Should the “right” of a foreign corporation to make a profit trump governments’ attempts to create local jobs, improve environmental regulations or establish laws that raise royalty rates? Most Canadians would say no.
But that’s what the Conservative government is pushing poor countries to accept if they want Canadian investment.
Barely noticed in the media, Canada recently concluded negotiations on a foreign investment promotion and protection agreement (FIPA) with the West African country of Côte d’Ivoire. In a press release Minister for La Francophonie Christian Paradis said: “The investment agreement announced today will provide better protection for Canadian companies operating in Côte d’Ivoire.”
Since the start of the year Ottawa has signed similar agreements with Tanzania, Nigeria, Benin, Cameroon and Zambia while over the past few years Canada has concluded FIPAs with Madagascar, Mali and Senegal. Ottawa is currently engaged in FIPA negotiations with Ghana, Guinea, Tunisia and Burkina Faso and plans are likely afoot to pursue bilateral investment treaties with other African countries.
According to the government, “A FIPA is a treaty designed to promote and protect Canadian investment abroad through legally binding provisions and to promote foreign investment in Canada. By ensuring greater protection against discriminatory and arbitrary practices, and by enhancing the predictability of a market’s policy framework, a FIPA gives businesses greater confidence in investing.”
These treaties give corporations the right to sue governments — in private, investor-friendly tribunals — for pursuing policies that interfere with their profit making. They are modelled after NAFTA’s notorious Chapter 11.
The FIPAs signed with African countries are largely motivated by Canada’s mining industry. Over the past two decades Canadian mining investment in Africa has grown over 100 fold from $250 million in 1989 to $6 billion in 2005 and $31 billion in 2011.
The owners of Canada’s mining industry have greatly benefited from three decades of neoliberal reforms in Africa, notably the privatization of state-run mining companies, loosening restrictions on foreign investment and reductions in resource royalty rates. As an early advocate of International Monetary Fund/World Bank structural adjustment programs, Ottawa has channeled hundreds of millions in “aid” dollars to supporting economic liberalization efforts in Africa. The Conservative government’s current FIPA push represents a bid to entrench some of these neoliberal policies.
Canadian mining companies that have benefited from privatizations and loosened restrictions on foreign investment in Africa fear a reversal of these policies. Their concerns can be somewhat alleviated by gaining the ability to sue a government if it expropriates a concession, changes investment rules or requires value added production take place in the country.
The ability to sue — or threaten a suit — is particularly valuable to mining companies facing local opposition to their projects. As the Council of Canadians points out, “Canadian mining companies are using FIPAs with developing countries to claim damages from community opposition to unwanted mega-projects.”
For the rest of this column, click here: http://www.huffingtonpost.ca/yves-engler/foreign-investment_b_4099382.html