Tag Archives: FIPA

Canada undermines democracy in Burkina Faso

With flagrant disregard for democracy, the Harper Conservatives recently signed a deal with a transition regime to circumscribe future governments’ capacity to regulate Canadian miners. But, those victimized are impoverished Africans so the move elicited little reaction.

In April Harper’s Conservatives signed a Foreign Investment Promotion and Protection Agreement (FIPA) with the interim government of Burkina Faso. According to the official release, the West African nation was represented at the signing ceremony in Ottawa by Prime Minister Yacouba Isaac Zida, who was deputy commander of the presidential guard when Blaise Compaore was ousted by popular protest last October. A U.S. and Canadian trained Lieutenant Colonel, Zida is one of five military men in a cabinet overseeing the landlocked country’s transition towards elections after President Compaore’s 27 year rule.

While the caretaker government is supposed to move aside after an election planned for October, the investment treaty will live on for at least 16 years. According to the FIPA, “the termination of this Agreement will be effective one year after notice of termination has been received by the other Party.” The subsequent line, however, reads that “in respect of investments or commitments to invest made prior to the date when the termination of this Agreement becomes effective, Articles 1 to 42 inclusive, as well as paragraphs 1, 2 and 3 of this Article, shall remain in force for a period of 15 years.” In other words, any elected government will be effectively bound by the accord for another decade and a half.

The FIPA’s Investor State Dispute Settlement mechanism clearly undermines (forgive the pun) democracy. It gives Canadian corporations the right to sue Burkina Faso’s government – in a private, investor-friendly international tribunal – for pursuing policies that interfere with their profit making. While Ottawa says the process protects Canadian investors “against discriminatory and arbitrary practices”, it also undermines the public’s ability to determine economic policy.

What is of concern to the Conservatives is the impoverished nation’s mining sector, which is dominated by corporate Canada. Since ousting Compaore, community groups and mine workers have launched a wave of protests against foreign-owned mining companies. After local residents damaged equipment in January, Vancouver’s True Gold Mining shuttered its Karma gold project and an official from Montréal-based Semafo recently told Bloomberg that the company was looking to fund a new police unit that would focus on protecting mining interests.

Under the FIPA a Canadian mining firm could sue if the central government listened to a community opposed to a mine. Canadian companies have already used investment treaties to claim hundreds of millions of dollars in damages from Latin American countries that withdrew mining licenses after stiff local resistance.

A company could also sue if a new government required a certain level of domestic purchasing. The accord explicitly precludes “domestic content” requirements or any effort to “accord a preference to a good produced or service provided in its territory.”

At a broader level, the aim of the FIPA is to counter a resurgence of “resource nationalism”. Having received a free hand during the last decade of Compaore’s rule, Canadian companies fear a reversal of these policies. So, they seek rights to sue the country if a new government expropriates a concession, changes investment rules or requires value added production in the country.

Over the past decade Canada has become a mining superpower in Africa and the Conservatives have aggressively pushed the industry’s agenda. To protect $31 billion in Canadian mining investment from policy shifts, the federal government has signed or negotiated FIPAs with 15 African countries and officials have sent a message that aid is more likely to flow to a government that signs a FIPA.

The Conservatives are undermining African democracy in their haste to defend mining companies. It is unjust to persuade an elected government to concede power to an international investment tribunal and simply indefensible to sign a deal with an unelected transition administration that binds future governments.

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Good for business, bad for Africans

Sometimes what is good for business can be bad for people. Most Canadians understand this and cherish their right to protest “bad deals” and to elect new governments willing to reverse so-called “business-friendly” policies. This is called democracy.

So what do we call it when Ottawa signs a deal with an unelected regime that would prevent any future elected government in a small African nation from changing its laws regulating Canadian-owned mines for almost two decades?

In April Harper’s Conservatives signed a Foreign Investment Promotion and Protection Agreement (FIPA) with the interim government of Burkina Faso. According to the official release, the West African nation was represented at the signing ceremony in Ottawa by Prime Minister Yacouba Isaac Zida, who was deputy commander of the presidential guard when Blaise Compaore was ousted by popular protest last October. A U.S. and Canadian trained Lieutenant Colonel, Zida is one of five military men in a cabinet overseeing the landlocked country’s transition towards elections after President Compaore’s 27 year rule.

While the caretaker government is supposed to move aside after an election planned for October, the investment treaty will live on for at least 16 years. According to the FIPA, “the termination of this Agreement will be effective one year after notice of termination has been received by the other Party.” The subsequent line, however, reads that “in respect of investments or commitments to invest made prior to the date when the termination of this Agreement becomes effective, Articles 1 to 42 inclusive, as well as paragraphs 1, 2 and 3 of this Article, shall remain in force for a period of 15 years.” In other words, any elected government will be effectively bound by the accord for another decade and a half.

The FIPA’s Investor State Dispute Settlement mechanism clearly undermines (forgive the pun) democracy. It gives Canadian corporations the right to sue Burkina Faso’s government – in a private, investor-friendly international tribunal – for pursuing policies that interfere with their profit making. While Ottawa says the process protects Canadian investors “against discriminatory and arbitrary practices”, it also undermines the public’s ability to determine economic policy.

What is of concern to the Conservatives is the impoverished nation’s mining sector, which is dominated by corporate Canada. Since ousting Compaore, community groups and mine workers have launched a wave of protests against foreign-owned mining companies. After local residents damaged equipment in January, Vancouver’s True Gold Mining shuttered its Karma gold project and an official from Montréal-based Semafo recently told Bloomberg that the company was looking to fund a new police unit that would focus on protecting mining interests.

Under the FIPA a Canadian mining firm could sue if the central government listened to a community opposed to a mine. Canadian companies have already used investment treaties to claim hundreds of millions of dollars in damages from Latin American countries that withdrew mining licenses after stiff local resistance.

A company could also sue if a new government required a certain level of domestic purchasing. The accord explicitly precludes “domestic content” requirements or any effort to “accord a preference to a good produced or service provided in its territory.”

At a broader level, the aim of the FIPA is to counter a resurgence of “resource nationalism”. Having received a free hand during the last decade of Compaore’s rule, Canadian companies fear a reversal of these policies. So, they seek rights to sue the country if a new government expropriates a concession, changes investment rules or requires value added production in the country.

Over the past decade Canada has become a mining superpower in Africa and the Conservatives have aggressively pushed the industry’s agenda. To protect $31 billion in Canadian mining investment from policy shifts, the federal government has signed or negotiated FIPAs with 15 African countries and officials have sent a message that aid is more likely to flow to a government that signs a FIPA.

The Conservatives are undermining African democracy in their haste to defend mining companies. It is unjust to persuade an elected government to concede power to an international investment tribunal and simply indefensible to sign a deal with an unelected transition administration that binds future governments.

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Canada: An investment bully

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.”

Last week Infinito Gold sued Costa Rica for $1-billion under a Canadian bilateral investment treaty with that country when the government failed to approve a controversial gold mine. The Calgary-based company launched this suit even though polls show that more than 75 percent of Costa Ricans oppose its proposed Crucitas mine and the Supreme Court of Costa Rica denied Infinito permission to proceed with the project on three occasions.

Many Canadian-owned mining sites across Africa are bitterly resisted by local communities and there’s been a great deal of social upheaval around the mines. Canadian mines have spurred war in the Congo, killings in Tanzania and environmental devastation from Kenya to Ghana.
Of course, the dominant media has largely ignored the conflict wrought by Canadian mining companies. Much the same can be said of their role in buying up Africa’s natural resources or Ottawa’s role in facilitating it. The dominant media prefers to focus on how Chinese companies are buying up the continent even though on a per capita basis Canadian corporations have taken control of a great deal more of Africa’s natural resources than China’s.

Unfortunately, the Left has sometimes reflected (and perpetuated) this type of thinking. While a number of independent journalists and small collectives have exposed the destruction wrought by Canadian mining projects, there’s been little opposition to these African FIPAs. On the other hand, there’s been significant opposition to the FIPA Canada recently signed with China.

A recent Leadnow.ca callout to raise money for the Hupacasath First Nation’s legal challenge to the Canada-China FIPA provides an example of this ignorance/indifference towards African FIPAs’. The e-mail has a picture of a woman holding a “Stop FIPA” sign and calls on members to send a note to Conservative MPs to tell them “they will pay a steep political price if they try to pass FIPA.” While Leadnow’s opposition to the China FIPA is to be commended, it need not be done in denial/opposition of the fact that the Conservatives’ have passed a slew of FIPAs’ recently.

One reason the China FIPA has received more attention is that Chinese companies have invested significant sums in Canada while most of Canada’s other FIPA partners have not. In terms of the African FIPAs the investment flow is unidirectional with Canadian companies overwhelmingly dominant.

All too often, criticism of bilateral investment treaties and free ‘trade’ agreements take a nationalistic tone with opposition focused on the ways in which the accords strengthen the rights of multinational corporations in this country. Since African companies have little invested in Canada there’s few short to medium term consequences for Canadians with the African FIPAs and thus little opposition expressed.

But this is short-term thinking. The past 25 years of neoliberalism has demonstrated quite clearly that these policies are being pursued in lockstep globally and that they exacerbate inequality and ecological destruction everywhere.

If we oppose “investor-rights” agreements in Canada we must oppose them everywhere.

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Filed under Black Book of Canadian Foreign Policy