The supply of minerals to Europeans at any price?

November 25, 2013

Economical actors, Article, Human rights, Social issues, Natural resources

The contextualization of a major European Commission document leads to the examination of natural resources diplomacy. “If you want peace, prepare for war. » This well-known recommendation from Clausewitz applies in the field of raw materials in the name of development and under the banner of human rights. This practical application lends itself to reflection.

A painful awakening for Europe It was not until 2008 that the EC reacted by publishing its Raw Materials Initiative (IMP). As in the German strategy, it is a question of responding to the risks linked to the supply of “critical minerals” for European industry. At its launch, it was presented as integrated into the Lisbon Strategy dedicated to growth and employment in Europe. Indeed, the Commission estimated in 2008 that nearly 30 million jobs, in sectors such as construction, automobiles, aerospace and the chemical industry, depended on mineral imports. In 2012, the latter represented 10 % of UB imports, or 142 billion euros (Gerber, 2012, p. 2). The main problem that the Germans and the UB are trying to address is that of European dependence, sometimes extreme, on external sources of supply. Although it has existed for a long time, the issues surrounding it have become more complex, and the late awakening of Europeans in this area is all the more painful. Multipolar competition for access to resources As Frédéric Thomas describes in this file, the increased attention paid at the international level to the mining issue is mainly explained by the growing weight of emerging countries on the supply of natural resources and relationships of multipolar forces which result from it. Today we are witnessing a return of geostrategic issues around mining resources: “At the heart of strategic concerns until the end of the Cold War, [the situation of metals] seemed to be, during the 1990s and the beginning of 2000s, largely ignored in geopolitical debates. The rise in power of emerging countries, and in particular China, however, put an end to this period of forgetting” (Jégourel, 2011, p. 61). If the United States remains the world political-military superpower, “the sources of wealth are much more dispersed today than they were thirty years ago” (Laïdi, 2003, p. 298). To build this power, major economies need to ensure their access to natural resources (oil, gas, minerals) that are limited and unevenly distributed around the world. For around ten years, Brazil, India and China have had the means to deploy their political and economic cooperation based on access to resources, particularly in Africa (Triest et al., 2009). In this way, they are competing, for the first time since independence, with the former colonial powers in what they until then considered their private preserve. The concentration of most mineral reserves in a limited number of countries only reinforces the strategic nature of metals on the international scene. Take for example the cases of copper, platinum (PGM), rare earths (REE), ferrous metals, bauxite and chrome. There is also a shortage of many metals that have now become essential, due to metallurgical properties necessary for the development of industrial and green technologies. Indeed, “new production and consumption opportunities multiply and diversify needs” (Alex and Matelly, 2011, p. 54). In 2012, the popular science magazine Sciences&Vie reported on twenty-six metals which, to varying degrees, are in short supply. Among them, the best known are gold, silver, copper, zinc, antimony, tungsten, phosphorus, uranium, platinum and coltan. The IMP: ultra-liberal recipes again and again! The overall context described in the previous point allows us to better decipher the objectives pursued by the EC within the framework of the IMP. Launched in 2008, it was also updated in 2010 to try to integrate (without much success ) the issues linked to financial speculation . First of all, the EU intends to target minerals deemed “critical” for European industry. They are defined as “essential raw materials” that are at increased risk of supply shortages and have a greater impact on the economy than most other raw materials. To enter the category of “critical” minerals, three criteria must be met: the concentration of a significant part of world production in a handful of countries, a low rate of “substitutability” (they cannot be replaced by other 'others) and finally, a low recycling rate within the EU. Based on these criteria, the EC published a list of fourteen minerals in 2010 (see table ) “critics” on which it focuses. The IMP is structured around the following three components: developing internal production (mining production and recycling); reduce consumption and ensure security and price stability of EU supplies from third countries. We are interested here in the third component which consists of “launching a community diplomacy of strategic raw materials with the main industrialized countries and resource holders”. This “resource diplomacy” consists of a commercial strategy of aggressive liberalization towards mineral-producing countries. This first involves providing provisions relating to access to raw materials and their sustainable management in all bilateral (bilateral investment treaties) and multilateral trade agreements and regulatory dialogues, as appropriate. Next, identify and challenge “trade distorting” measures taken by third countries, using all available instruments and mechanisms, including negotiations within the WTO, dispute settlement mechanisms and market access partnerships, prioritizing measures that most harm the EU in international markets. Finally, promote sustainable access to raw materials in the area of development policy by using budgetary support, cooperation strategies and other instruments. In other words, the EU intends to attack any protectionist measure taken by countries producing “strategic minerals” that are unfavorable to European industry (taxes, quotas, subsidies, price fixing and regulation of investments). The private sector applauded the IMP with both hands. Business Europe, the powerful coalition of European business and employers' federations, has even encouraged the EU to use its development cooperation policy to establish "privileged relationships" with third countries that facilitate the EU's access to their resources ! Seen in this light, is EU “resource diplomacy” not simply a renewed form of economic colonization? In any case, it threatens the sovereignty of producing States over their resources. It restricts the political space available to them to decide how to exploit and benefit from them. Any attempt by these States to protect their resources from the greed of foreign companies, by favoring models other than free access to private sectors and exports at low prices for foreigners, can thus be combatted by the EU under the pretext of being a commercially “unfair” “market distortion”. A resource diplomacy that contaminates other policies The EU has several tools to implement its “resource diplomacy”. Already mentioned above, the WTO mechanisms and trade agreements (bilateral and regional) are already known to the general public. Another instrument, complementary to trade agreements, but less known, deserves to be more fully presented: bilateral investment agreements (BIAs). These are treaties between two countries which protect the interests of private investments from any unfair treatment, discriminatory treatment and any expropriation on the part of the signatory states. Deliberately vague, this protection refers to all potential attacks by States against the profits expected by the investor. These BITs are “straitjackets” (Cermak, 2011) for producing States because they grant private investors the right to have them ordered by international arbitration courts, which operate opaquely and favor private interests, to pay million dollars in damages . Currently, 1200 bilateral agreements have already been signed by member states. Since the entry into force of the Lisbon Treaty in 2009, the competence to conclude BITs rests with the EU and no longer with the member states. However, the EC is currently granting a partial re-delegation of this mandate to Member States during a transition period which is expected to last a few more years. The objectives of the IMP contaminate other European political processes. In 2012, the EC profoundly modified its scheme of generalized tariff preferences (GSP), taking the opportunity to place metals in the “list of products included in the general regime” of the GSP. . In article 19 of the new Regulation, relating to the reasons justifying the temporary withdrawal of benefits granted by the GSP, we find “serious and systematic unfair commercial practices, having in particular repercussions on the supply of raw materials, which have negative effects on the Union industry which have not been remedied by the beneficiary country. Even more recently, the EC included the question of mineral supply in its proposal to revise the EU's trade defense mechanisms (fight against dumping and other export subsidies). third parties increasingly interfere with trade in raw materials with a view to keeping them in their domestic market for the benefit of their own downstream users, for example by introducing export taxes or using dual pricing systems . Consequently, raw material costs do not arise from the normal operation of the market reflecting supply and demand for a given raw material. This interference generates additional distortions of trade. As a result, Union producers are not only harmed by dumping, but also suffer, compared to downstream producers in third countries who use such practices, from additional trade distortions. » Development and human rights in the trap Certainly, the IMP says it wants to “promote the country's access to raw materials in the field of development policy by using budgetary aid, cooperation strategies and 'other instruments'. In fact, Europe clearly places priority on securing its supply of minerals and is not concerned, or very little, about the many negative impacts of their exploitation on the populations of the South. In any case, this is the sad observation that we can draw from the contacts with the EC made, from 2010 to 2012, by the Justice and Peace Commission and its partners in the Belgian Natural Resources Network. When we called on the EC to make the IMP consistent with the right of countries in the South to choose their development model and respect for human rights, we were told in substance: business first, for the rest come back later . As is particularly the case for the DRC, gold and tin, coltan and tungsten play a major role in the dynamics of several armed conflicts in the world. However, the latter two are part of the fourteen “critical” metals targeted by the IMP. Questioned for several years by NGOs on the issue of “conflict minerals”, the EC has committed to proposing an “initiative” by December 2013 in order to return the supply chains of these minerals to Europe more transparent. But, at this stage, there is no indication that the EC will finally impose legally binding obligations on companies to account for their sources of supply. In addition to the issue of armed conflicts, mining is the source of intense social conflict throughout the world, particularly due to the negative impact of mining activity on the environment and economic activity. agriculture of local communities (access to land, water pollution, etc.). Several international experts have undoubtedly demonstrated that the alarming increase in human rights violations in certain countries is directly linked to the presence of the mining industry (Ruggie, 2006; Stavenhagen, 2003). In Peru, where 20 % of the territory is under mining concession, the extractive sector is responsible for two thirds of the two hundred and twenty-three social conflicts recorded at the end of 2011 (Defensoria del pueblo, 2011). In the Philippines, social protest against the expansion of the mining industry has increased in recent years (Triest, 2011). Europe prides itself on placing human rights as “essential values” of its construction. The entry into force of the Treaty of Lisbon in 2009 made the Charter of Fundamental Rights legally binding on member states. However, once EU borders are crossed, the protection and respect of these rights becomes primarily rhetorical. The fault lies primarily in the lack of will (courage?) of our political decision-makers who, unfortunately, unsurprisingly, put the interests of businesses ahead of the well-being and rights of the populations of the South. Frederic Triest

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The supply of minerals to Europeans at any price?

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Notes
↑1	European Commission (2010), Raw Materials Initiative • – meeting our fundamental needs to ensure growth and create jobs in Europe, COM (2008) 699 final/2.6 May, Brussels.
↑2	China controls 95 % of global production of this group of seventeen metals increasingly used in innovative industry and green technologies (wind turbines, batteries, solar panels, lasers, iPhones, touch screens). There is currently no commercially viable recycling or substitution process for this type of metal.
↑3	Other lesser known metals are beryllium, dysprosium, europium, gallium, germanium, helium 3, hydrogen 3, indium, neodymium, niobium, rhenium, rhodium, technetium 99, terbium and, for the rare earth group, yttrium and scandium. See Sciences&Vie, May 2012, p. 52-71.
↑4	European Commission (2011), Meeting the challenges posed by commodity markets and raw materials, Corn (2011) 25, February 2, Brussels.
↑5	The table on the following page was produced from a compilation of European Commission (2011), Meeting the challenges posed by commodity markets and raw materials, Com(2011) February 25, 2, Brussels. The EC was based on a report from the Working Group on the definition of critical raw materials, “Critical raw materials for the EU”, June 2010.
↑6	Adrian van den Hoven (2010), Advancing the EU's Raw Materials Pollcy, Business Europe, hearing at the European Parliament, November 18.
↑7	Since 1990, there have been more than three hundred cases of state prosecutions by companies, often followed by outrageous financial convictions. Thus the judgments against Argentina reach a total of 912 million dollars. For a single case lost before an arbitration court, Ecuador was ordered to pay $698.6 million, Slovakia $1 billion. Today, the amount claimed from a State for a single case can amount to 19 billion dollars.
↑8	European Commission (2012), WEJ Regulation N » 97812012 of the European Parliament and of the Council 25 October 2012 applying a scheme of generalized tariff preferences and repealing the Regulation
↑9	European Commission (2013), Proposal for a regulation of the European Parliament and of the Council amending Council Regulation (ECJ No 122512009) on protection against dumped imports from non-Community countries European Union and CCEJ Council Regulation No. 5971-2009 on protection against subsidized imports from countries not members of the European Community, COM (2013) 192 final, Brussels, p. 6.