Australia’s export credit agency must be reformed to better protect human rights in developing countries
The Human Rights Law Centre has made a submission to the Productivity Commission calling for reform of Australia’s Export Finance and Insurance Corporation ('EFIC') to better promote and protect human rights. EFIC is the Australian Government provider of export credits, insurance, reinsurance, and other financial services that support Australian exports and overseas investments.
Like most export credit agencies globally, EFIC assists exporters and private providers of insurance and finance products in circumstances where the private sector is unwilling or unable to provide support.
The role of ECAs has expanded considerably due to globalisation and the exponential growth of global markets. In particular, ECAs play a significant role as providers of finance in the developing world. ECAs may offer loans to developing countries on the condition that they buy the exports of the lending country, or they may provide guarantees or insurance for the loans made by commercial banks or exporters to developing countries.
Given the importance of ECAs in the global economy and their role in supporting corporate activity in developing countries, ECAs are in a unique position to promote human rights compliance in projects seeking ECA support. However, EFIC and other ECAs have a poor history of incorporating human rights compliance mechanisms into their operations. As a result, EFIC and other ECAs have facilitated corporate activity that has been associated with significant adverse human rights impacts.
For example, ECA-backed projects have been associated with forced displacement of local populations, poor conditions of work, suppression of peaceful protests and the rights to freedom of expression and association, exposure to environmental contaminants and the destruction of cultural sites.
The HRLC submission considers EFIC’s international human rights obligations and concludes that EFIC’s current policies and operations do not comply with its obligation to protect human rights as established under the framework set out by the UN Special Representative on Business and Human Rights, Professor John Ruggie.
The HRLC recommends that EFIC’s policies should:
- require that EFIC undertake adequate human rights due diligence;
- require due diligence by EFIC’s client companies; and
- state that EFIC will not support activities that are likely to cause or contribute to human rights abuses.
The implementation of these policies, in conjunction with appropriate transparency requirements and grievance mechanisms, would be a significant step towards the implementation of EFIC’s international human rights obligations.