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Chile:
A Fragile Ecosystem;
A Fragile Economy
Extractive Industries and the US-Chile Free Trade Agreement
Prepared by Howl J. Baggins of Global Justice for Animals and the Environment
EXECUTIVE SUMMARY
INTRODUCTION
Chile is overly dependent on extractive industries such as mining and logging, and has some of the highest levels of inequality in the world, which has only been exacerbated by the Free Trade Agreement with the United States, in force since 2004. It is also home to some of the most unique environments in the world - ones that would become endangered by an expansion of mining and logging industries. With a brutal history under the dictator Pinochet, known for his neoliberal economic agenda, which he later backtracked from when he saw that no benefit could be gained from it, Chile is the perfect subject for a campaign against free trade, free trade agreements, and extractive industries. Using resources already provided by previous campaigns against mining and logging in the area, we could combine the two sources of information , locate and inform the public on new issues, and shed some light on the history of Chile. Too often used as a prime example of how well free trade works, we could work to change that perception and hold Chile up high as an example of how free trade destroys lives and the environment. As Forest Ethic's Aaron Sanger put it: “[TheUS-Chile Free Trade Agreement] did/does exacerbate environmental and social problems in Chile by boosting the revenue, and therefore the influence, of companies such as Arauco and CMPC--without requiring any new enviro/social safeguards and even lowering some existing safeguards.”
KEY FACTS
- Exports are 90% primary materials, with 60% of that focused on mined minerals.
- Chile has some of the highest levels of inequality in the world
- Voluntarily removed and/or reduced many of its highly successful duty drawback system and several sectoral policies as part of the run-up to the FTA because the government dubbed them “WTO-illegal export subsidies.” Without these initiatives to expand industry, the Chilean economy runs the risk of becoming even more dramatically dependent on a few extractive industries.
- Barrick Gold Corp. has been target of government reports that just an exploratory mission of the corporation has rendered significant damage to the glacier around the site.
- ForestEthics published reports of over-exploitation of Chile’s rare forests and planting of non-native tree species in the forests
- Two of the major logging companies are: Arauco (sometimes called 'Celco') and CMPC (sometimes
called 'Mininco')
- Chile has a privatized water system that has caused social and environmental problems, such as ignoring environmental protection, and rising prices that takes water out of the hands out of the poor
- Hydroelectric industries are growing in Chile, which poses a risk to the environment, and which could spiral out of control thanks to the FTA
- Chile would make an excellent campaign as two groups, ForestEthics and Protest Barrick, have done work on mining and lumber problems.
- No Dirty Gold is a campaign being done by Earth Works that focuses on making jewelry stores have “responsible sourcing” of gold. It is possible that we could work with them.
-International Rivers has been doing a campaign against Home Depot for their involvement in helping to fund a dam in Patagonia, Chile, that would be dangerous to the environment. Maybe we could help them?
CAMPAIGN PROPOSALS
Campaigns:
Broader campaign versus Gold Mining companies, including Barrick, partnership with No Dirty Gold campaign (Earth Works) http://tradejustice.net/?page=DirtyGoldCampaign
Focused anti-corporate campaign vs: Home Depot, with support from International Rivers http://tradejustice.net/?page=HDPatagonia <http://tradejustice.net/?page=HDPatagonia>
Add the US-Chile FTA to the TRADE Act: it's not in there, along with most FTAs. http://tradejustice.net/?page=ChileFTATradeAct
Advantages of doing work that involves Chile:
A campaign against the exploitation of the resources here could easily fit with campaigns against the high inequality in Chile, and to a condemnation of the history of neoliberal experiments as brutal affairs, and its obvious failure as an experiment. There are also incredibly unique circumstances in Chile's ecosystem that would allow for easy propaganda - from “save the oldest tree”, to “protect the smallest deer”.
CHILE, TRADE POLICY,
AND EXTRACTIVE INDUSTRIES
Chile's ecosystem relies upon the glaciers in the mountains melting down and flowing throughout the country. Many groups of people living in Chile also rely deeply upon these glacial rivers. The many unique animals, such as the world's smallest deer, the pudu, now listed as Vulnerable in the IUCN list of threatened species, depend upon this balance, and on the incredibly isolated ancient forest in and around the Andes that make up Chile. (8) Not for long, with the FTA.
Similarly, Chile's economy relies upon a tenuous balance between government and the private sector. With some of the only financial system controls of an OECD (Organisation for Economic Co-operation and Development) member, and requirements for investment that make only long-term, profitable investments worthwhile, Chile's economy is as unique as its fauna. And with exports that are 90% primary materials, with 60% of that focused on mined materials, in particular copper, Chile is, also, less uniquely, overly sensitive to the common shocks of the market. (7.) Which is encouraged by the FTA.
Unfortunately, thanks to the Chile-U.S. Free Trade Agreement, which contains NAFTA-like provisions in Chapter 10, both of these rare systems are at risk. Chile voluntarily removed and/or reduced many of its highly successful duty drawback system and several sectoral policies as part of the run up to the FTA, because the Chilean government dubbed them “WTO-illegal export subsidies”. Without these initiatives to expand industry, the Chilean economy runs the risk of becoming even more dramatically dependent on a few extractive industries, and so more sensitive to shocks. (7.)
The Atacama desert in northern Chile, the driest in the world, is also the home of the mining industry of Chile, and its most valuable metal - copper. The altiplano (which includes Chile, parts of Argentina, parts Bolivia, and parts of Peru) produces 40% of the world's copper. One of the largest open-pit copper mines in the world, Chuquicamata produces 18% of the world's copper. Chuquicamata also, in order to keep this mine running, pumps in 15 billion gallons of water a year - 8 times the consumption of the capital of Santiago. This can cause aquifers, the natural wells under the rocks that farmers have been relying on for more than 2,000 years. (11) It also pollutes the Loa River, the longest river in the country. (10) Codelco, which owns this mine, is a state owned corporation, nationalized by Allende and, after the violent military coup, Pinochet formalized the creation of this corporation by decree. (9)
A not so treasured rare system of Chile is known as the “Chilean Model”, and is a way to privatize water sources. A system wherein the president, investors, the Ministry of Public Works, and the Water Cadastre all work together to ensure investment in the Chilean water system. Unfortunately, for Chileans, this has meant a decrease in availability of water, with price increases of anywhere between 41% to 240% between the years 1986-2000. In 2005, a reform bill called the Water Code Reform was passed that was intended to deal with the many social and environmental problems resulting from this privatization of water. The Major changes were: “1) Giving the President authority to exclude water resources from economic competition in cases where necessary to protect the public interest. 2) Obliging the General Directorate of Water Resources (DGA) to consider environmental aspects in the process of establishing new water rights, especially in terms of determining ecological water flows and protecting sustainable aquifer management. 3) Charging a license fee for unused water rights and limiting requests for water use rights to genuine needs, as a deterrent against hoarding and speculation.” (10) This problem is exacerbated by the FTA.
~40% of Chile's electricity is produced by hydroelectric dams. Endesa and Colbun, two electric companies, formed a joint venture called HidroAysen to develop hydroelectric dams. This venture proposes to build 5 dams on the Baker River and Pascua River. “The HidroAysén project is being opposed by the Natural Resources Defense Council (NRDC), Ecosistemas, the Citizen Coalition for Aysen Life Reserve, and Chilean celebrities. The opposition argues the project would be environmentally devastating, lead to more destructive projects, ruin pristine ecosystems, and that alternatives such as conservation policies remain to be instituted.” (10) This problem will grow as more and more foreign investors look to make a profit off of this expanding, dangerous, industry. International Rivers is heading a campaign against Home Depot for their support of the project, through financing by purchasing materials produced by two companies which are the pawns of two larger companies. These two pawns also happen to be the two named by ForestEthics having having the most impact on the Chilean environment . Go figure....
Barrick Gold Corporation has been putting the moves on Chile for some time, actions that not only the people, but the government is suspicious of, especially after government reports that just an exploratory mission of the corporation has rendered significant damage to the glacier around the site that Chile depends so much on for water. (1, 2) This is known as the Pascua-Lama project, which is strongly opposed by the local indigenous population . Said one woman from a group of 250 indigenous families that inhabit “the last unpolluted valley of northern Chile” to Barrick Gold Corp., ““We do not need your money, and we are not seeking compensation,” she said. “We just want you to leave our lands and allow us to live in peace.” (12) With the FTA, Barrick Gold Corporation may be in a better position to attack the Chilean government and ignore the wishes of the people in the area, and sue for the right to mine areas that whole communities rely on to be clean.
ForestEthics has also published reports of over-exploitation of Chile's forests, which are some of the rarest in the world (.2% of the world's forests are similar to Chile's), and home of the world's oldest tree (the 5,000 year old Monkey Puzzle Tree ), and the planting of non-native tree species in the forests. (3) New gateways for foreign investment in logging may throw this delicate area of the world more out of balance. Arauco and CMPC are two companies that have been having a negative impact on this environment , which are owned by two larger companies that are funding the dam that International Rivers is protesting.
Here is what Aaron Sanger, of ForestEthics, had to say on the effects of those logging companies taking advantage of Chile's age old forests, and the effects of FTAs on Chile:
“It did/does exacerbate environmental and social problems in Chile by boosting the revenue , and therefore the influence, of companies such as Arauco and CMPC--without requiring any new enviro/social safeguards and even lowering some existing safeguards. Of course, with China now replacing the US as Chile's 'most desirable customer', and revenues to Chilean companies from the US in decline, it would be good to consider whether China or the TLC is currently the bigger 'exacerbater'.”
SOURCES
1. http://www.miningwatch.ca/en/halifax-initiative-publishes-canadian-mining-map
2. http://halifaxinitiative.org/updir/miningmap.pdf
3. http://www.forestethics.org/chilean-government-weak-on-native-forest-protection-and-illegal-logging-1
4. http://www.ustr.gov/sites/default/files/uploads/agreements/fta/chile/asset_upload_file1_4004.pdf
5. http://www.citizen.org/Page.aspx?pid=3049
6. http://www.citizen.org/documents/CTCpressreleaseCHILE.pdf
7. http://www.citizen.org/documents/chilealternatives.pdf
8. (plus, a nature show on Chile's unique ecosystem on PBS, and some wiki articles on some animals)
9. http://en.wikipedia.org/wiki/Codelco
10. http://en.wikipedia.org/wiki/Water_resources_management_in_Chile#cite_note-FAO-12
11. http://www.orionmagazine.org/index.php/articles/article/158/
12. http://protestbarrick.net/article.php?id=595
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