New free trade deals threaten regulation of Phl mining

MANILA, Philippines – New free trade deals to be entered by the Philippines with other economic blocs would hamper the regulation of the country’s mining industry, a report by an Amsterdam-based international research and advocacy institute said.

Transnational Institute said free trade agreements such as the European Union-Philippines free trade agreement and the Regional Comprehensive Economic Partnership (RCEP) pose a threat in the regulation of the local mining sector.

“The Philippines, one of five countries worldwide with the highest overall mineral reserves, has a web of investment treaties which severely constrain the government’s ability to regulate or close polluting mines. This legal straitjacket will become even tighter if the EU–Philippines free trade agreement and the RCEP proceed,” Transnational Institute said.

According to the report, the country’s treaties with Australia, Canada, China, Japan, Malaysia, South Korea and the UK—all host nations of major multinational mining companies—have already created a very effective line of defense against regulation in the mining industry.

“All of these treaties, bar very few exceptions, allow investors to sue the government at international arbitration tribunals if they consider that their profits have been unduly affected. Extractive companies have been one of the sectors most given to launching arbitration lawsuits, and 52 current cases worldwide are relating to mining. Based on the 44 cases for which data are available, mining companies have sued governments for a total of $53 billion,” it said.

Although the Philippines has yet to face a mining-related arbitration lawsuit, Transnational Institute said the country has already experienced a very costly case launched by German firm Fraport.

Despite the international tribunal dismissing the case, it noted the Philippines government still ended up paying $58 million solely in legal fees.

“The Philippines government’s move to negotiate RCEP and the EU–Philippines FTA, which will extend investors’ rights with more countries, is a dangerous step that will prevent effective regulation of the country’s mining industry. Worse still, unlike the existing bilateral investment treaties (BIT), it will be much harder for the Philippines to revise its investment policies in the future since regional trade agreements (unlike BITs) do not expire,” the Transnational Institute said.

With the threats it pose to the regulation of the mining industry, the report suggests the country starts halting negotiations on further treaties and begin seeking revisions to those that are already in existence.