US Action threatens to damage the fight for transparency in extractives

12 November 2017

The U.S announced on 2 November that it was withdrawing from implementing the Extractive Industries Transparency Initiative (EITI). This initiative was begun in 2003 by Tony Blair. The institution is based in Norway. It promotes a standard of good behaviour which contains various strands requiring transparency in contracts, licences, ownership and tax and other payments. It has been widely recognised as an important initiative. Countries apply to achieve ascending levels of compliance with the EITI standard. The U.S. was an important leader in the early years, and announced its commitment to EITI implementation in 2011. It became an 'implementing country' in 2014.

The statement from the U.S Department of the Interior takes the form: " While the U.S. government remains committed to fighting corruption in the extractive industries sector, and the ideals of transparency enshrined in the EITI Principles and the EITI Standard, it is clear that domestic implementation of EITI does not fully account for the U.S. legal framework. Effective immediately, therefore, the United States must withdraw as an EITI implementing country." 

The lack of compatibility refers to the fact that US companies in the sector are indeed not 'required' to publish information on tax payments. They were so required under section 1504 of the Dodd-Frank Act of 2010, but the implementation of this law was strongly opposed by the oil lobby – in particular Chevron, Exxon Mobil and the American Petroleum Institute who in February of this year won a significant battle when Congress axed the disclosure rule (in line with other such measures under the Trump administration). So now it is true that US firms are not obliged by law to disclose. However, to use this as an argument that the US 'cannot' comply and must 'therefore' withdraw is specious, as analysts are pointing out on all sides. Various countries have achieved 'compliant' status on the basis of voluntary disclosure by companies of such information, and nothing in US law prevents that.

However much the U.S protests that it is still supporting EITI, this step is clearly likely to weaken the impetus behind the important initiative represented by EITI. Peru gained kudos by its early support for EITI and its assessment in 2016 rated the country as achieving a 'meaningful' level of compliance. The U.S. action must not be allowed to weaken the effort to increase transparency and control corruption.

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