Bill C-300 (Historical)

Corporate Accountability of Mining, Oil and Gas Corporations in Developing Countries Act

An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries

The purpose of this enactment is to promote environmental best practices and to ensure the protection and promotion of international human rights standards in respect of the mining, oil or gas activities of Canadian corporations in developing countries. It also gives the Minister of Foreign Affairs and Minister of International Trade the responsibility to issue guidelines that articulate corporate accountability standards for mining, oil or gas activities and it requires the Ministers to submit an annual report to both Houses of Parliament on the provisions and operation of this Act.

[Alex Neve, Secretary General, Amnesty International]

Thank you very much.

Yes, it's been a happy morning, having my computer fail me, but I'm very pleased to be here with you. I welcome the opportunity to share Amnesty International's views and recommendations with respect to Bill C-300.

Certainly for many decades the crucial global struggle to better safeguard and protect the human rights of women, men, and young people around the world has been very much focused on governments, both in the sense of governments being the ones who violate human rights and in the sense of governments being the ones who have to take action to protect human rights. However, in the past 10 to 15 years, there has been a multitude of ways in which the international system has recognized that it's vital to move beyond that sole focus on governments and to look at the various ways in which a range of non-state actors, certainly including companies, impact in very significant ways on human rights.

That's certainly very true when it comes to companies. On both sides of the coin, if they act responsibly, companies can in many important ways help promote and safeguard human rights and can strengthen human rights culture in the countries in which they operate; but when companies act in an irresponsible manner, we know only too well that their activities can and do, both directly and indirectly, cause or, at the very least, very significantly contribute to grave human rights violations.

Over the past decade, therefore, much has been done, a great deal of it in the broader context of trying to advance notions of corporate social responsibility. This takes us also into the realms of environmental protection and labour rights, for instance. To look at this issue of how to better ensure that we're getting the former company activities that will help promote human rights and avoiding the latter company activities that will cause or contribute to human rights violations, companies themselves have taken individual action, governments have launched some initiatives, and at the international level, initiatives like the UN Secretary General's Global Compact, work being done within the UN Human Rights Council, at the International Finance Corporation and other settings, things are being done as well.

What virtually all of those initiatives have in common are two significant shortcomings.

The first is that the human rights aspect of the various standards and principles that are being developed and adopted are, at best, vague, certainly almost always very general, and frequently even non-existent. For instance, the International Finance Corporation's performance standards, which are central to the government's new CSR strategy, are silent when it comes to human rights.

The second is that there is virtually nothing mandatory or obligatory about the expectation that companies will conform to these standards. The approach taken, rather, is to hope that companies will voluntarily choose to do so. As such, monitoring and enforcement mechanisms, where they exist, are generally weak and have no power to order or require companies to comply, but rather have power to suggest or advise.

In the broader human rights system, we've long learned that hopeful promises and voluntary commitments are not enough. It doesn't deliver the goods when it comes to protecting human rights. We, of course, want people, governments, to volunteer, but that doesn't get us to that end point of strong human rights protection. We know that only too well by looking at the international system. It's no different, and there's no reason it would be any different, when it comes to companies.

Much is at stake here. Company security forces, if not held to careful standards, can and do operate in ways--for instance, to dispel protests by indigenous communities in and around their operations--that lead to injuries and even the killing of protesters--the right to life at stake. Any irresponsible approach taken to how mining companies deal with their tailings and industrial waste may contaminate the local area and lead to serious violations of the right to health. Inappropriate use of company infrastructure by local security forces or failure to carefully monitor how company royalties are used by a government may simply exacerbate terrible wars and conflicts in regions where companies operate, again leading to civilian casualties.

So much is at stake, and clearly more is needed. That is why Amnesty International has so actively participated in all recent efforts to review and strengthen Canadian law, policy, and practice going back to 2005 when your subcommittee conducted its study. Certainly in 2006 we were an active participant in all cities that the round table process visited. We welcomed and endorsed the report prepared by the advisory group to that process and then, like many, waited anxiously for two years to see what the government's response would be.

While we do recognize and acknowledge that the government's new CSR strategy is a step forward, we are fundamentally disappointed with it with respect to the two key challenges I just mentioned earlier.

The first is the issue of standards. The new CSR strategy essentially takes up existing standards, the International Finance Corporation's standards, for instance, that I referred to earlier and a number of others that, combined, really give no more than scant or selective attention to human rights. The round table recommendation had called for new standards, very explicitly incorporating Canada's international human rights obligations.

The other concern is on the level of enforcement. The CSR strategy, of course, doesn't take up the call for strong, meaningful oversight and enforcement; gone is the idea of an ombudsman; gone is the idea of a tripartite compliance review committee. Instead, we have a CSR counsellor whose powers are really to advise and guide, and only to investigate if all are in agreement and with no real powers to sanction.

Bill C-300 offers Parliament an opportunity to move ahead on the human rights front, and as I say, it's very much needed. As such, Amnesty International certainly welcomes this initiative and calls on Parliament ultimately to pass it. There are ways in which we might have urged for it to be stronger, but we think it is the right step forward.

It's the right step forward when it comes to standards. It is so important that Bill C-300 calls for the development of international human rights standards, for instance, based on treaties that have been ratified by Canada, based on customary law. This is a crucial dimension that we think absolutely has to be key to any initiative in this area. We think that Bill C-300 moves us forward in a meaningful way when it comes to enforcement as well. The power and responsibility given to ministers to launch investigations when there are concerns about a company possibly falling short of these new standards and the associated possibility of that having implications for eligibility for EDC financing, for assistance from government diplomats and trade officers, and even of being a possible target for CPP investing, is all crucial.

So why not? What are the possible objections to a new approach that puts Canada's human rights obligations front and centre and endeavours to ensure there will be compliance with those standards? Most often what we hear is a fear that requiring Canadian companies to live up to what are sometimes described as cumbersome human rights obligations puts Canadian companies at a competitive disadvantage. Companies from other countries, goes the argument, don't have to live up to those obligations; forcing Canadian companies to do so costs money and means they can't compete.

In Amnesty's view, that is both overstated and shortsighted and it is ultimately irrelevant. It is overstated in that it is hard to imagine how putting in place measures to ensure that company personnel don't mistreat or even summarily kill protesters, or safeguards to avoid the possibility of company infrastructure being misused by government security forces to mount sorties in the region that would lead to civilian casualties is somehow so onerous and costly as to tip the balance between profit and loss.

Further, it overlooks and ignores the many ways that regard for human rights actually boosts a company's position, improves its reputation, ensures that there's a good relationship with the local population, and helps ensure stronger rule of law, all of which is beneficial in many ways to company operations and means that it is less likely that company will ultimately be a target, for instance, for boycotts or protests.

This argument is shortsighted in that it assumes that CSR improvements would somehow begin and end with Canada, that no other country is doing similar things or is likely to follow suit. Canada shouldn't shirk leadership but rather rise to it. We also should not assume that leadership is lonely at this point. Many countries are moving forward on this front. Canada can't be, shouldn't be, at the end of the line. We must be among the leaders and work persistently, bilaterally and multilaterally, to press others to adopt stronger laws and policies.

Lastly, as I said, this argument is irrelevant, as Parliament must ultimately recognize that Canada's international human rights obligations are on the line here. Human rights obligations do not only mean that government officials and agencies themselves must refrain from human rights violations. More is at stake. Governments are obliged to ensure that individuals, including individuals abroad, are protected from abuses at the hands of those over whom the government has some jurisdiction and authority. That is certainly the case with companies, which, after all, are incorporated under and regulated by federal and provincial laws and regularly benefit from various forms of government assistance and support. The government is obliged to act here.

Amnesty therefore very much believes Bill C-300 should be supported. It conveys the very important message that business can be good for human rights, but also that human rights can be good for business.

Thank you.

[Michael Casey]

I have one last comment.

The passage of Bill C-300 is a necessary step to ensure that Canadian companies respect environmental and human rights. This bill, as law, would make Canada a leader in corporate social responsibility in an era where the status quo is not sustainable. Its adoption would reflect not only the concerns of hundreds of thousands of Canadian citizens and the voices of those in developing countries affected by the operations of Canadian companies, but also the opinion and direction of the highest representatives of the Catholic Church in these countries. It would send a strong and timely message of leadership to the other leaders of the G8 and G20 in the months prior to Canada hosting this important meeting: that Canada has the means and the will to positively influence and lead behaviour in the industry.

Thank you.

[Michael Casey, Executive Director, Canadian Catholic Organization for Development and Peace]

Thank you very much, Mr. Chairman.

I'm just taking advantage here of a computer failure on the part of my colleague, who graciously offered us the opening slot to speak while he prepares his notes by hand from memory.

Development and Peace is the official international development agency of the Catholic church in Canada. We were founded in 1967 by the Catholic bishops, and we have two mandates. One is to support projects to fight poverty in countries of the south. The other is to promote awareness of development issues among the Canadian population. We're a membership-based organization, and we have approximately 13,000 members from coast to coast across Canada. We are currently active in 33 countries abroad, with approximately 200 partnerships in all the major continental regions: Latin America, Africa, Asia, and the Middle East.

I want to speak today about our education and public engagement campaign that focused on extractive industries, and particularly in support of Bill C-300.

Every year we conduct a thematic campaign related to particular development issues. We follow several key principles that are part of the values of the organization, looking to guide the awareness of the public in this campaign on resource extraction and management. The principles behind this campaign include a recognition of the sacredness of the earth, the need to share resources in a peaceful and sustainable manner that benefits the common good and respects the human rights of all, and the right of people to have control over decisions that affect their lives and communities.

We've intervened on this concern on a number of previous occasions. Over the past several years we've maintained a focus on the actions of Canadian mining companies in the global south and the need for mining companies to carry out their operations in a socially and environmentally responsible manner. In order to ensure that Canadian mining companies respect Canada's commitment to international standards for human rights and environmental law, we strongly believe that Bill C-300 should be adopted. Although this bill does not contain all the measures that were recommended by the final report of the national round tables in March 2007, it is the strongest answer to date that has been proposed to solve the problems that the process was attempting to address. We feel that this is a good and necessary step in the right direction.

As you are all aware from previous testimony, Canada is a major player in the international extractive industry, with significant investments abroad. The Toronto Stock Exchange is the most active mining exchange in the world. In 2008, 60% of the world's mining and exploration companies were listed in Canada.

Most of the Canadian mining companies behave responsibly. Those companies not only drive prosperity here at home; they also provide jobs, opportunities, and other benefits in local communities abroad. Unfortunately, some other companies give little or no importance to the impact of their operations on the living conditions of people in the south. There are documented cases of egregious disregard by Canadian companies operating in many countries, and these have been presented in previous testimony to this committee, notably on May 25 by the Honourable John McKay, and on October 8 by Mining Watch Canada.

Development and Peace is not against mining or the extractive industries, but we are calling for these industries to be held to account. There should be some avenue of recourse--an open, democratic, and just means--for those companies that do not meet a certain and necessary standard of behaviour, having been given ample opportunity to do so, to accept certain consequences. We believe that the inherently higher risk, danger, and pollution of this industry must be accompanied by a higher standard of care, responsibility, accountability, and a necessary presence in the legislative framework of this country.

I'm here today to speak for our members and represent the voices of many of our partners in developing countries who would be in favour of this bill. It is not just Canadians who are calling for more legislation and legal mechanisms that ensure mining companies are held accountable for their actions in the global south. The issue of responsibility of Canadian companies in extractive operations is something that is consistently raised by our partners in the countries where we work. I'll give you a couple of examples.

In 2008, in Cerro de Pasco, a mining centre in the Peruvian highlands, where Development and Peace has been working for almost 25 years, a local group downloaded our materials for our action campaign, translated them into Spanish, printed them, and received more than 3,500 signatures on the action cards, as well as organizing street theatre, public seminars, and advocacy activities on the mining activities in their community.

The same year, 4,400 residents of Canatuan, a community in the southern Philippines affected by the activities of the Canadian mining company TVI, signed our postcards and urged us to continue to lobby our government to appoint an ombudsperson to monitor the activities of Canadian mining companies operating abroad.

In Honduras, the Entre Mares mine, a subsidiary of Goldcorp, has been using cyanide to extract gold from the mine. This process is less expensive for the company, but the local population pays the real price. This process has caused 14 streams and rivers to dry up, contaminating surrounding lands, and has led to increased disease among the inhabitants and their livestock.

Our partner, Caritas Tegucigalpa, has provided us with testimony regarding the state of the local environment and the health of the people in the communities surrounding the mine. The mine uses 80 million tonnes of water per year, enough to meet the needs of 20,000 inhabitants, or over half the local population. After having rung up significant profits when the price of gold was at its height in 2008, Entre Mares is now preparing to shut down the mine. Caritas Tegucigalpa is asking Entre Mares to decontaminate the water, reforest the land. It must pay the fines, taxes, and other money due to national and local governments that have accumulated over the years. The company will also have to ensure that people who were displaced have titles proving they own their new land.

Caritas Tegucigalpa and Development and Peace are convinced the company has the means to close the mine responsibly, but will it be willing to do so? If a Canadian legal framework on the social responsibility of mining companies had been in place, it would have been possible to protect the rights of the people of the Siria Valley and to prevent these human and environmental tragedies from being repeated.

I have a quotation here from His Eminence Cardinal Oscar Andrés Rodríguez Maradiaga, who is the archbishop of the archdiocese of Tegucigalpa, in Honduras, and president of Caritas Internationalis. His quote:

The increasingly frequent conflicts in different parts of the world between mining companies and affected communities, as well as the growing efforts of civil society organizations to demand stricter regulation, more rigorous monitoring, more responsible and transparent practices, are a sign that we can no longer continue to adhere solely to the logic of the business market that operates on the principle of the less invested, the greater the profits. We must move towards a vision of Corporate Social Responsibility, which cannot be reduced to corporate voluntarism alone but must be complemented by a social responsibility regulated by the state and international organizations. Such a redefinition is urgent, as the depletion of natural resources has been substantially accelerated partly because of the growing demand for precious minerals.

The passage of Bill C-300 into law would be a step in this necessary direction.

I want to speak for a minute about our campaign. Many of you members have likely received our cards or perhaps a visit by members of Development and Peace on this issue of corporate social responsibility. Over 500,000 Canadian citizens have demonstrated support for this bill by signing our action cards and letters as part of our public engagement campaign. These cards have all been delivered to the government. Over 120 meetings with MPs in their local ridings have been organized by members of Development and Peace across the country to discuss this issue. Citizens in all your ridings are concerned about this issue and would like to see the government respond adequately to the recommendations on the round table process on corporate social responsibility. This bill is the response they are looking for.

Our presentation today is the culmination of years of work and support from members of Development and Peace and those who have signed these cards. On May 12 of this year, Development and Peace delivered 38 boxes with action postcards addressed to Prime Minister Harper and signed through our recent campaign in 2008-09. Our supporters called on the Prime Minister to implement legal mechanisms to hold Canadian mining companies accountable for their actions in developing countries.

This last delivery of cards brings the total number of cards and letters delivered by us to the Government of Canada to more than half a million over the course of our three-year campaign. We began in 2006 and continued through 2009, each year accumulating between 150,000 and 200,000 cards.

With the last submission of cards, we asked that the Prime Minister create an independent ombudsperson office, appointed by Parliament, that can receive complaints about the activities of Canadian mining companies, investigate complaints, make recommendations in an effective manner, and operate in a transparent manner.

However, the hope that the round tables generated turned to disappointment as a result of the lack of response on the part of government to this collaborative, consensus-based report. Development and Peace decided to extend its education campaign on mining for one additional year to push that these recommendations be put into place. While we now have a response from the government, a corporate social responsibility strategy, we feel that it is not sufficient to adequately balance the opinions of all the parties involved. The passage of Bill C-300 would be a necessary step in the follow-up to this process.

We acknowledge that the CSR strategy constitutes the first steps in the implementation of the round table recommendations. It means that the government acknowledges the need for improvement in the behaviour of some extractive companies working abroad in developing companies. This is a good thing, but it is not enough. Bill C-300 would fill an important gap between what was recommended by the round table report and the government's response.

The Canadian government's response lacks teeth because it proposes voluntary action. It displaces the responsibility for irresponsible behaviour from mining companies to the governments of developing countries. In addition, the government's CSR strategy does not include strong sanctions for companies with damaging practices. Most importantly, there is no ombudsperson in the government's CSR strategy, as was recommended by the round tables; rather, there is a corporate social responsibility counsellor with limited functions, including hearing disputes and suggesting mediation if there is consent from all the parties. The position would be appointed by the Prime Minister's Office instead of by the Parliament of Canada.

There is no provision for an ombudsperson in Bill C-300, as private member's bills are not enabled to propose budgetary changes such as the creation of new positions. Development and Peace strongly urges the passage of this bill and strongly recommends that the government create a position of ombudsperson subsequent to the passage of the law, as was suggested by the round table report.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

Thank you.

I want to make sure I leave proper time for Ms. Brown.

Mr. MacLennan, I didn't quite catch the wording that Madame Lalonde gave you in that question. Did I hear you say that as director general of CIDA you agree that Bill C-300 would be a good bill?

[Bob Rae, Liberal, Toronto Centre, ON]

But what CIDA does is part of the broader political direction of the government with respect to development in Latin America. It's part of our foreign policy. It's not a separate entity unto itself. CIDA is part of the overall Canadian enterprise that we're looking at.

I'm just saying that if Bill C-300 says the minister gets a complaint and then considers the activities, surely the evidence.... What CIDA is doing and the evidence of what CIDA has with respect to a particular company would be entirely relevant to the Minister of Foreign Affairs. I would argue that it would be ludicrous to suggest that CIDA isn't going to be part of this puzzle. Of course it's going to be part of the puzzle. The counsellor who has been appointed for CSR is going to want to talk to you guys about what you're doing and what you're finding on the ground. Madame Giroux will have her staff in Latin America and they'll be reporting to her, as well as to the ambassador who is on site. Isn't that the case?

[Christopher MacLennan]

As I stated, and as you actually noted in your testimony, Bill C-300 doesn't directly bear upon the activities of the Canadian International Development Agency in terms of what we're actually doing in-country. So in terms of how well the bill will function, it actually affects the Department of Foreign Affairs and International Trade more, and as a result, I would think that question is probably more appropriately posed to the Department of Foreign Affairs.

So it won't affect CIDA's role under the CSR strategy.

[Christopher MacLennan, Director General, Thematic and Sectoral Policy Directorate, Canadian International Development Agency]

Thank you very much, Mr. Chairman.

I am pleased to have the opportunity to describe to the standing committee CIDA's role in the Government of Canada's CSR strategy, to provide some background information on the importance of the extractive sector to developing countries, and to give you an idea of the type of programming that CIDA has been doing and is planning to do.

As you've mentioned, my name is Chris MacLennan; I'm director general of thematic and sectoral policy. With me is Madame Hélène Giroux, who is the director general for South America; and Bill Singleton, who is CIDA's internal focal point on CSR. As members of the committee may recall, the government's CSR strategy required CIDA to create an internal focal point on extractive sector development issues, and Bill is currently serving in that capacity on an interim basis.

Before describing CIDA's role in the government's CSR strategy, I wish to draw the attention of the committee to one item in Bill C-300. In the interpretation section of the bill, subclause 2(1), there is reference to “the list of countries and territories eligible for Canadian development assistance established by the Minister of International Cooperation.” Such a list no longer exists. CIDA publishes in its annual report to Parliament the list of countries in which CIDA has actually made disbursements, but this is not the same as a list of countries that are actually eligible for development assistance.

That said, of course, the government, in February 2009, announced that as part of its aid effectiveness agenda, CIDA would concentrate 80% of its bilateral programming spending in 20 countries of focus. That is also not a list of eligible countries but simply where CIDA will be concentrating its efforts under the aid effectiveness agenda.

With this exception, Bill C-300 makes no direct reference to CIDA or its activities. However, because Bill C-300 is addressing issues in the same area as the government's CSR strategy for the Canadian international extractive sector, I would like to describe to the committee what CIDA is doing in relation to the extractive sector in developing countries.

As members of the committee will recall, the government's CSR strategy has four elements. One of these is entitled “Host Country Capacity-Building”, and it is this part of the strategy with which CIDA is directly concerned.

A large number of studies have been carried out about why mineral and hydrocarbon resources are all too often more of a problem than an opportunity for many developing countries. This is in contrast to the economic history of countries such as Canada, the United States, and Australia, which have been able to make productive use of natural resources as a source of economic growth, employment, and export earnings.

The common conclusion at which the various studies have arrived is that the most important single factor is the transparency and effectiveness of host countries' resource governance and management regimes. This includes the establishment of stable legal and fiscal regulatory frameworks to ensure sustainable resource management and development, and regulatory institutions and agencies responsible for regulating and overseeing sector activities.

In the absence of strong institutions, natural resources such as minerals, oil, and gas can become what, of course, is known in development as the “resource curse”. The curse can lead to a number of problems, including corruption, conflict, social unrest, and negative economic and environmental impacts. The revenues from the resources are volatile, which makes it difficult for governments to manage their spending. Finally, in some countries, revenues from minerals, oil, and gas have been used as a means of financing conflict, as many of you are aware.

The nature of the choices that developing countries must make are well known to Canadians: whether to extract the resources at all; how quickly to extract; whether to use national companies or rely on the international private sector; how to design the laws, regulations, and contracts that can produce the greatest benefits to the country and its citizens; and how to avoid or mitigate the environmental or social costs of extraction. Developing countries must also decide on policies and mechanisms for dialogue and stakeholder participation in extractive sector development. Each choice will have far-reaching consequences that can shape a country's development path.

CIDA's recent programming in individual countries in the extractive sector has been primarily in the Americas. In line with the principles of aid effectiveness, the orientation of this programming has been to support countries that have themselves set extractive sector resource management as a priority for their development planning.

In Peru, for example, CIDA has worked extensively with the national and regional governments and affected communities to develop and promote regulatory requirements for social and environmental management in the extractive sector. CIDA's support has included the provision of tools and expertise in the mining and hydrocarbon sectors and support for social, environmental, and multi-stakeholder dialogue, community participation, and conflict resolution.

CIDA has assisted Bolivia in establishing a tax collection unit. As a result, from 2004 to 2008, Bolivia realized a fourfold increase in revenue, amounting to well over $2 billion annually. Most of this money has been reinvested in public services and social supports.

In addition, CIDA is developing an Andean regional initiative, which will strengthen regional and local governments as well as community capacity to plan, develop, and implement sustainable development projects. The initiative will increase the well-being of the communities and enhance their capacity for engagement with extractive-sector firms.

At the multilateral level, CIDA is working on the extractive industries transparency initiative, or the EITI, in partnership with the Department of Foreign Affairs and International Trade and with Natural Resources Canada. The objective of the initiative is to introduce greater transparency into financial flows precipitated by natural resources in developing countries, with the objective of reducing corruption. CIDA has provided some of the funding for Canada's participation in the EITI multi-donor trust fund managed by the World Bank.

In addition, as laid out in the government's CSR strategy, CIDA is in the process of identifying an individual who will work with the World Bank on implementation of EITI in a number of countries in Africa.

For the future, CIDA's assistance to developing countries in their natural resource management will be carried out under the thematic priority of sustainable economic growth, which is one of the priorities set for the Government of Canada's international assistance envelope.

I've already described how natural resources can be a source of economic growth. Good resource management, especially in relation to environmental and social impacts, can help make growth sustainable.

We have made contact with our counterpart development agencies in other countries, such as Norway and the United Kingdom, to identify ways in which we might collaborate more effectively. In July, CIDA hosted round tables on CSR with the private sector and with civil society, and we are continuing that dialogue. We are working closely with DFAIT and NRCan on implementation of the other three elements in the government's CSR strategy.

I hope this brief description of CIDA's approach to the extractive sector in developing countries will assist the committee in its consideration of Bill C-300. Hélène, Bill, and I are open to questions you might have about CIDA's experience and how our work is contributing to the achievement of the government's objectives.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

In the second portion of our meeting today we're going to continue with the study of Bill C-300.

We have before us, from the Canadian International Development Agency, Mr. Christopher MacLennan, director general of the thematic and sectoral policy directorate; Bill Singleton, senior economic policy advisor to the strategic policy and performance branch; and Hélène Giroux, director general for South America and Americas geographic programs branch. We welcome you.

I understand you have an opening statement. We will look forward to that, and then we'll move into the first round of questioning.

Mr. MacLennan.

[Jim Abbott, Conservative, Kootenay—Columbia, BC]

The devil is in the details in all these kinds of acts. The example I used in testimony two days ago is that we have two different flu vaccines because we have two different viruses. In other words, you have to be specific with a remedy. In this particular case, if we can pull that analogy over to Bill C-300, the devil is in the details. It might be that we need to be going after flu, whereas in fact we need to be going after H1N1 flu. This bill is not going to touch the H1N1 potential pandemic, if you understand my analogy.

I'm looking under the powers and functions of the ministers. I'll quickly read the clause I'm thinking of:

In carrying out their responsibilities and powers under this Act, the Ministers shall receive complaints regarding Canadian companies engaged in mining, oil or gas activities from any Canadian citizen or permanent resident or any resident or citizen of a developing country in which such activities have occurred or are occurring.

Do you not see that this is a big enough hole to probably slide the Queen Elizabeth 2 through? I mean, why couldn't there be people among the six billion inhabitants of the earth who would bring vexatious actions against Canadian companies? This is a gigantic hole. Or do you disagree with me?

[Karyn Keenan]

One of the complaints that I referred to was lodged by my organization. It was before I started working for the Halifax Initiative, but I'm aware of the case. It concerned a nuclear energy facility, and it was concerned with the review of that project. So it was Export Development Canada's due diligence when it reviewed the project and was making a decision about whether to support it or not.

The reason my organization was discouraged then from launching other complaints, or advising our colleagues who are impacted by EDC projects to launch further complaints, was because of the problems that I enumerated in my comments. That is, it's a very closed, internal process. In fact, I don't believe my colleagues were entirely clear on what the process was. At the end of the process, when we received a response, which was that the corporation was in compliance with its internal policies, that was the only answer we received. We did not receive information that explained how the officer had come to that determination, how they had made that determination, what the investigation consisted of, and so on.

It's very closed, it's difficult to access information, and, as I said earlier, even in the case of an audit that finds there's non-compliance, there's no obligation on the part of EDC to then take that up and make changes. Again, effective community civil society organizations have scant resources, human and otherwise, to take the time and energy to make a complaint before this kind of body, and knowing the chances of there being some impact at the end of the day, on balance it's not a worthwhile endeavour.

That's why we're excited about the mechanism under Bill C-300, because it's more transparent, because it's independent, because the process will be known and understood, the results will be released publicly, and there will be some consequence if there is a finding of non-compliance.

[John McKay, Liberal, Scarborough—Guildwood, ON]

The most significant deficiency in the government's response is the inability of the counsellor to independently commence an investigation, or even complete an investigation once commenced, because it's dependent on the consent of the corporation involved. It's a rather glaring omission, yet Bill C-300 would fill that gap.

What is your view on a counsellor who effectively has no ability to investigate?

[John McKay, Liberal, Scarborough—Guildwood, ON]

The environment in which Bill C-300 was put forward was, if you will, a bit of a vacuum. The vacuum was that there was no response to the round tables, the bill came on, and then the government responded with the CSR counsellor. The CSR counsellor has a mandate, many things of which are quite good and are helpful in this area.

So what we're essentially left with is the last two yards out of the hundred yards. I'd be interested in your comments on how you see Bill C-300 interacting with the CSR counsellor.

[Karyn Keenan, Program Officer, Halifax Initiative Coalition]

Thank you.

The Halifax Initiative is a coalition of human rights, environmental, faith-based, developmental, and labour organizations. Our objective is to transform the public international financial institutions to achieve poverty eradication, environmental sustainability, and the full realization of universal human rights.

My work focuses on the operations of public institutions that provide support to the private sector—in particular, the International Finance Corporation of the World Bank group and Export Development Canada. The latter, a crown corporation, is Canada's export credit agency and will be the focus of my comments this morning.

The extractive sector is the greatest recipient of support from Export Development Canada, and the crown corporation has plans to expand its assistance to extractive companies. Export Development Canada does not have a good record in this area. The agency has provided support to a number of mining projects that have generated serious environmental and social impacts for which affected individuals and communities have been unable to access compensation and other remedies.

Perhaps the most infamous case concerns the massive tailings dam failure that occurred at the Omai gold mine in Guyana in 1995. Three years following the disaster, a lawsuit was initiated in Canada by indigenous people affected by the spill. The Canadian court refused to hear the complaint, arguing that Guyana was the appropriate forum for the action. A subsequent case brought in Guyana was also dismissed, leaving the victims without recourse. Several other EDC-supported projects merit attention, including the Bulyanhulu gold mine in Tanzania. Local residents allege that over 50 artisanal miners were killed by Tanzanian troops in order to clear the mining concession to make way for commercial operations.

Indigenous people affected by the PT Inco nickel mine and smelter in Indonesia complain that they have lost prime agricultural land, that the local environment has been contaminated, and that they suffer threats and intimidation by the police.

In 1998 a large cyanide spill took place at the EDC-supported Kumtor mine in Kyrgyzstan. EDC also funded the Marcopper mine on Marinduque Island in the Philippines, where environmental contamination destroyed the source livelihood for local fishing villages. I understand this committee heard testimony earlier this week about that case.

More recently, the EDC-supported Veladero mine in Argentina was the subject of complaint before that country's national ombudsman. The office of the national ombudsman, which is independent of government, is mandated to protect legally sanctioned rights and freedoms, including human rights. Local actors who lodged the complaint regarding Barrick's mine were concerned about its impacts on the San Guillermo UNESCO biosphere reserve. The ombudsman accepted the complaint and in 2008 reported that the mine concession violates several national laws. He called for an immediate halt to mining activity in the reserve.

This year, an Argentinian environmental organization filed a complaint regarding the mine with the Supreme Court. The complainants, who expressed concern that mining operations are causing irreversible damage to local glaciers, asked the court to issue an order for an audit that would assess whether the company is in compliance with national laws.

Intense debate continues among Argentinian parliamentarians concerning the future of that country's glaciers. Last year, President Fernández de Kirchner vetoed legislation designed to protect glacial deposits. The law, which prohibits mining, oil, and gas operations in or around glaciers, received the unanimous approval of Congress.

EDC continues to provide support for Canadian extractive companies that invest in countries with weak regulatory frameworks, inadequate institutional capacity, and poor law enforcement. The crown corporation is currently considering support for a major mining project in the Democratic Republic of Congo, a country plagued by negligible governance capacity, widespread human rights abuse, and brutal conflicts associated with mined materials.

Moreover, EDC recently opened a new office in Lima, Peru, from which it plans to expand support for Canadian extractive companies operating in that country. According to the Peruvian national ombudsman, extractive investments constitute the most important source of social conflict in that country. Community members who resist the entry of foreign extractive companies on their lands are intimidated, beaten, and in some cases killed.

Earlier this year, indigenous people in Peru mounted a major protest regarding the adoption of new legislative provisions that further facilitate extractive operations in their territories. On June 5, the national police attacked the protestors, triggering a violent confrontation that ended with the deaths of over 30 people. The prime minister was forced to resign over the government's handling of the incident, and Congress repealed a number of the contested decrees.

To avoid complicity in the environmental and human rights abuses that are common in these contexts, Export Development Canada must apply robust and transparent environmental, social, and human rights standards to its clients. Currently EDC relies on the International Finance Corporation's performance standards and the Equator Principles. The latter instrument, which was developed by private banks, is largely based on the performance standards. The performance standards are widely recognized as the de facto standards set for multinational companies that invest in developing and emerging markets. However, they suffer from several important debilities. They are weak on human rights. With the exception of labour rights, the performance standards neither reflect nor reference international human rights norms.

The multi-stakeholder advisory group to the national round tables on corporate social responsibility and the extractive industry in developing countries, of which I was a member, recognized this important shortcoming. The advisory group used the performance standards as the basis of the Canadian CSR standards that were proposed for adoption by the Canadian government, but supplemented those standards with international human rights norms.

The second problem with the performance standards and the Equator Principles is that they are discretionary. Export Development Canada is under no obligation to apply them, to enforce them, or to sanction clients who fail to comply. EDC adopted the performance standards through an OECD recommendation that explicitly permits signatories to derogate, at their discretion, from the standards set. Compliance with the Equator Principles is also optional. Under the Equator Principles, companies are required to comply with the performance standards to the satisfaction of the implementing financial institution. Moreover, non-compliance is permitted as long as any derivation from the standards is justified.

No guidance is provided regarding the acceptable threshold for satisfactory levels of compliance or justified derivations from the standards. Bill C-300 remedies these shortcomings. It ensures that EDC's existing standards are consistently applied and supplements them with international human rights norms, to which Canada is a signatory.

This will strengthen EDC's due diligence, steering it away from projects that carry a high risk of generating negative human rights impacts. It will provide EDC clients with valuable guidance regarding their expected standard of operation. Finally, it will ensure that Canada is in compliance with its international human rights obligations in the provision of export credit.

As an agency of the Canadian government, Export Development Canada is bound by Canada's international human rights commitments. Currently there is no mechanism to ensure that its operations are consistent with those commitments. Bill C-300 will also bring EDC in line with recommendations on export credit agencies made by the UN Secretary General's special representative for business and human rights, John Ruggie.

In a report to the Human Rights Council, Mr. Ruggie argues that export credit agencies should require that their clients perform adequate due diligence regarding their potential human rights impacts. According to the special representative, such due diligence will allow these agencies to identify investments that require greater oversight and those where the risk is too great for state involvement.

Following the release of the special representative's report, EDC published a five-paragraph statement on human rights. EDC describes the statement as an articulation of principles. The statement does not provide for the level of due diligence that Mr. Ruggie advocates. It is silent on the issue of whether and how EDC assesses the potential for adverse human rights outcomes from client operations, on what it expects of clients in the area of human rights, and on how it ensures that clients meet those expectations over the life of a project.

I'd now like to speak for a moment about the investigation of complaints concerning EDC client operations. EDC is one of few export credit agencies that has a complaints mechanism. However, the office of the compliance officer has processed just two complaints since it was created in 2001.

Affected communities and some civil society organizations have chosen not to use this mechanism because it lacks independence, transparency, and power. The office is maintained and staffed by EDC. Compliance audits, when undertaken, are internal. Scant information is provided to complainants to explain the officer's findings. Moreover, the crown corporation is under no obligation to adopt any recommendations the officer may make at the conclusion of an audit.

The complaint mechanism established under Bill C-300 remedies these problems. The mechanism is independent of EDC and involves public reporting. Moreover, findings of non-compliance bring consequences. While the complaint mechanism will not provide individuals and communities who are affected by EDC-supported extractive projects with access to legal remedies, which is an issue that deserves the attention of this legislature, it will afford them the opportunity to have their case investigated and may result in a shift in corporate behaviour.

Moreover, the complaints mechanism under Bill C-300 is consistent with the recommendation of the advisory group to the round table process regarding the appointment of an ombudsman. As with Bill C-300, this office was to receive and investigate complaints regarding the overseas operations of Canadian extractive companies.

To conclude, Bill C-300 addresses shortcomings in EDC's due diligence policies and practices and weaknesses in its complaints mechanism. Moreover, the legislation is consistent with consensus recommendations regarding these issues made by the advisory group to the round table process.

The reforms contained in Bill C-300 will help to ensure that EDC no longer funds extractive projects that result in serious environmental and social harm.

Thank you.

[The Chair, Conservative, Kevin Sorenson]

Good morning, colleagues. This is the 34th meeting of the Standing Committee on Foreign Affairs and International Development, on Thursday, October 22.

Today we're going to return to our committee study of Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries. As our witness in the first segment today, we will have, from the Halifax Initiative Coalition, Karen Keenan, the program officer.

Welcome to our committee.

We have to pretty well stop for committee business at 10:30. That was the idea. We have two different witnesses. In the second hour, CIDA will be here. We may go until 9:30 or 9:45 and just see how much time we have.

Welcome, Ms. Keenan. We look forward to your comments. Then we'll have our questions for you.

Foreign Affairs and International Development

[Gordon O'Connor, Conservative, Minister of State and Chief Government Whip]

Mr. Speaker, I believe you will find agreement among all parties to adopt the following motion. I move:

That, notwithstanding any Standing Order or usual practices of the House, the motion to concur in the Seventh Report of the Standing Committee on Foreign Affairs and International Development (extension of time, pursuant to Standing Order 97.1, to consider Bill C-300, An Act respecting Corporate Accountability for the Activities of Mining, Oil or Gas in Developing Countries) be deemed adopted.