A year ago to this day, ONE celebrated the success of Congress in passing a new law to improve transparency in extractive industries. The Cardin-Lugar Transparency Amendment to the Dodd-Frank Wall Street Reform and Consumer Protection Act, as it is called, was supported by ONE members and Publish What You Pay, and sponsored by senators Ben Cardin, D-Md., Richard Lugar, R-Ind., and Pat Leahy, D-Vt. The law requires all companies listed on the New York Stock Exchange to publish their payments to foreign governments for oil, gas and mining.
President Obama signs the Dodd-Frank Wall Street Reform and Consumer Protection Act. Photo Credit: Lawrence Jackson/White House.
Once the highly anticipated regulations are published by the US Securities and Exchange Commission, the new law will shed light on government revenues, making it harder for corruption and embezzlement by leaders in developing countries to deny their citizens the full benefits of the natural resources beneath their feet. It will promote good governance and enable Africans to more effectively capitalize on natural resources and harness revenue for development.
Cardin-Lugar offers a hopeful outlook for transparency in trade, and can help increase development in Africa. A landmark for transparency in the extractives sector, Cardin-Lugar sets the bar for other countries that would amount to major changes in the role that oil, gas and mining play in developing countries. Since the passage of the US law, several European leaders have come out publicly to support instituting a comparable standard in the European Union, which would cover 27 countries.
In March, we updated you on the progress of this process, and the European Commission is currently drafting a legislative proposal to amend the Transparency Directive, mandating similar regulations, for the European Parliament and Council to consider later this year.
In another promising move, world leaders at the G8 Conference in May also supported increased transparency in the G8 Declaration, saying they would look to the Extractive Industries Transparency Initiative (EITI) guidelines. EITI is a voluntary program in which countries and companies commit to annually publishing revenues from and payments in the extractives sector. Cardin-Lugar basically codifies the best practices of EITI in US law.
Here’s why the details matter. It is more difficult to hold leaders accountable if a single total payment to a foreign government is made public, rather than a break-down of payments like royalties, licenses or environmental damages. Additionally, making this information public could empower African countries that are entering into new extractive markets. For example, Ghana and Uganda, which recently discovered oil, would be better able to negotiate fair market prices for their crude oil.
While celebrating this new widespread commitment to accountability, the Publish What Pay Coalition, including ONE, remains dedicated to pushing leaders and policymakers to follow through with high standards in the EU and around the world. We continue to work for transparency that empowers people and fosters fairness and accountability, allowing citizens to utilize their public resources for prosperity. It is critical that Cardin-Lugar become the minimum international standard, and with the support and voices of ONE members, world leaders can make transparency laws effective tools for development. Our work has just begun.