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Friday 13 January 2012
Mining Ban: Good for the Grand Canyon, but Not for El Salvador?

Makes sense to me too. But too bad U.S. trade partners have to worry that if they pursue similarly responsible stewardship, they could get rewarded with a big fat corporate lawsuit.

That’s what has happened in El Salvador, where the international corporation Pacific Rim is suing the government for the right to mine the country’s gold resources. Like many in the Colorado River Basin, people in El Salvador are concerned that mining could contaminate their drinking water. More than half the population relies on one river, the Lempa. Pacific Rim is demanding compensation of more than $77 million under the investor protections of the U.S.-Central America Free Trade Agreement.

That’s also what happened in Mexico, where the government had to pay off a U.S. corporation that wanted to operate a hazardous waste facility in an environmentally sensitive area. When the local community opposed the project, California-based Metalclad won about $15.5 million from the government through a claim under the North American Free Trade Agreement (NAFTA).

In Peru, U.S.-based Renco is demanding $800 million in damages after the Peruvian government revoked an operating license for a smelter, charging that the company had failed to fulfill contractual obligations for environmental clean-up. The U.S.-Peru free trade agreement made their lawsuit possible.

Who knows, the Grand Canyon mining ban could also provoke similar lawsuits. It wouldn’t be the first time a foreign corporation tried to cash in by using the “investor-state” dispute settlement system granted by our trade agreements.

In 2003, for example, the Canadian company Glamis Gold sued the U.S. government under NAFTA, demanding $50 million in compensation for regulations enacted to protect the environment and indigenous communities from the impacts of open-pit mining. A tribunal set up under the arbitration system that handles such cases eventually dismissed the Glamis case, after years of legal wrangling. But the U.S. government still had to pay for one-third of the arbitration costs and its own legal defense. The United States has faced more than a dozen such NAFTA investor claims.

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