $175 million, to build Chamera II. That’s another dam just 30 kilometres upstream of the troubled Chamera I dam. But this time CIDA backed out and EDC is funding it alone. Because Bill C-31 fails to make EDC subject to the Access to Information Act, Indian citizens living downstream of Chamera I and Chamera II will simply have no right to know from here on in what risks EDC has taken with their lives.

Lastly, let me address this fallacious argument of the EDC that it must balance the views of all of its stakeholders when drafting environmental review and information disclosure rules. The implication here is that the two stakeholder groups, its corporate beneficiaries, and the public have equal rights. They do not.

EDC may have legal contracts with its corporate clients and be responsible to adhere to those, but it is not accountable to those corporations. It is, however, accountable to those who backstop every dollar EDC borrows, giving EDC its wherewithal to carry on business—that is, to Canadian taxpayers. Equating the two only serves to blur and confuse the parties’ rights and responsibilities and compromise the policies and the law that govern EDC. It is your duty, as our elected representatives, to see clearly through that confusion and to translate the public will into effective legislation, not into Bill C-31.

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Thank you.

The Vice-Chair (Ms. Jean Augustine): Thank you, Ms. Adams.

We’ll now move to Ms. Gibb. Ms. Gibb is from the North-South Institute, a senior researcher.

Ms. Heather Gibb (Senior Researcher, North-South Institute): Thank you, Madam Chair. I’d like to thank you for the opportunity to appear today. My comments generally relate to issues of consistency and coherence across Canadian policy and to Canadian obligations under international conventions and treaties to which it is a signatory.

This legislation, I believe, is important not only because it responds to a very lengthy process of examination and consultation in Canada, but because it’s part of larger international discussions relating to global governance. In November, as you know, the OECD’s working party on export credits and credit guarantees is scheduled to consider a recommendation on common approaches in environment and officially supported export credits. Canada has been taking a leadership role in discussions on global governance in many forums, for example, on international financial architecture.

The direction of revisions to the Export Development Act should be consistent with our broader Canadian objectives to move the bar up. I’d like to make three general observations.

The first has to do with setting environmental standards for the Export Development Corporation, and that is that Canada should be aiming for the highest common denominator. The benchmark on environmental assessment has moved substantially since the Canadian Environmental Assessment Act was first approved, and now includes socioeconomic considerations as well as national obligations under international agreements on human rights and labour standards. We believe Bill C-31 should state explicitly that environmental assessment includes socioeconomic rights and labour standards impacts.

We have several concerns with the proposed changes regarding environmental effects, and these include absence of language requiring the EDC to turn down projects that have significant adverse environmental effects. I go back to my earlier comment about what we now understand is environmental effect. We also have concerns about vagueness in the definitions and criteria and concerns about delegating responsibility and authority to the Export Development Corporation to set its own criteria when such criteria and standards already exist elsewhere, including in the CEAA.

A third area of concern is the absence of language on disclosure. This is a major weakness in the bill. Timely and appropriate disclosure of environmental reviews is important to facilitate meaningful input by stakeholders and the possibility of improvements to the projects. I think critically it’s also an important tool for accountability.

Referring specifically to the clauses in the legislation, I’d like to comment on clause 1, the long title of the corporation. While it’s to be hoped that agencies acting under the name of the Government of Canada would act in accordance with all international obligations of that government, we understand there is a concern that when there is an apparent potential conflict between supporting and developing trade and promoting Canadian competitiveness in international marketplaces on the one hand, and environmental, human, or labour rights considerations on the other, priority could be given to the former, that is, promoting trade and Canadian competitiveness.

To remove any doubt, both on the part of the EDC and its staff and clients, and to provide for the EDC to reject environmentally—broadly understood—projects, we suggest the addition of language in the bill that clearly spells out that in its business decisions, the EDC will pay due regard to international treaties and conventions ratified by Canada. This is done by the Australians with their legislation. I think it’s also important to provide tools for the EDC to build capacity within itself to understand the implications of these commitments. For greater clarity, it might be useful to actually append a list of international conventions against which transactions are to be checked.

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Turning to clause 9, “Environmental Effects”, the EDC has embarked on an ambitious initiative to strengthen its own environmental review framework. In our comments during a recent consultation by the EDC on the draft environmental framework, we commended the corporation for the substantial progress it has made in strengthening that framework.

We did note some concerns, which we have as well concerning Bill C-31, specifically with respect to proposed section 10.1. This requires the corporation to determine whether there might be environmental effects resulting from a project despite implementation of mitigation measures, and then to determine whether the corporation should enter into a transaction if there were adverse environmental effects anticipated.

We feel this section could be strengthened with the addition of language that required the corporation not to enter into transactions where an environmental assessment indicated significant adverse environmental, social, human, or labour rights effects despite mitigation measures. If the EDC is expected to respect norms for corporate, social, and environmental behaviour, it must be required to turn down business when environmental assessments indicate a project cannot meet standards. Such decisions should also be made public, to assist the building up of a corpus of practice to guide both clients and the corporation itself.

The proposed section would be strengthened and the corporation given greater flexibility to fulfill its mandate, with the addition of language requiring the corporation to request project proponents to identify alternative means of carrying out the project. Information on alternative means should also be disclosed.

With respect to proposed section 10.1(2), for greater clarity, consistency, and accountability the legislation should include specific taxonomy and not leave definitions of terms and expressions to the board. The Canadian Environmental Assessment Act, for example, contains a detailed list of definitions.

Finally, with respect to disclosure, a key principle of good governance is transparency. In view of the trend in international practice in favour of disclosure, as well as more demanding public expectations for behaviour on the part of those exercising some measure of public authority, we believe the legislation should include explicit requirements for disclosure of project-related information in a timely and regular manner. The Canadian Environmental Assessment Act, for example, presumes in favour of disclosure, specifying non-disclosure only if disclosure would cause “specific, direct, and substantial harm.”

There is little argument against non-disclosure of trade secrets—financial, commercial, scientific, or technical information of a confidential nature—or of information that could result in material financial loss. The CEAA sets out clear guidance on access to information. Other national and multilateral financial credit agencies also provide explicit direction.

Since the EDC is exempted from provisions of the Access to Information Act, it is even more important that the legislation governing the corporation clearly set out a requirement for adequate and timely disclosure of environmental assessments—standards against which a clear assessment of the corporation’s performance can be made.

The legislation, not the board, should spell out the nature of any exemptions to the requirement for an assessment. In practice, all projects should be screened, and most agencies have established clear criteria to guide them. The CEAA, for example, has exclusion and inclusion list regulations. They are specific and public. Guidance is provided on exceptions by other export credit and finance agencies. The World Bank is often cited as an example. Thank you.

The Vice-Chair (Ms. Jean Augustine): Thank you very much, Ms. Gibb. We’ll now ask Ms. Revil, from the NGO Working Group, the Halifax Initiative, to come forward.


Ms. Émilie Revil (Coordinator, NGO Working Group on the Export Development Corporation, Halifax Initiative Coalition): Thank you very much, Madam Chair. My name is Émilie Revil and I’m the coordinator of the NGO Working Group on the Export Development Corporation.

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The NGO working group on the Export Development Corporation has been working on this file for three years, and I must say that we are deeply disappointed with Bill C-31. Our case studies of EDC-supported projects detail the kinds of impacts this institution can have on people’s lives and the environment, on our international commitments, and on our reputation abroad if it operates without proper regulation.

Not only does Bill C-31 fail to provide appropriate checks and balances or much-needed direction, it proposes to reinforce in law a status quo that is highly problematic. More than 100,000 Canadians have written to the government this year to express dismay concerning the status quo, and pages of newsprint have been dedicated to the failures of EDC as a public institution.

Yet Bill C-31 is silent in all areas of public interest with the exception of the environment, in which basically all it says is that the EDC can do whatever it wants. Bill C-31 legislates the process of autonomy the EDC already enjoys today. It puts into law the kinds of loopholes in the environmental assessment process that, if used, will put to shame international and Canadian standards for environmental assessments.

No other government-owned institution we know of has the legislative power to define its own environmental assessment process that Bill C-31 gives the EDC. The majority of public institutions in this country are regulated under the Canadian Environmental Assessment Act. Bill C-31 not only allows EDC’s board of directors to define environmental assessment; it allows it to exempt its own activities from an environmental assessment process and to agree to go ahead with a project even if the environmental assessment process indicates serious adverse impacts.

These loopholes have been clearly exposed in the summary and analysis of the bill on the government’s website. The delegation of decision-making authority to the board of directors of the EDC, with no limits or criteria to this delegation, is—and I quote—“unusual”. And I quote again:

The complete absence of limits on the decision-making power would suggest that the board directives would be virtually immune from judicial review.

Bill C-31 gives control to EDC when EDC has failed to show itself capable of steering itself in the public interest. EDC’s current environmental framework has been widely criticized by Gowling, by SCFAIT, and most recently by the office of the Auditor General.

In its response to the SCFAIT report of December 1999, the government asked the Auditor General to review the current environmental directive the EDC developed on its own. The Auditor General found it lacking and poorly implemented in 92% of the cases it reviewed.

EDC’s environmental framework will only be finalized this spring. How can Parliament decide that the ERF will be satisfactory if it does not require EDC in law to adopt good practice?

This bill also asks the Auditor General to review the EDC’s implementation of its own directives every five years. But what recourse does the public have when EDC gets a failing grade? What recourse does the public have to hold EDC accountable when it exempts itself from an environmental process or when it approves a project that has known serious adverse environmental impacts?

This act should lay out criteria that it expects EDC to follow, such as the following.

All transactions with potential or known significant adverse impacts must undergo an environmental assessment.

All environmental assessments of transactions with known significant adverse impacts must include the consultation of locally affected populations.

Information collected on impacts through an assessment process must be made public at least 60 days before the transaction’s approval by the board of directors.

Standards followed must take after the large body of expertise that exists on environmental assessment process such as the IFC of the World Bank Group or American export credit agencies.

Finally, EDC’s board must be required to review all transactions with known or potential severe impacts.

This last criterion is important because few of EDC’s transactions are actually approved by EDC’s board of directors.

There is a little confusion here. I do not know if it’s over $25 million or over $250 million that projects have to be approved by the board of directors, while all the other transactions under $25 million—or under $250 million, if what I think is right—can be approved solely at management’s discretion.

Mr. Svend Robinson: It’s $225 million.

Ms. Émilie Revil: Is it $225 million? Okay.

I also note that the World Bank board of directors approves all transactions and the U.S. Ex-Im Bank’s board approves all projects greater than $10 million.

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Also, EDC should be brought under the Canadian Environmental Assessment Act. The inclusion of the clause in Bill C-31 reinforcing EDC’s current exemption from CEAA ties the hands of policy-makers. CEAA does not need to be amended to bring EDC under it; however, now the ED Act would need to be if the government decided to apply CEAA, as one hopes they would by example after an appalling review by the Auditor General’s office.

You heard from DFAIT this morning, from a Mr. Jensen in particular, that it included the clause regarding CEAA to ensure that EDC is not required to follow two different assessment processes. There is a case to be made that EDC’s Canada account should fall under the projects outside Canada regulation of CEAA. This case is being made in the courts at the moment, but Bill C-31 might pre-empt this court decision with the inclusion of this clause.

Also, on human rights, Bill C-31 does not strengthen EDC’s respect of Canadian international commitments and obligations. EDC’s purpose in section 10 must be changed to include consistency with Canada’s international obligations. I have made some more specific recommendations that are in the submission I presented to SCFAIT.

The bill must also set out requirements for EDC in the area of disclosure. Mr. Warren Allmand sent me a copy of a letter that he sent to SCFAIT yesterday. He apologizes for not being present today. He hopes he can be present next week at the hearings. He’s in Montreal today releasing a report on human rights in China.

He writes in his letter, which I have here, that they have been unable to find the crucial information they needed from the EDC, that is, what projects received EDC’s support in the form of financing or insurance, over what period of time, and to whom this support was given. He writes further in his letter that this demonstrates clearly that we need a requirement for regular disclosure of project-related information in the bill.

My last point is that specifically EDC must be required, prior to approval, to disclose environmental and social information for projects with adverse impacts. This was noted in the draft policy paper. As noted in the legislative summary, it is in the draft policy paper but it was not in the final policy paper that was finalized October 1. The EDC has said about this that this type of disclosure will be considered in relation to the environmental framework that is currently being developed and is to be finalized this spring.

To conclude, my working group would urge you not to recommend this bill for approval as it is currently drafted because it fails to live up to Canadian values and standards.

Thank you very much. Merci.

The Vice-Chair (Ms. Jean Augustine): Thank you, Ms. Revil. We look forward to having Mr. Allmand with us, and maybe some of the references made in your letter he will be making directly to the committee.

We now have Ms. Price from the Canadian Ecumenical Justice Initiatives.

Ms. Kathy Price (Representative, Canadian Ecumenical Justice Initiatives): Thank you, Madam Chair. Thank you for this opportunity to appear before the committee.

The coalition I work with is formed by the Anglican, United, Presbyterian, Christian Reformed, and Evangelical Lutheran churches of Canada, as well as the Canadian Conference of Catholic Bishops, the Canadian Catholic Organization for Development and Peace, the Canadian Religious Conference, the Quakers, and the Mennonite Central Committee.

Canadian Ecumenical Justice Initiatives includes the former Inter-church Committee On Human Rights In Latin America, with whom I’ve worked for almost a decade. Indeed it’s in my capacity as a human rights worker that I’ve come here today to comment on this bill and draw attention to a serious omission in terms of its failure to embed in law that EDC investments must be consistent with Canada’s commitments to international human rights agreements we’ve signed and ratified.

I will make specific recommendations with regard to amendments that would address this omission, but first let me briefly explain why amendments are necessary, why they are crucial.

We appeared before this committee during hearings in 1999 with Embera Katio leader Kimy Pernia, who provided testimony about the impact of the EDC-supported Urra hydroelectric dam in northern Columbia.

Kimy testified about how their land and crops were being flooded by the dam. Fish stocks up river from the dam were eliminated, robbing the Embera of the mainstay of their diet, and vast areas of stagnant water were created bringing mosquitoes and epidemics of malaria and dengue to Embera communities.

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What’s most important to remember is that Kimy testified that the dam was built without ever consulting the indigenous communities living in the area that would be affected, a violation of both the Colombian constitution and international human rights agreements. Kimy also told you that speaking out about these things put his life in danger and that four other Embera leaders had already been killed by paramilitary forces for challenging the negative impacts of the dam.

On June 2, Kimy Pernia was abducted by paramilitary gunmen. Since then there has been absolutely no news about his whereabouts. Since Kimy was “disappeared”, there have been other killings and continued threats against Embera communities.

While Colombia is a country in the midst of a bloody armed conflict with horrendous levels of human rights abuses, there is no doubt that Kimy’s disappearance and the killing of other Embera Katio leaders has to do with their opposition to the dam. It is also clear that the dam, a project the EDC chose to invest in despite the opposition of local affected indigenous communities, in a country where opposition to powerful economic interests, like those involved with the Urra project, is regularly met with repression, has exacerbated the violence that already existed.

This lamentable situation is not something that the tens of thousands of members of our constituency want to see repeated in the future. And it should be noted that the churches collected more than 140,000 letters calling for the Export Development Act to be amended so as to compel the EDC to respect Canada’s commitments to international human rights and indigenous rights agreements.

Yet there is nothing in Bill C-31 that would prevent the EDC from investing in projects, again, that might exacerbate human rights violations in the future. For this reason it is crucial to amend the bill in the following way: section 10, which establishes the purpose of the EDC, needs to be amended to add that the EDC respond to international business opportunities in a manner consistent with Canada’s commitments to international agreements, including the Universal Declaration of Human Rights; UN covenants on civil, political, economic, social, and cultural rights; ILO core labour standards; and the Rio declaration of the United Nations Conference on Environment and Development. Trade and investment cannot be allowed to take place in isolation from our commitments to standards regarding human rights. And the only way to ensure that is to specifically write this into Bill C-31’s mandate statement.

I also want to make a recommendation about amending the operational framework set out in Bill C-31. Environmental review alone is inadequate, particularly when it fails to include criteria for assessing the human rights impact of a given project and for withholding support for a project on the basis of a negative human rights impact.

The EDC must be required, through amendments to Bill C-31, to undertake an efficient human rights assessment process when considering a project with potential negative impacts. That assessment process must involve a full and meaningful consultation for affected communities, including women and indigenous peoples. It must also include full and meaningful consultation with national and international non-governmental human rights organizations.

The object of such consultation would be to assess whether a proposed development project might exacerbate existing violence and lead to human rights violations. The way to ensure that EDC investments are consistent with Canada’s obligations under international human rights agreements we have signed is to require the EDC, by law, through amendments to Bill C-31, to do a proper human rights impact assessment prior to approval of a project and to reject a project that yields a negative human rights impact.

If such an assessment had been done in Colombia, consulting with the Embera Katio and with organizations like the National Indigenous Organization, and the Colombian Commission of Jurists, who represented the Embera Katio in obtaining an injunction from the Colombian court on the basis of the way in which the dam violated their rights, Canadians would not now feel a sense of responsibility with regard to the violence being levied against the Embera Katio.

This brings me to my final recommendations. Bill C-31 must be amended to legally require the disclosure of project-related information in a timely and regular manner. This is a specific recommendation that the Canadian Catholic Organization for Development and Peace has asked me to raise with you here today. They were unable to come.

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Why is this crucial? In the case of the Ralco dam project in southern Chile, a project approved under the EDC’s new environmental review framework, a specialized consultancy group did an impact study that satisfied the EDC that its standards would be met. But an environmental group working with local indigenous Pehuenche people told Development and Peace that the original report of this consultant had been submitted to the Chilean government, which then falsified aspects of the report before sending it to the funding agencies. This claim was supported by written testimony from staff of the consultancy group.

If the EDC was subject to the Access to Information Act, as 140,000 of our constituents and member churches have called for by amendments to Bill C-31, the environmental groups and the local Pehuenche could have known early on the impact assessment the EDC relied on and could have shown that the study had been falsified. Not only would EDC have been forced to review its decision, but it would have raised questions about the overall legitimacy of the Ralco dam.

A voluntary disclosure policy is not good enough. There is no accountability unless disclosure is required by law.

These amendments to the bill will ensure that the investments of a public institution that should be accountable to the Canadian Parliament and to Canadian people do not hurt people or the environment.

I would like to close by telling you that I was in Colombia last summer filming the impact of the Urra dam and met with many indigenous people there who are suffering an absolutely horrendous situation. I cannot forget the Embera Katio woman who said, “Maybe Canadians don’t care because your investments are felt in other countries, but it’s our people who are dying.”

I urge you to change Bill C-31 to ensure this can never happen again.

Thank you.

The Vice-Chair (Ms. Jean Augustine): Thank you, Ms. Price.

I think some members would remember Kimy’s presence and presentation to us, and we regret his disappearance.

We’ll now go to questioning. We have a half hour.

We’ll start with you, Mr. Duncan.

Mr. John Duncan: Thank you very much.

There certainly seems to be a consistent thread in your testimony. What hits me quite strongly is that dams don’t seem to be very good projects in terms of their consequences, and I have to wonder, if EDC were not a funder, would those projects proceed?

One or more of you may offer an opinion there, please.

The Vice-Chair (Ms. Jean Augustine): Ms. Adams.

Ms. Patricia Adams: Thank you for that question. It’s an important one.

We monitor dams around the world. We’re one of the two groups in the world that follow them religiously. What we have seen happen in the last 10 years is that the public sector institutions have slowly but surely retreated from big hydro dams because of the conflicts, and because they’re not economic and they don’t perform properly. They have hoped that the private sector would step in, but the private sector has refused to do so because they are simply not economic.

If you take the case of the Three Gorges dam, no public funder supported that project until EDC declared that it would. At that point, a couple of other export credit agencies then stepped in because the dam had burst, so to speak.

What has happened with Three Gorges is that it is under construction. Approximately 150,000 to 200,000 people have been forcibly resettled. There is a lot of opposition. People are returning to their homes. Several people have been arrested for trying to expose that these peasants are not receiving compensation.

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During the construction it has come to light that the price of power from Three Gorges will be about 8¢ a kilowatt. This compares to about 3¢ to 4¢ a kilowatt for power from small-scale, more environmentally benign, and obviously much more efficient generators of electricity that could be up and running within a couple of years, and in some cases as little as six months.

So what has happened in the hydro dam industry is that the private sector refuses to move in, and the only institutions that are financing these projects now are ones that don’t need to care about the economics, that are driven often by political interests.

It actually goes back to a very interesting question you asked this morning; that is, what is EDC worth? EDC is essentially worth us. There are—

Mr. John Duncan: Excuse me, what did you say?

Ms. Patricia Adams: EDC’s assets are taxpayers in this country.

Mr. John Duncan: Oh, okay.

Ms. Patricia Adams: Taxpayers gave $1 billion towards the capital of EDC. Its debt-to-equity ratio is not a good one. It insures companies that probably have a better asset base than it has. Why is it able to insure these private corporations? Because it has access to taxpayers’ pockets.

So in answer to both of your questions, EDC is an institution that essentially is backed by taxpayers. It would be very difficult to sell it to a private sector, because you can’t sell the taxpayer commitment along with it. In the case of hydro dams, you only find institutions like the export credit agencies, and in some cases the multilateral development banks, that don’t need to worry about the economics of these projects and will support them.

Mr. John Duncan: Ms. Price, would you care to comment on the same question?

Ms. Kathy Price: The question we’re addressing here is whether we should be getting involved in these projects, and—

Mr. John Duncan: You were concerned about projects also. Do you think they would have proceeded if there hadn’t been EDC-type mechanisms to fund them?

Ms. Émilie Revil: Can I answer that?

Mr. John Duncan: Yes.

Ms. Émilie Revil: Very often the EDC is a small player in the project, and the project would go ahead even if the EDC were not involved. That is the argument EDC always uses when they say they can’t apply their strong environmental standards.

Mr. John Duncan: But you would argue that small player or not, we shouldn’t participate.

Ms. Émilie Revil: Absolutely.

As soon as the EDC gives out political risk insurance or a loan or equity, as soon as they’re involved in a project that has impacts, the impacts are the trigger for environmental assessments and whether we should be involved or not, and not the importance of the role of the EDC, financially speaking.

Ms. Kathy Price: May I add a comment?

Mr. John Duncan: Sure.

Ms. Kathy Price: If we are serious about our commitment to human rights through the international agreements we’ve signed, then we have to do the human rights impact assessment. If that comes up negative, we should not be involved, if we are serious about these other commitments that are central and that have primacy. So whether or not the dam goes ahead with other investment, we’re not involved.

Mr. John Duncan: I have one further question. Do I have time?

The Vice-Chair (Ms. Jean Augustine): One small question.

Mr. John Duncan: It’s for Ms. Gibb.

You talked at some length about EDC taking heed of international conventions, and you mentioned the Australian model. One of the things that I think concerns not just my party, but Pierre’s party in the House of Commons, is the fact that we have these international conventions that don’t receive any parliamentary scrutiny. What you’re asking is that those international conventions become binding on EDC, which does receive some parliamentary scrutiny. So I would ask whether you think it’s appropriate that international conventions receive parliamentary scrutiny, some form of ratification. There are many we enter into, and they’re binding—and you know the rest.

• 1140

The Vice-Chair (Ms. Jean Augustine): Have we gone outside of EDC?

Mr. John Duncan: Well, not really, not according to her testimony. Her proposal would have those attached as a schedule to EDC. Those conventions would be attached to any project and would be a checklist against which their performance or standards would be measured, if I understood correctly.

Ms. Heather Gibb: Yes, that’s an excellent question. It takes us into quite a wide-ranging discussion—the extent to which government and indeed corporations can be held accountable to fulfill obligations that a government makes through the United Nations or the ILO or other organizations. I would be delighted to engage in that.

The example given in the Export Finance and Insurance Corporation Act governing the Australian agency simply states that in performing its functions, their corporation must comply with a number of areas, but it must also have regard to Australia’s obligations under international agreements. My suggestion was that the Canadian body, the Export Development Corporation, should include that as well. One can tend to get bogged down in federal and provincial jurisdiction issues. I think that’s one of the problems with the Canadian Environmental Assessment Act.

The intent is to develop and to require the development of capacity within the corporation and use every tool possible that we have to advance understanding and ways to effect the kinds of agreements that we’ve entered into as a government. I’m very much a practical person. If I were working in the Export Development Corporation, where I think there is one corporate social responsibility person and probably one environmental assessment person, it would be impossible for me to do my job properly. But if there were legislation that required me to have regard to those international agreements, then the corporation would be required—I would hope—to start developing some capacity to do that and some capacity to work with the private sector. This is what the World Bank agencies are doing right now.

The Vice-Chair (Ms. Jean Augustine): Thank you.


Mr. Paquette.

Mr. Pierre Paquette: Thank you, Madam Chair.

My first question is for Ms. Gibb. In the part of your document concerning disclosure of information, you allude to the practices of the World Bank Group and I’d like you to elaborate further on this point. However, nowhere do you mention the Access to Information Act. Several of the groups that have appeared before the committee have suggested that the Export Development Corporation be subject to the provisions of the Access to Information Act. However, you are silent on this point. Is it because you feel it would be better to integrate the standards of the World Bank into the act than to make an explicit reference to the Access to Information Act?

Ms. Heather Gibb: Thank you for your question. I will answer it in English.


The quick answer is that my colleagues are much more knowledgeable about the Access to Information Act. I knew they would be covering it off very well. Again, I think one wants to be proactive rather than reactive. There is a very significant lag time in obtaining information through an application to the Access to Information Act. The emphasis in the World Bank Group, through the international financial corporations and through various other export credit agencies, is for the timely and regular disclosure of information. Relying on an appeal to the Access to Information Act means a delay in some cases of years.

The purpose of disclosure is to provide information in a way that a group—an aboriginal group in Colombia—can have access to information about what is being proposed for an area that affects them. Waiting for a Canadian organization to file an appeal under the Access to Information Act just won’t work. That is why other organizations have embarked on timely and effective methods of disclosure.

Some organizations propose to do this by relying on the Internet. This may be very useful in western countries, but it is not useful in areas where aboriginal groups do not have access to computers and may not be literate. The onus, again, is on the project proponents to ensure that they disclose in a way that can be accessed by communities, so that these communities are able to know what’s being planned and are able to comment and have input on it. The intent is constructive—to see that a project could be improved by consulting with those who know the area—but it’s also to prevent, hopefully, the kinds of scenarios that my colleagues here have described to us this morning.

• 1145

Ms. Patricia Adams: May I respond?

I think it’s a good suggestion that a lot more information should be readily available—posted before projects are approved. But the crucial issue is who defines what information should be disclosed. The problem with EDC is that it is defining what it will disclose, and it will not disclose anything if its corporate clients say no. We would never have received that information on India without the Access to Information Act. It would never have been disclosed in a timely fashion. You have to give the public the right to define what kind of information they want in order to make that institution truly accountable. Otherwise, they can hide mistakes. And it was a very big mistake. They had many serious problems with that dam. The engineers who were building it, as well as CIDA and EDC, had every interest in keeping it under wraps. You must give the public the right to define what kind of information they need to get.


Mr. Pierre Paquette: I have another question for Ms. Revil, time permitting, of course. You suggest, and I fully agree with you, that along with the environmental assessment per se, we consider the overall social and human impacts. As far as the environmental assessment is concerned, you suggest that the assessment process be regulated, but I did not see any proposal calling for an assessment of the social and human impacts to be mandatory in the case of the Export Development Corporation.

This morning, EDC representatives told us that is was more difficult to assess the social and human impacts, because the framework was not as clearly defined as in the case of environmental impacts. Would it not be a good idea to have in place regulations governing the assessment of social and human impacts?

Having said this, I neglected to mention at the outset that I greatly appreciated your proposals. You can be certain that the Bloc Québécois will look to your recommendations for inspiration when considering amendments.

Ms. Émilie Revil: Indeed, I failed to mention this recommendation pertaining to social and environmental impacts.

We did, however, recommend among other things that the section entitled “Environmental Effects” be changed to “Environmental, Social and Human Rights Impacts”. The EDC sometimes refers to social impacts within its environmental framework, but this area is not highly developed. Local populations are consulted as part of the environmental assessment process. Since the section will not be finalized until the spring, it’s difficult to know exactly what it will cover. It would in fact be interesting to develop the social impacts aspects further, because aside from the consultation process, few social effects are in fact taken into account.

Regarding human rights impacts, the EDC maintains that it does take human rights into account in its studies and assessments before projects are approved. We’ve never seen a clear process in the area of human rights. The EDC maintains that it takes into account Canada’s international obligations in the area of human rights, but no clear, well-drafted standards are in place to ascertain if in fact , it complies with conventions and respects human rights. If such standards exist, we have yet to see them.

Quite often, when the EDC talks about human rights, it’s in the context of how human rights in the country may affect projects. We would like to the EDC to think about how the project in question may affect the human rights situation in that particular country.

There should be a clear reference to human rights in the bill. It’s unacceptable that no mention whatsoever is made of them.


The Vice-Chair (Ms. Jean Augustine): Thank you. I’m going to move on. Maybe there will be an opportunity for you to come back in on this, but I’m conscious of the time and I have two questioners on this side. When there’s an opportunity, maybe you can throw your response in.

• 1150

We’ll go to Ms. Marleau.

Ms. Diane Marleau: I have read some of your briefs. I object a little to the kind of language that is sometimes used.

Part of the challenge is of course that many of these projects go on for many years. They may have been in process for 15 or 20 years. Often EDC will come in towards the end of the project rather than at the beginning.

I don’t know how you view that in terms of some of your statements. For instance, I look at this statement by Probe. On page 3 you use an example with the Three Gorges dam in China. You say “For example, in the case of the CIDA and EDC-funded Three Gorges dam in China”…. Well, if memory serves me right, CIDA has not funded the actual dam. CIDA was involved in an environmental study perhaps 15 years ago and has not been involved since.

I can’t speak to EDC, but I know that this particular dam was a project of the Government of China that went ahead and is ongoing. If there is some involvement of EDC, it is later rather than sooner. It consists more of the monitoring and technology aspect. Would you suggest that EDC should have done an environmental assessment before the dam started and not come in after the fact to make sure some of the equipment worked properly?

It’s very difficult for me because many of these things are not black and white. They’re just not. They go on for many years. Oftentimes EDC will be asked to ensure perhaps the installation of a Canadian turbine in one of these projects. The project would have gone on whether EDC and this turbine were there or not. Is it not better to have the improved technology at this point than otherwise?

I find it very difficult to see how some of your simplistic statements can always fit these situations, because they’re not black and white.

I have another point. The Auditor General is mandated to review the work of the Export Development Corporation every five years. I know for many people this means after the fact. But I can tell you that there isn’t a crown corporation in this country, nor a department of this government, that is not very much in tune to the fact that they’re about to be reviewed by the Auditor General and that his or her report will be made public. Therefore, they very much want to make sure that this review comes off well.

In a sense, that is perhaps more than many other development corporations in other countries would be subjected to. I’m not aware of others who are subjected to this kind of public review by an Auditor General.

The Vice-Chair (Ms. Jean Augustine): I think this one is directed to Probe.

Ms. Diane Marleau: Whichever one.

Ms. Patricia Adams: Yes, that’s right. Thank you.

Ms. Diane Marleau: One of them was to Probe.

Ms. Patricia Adams: I can also answer the second one, and other people may want to contribute.

In the case of the Three Gorges dam, CIDA financed a feasibility study for the dam.

Ms. Diane Marleau: Way back, yes.

Ms. Patricia Adams: We obtained that information through the Access to Information Act as well.

We commissioned an independent review by nine international experts. They looked it over and declared that it was negligent and so seriously flawed that we filed complaints against the engineering firms for completion of it.

Let me give you a few examples. The environmental assessment that the engineers did really did not exist. They accepted a flawed and rejected Chinese assessment that had been done. They never saw the sedimentation data. The Yangtze River has the fourth highest silt load of any river in the world. A dam just downstream of the Three Gorges has already lost 40% of its capacity to silt, and it’s only about eight years old. So that assessment was a very seriously flawed one.

• 1155

Ms. Diane Marleau: But that was 15 years ago.

Ms. Patricia Adams: The purpose of that assessment was so the Chinese authorities could go and raise international funds for the project. But by that time there was so much publicity and so many problems with the dam—which has, by the way, been in the works for 70 years—that the Chinese government then tried to get foreign financing for it.

Nobody would touch it. The Export-Import Bank knew they would probably face a lawsuit under the Endangered Species Act if they decided to support Three Gorges, so they rejected it. EDC started the bandwagon. EDC kicked it off. EDC gave moral support to this dam. It has financed a computer system to help with the management of construction. It has financed turbines that General Electric Canada is providing.

I think Three Gorges is black and white. It is a flawed project, and history will prove it is flawed. It is not economic. It is leading to gross human rights violations. People are under arrest without trial, without detention. They have been in jail since March of this year. What has the Canadian government done to help them? What has EDC done to help them? Nothing.

Let me go to your second point about the Auditor General doing a five-year review. I don’t know if you were referring to the environmental review framework or the special examination the Auditor General does every five years. For your information, that document it produces once every five years is a confidential document. The Auditor General is not allowed to disclose it.

We tried to get it using the Access to Information Act, by going to the Department of Foreign Affairs and International Trade. They told us they couldn’t find it in their files. That was disturbing. We went to EDC. We said, “Could you please give us this examination? It is supposed to cover the economic efficiency and effectiveness of EDC’s operation.” They sent us back correspondence saying, “This is a confidential document and we will not disclose it to the public.”

That’s the kind of scrutiny that EDC is put under. They don’t live in fear of this being disclosed to the public because it won’t be. That’s why the institution has to be subject to the Access to Information Act.

The Vice-Chair (Ms. Jean Augustine): Ms. Carroll, you have the final question.

Ms. Aileen Carroll: This is a follow-up. You are saying, Ms. Adams, you are not able to get this document, Report on the Export Development Corporation’s Environmental Review Framework, May, 2001 by the Auditor General.

Ms. Patricia Adams: I was referring to another—

Ms. Aileen Carroll: [Technical Difficulty—Editor]…that is his or her role.

Ms. Patricia Adams: The Auditor General’s relationship with the EDC—and I have this in correspondence, which I would be happy to provide this committee with—is that the Auditor General must accept the disclosure requirements and policy of the institution they are financing. This may be particularly with respect to crown corporations. The policy of EDC is that no information will be disclosed without approval from their corporate clients.

I have asked the Auditor General for information for 15 years about EDC and the 26 projects that were reviewed. Initially, they weren’t disclosed, then they finally were disclosed, except for three, because three of the firms wouldn’t agree to the disclosure of their projects that were reviewed in the scrutiny of the environmental review framework.

In the case of the special examination of EDC, which is done every five years by the Auditor General, the Auditor General is bound by its contract with EDC not to disclose the details of that review. So it’s not available to the public. We have tried letters to EDC, we’ve tried Access to Information, and we haven’t been able to get it.

Ms. Aileen Carroll: Thank you for your response.

I was pleased to note in Mr. Pettigrew’s letter, with regard to the Export Development Corporation’s environmental review framework—not the larger one—that he asked not for a three-year audit in that venue but a two-year audit. So I think there is evidence in all of our discussions—and of course the discussions are focused on what has yet to be done, rather than on what has been done—that considerable change has been implemented in a number of aspects, as a result of the work of this committee and as a result of his report. Our work in the past reflected your witnessing, and so on.

• 1200

I was coming along a segue from Ms. Marleau. You commented, Ms. Price, that you’re not sure about where we are with the Export Development Corporation and its practices vis-à-vis international obligations. That was discussed earlier by Ms. Morin. Were you here earlier for…? Then you might want to get a copy of the blues, because there was a good discussion relating to that.

I can make reference to what I particularly noticed in the document she gave out, and I’m sure those copies are available. The approach we have chosen is consistent with emerging practice in the international community and with our work on this issue, this particular issue being environmental dimensions, in the OECD. The OECD, of course, is doing some excellent work. I just came back from meeting with the OECD a week or two ago, and meeting with Mr. Johnston. As someone who sat on the environment committee, I was really pleased to see how much progress has been made there, the priorities they’re setting, and the timelines they’re giving for the goals they want to see achieved. So I have to say, quite honestly, I was pleased to see the nexus this morning in her response to that of the OECD.

Again, it is incumbent on all of us to keep feet to the fire, but I think on occasion we ought to pull them off and take a look at what progress has been made.

Finally, just with regard to the question on what has to be within legislation in order for there to be a response within the administration, I think you ought not be too legalistic there, because I think frequently progress has been made because of onuses and directives set by government and priorities set by us and the Auditor General that obligate corporations such as the Export Development Corporation to respond. I don’t think it is always the best route, at least not the exclusive route, to see those obligations put down in legislation. I think much can be done and is being done within the everyday practice of that.

I was just going to respond to your comment that if you were the only one there alone, maybe you wouldn’t be alone if there were something in the statute. But from my perspective, I think directions are taken and enhancement has been made of your job—as you yourself gave the example—without every single word of that being nailed down in law.

The Vice-Chair (Ms. Jean Augustine): I think maybe I’ll give Ms. Price the opportunity to respond first, simply because I offered you that opportunity earlier.

Ms. Kathy Price: I’d just like to say that the accountability comes through legislation. The human rights requirements need to be there within legislation for there to be accountability. Expressions of goodwill or voluntary movement are not adequate. There needs to be that embedding in law, that recognition that human rights impacts are just as important as environmental impacts.

We know there have been horrendous human rights abuses and exacerbation of very serious situations, and the Urra dam and the situation in northern Colombia is just one of those. It needs to be there in the mandate statement and in the operational guidelines in terms of a requirement to do a human rights impact assessment. That impact assessment must be based on consultations with local communities and non-governmental human rights organizations in the region.

If that had happened in the case of the Urra dam in Colombia, we wouldn’t be seeing the situation we are seeing now.

The Vice-Chair (Ms. Jean Augustine): Mr. O’Brien, very short.

Mr. Pat O’Brien: I’ll be very brief. Thank you, Madam Chair. I wasn’t going to speak. I waited for my colleagues.

I would just note that the only example I have heard cited today was Australian legislation, and the quote I heard was “have regard to”. I’m not a lawyer, but I’ve been in politics for a while and I don’t think a statement saying that somebody must have regard to something is the same as saying they must comply, or shall comply. I would make that point.

• 1205

As a request of the witnesses, if they have any specific examples of countries with legislation—their equivalence to what Export Development Canada’s will be called—requiring them to comply with various standards, I’d ask them to table them with the committee.

Thanks, Madam Chair.

The Vice-Chair (Ms. Jean Augustine): I would want to follow up by saying to the witnesses that anything they send to us will be considered by the committee as we proceed with clause-by-clause deliberation.

I want to say how much I appreciate your being here this morning. Thank you so much for the input, and carry on the work you do in your various organizations.

Thank you.

The meeting ends.

The full transcript of the Committee’s meeting on October 18, 2001 is available on the parliamentary web site http://www.parl.gc.ca/InfoComDoc/37/1/FAIT/Meetings/Evidence/faitev33-e.htm [PDF]

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