Bill C-31 (Historical)

Export Development Act

An Act to amend the Export Development Act and to make consequential amendments to other Acts

Export Development Act

[Francine Lalonde, Bloc, Mercier, QC]

Mr. Speaker, this bill on the Export Development Corporation—let us call it that for the last time—which was known by the French acronym SEE and the English EDC, stems from a series of consultations in which I participated as a member of the Standing Committee on Foreign Affairs and International Trade.

We have put a lot of work into the Export Development Corporation, and I regret now to have to announce that we will be voting against this bill at third reading. We did, as I said, try to get it amended.

For our audience, it is important to know that the mandate of the Export Development Corporation is to support Quebec's and Canada's exporters, as well as those who wish to do business in Canada. It therefore also has a function to develop trade with other countries.

It was established in 1944 as the Export Credits Insurance Corporation. In 1969, it became a crown corporation and acquired the additional powers of being able—and this was something new—to make direct loans to foreign borrowers, and to borrow against the government's credit to finance its activities.

In 1993, a final change enabled it to invest in capital stock, to lease assets to users outside Canada, to constitute subsidiaries, as well as to take part in joint ventures.

In a way, the EDC is self-funding, in that it receives no parliamentary votes for its activities. It is a very important corporation.

Hon. members need to know that it estimates that it has supported experts and foreign investments to the tune of some $45 billion last year. It is a very important corporation. Despite its financial self-sufficiency, it is still a crown corporation, because a private company wishing to do the same could never compete with it. It is, therefore, a crown corporation which, thanks to a series of privileges, benefits both potential investors in Quebec and Canada and potential exporters from Quebec and Canada.

It is not subject to the Access to Information Act. It is not subject to the Environmental Assessment Act. It is not regulated by the Office of the Superintendent of Financial Institutions, as is the case for the private sector. It does not pay income tax. It does not have to pay dividends. It can borrow at favourable rates, thanks to the credit extended to the Government of Canada.

Those are some of what might be termed the privileges enjoyed by the EDC.

It is easy to see its importance but it is also easy to see why parliamentarians have repeatedly studied its role in Quebec, in Canada and abroad. It is not subject to the Access to Information Act, nor environmental assessment, and it has developed a policy of extreme secrecy. For all these reasons, there have been numerous recommendations made regarding the EDC.

The first amendment to Bill C-31 is to change the name of the EDC. I think that few parliamentarians noticed this. However, since I have been here, I have seen many legislative texts that begin by modifying the name.

The EDC, the Export Development Corporation, is well known. This bill changes the name to Export Development Canada.

The names of so many crown corporations have been changed to contain the “Canada” trademark, all I can do is to comment that this is also the case with the name of the EDC.

For the benefit of those listening, I would like to point out that the most outrageous change, in my opinion, was that made to the former Federal Office of Regional Development-Quebec, the regional section of the Department of Industry, the former Canadian regional development department, which dealt solely with development investment in Quebec. That was why it was called the Federal Office of Regional Development-Quebec.

Shortly after we arrived here in 1993, a bill was adopted which stipulated that this office, for the region of Quebec, would be called Economic Development Canada. What is peculiar is that, in the budget or votes, the names of offices with a similar mandate in the other provinces—for example, Atlantic Canada Opportunities Agency and the Western Diversification Office—remained unchanged.

Yet in Quebec, it is now called Export Development Canada. Of course, this is all part of the great propaganda campaign to rename things. So, in French, it is goodbye to the SEE and hello to Exportation et développement Canada.

In 1998-99, the EDC was the object of a first review that had been decided in 1993. For the purpose of that exercise, the firm of Gowlings was asked to make recommendations. Gowlings conducts studies and audits. It is one of these large Canadian accounting, and surely now financial firms.

Gowlings, which is very much a private firm, made recommendations that differed significantly from the practices in use at the EDC as regards, among other things, transparency, the environment, sustainable development and also human rights.

Indeed, this is from the firm of Gowlings, a well known firm of lawyers, accountants and other experts. Its recommendations were not revolutionary, but provided that:

The EDC should regularly publish information on the operations that it funds. This information could include, for example, the name of the borrower, the country, the exporter—

The firm added the following:

Canada must work to achieve an international consensus on guidelines and environmental procedures that must be complied with by organizations similar to the EDC in other countries.

Immediately after, it goes on to say:

The EDC should submit its environmental framework to a public consultation process and ensure that the resulting policy is largely supported by exporters and non-governmental organizations.

This was in 1998-99. The firm then recommended:

—That the EDC act be amended to subject the EDC to the general requirement of establishing environmental assessment procedures in line with its commercial objectives and allow its board of directors to authorize or deny financial support by the corporation, based on the benefits or consequences of the projects or operations for the environment. The corporation should develop and publish a policy regarding its obligation to inform the public of the results of its environmental assessments—

I will not read everything. Finally, on the issue of human rights, the firm said:

EDC should implement a policy whereby when applying for EDC financial or insurance services, Canadian exporters are asked to indicate on a voluntary basis whether they have adopted their own codes of conduct that ensure respect for human rights, ethical business conduct and fair labour standards in their international activities.

The Standing Committee on Foreign Affairs and International Trade studied the Gowlings report at some length, after hearing from many witnesses. The committee made several recommendations. These recommendations dealt with public disclosure, with its risk assessments, which could be useful to Canadian financial institutions and to the Office of the Superintendent of Financial Institutions.

The committee, with the support of Liberal members—we know, of course, how things work in committee—opted for the principle of improving mandatory disclosure of useful information in the interest of public accountability, in line with the Gowlings report's recommendation, provided that confidential trade information was protected.

It also suggested that:

--a provision be added enjoining EDC to give due regard to the commitments and obligations undertaken by Canada under international agreements—

The committee then proposed, and this is interesting:

—EDC could further enhance its public credibility by conducting a formal consultation with stakeholders on the framework's performance after its first year of operation—

Generally speaking, the recommendations did not find a taker in the report. However, not only the Bloc Quebecois but many NGOs who came to testify found that even the committee's report did not go far enough.

There is one basic principle. This corporation is a crown corporation. As such, can it afford to fund and support in various ways companies which do not respect the environmental assessment framework? Can it refuse to provide information which is provided in other countries by equivalent corporations?

Can it circumvent international agreements that Canada signs in the area of human rights? Can the corporation, which acts on Canada's behalf, do everything contrary to what Canada signs?

This basically is what the Bloc is opposed to. I will not say that there should be no concern over competition and trade secrets. That said, however, there remains a significant margin where, while remaining competitive—the American and Australian corporations are—the corporations must honour the bases of the major international conventions.

Without compatibility, we could be contributing to the confusion and anger of many countries and people living in developing countries, who see countries like Canada with international commitments respecting the environment and human rights and a degree of transparency and practices at home that contravene these very rules.

Bill C-31, which has created a lot of expectations among many people, contains some improvements. They are so timid that they will prevent us, even if we wanted to, from voting in favour of its content.

I have no doubt my colleague from Rosemont will use all his time to speak to the environmental aspect, because what is there is totally inadequate. I will read the only thing sought, and we will see it makes no sense.

Clause 10.1 provides, and I quote:

10.1(1) Before entering, in the exercise of its powers under subsection 10(1.1), into a transaction that is related to a project—

So before it knows if it will support a project,

the Corporation must determine—

(a) whether the project is likely to have adverse environmental effects despite the implementation of mitigation measures; and

(b) if such is the case, whether the Corporation is justified in entering into the transaction.

The problem lies in the fact that the auditor general has said that the frames of reference were inadequate even to evaluate it, and that of the 25 projects she evaluated, 23 did not conform.

In terms of the environment, transparency, public disclosure of information or compliance with international conventions on human rights, Bill C-31 is a long way from attaining the minimum objectives we might have expected.

It is therefore with regret that we will vote against the bill.

[John Williams, Canadian Alliance, St. Albert, AB]

Madam Speaker, I am pleased to rise in the debate on Bill C-31.

The bill deals with changes to the Export Development Act and the Export Development Corporation and the way we help our exporters participate in the global economy we now find ourselves in. Unfortunately as we all know the economy of the country and the economy of the world have been taking a bit of a knock on the head since September 11 and perhaps even before that.

Any time September 11 is mentioned we think of those who suffered and died in New York and Washington. We should never make light of what happened there. However it does have some ongoing effects on our economy and these are things we have to discuss.

The Minister of Finance is going to have to bring down a budget soon. He is trying to stay away from that awful D word, the deficit. Perhaps it will be looming large again in our vocabulary but we certainly hope not.

The Export Development Corporation's role is to help small, medium and large exporters obtain sales abroad for Canadian goods and Canadian services. To ensure that our Canadian suppliers get paid, they can obtain insurance through the Export Development Corporation to guarantee that they will get payment. On a normal transaction that is not a bad thing. We ensure many different things these days. We wonder why it has to be a crown corporation that does that and not the private sector.

It used to be that mortgages had to be insured by the government and then the private sector took over that. Why can we not think about allowing the private sector to do it in the export market as well? That of course would bring to bear what is called the Canada account.

The member who spoke previously talked about the Canada account which is a political account. Team Canada sometimes likes to slide all those great big sales that it announces to justify its trips around the world through the Export Development Corporation. In the final analysis sometimes Canadian taxpayers end up picking up the tab not only for the trip around the world but also for those great sales promotions that team Canada said it had achieved but it did not quite work out that way.

I would like to think that we would get away from these politically motivated deals. The governor in council, the cabinet, can dictate to the corporation saying it has signed a deal to sell a Candu reactor to some rather nefarious country it would rather not deal with but it is good for Canadian jobs. It tells the corporation to sign the deal and guarantees the deal. Lo and behold if sometime later something goes wrong and we do not get paid, the Canadian taxpayer gets to pick up the tab.

It works in much the same way as the Canadian Wheat Board which sells wheat and grain around the world all guaranteed by the Government of Canada. When we look at the financial statements of the Canadian Wheat Board, it has never had a bad debt since it started. The Government of Canada pays every bad debt that it incurs. We never know exactly how much that is costing us. The wonderful statements made by the wheat board say, “Don't worry. We get paid”. It is the Canadian taxpayer who quite often pays for the wheat that we presumably sell elsewhere.

Part of the bill deals with trying to require the Export Development Corporation to build in some environmental criteria. We recognize that the environmental laws are different in different parts of the world. To apply a Canadian standard and say that we are not going to finance a project in country x unless it meets a Canadian environmental standard may be totally inappropriate. The environmental standards would be different in that country and there would be a total mismatch of rules and regulations and the whole thing would fall apart. It is going to require the Export Development Corporation to try to develop some criteria to ensure that not only the country involved but all the inhabitants of the world benefit and that the environment does not suffer too dramatically because of the project that is being anticipated.

The auditor general's report produced in May 2001, just a few months ago, reports on the Export Development Corporation and its environmental review framework. That is what the bill talks about in some degree.

On page 5 the report talks about the important gaps in public consultation and disclosure. We are talking about a crown corporation. A crown corporation is owned by the taxpayers and has to report to the taxpayers. On the first page of part 1 the auditor general says there are important gaps in public consultation and disclosure. That is right at the front.

That is typical of the government. Every time we turn around there is something it is trying to hide, be it the shawinigate papers we could not get our hands on, or just yesterday I was reading in the newspaper how the privacy commissioner is trying to get a hold of the Prime Minister's agenda, not the contents of what he discussed, but whom he met with. Even that is a state secret. It is little wonder that the Export Development Corporation is saying that it wants to be part of the same mould.

The auditor general is right in saying that the elite of the corporation will have to act quickly to address issues of transparency and that there is lack of policies and procedures at the project level to govern public consultation and disclosure of environmental information. These are serious allegations. The auditor general, our officer of parliament, is saying it is time for EDC to wake up and start being more open and transparent and tell us what it is actually doing because we the taxpayers are the shareholders.

In paragraph 10 on page 6 under the heading “Is the framework operating effectively?” the auditor general says:

In most cases we found significant differences between the framework design and its operation. In those cases, employees seem to have viewed the framework more as a guidance, to be interpreted according to the circumstances of each project, than as an important risk management tool that they were expected to apply.

Who is minding the store? If there is no openness and transparency, the institution of parliament which is supposed to be holding it to account does not have the information. Therefore we cannot do our job properly and it gets away with anything it wants to get away with.

Paragraph 22 on page 8 states:

Unlike federal departments and agencies, the Export Development Corporation is not subject to the Canadian Environmental Assessment Act or to the Access to Information Act. Unlike private sector financial institutions, it is not subject to regulation by the Office of the Superintendent of Financial Institutions, does not pay income tax, is not required to pay dividends, and can borrow at favourable rates on the credit of the Government of Canada.

If it can do all those things, we would think the least it could do is tell us what it is up to so we could keep an eye on what the organization is doing. But we all know that transparency is not the watch word of the government.

Paragraph 27 on transparency, public disclosure and accountability states:

The government acknowledged that the information the corporation currently discloses provides few details.

What are we really trying to do here? Are we a dictatorship or are we an open democracy? I thought we were an open democracy. It goes on to state:

It noted, however, that the corporation was making significant strides toward making more information on its activities available to the public.

Well, we are still waiting. The litany continues on. In paragraph 34 which deals with developing a framework for risk management it states:

To provide the public with a better understanding of the corporation's environmental practices. Although the corporation had been assessing environmental risks of projects for some time, it had not kept the public informed on the nature or extent of its analysis.

We are right back to square one. Whatever it wants to do it does behind closed doors. It does it incompetently or not at all. As long as the taxpayer is kept in the dark it thinks it is home free.

That is not the way it should be. Given that it relied on the environmental information provided by project proponents for its risk assessments, the corporation needed to communicate to participants what information it required and how it would be used.

Going through the report, there are many instances of problems in the organization. In paragraph 56 at page 14 the auditor general points out that there are important gaps in public consultation and disclosure. It states:

The key gaps in the design of the Corporation's Framework are in transparency--

Through the entire report transparency or the lack thereof is the key. The organization needs serious review to open itself up to the public. It needs reform.

[Gary Lunn, Canadian Alliance, Saanich—Gulf Islands, BC]

Madam Speaker, I am pleased to rise today to speak to Bill C-31, an act to amend the Export Development Act. It makes a number of other amendments which I will go through.

The Minister for International Trade tabled amendments to the Export Development Act. There are a number of them, including changing the name of the corporation to Export Development Canada. There is nothing too substantive in that regard, but I should like to talk about some of the more substantive changes. I should also like to spend some time at the end talking about the Canada account.

First I will go to some of the proposed changes. One amendment would enable the board of directors to delegate its powers and duties to committees that it may establish other than the executive committee. Right now 13 of the 15 board members are currently appointed by the Minister for International Trade. The remaining two, the chairman and the president, are appointed by the Prime Minister.

These appointments, all very partisan political appointments, are the people responsible for formulating the current practices of the EDC. We have political appointments. There is the patronage we have seen in the past and now an unelected board wants to delegate its powers and duties to one level down. I think it is incredibly questionable. Instead I would suggest that the board should come before a parliamentary committee and be held accountable instead of further divesting its responsibilities and powers to another partisan appointed committee.

The 15 member board is appointed by the Prime Minister and the Minister for International Trade, which I think is wrong. They should be looking at its focus. Recently Patrick Lavelle, chairman of the EDC, called for more independence for crown corporations and agencies such as the EDC, stating the objective of naming directors should be to “get the best people, no matter where they come from”.

Mr. Lavelle has suggested the EDC move toward privatization, noting that there is a culture of secrecy in the government bureaucracies, “an inherent believability in federal crowns that information is power and increasing its release will just generate unwarranted criticism”.

We are dealing with taxpayer money. This is all about accountability. Yes, one in four jobs in Canada is a direct result of our exports. Some 43% of our GDP solely depends on exports. However the funding that goes out from EDC has to be fully accountable. It has to be transparent.

When we have the chairman of the EDC saying that the power of the federal crowns in releasing information will only generate unwarranted criticism, we have to question where these types of things should be addressed. Of course they have not been in this legislation.

Furthermore he is recommending that the Prime Minister create a cabinet post that would make one minister responsible for overseeing all crown corporations, with a parliamentary committee established to provide oversight. On another note he mentions that crown directors should perhaps face the same liability as private sector directors.

Of course this is coming from somebody who has worked very closely with the EDC as the chairman and has seen this firsthand, probably better than most. These are the types of suggestions that he has come forward with. Yet there is no mention of any of them in the legislation. It does not address any of these issues.

In light of Mr. Lavelle's words, the latest addition to this haven for patronage appointment is former Senator Bernie Boudreau who was named by the PMO last month to a plumb post as a director of the EDC. It is just another flagrant example of patronage on the part of the government.

There has to be more accountability with crown corporations, something which is evidently lacking at present.

The present government agrees that EDC should “publicly demonstrate its accountability by reflecting the full range of public policy concerns in its activities and should introduce appropriate transparency measures concerning its activities”.

The Export Development Corporation is immune from access to information because it is not covered under the act. We are dealing with billions of dollars of taxpayer money and it is immune from any type of access to information request to make sure that we have more accountability.

I was going to call quorum, Madam Speaker, because I did not see any government members. However I apologize because I see one now. I thought I was speaking to an empty House.

[Svend Robinson, NDP, Burnaby—Douglas, BC]

Madam Speaker, first off I would like to thank the hon. member for Joliette and Bloc Quebecois critic for international trade for his comments. I would like to say, on behalf of my New Democratic colleagues, that we will also oppose Bill C-31. We will do so for the reasons expressed very eloquently by the member for Joliette, which I will try to explain in the few minutes of comment allowed me in connection with third reading of this bill.

As I said, we are opposing the bill at third reading. I want to make it clear how profoundly disturbing and disheartening the process was in committee with respect to the bill.

The committee took the time to hear many witnesses from civil society, the labour movement and the NGO working group on the Export Development Corporation. We heard witnesses from a Latin American human rights group, a researcher for KAIROS, witnesses from Développement et Paix and many others from the business community.

Following extensive hearings on the bill, when it came time to reflecting the concerns and the hopes of those witnesses in the legislation with respect to amendments, not a single amendment was accepted by the government members on the committee. Not a comma changed in the bill from its original presentation. Frankly this was contemptuous of the very thoughtful concerns that were expressed by the members of the committee and by the witnesses who appeared before the committee on its hearings.

I mentioned the NGO working group on the Export Development Corporation, the so-called Halifax initiative. I want to read out the names of the members of that initiative to give some sense to the House and to those Canadians who are watching this debate of the broad diversity of groups that made up this initiative and who were calling for significant changes to the legislation.

The Halifax initiative working group was made up of: the United Auto Workers Union, the Canadian Council for International Cooperation, the Canadian Friends of Burma, the Canadian Labour Congress, the Canadian Lawyers Association for International Human Rights, Democracy Watch, Development and Peace, East Timor Alert Network, the Falls Brook Centre, Rights and Democracy, Mining Watch Canada, Project Ploughshares, Results Canada, Sierra Club Nuclear Campaign, the Social Justice Commission of Montreal, the Steel Workers' Humanity Fund and the West Coast Environmental Law Association. This is a very impressive group of organizations from across the land that appeared before the committee and put together a comprehensive brief asking for some significant changes in the legislation.

In response to those suggestions, on behalf of my colleagues in the New Democratic Party, I proposed a number of amendments and each and every one was rejected.

My colleague from the Bloc Quebecois also tried to respond to the concerns and priorities of these witnesses. His amendments were also totally rejected by the committee.

I will now summarize the key areas of concern that were raised in the committee with respect to Bill C-31. First is the issue of disclosure and transparency.

The recommendations made to the committee were that the act be amended to require the disclosure of project related information in a timely and regular manner and that pre-approval disclosure of environmental and social information for projects with known or potential significant adverse impacts should have been included in Bill C-31.

The review made by Gowlings in June 1999 of the Export Development Act, by the foreign affairs committee in December 1999 and by the minister, all recommended that the EDC be required to disclose information related to transactions. When we look at Bill C-31 there is not a word about disclosure. There is not a single word about greater transparency.

In tabling the legislation and in refusing to implement the amendments and recommendations of witnesses, the government is ignoring not only the Gowlings report and the foreign affairs committee but the commitments that were made previously by the minister himself.

The EDC says that it has a disclosure policy that was implemented on October 1 of this year. It says that it has an internal compliance officer. The fact of the matter is there is nothing at all in the bill that requires the EDC to disclose any information whatsoever. Historically, back in the mid-1980s, the EDC actually decided that it would stop releasing any project related information to the public. It could do that tomorrow under the provisions of the legislation.

It is particularly important as well that the EDC be required to adopt pre-approval disclosure of environmental and social information for projects that may have a significant adverse environmental or social impact. If there is going to be any efficient environmental impact assessment process there has to be pre-approval disclosure. This is already part of the process under other international financial institutions such as the IFC and the European bank for reconstruction and development. In fact, the export credit agencies in the United States and Australia release such information 45 to 60 days prior to approval.

This is just good practice and it is a principle of the Canadian Environmental Assessment Act. If we look at Bill C-31 there is absolutely no requirement whatsoever for any kind of prior disclosure or pre-approval disclosure of environmental and social information for projects that could have very serious impacts on the environment. Although it was not possible to introduce an amendment to this effect because it was ruled to be beyond the scope of the bill, I would urge the government to bring in legislation to ensure the Export Development Corporation is fully subject to the Access to Information Act.

The Business Development Bank, which is another crown corporation in Canada, is already subject to the Access to Information Act. Both of the American export credit agencies are subject to similar United States legislation. It is totally unacceptable that a crucial question such as transparency should simply be left up to the entire discretion of the corporation. It should come under the umbrella of the access to information legislation.

With respect to the issue of environmental protection, clause 10.1 in Bill C-31 is a new clause that deals with environmental effects but it is full of loopholes. It gives the Export Development Corporation board total arbitrary discretion. I will read now from the section itself. It states:

(c) establish exceptions specifically or by any class, as defined by the Board, to the Corporation's obligation to make the determination.

That determination is with respect to adverse environmental impacts. It could exempt an entire category without any oversight whatsoever. This makes a mockery of any meaningful environmental assessment under the legislation.

Instead, we proposed, along with the many NGOs that appeared before the committee, that environmental criteria, including standards and processes, should have been included in the legislation and that a regulation on the environmental assessment process for the EDC should have been developed under the Canadian Environmental Assessment Act.

Once again, in December 1999, the foreign affairs committee made a similar recommendation that made it very clear that there should be far more openness to environmental criteria being included in the legislation. No such thing was done. There is not a single word about it in Bill C-31.

Even if the Export Development Corporation finds that a project does have, in the words of the section, adverse environmental effects despite the implementation of mitigation measures, the board can approve funding for the project in any event. Even if it accepts that there will be a significant adverse impact on the environment, it can fund a project despite that.

When we look at some of the projects that have been funded, such as some of the Candu reactor projects, including the Cernavoda project in Romania and in China, we have very serious concerns about those, just as we have concerns about the Three Gorges dam project in China and a number of other projects that the EDC has seen fit to fund despite very destructive environmental and social impacts. That is why we proposed those amendments.

I would note as well that the auditor general's report released in May was a damning indictment of the EDC's failure to implement its own environmental framework. It had an existing environmental framework in place but according to the auditor general's report it correctly implemented its own internal environmental framework in only 2 out of the 26 projects that were reviewed. That is why we as New Democrats have called for the Export Development Corporation to be placed under the framework of the Canadian Environmental Assessment Act. There is litigation currently underway challenging the decisions with respect to the Three Gorges dam. I for one hope that the litigation ultimately will be successful.

The final area of concern is with respect to human rights and core labour standards. We recommended in the committee, supported by the Bloc Quebecois which made a similar recommendation, that the purpose of the EDC be changed to include a requirement that it respond to international business opportunities in a manner consistent with Canada's international obligations.

Is it really such a revolutionary thing to ask that the Export Development Corporation, which is accountable to Canadian taxpayers and owned by the people of Canada, respect and honour the international commitments that Canada has undertaken, whether it be the international covenant on civil and political rights; the international covenant on economic, social and cultural rights; our international environmental commitments; or our ILO commitments on core labour standards?

When Warren Allmand, the director of rights and democracy, appeared before the committee, he pointed out the same thing and made the same recommendation, that we should be honouring and EDC should be required to honour in its operations those international obligations.

Here again was a recommendation of the foreign affairs committee, the same committee that studied the bill and recommended in its December 1999 report, of which I have a copy here, that we explicitly make reference in the legislation to our international commitments to human rights, core labour standards and other key areas, including the environment.

I have a copy of the press release that was issued by the Standing Committee on Foreign Affairs and International Trade on December 16, 1999. The committee stated the following:

The Committee recommends, as an overarching provision, adding to the Export Development Act clear Parliamentary guidelines for EDC supported activities and transactions so as to ensure that these both deliver benefits to Canadians and meet Canada’s international commitments and obligations, including those related to environmentally sustainable development and human rights.

What happened between December 1999 and October 2001? The same committee rejected an amendment proposé par le Bloc québécois, proposé par moi pour le NPD.

They rejected an amendment in the identical wording that we had accepted and unanimously recommended in December 1999. I say shame on the Liberal members of that committee for not being prepared to stand up for the original recommendation that was made by their own committee.

Once again the bill is profoundly flawed in that respect as well. There is no commitment whatsoever to honour those international obligations and no commitment whatsoever with respect to the important issue of establishing an ombudsperson within the EDC. For those reasons my colleagues and I oppose the legislation.

We want to raise a broader question today. What the EDC has said is that it is prepared to protect commercial interests. We have heard this same argument with respect to trade deals. We know that under NAFTA corporate interests are protected by chapter 11, the investor state provision. We know that under the WTO the interests of patent holders and multinational pharmaceutical companies are accepted under the so-called TRIPS agreement, even when that has an obvious detrimental and in some cases devastating impact on the availability of affordable drugs to fight HIV-AIDS and malaria in sub-Saharan Africa, Brazil, India and elsewhere.

Why is it that the Liberal government and its allies in the Canadian Alliance on this issue are prepared to defend the rights of multinational pharmaceutical drug companies but are not prepared to defend the basic rights of workers around the world? They are not prepared to defend the environment, to defend indigenous peoples, to defend human rights. Why the double standard?

I might just say parenthetically that many in developing countries are asking why the double standard with respect to patent rights. We have seen the spectacle of the Minister of Health recently being prepared to override patent rights of the Bayer corporation in a minute because of a possible threat of anthrax in Canada. Frankly we as New Democrats welcome that decision.

People in developing countries are asking if this is the same government that is prepared to defend the multinational pharmaceutical companies under the TRIPS agreement when they try to say they need the right to protect their patents on drugs to fight HIV and AIDS. What hypocrisy. What a double standard with respect to multinational pharmaceutical companies. If it is good enough for Canada, it is good enough for the poor in sub-Saharan Africa, Brazil, India and around the world.

In closing I want to point to one very real, powerful, human example as to why there has to be fundamental changes in the workings of the EDC and why Bill C-31 falls far short of what is acceptable.

In 1999 an indigenous Embera Katio leader from Colombia, Kimy Pernia, appeared before the foreign affairs committee. I was there when he gave evidence. At that time he provided testimony about the impact of the EDC supported Urra hydroelectric dam in northern Colombia. Kimy testified eloquently before a committee about how Embera land and crops were being flooded by the dam. Fish stocks upriver from the dam were eliminated, robbing the Embera of the mainstay of their diet. Vast areas of stagnant water were created, bringing mosquitoes and epidemics of malaria and dengue to Embera communities.

Kimy testified that this dam was built without ever consulting any of the indigenous communities living in the area that would be affected. This was a violation at the time of both the Colombian constitution and international human rights agreements. The EDC financed a portion of this dam. There was no consultation whatsoever with the indigenous peoples that were most directly affected.

Kimy also told our committee that day that speaking out about these things would put his life in danger in Colombia and that four other Embera leaders had already been killed by paramilitary forces for challenging the negative impacts of that dam.

Tragically Kimy's prediction proved to be accurate. On June 2 of this year Kimy Pernia was abducted by paramilitary gunman in Colombia. Since then we have no way of knowing where he is. There has been absolutely no news about his whereabouts. Since he has disappeared there have been other killings and continued threats against Embera communities.

It is clear that the dam, a project the EDC chose to invest in despite the opposition of the local indigenous communities, has exacerbated the violence that already existed there.

That is another reason we wanted to see included in the legislation a requirement that the EDC operate in a manner which would be consistent with our international obligations in areas such as the universal declaration of human rights, the UN covenants I mentioned, and the ILO declarations on core labour standards.

If that kind of assessment had been done in Colombia perhaps that terrible project would not have been funded. We oppose Bill C-31. We believe that in the key areas of transparency, environmental protection and respect for human rights core labour standards the bill falls far short. For that reason we will be voting against the bill at third reading.

[Pierre Paquette, Bloc, Joliette, QC]

Madam Speaker, we are now studying Bill C-31, an act to amend the Export Development Act.

Before anything else, I would remind the House what the key elements of this legislation are. The bill would enshrines in law the fact that before entering into a financing transaction the Export Development Corporation, whose name it changes incidentally, must take environmental considerations into consideration.

The bill leaves it up to the Export Development Corporation to establish its own environmental criteria and to determine the exceptions to the rules. It is rare to see a corporation be made both judge and defendant, when that corporation already does not comply with its own directives.

We will see that in detail later on. In her May 2001 report, the auditor general stated that, out of the 25 projects audited under the terms of reference determined by the corporation itself, she found 23 to be in violation of those terms of reference. I am referring to the Export Development Corporation.

The present bill adds nothing to the requirement for accountability on the part of that corporation. There is nothing in the bill about the disclosure of information or about public consultation.

As I said, the frame of reference is what the corporation assigns to itself, and there is really nothing in the bill to ensure that this framework is adequate to properly assess the environmental effects of projects submitted to it.

Moreover, the bill gives the rather strange discretionary power to the Minister of Finance and the Minister for International Trade to exempt a project from environmental assessment. The bill, in principle, gives exclusion from any of the requirements of the Canadian Environmental Assessment Act.

I must admit that we are totally mystified by this choice. We pass environmental assessment legislation and then exempt the corporation from it, at the very time that it is being asked to put more effort into its environmental assessments.

Finally, this bill makes absolutely no mention of human rights.

As hon. members can see, this bill might appear ambitious, in light of the criticism there has been of the EDC in recent years. Once read, however, it can be seen to be a pretty lightweight piece of legislation.

I would take this opportunity to remind the House that the EDC was established in 1944, as the Export Credits Insurance Corporation, with a mandate to support and develop Canada's export trade. It was given the responsibility of providing credit insurance and guarantees to Canadian exporters. In 1969 it became a crown corporation and acquired the additional powers of being able to make direct loans to foreign borrowers, and to borrow against the government's credit to finance its activities.

The last change, made in 1993, now enables it to invest in capital stock, to lease assets to users outside Canada, to constitute subsidiaries, and to take part in joint ventures.

It is noteworthy that the EDC is self-funding, in that it receives no parliamentary votes for its activities. It derives its operating revenue from fees, premiums and loan interest.

In the year 2000, for instance, it reported net profits of $194 million, a 9.7% return on shareholder assets. Its assets would therefore be some $2.8 billion. That same year, hon. members will recall, the corporation estimated that it had supported exports and foreign investments to the tune of some $45 billion.

Finally, let us not forget that this crown corporation enjoys special status. It is not subject to the Access to Information Act. It is not subject to the Environmental Assessment Act. It is not regulated by the Office of the Superintendent of Financial Institutions, as is the case for all private enterprises. It does not pay income tax. It does not have to pay dividends. It can borrow money at favourable rates, thanks to the credit extended to the Government of Canada.

I think it must also be said that the Export Development Corporation has a highly developed secrecy policy: it hardly gives out any information about its activities.

In the evidence we heard at the Standing Committee on External Affairs and International Trade, most of the groups that appeared before the committee, particularly the international co-operation groups, reminded us of the difficulty they had in getting information.

For example, Warren Allmand, a former Liberal member and minister, who is now president of Rights and Democracy, presented a document that was obtained by his organization through the Access to Information Act. The document was completely blank. This shows that a secrecy policy, a lack of transparency, seems to be a feature of this corporation.

Coming back specifically to the environmental issue, since it is the only new element in this bill, we see that the corporation will set up an environmental framework to apply environmental criteria to its financing decisions.

As I already mentioned, in response to many criticisms, the auditor general was asked to assess the appropriateness of the Export Development Corporation's environmental review framework. She concluded that the framework contains, and I quote “most elements of a suitably designed environmental review process”. However, it would appear that the framework has never been properly applied.

As I mentioned at the outset, and I think the Canadian and Quebec public have to know it, out of the 25 projects she studied, 23 had not been properly reviewed for environmental risks, or not reviewed at all, in accordance with the framework the corporation had defined.

Of course, this was not the only thing she criticized. I will repeat some of her criticisms, as set out in her May 2001 report.

The auditor general pointed out that there are major shortcomings in terms of public consultation and disclosure at the Export Development Corporation, there are significant differences between the environmental review framework's design and its operation, the framework's statement of objectives is not clear, the framework's environmental standards are not specified, there are flaws at each stage of the environmental review process, screening tools are not applied adequately to identify potential environmental risk, and there is no methodology to determine if adverse environmental risks can justify a decision or not.

It is not the only report we can refer to in order to have an idea of the major shortcomings in the current management approach taken by the Export Development Corporation. Members will recall that in 1999, the Gowlings report pointed out much the same shortcomings with regard to transparency, environmental review and human rights. In December 1999, the Standing Committee on Foreign Affairs and International Trade tabled its report, in which we find basically the same criticisms.

So we are dealing with a corporation that has gotten some pretty bad press from most groups, including parliamentarians. In my opinion, this should have elicited a much stronger response from the federal government than that which was given with Bill C-31.

In December 1999, the Bloc Quebecois published a dissenting opinion to the report of the Standing Committee on Foreign Affairs and International Trade; it was already clear to us then that there was disagreement that could be boiled down to three elements: transparency, human rights and the environment.

I will recap the main elements that we highlighted in December 1999. Regarding transparency, we noted that there was an obvious and marked lack of transparency in the Export Development Corporation's operations; that access to information was sorely lacking; and that given the context of a lack of transparency, it was highly likely that the Export Development Corporation's activities could be used for inappropriate purposes, which might even conflict with the purposes outlined in the statute.

Therefore, it seemed essential to us at that time that the Export Development Corporation be subject to the Access to Information Act.

As for human rights, the Bloc Quebecois expressed serious concern regarding the Export Development Corporation when it comes to respecting human rights. Among the risks that the corporation assumes, there are political factors. It provides political risk insurance. However, the Export Development Corporation does not take into consideration the human rights situation when it assesses political risks. When it comes to political risks, obviously there is a serious risk of political upheaval in the case of regimes that abuse human rights and do not respect fundamental labour law.

Before providing support for a business, the corporation should at the very least—this is what we thought then, and still think now—ensure that the company in question subscribes to the code of conduct established by the OECD, when it comes to human rights. Bill C-31 makes no mention of this fact, as I stated earlier.

As for environmental standards, they are briefly mentioned in Bill C-31. The Bloc Quebecois was and is still of the opinion that the committee's recommendations concerning the environmental responsibility of the Export Development Corporation—we refer here to the report of the Standing Committee on Foreign Affairs and International Trade—were nothing but a wish list. It was not enough to ensure that, in fact, the environment will now be included in the corporation's studies prior to any decision making process.

The Export Development Corporation's environmental responsibility must be more firmly anchored in order to better reflect the corporation's duty as regards environment, respect for the environment, and sustainable development.

In this regard, the Bloc Quebecois would have expected the Export Development Corporation to draw more from the operating framework of the World Bank or the European Bank for Reconstruction and Development, where for each reasonable project there is an environmental impact assessment, public hearings, and above all full transparency.

We cannot accept that the Export Development Corporation, even under its new name, should use public moneys to fund projects that could end up destroying the environment or violating human rights, and do so with impunity, as secrecy is one of the corporation's characteristics.

As I indicated, there were three very harsh reports. The May 2001 report of the auditor general, the report of the Standing Committee on Foreign Affairs and International Trade, complete with the Bloc Quebecois dissenting report, and the Gowlings report were all extremely critical.

In a way, Bill C-31 was presented as a response to this criticism, since that the Export Development Corporation had obviously not succeeded in regulating itself. One would have expected Bill C-31 to address this weakness, but there is nothing in this bill to do so.

The bill is too weak from an environmental point of view. It provides no guarantee for an effective environmental assessment and gives the EDC too much leeway in establishing the criteria. It is silent on disclosure. The bill does not include any punitive provisions should the EDC not respect its own environmental framework.

We have seen in the auditor general report that in 23 of the 25 projects examined, the framework had not been respected. In this regard, I shall point out that Quebec imposes fines and even jail terms on officials who are found guilty of negligence in environmental matters.

On the other hand, the bill is watering down environmental standards by not assuring Canadians that projects comply with more than just the standards of host countries, and that they respect the environmental review framework. This bill also excludes any possibility of making the EDC subject to the Canadian Environmental Assessment Act. Since the corporation has no credibility whatsoever, this bill does not represent a response to the criticisms made repeatedly over the last three years.

Finally, Bill C-31 completely sidesteps the issue of fundamental rights, human rights, labour rights, and this is totally unacceptable. For example, we know of this gold mine in Tanzania that belongs to a Canadian company which was granted a political risk insurance by the Export Development Corporation.

The mine was apparently put at the disposal of the Canadian company following a massive eviction of artisanal miners. There are even allegations by Tanzanian lawyers which were made public here in Canada to the effect that, as part of this massive eviction operation--and we are talking about hundreds of thousands of people--there were artisanal miners who were buried alive in their mine. These are allegations.

I take this opportunity to mention that the NDP leader asked a question in this House concerning this extremely disturbing case. In his reply, the Minister for International Trade referred to the fact that Amnesty International had investigated the matter, but had not found evidence supporting the allegations made by human rights lawyers, particularly Tanzanian lawyers.

However, in its annual report for the year 2000, Amnesty International says that, based on the documents provided to it by the Tanzanian police, it was not able to come to a conclusion regarding this issue, and it is asking for an independent, international investigation to shed light on these events.

Contrary to what the minister told us, probably in good faith, not only did Amnesty International not come to a conclusion regarding these extremely disturbing and dramatic facts, but it is also asking--as we are--for an independent, international investigation to shed light on all these events.

Be that as it may, the Export Development Corporation continues to proceed as if it were business as usual.

In order to correct this situation, I proposed a number of amendments in committee, which I will mention.

These amendments basically deal with clause 10.(1) and seek to correct a number of flaws relating to this clause and to make appropriate related changes. I will discuss clause 10.1

For example, absolutely no reference is made to the EDC's responsibility to take into account not only environmental effects, but also social effects and, more globally, human and other rights provided for in international agreements.

I therefore proposed that, to this clause, be added a point that would clarify the mandate of Export Development Corporation. The amendment read as follows:

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 keeping with Canada's international commitments.

It strikes me as perfectly normal that a crown corporation would honour commitments made by the government internationally, especially in the area of human rights and basic labour rights.

Believe it or not, the Liberal members of the committee rejected this amendment. It is difficult to understand how the federal government makes commitments on Canada's and Canadians' behalf, and indirectly still on behalf of Quebecers, and then does not want to require its own corporations to honour these commitments. We are indeed talking about international commitments, that is conventions, treaties and charters ratified by the Canadian government.

I have to say I was quite disillusioned about the scope of the work Canada can do internationally, if it is not prepared to have its crown corporations honour the commitments it itself makes. How is it going to get private firms and multinationals based in Canada to honour these commitments?

So my first disappointment was at the rejection of such an obvious amendment, which was later reformulated by the member for Burnaby--Douglas, in fact. Twice, we have tried to get this element, a simple matter of common sense, passed, and twice the Liberal members have rejected it. That was the first great disappointment.

As I said in my presentation, the environmental frame of reference that the Export Development Corporation has set for itself is inadequate. It fails to honour this environmental framework it set for itself. It is therefore incapable of self-regulation.

Paragraph (2) of the famous clause 10 reads as follows:

The Board shall issue a directive respecting the determination referred to in subsection (1)--

That is the assessment of environmental effects.

--, which directive may

(a) define the words and expressions that the Board considers necessary for the application of that subsection, including the words and expressions “transaction”, “project”, “adverse environmental effects” and “mitigation measures”;

(b) establish the criteria that the Corporation must apply in making the determination:

(c) establish exceptions specifically or by any class, as defined by the Board, to the Corporation's obligation to make the determination.

It is therefore not an obligation. The Export Development Corporation can define its own terms of reference. It beats me how there can be environmental terms of reference without some sort of minimal definition of words such as transaction, project, adverse environmental effects and mitigation measures.

I therefore proposed an amendment to Bill C-31 to define these various terms. People must know what they are talking about when they refer to impact on the environment. Without reading the amendment in its entirety, I will convey the gist of it by reading what strikes me as the most important term, environmental effects, because this has to do with a framework for assessing environmental effects. I suggested this definition to the committee:

environmental effects means any change that the project may cause in the environment, including any effect of any such change on health and socio-economic conditions--

It is very clear to me that when one refers to environmental effects, one is also referring to socio-economic effects:

on the current use of lands and resources by local communities, on any structure, site or thing that is of historical, archaeological...importance--

As the House can see, it is a very straightforward definition. The definitions are borrowed from the Canadian Environmental Assessment Act. We therefore did not rebuild the wheel; we used what was already available. I also borrowed the definition of environment, environmental assessment, mitigation and project.

Here again, I was astonished, because it is only common sense that if a crown corporation adopts environmental terms of reference, there should at least be agreement on the terminology used to make an assessment.

Once again, the Liberal members of the Standing Committee on Foreign Affairs and International Trade rejected this amendment. I am still wondering what logic they could have used, unless it was a form of anti-opposition sectarianism.

A second amendment was therefore rejected. Its purpose was merely to define the terms on which we must work and agree on so that when the auditor general and parliamentarians are called upon to assess the work of this crown corporation, they will know where we are coming from.

As I said, I believe definitions are necessary, but we ought to have at least been able to expect to find the bill stating that the corporation “must” define a certain number of criteria, and make these definitions public in order to open them up to public debate. It seems, however, that the government side of this House prefers to lend to this bill the same secrecy as reigns within this crown corporation, the EDC, at the present time.

As I said earlier, not only are definitions lacking, but the frame of reference for assessments is flawed as well.

All that is stated in clause 10.1 is the following:

10.1(1) Before entering, in the exercise of its powers under subsection 10(1.1), into a transaction that is related to a project, the Corporation must determine, in accordance with the directive referred to in subsection (2),

(a) whether the project is likely to have adverse environmental effects despite the implementation of mitigation measures; and

(b) if such is the case, whether the Corporation is justified in entering into the transaction.

Hon. members can see that this is far too weak a directive from the legislator. I therefore took the liberty of submitting to the committee a far clearer, and far more complete, environmental assessment procedure.

In connection with the first element of this procedure, what I proposed--not just what is stated here about looking to see whether there are likely to be adverse environmental effects--what I proposed was for the corporation to be required to carry out an environmental assessment before exercising its power to assess a project against a series of criteria, such as environmental assessment, or the development and implementation of a program for follow up. Then the environmental effects must be determined, along with the extent of these effects. Comments from the local population must be obtained. And are the mitigation measures technically and economically feasible?

Furthermore, the rationale behind the bill is important. There are the alternative solutions and the requirement for a follow up program. Those are all self-evident criteria for the evaluation of any project.

The corporation carries out the environmental assessment, prepares a report and sends it to the Minister for International Trade. On the basis of that report, the corporation takes one of the following measures, depending on the environmental assessment: it decides either to go ahead with the project or not to support the project because its environmental impact would be negative. In that case,however, what is EDC to do? It is not really clear; there is a grey area? Can the corporation be judge and defendant? I do not think so. It seems to me that in such a case the Minister for International Trade has a responsibility and a role to play.

I was suggesting that, whenever it is unclear whether the adverse environmental effects outweigh the value of a project, the corporation should ask the Minister for International Trade to decide. If the corporation considers that even after the implementation of appropriate mitigation measures, the project might have serious adverse environmental effects, it should refer the matter to the minister.

If a project is likely to have major adverse environmental effects despite the implementation of mitigation measures and if the previous clause does not apply, the EDC refers to the minister, provided the concerns of local populations justify such a measure.

This is an environmental frame of reference that leaves a lot of leeway to the Export Development Corporation, while defining rules that everyone would know and understand.

Under Bill C-31, the corporation will set for itself the rules that it wants. It will decide whether or not it will comply with these rules.

Finally, in the same amendment, I proposed including two small provisions whereby the corporation would have to disclose, in the 45 days prior to the conclusion of an agreement, information on the projects in which it is involved. This information was to include the name of the borrower, the host country of the project, the environmental and social concerns of local populations, the value of the project and the conditions relating to financial support.

If we want Canadians and Quebecers, international solidarity organizations and any interested party to be able to express their own views on the evaluations to be made before supporting a project, the public must be informed of the existence of the project.

Finally, we proposed that no provision in the Privacy Act or the Access to Information Act should have the effect of preventing or restricting the disclosure of the information mentioned in the previous paragraphs, to which I just referred. This is a fundamental flaw in Bill C-31. Nothing is done to give Canadians and Quebecers access to information on the management of the Export Development Corporation.

It will obviously be no surprise to anyone if I say that the Liberal members of the Standing Committee on Foreign Affairs and International Trade voted against this amendment, which, as I mentioned, was drawn from internationally known rules. More specifically, I drew on the rules of the World Bank. We were not starting a revolution in committee by proposing such amendments, but it was rejected. Once again, I have a hard time understanding the reasons.

Finally, in light of the criticism raised about the governance of the Export Development Corporation, I cited three or four damning reports, but the evidence of representatives of NGOs, groups and individuals before the standing committee should have been heard. They raised questions of considerable concern.

I think that, to wait until the auditor general looks into the EDC's operations every five years, is to give the corporation far too much latitude, especially with what is contained in the rest of Bill C-31. There is practically nothing there to really structure the work of this crown corporation. If an audit is done only every five years, the Export Development Corporation will have time to do a lot of damage.

Some guideline must be set in terms of time so that in the next two years, the auditor general will be able to report on management methods subsequent to the passage of this bill on the Export Development Corporation.

Did it make the changes the Canadian and Quebec public were expecting? Did it support projects consistent with our laws and concepts of sustainable development in environmental terms? Did it support projects that promoted fundamental rights or, conversely, did it help to further destroy our planet and further erode the rights of workers and people in countries in the southern hemisphere?

In my opinion, five years is too long a time. I therefore proposed an amendment to enable the auditor general to examine the governance of the Export Development Corporation.

Once again, no one will be surprised to hear me say that the Liberal members voted against this amendment, which makes good sense.

The legislation is therefore still hollow. Bill C-31 does not address any of the concerns repeatedly mentioned by committees, groups, individuals, and Canadians and Quebecers. The bill is nothing more than a surface attempt to give the impression that the federal government has listened to the criticisms and made the necessary changes.

It has not. Unfortunately, I do not have enough time to go through the whole bill but as soon as the surface is scratched, the bill's hollowness becomes apparent.

I think the criticisms of the Export Development Corporation in recent years will not end, even with a name change. On the contrary, they will increase. Why? Because for a few months, or weeks, now, the public, not just in Canada and Quebec, but in the entire western world, has understood that trade is not the only thing that matters when it comes to assessing support for corporations such as the Export Development Corporation, or for agreements and international treaties.

Human and environmental considerations, as well as considerations of democratic rights, are now vital. And this is not the first time. It was the same with the debate on the Canada--Costa Rica free trade agreement. The Canadian government had no suggestions to make regarding human rights, environmental rights or democratic rights.

Frankly, Bill C-31 is just like Bill C-32. The government is plowing ahead as though there had been no change in public opinion in Canada and Quebec, as though the economy is more important than the values of Canadians and Quebecers.

I was also surprised that the bill contained no proposal to create a position of ombudsman, although this was repeatedly recommended, both by government committees and by parliamentary committees.

There is therefore nothing in this bill that meets the expectations of the Bloc Quebecois or of Canadians or Quebecers. We will therefore have no choice but to vote against Bill C-31.

[John Duncan, Canadian Alliance, Vancouver Island North, BC]

Mr. Speaker, I am pleased to speak today to Bill C-31, the amendments to the Export Development Act. As the parliamentary secretary laid out, I do recognize that this has been a lengthy process. The process of review, consultation, surveys and other research that has gone into the background leading up to these amendments has certainly been a longer process than many of us have been involved in before. I have only been involved in this portfolio since June of this year so there is a lot to catch up to.

What I can say is that very clearly a consensus was developed on some of the needs that required addressing and they deal primarily with the issue of transparency and environmental and social standards. It is important to recognize what is the mandate of the Export Development Corporation. It is a commercial financial institution, the mandate of which is to support and develop directly or indirectly Canada's export trade and Canadian capacity to engage in that trade and to respond to international business opportunities. That public policy mandate is what makes EDC different from our commercial financial institutions.

As a result of all the consultations and input from various parties, we now have what is called an environmental review framework, which is built in as part of the mandate of the Export Development Corporation. It is to review on a timely basis the best available environmental information on projects for which EDC support is sought.

One thing that is clear is that EDC borrowed significantly from the World Bank group in regard to this. There is some background on this from the standpoint that very clearly the World Bank screens projects for their risk and impact and then categorizes them for their level of potential impact. It then provides reasonable public transparency for those projects that pose the greatest potential for environmental impact. The environmental review framework for EDC resembles that kind of background.

On the basis of looking at it historically over a 12 year period, I found it very interesting that something in the order of 13% of World Bank projects fall into category A, which requires a full environmental assessment. Thirty-five per cent fit into category B. The bulk of the World Bank's portfolio, just over 50%, was deemed to have no environmental impact and therefore required no environmental analysis. This is the proper way to direct ourselves because obviously every project or every finance opportunity does not lead to the same degree of environmental concern. It will be interesting to track the EDC experience over time and see how close it comes to reflecting what has happened over the last 12 years with the World Bank group.

There are ongoing discussions at the Organisation for Economic Co-operation and Development. It is likely to strengthen environmental considerations in its risk assessment practices for export development and export credit agencies and would like to pursue a multilateral approach. This is all very beneficial.

There is a very high degree of desire from the people who have appeared for consultations that the Export Development Corporation demonstrate responsible behaviour. In a sense it is a representative of the Canadian government and Canadian social and environmental practices, policies and values. One of the things that became very clear is that we have had no environmental mandate for EDC up to now. Although there has been some recognition within EDC and it has changed its behaviour, there really were some quite inappropriate measures or financing packages. Interestingly a lot of them seem to revolve around our financing of dams around the world. They involve not just environmental impacts but huge social impacts, having to do with indigenous people or long term communities sometimes being uprooted, and a lot of other untoward circumstances.

The government has argued at times that EDC was only a minor player and therefore whether it entered into those packages or not was not all that significant, but it was significant. I think it is important to recognize that in the same way Canada has some moral high ground in terms of its participation in the United Nations peacekeeping operations, often being the first to be asked because once it commits that is the catalyst for others to commit, the same argument could be used for EDC on some of these environmental issues. It is important that we have an environmental conscience, an environmental strategy, and that it is part of the decision making process.

The other thing that became very clear in the consultations and the responses to the proposed legislation is that people retain a residual concern, which is that there is nothing to prevent the Export Development Corporation under this legislation from revising its environmental review framework if it deems circumstances to be such that this is the appropriate thing to do. Many people wanted it to be more binding than that.

The Export Development Corporation's argument is, of course, that it needs flexibility and there are industry participants and stakeholders as well who are obviously concerned about any insecurity of arrangements that might result if something could be an impediment to making a binding arrangement.

All of those things require a degree of balance that leads me to think that although we have an environmental review framework right now that is considered to be progressive, we will see further changes. There will be pressure for further changes and it remains to be seen whether this will be workable without having it more binding in terms of the statutory requirement to have environmental assessments where appropriate.

I find it highly ironic that these amendments were tabled on September 20, during our first week back in this fall session, when just three weeks earlier on August 30, just before the long weekend, a very good time to announce something if we do not really want people paying attention to it, the minister appointed professional Liberal Bernard Boudreau to the Export Development Corporation.

I said at the time that we have a crown corporation attempting to operate at arm's length from government, and that is the stated objective of its mandate and the stated objective of government, yet appointed to head it is a long favoured friend of the government, appointed previously by the Minister of Finance to the Bank of Canada in 1998, appointed by the Prime Minister to the Senate in 1999 and appointed by the Prime Minister as the Minister of State for ACOA in 1999. This individual then resigned from the Senate in 2000 to run for the House of Commons and was defeated in November 2000. My point is that the independence of our crown corporations is made a mockery of by the moves of their political masters on the Liberal side.

In discussions with officials from EDC, I know how to read between the lines. This is not good for morale. It is embarrassing for professional employees of our crown corporations when these things happen. The only justification that has ever been offered is that because they are at arm's length and the government wants to retain some influence, the only way it can see to do so is through appointments of its people.

I find this completely unacceptable. I think the professionals who operate within this environment find it unacceptable but are compromised in their ability to say so. It is time for this type of behaviour to stop.

We have a living example with Canada Post. It is portrayed by the government as an independent crown corporation. It has the most blatant political patronage when it comes to filling the post of head of Canada Post, a very lucrative position and one which would be well sought after by very qualified people from the private sector. Yet we get political appointments in that very visible, high profile position as well.

We need to change that. It does not make Canada look good in the international community. Basically it is saying that the government wants it both ways. It lessens our stature domestically and internationally.

Another aspect to the Export Development Corporation which I would like to refer to is that there are two accounts within the Export Development Corporation. There is the EDC corporate account where admittedly the vast majority of EDC's business is conducted and there is this thing called the Canada account. Reading EDC's own information from its corporate communications department, it states:

Canada account is used to support export transactions that are determined to be in the national interest. They are negotiated, executed and administered by EDC but the risks are assumed by the federal government.

Negotiated, executed and administered by EDC is the operative statement. I wish I could witness that this were true but we have all seen very clearly that the Canada account has become a slush fund for Liberal ministers. It gets disbursed under the cloak of being arm's length business of the EDC and it simply is not in many instances.

This year for example EDC provided $3.7 billion in loans to two U.S. airlines to buy Bombardier jets. In the first instance the Minister of Industry made the announcement, basically barging in on the Minister for International Trade's territory. At the time he said it was a one time deal. Then just months later the Minister for International Trade followed up with a second announcement.

The first one I believe was Northwest Air and the second was Air Wisconsin. The first deal was $2.6 billion and the second was $1.7 billion. These loan guarantees were to offset competition from Embraer from Brazil.

We said at the time that this was inappropriate, that there were other mechanisms, other avenues open to us. We had a four year fight at WTO. We won the subsidy argument and we had $344 million worth of tariffs that we could apply as a penalty against Brazilian imports on this corporate jet subsidy argument. Rather than strengthening WTO and following its judgments, we basically taunted WTO by going in direct competition with further subsidies. This puts our taxpayers at risk, both on the loan and because we are running the risk that WTO will find that to be unacceptable behaviour.

This is all at a time when Canada has a strong vested interest in rules based trade. We have one of the strongest requirements of any country for strengthening WTO, not weakening it. As a small country with a large dependency on trade--

[Pat O'Brien, Liberal, Parliamentary Secretary to the Minister for International Trade]

Mr. Speaker, I am very pleased to have the opportunity to speak on third reading of this very important and timely bill, an act to amend the Export Development Act. Bill C-31 is the outcome of a legislative review process that was mandated in 1993. In that year a number of amendments were made to the Export Development Act.

The purpose of the amendments was to improve the EDC's ability to serve Canadian exporters. Canada's trade was expanding rapidly and certain aspects of EDC's operations needed streamlining. If the debates that surrounded the 1993 amendments were reviewed, we would find a strong consensus that EDC is a key player in Canada's international trade.

The expansion of the corporation's powers was supported by all parties. I do not have to tell the House how important Canada's exports are to our national prosperity. Forty-three per cent of our GDP and one out of four Canadian jobs are directly tied to exports. At the present time, EDC supports nearly 10% of this trade. This is a remarkable role for a single firm and underlines the corporation's importance to Canada.

Since the 1993 amendments took effect, EDC's business has grown almost fourfold, reaching $45 billion last year. It is clear that the 1993 changes have borne fruit, but at that time they were seen as a bold step. As a result parliament also decided to monitor the corporation's future performance. It imposed a requirement for a thorough review of EDC's mandate in five years' time.

That review began in 1998 with a report by the law firm Gowling, Strathy & Henderson. This was the so-called Gowlings report which was the starting point for studies by the Standing Committee on Foreign Affairs and International Trade in the fall of 1999. That committee's report was presented to the House in December 1999 and was the subject of a government response tabled in parliament by the Minister for International Trade in May 2000. On the whole, the government endorsed the findings of the standing committee.

Before moving to the substance of this bill and how it responds to the many issues that were raised during the legislative review, I will note a few things about the conduct of the review itself.

First, the terms of reference were extremely broad, touching all aspects of EDC's operations and mandate: how were its current programs operating; what were its customers views; EDC served a large number of Canadian exporters, but what about those who did not use its services; and what did its competitors think of it? All of these viewpoints were sought.

Second, the review surveyed the dynamics of international trade itself and the challenges facing Canadian exporters. Could EDC's current services to them be improved? Was there untapped capacity in the Canadian financial system that EDC might help deliver to exporters?

Third, a lot of stress was placed on non-commercial issues like the environment and human rights. Was the corporation upholding Canadian values in its activities? What effect did Canadian trade have on economic and social development in other countries?

Finally, the review included very extensive public consultations. If we look at the list of witnesses and written submissions that were received during the review, we will see that scores of individuals, companies and organizations were heard. There were additional consultations on individuals' issues as well.

The review was conducted with great publicity. However, this did not always make for easy decisions. There was a wide range of opinion on the issues. Much of it was valid on its own terms but difficult to reconcile. We did ensure that all voices were heard and that we were well informed concerning where Canadians stood. There was strong consensus on some points. I have already noted how Canada's economic well-being depends on international trade.

The review demonstrated EDC's significant contribution to this trade. It is a well managed organization, highly valued by its clients and respected by its competitors.

I would digress from my text to note that a major exporting firm in my riding of London--Fanshawe, namely General Motors, diesel and defense, has told me repeatedly how valuable the assistance of EDC has been in helping it win very important export contracts.

EDC is innovative in its development of programs and an important contributor to multilateral dialogue on trade issues.

Whatever changes we propose, we should preserve EDC's flexibility to deliver its services and protect those programs that are operating well. At the same time, there is also consensus that EDC could do more to ensure adherence to those values that Canadians expect of an agency of government. This is particularly true with regard to environmental and human rights issues.

EDC is Canada's emissary in many important respects. In some measure, it is Canada's reputation as well. All Canadians have a stake in this.

The standing committee, in its report to the House, summarized these views. EDC should meet reasonable environmental and social standards in conducting its business. Its environmental review framework should be given a firm basis in law. To promote greater transparency and rigour in the framework, the auditor general should oversee its operation on a regular and public basis.

EDC's development of a disclosure policy is welcomed, but it should be subject to public consultations, independent review and the corporation should consider using an ombudsman to help administer the policy.

Finally, EDC should be required, by law, to pay due regard to benefits to Canada and Canada's international commitments, particularly those bearing on human rights and labour standards.

The challenge to do these things is not just for EDC or other trade finance institutions. It is a challenge that confronts any firm doing business on a certain scale. We are seeing very focused responses to it, on the part of both individual firms and multilateral bodies, like the organization for economic co-operation and development, where relevant codes of business conduct are being developed.

The OECD guidelines for multinational enterprises are a leading example of this. They outline principles and standards in areas as diverse as employment and industrial relations, human rights and the environment, disclosure and transparency and competition and tax. They are voluntary but carry great political and moral weight.

Canada is a signatory to the guidelines and we have agreed to encourage multinational enterprises to implement them.

However, there are no easy precedents to follow in taking initiatives like these. At the most practical level, we are talking about revising the due diligence that is practised by corporations on a regular, daily basis.

New systems always have an impact on costs, on client expectations and on accepted ways of doing business. Naturally, there is some resistance. The work requires time, resources and real commitment. The Government of Canada believes that our crown corporations have both the means and the duty to take a leadership role in this work.

I would like to turn now to Bill C-31 and describe how it responds to the concerns raised during the legislative review.

EDC served nearly 6,000 Canadian exporters last year. The corporation is always working to expand this customer base. To do this, Canada's small and medium-sized enterprises need easy access to EDC's services. Part of this work involves service innovations like online credit insurance, and EDC is taking steps to implement such systems. Part of it involves simple publicity, and some members will have seen EDC's recent television advertisements.

Both here and abroad, the corporation is known by the popular acronym EDC. Bill C-31 would amend the corporation's name to Export Development Canada in English and Exportation et développement Canada en français.

This would allow use of the well known brand name EDC in both of Canada's official languages. It would strengthen the corporation's identity as a Canadian institution and it would facilitate EDC's outreach marketing, especially to small exporters throughout Canada.

In a subtle way then, the amendment serves an important objective which I am sure we can all support.

Bill C-31 also contains two amendments to the powers of its board of directors. The first would permit delegation of board powers to subcommittees composed of directors with special abilities in some area of corporate concern. This is a standard modern business practice. It permits a corporate board to refer issues to those who are best qualified to deal with them. It does not absolve the board of ultimate responsibility for the final decisions taken in respect of such questions.

A related amendment would enable EDC's board to make bylaws for the administration of a recently established pension plan. The new plan took effect in April 2000. It was established with appropriate authorizations and is consistent with treasury board policy that crown corporations should establish pension plans independent of the government.

I would like to turn now to the amendments that are probably of most interest to the House. Bill C-31 would establish a legal requirement for EDC to conduct environmental reviews of the projects it is asked to support. EDC already does this but the amendment would make it a binding legal obligation. A related amendment would require the auditor general to conduct regular examinations of EDC's environmental review framework. These examinations would cover both the design of the framework and EDC's performance in applying it. The examinations would occur at least once every five years and would be reported to parliament.

A related amendment would prevent duplicate requirements arising under the Canadian Environmental Assessment Act. Certain ministerial or cabinet actions can trigger that act, for example when ministerial authorizations are required for a transaction. Bill C-31 would require environmental reviews under the Export Development Act but there would still be a risk of a duplicate obligation arising under the Canadian Environmental Assessment Act. The amendment simply would prevent such duplication from occurring.

Critics of Bill C-31 have suggested that EDC should be regulated under the Canadian Environmental Assessment Act. This view was expressed repeatedly throughout the legislative review but neither Gowlings nor the standing committee took up the suggestion. In fact Gowlings stated that legislating specific environmental requirements for EDC might not be practical. Instead they recommended an approach similar to that of the United States export credit agency Eximbank.

Eximbank has had an environmental requirement in its governing legislation for almost 10 years. Eximbank's practices are often held up as a model for other agencies. In this approach, a general mandate to conduct environmental reviews is set by law but Eximbank's board of directors is responsible for developing specific guidelines and procedures in consultation with stakeholders.

This is precisely what Bill C-31 would do, establish a general environmental mandate while leaving its implementation to EDC's board of directors.

EDC recently completed public consultations on revising its environmental review framework. It employed both the auditor general's recommendations and specific government guidance in undertaking these consultations. It has sought out and taken account of the views of industry and NGOs. It has also engaged a leading environmental consultant to assist with the consultations and prepare detailed recommendations for the framework's revision. No other export credit agency in the world has had its environmental procedures subjected to such meticulous and exhaustive review.

The possibility of regulating EDC under the Canadian Environmental Assessment Act was given careful consideration before the present course was chosen. In taking its decision, the government applied such criteria as ensuring environmentally sound projects, protecting competitiveness, respecting foreign sovereignty and preserving flexibility to operate in the fast paced international environment.

The approach we have chosen is consistent with the emerging practice in the international community and with our work on this issue in the OECD. It would provide a uniform process for EDC's projects and permit rapid adaptation to changing competitive and technical circumstances. To ensure that its procedures and standards are sound, the auditor general will continue to oversee both its design and operation.

The Standing Committee on Foreign Affairs and International Trade has also recommended that EDC's mandate should include a legal requirement to pay due regard to benefits to Canada and Canada's international commitments, particularly those that concern human rights and core labour standards.

EDC's mandate is trade promotion, to the benefit of Canadian exporters and our common prosperity. Furthermore, as an agent of the crown, EDC is already bound to adhere to Canada's international commitments. However it was recognized that a general statutory mandate of this kind could raise legal risks for the corporation without clarifying the specific requirements that must be met in a given case. Unlike the environmental mandate, there is no pre-existing framework to help ground such an obligation in concrete operational measures.

Nonetheless, the government acknowledges the serious concern that underlines the recommendation and is committed to ensuring that economic benefits in international obligations are taken account of in EDC's decision making. The government has decided to address this issue through two interconnected mechanisms.

In the first place, EDC will be required by its corporate plan to consider economic benefits to Canada and Canada's international commitments in the areas of human rights and core labour standards. Preparation of a corporate plan for crown corporations is required by the Financial Administrative Act. A corporate plan sets out and limits the range of a crown corporation's activities. It must be approved by ministers and tabled in summary form in parliament. A crown corporation cannot act outside the parameters set down in its corporate plan and must undertake to fulfill its requirements. EDC's corporate plan will now include these requirements and the House will have the ability to review its performance and assess whether the requirements have indeed been met.

However general commitments to human rights mean little unless we take concrete steps to ensure their respect in specific cases. At a practical level, the Department of Foreign Affairs and International Trade is working with EDC to refine our information sharing on human rights concerns in specific countries. This will operate at the level of general or sectoral conditions as well as individual projects. The objective is to ensure that EDC's decisions take full account of both the facts of the situation and how that may impact on Canada's international commitments. Once again, we recognize this is an issue that is important to all Canadians.

In bringing Bill C-31 to parliament, my colleague, the Minister for International Trade, took a very balanced approach to policy reform at EDC. On the one hand, the bill would leave significant responsibility in EDC's hands for the development of environmental and social policies. On the other hand, both government oversight and public accountability would be brought to these policies through regular consultations and the Office of the Auditor General.

When we last amended the Export Development Act in 1993, we hoped the changes would benefit Canada's trade and promote our common prosperity, and the intervening years have borne this out. Today we are again taking bold steps to keep the Export Development Corporation at the forefront of international trade practice.

I want to note that the legislation is very important and would make EDC more transparent and accountable, but what is most important is to have a proactive minister who will take it upon himself or herself, whoever has the position at any given time, to ensure that the full weight of the act is carried through.

I want to acknowledge the proactive efforts of the Minister for International Trade who said that he wants to see a report on the activities of EDC within two years, not the five years for which the legislation calls or even the three years which I believe the auditor general proposed. The minister took the initiative in wanting a full audit in two years time.

That is the kind of commitment the Minister for International Trade and the government has to making sure EDC performs effectively but in the most transparent way that is consistent with Canadian values.

I ask all members of the House to endorse the objectives of the bill and I look forward to their support for it.

Committees of the House

[Mac Harb, Liberal, Ottawa Centre, ON]

Madam Speaker, the Standing Committee on Foreign Affairs and International Trade has the honour to present its ninth report.

In accordance with its order of reference of Tuesday, October 2, your committee has considered Bill C-31, an act to amend the Export Development Act and to make consequential amendments to other acts, and agreed on Thursday, October 25 to report it without amendment. A copy of the relevant minutes of proceedings for meetings numbers 33, 35 and 36 is tabled.

Business of the House

[Don Boudria, Liberal, Minister of State and Leader of the Government in the House of Commons]

Mr. Speaker, I thank the deputy opposition House leader for her question.

I will report to the House that this afternoon we will complete third reading of Bill C-32, assuming we can complete this legislation, which is the Costa Rica trade bill. A little later today there will also be a royal assent on Bill S-23, which is important for national security.

On Friday we will debate report stage and third reading of Bill C-34, the transport tribunal bill.

Monday shall be an allotted day.

On Tuesday we will debate report stage and third reading of Bill C-31, the export development bill. This will be followed by a motion respecting the name of the province of Newfoundland and Labrador.

On Wednesday we will debate second reading of the Air Canada bill that was introduced earlier this day.

On Thursday we hope to deal with report stage of Bill C-10, respecting marine parks.

Export Development Act

[The Deputy Speaker]

The House will now proceed to the taking of the deferred recorded division on the motion at second reading of Bill C-31.

National Security

[Elinor Caplan, Liberal, Minister of Citizenship and Immigration]

Mr. Speaker, it was this government that recognized the need to update our immigration laws. It has been 25 years since we have had a new law. It was that party that initially delayed Bill C-31 and voted against Bill C-11.

Many of the provisions the member has suggested are actually included in Bill C-11, which is now before the Senate. We are hoping to see royal assent this fall. We are ready to go, virtually ready to go with the regulations which have already been before committee. I look forward to his co-operation on implementation.

Export Development Act

[Jason Kenney, Canadian Alliance, Calgary Southeast, AB]

Mr. Speaker, I commend my colleague from Calgary East, my neighbouring constituency, for his remarks. His remarks reflect expert knowledge of issues related to foreign trade, export development and international development. They have helped me to have a better understanding of the issue. The hon. member spends a lot of time overseas examining Canadian aid projects and trade with foreign countries, and it is well reflected in his remarks.

Bill C-31, as we know, seeks to amend the Export Development Act and to make consequential amendments to other acts. It provides for delegation of powers to committees established by the board of EDC. It also provides for the establishment of a procedure for environmental assessment of projects supported by the crown corporation.

My colleagues in the official opposition and I have for a long time had fundamental concerns about the operation of Export Development Corporation. We start from the first premise that the private sector is a more efficient means of allocating scarce capital than government or government agencies. We agree with the need for financing and insurance to facilitate Canadian trade abroad. Foreign trade is an essential aspect of our economy and it is absolutely essential to our economic growth.

Canada is a net exporting country. We have a current account surplus of something in the neighbourhood of $27 billion a year. We export more goods and services than we import, to the tune of $27 billion.

There is an urgent need for Canada to continue its growth in exports. We have much to offer the rest of the world, not just in terms of manufactured goods produced in Canada but in terms of services and hard commodities which help feed millions of people around the world and provide much needed equipment to raise living standards in underdeveloped countries and economies.

For all these reasons it is necessary to focus on assisting Canadian companies which trade abroad. Sometimes this can be difficult. Sometimes it involves incurring political hazard. Sometimes there is a need for special kinds of insurance for our export oriented companies. Sometimes there is a need for financing to enable companies abroad to buy Canadian goods and services.

My colleagues and I believe most of these functions could be carried out more efficiently by the private sector. Maintaining a government run and taxpayer owned corporation such as EDC which provides insurance, financing and services of this nature takes away opportunities from Canadian capital markets and insurance companies.

These companies could provide the same services on a commercial basis without exposing Canadian taxpayers to risk. This would enlarge opportunities for private Canadian companies as opposed to government run crown corporations.

Inevitably crown corporations present opportunities for abuse and unaccountability. Nowhere is that more clear than with the board of Export Development Corporation. It is used frequently by the executive council, the government, the cabinet and the Prime Minister as a parking place for Liberal patronage appointees.

My colleague from Calgary East and other colleagues have mentioned the recent appointment of Bernie Boudreau. He lost a provincial election in Nova Scotia, was appointed to the cabinet through the Senate and lost a federal election. His reward for having lost two elections was to get appointed to the board of EDC. This was his principal qualification.

The same man would not have been appointed to the board of a private insurance company, private venture capital company or bank which provides the same services in the private sector. The criterion for people who govern such corporations is not the ability to lose elections for the right party. It is the demonstrable ability to manage the bottom line and create profits and dividends for shareholders. That is the sort of governance we need for the services now provided by Export Development Corporation.

I saw my friend, the hon. government House leader, a moment ago and it brought to mind the Liberal standards on patronage. They were very high indeed between 1984 and 1993. When I was a young Liberal I used to receive mailings from the current hon. government House leader. Every year between 1984 and 1993 he put out something called the black book on Tory patronage. It was an exhaustive litany of all the horrendous patronage appointments made by the then Tory government.

There was indeed an orgy of patronage during those years but it was the current government House leader who raised his voice in great indignation about it. He said if the Liberal Party ever formed a government again it would never engage in patronage, the kind of patronage we now see day after day in appointments to boards like that of EDC.

I ask my colleagues opposite, when they reflect on government control of organizations like EDC, to consider that they should perhaps be consistent with what they have said. Perhaps they should walk the talk about patronage that they offered to Canadians between 1984 and 1993. Perhaps they should consider our non-partisan constructive criticism that many of the functions of EDC could be spun off more effectively into the private sector.

As my colleague from Calgary East has said, there are two basic functions at EDC. First, there are functions managed within the corporate account such as export financing, insurance and guarantees. These are financed primarily by borrowing on domestic and international capital markets.

Second, there is the Canada account which provides government the means and authority to support export transactions that do not meet EDC's normal criteria for prudent risk management. That is another way of saying companies which finance agreements that would not normally meet commercial criteria can get money from the Canada account. These sometimes include large corporations that receive hundreds of millions of dollars from Canadian taxpayers.

Most of the services provided by EDC such as short and medium term export insurance and financing should be turned over to the private sector. The rest of EDC could become a division of DFAIT.

My colleague from Calgary East has suggested somehow linking it with certain functions carried out by CIDA, the Canadian International Development Agency. Those functions could then be accountable to parliament directly rather than through the indirect relationship of a crown corporation.

The new export division could provide occasional loan guarantees and other services beyond the scope of private companies such as long term insurance, political risk insurance and small premium insurance. It could support projects which are not commercially viable but are deemed to be in the national interest.

I accept that from time to time there are projects that need non-commercial financing and that Canada needs, for strategic reasons of national interest and not just economic reasons, to be present in the economies of countries abroad.

For that reason we in the Canadian Alliance would support, as a function of our international aid portfolio, financing of that nature. However we could do so with greater parliamentary accountability while allowing the more commercial aspects of EDC to operate in the private sector where they belong.

Until we finally see changes of this nature, changes which would increase accountability, reduce taxpayer risk and allow functions that could be in the private sector to go into the private sector, my colleagues in the official opposition and I cannot and will not support the changes to the Export Development Act because they do not deal with the fundamental problems of this crown corporation.

We are moving into a time of great fiscal and economic uncertainty. The Bank of Nova Scotia reported last Friday that the government would face a deficit of $5 billion in fiscal year 2002-03.

We are almost undoubtedly in the midst of a recession. The finance minister will accuse me and anyone who uses that word of alarmism, but it is an unavoidable fact. We had negative economic growth in the first two months of the third quarter of this year. There is almost no doubt that given the events of September 11 and its economic consequences we will see negative growth at the end of the third quarter and the beginning of the fourth quarter.

Two successive quarters of negative growth constitute a recession. Unfortunately it is not only plausible but likely that we will find ourselves in that position. That will have a negative effect on the fiscal position of the government. It means revenues will go down and so-called automatic stabilizers and social expenditures will go up.

All this puts us close to a deficit position mainly because the government is increasing its program expenditures far beyond the level of growth in the economy, inflation or population.

Why do I say this? I say it because it is time once again for parliament and the government to make hard choices. As the finance minister said three years ago, we can never again allow ourselves to go into deficit come hell or high water. I asked him last Friday if he would again make that commitment. He pointedly failed to do so.

There is a huge imperative to invest more resources into areas of national security such as the Department of National Defence, the RCMP, intelligence services such as CSIS, customs and border control, the coast guard and restoration of the ports police. These demands will undoubtedly cost several billions of dollars. Together with the oncoming recession and the enormous spending pressures the government has imposed on taxpayers through various discretionary programs, they will add up to a time in which we must be single minded and make difficult decisions.

That will mean liquidating assets such as some crown corporations. It will mean privatizing functions now performed by government agencies and crown corporations which could be carried out more efficiently in the private sector. These are some of the decisions we must make if we are to avoid a deficit. Our argument for the partial privatization of the functions of EDC is more important now than ever because we are once again staring a deficit in the face.

I recommend we go back to the drawing board on EDC, look at how its functions could be operated in the private sector, save the taxpayers a potential risk of hundreds of millions of dollars and prepare ourselves for some of the difficult choices which lie ahead in the near future.

[Ken Epp, Canadian Alliance, Elk Island, AB]

Mr. Speaker, I am pleased to participate in the debate today on Bill C-31 regarding the Export Development Corporation.

I asked my assistant to go to the website to find out exactly what the mandate of the organization is and I will quote the very first sentence: “EDC is a Canadian financial institution devoted exclusively to providing trade finance services to support Canadian exporters and investors in some 200 markets, 130 of which are in developing markets”. I believe the website is relatively current. It goes on to say that last year, Canadian business concluded $45.4 billion in export and domestic sales and investments in markets using EDC trade financing services. It claims right up front that it is not only involved in exports but also has domestic sales and investments in the marketplace.

The EDC also says that 90% of its customers are smaller customers, but it does not indicate the magnitude of the business conducted with these different corporations. While 90% of its customers are presumably smaller companies, in terms of the number of them, we have no indication or any way of finding out exactly who the other 10% are. It could well be, and I suspect it is the case, that the 10% that are not smaller companies are large corporations that benefit immensely from the majority of the financial activity of the corporation.

The EDC goes on to say that it also has responsibility for social corporate activity. It logs its code of conduct and business ethics. It lists all of the things it is high on and we should commend it for that. It is a global business and says that it is therefore a global citizen and works within a global environmental context.

I find it quite incredible because the Government of Canada has expressed its concern for global environmental issues. We are no longer living in a world where what we do with our air, water and soil is limited only to ourselves because of the fact that our world has become a very small community. I commend these words, but when we look into the depths of the legislation that is before us and what is proposed therein, we find that it is somewhat inadequate in the sense that Canada's rigid environmental laws do not apply.

I will digress for a second. I think of Canada signing the Kyoto accord. One of the questions that has been asked of me, and which I actually have asked myself, is exactly how the environment is enhanced by shipping Canadian money to other countries that for whatever reason do not have as much pollution as our country.

For example, we are a northern country. We have heating demands which are just not present in Africa. A person would have a hard time making a living selling furnaces in Africa because they are not needed. No fuel is burned and hence not as much pollution is produced.

In order to solve the environmental problems of the world, should we ship our money to Africa? How is the environment enhanced by that? Would it not be better to keep the money at home in Canada and use it for research and other activities in order to clean up our environment and the way in which we produce our own energy needs?

The Export Development Corporation is not required to adhere to Canada's environmental laws. It has its own law. I can see its argument. It says that it is one that is internationally agreed to and in order to allow it to play on a level playing field, that is the rule it needs to apply.

From time to time EDC becomes involved in financing projects which would not fly in Canada because of Canadian environmental laws. That to me is an anachronism. We are willing to send money out of the country which has nothing to do with helping the environment yet, through the Export Development Corporation, we may be financing projects which do not meet even our own requirements. It is a contradictory use of Canadian taxpayers' money.

There is also something called the Canada account. My colleague from Kelowna mentioned it. The Canada account is used to support export transactions which are determined by the Minister for International Trade to be in Canada's national interest. According to its website, this is usually due to a combination of risks and it mentions what those are. Basically the executive summary of it is it would become involved if ordinary banks would not touch the matter.

Canada account transactions are negotiated, executed and administered by the EDC, just like the corporate account transactions are, but the risks under the Canada account are assumed by the Government of Canada.

We see a direct involvement of the Minister for International Trade who can say “This is a project which we will approve”. Unfortunately, there is no check and balance in the legislation to prevent the minister from using it for the purposes of propping up businesses of the minister's choice rather than perhaps what is really good for the country as a whole.

To whom is EDC accountable? It says that it operates at arm's length from government. However, the way the corporation is set up, the Government of Canada, i.e., the taxpayers of Canada, is the only shareholder of the corporation. I was elected to speak for taxpayers in Canada. That was my primary theme. Canadian taxpayers have “invested” into EDC in excess of $1 billion, yet the corporation claims that it operates at arm's length from the government and does not cost the taxpayers anything. I beg to differ.

As a matter of fact, if someone were to give me $1 billion and said that I would have to pay it back, eventually I would give back the $1 billion but boy, would I live a happy life in the intervening years. It is a little thing called interest. One billion dollars could easily produce $100 million per year in income. That would be adequate for a good weekend, would it not? We are talking a lot of money here and it is money that is lost to Canadians by virtue of the fact that it is tied up in the Export Development Corporation.

Let us not kid ourselves. Let us not say that the corporation does not cost the taxpayers anything. It obviously does since we have this huge amount of money that has been invested in it. It is taxpayers' money.

I will not deny the fact that many businesses benefit from the work of the Export Development Corporation. It enables them to promote their own business and to export to countries around the world. In that sense those taxpayers at least get something back. It obviously produces some employment and that is also good.

I would like to see legislation which would greatly enhance the accountability to the Canadian taxpayers. I am appalled when I read the details that although the auditor general has access to the accounts and makes reports and the five year special report, those audits are not readily available, even through access to information.

I regret that my time for debate is up. I hope some members will have questions for me so that we can enter into debate.

[Werner Schmidt, Canadian Alliance, Kelowna, BC]

Mr. Speaker, I will be splitting my time with the hon. member for Elk Island. One would think that after the member for Parkdale--High Park finished with her catalogue of good things the EDC had done over the past years that there was absolutely nothing in the world the EDC could not do to promote business. I wonder what happened to all of our financial institutions and our private enterprises that operate without EDC support.

I want to put on the record a balanced position which clearly indicates there is something else besides EDC that might work. One would think that according to the government the only corporations which really know what to do are crown corporations. That is far from the truth. There are a lot of other corporations that are doing very well. I suspect that is one of the reasons CN, which was a crown corporation, is now a private corporation.

I will speak to a number of amendments contained in Bill C-31: the environmental provision, the increase of the contingent liability ceiling from $15 billion to $32.5 billion, the empowering of the board to make contributions to pension plans, making it an offence for businesses to refer in their advertisement to EDC involvement in their enterprises, the appointment of committees and the power of the board to delegate its powers to them.

I will read into the record the clause pertaining to the environmental provisions. I am sure many people who are watching do not know exactly what is being talked about. Clause 10.1 states:

Before entering, in the exercise of its powers under subsection 10(1.1), into a transaction that is related to a project, the Corporation must determine, in accordance with the directive referred to in subsection (2),

(a) whether the project is likely to have adverse environmental effects despite the implementation of mitigation measures;

Subclause 10.1 (2) states:

The Board shall issue a directive respecting the determination referred to in subsection (1), which directive may

(a) define the words and expressions that the Board considers necessary for the application of that subsection, including the words and expressions “transaction”, “project”, “adverse environmental effects” and “mitigation measures”;

Is that not interesting? The board has the right to decide whether there will be adverse environmental effects. The next section defines an adverse environmental effect.

The bill does not in any way refer to Canada's environmental act. It is excluded specifically. Those projects are approved under the Canada account which the Minister of Finance and the Minister for International Trade need to approve. They are specifically exempted and do not apply or come under the jurisdiction of the Canadian Environmental Assessment Act. Clause 12 which amends section 24.1 states:

(1) Subsection 5(1) of the Canadian Environmental Assessment Act does not apply where the Minister or the Minister of Finance exercises a power or performs a duty or function under this Act or any regulation made under it, or exercises a power of authorization or approval with respect to the Corporation under any other Act of Parliament or any other regulation made under it.

We now need to look at the very wide reaching powers of the EDC. The corporation may acquire and dispose of any interest in any entity by any means; enter into any arrangement that has the effect of providing to any person any insurance, reinsurance, indemnity or guarantee; enter into any arrangement that has the effect of extending credit to any person or providing an undertaking to pay money to any person; take any security interest in any property; prepare, compile, publish and distribute information; provide consulting services; procure the incorporation, dissolution or amalgamation of subsidiaries; make any investment and enter into any transaction necessary or desirable for the financial management of the corporation; and there are others.

The powers are overwhelming. The auditor could be the president of the EDC and do anything he would want to do. It is like telling my friends to form a corporation, make sure to do some exporting and make sure that they get paid by the person who is buying the product they are exporting. That is what is possible here.

We have to recognize that these people will be responsible, but the law is an open book and allows them pretty well to go anywhere they want to go. That is the sort of thing that makes it possible for a patronage appointment, for example, to reflect specifically what it is the Prime Minister wants done in another country, another corporation, or whatever the case may be.

In addition, the board that runs the corporation may now appoint committees which can have any of these powers delegated to them. This is really interesting. That is the kind of bill we have before us. If it were not for the trust, faith and common sense of some of people, we would have the possibility and potential of making something corrupt.

I am happy that we as Canadians do not live like that. We trust one another. We have a sense of morality and a sense of ethics. That is what makes this kind of thing work. It is not because the legislation is so good. It is because the people are so decent.

This is why I am such a strong proponent of private enterprise in the first instance. These people are now directly responsible for their own money in their own way. They can do the things that have to be done to benefit them and get the finest results they can get.

The answer lies not in forming crown corporations and extending their powers and privileges but rather in creating an environment so that private enterprise can win and can apply these kinds of things.

I am sorry the hon. member for Parkdale--High Park is not in the House right now because I would like to ask her if it is really possible--

[Jean Augustine, Liberal, Etobicoke—Lakeshore, ON]

Mr. Speaker, on behalf of the constituents of Etobicoke--Lakeshore who are very much involved and interested in businesses, et cetera, where the Export Development Act would have some reference, I am pleased to join in the debate today.

As Canadians we all understand the importance of a healthy environment, not just within our bodies but for everyone on this planet.

This past spring, I hosted a roundtable on the environment, where many of my constituents expressed concern over the state of the air we breath, the pollution of our lakes and rivers and global warming. For them they want the federal government to ensure that Canadian corporations, when carrying out their activities overseas, that they act responsibly toward the environment as they would if they were here in Canada.

Bill C-31 answers that concern. The bill would complement Canada's international and domestic obligations on the environment front. The bill would allow those values that we share as Canadians and initiatives that we implement on the environment to be implemented in an international context.

Canada's leadership role in the Kyoto protocol is sending a strong signal to our international partners that the federal government is committed to protecting and preserving the environment.

We are also helping developing countries to reduce toxic by-products that are industrial and agricultural based by encouraging them to adopt best practices to ensure environmental sustainability. As Canadians we have a responsibility to do this.

My constituents understand that toxics know no border and that we must take measures to respond to environmental challenges such as climate change and air pollution.

My constituents also understand that all sectors in society, government, civil society and the private sector, must share in the responsibility for a healthy and safe environment.

As a member of the Standing Committee on Foreign Affairs and International Trade, I have had the privilege of hearing from numerous witnesses who came before the committee. They spoke about the operations of the EDC. We heard from the president, from labour, civil society, business owners and exporters.

During the hearings the message was loud and clear: consideration must be given to the environment when EDC finances projects; and, that a formal environmental review process must be established.

Let me take this opportunity to remind the House that EDC was established in 1944 with a mandate to support and develop Canada's export trade. In the year 2000, it supported an estimated $45 billion in export and foreign investments.

The scope of credit agencies financing activities, particularly in the developing world, has prompted a call for sound environmental practices, recognizing the importance of fostering trade competitiveness that is consistent with environmental conservation.

From the early 1990s, as part of its risk management process, the corporation reviewed projects for their environmental impact.

Two years ago, EDC introduced its environmental review framework to formalize and strengthen its environmental procedures. The framework was developed at a time when few export credit agencies were seeking to manage environmental risks.

I am very pleased that the EDC has followed through on the suggestions and recommendations, not only of the foreign affairs committee but also on the Gowling report studied by the foreign affairs and international trade committee with the recommendations for a legislative framework and a substantive approach following that of environmental practices in other areas, including the World Bank.

The federal government is committed to ensuring that environmental standards are observed and defends the discussion today on the bill, balancing the need for EDC to be environmentally as well as socially responsible with the need to promote Canada's participation in a competitive and international market.

Bill C-31 makes the EDC's board of directors--and we heard mention of the board of directors earlier-including two deputy ministers of the federal government responsible for the environmental review policy. This is a binding obligation.

In addition the auditor general would have an ongoing monitoring and reporting role on behalf of parliament and the Canadian public. The EDC was among the first export credit agency to introduce such a review framework, putting Canada and the EDC at the forefront of current practices in the environmental review of export projects.

The framework has to two guiding principles: first, as the witnesses we heard from stressed, that environmental reviews undertaken by financial institutions to mitigate project risk can help encourage sustainable development by promoting consideration of the environmental benefits and costs of projects in host country jurisdictions; and, second, that EDC should decline support for projects which after taking into account the implementation of mitigation measures are in its opinion likely to cause significant adverse environmental effects that cannot be justified by the anticipated positive effects of such projects.

In other words, if the end result of a project is positive but there is a negative way in which to get to the end result, under its guiding principle the EDC can say no.

This environmental review framework is a reflection of ongoing multilateral discussions at the Organization for Economic Co-operation and Development. In that forum an export credits group is working to develop internationally acceptable standards for the environmental review practices of the export credit agencies of all OECD member countries.

There is a growing number of countries with formal environmental review policies including all the G-7 nations and the majority of OECD nations. Among the best are those of the United States, the United Kingdom and France. My constituents know that EDC's environmental review framework is regarded as being at the forefront of international initiatives in this regard.

Earlier my colleague mentioned the report of the auditor general. He stated that this framework contained all the elements suitably designed to aid this process. It shows the following: how the corporation would identify environmental risks, the information it would need to assess them, the circumstances under which it would decline to support a project or to make its support conditional, and the process for monitoring and reporting to ensure that the risks are appropriately managed.

Canada is standing head to head with other nations. These practices are in wide use. Bill C-31 would strengthen our domestic values and international agreements relating to the environment. Canadians expect that corporations doing business outside our shores such as EDC will reflect our values and the environment.

I call on all my colleagues to support Bill C-31 which would work to ensure the concerns of Canadians will be echoed in both the domestic and international spheres.