Trade in raw materials between the EU and Latin America

EURO-LATIN AMERICAN PARLIAMTARY ASSEMBLY RESOLUTION: Trade in raw materials between the EU and Latin America on the basis of the report by the Committee on Economic, Financial and Commercial Affairs EP co-rapporteur: Catherine Grèze (Verts/ALE) LAC co-rapporteur Rafael Flechas Díaz (Andean Parliament) Saturday, 29 March 2014 - Athens AT\1025902.doc AP101.309v06-00

EUROLAT Resolution of 29 March 2014 Athens on the basis of the report by the Committee on Economic, Financial and Commercial Affairs Trade in raw materials between the EU and Latin America The Euro-Latin American Parliamentary Assembly, having regard to Article 208 of the Lisbon Treaty, which states that the Union s development cooperation policy shall have as its primary objective the reduction and, in the long term, the eradication of poverty, having regard to the fact that the Union s development policy has as its primary objective the reduction and, in the long term, the eradication of poverty, having regard to the Commission Communication of 4 November 2008 entitled The raw materials initiative meeting our critical needs for growth and jobs in Europe (COM(2008)0699), having regard to the European Parliament s resolution of 13 September 2011 on an effective raw materials strategy for Europe, having regard to the Durban agreement on climate change, having regard to Latin American policies to protect the environment and natural resources, having regard to the endeavours of Latin American States to conclude agreements under which the profits from extractive industries have the greatest impact on sustainable human development, having regard to the recommendations adopted by the International Labour Conference, having regard to Convention 169 of the International Labour Organization (C169 ILO), having regard to the UN Declaration on the Rights of Indigenous Peoples, having regard to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Pub.L. 111-203, H.R. 4173), having regard to the Inter-American Court of Human Rights judgment of 28 November 2007 in the case of the Saramaka People v. Suriname, A. whereas the Latin American and Caribbean (LAC) region is the world s main source of raw materials, and whereas 13 of the countries in the region number among the world s top 15 providers of mineral resources; B. whereas Latin America and the Caribbean form the most biodiverse region on the planet, with almost half the world s tropical forests, 30 % of all its available fresh water and 40 % of its renewable water resources and according to the UN has 23 % of the world s forests, yet is nevertheless the region with the highest rate of deforestation in the world and where the largest number of tree species are vulnerable, threatened or endangered with AP101.309v06-00 2/7 AT\1025902.doc

extinction; C. whereas the Free Trade Agreement between the EU and Colombia and Peru and the EU- Central America Association Agreement will increase the trade flow in raw materials from Latin America to Europe and whereas these agreements do not include binding mechanisms to ensure compliance with environmental, human rights and labour standards; D. whereas, owing to high demand, speculation and their relative scarcity, raw materials have seen high growth as well as volatile prices, and whereas this has led to a re-primarisation of production structures in the region, meaning that raw materials now account for around 40 % of exported goods; E. whereas a number of governments have authorised mining in natural reserves, national and regional parks, wetlands, forest reserves, moorland and other protected areas; F. whereas there is a close correlation between social conflicts and mining in both the EU and LAC countries, as can be seen from the campaigns of local residents and European social movements in opposition to opencast mining projects in Greece, Spain, Romania and Bulgaria, and similarly, in Colombia, the Comptroller General of the Republic has confirmed that 80 % of human rights violations in 2011 were in mining districts, while in Peru the Presidency of the Council of Ministers has stated that the vast majority of the 62 social conflicts recorded since the beginning of 2013 have been linked to natural resources and extractive industries; G. whereas the rise in the price of raw materials is mainly due to financial speculation on the stock markets, where speculative attitudes take precedence over actual demand, and whereas no form of regulation exists to control market speculation, either internationally or in EU-LAC bilateral agreements; H. whereas the financial crisis in the euro zone and the slowing down of the Chinese economy are likely to have an effect on world demand for Latin American raw materials; I. whereas, as a result of this, there is still a reliance on long-established LAC-EU trading structures, which are characterised by a one-way flow of raw materials into Europe and the increasingly unequal trade of natural resources for, primarily, manufactured products with high added value going to Latin America from the EU; J. whereas the European and Latin American countries rely on an energy model based on fossil fuels, which increases and accelerates global warming; K. whereas it is unviable in the long term to use an economic development model based on the exploitation of natural resources; L. whereas, generally speaking, LAC countries are seeing high levels of economic growth; whereas, however, this comes at a high environmental and social cost as there are not enough proper regulatory systems or procedures for planning, land use planning and the distribution of wealth, as only a very small proportion of the population enjoys the benefits of this growth; whereas redistribution of wealth in raw materials should help reduce inequalities; M. whereas in view of the finite nature of natural resources, the undesirable effects of the current extractivist system where democratic accountability is concerned, in that it deprives future generations of the benefits thereof, the low levels of job creation, the insufficient revenue for national exchequers, land pressures, deforestation, water AT\1025902.doc 3/7 AP101.309v06-00

shortages, air and water pollution, loss of biodiversity, climate change, displacements and poverty belts in major population centres, EU-LAC trade should be accompanied by systems that shift the focus towards diversifying the range of exports, should promote exports with added value, adjust the balance where profits are concerned and develop a sustainable model for manufacturing and trade in the future; in this respect a green economy should help to eradicate poverty and create sustained economic growth, increasing social inclusion; EU-LAC countries should promote sustainable extraction methods and fair trade relations between the EU and Latin America; N. whereas ILO Convention 169 states that indigenous peoples must be consulted on decisions affecting them, including the carrying out of extractive activities on their land; whereas several European and Latin American countries have not yet ratified this treaty; O. whereas to overcome the risks involved in a purely extractive economy, it is essential to foster diversification in other areas of the economy; to increase productivity by strengthening the local manufacturing system with cutting edge technology; to develop agriculture policies that guarantee sustainable food sovereignty by focusing them on increasing added value, tailoring agricultural production first and foremost to food security and local, national, regional and continental food needs; whereas the exploitation of raw materials leaves less land for food production and pollutes the soil and water; P. whereas this challenge is manifold and involves issues connected with democratic order and political institutions, technology, resource efficiency, investment regulation, control of financial speculation, a review of both international and bilateral legislation in pursuit of an appropriate model of production which does not endanger food sovereignty or destroy the environment and which requires short, medium and long-term action negotiated between both regions with public participation that is as broad as possible; 1. Emphasises the urgent need to create an EU-LAC association based on shared responsibility in the interests of the survival of the planet, and the need for change to ensure the sustainable management of finite resources, in particular non-renewable raw materials, while guaranteeing countries shall be able to decide for themselves concerning their natural resources; also emphasises the need for profits to be taxed and for the public to be involved in democracy, with the aim being to establish a balance between interests and rights; this should increase corporate social and environmental responsibility with the aim of establishing a balance between economic interests, responsibilities and human rights; 2. Calls on the Member States to cooperate with each other and with the countries of Latin America within the framework of a joint strategy on raw materials; asks for this joint EU- Latin American strategy to exploit the synergies between economic, mining, industrial and ecology policies; 3. Emphasises that the abundant profits from raw material exports ought to be more widely distributed among the population, provide governments with greater fiscal space and act as a platform for sustainable development; 4. Stresses that in order to avoid recession, the EU and Latin American economies need to regulate trade between them based on a renewed commitment by all the governments to revitalise the equitable multilateral trade system; 5. Emphasises that the EU-LAC association needs structural changes to be made on both AP101.309v06-00 4/7 AT\1025902.doc

sides to foster trade and investment that minimise the adverse socio-economic impact that the current situation is having, shift the focus of economies onto reducing dependence on raw materials and their use and onto recycling and reuse in both continents; emphasises, furthermore, that the challenge and necessary condition in this context is finding solutions leading to a sustainable energy transfer in the long term and which in the meantime make life better for the public, without neglecting environmental protection; 6. Points to the importance of EU-LA relations in the sphere of trade in raw materials; insists that this relationship be based on mutual interests, points out that in fostering sustainable mining practices it is important to exchange best practices on good governance, increased resource efficiency, reuse and recycling, management of tailings and waste-rock, rehabilitation of mine legacy, health and safety, protection of workers and the eradication of child labour; 7. Draws attention to the displacement of local, mainly indigenous, population groups in areas where mineral and energy resources are being exploited and calls on the Latin American countries involved to uphold the rights of these population groups; 8. Welcomes the fact that trade relations with partners in Latin America have become a priority for the EU and calls for bilateral agreements between Latin America and the EU, and those currently being negotiated and prepared, to factor in environmental and health standards, to include efficient and binding mechanisms needed to preserve the physical situation for the future, and to implement a production model that is sustainable and inclusive, taking account of the fact that natural resources are finite; in this context, supports cooperation for energy transition towards a sustainable and inclusive model with green economy policies; 9. Where technology is concerned, proposes increased cooperation in technology transfer, upholding health and safety rules, infrastructure to limit chemical waste and pollution, allowing the whole production chain to be monitored; the health and safety measures shall be compulsory for all companies operating in EU and LAC countries; insists on the absolute necessity of a transition to sustainable production structures which is backed by sufficient financial resources; stresses the need for a review of policies relating to tax and royalties, intellectual property and technology transfer, as well as measures against tax fraud, to ensure transparency concerning investments, the use of royalties and payment of taxes; calls on the EU-LAC countries to work together to combat the tax havens from which companies exploiting raw materials may operate; 10. Calls for all trade agreements to include the Extractive Industries Transparency Initiative (EITI), which shall be made compulsory in both Europe and Latin America, paving the way for the EITI++ model proposed by the World Bank and the development of the legal framework for the implementation of country-by-country reporting and the development and implementation of laws modelled on the Dodd-Frank Act and its implementing provisions, which covers cooperation as regards transparency on tax, supervision of the financial sector and of investment practices and production conditions; trade in metals and hydrocarbons produced using slave labour or in other illegal ways, or sourced in protected areas, shall be excluded; 11. Also calls for such agreements to contain joint mechanisms to oversee both investment practices and their transparency and sustainable impact, and production conditions, and calls for the trade in metals and hydrocarbons produced in violation of labour and human rights laws, for instance under inhumane working conditions or in other illegal ways, or AT\1025902.doc 5/7 AP101.309v06-00

which are sourced in protected areas, to be excluded; 12. Calls for the inclusion in the agreements of clauses based on anti-corruption conventions, the fight against tax fraud and tax evasion and financial speculation in raw materials, and respect for human, labour and environmental rights; 13. Emphasises the importance of ensuring that the trade agreements are compatible with international commitments concerning human rights and the environment, and particularly with the 2007 UN Declaration on the Rights of Indigenous Peoples and the 2010 UN Resolution establishing the right to water and sanitation as a human right; 14. Welcomes the fact that the Madrid Declaration explicitly recognises the principle of the sovereign right of States to manage and regulate their natural resources, while stressing that due attention should be paid to sustainability criteria; 15. Emphasises that it is the duty of governments and legislators to take into account the possible effects of their decisions on populations most directly affected, including indigenous peoples; stresses that said governments and legislators shall therefore consult affected populations as required and provide them with appropriate information; points out that the EU as a whole and EU-based companies operating in Latin America should display exemplary behaviour in environmental and social matters, observing the principles of corporate social responsibility; takes the view that it is vital to ratify and implement the relevant ILO Conventions and refer to its main principles in agreements which are being negotiated or reviewed; urges those CELAC and EU countries which have not already signed ILO Convention 169 to do so as soon as possible and, keeping the prior consultation in mind, to move towards the introduction of its rules and their immediate implementation; 16. Emphasises that for Latin America it is vital that it diversifies more its trade, based until now on raw materials, and continues to progress towards sustainable trade in goods and services with greater added value; 17. Insists that European and Latin American companies and their subsidiaries shall report and be responsible in the host country and in their countries of origin for any breach of human rights, environmental standards or ILO core labour standards by their subsidiaries abroad and the entities they control; with victims having the right to appeal to the International Labour Organization (ILO), the World Trade Organization (WTO) and the International Centre for Settlement of Investment Disputes (ICSID); points out that the EU as a whole and EU-based companies operating in Latin America shall display exemplary behaviour in environmental, social and employment-related matters; and that the EU's image in Latin America shall be promoted in observing the principles of corporate social responsibility; considers that in the context of combating environment crime, supporting the move to establish an International Penal Court for the Environment is important; 18. Proposes that the criteria relating to the new Latin American Investment Fund be redefined, so that its main aim is to make an effective contribution to combating inequality, poverty eradication, and the achievement of the Millennium Goals and objectives relating to the sustainable exploitation of resources, while respecting human and labour rights and, in particular, the rights of indigenous peoples; AP101.309v06-00 6/7 AT\1025902.doc

19. Supports the strengthening of regional financial institutions and the tightening-up of their social and environmental requirements, such as improving access to information and public involvement, clear and transparent criteria for monitoring their impact and that their finances and projects should be based on sustainable development; supports the setting up and in motion of regional bodies to settle investment disputes, able to guarantee fair and balanced rules when handling conflicts between transnational companies and states; 20. Asks the Commission to establish a control mechanism aimed at preventing the import into the EU of mining products extracted without social, labour, safety and environmental guarantees; encourages the Commission to establish a European quality label for mining products extracted in accordance with minimum social, labour, safety and environmental standards; 21. Calls on the Commission and the EU s strategic suppliers countries to jointly develop an effective raw materials traceability system from extraction and import through to recycling or disposal, and to introduce a mutual certification scheme for raw materials and their trading chains (Certified Trading Chains), so that trade can be guaranteed to be fair, and, in particular in order to prevent abuses with regard to trade in raw materials from crisis regions; calls on the Commission to cooperate with the relevant international institutions (UN, OECD, ILO) with a view to identifying and endeavouring to harmonise the best certification practices; ***** 22. Instructs its Co-Presidents to forward this resolution to the Council of the European Union and the European Commission, and to the parliaments of the Member States of the European Union and all the countries of Latin America and the Caribbean, the Latin American Parliament, the Central American Parliament, the Andean Parliament and the Mercosur Parliament, the Secretariat of the Andean Community, the Committee of Permanent Representatives of Mercosur, the Permanent Secretariat of the Latin American Economic System and the Secretaries-General of the Organization of American States and the Union of South American Nations. AT\1025902.doc 7/7 AP101.309v06-00