*EPF417 12/11/2003
OECD Countries Agree to Environment Pact on Financing, U.S. Says
(Agreement affects projects financed through credit agencies, State Dept.'s Larson says) (550)

By Andrzej Zwaniecki
Washington File Staff Writer

Washington -- The United States and other industrialized countries have reached agreement on voluntary environmental guidelines for projects in the developing world financed through their export credit agencies, a U.S. State Department official says.

Briefing reporters in Washington December 11, Under Secretary of State Alan Larson said that the agreement soon to be announced by the Organization for Economic Cooperation and Development (OECD) will advance sustainable development and create a level playing field for U.S. exporters.

"We have achieved something important," he said. "It is a victory for the environment; it is a victory for U.S. business."

Larson said that the pact has the political backing of all 30 OECD countries and that he expects it to be ratified by the OECD Council "very, very quickly."

He said that the United States has fought hard for a strong agreement because around $60 billion in financing offered by export credit agencies in developed countries for projects such as dams, power plants and steel mills could have "tremendous" impact on the environment in developing countries. The U.S. government also wanted to end the competitive disadvantage suffered by companies from countries such as the United States that have imposed high environmental standards on export financing, Larson added.

The tentative agreement would significantly diminish this disparity by requiring a government financing an international project to apply a more stringent set of benchmarks between its own environmental standards and international standards established by the World Bank or regional development banks.

In special cases government lenders can choose to adhere to lesser standards, but Larson said that those choosing the escape clause would be held up for public scrutiny.

The agreement also would make the procedures for assessing the environmental impact of projects financed through export credit agencies more transparent and establish a monitoring mechanism, he said.

It is the combination of more universal high standards with a monitoring system that makes this agreement really significant, Larson said.

Other government officials and business and environmental leaders briefing alongside Larson also welcomed the agreement.

Clay Lowrey, a Treasury Department official, said that, while the agreement's guidelines are voluntary and legally non-biding, OECD member countries usually accept recommendations as obligations.

"We have a pretty good record on OECD recommendations [being followed] so we hope that also this time they will work out," he said.

Edmund Rice, president of the Coalition for Employment through Exports, a trade group representing large U.S. exporters, said that the monitoring mechanism allows the U.S. government to identify and bring up any problems with the implementation of the agreement.

U.S. exporters have complained for years that they were losing international contracts not because their offers were less competitive on price or quality but because their rivals from countries such as Germany, Spain and Japan did not have to meet environmental standards as stringent as those imposed on U.S. businesses by the Export-Import Bank of the United States (Ex-Im Bank).

Peter Saaba, Ex-Im Bank's general counsel, said that once the agreement is ratified his agency will start reviewing and amending its standards to conform to the new rules.

(The Washington File is a product of the Bureau of International Information Programs, U.S. Department of State. Web site: http://usinfo.state.gov)

Return to Public File Main Page

Return to Public Table of Contents