Information on Export Credit Agencies and Human Rights
Subtitle:
What are Export Credit Agencies and how do they impact upon human rights?
Export credit agencies (ECAs) use public funds or a combination of public and private funds to provide loans, guarantees, and insurance in support of overseas investment and exports by domestic corporations. Most OECD-member countries have at least one taxpayer-funded export credit agency, often overseen by the trade, finance, or economics ministry. While promoting exports and investment is not necessarily problematic, ECAs have minimal transparency, accountability, and safeguards related to human rights, corruption, or the environment. As a result, ECAs often fund controversial projects. Financial backing is provided with taxpayer money for endeavors ranging from weapons export to extractive industry projects to infrastructure developments that have been rejected by the World Bank Group.
With minimal transparency, the Export Development Canada (EDC) provides significant support to Canada's mining companies, while UK Export Credit Guarantee Department (ECGD) is heavily invested in arms exports. ECAs, such as the US Export-Import (Ex-Im), are one of the largest and most influential public international financial institutions in trade and investment today, providing over ten times more in guarantees and risk insurance for large-scale infrastructure projects than the World Bank. Many ECA-backed projects have been associated with significant human rights violations, including arbitrary arrest, use of paramilitary 'security' forces, forced resettlement, inadequate consultation and compensation, violations of the right to a healthy environment, loss of livelihood and destruction of sacred and cultural sites.
Civil Society Advocacy
Over the past several years, civil society advocacy has led ECAs to institute minimum environmental standards for large scale projects. Similarly, progress has been made with the World Bank and IFC, resulting in a body of Safeguard Policies that are now seen as the international benchmark for other financial institutions both public and private. While ECAs have collapsed indigenous rights, cultural heritage sites, and forced resettlement into their voluntary 'environmental' guidelines, comprehensive human rights concerns remain unaddressed. Under international human rights law, states have clear obligations to respect, protect and fulfill human rights, which extend to their respective institutions, including ECAs.
In order to ensure that ECA-backed projects are not directly responsible for or complicit with human rights violations, a number of human rights advocates and ECA campaigners have begun to explore mechanisms and standards to ensure the protection of human rights in projects supported by ECAs. Potential tools or strategies may include national litigation; regional and international mechanisms, such as regional human rights courts, the ILO, OECD National Contact Points, and UN treaty bodies and Special Rapporteurs; compliance officers associated with the Canadian and Japanese ECAs; and parliamentary oversight and implementation of human rights impact assessments. Similarly, there seems to be a need to explore the content of investment agreements, particularly host-government agreements (HGAs) that include stabilization clauses and dispute mechanisms that undermine state sovereignty and the ability to protect human rights.
International Cooperation and Progressive Realization of Economic Human Rights
Export credit agencies are part of larger system of investment and trade agreements that often threaten the ability of states to respect, protect and fulfill human rights. Under the International Covenant on Economic, Social, and Cultural Rights, countries are obligated to 'take steps, individually and through international assistance and cooperation' in order to achieve 'progressively' economic, social and cultural human rights, 'without discrimination.' Corporations are the primary beneficiaries of export credit and insurance, often provided to projects of questionable feasibility on costly financing terms. This has led to massive indebtedness in many countries. According to 'Worse than the World Bank' (Food First/Institute for Food and Development Policy, 2003), over sixty percent of Nigeria's external debt and over forty percent of the debt of the Democratic Republic of Congo is for export credits, normally with higher interest rates than World Bank or IMF loans. In turn, OECD countries often inflate their aid statistics by including the cancellation of commercial ECA debts in official aid budgets. Debt and reduced aid limit a State's ability to fulfill all human rights, as do host-government agreements (HGAs) that include stabilization clauses that harshly penalize the creation or enforcement of laws that protect human rights and the environment.
We are eager to compile and develop resources on these and other ECA-related issues. We would be grateful for your participation, input and contributions; we encourage you to be in contact with us at nlusiani@escr-net.org.
Resources on Export Credit Agencies and Human Rights
We hope that the following resources and links to organizations will be a helpful starting point in exploring different aspects of human rights and export credit agencies. We are grateful to Laura Timme for her initial research in this area.
Export credit agencies (ECAs) use public funds or a combination of public and private funds to provide loans, guarantees, and insurance in support of overseas investment and exports by domestic corporations. Most OECD-member countries have at least one taxpayer-funded export credit agency, often overseen by the trade, finance, or economics ministry. While promoting exports and investment is not necessarily problematic, ECAs have minimal transparency, accountability, and safeguards related to human rights, corruption, or the environment. As a result, ECAs often fund controversial projects. Financial backing is provided with taxpayer money for endeavors ranging from weapons export to extractive industry projects to infrastructure developments that have been rejected by the World Bank Group.
With minimal transparency, the Export Development Canada (EDC) provides significant support to Canada's mining companies, while UK Export Credit Guarantee Department (ECGD) is heavily invested in arms exports. ECAs, such as the US Export-Import (Ex-Im), are one of the largest and most influential public international financial institutions in trade and investment today, providing over ten times more in guarantees and risk insurance for large-scale infrastructure projects than the World Bank. Many ECA-backed projects have been associated with significant human rights violations, including arbitrary arrest, use of paramilitary 'security' forces, forced resettlement, inadequate consultation and compensation, violations of the right to a healthy environment, loss of livelihood and destruction of sacred and cultural sites.
Civil Society Advocacy
Over the past several years, civil society advocacy has led ECAs to institute minimum environmental standards for large scale projects. Similarly, progress has been made with the World Bank and IFC, resulting in a body of Safeguard Policies that are now seen as the international benchmark for other financial institutions both public and private. While ECAs have collapsed indigenous rights, cultural heritage sites, and forced resettlement into their voluntary 'environmental' guidelines, comprehensive human rights concerns remain unaddressed. Under international human rights law, states have clear obligations to respect, protect and fulfill human rights, which extend to their respective institutions, including ECAs.
In order to ensure that ECA-backed projects are not directly responsible for or complicit with human rights violations, a number of human rights advocates and ECA campaigners have begun to explore mechanisms and standards to ensure the protection of human rights in projects supported by ECAs. Potential tools or strategies may include national litigation; regional and international mechanisms, such as regional human rights courts, the ILO, OECD National Contact Points, and UN treaty bodies and Special Rapporteurs; compliance officers associated with the Canadian and Japanese ECAs; and parliamentary oversight and implementation of human rights impact assessments. Similarly, there seems to be a need to explore the content of investment agreements, particularly host-government agreements (HGAs) that include stabilization clauses and dispute mechanisms that undermine state sovereignty and the ability to protect human rights.
International Cooperation and Progressive Realization of Economic Human Rights
Export credit agencies are part of larger system of investment and trade agreements that often threaten the ability of states to respect, protect and fulfill human rights. Under the International Covenant on Economic, Social, and Cultural Rights, countries are obligated to 'take steps, individually and through international assistance and cooperation' in order to achieve 'progressively' economic, social and cultural human rights, 'without discrimination.' Corporations are the primary beneficiaries of export credit and insurance, often provided to projects of questionable feasibility on costly financing terms. This has led to massive indebtedness in many countries. According to 'Worse than the World Bank' (Food First/Institute for Food and Development Policy, 2003), over sixty percent of Nigeria's external debt and over forty percent of the debt of the Democratic Republic of Congo is for export credits, normally with higher interest rates than World Bank or IMF loans. In turn, OECD countries often inflate their aid statistics by including the cancellation of commercial ECA debts in official aid budgets. Debt and reduced aid limit a State's ability to fulfill all human rights, as do host-government agreements (HGAs) that include stabilization clauses that harshly penalize the creation or enforcement of laws that protect human rights and the environment.
We are eager to compile and develop resources on these and other ECA-related issues. We would be grateful for your participation, input and contributions; we encourage you to be in contact with us at nlusiani@escr-net.org.
Resources on Export Credit Agencies and Human Rights
We hope that the following resources and links to organizations will be a helpful starting point in exploring different aspects of human rights and export credit agencies. We are grateful to Laura Timme for her initial research in this area.
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