See No Evil: Despite a New Law and New Policies, Export Development Canada Retains Plenty of Room to Avoid Careful Environmental Assessments and Public Scrutiny. (Sustaining Livelihoods)

Article excerpt

New legislation now governs the controversial Export Development Corporation (EDC), now to be Export Development Canada (still EDC). The Crown corporation, funded by Canadian taxpayers, provides trade financing, risk insurance and other financial services to Canadian firms exporting or investing abroad.

For years, EDC has been criticized for its secrecy and apparent willingness to support Canadian involvement in socially and ecologically questionable projects. Critics have pushed the government to impose rigorous environmental assessment and disclosure obligations on the corporation.

The revised Export Development Act, proclaimed late last year, is the government's response. It requires EDC to establish and apply a process for environmental reviews of proposed transactions involving projects that could have adverse environmental effects. However, critics are disappointed by the vagueness of the requirements and the amount of discretion left in the hands of EDC.

In cases where proposed EDC support would involve a sizable new project, the new law requires EDC to determine whether the project is likely to have negative environmental effects and whether EDC involvement is justified. But it allows the corporation to make the key decisions on what projects are reviewed, what studies are required, what criteria are applied, and what information is made public on the ecological and social effects of EDC-supported projects.

As a result, the critics say, there is no guarantee that EDC will meet Canadian or international standards for environmental assessment, provide greater transparency or ensure adequate attention to human rights, labour and environmental concerns. In effect, the critics argue, the government has left the fox in charge of the henhouse.

Some details on how EDC will exercise its discretion under the new law were revealed soon after it came into effect. On December 21,2001, EDC released an Environmental Review Directive setting out its commitments and procedures for environmental review of potentially damaging projects. It also announced a new information disclosure policy, which commits the corporation to ensuring that applicants for EDC support release environmental assessments of the most worrisome projects - those categorized as "likely to have environmental effects that are sensitive, diverse or unprecedented."

The directive replaces an earlier Environmental Review Framework that had been criticized in an independent evaluation commissioned by the government, a report from Parliament's Standing Committee on Foreign Affairs and International Trade, and an audit by the Office of the Auditor General.

In May 2001, the NGO Working Group on the EDC, established by a coalition of environmental and human rights organizations called the Halifax Initiative, released a review of EDC-supported projects entitled Reckless Lending II. It identified many EDC supported projects with significant adverse ecological and/or social impacts.

One example is the primarily Canadian-owned Antamina mine in Peru, which received five million dollars in EDC support. Development of the huge mine will result in the leveling of eight peaks in Peru's highest mountain range and disrupt the livelihoods of thousands of local inhabitants. Residents have complained about inadequate compensation for resettlement, livelihood loss and exposure to pollution from the mining operations.

EDC also provided support for the Chamera II dam in northern India. Critics claim that the social and ecological repercussions of the first Chamera dam, including the flooding of 18 [km.sup.2] of forest, remain unaddressed. They also say the second dam is being built in one of the highest seismic activity areas in India.

A third case centres on funding for the world's largest urea plant, the 50 percent Canadian-owned Profertil nitrogen fertilizer factory in Argentina. Profertil has twice been shut down because of ammonia leaks and related fires. …