Stragetic Environmental Assessment of FTAs: Concerns over Mining Practices Abroad?

During negotiations of free trade agreements (FTAs), strategic environmental assessments are conducted to predict impacts.  These SEAs have two objectives: to integrate environmental concerns into the negotiating process, and to publicly illustrate the government’s commitment to the consideration of the environment during negotiating FTAs1.  However, one contentious problem of these SEAs is that they focus entirely on domestic impacts, and ignore the impacts that Canadian businesses will have in the reciprocating country1.  Not surprisingly, the impact on Canada is low, as capital flows out of Canada (e.g. the Canada-Peru FTA Environmental Assessment concluded there would be virtually no impact in Canada)2.  While many FTAs are accompanied by environmental agreements, with provisions, for example, that require both countries to uphold environmental standards, EA frameworks, and participatory processes – and specifically not use the FTA and the lowering of environmental standards to drive economic growth – they are largely unenforced1.  The argument, which is not without reason, is that the reciprocal country should be responsible for enforcing their environmental laws1.  However, it well known that developing nations are often unwilling or unable to effectively regulate the operations of foreign companies operating in their territories3.

Canada’s role in Latin America’s mining industry provides ample evidence of the failure of the SEAs of FTAs to consider Canada’s impacts abroad.  Canada is heavily invested in Latin American mining (our single largest foreign destination for Canadian mining capital).  Investment in the region is facilitated by national public bodies, such as Export Development Canada, which, for example, oversaw $4 billion worth of investment in 2008 (the total value of investment in 2008 has been estimated at $57 billion)3.  A cursory search of Canadian mining operations in Latin America reveals a host of problems, including environmental damage, human rights violations, and conflict with local communities3, 4.  Not only do the miming companies that commit these acts receive federal government support, there is little recourse for those affected in foreign countries to hold our companies accountable when their governments fail to do so3.

A number of questions arise from this problem.  First, at what scope should SEAs of FTAs be conducted.  Should the Canadian government consider possible environmental damages/conflicts that could arise in foreign countries as a result of its economic policies and an increase in Canadian company operations that result from the FTA? Traditionally, the government has shied away from this5.  Second, to what extent should the federal government be involved in monitoring the foreign operations of Canadian corporations?  Formal CSR frameworks exist, including standards and public reporting requirements for mining companies, but are ultimately not legally binding, and receive little federal support3.  Is such a voluntary system adequate, or are strong legal measures necessary?  It is important to note that numerous conflicts of interest are involved in such cases, beyond the standard links one often finds between politicians and the private sector.  For example, the Canada Pension Plan has invested roughly $2.5 billion of equity in Canadian mining companies that operate abroad.  Others with similar ties are the Ontario Teachers’ Pension Plan, and the British Columbia Investment Management Corporation6.  From a strictly economic point of view, this puts the government in a difficult position if it wishes to prosecute a company.  However, from a moral standpoint it seems clear that while we proclaim the necessity for environmental and human standards in Canada, we fall woefully short in our interactions with countries that are currently less able to establish such standards for themselves

Update: relevant headlines continue to dot the news.   For example, this article on the CBC website (http://www.cbc.ca/news/business/story/2013/01/25/wrd-canada-peru-mine-candente-copper-vancouver.html) which was published Jan 25, 2013.

Works Cited

1McComick, R. et. al. (2008) Environmental assessment of Canadian trade and investment negotiations. Impact Assessment and Project Appraisal, 24(4), 317-324.

2DFAIT. Final Environment Assessment of the Canada-Colombia and Canada-Peru Free Trade Agreement (FTA) Negotiations.  Accessed 22 January 2013. http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/andean-andin/final-ea-colombia-peru-ee-finale-colombie-perou.aspx?lang=en&view=d.

3Keenan, K (2010). Canadian Mining: Still Unaccountable. North American Congress on Latin America.  Accessed 22 January 2013. https://nacla.org/sites/default/files/A043030031_8.pdf

4Gordon, T, and Webber, J (2008) Imperialism and Resistance: Canadian mining companies in Latin America. Third World Quarterly, 29(1), 63-87.

5Clark, Tim. (2003). Canadian Mining Companies in Latin America: Community Rights and Corporate Responsibility.  Centre for Research on Latin America and the Caribbean Colloquia Paper.

6Latta, A, and Williams, K ().  Chilean Patagonia in the Balance Dams, Mines and the Canadian Connection. The Council of Canadians. Accessed 22 January 2013. http://canadians.org/water/documents/patagonia-0112.pdf.

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