European legislation mirroring recent US laws are set to compel companies engaged in extractive activities such as oil, gas and minerals to disclose full details of their payments made to national governments on a country-by-country and project-by-project basis.

The rules follow approval by the European Parliament's Legal Affairs Committee yesterday, which endorsed a package of proposals aimed at large companies extracting oil, gas and minerals as well as loggers of primary forests.

The proposed measures - to be agreed with the 27 national governments - would delete from the Commission's proposal an article exempting companies from respecting information requirements forbidden in the host country.

In the US, the Securities and Exchange Commission (SEC) gave the green light for the implementation of Section 1504 following a vote on 22 August, which imposes similar strict disclosure rules for US-listed companies engaged in extractive activities.

UK MEP, Arlene McCarthy, responsible for the legislation, said she was pleased with the outcome: 'The committee has overwhelmingly backed my compromises for a strong law on transparency and disclosure for the extractive industries. The vote is a clear rejection of the 27 member states' weak proposals for disclosure of country-by-country payments and reporting in the extractive industries. We have not given in to the pressure of industry and government lobbying for a weak transparency regime.'

Information disclosure would be on a country-by-country basis and indicate the financial resources allocated to each project.

'Project-level disclosure is the only way in which local communities in resource-rich countries are able to expose corruption and hold their governments accountable for using revenues towards development,' McCarthy added.

At the same time, the committee will seek during the negotiations to avoid overburdening smaller EU firms.

The committee also proposes to extend country-by-country information requirements to the banking, telecoms and construction sectors. The new rules would entail stricter sanctions for firms that fail to respect the new information requirements.

The mandate was approved unanimously. Committee members will soon enter into negotiations with European Council on all the issues covered by the draft legislation.