EDC

Rights and Democracy & West Coast Environmental Law Association present briefs to SCFAIT

(October 24, 2001) SCFAIT hears presentations from Warren Allmand, President, Rights and Democracy and Linda Nowlan, Executive Director, West Coast Environmental Law Association as the committee continues to review Bill C-31.

STANDING COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
COMITÉ PERMANENT DES AFFAIRES ÉTRANGÈRES ET DU COMMERCE INTERNATIONAL
EVIDENCE
[Recorded by Electronic Apparatus]

The Chair: Colleagues, I call the meeting to order.

We are now moving to the part of today’s meeting when we will be talking about the Export Development Corporation bill. As you know, we’ll be doing clause-by-clause consideration tomorrow. We have one hearing this afternoon and one hearing tomorrow morning with witnesses. We were set from 5 to 6. We’re already 15 minutes late. Hopefully, we’ll continue after 6.

We have some five witnesses lined up, and if each of you were to take 10 minutes—you can do the math—there wouldn’t be much time left for questions. I understand that each and every one of you has filed a paper with the committee. If you could keep your opening statements as short as possible, that would leave more time for questioning.

With that in mind, Mr. Allmand, we’ll ask you if you’re going to go first.

Mr. Warren Allmand (President, Rights and Democracy): I’ll be very brief.

The Chair: But what does that statement mean? Please do not take a leaf out of Madam Jennings’ book. She’s being very sneaky.

Some hon. members: Oh, oh!

Mrs. Marlene Jennings: Mr. Chairman, as you well know, I followed in the Honourable Warren Allmand’s footsteps in terms of representing the riding.

Mr. Warren Allmand: Outstanding work.

The Chair: I’m glad to see that you two are at the same end of the table.

Mr. Allmand.

Mr. Warren Allmand: Mr. Chair and committee, I want first of all to thank you for the opportunity to appear on this important bill, Bill C-31, which contains amendments to the Export Development Act.

As you know, I appeared before the committee on this issue on November 16, 1999, when you were considering the Gowlings report.

It’s interesting to note that appearing with me on that date was Kimy Pernia, a leader of the Embera Katio indigenous people in Colombia. He testified to the fact that the Export Development Corporation had financed a dam on the territory of his people in Colombia. The dam had led to the destruction of their livelihood and had seriously harmed the health of his people. We were in Colombia this past June. Because Kimy has been standing up for his people all these years, two days after we were there he was kidnapped by the paramilitaries in Colombia, and he hasn’t been heard of since. It’s presumed that he’s dead, another tragedy in Colombia. He was a witness before this committee, as I say, the last time I appeared on this issue.

The EDC is an important Canadian agency with a public policy mandate with regard to export trade. It has the backing of the Canadian Parliament and the Canadian government. Because it has that backing, it’s essential that it’s fully accountable to Parliament and the Canadian people. It’s extremely important that as a crown corporation, its operations and mandate are consistent with other Canadian policies and law, especially with the commitments that Canada has made under international treaties.

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Mr. Chairman, we believe that Bill C-31 has made some improvements, especially with regard to the environment, but it has not moved ahead very much with regard to disclosure and human rights. I won’t touch on environmental matters, because there are other organizations better placed to do that than I am.

I want to point out that we believe that section 10 of the Export Development Act, which refers to the purpose of the corporation, should read that:

The Corporation is established for the purposes of supporting and developing, directly or indirectly, Canada’s export trade and Canadian capacity to engage in that trade and to respond to international business opportunities in a manner consistent with Canada’s international obligations.

We’re putting that forward as a proposed amendment to the act.

The Standing Committee on Foreign Affairs and International Trade, in its report of December 1999, recommended such a change. I must say that we fully supported the committee’s report of December 16, 1999. I believe it was an outstanding report. I refer you to your recommendations 21 and 22 where you said that in carrying out its mandate and exercising its powers, the corporation shall give due regard to the benefits to Canada to be derived therefrom and to the commitments and obligations undertaken by Canada under international agreements.

Minister Pettigrew himself suggested that these changes would be made in the act in a statement he made on June 26, 2001. In the backgrounder on the legislative review of the Export Development Corporation, Mr. Pettigrew noted that a report to Parliament in May 2000 included undertakings to require the EDC to take account of benefits to Canada and Canada’s international commitments, especially in human rights, core labour standards, and the environment.

With regard to disclosure, Mr. Chairman, although the Gowlings report, this committee’s report, and the Office of the Auditor General found the Export Development Corporation’s level of disclosure to be inadequate, Bill C-31 places no requirement on the EDC to disclose information to the Canadian public. The Gowlings report said at page 104 that the EDC should be required to post on a regular basis specific information regarding transactions it has supported.

The review of the Export Development Act by Gowling, Strathy & Henderson in June 1999 and by this committee in December 1999…. Minister Pettigrew recommended that the EDC be required to disclose information related to transactions. It’s true that the EDC has developed a disclosure policy, which they implemented on October 1, 2001, but that’s a policy of the corporation and not a requirement of law. It’s interesting to note that in the mid-1980s the EDC unilaterally decided it was not going to disclose information it had previously disclosed. So a policy of the corporation can be withdrawn whenever they want if it’s not required to do certain things by Parliament. The members of the committee said in your report that you wanted mandatory disclosure; so did the minister and so did the Gowlings report. We’re asking you to make amendments to the act in that respect.

With regard to human rights, Mr. Chairman—and these are my final words—in the 1999 committee report you recommended that section 10 of the act, which I already referred to, be changed to refer to our obligations under international law, especially our obligations under the International Convention on Civil and Political Rights and the International Covenant on Economic, Social and Cultural Rights, and that they be made part of the act. This is in recommendations 21 and 22 of your excellent report. We’re suggesting that you should make amendments to that effect.

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Mr. Chairman, with respect to disclosure, I simply want to say that for the last two years we’ve been preparing a report on the implications of Canadian corporations developing high technology for surveillance and control of the pro-democracy movement and the human rights group in China. Last week we published this report, China’s Golden Shield.

In trying to get information from the government on what role was played by the EDC in financing Nortel and other companies developing this technology for the very repressive government in China, we tabled 17 access to information requests. We got back blank pages. We got back blank pages—17—because the EDC is not subject to the Access to Information Act.

As an example, the Business Development Bank of Canada, another crown corporation, is subject to the Access to Information Act. Both American export credit agencies are subject to the U.S. Freedom of Information Act, and that includes OPIC, the Overseas Private Investment Corporation. So we believe that, in accordance with the recommendations you made, you should make amendments to the act.

In conclusion, I want to say this. First of all, there has to be cohesion between this law and other Canadian obligations undertaken with respect to human rights, to labour, to environment, and so on. If the ratification of international conventions means anything, it has to mean it has some impact in Canada. They must be read vis-à-vis other laws, and the Parliament of Canada, in passing laws, must assure that one law is consistent and coherent with other laws and other obligations.

As I said earlier, your report of December 16, 1999, was an excellent report. We fully supported your recommendation numbers 20, 21, and 22 in that report, but these recommendations are not to be found in Bill C-31.

I have to say that the credibility of your committee is at stake. You have the power, in the committee, to amend the legislation to make it consistent with your report, and I’m asking you and the members of your committee to do just that. Thank you, Mr. Chairman.

The Chair: Well, thank you, Mr. Allmand. Maybe I’ll just leave you, however, with a reflection. You’re an experienced parliamentarian yourself, so you’ll be aware of the fact that this bill is coming to us after second reading. The House has pronounced on the bill, so the number of amendments…. We’re looking at them as they come forward, but obviously we have a limited power to amend after second reading, as opposed to after first reading. So that will have to be a consideration for us when we’re—

Mr. Warren Allmand: In short answer to that, you also have an opportunity, as members of Parliament, if you can’t make the amendments here, to do it at the report stage.

The Chair: Certainly, but I just want you to bear that in mind. We all have to bear that distinction in mind.

Also, I want to make an announcement. By the way, I’m sorry to interrupt; Ms. Nowlan will be next. The minister asked me to announce that at the end, when I asked him a question about the Byrd amendment, he said it had not entered into effect, but in fact it has entered into effect. He was thinking of another portion of another law that had been set aside—the Helms-Burton amendment, which has been set aside for the present. In fact, the Byrd amendment is presently law in the United States, the one that allows petitioners in anti-dumping cases to get the money instead of the government. But he wished me to say that the Canadian government is actively disputing that law in the WTO, along with many other countries.

Mr. John Duncan: May I just add to that point? That was said in the House during the emergency debate two weeks ago, and I tried to confirm it through our embassy and other places, so I’m glad to receive this clarification that the Byrd amendment is actually in effect.

The Chair: It is in effect, and they are using it as a way to attract people to join onto petitions.

Mr. John Duncan: Of course. Thank you.

The Chair: You’re welcome, Mr. Duncan, sir.

Ms. Nowlan, I believe you’re next.

Ms. Linda Nowlan (Executive Director, West Coast Environmental Law Association): Thank you, Mr. Chairman, and thank you, members of the committee. I appreciate being invited back to talk to you again. I was here two years ago, and in the intervening two years there have been a lot of changes.

I completely support Mr. Allmand’s endorsement of your report. I thought it was an excellent report, and the government’s response indicated it would accept most of the recommendations in your report of almost two years ago.

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There have been many changes made. You’ll be hearing from EDC witnesses tomorrow, and I’m sure they will tell you about all the positive changes that have been made, including the release of a disclosure policy, release of an environmental review framework, and public consultations on that environmental review framework such as you and the government urged them to have.

These are policies. They can change at any time. I would suggest one of the chief reasons these policy changes have been introduced at the EDC is because of the scrutiny of groups like this committee and others.

Once this bill is through, the eye of the public, the eye of the government, will be off the EDC for five years until the next legislative review. So I would urge you—and I hope you still do have the power to consider amendments—to try to ensure that your previous recommendations and the recommendations from civil society groups on ensuring the EDC upholds environmental and human rights and other standards do become binding law rather than policy. There is a big difference, as you are aware.

I provided a brief to the committee and won’t go through it in detail because of time constraints. But we do have serious concerns about the environmental provisions of this bill. It’s great that the EDC is at last required by law to do an environmental review of its projects and transactions. That will be a statutory obligation and is an improvement over pure policy.

However, I must disagree with the Minister of International Trade, when he spoke earlier, that Canada is at the forefront of all export credit agencies in the world. It is not. The U.S. Export-Import Bank is certainly far ahead in terms of statutory requirements for export credit agencies. Australia is also a leader. Canada may be near the front; it’s not at the forefront. I urge you to bring it to the forefront and strengthen those environmental requirements.

The main problem with the environmental provisions—proposed section 10.1—as currently worded is that it’s completely up to the EDC to decide what to do about the environment. They decide on the content of their directive. They decide how it’s applied. There’s no duty to refuse support. If serious adverse environmental effects are found, they can go ahead. They can decide that they’re justified. There are no limits on their discretion.

If nothing else, I would urge this committee to consider amending that proposed section to require the EDC to refuse to support projects or transactions that will pose major unreasonable environmental health or safety hazards. This is an important enough matter that it should not be left solely to the discretion of the EDC.

The Auditor General’s review, which was done and released in May 2001, showed that there were serious deficiencies in the way the EDC was operationalizing its voluntary environmental review framework. You have the opportunity to strengthen the environmental review framework the EDC is currently operating under and to limit their discretion. At the very least, give them statutory direction that when their review shows the environmental risks are too high, support should be denied.

Similarly, in proposed subsection 10.1(2) it’s totally up to the EDC’s discretion what they do about the environment. They have to issue a directive, and the directive “may” include certain matters—not “must”. It doesn’t even have to include definitions. I know the trend in a lot of legislation these days is to be discretionary and to use “may” rather than “shall”, but this is one case where discretion should have some bounds placed on it.

I urge you to put some mandatory content into this environmental directive—mandatory content about what a good, thorough environmental review consists of. I’ve given some suggestions about what that might mean in the brief I’ve provided to the committee.

In particular, I will repeat Mr. Allmand’s and other committee members’ earlier questions about treaty commitments. This should be a requirement. The EDC should be required to satisfy itself on reasonable grounds that any proponent is in conformity not only with all applicable environmental laws, but with environmental and other international commitments that Canada has made. As Mr. Robinson has noted, Australia does have this requirement; it is possible to put it in legislation. I urge you to make the same amendment and bring Canada to the forefront.

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Another way to ensure that the EDC’s discretion in this area is limited is to do as you recommended in your report and as the government indicated it supported. It is to create the position of an independent ombudsperson to oversee the implementation of the environmental review process. That is another amendment you could make.

I completely agree with the submissions on disclosure. This is a very serious omission from the bill. Disclosure has been a key problem with the way the EDC has worked. Every review that’s been done in the past two years has shown that. I think the blank pages you were just shown amply demonstrate that there is a big problem with disclosure. Disclosure is at the base of the public’s ability to oversee what’s going on. It’s at the base of your ability to oversee what’s going on. Disclosure requirements are now completely absent from this bill.

Again, the minister was very interesting in talking about the upcoming WTO meeting and stressing transparency. I would submit to you that there is no transparency here at home. How can we expect the WTO to have transparency when we can’t even get our own export credit agency to do so? That’s a really serious flaw with the bill.

Another problem with the bill is that it exempts the EDC from the application of the Canadian Environmental Assessment Act. As you all know, this is an issue that’s currently being litigated. Without a very thorough, legislated, statutory process for environmental review, exempting the EDC from CEAA is having it both ways.

If what was in the bill was a thorough, environmental CEAA-like process, then perhaps the exemption might be justified, but as it now stands what we have is a completely discretionary, self-directed, self-overseeing process. And we also have an exemption from the only tool the public has at their disposal, in very limited circumstances, to challenge the EDC’s decisions.

It’s extremely expensive and time-consuming to bring litigation. Public interest groups really don’t have the resources to do it except in very exceptional circumstances. They won’t abuse that power. If they did, the courts would stop them.

I urge you to delete this exemption from CEAA.

My final comment relates to the provision in proposed section 24.2 that creates a new offence of misusing the name of the EDC. I would submit to you that this provision is offensive and should be deleted. Existing copyright and trademark law is enough to protect the EDC’s name, logo, trademark, etc. Creating a new offence with a fine of $10,000 for using EDC’s name for any “business purpose”, the words used in the act, is offensive and an attempt to limit public debate. I know of groups who have been threatened with lawsuits by the EDC for using the name EDC.

What is a business purpose? As the bill now stands, you would have to get written permission from the EDC before you would be allowed to use their name. I submit that this is simply unreasonable and I ask you to delete that. I think it’s overkill. We don’t need to have additional protection other than that already provided to all copyright and trademark holders in Canada.

So I urge you to make some amendments to this bill, to bring Canada to the forefront. It’s the end of the long legislative review road. You’ve done a great job at the committee level and I hope the government listens to what you propose at the committee stage.

The Chair: Thank you, Ms. Nowlan.

We’ll go to the Canadian Chamber of Commerce. Mr. Keyes, please.

Mr. Robert Keyes (Senior Vice-President, International, Canadian Chamber of Commerce): Thank you, Mr. Chairman. Ladies and gentlemen, members of the committee, I’m pleased to be here this afternoon.

As you know, we represent a nation-wide network of some 170,000 businesses of all sizes, so we understand the importance of exports to the Canadian economy and the role of an institution like EDC.

For trade and investment in an internationalized world economy to run smoothly, it requires insurance. Companies must have access to export credit agencies to get the support they need to break into foreign high-risk markets and to remain viable players in a global competitive marketplace.

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In the post-September 11 world, with all the additional uncertainties and risks facing business, the role of an export credit agency is more important than ever.

EDC’s capacity to perform these roles for Canadian companies has been a significant asset for Canadian business, a vital cog in the wheel that sustains Canadian firms abroad.

I’m sure we all want this to continue.

As a starting point, we feel that reforms to the legislation governing EDC not compromise the ability to provide its services to Canadian business. We all realize and accept that EDC is operating in a changed world in terms of public expectations for environmental responsibility and transparency. However, lumbering EDC and its customers with unproductive processes that are impractical, time-consuming, and potentially damaging is not what’s needed. Ensuring an efficient, timely, and responsible framework for EDC should be the goal.

The proposed environmental review framework, as envisaged in this bill, is an appropriate level of reference, and its application is going to be regularly monitored. EDC is not operating in an oversight vacuum. The Attorney General will be looking over their shoulders. There will be public scrutiny, there are consultative mechanisms, and this mechanism of environmental review is being referenced in law. It is not simply a policy matter.

In designing and applying the framework, the business community is ready to work with EDC and with others to ensure a workable process. I submit there are limits on what an agency like EDC can be expected to do, what it can do, and what it should be requiring its customers to do. EDC is not a “regulator”, and there are limits to the discretionary actions that an export credit agency can be expected to demand or apply.

Moreover, at its core EDC is different from other crown entities. It has a commercial role to fulfill. Expecting that EDC can fulfill lofty expectations on issues involving environmental matters moves it away from that commercial basis and onto a slippery slope of complex analyses for which a rigorous framework or hard numbers and details can be problematic.

To the extent that EDC has the internal expertise to assess environmental risks of a project and incorporate these in the financing and ensuring of projects through its established environmental assessment framework, it is fine, and it is already doing this. Moreover, every significant project in the world is subjected to environmental analysis commensurate with the level of impact and potential disturbance. This information as well is available when projects are being assessed by EDC.

The environmental process has certain imperatives. It has to be practical and time efficient. It has to represent value added and contribute to better environmental results. We think the proposed process will indeed do so.

The proposed system must be in step with Canada’s OECD partners. The OECD countries are hoping to conclude an agreement on officially supported export credits in the environment before the end of this calendar year. If EDC’s environmental framework gets too far ahead of the OECD consensus and ends up imposing owners’ requirements on EDC that other countries’ agencies are not required to follow, this could impact upon its competitive position, and this means Canada loses exports and consequently jobs. People source elsewhere.

Environmental framework must be predictable, fair, and transparent, with expectations and requirements being clear.

Another one of our concerns is the proposed requirement for disclosure. EDC has a disclosure policy, which is currently out for comment, that they are going to be implementing.

While the disclosure policy is not directly addressed by this bill, the proposed 45-day period for posting of information relevant to social and environmental impacts remains to be tested to see how it’s actually going to work in practice. Moreover, we are very concerned the proposals for prior disclosure could require commercially confidential information to be made public, thereby putting the bids of Canadian companies at risk.

Finally, competitiveness both of EDC and its customers must be a guiding principle within any environmental review framework.

In closing, let me say that environmental issues have to be addressed, but we must ask which forums are best suited to the task. While EDC should continue to evaluate environmental risks in the projects it funds, as I said earlier, it can’t become a “regulator”. Any attempt to do so would hamper its efficiency.

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Moreover, because EDC is rarely the sole organization involved in financing major projects—as we know, these are done on a consortium basis—just how much leverage EDC might have at the end of the day to influence some project’s modus operandi is open to debate. We don’t want a situation where our processes have put Canadian suppliers on the sidelines but nothing has been achieved on the ground.

I draw a parallel between burdening EDC with unrealistic expectations to similar calls to overburden the WTO, essentially turning it into a world negotiating organization. It won’t work. EDC has proven its competence and flexibility. It’s good at what it has done. It has a role to project Canadian environmental goals and values, but it alone cannot effect meaningful change. It can do only so much, and it’s critical to address many of the problems and issues that we’re all concerned about at their source, in the countries where they occur.

Mr. Chair, we’re sympathetic to the principles underlying proposed section 10 of Bill C-31, and we agree that EDC must be credible and accountable. But we must not lose sight of the fact that it’s raison d’être is to support Canadian exporters, and if it’s going to do that, we must ensure we don’t unduly handicap it.

Thank you.

The Chair: Thank you very much, Mr. Keyes.

Our next witness will be from the Canadian Manufacturers and Exporters.

Will both Mr. Myers and Mr. Blackburn be speaking?

Mr. Jayson Myers (Senior Vice-President and Chief Economist, Canadian Manufacturers and Exporters): I’ll make the first presentation.

The Chair: Thank you.

Mr. Jayson Myers: Mr. Chairman, ladies and gentlemen, mesdames and messieurs, thank you very much for inviting us here today.

My name is Jay Myers. I’m the senior vice-president and chief economist of the Canadian Manufacturers and Exporters. I’m joined by Mr. Robert Blackburn, who’s the senior vice-president for government and international development institutions at SNC-Lavalin International. I think Mr. Blackburn’s experience will provide a somewhat more pragmatic perspective to some of our discussions today.

EDC is a very vital financing and risk management service for Canadian exporters. As Mr. Keyes pointed out, given today’s very uncertain international economy, those services are more important than ever before. Canadian Manufacturers and Exporters represents approximately 95% of the total value of Canadian exports, and our members are very much the clientele that EDC services.

The CME supports Bill C-31, with one proviso that reflects the concerns of Canadian exporters with respect to the provisions that would require EDC to determine whether international projects are likely to have adverse environmental impacts and whether the corporation is justified in entering into those transactions. The CME recognizes the government’s commitment to providing a legislative mandate for environmental reviews of projects financed by EDC, and we believe the environmental review of such projects should both be credible and effective in assessing environmental impacts.

At the same time, EDC’s environmental review process has to be practical, and it really has to reflect business sensitivities about the disclosure of commercially confidential information. Above all, EDC’s determination process must sustain the competitiveness of Canadian exporters.

We’ve consistently supported the amendment of the Export Development Act to include a provision that would require EDC to apply an environmental assessment framework to international projects in which it’s involved. However, we’ve also emphasized that an effective process for environmental review of EDC-financed projects has to be simple, clear, and expeditious. It has to avoid subjecting exporters or the EDC to costly and time-consuming litigation; ensure the protection of commercially sensitive project information; avoid imposing Canadian regulatory requirements on EDC’s foreign clients; establish a level playing field for Canadian exporters by reflecting OECD standards for environmental reviews conducted by export credit agencies; and avoid undermining EDC’s important role in providing financial support to Canadian exporters.

In light of these considerations, we believe Bill C-31 should contain a privative clause to protect EDC’s environmental review practices from frivolous third-party intervention and legal challenges. As has already been pointed out by Ms. Nowlan, U.S. Ex-Im Bank is frequently cited as a model for how EDC might operate under a legislative environmental review process. However, U.S. legislation also explicitly recognizes that nothing in that act should be construed to create any cause for illegal action.

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This privative clause was established in order to ensure the bank could render timely decisions on clear and known rules without the threat of potential abuse of process, legal appeals, or applications by interveners to challenge the application of those rules and thereby block transactions.

We believe such protection can be afforded only through the inclusion of a privative clause in legislation mandating environmental review. The absence in Bill C-31 of provisions that would prevent frivolous lawsuits not only creates additional uncertainty with respect to potential litigation, it also places Canadian exporters at a disadvantage with respect to their international competitors by imposing more onerous requirements on EDC than on other export credit agencies.

CME will continue to work closely with EDC as it implements its environmental review framework. We want to ensure EDC’s disclosure policy, particularly that part pertaining to the disclosure of information relevant to assessing social impacts of environmental projects, is both workable and competitive with respect to the requirements of other export credit agencies.

The danger is if EDC moves too far ahead of prevailing international practice, it will make its project financing business highly uncompetitive for Canadian exporters. Larger firms will turn to other sources of export financing, but small and medium-sized exporters, the companies that are most dependent on EDC for financing, are very likely to lose their ability to participate in international projects altogether.

For EDC, over $500 million in project-related revenue will be placed at risk if capital projects are excluded as a result of the corporation’s disclosure policy. Such a loss would also diminish EDC’s capital base and reduce its capacity to finance other export transactions.

Ladies and gentlemen, in conclusion, we would like to express our dissatisfaction and disappointment with regard to both the conduct and outcome of the Export Development Act review. From the beginning, over three and a half years ago, CME has consistently emphasized this review must focus on the changing needs of Canadian exporters and EDC’s capacity to serve the export community in Canada. We’re very concerned now that the outcome of the review may actually weaken EDC’s role in servicing the financing requirements of Canadian exporters.

In today’s difficult economic environment, Canadian exporters need strong, responsive, and flexible financial and insurance services more than ever. The government should ensure EDC continues to meet the changing requirements of Canadian companies in international markets. For that reason, we urge the government to amend Bill C-31 to include a privative clause.

Thank you very much.

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

The chair expresses his regret at having to leave at this specific point in time, but we’ll proceed with the questioning.

We’ll start with you, Mr. Duncan. We’re into a five-minute round each.

Mr. John Duncan: The first question I’ll ask of Ms. Nowlan. It relates to her concerns on the proposed environmental amendments. From your perspective, can you tell me what the impact on EDC will be if they lose the Three Gorges litigation?

Ms. Linda Nowlan: I’m not sure I’m the best person to ask that question of.

Mr. John Duncan: But do you have a point of view?

Ms. Linda Nowlan: It may not be the EDC that is affected as much as the Department of Justice and the Government of Canada, which has been fighting this litigation. As you probably know, there was a leaked Department of Justice memo that said the Sierra Club’s case was very strong.

I saw Prime Minister Chrétien on the news the other night in China celebrating the opening of a CANDU reactor and urging the Chinese government to proceed with further purchases.

It is, I suppose, possible, if the Sierra Club wins their litigation, documents would have to be disclosed about the previous loans and guarantees given to allow those purchases to take place.

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I don’t think it would have an affect on any future business. Certainly if this exemption from CEAA goes through, there would never be any other application of the act, so there wouldn’t be any litigation, at least related to those sections.

I don’t know if that answers your question. You might ask the EDC representatives when they testify tomorrow.

Mr. John Duncan: As a follow-up to that, would making the environmental review framework a statutory document address some of your concerns?

Ms. Linda Nowlan: Yes, it would, especially a revised environmental review framework. They’re currently in the process of revising their framework. It is relatively thorough, and I would be happy to see it become a regulation under the act.

I must also say that in relation to the whole question of litigation, the rules of court of each province and of the Federal Court contain provisions preventing frivolous and vexatious lawsuits. Anytime the opposing party feels that the lawsuit is frivolous or vexatious, it has the power to use those rules. So there’s no need to introduce similar provisions into this particular piece of legislation. Courts have that inherent power.

Mr. John Duncan: You’re referring to the privative clause statements that were made.

Ms. Linda Nowlan: Yes.

Mr. John Duncan: The next question I would like to direct to the Canadian Chamber of Commerce, to Mr. Keyes.

You said in your testimony that EDC is fulfilling a commercial role and that you didn’t want to see inappropriate burdens placed upon their ability to do that. Some of the criticism is they are fulfilling a commercial role, but they’re doing it on a non-commercial basis. In other words, the backing of the taxpayer allows them to make decisions that a commercial operation would never make, and therefore there have to be some checks and balances on that.

Would you concur that this logic might lead one to say that there are some parts of EDC that lend themselves to privatization?

Mr. Robert Keyes: Well, the notion of privatization has been kicked round. I would toss back a question. If EDC is not doing what it’s doing, do we have a commercial alternative that will do it? Will the banks step in?

Mr. John Duncan: That was my question to you.

Mr. Robert Keyes: I don’t think it’s clear that the banks would step in on some basis.

I might ask Robert Blackburn to comment as somebody who has dealt with this in a very practical fashion.

Mr. Robert Blackburn (Senior Vice-President, SNC-Lavalin Inc.; Canadian Manufacturers and Exporters): My company does about half of its business outside North America in about 100 countries. As was said earlier on the panel, getting financing for those projects is a key part of any international business, particularly on large projects of the sort we tend to get involved in.

We see a very important role for an export credit agency in Canada, as in all of the other OECD countries. Our concern is that the EDC be in a position to provide the support in a way that is competitive with other ECAs. Perhaps I could just give you a couple of concrete examples.

We’ve just finished a large gas processing plant in the southern desert in Algeria for Sona Trach, the national oil company there. That was a very complex financing where EDC was in for approximately 20%. The European Investment Bank, the Belgian ECA, the Spanish ECA, and the Italian ECA were all part of that deal. Of course, whenever you deal with an export credit agency there is a string attached that says you have to use Belgians, or Spanish equipment or people, etc.

We would have liked to use a lot more Canadian supplies on that job because, among other things, Canadian suppliers were a lot cheaper than European ones. But because EDC was there for only 20%, we did use 60 Canadian small and medium-sized businesses on that job in addition to ourselves.

In a similar job on a light-rail system in Malaysia, we used 100 Canadian small and medium-sized businesses from across the country, starting in Sidney, Nova Scotia, all the way to Vancouver.

• 1755

If EDC isn’t available and competitive to do that kind of work, it’s not that the Sona Trach deal isn’t going to go forward; it’s just that the 20% Canadian content won’t be there. So those Canadian companies won’t be working.

It’s essential that there be ECAs to do this business because they’re not the sort of thing that commercial banks, particularly in Canada, will support. If SNC-Lavalin and some of the larger companies can’t deal with a Canadian ECA, since we’re dealing with a variety of ECAs around the world, we won’t be able to use EDC. We want to. It’s really important to have Canadian government participation. It goes to credibility and other things. We’re just concerned that if the EDC becomes uncompetitive—gets too far out ahead in what is a commercial world—it won’t be able to participate.

I think we and companies like us in the engineering and resource business make up about 7% only of the EDC’s business. I believe that is the $500 million Jayson Myers cited. I gather this is an internal EDC number of what they think the business loss may be if they were to go ahead with the total environmental framework package they’re looking at.

So we’re very concerned about that. We’re very concerned about introducing uncertainty, because as you know, markets hate uncertainty. If you’re financing a package, you don’t go to the places that are uncertain. If you can go to any number of other places where it’s certain, why go to a place that’s uncertain? That’s what we’re worried about. We’re worried about legislation being put in place that weakens the EDC’s ability to be competitive and our ability to use it—as Jay says, the ability of small and medium-sized companies that can’t go elsewhere to ECAs and will end up being excluded from this business.

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

We’ll now move to Madam Lalonde.

[Translation]

Ms. Francine Lalonde: Thank you, Madam Chair.

Thank you very much for coming. These impromptu meetings are always very important because fundamentally, this is a complex piece of legislation. We’re being asked to comment on provisions that are difficult to evaluate. The environment, disclosure of information and human rights are all important issues. You maintain that these provisions will impede our competitiveness.

How is it that export credit agencies in the US and Australia have agreed to publish project-related information so that the public can comment before any funding decisions are made? How is it that they can do this—and we can’t say that they aren’t competitive—whereas here, this would supposedly hinder competitiveness? That’s my first question.

Secondly, how can we accept the fact that no mention at all is being made of human rights? You just said that businesses are worried about instability. That is certainly true of a number of businesses, but many see their profits increase in uncertain times. There’s no need for me to give you examples. I’m sure you’re familiar with companies like this.

My third point is this: this export credit corporation is a public corporation. It’s all well and good to say that an initial investment was made, but when we ask administrators whether the corporation could operate with the same rates if it were privatized, they argue that this certainly would not be case. The risks and the rates would be different in the case of a private corporation. This is a public corporation and it has a public responsibility in terms of the ethical behaviour of businesses. US and Australian corporations are competitive.

Those are my questions and I await your answers.

Mr. Robert Blackburn: I’ll try to answer them if I can.

• 1800

The US Eximbank has a prior disclosure system in place which includes many provisions prohibiting the disclosure of business- related information. Ms. Nowlan maintains that a privative clause is not essential. The Americans have decided that such a clause is indeed vital to safeguarding information that may be disclosed about a project and to avoiding any potential legal uncertainties. It’s not necessarily a matter of proving that a project would be harmful to the environment or to human rights. It’s a question of slowing down the project and raising some doubts. Once problems of this nature arise, people look elsewhere for their project financing.

We work closely with the US Eximbank. It uses a system that protects business information and that includes a privative clause and disclosure provisions. The system is no way resembles what EDC is proposing. For instance, project sponsors are not required to publish information 45 days in advance. If we search their Website, we find the name of the project listed. However, if we go to the Eximbank site, we find that very little is said about the project. There is no question whatsoever of all relevant commercial documents being made available.

Consider this example: the government of Algeria publishes information about all of its environment-related activities. Sona Trach is an agency of the Algerian government. If it were asked to publish on the Internet all project-related information 45 days before a decision is made, it would refuse. That would never happen at Eximbank.

Not many projects are financed in Australia, especially not large projects. Unless I’m mistaken, according to my information sources, Australia’s disclosure legislation has been used only once. I’m not 100 per cent certain about this, but that’s what I was told. Information is not often disclosed. However, EDC’s proposed disclosure policy would apply to all of our projects. Virtually every single project would be subject to EDC’s proposed disclosure policy. It would in effect be impossible to work with EDC under the circumstances.

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

Ms. Francine Lalonde: I would imagine that some of the other witnesses would like to respond as well.

[English]

The Vice-Chair (Ms. Jean Augustine): Very briefly, please.

Mr. Robert Keyes: Very briefly, I would just note that under the definition of environmental effect, any social impact is included. There’s reference to relocation of human settlement. So to say that the human rights issues are being totally ignored is incorrect. It’s in the draft. The social issues are there, and those are considered by international agencies. Again, we’re not operating in a vacuum.

[Translation]

Ms. Linda Nowlan: Thank you for your questions. I apologize for not being able to answer them in French.

[English]

In relation to this disclosure policy, it’s a policy not in law. There are no human rights or disclosure obligations in Bill C-31.

In relation to your very good question about disclosure of information, I think Mr. Blackburn did say commercially sensitive information wasn’t disclosed by the U.S. Export-Import Bank, and certainly no NGO would want such commercially sensitive information to be disclosed. That’s not what we’re asking for.

We’re asking for the opportunity to find out what our government is supporting and whether that fits all of our public policy goals.

• 1805

I’m sorry, I missed the most obvious response to your question, Mr. Duncan, which fits in with this. If the EDC and the Government of Canada lose this lawsuit, what will happen is that Canadians and the Chinese public will be able to say whether in fact CANDU reactors are a technology that they welcome, because a full environmental assessment will be required. That will be the result of the lawsuit, and in my opinion it is certainly a good result. So I do welcome your question.

I also would note that Mr. Blackburn does have the commercial experience that I do not, but I know that his corporation uses the Export-Import Bank, at least I think it does, so obviously it’s not a business impediment for SNC-Lavalin. I suggest that it wouldn’t be an impediment for other Canadian corporations if we had a similar statutory policy here in Canada.

We’ve had conversations about this before. Just so you know, we had a very interesting subcommittee of the regulatory advisory committee to the Canadian Environmental Assessment Act with long and protracted debates about this. We do not agree, but we respect each other’s right to put forward our positions.

The Vice-Chair (Ms. Jean Augustine): Mr. Allmand.

Mr. Warren Allmand: Very briefly, the Export Development Corporation is able to finance these projects because it has the backing of the Canadian government and the Canadian people. Consequently, I believe the Canadian people have the right to know how that government backing is being used, especially if it’s being used to transgress international conventions with respect to the environment, with respect to human rights, and with respect to labour rights. How else can the Canadian people assess that if they don’t have the disclosure of information?

This is a corporation that can only do what it does because it has the backing, the credit rating, of the Canadian government, which means the Canadian people. Consequently, in principle, I believe the people have the right to know how that backing, and power, and support is being used.

I can’t understand the position taken by some of my friends at the table here. Either they don’t support the international convention on human rights, on civil and political rights, or economic, social, and cultural rights, and think Canada should abrogate them, or if they don’t take that position, then how else should Canada assure that the obligations they undertake internationally are implemented and not broken? There has to be some way of assuring that the right hand isn’t doing completely the opposite of the left hand.

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

We will now go to Mr. Robinson.

Mr. Svend Robinson: Thank you very much.

In fact, I’d like to put that question directly to Mr. Myers and to Mr. Keyes, because I think it’s an excellent question. Before I do that, I want to seek clarification. I think Mr. Blackburn or Mr. Myers indicated that the American bank was able to protect commercially sensitive information under their legislative framework. Is that correct?

Mr. Robert Blackburn: Yes, there’s a whole process it uses in this area that is very protective of competitive information.

Mr. Svend Robinson: Are they not subject to freedom of information legislation in America?

Mr. Robert Blackburn: I don’t know that. I think the suggestion earlier was that they were.

Mr. Svend Robinson: They are. So the point I’m making is that it seems to me that the EDC in Canada could be subject to the access to information legislation and at the same time commercial sensitivity could be protected. It’s done in the United States. It could be done here as well.

Mr. Robert Blackburn: It might be. I’m not an expert on this.

Mr. Svend Robinson: Right.

I do want to come to the point that Mr. Allmand made and ask for a response to that. I’ll put two questions.

One is on the issue of frivolous lawsuits and the privative clause. Ms. Nowlan has indicated, and quite rightly, that there exists in any provision for civil litigation a discretion of the court to dismiss frivolous and vexatious lawsuits. I can recall from a distant past when I practised law bringing one or two applications of that nature myself, so frankly there’s absolutely no need for a privative clause if that’s the objective of the privative clause because the courts already have that discretion.

I want to ask two specific questions. One, you say that the requirement under the draft disclosure policy imposes an unreasonable burden if you have to disclose the environmental and social aspects of the entire project and not just the portion related to EDC funding. Frankly, I find this a rather bizarre argument. If EDC, for example, is funding a portion of a project—let’s say they’re funding a contract for turbines in a dam, the Urra dam, for example—but not the whole project, why on earth shouldn’t we be aware of what the overall impact of that project is?

• 1810

What I hear you saying is, look, if we’re only financing part of it, we’re just financing the turbine. Even if it has appalling environmental, labour, or human rights consequences, we shouldn’t be worried about that because we’re only financing a part of it. In fact, I heard that argument specifically on the Urra dam project when I was down in Colombia; it was, “We only have a small share, so why should we be worried about what happens with that project?”

So I’d like to have a comment on that. But I have a question on the legislation specifically, and this is a really key question, it’s one that Mr. Allmand alluded to.

Mr. Myers, you say in your brief on behalf of the Alliance of Manufacturers and Exporters of Canada that you consistently supported the amendment of the Export Development Act to include a provision that would require EDC to apply an environmental assessment framework to international projects in which it’s involved. And in fact in the evidence that Mr. Neals gave, speaking on behalf of the organization, to this committee, he said it’s entirely appropriate that the EDC should be required to follow international norms, including human rights norms. I could read the whole paragraph. I’m sure you recall it.

If it’s appropriate and acceptable for this committee to include, and for the government to include, an amendment with respect to the environmental assessment framework, why wouldn’t we want to also include similar provisions with respect to core labour standards and international human rights covenants?

Mr. Jayson Myers: I could begin. Please don’t understand us as saying that we oppose the inclusion of environmental review framework in this legislation. We don’t, and I think a good environmental assessment is a very good part of any risk assessment of any international project, as is an assessment on the impact on social dislocation and on human rights. I think that is good risk analysis and a good part of what EDC does, so we’re certainly not opposed to that sort of assessment being made.

I think our concerns, and specifically using the example of a project where EDC is financing a part of that project, are that this has to be done in a practical, workable way in order to make sure EDC is in the game in the first place here. By having measures that would require EDC to go to a project sponsor and require them to make an environmental assessment, to disclose that openly, to disclose what could be commercially sensitive information at that point, I think, first of all, Canadian participants in that project would simply be out of that game at the beginning, and secondly, I don’t think Canadian companies would go to EDC under those terms.

So this is very much around how this risk assessment is to be done and what sort of information is to be made public.

Mr. Svend Robinson: So I can understand clearly, are you agreeing then that if it’s appropriate to do an environmental assessment, that it’s just as important to do an assessment of the respect for international human rights standards and core labour standards?

Mr. Jayson Myers: I think that risk assessment should be a part of the ongoing risk assessment that EDC does, and from what I believe to be the management practices of EDC, it is a part of their project and risk assessment.

Mr. Svend Robinson: So you wouldn’t have any objection, speaking on behalf of your organization, to including an amendment that expanded the references to international obligations, as this committee initially recommended.

Mr. Jayson Myers: It is my view that it was already looking at not only environmental assessments but social assessments as well. I would have thought that this would have been a part of it.

Mr. Svend Robinson: Exactly, and I’m pleased to hear you confirm that, because the legislation itself doesn’t refer in any way to respect for international human rights obligations or core labour standards. Mr. Keyes, I believe, referred to the policy, the environmental review framework, which does make some reference to I think social impact, but—

• 1815

Mr. Robert Keyes: It also refers to no justification for a project where there’s a contravention of relevant international conventions.

Mr. Svend Robinson: Exactly, but that’s an entirely discretionary policy, which could be changed tomorrow. This is law. This is legislation, and I’m pleased to hear—at least I think I hear—Mr. Myers agreeing that the legislation should reflect those same standards.

Mr. Jayson Myers: Obviously, before reading too much into what I’ve just said—

Mr. Svend Robinson: I’m glad to accept your assurance, Mr. Myers.

Mr. Jayson Myers: —our concerns around the way the environmental assessment process, and the environmental and social impacts are being undertaken by this bill are…. Our view is that social impact assessments should look at matters that may differ from project to project. That’s, again, a part of good EDC project management, but, Mr. Robinson, I would like to ask Mr. Blackburn to respond to your point about the frivolous and vexatious legislation as well.

The Vice-Chair (Ms. Jean Augustine): Very briefly, Mr. Blackburn.

Mr. Robert Blackburn: The point would be we’re not just talking about frivolous and vexatious challenge. It could be differences of opinion. The point is that we want there to be certainty that if the EDC board makes a decision to finance, it will stand up, so somebody can’t go and say, I disagree with that; you may think the environment or some other aspect of the project has been appropriately dealt with, but I disagree.

Mr. Svend Robinson: “Frivolous” is your word.

Mr. Robert Blackburn: No, it’s not my word.

Mr. Svend Robinson: Certainly you agree with Mr. Myers.

Mr. Robert Blackburn: I agree with that, but I’m saying, as I suspect you know well, this is not the only thing that…. In fact, the American privative clause, which we’ve used as a model since the Ex-Im Bank seems to be everybody’s model, was certainly not just addressed to frivolous and vexatious. It was addressed to providing legal certainty once a decision was made rather than having the decision-making process open to legal challenge.

Mr. Svend Robinson: And what if in fact there was arguably an error in law in the way in which the decision was made by the EDC? What you’re saying is, slam the door and there shouldn’t be any opportunity to review that.

Mr. Robert Blackburn: My understanding is—you’re a lawyer and I’m not—that a privative clause would militate against challenges on substance, but, as in any B decision, you have the right to appeal on grounds of denial of natural justice or abuse of process rather than on the substance of the decision. Perhaps I’m wrong, but that’s my—

The Vice-Chair (Ms. Jean Augustine): Thank you very much, Mr. Robinson.

I’m conscious of the time, and the committee has gone beyond the scheduled time. I thank you for your patience and forbearance. I thank you also for waiting for the start of this part of the meeting and for your input. Thank you very much.

The meeting is adjourned.

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