November 20, 2003

Mr. A. Ian Gillespie
President and CEO
Export Development Canada
151 O’Connor Street,
Ottawa, ON K1A 1K3

The Hon. Pierre Pettigrew
Minister of International Trade
Department of Foreign Affairs
125 Sussex Drive, Tower B, 5th Floor
Ottawa, ON   K1A 0G2

Dear Minister Pettigrew and Mr. Gillespie,

Thank you for forwarding me Rev. 2 of the OECD “Common Approaches on Environment and Officially Support Export Credits 2003.”

Canada is one of a handful of governments to have circulated the draft for comment prior to a decision being made on the draft tomorrow at the Export Credit Group. We welcome Canada’s efforts to open up the consultation process at the OECD, and would strongly encourage the Canadian government to keep pressuring other governments to follow this lead in the future.

That said, we are somewhat disappointed with the small window of opportunity we have been given for commenting on this draft. In this case we were given four days, even though the OECD released almost two weeks ago.

While the current draft is an improvement on 2001 Rev 6, we are deeply disappointed with the final wording in 2003 Rev. 2. This is not only substantially weaker than previous negotiating texts in a number of areas, but also continues to contain serious loopholes in terms of applying the international standards that are defined in the text. As a result, we believe that Rev. 2, like its predecessor will fail to achieve three of its stated objectives: namely, to contribute to sustainable development, to develop common procedures among ECAs and to promote a level playing field for officially supported export credits (para 1).

Further to the comments we submitted earlier on 2003 Rev. 1, many of which still apply, we would like to draw your attention to concerns we have with regards to the following paragraphs:

1.) Para 7, bullet 1: We greatly regret that the deletion of an explicit reference to assessing the impacts on flora and fauna, human health and safety, impacts on land use, and the inclusion of social aspects of projects under environmental. In our view, the deletion opens up a significant loophole that could allow many important environmental and social impacts to go unassessed.

2.) Para 11: The deletion of any explicit reference to meaningful public consultations, and the disclosure of information to these groups in a timely manner and in an appropriate language, is of significant and grave concern. Meaningful public consultation is the cornerstone of environmental impact assessments, and passing references to it in para. 6 and in Annex II is insufficient to ensure that due attention is given to the opinions of key stakeholders. Without a more explicit reference to this, Rev. 2 will remain deeply flawed.

3.) Para 12.1: We welcome the members agreement to abide by host country law and standards(!) and the explicit mention of three World Bank safeguard policies (on involuntary resettlement, indigenous peoples and cultural property) as benchmark standards. However, we would also urge tightening the wording of the paragraph. At present, it is unclear whether benchmarking against World Bank safeguard policies is a requirement in every case where there is a potential impact involving indigenous peoples, resettlement or cultural property or whether, in such cases, alternative benchmarks may be employed such as the weaker IDB resettlement policy. This could be greatly clarified if members were to disclose ex ante what standards a specific project has met with in the information outlined in Para 16, bullet 3.

4.) Para 12.1: The deletion of the previous requirement to benchmark "new projects and […] relevant modifications of, or additions to, existing projects with significant environmental impacts" is highly regrettable. In our view, this will permit many environmentally and socially damaging projects to go unassessed. International standards should be applied to all projects with significant environmental impacts, regardless. We would therefore urge the appropriate wording be reinserted.

5.) Para 12.3: Despite the reference to meeting stringent international standards, we find it highly regrettable that members will still be able to apply standards below international standards. This remains one of the most significant loopholes in the OECD Recommendation, and makes a mockery of any efforts to develop a common approach or realize a level playing field.

6.) Para 14: We believe that an explicit reference to the potential sanctions available to ECAs in the event of non-compliance (suspension of support, for example) is desirable.  We would therefore urge that wording similar to the previous draft be reinserted.

7.) Para 16: We welcome the reference to a 30 day ex-ante disclosure period for environmental information, however 30 days is totally inadequate, particularly given the size and complexity of EIAs and the difficulties that affected communities in remote areas are likely to have in obtaining such documents. A minimum of 120 days should be required.

8.) Para 21:  We would urge a two year review period, in particular given the concerns that some governments continue to have around paragraph 12.

Enclosed is a copy of “Race to the Bottom II” that demonstrates how Rev. 6 failed to achieved these objectives and allowed countries to develop different, rather than ‘common’ approaches. We fear that, given the significant loopholes and omissions highlighted above, 2003 Rev. 2 will not fare any better.

Yours sincerely,

Fraser Reilly-King

On behalf of the NGO Working on EDC

Encl. “Race to the Bottom II”