Switzerland Must Seize Opportunity for Commodity Trading Transparency
Berne, 20 October 2015
Press release by Déclaration de Berne (DB), Swissaid, Natural Resource Governance Institute (NRGI) and Publish What You Pay (PWYP)
At least 60 percent of the global trade in metals and 35 percent of global crude oil trading occurs in Switzerland, the world’s leading commodity trading hub. The transactions of Switzerland-based trading companies are therefore of critical interest to many resource-rich developing countries.
According to a study by the Natural Resource Governance Institute (NRGI), Berne Declaration (BD) and SWISSAID, Swiss commodity traders paid $55 billion to the governments of ten African countries in exchange for crude oil between 2011 and 2013. This is equivalent to 12 percent of the countries’ combined government revenues, and more than double the amount of global development aid received by those countries. These payments can incur many governance risks; in order to minimize these risks, more information about the underlying transactions is needed. The EITI has included commodity trading in its provisions, which 48 countries have volunteered to adopt. However, further refinement of the relevant requirement in the EITI Standard is on the agenda at this week’s EITI Board meeting in Berne, Switzerland.
In a new position paper, NRGI, BD, SWISSAID, and the global civil society coalition Publish What You Pay (PWYP) strongly urge EITI’s board to require that countries break down payments by individual sales.“It is only with this level of granularity that reporting delivers valuable and concrete information that can lead to public debate and more accountability, two key principles of the EITI Standard,” said Marinke van Riet, International Director of PWYP and an EITI board member. There are however many countries which do not participate in the EITI. In order to close this significant transparency gap in the natural resource sector, the Swiss government should subject Switzerland-based commodity trading companies to regulation.
Next month, the Swiss parliament will receive a revision of the Swiss company law. In the current draft, the Swiss Federal Council applied the payment disclosure provisions only to exploration and production activities, thus excluding trading—even though traders dominate the Swiss commodity sector. If the government does not alter its course, the Swiss transparency law will have limited added value for citizens of resource-rich countries. Governments in other jurisdictions where commodity traders have a significant footprint, such as the United Kingdom, should implement similar regulations.
- Marc Guéniat, Berne Declaration, +41 (0)21 620 03 02; gueniat(at)ladb.ch
- Alexandra Gillies, NRGI, +1 646 361 1563; agillies(at)resourcegovernance.org
- Alexandra Malmqvist, PCQVP, +44 (0) 20 3096 7714, amalmqvist(at)publishwhatyoupay.org
- Lorenz Kummer, SWISSAID, +41 (0)79 307 2592; l.kummer(at)swissaid.ch