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Resource Conflict on the Rise: Free Trade Agreements Up for Vote

| Friday July 15th, 2011 | 0 Comments

Conflicts between private businesses and investors, national governments and local populations over natural resource use and development are nothing new, but the far-reaching legal implications of Free Trade Agreements (FTAs) have placed the rights of private companies above those of local residents and even national governments. In an increasingly resource-constrained world, that could be a recipe for disaster.

Though the US has not passed an FTA since 2007, three are due up for congressional vote this month. While supporters hold them up as a means of stimulating economic growth and developments by bringing down barriers to trade and investment, opponents such as Friends of the Earth contend that “the U.S. pacts with all three countries would open the door to attacks on environmental protections.

If, for instance, a South Korean chemical or uranium mining company thought a U.S. environmental law impinged on its ‘right’ to make profits, it could sue our government through a tribunal, just as happened to El Salvador.

Pacific Rim v. El Salvador, Gold vs. Water

Three anti-mining, environmental activists have been killed in El Salvador in recent years, key players in organizing local protests and political resistance that resulted in the El Salvadoran government denying Canadian miner Pacific Rim the permits and license it needs to commercially develop its flagship project, the El Dorado gold mine high up in the Central American nation’s Lempa River watershed.

Clean fresh water, along with healthy soils, are particularly precious commodities to the 4+ million Salvadorans that call the Lempa River basin home. Most rely on farming and river water to meet their basic daily needs, as does half the population of San Salvador, who rely on the river for drinking water. Gold is also a precious commodity, one whose value has risen for 10 years running, and miners such as Pacific Rim are keen to exploit ore deposits wherever they are found.

Local activists decided to take action and prod the El Salvadoran government to deny Pacific Rim’s request for a mining license after seeing the effects preliminary mine exploration and development work had on local water resources and land. Of particular concern if the license were to be approved was Pacific Rim’s planned use of cyanide leaching to recover gold from the ore deposit.

The story doesn’t end with Pacific Rim being denied its license, however. Through an offshore Cayman registered subsidiary, the miner filed a claim against the El Salvador government with the World Bank’s International Center for Settlement of Investment Disputes (ICSID) under the United States-Dominican Republic-Central American Free Trade Agreement (CAFTA), looking to win compensation of $77 million in sunk costs and lost potential profit.

FTAs & Resource Conflict

The fundamental conflict in El Salvador over who has what rights to develop local natural resources, and how they are developed, is one that’s being played out across natural resource-rich countries across the Americas, be it tar sands development in Canada, shale oil and gas development in the US, or gold mining in El Salvador.

Free Trade Agreements have injected a new element into the process, one that puts the interests of private, often foreign, commercial interests above those of local residents and even the authority of national governments looking to protect the environment, as well as the health and safety of their people.

Supporters counter that FTAs are a win-win situation, stimulating investment and economic growth by tearing down trade and investment barriers. This process, they say, will lead to higher standards of living for those living in all countries involved.

The debate and controversy over FTAs continues. Environmental NGOs, including Amazon Watch and Friends of the Earth are organizing lobbying campaigns to persuade Congress to vote “No” on proposed FTAs with Colombia, Panama and South Korea, the first FTAs to come up for voting since 2007. Said Friends of the Earth:

The trade pact with Colombia is alarming. It could fuel that country’s on-going armed conflict by pricing small farmers out of the market and into coca production for drug lords and paramilitary groups,” FoE says. “It would also encourage destructive investments in palm oil plantations, mines, oil drilling and other projects that would lead to deforestation and ruin pristine areas, causing the extinction of irreplaceable plant and animal species. Such projects also threaten to displace Afro-Colombian and indigenous peoples.

Bill Moyers has done excellent, pioneering work for PBS when it comes to investigating the theoretical underpinnings of FTAs, the international legal precedents they seek to establish, and their actual effects.

If anything, the potential for resource conflict is on the rise. Are FTAs as they have been written, justifiable on legal, if not moral and ethical, grounds? And will governments that have signed on to FTAs actually be willing, or able, to comply with them, even if that means holding the decision of a World Bank arbitration panel above its own laws and the wishes and interests of its own people?

The situation screams out for finding a more inclusive, balanced means of stakeholder enfranchisement, engagement and dialogue, as well as transparency and a truly representative, independent means of settling disputes, particularly as they relate to natural resource use and development. To that end, FoE is lobbying Congress to pass the Trade Reform, Accountability, Development and Employment (TRADE) Act.


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