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Testimony of Jeffrey S. Vogt
Global Economic Policy Specialist
American Federation of Labor & Congress of Industrial Organizations (AFL-CIO)
Before the U.S. House of Representatives Committee on Foreign Affairs
Subcommittee on Terrorism, Nonproliferation and Trade
on Renewing OPIC and Reviewing Its Role
in Support of Key U.S. Foreign Policy Priorities
May 25, 2007

Chairman Sherman, Members of the Committee, I thank you for the opportunity to testify today on behalf of the ten million working men and women of the AFL-CIO on the reauthorization of the Overseas Private Investment Corporation (OPIC). OPIC's reauthorization request presents the Committee with a critical opportunity to review its effectiveness and to make needed reforms to the laws that govern its operations.

Introduction

Investment by U.S. companies abroad can support U.S. exports and jobs, but there is no automatic relationship between outbound FDI and American jobs. At present, U.S. foreign direct investment in manufacturing in developing countries is continuing to increase. Much of this increase goes to producing goods destined to be exported to the United States. Whether investors are shifting existing production or choosing to locate new production abroad, too often the result is an increase in imports greater than any linked increase in exports.

This phenomenon of outward FDI has contributed to the deterioration of our trade balance. Each year seems to bring another record-breaking trade deficit in the U.S. Last year, our trade deficit in goods and services reached a staggering $764 billion - over six percent of GDP - creating a drain on our economy and vulnerability in our long-term economic health. The human cost of this unsustainable trade deficit is lost jobs and stagnating wages. Altogether we have lost 3 million manufacturing jobs since 2001, and we now have fewer manufacturing jobs than we did forty years ago. These are jobs that pay good wages and provide decent benefits. For generations, these jobs have provided a ladder to the middle class for the majority of workers who lack a college education. Now these jobs are disappearing - many of them permanently - with lasting consequences for workers, their families, and their communities.

American workers who have seen their jobs shipped overseas have been told that their loss is a gain for workers in developing countries, and that investment in overseas production is stimulating real economic and social development. There is no doubt that FDI has the potential to contribute to a developing country's economy by providing access to new employment, skills, and technology. But there is real reason to doubt whether the current rules regulating FDI are ensuring that these benefits actually materialize and that they are shared equitably. Compared to the period from 1960 to 1980, growth in the developing world has been lower, not higher, than in the period of booming trade and investment from 1980 to 2000. And workers' rights continue to be violated with impunity, with profits from this abuse enriching some of the wealthiest corporations in the world.

That is where OPIC can help to make a difference. To fulfill the need for high-quality, job-creating, development-enhancing foreign direct investment that is currently not being met by the private market, OPIC must set the highest possible standards for our investors. Below are some observations as to how OPIC can better ensure that each and every project it supports strengthens our trade balance and creates U.S. jobs, and contributes to sustainable and equitable development abroad based on full respect for workers' rights, human rights, and the environment.

I. Worker Rights

The inclusion of internationally recognized worker rights in the OPIC statute in 1986 was a significant step forward, in that it offered to workers in developing countries a tool to hold their governments and their employers accountable with respect to internationally recognized worker rights. However, the experience of worker rights advocates with the implementation of the statute over the years has demonstrated important shortfalls in ensuring that worker rights are actually respected in all OPIC-supported projects. In addition to the statute's limitations, we are concerned about the way in which OPIC undertakes its worker rights assessments both before and after project approval. In reviewing recent projects, it is apparent that the methodology for determining whether workers' rights are respected - in the country or on the project - prior to project approval is insufficient to screen out potential and actual labor rights violators.

National Law and Practice

By statute, OPIC can only support those projects in which the country is "taking steps to adopt and implement laws that extend internationally recognized worker rights."[1] However, the "taking steps" standard, incorporated from the Generalized System of Preferences (GSP), allows OPIC to support projects in countries with laws that fall far short of international standards and with a poor record of compliance with its laws, so long as the government can argue that at least some progress is being made. This concern is not academic. In many cases, petitions filed under the worker rights provisions of GSP, and other unilateral trade preference programs, alleging violations of worker rights were rejected or dropped after a short period of review after a country made only marginal improvements in law or in practice - even though overall labor conditions remained dismal.[2]

Moreover, the statute does not establish a minimum threshold of compliance with international norms, allowing a country to qualify if it is taking steps from an already low level. A country that takes a step up from 20% to 30% compliance with international norms, or that makes progress on one right, but continues to limit or prohibit another, could still qualify.

Finally, the statute provides broad executive discretion as to worker rights. If OPIC determines that a country does not comply with the statutory conditions on worker rights, the President may waive the conditions, pursuant to § 2191a(3), if s/he determines that it would be in the "national economic interests of the United States." Such a vague and unbounded standard opens the door for political and economic interests to supersede the rights of workers, even in the most extreme cases.

A review of OPIC annual reports for 2004-2006 reveals that OPIC supported projects in several countries that have been harshly criticized by the International Labor Organization (ILO) and the U.S. State Department for failing to uphold internationally recognized worker rights, including Colombia, El Salvador, Guatemala, Bangladesh and Zimbabwe, to name only a few. Thus, a review and strengthening of the statutory language regarding worker rights is urgently needed.

b. Company Practice

The Office of Investment Policy (OIP) is required to review the investor's application once the project officer has confirmed that the project otherwise qualifies for OPIC support. The OIP is supposed to ensure that the project meets all of the statutorily mandated requirments, including the environment, worker rights, human rights and econonoic impact. As to worker rights, OPIC is prohibited from providing assistance for any program, project, or activity that contributes to the violation of "internationally recognized workers rights." However, we have concerns over the methodology used to determine whether a project will contribute to the violation of these rights.

For example, the OPIC 2006 Annual Report indicates the approval of a $7 million financing project in Peru. The funds, which were awarded to Citigroup Corporate and Investment Bank for Corporación José R. Lindley, S.A., financed the expansion of a Coca-Cola distribution plant. A careful review of the project would have revealed that José R. Lindley had engaged in aggressive anti-union activity in the previous two years.[3]

In 2004, José R Lindley, S.A. emerged to become the exclusive bottler of Coca Cola in Peru. In May of that year, José R Lindley restructured the company and fired 233 workers, 133 of which were union members. JR Lindley also dismissed the union's General Secretary, Julio Falla Juárez, even though he had legal protection from dismissal ("fuero sindical"). The union alleged that the objective of the reorganization, and the subsequent dismissals, was to break the union and to reduce the number of directly hired employees. In Peru, employer have often dismissed directly employed workers in order to replace them with new employees hired through third-party contacting schemes. The advantage to the company is that this reduces its wage and benefit obligations, while also making it far more difficult to form a union.

Although the law required José R Lindley to negotiate with the union regarding the terms of the dismissal and over the measures necessary to limit personnel reduction, the company failed to do so. As a result, the Ministry of Labor rejected the mass dismissal and ordered José R Lindley to reinstate the dismissed workers. The company refused to do so, prompting the union to file a lawsuit demanding the reinstatement of the workers. The union won the case, but the company disobeyed the judicial order.

Later that year, the union attempted to bargain collectively with the company. However, the negotiations were delayed for almost seven months due to the company's refusal to table a final proposal. Eventually, the union broke off talks and initiated a strike on September 30, 2004. During the strike, workers were attacked by police and by day's end, eight trade unionists were detained and four were injured. Since then, the company paid most of the remaining union members a small sum for their voluntary resignation. Today, the union has nearly disappeared.

One would hope that a review of the company's past practice would have reveled these facts and would have raised serious questions as to whether the company, which had recently defied the Ministry of Labor in 2004-05, would respect worker rights in 2006. As the José R Lindley project is relatively small in comparison to others, it is unclear whether OPIC's review included an on-site visit or any other type of local investigation. Since none of the OIP clearance reports are available, it is also unknown whether OPIC was aware of these facts or took any action to address these matters or extract any additional commitments from José R Lindley (other than inserting boiler-plate contract language - discussed below - which requires a company not to contribute to violations of internationally recognized worker rights in the future).

In a call to OPIC earlier this month regarding another project of concern in Peru, I was informed that OPIC normally bases its assessment of worker rights - at the national and project level - on information provided by the U.S. Embassy, the project's management and, in most cases, workers. The workers interviewed for the assessment are either selected by management or at random by OPIC representatives. I was informed, however, that OPIC does not interview the worker in a neutral setting, but has conducted past interviews in company conference rooms or in the worksite (e.g., assemblyline). Information so obtained is by its nature suspect, as workers often feel reluctant or scared to divulge information to monitors lest they suffer retaliation in the form of discipline or dismissal. I was also informed that it was not OPIC's consistent practice to speak to union representatives, even when a union exists in a company and represents a substantial percentage of the workforce. Thus, it is not surprising that the information obtained, in some cases, may not accurately reflect the reality for workers.

Once approved, the statute requires OPIC to include a commitment on workers' rights in its contracts with investors. However, this language is unacceptably weak. Investors must agree not to take actions to prevent workers from exercising their right to freedom of association and the right to organize and bargain collectively. But they only have to meet local legal standards on child labor and acceptable conditions of work, no matter how far below international standards the country's laws may be on these issues. In addition, investors are explicitly not held responsible for failures of the host government to guarantee workers' rights.

In its 2006 Development Report, OPIC notes that where applicable laws fall below ILO standards as to minimum age and acceptable conditions of work, it will add additional contractual language requiring the investor to meet the relevant ILO standards.[4] Although we appreciate OPIC's initiative to include additional contractual language, it is doing so at its own discretion. The statute should be amended to reflect current practice.

Following the commencement of a project, OPIC will monitor compliance with workers' rights conditions either by asking investors to fill out annually a short questionnaire or by conducting random inspections. However, the questionnaire as to labor conditions contains only one question, and investors must simply put a check next to any conditions that applied within the past year. Those conditions are simply "labor union," "collective labor agreement," "strike," "hazardous labor," whether anyone was employed under the age of 18, and the maximum hours worked per week. The checklist requires more information only if the child labor box is checked. Thus, the information provided in this checklist is completely inadequate.

There is absolutely no possible way that OPIC can assess from this checklist whether the investor has in fact interfered with its workers' right to organize an independent union, discriminated against union organizers, set up its own employer-dominated union to break an independent organizing drive, refused to bargain in good faith with an independent union, or fired striking workers. In addition, the information provided in the checklist is treated as "business confidential," depriving workers and the public of any knowledge about the labor conditions investors are claiming to have met.

OPIC uses a random selection process to determine which projects it will site-monitor. According to OPIC's website, "site-monitoring is broken into three-year 'cycles' that include all OPIC-supported projects from a three-year period."[5] Thus, three years will pass before the first time the project is put into the pool of projects subject to a potential site inspection. In that time a union could form and be busted. Thus, it is unlikely that a worker rights violation will be detected unless the employer self-reports, or labor rights advocates discover the violation and submit a complaint.

Recommendations on Workers' Rights:

1) The law should require OPIC to ensure that each country in which it supports projects is in full or substantial compliance with internationally recognized worker rights and the core labor standards as defined by the ILO. The "taking steps" standard in current law is simply insufficient to ensure that workers' rights will actually be respected. This condition should not be subject to waiver.

2) In addition, investor contracts should insure that investors comply with relevant international standards (as defined by the ILO) on freedom of association, the right to organize and bargain collectively, child labor, forced labor, and discrimination.

3) OPIC needs to make effective monitoring of workers' rights conditions a high priority. OPIC needs to dedicate appropriate levels of funding and expertise to the task. Compliance officers must have the ability to initiate their own investigations, make on-site visits, and conduct confidential interviews with workers and their representatives, as well as with local labor ministry officials and ILO representatives. Compliance monitoring should not have to rely on minimal self-reporting or on outside complaints.

4) One way to increase the effectiveness and independence of labor rights monitoring would be to ensure that the Office of Accountability is well staffed and has the autonomy to initiate its own investigations and report directly to the OPIC board on the results of these investigations.

5) Information gathered in the monitoring process, and any information on decisions taken as a result of such monitoring, should be available to workers and the public.

II. Impact on U.S. Jobs

It is of paramount importance that government funds for development do not undermine domestic production or accelerate the outsourcing of U.S. jobs. Thus, OPIC's statute requires it to "further to the greatest degree possible ... the balance of payments and employment objectives of the United States."[6] OPIC is also required not to support investments where it determines that the investment is likely to cause a significant reduction in the investor's U.S. workforce or a significant reduction in U.S. employment generally.[7] In addition, OPIC must deny support to any "investment subject to performance requirements which would reduce substantially the positive trade benefits likely to accrue to the United States."[8] However, OPIC is only directed to "consider" the possible adverse effect of the investment upon the balance of payments of the United States.[9]

a. Assessing the U.S. Impact

Each year, OPIC issues a report on the impact of OPIC-supported production on the manufacture of similar products in the U.S. and on jobs in the U.S. The OPIC 2006 Development Report states that for its investment of $2.85 billion, roughly 2,767 jobs were created in the U.S.[10] However, there is scant information as to how OPIC arrived at that number other than its explanation that it drew on company information regarding expected initial and ongoing procurement and uses multipliers to determine direct and indirect employment created. As to job loss, there is no information other than the bald assertion that none of the 2006 projects are expected to result in job losses in the U.S. The methodology employed to calculate job creation and loss must be explained in greater detail, and the information on which the projections are based should be disclosed.

As with the workers' rights conditions discussed above, OPIC's enforcement of the employment and trade conditions consists of a requirement that each investor complete annually a short form stating whether or not it has laid off any employees as a result of its project and listing in which countries its products have been sold. These "business confidential" forms are completely inadequate for ensuring that OPIC projects do not worsen our trade balance or cost U.S. jobs.

Most OPIC projects, such as building affordable housing, improving basic infrastructure and utilities and building schools fulfill important local needs and pose no threat to U.S. employment. However, an aborted 2005 plan to support a Ford Motor Co. auto assembly factory in Brazil does raise concerns about OPIC's commitment. If not for the intervention of the labor representative on the OPIC Board, and the urging of the United Auto Workers (UAW), the project may have been supported. The lack of public information makes it difficult to ascertain which projects may in fact pose a threat to our members, or to workers employed in the U.S. generally.

b. Lack of Transparency on Structured Finance and Investment Fund Projects

There is little information on OPIC's structured finance and investment funds projects. According to OPIC, "structured finance has channeled U.S. private bank loans and capital market funds into regions with a high foreign policy priority and into business sectors that generate significant developmental benefits." In the FY 2008 OPIC Budget Request, OPIC offers a summary of the Wachovia Bank Global Framework Agreement III.[11] "OPIC shares credit risk with Wachovia on up to $250 million in bank loans to OPIC eligible countries. Wachovia will channel a majority of the loans to correspondent banks that will use the money to extend the tenor on small business loans and mortgages." Unfortunately, there is no information available as to where these funds will be directed, into which sectors, and for what purposes. Though most small business loans will likely not end up supporting projects that affect U.S. employment, it is impossible to know without more information.

OPIC's investment fund portfolios are similarly opaque. OPIC's investment funds make direct equity and equity-related investments in new, expanding or privatizing emerging market companies. According to OPIC, it has committed over $2.6 billion in funding from 1987 to 2005 to 32 private equity funds. These funds have invested in more than 350 privately-owned and managed companies, mostly small and medium-sized enterprises in the developing world.[12] In Latin America in 2006, the AIC Caribbean Fund was developed to direct capital into new and expanding companies in the Caribbean and Dominican Republic. The fund, the impetus of which explicitly was DR-CAFTA, has a total capitalization of $250 million, with an OPIC guarantee of $80 million.[13] Although investment in Central America is certainly needed, without more information it will be impossible to monitor impacts on development, employment and worker rights. Although OPIC projects that this project will generate 350 U.S. jobs, the projection appears to be nothing more than a wild guess. To date, there is no publicly available information as to which businesses have or will be supported by the investment fund.

c. Maintaining the U.S. Ownership Linkage

In 2003, the Administration proposed loosening the laws governing OPIC to allow foreign-owned investors to receive OPIC support. Under that proposal, OPIC would be allowed to support a foreign investor as long as the investor could show it has "significant U.S. connections" in support of the OPIC-backed project. These "connections" could be U.S. jobs, but they do not have to be. A foreign-owned company could also receive OPIC support if it showed connections such as physical facilities in the U.S. or the payment of state or federal taxes. Under that proposal, a foreign company could receive OPIC financing for a project in Asia, and any exports to support that project in Asia could be sourced anywhere in the multinational company's global operations, just as long as the company maintained some physical facility or paid some taxes in the U.S. This loophole would have undermined one of the justifications for OPIC's existence: to help U.S. companies support U.S. jobs by exporting their goods to their overseas investments.

Although we are not aware of a current attempt to weaken the law on ownership, we strongly urge the Committee that no weakening of OPIC's employment mandate be allowed now or in the future. The simplest, fairest, and most accurate way to ensure that OPIC projects are supporting U.S. jobs is to bar support for projects that could displace U.S. workers, and to aggressively monitor the production and employment records of OPIC-backed investors.

Recommendations on Trade and Jobs:

1) Conditions on the trade and jobs impact of OPIC projects need to be clarified an made fully binding in law. They cannot just be general statements of policy or one among many factors that OPIC should consider in supporting projects. OPIC should be barred from supporting any project - either directly or indirectly through a financial intermediary - that would result in the loss of U.S. jobs or an increase in net U.S. imports.

2) As with the workers' rights conditions, compliance with conditions on the trade and jobs impact of OPIC projects must be fully monitored by staff who enjoy adequate independence and have access to sufficient resources. The methods and results of this monitoring must be fully transparent to workers and the public.

3) Congress must reject any future proposal that would further reduce any positive impacts of OPIC projects on our trade balance and American jobs. The trade and jobs conditions in OPIC's statute must not be weakened. Export-oriented, labor-intensive manufacturing projects are the wrong kind of projects for OPIC to support.

III. Development

One of the central purposes of OPIC is to promote economic development in the developing world. Indeed, the statute directs OPIC, in determining whether to provide insurance, financing, or reinsurance for a project, to be "guided by the economic and social development impact and benefits of such a project and the ways in which such a project complements, or is compatible with, other development assistance programs or projects of the United States or other donors."[14] There is little doubt that some of the projects financed by OPIC do in fact promote development, though the degree and quality of development could be debated. Again, the lack of adequate and reliable information makes it difficult to assess whether OPIC's projects are sufficiently contributing to local development.

a. Monitoring Methodology

OPIC is required to monitor projected and actual development impacts of the projects it supports. Effective monitoring is of course crucial to determining whether OPIC is improving its development effectiveness, meeting its development mandate, and complying with legislative requirements on workers' rights, employment impacts, and environmental impacts. However, we have concerns regarding the methodology of OPIC's development impact monitoring.

For FY 2007, OPIC inaugurated a new methodology to assess the development impact of a project. This tool appears to be similar to the previous development matrix, and in fact largely repackages many of those indicators. Criticisms of the previous methodology will not be repeated here. However, it is important to note that some of the standards from the previous methodology appear to be relaxed in the new one. For example, in previous years, a project would be deemed to have "no impact" under the job complexity indicator if the proportion of professional jobs to total jobs did not exceed 25%. In the new methodology, a project will be marked as having "some impact" as long as the ratio of professional jobs to total jobs exceeds 1%. Similarly, a project had to pay 21-35% of its revenues in taxes for the first five years in order to qualify as having a "strong impact" under the Fiscal Impact indicator. Now, a project need only pay taxes of any amount to so qualify. Neither the 2003-2008 Strategic Plan nor the FY 07 Budget Request (where the new methodology is introduced), explain why the standards were weakened. Finally, the new methodology does not reveal what weight it will assign to each of the indicators, making it difficult to determine whether a project could still qualify even if core development indicators received a low mark.

OPIC's most widely used development monitoring tool is a self-monitoring questionnaire to be completed by project sponsors. Without independent verification, self-monitoring results probably reflect the project sponsor's bias and desire to present a positive image. Since independent verification and site visits are done only on select projects, often these self-monitoring reports are the only source of monitoring information. Additionally, random, on-site development monitoring occurs only three years after project approval, which is often after the physical construction of a project (in relevant cases), when some of the most negative development impacts can occur. In other cases, the ability to redress failures in human capacity building or social effects may be long past.

b. Projects of Questionable Value to Development

Finally, some of the projects listed in the 2006 Annual Report have a dubious impact on development, other than immediate, short-term employment. For example, the following projects do not have any obvious development impact: a $5 million project to expand a cinema theater complex in Mexico, a $13.5 million project to build a residential compound for the U.S. Embassy in Belize and a $5 million project in Panama to expand Banco Uno's credit card portfolio.

The lack of information regarding OPIC's investment funds also makes it difficult to asses the development impact of these funds, other than OPIC's bald assertions on job creation and taxes. Indeed, the 2006 Development Report offers no specifics, but indicates only that the investment fund subprojects it monitored were in agribusiness, manufacturing, services, electronics and telecom somewhere in the world.

Recommendations on Development

1) OPIC should develop and utilize a development assessment tool that accurately reflects whether a project will in fact stimulate long-term, local development. The indicators now in use do not appear to be sufficient. OPIC should work with the international development community to devise a tool that will be a much better predictor of sustainable and equitable development than current tools.

2) Compliance with OPIC's conditions on development must be monitored closely by staff who enjoy adequate independence and have access to sufficient resources. The methods and results of this monitoring must be fully transparent to workers, affected communities and the public.

3) OPIC must be more transparent about how it calculates local job creation, especially with its investment funds. Currently, job creation numbers are no more than unsupported assertions. The lack of information about the quality of those jobs should also be addressed.

IV. Transparency

On November 4, 2003, the House Committee on International Relations issued Report 108-339 on OPIC reauthorization. Among other things, it directed OPIC to undertake a transparency initiative in order to heighten transparency and information disclosure concerning OPIC projects and internal mechanisms. The report language called for interested stakeholders to play an active role in this process and to provide recommendations on how the transparency initiative should be used to strengthen OPIC's programs and policies. The report language stressed the goal of making reforms and process improvements with respect to issues such as accountability, transparency, environmental, social and worker rights protections.

In 2004-2005, labor organizations and NGOs met with OPIC on numerous occasions and provided extensive recommendations. NGOs found that these sessions helped them achieve a better understanding of OPIC's internal mechanisms. Finally, on September 21, 2006, OPIC launched an Anti-Corruption and Transparency Initiative. Although the new initiative does promise an advance in transparency, it falls far short of civil society demands. For example, environmental and development impact monitoring reports, which are key indicators of OPIC's beneficial or detrimental impacts, are not required to be disclosed. Also, it does not appear that OPIC has issued the regulations necessary to make its commitments under the Transparency Initiative permanent. Moreover, some the information scheduled to be released under the Transparency Initiative remains unavailable.

a. Labor and NGO Recommendations:

On June 14, 2005, OPIC issued its draft Transparency Initiative Tracking Log, which recorded 48 areas where NGO and labor groups identified the need for improved transparency, information disclosure and strengthened programs, policies and practices.

Of all the recommendations, the agency agreed at the time to only three, including the posting of an OPIC Transparency Statement on the agency's website a publicly releasable Summary of Project Information; and the public release of some information on projects and subprojects of investment funds and other financial intermediaries. Copies of the Transparency Initiative Log and an NGO Evaluation of the Transparency Initiative, issued in January 2006, criticizing OPIC's failure to meaningfully improve upon its transparency, are attached hereto as Attachments A and B respectively.

The labor and NGO community made several, very specific demands for information or for improvement of information gathering tools, including:

• All clearance evaluations related to the environment, worker rights, human rights, and development impacts
• A project's annual self-monitoring reports on the environment, worker rights and human rights
• Site monitoring reports generated by staff or consultants related to the environment, worker rights and human rights
• Information on those projects rejected for environment, worker rights or domestic effects reasons
• Developmental Impact Profiles
• Three-year independent audits of all Category A projects
• Environmental Management and Monitoring Plans, Major Hazard Assessments and Environmental Remediation Plans for all projects, not just Category A
• Estimated trade balance and job impacts by project, not just annual summaries.

b. The Transparency Initiative Factsheet:

A September 2006 factsheet, entitled "OPIC Anti-Corruption & Transparency Initiative Factsheet," which describes the new initiative, is now available on the OPIC website.[15] Compared to previous demands on access to information, the initiative is not ambitious. The factsheet sets forth eight commitments, from redesigning the website to posting a range of documents. A review of the OPIC website reveals that few these commitments actually have been met.

For example:

Commitment #2 states that OPIC will post on its website non-business confidential summaries of OPIC-supported projects. The projects approved by the Board of Directors will be posted immediately, while other project summaries will follow as templates and processes are established. A review of the website finds summaries of only three "model" projects from 2003, namely: Sweetwater Pakistan (political risk insurance to provide advanced soil treatment technology to farmers in Pakistan), AbC.R.O.(financing to open offices in Eastern Europe to conduct clinical trials for pharmaceutical companies seeking U.S. Food and Drug Administration (FDA) registration for their medicines), and NURCHA (a loan guaranty to help build homes for low-income families in South Africa).

The website also includes newsletters that occasionally review a model project or two in summary. The OPIC website also contains board resolutions on approved projects. However, those resolutions are limited only to the name of the project, the cost of the project, and a sentence on the purpose of the project. This information is far from what is promised at Point 2 of the Factsheet.

Commitments # 3, 4, 7 and 8 all relate to information concerning Category A Projects, which are the most environmentally sensitive projects. Among documents promised are Enivronmental Impact Assemssments, Environmental Managament and Monitoring Plans, Environmental Remediation Plans, auditor certifications for Category A projects, standards environmental and social coventants in Category A projects, and host country notifications for Category A projects. Little of this information is currently available on OPIC's website. There is one EIA available, regarding the Tenke Fugurume Mining S.A.R.L Project. EIAs of any previous or currently operation projects are not online. Only one compliance report from OPIC's Office of Accountability is available, which concerns BP's witholding of information concerning the failed anti-corrosion coating of the controversial Baku-T'blisi-Ceyhan pipeline. However, no monitoring plans have been disclosed. Moreover, OPIC's Transparency Initiative does not commit to disclosing developmental, environmental and worker rights monitoring reports, hence there is no way for the public or for Congress to know if project sponsor obligations contained in these monitoring plans have been met.

Of note, OPIC's initiative promises no information with regard to worker rights - a key demand for the AFL-CIO. Although the 2006 OPIC Development Report contains summary information on worker rights in general, there is absolutely no project-specific information regarding worker rights on the website and apparently none forthcoming. Such information, including any initial assessments of worker rights at the country or project level, as well as any monitoring reports and complaints should be available on the website.

Conclusion

Congress should use the OPIC reauthorization to enact significant reforms to ensure that each and every OPIC-supported project strengthens our trade balance, creates U.S. jobs, and contributes to sustainable and equitable development abroad. Investment in developing countries can support U.S. jobs and stimulate development, but there is no automatic relationship between FDI and these desirable outcomes. In fact, even as we have seen FDI increase in developing countries, we have seen at the same time slow global growth, economic instability and inequality persist or get worse. At the same time, employment in the manufacturing sector has dwindled. Unless mandates for OPIC are strengthened and transparent monitoring of compliance made a top priority, OPIC will only be reinforcing the worst trends in the global economy. As a public institution, it must instead set and enforce the highest standards for investors. Only then can it ensure that its projects are truly advancing the interests of workers and their families in the U.S. and around the world.

[1] 22 U.S.C. §2191a. The statute incorporates the definition of "internationally recognized worker rights" from the Generalized System of Preferences, 19 USC 2467(4). The term includes: the right of association; the right to organize and bargain collectively; a prohibition on the use of any form of forced or compulsory labor; a minimum age for the employment of children; and acceptable conditions of work with respect to minimum wages, hours of work, and occupational safety and health.

[2] The repeated petitions against such countries as Guatemala and Bangladesh provide ample evidence of this phenomenon.

[3] Proposed projects under $25 million are not presented to the Board of Directors for a full review and approval. Had the projects been submitted to the Board, the labor representative could have had the opportunity to raise his concerns about the labor conditions at José R. Lindley. We recommend that projects under $25 million also be presented to the Board, or at the very least the Board's labor representative, for review.

[4] OPIC, Host Country Development and US Economic Effects of OPIC-Assisted Projects, Fiscal Year 2006 (March 2007), p. 26. Hereinafter "OPIC 2006 Development Report."

[5] See OPIC website, at http://www.opic.gov/doingbusiness/investment/pmsmq/index.asp.

[6] 22 U.S.C. §2191(h)

[7] 22 U.S.C. §2191(k) and (l)

[8] 22 U.S.C. §2191(m)

[9] 22 U.S.C. §2197(k)

[10] OPIC 2006 Development Report, p. 11. The report also claims that the monitoring of random projects over the last three years found about 6,500 jobs supported about 1,000 jobs less than projected.

[11] OPIC, Budget Request Fiscal Year 2008 (Feb. 2007), p.22.

[12] See, OPIC website at http://www.opic.gov/investment/index.asp.

[13] OPIC, Budget Request FY 2008, p. 24.

[14] Section 2191(1)

[15] See OPIC website, at http://www.opic.gov/about/Transparency/documents/transparencyfactsheet0906.pdf