Globalization and Neoliberal Legal Reforms

The extractive model that Canadian mining companies operate under has come to prominence against the back-drop of neoliberalism and corporate globalization.

Neoliberalism represents a set of thoughts and policies that have gained increasing traction with governments and institutions globally since the mid-1970s.  Characterized by corporate and financial de-regulation, drastic reductions in funding for social programs, privatization and a reliance on the logic of the free-market – neoliberalism has led to large-scale economic inequality and has spread globally through mechanisms such as Free Trade Agreements and programs promoted by the World Bank and International Monetary Fund (IMF).
cartoon of the earth with men in suits surrounding it like it's a table
Globalization in this context has been principally based on the territorial expansion of transnational corporations whose decisions and growth respond to the logic of financial capital. Over the years, these corporations have managed to install the conditions for political actors to implement policies in their favour.

In the mining sector, a shift to neoliberal ideology led to mining code reforms in some 100 countries between the 1980s and the early 2000s.

These legal reforms have followed a similar pattern, including:

  • Privatization of state mining companies.
  • An end to restrictions on foreign ownership and repatriation of profits.
  • Lower rates of taxation and royalties.
  • Greater flexibility within labour laws.
  • Termination of performance requirements like local sourcing and hiring.
  • Streamlining of administrative processes.
  • Greater technical services for industry.
  • Removal of “subjective” elements of bureaucratic discretion from the permitting and approvals process in order to make permitting easier.1

Parallel to these, additional reforms have taken place. Some have occurred to open up access to or purchase of collectively owned lands. Others have weakened environmental laws. Yet others were spurred by the signing of thousands of bilateral and multilateral free trade and investment protection agreements that cover a range of issues from tariff reductions to investment regulation and intellectual property rights. These trade and investment agreements have been described as a “Mechanism through which market discipline is advanced and the power of investors in the dominant capitalist countries is consolidated.”2

Spotlight on Free Trade Agreements – Corporations Suing States

A black and white cartoon of the scales of justice. On one side three people sit in the scale, on the other a corporate charter. A large hand pushes down on the side holding the corporate charter.
Photo: Matt Wuerker, Politico
Since Canada, the US and Mexico signed onto the North American Free Trade Agreement (NAFTA) in 1994, Free Trade Agreements have tended to include investor protection provisions that enable companies to sue signatory governments. Using an expanded concept of expropriation, governments can be sued if they take regulatory action that diminishes the company’s expected earnings, obliging governments to compensate investors if they can demonstrate that their income will be adversely affected.3

Such provisions are increasingly being used by oil, gas and mining companies to sue states for outlandish amounts of money when they makes decisions that they do not like. For example, OceanaGold (formerly Pacific Rim Mining) is suing the state of El Salvador for $301 million USD for not having granted it a permit to put a gold mine into operation, even though the company did not meet the regulatory requirements to obtain the permit.4

AS of March 2013, there were 169 cases pending at the most frequently used tribunal, the International Center for Settlement of Investment Disputes (ICSID), of which 60 (35.7%) were related to oil, mining, or gas. By contrast, in 2000, there were only three pending ICSID cases related to oil, mining, or gas. During the entire decades of the 1980s and 1990s, there were only 7 such cases filed.5

More on the Mining Model


Source: [1] David Szablowski, Transnational Law and Local Struggles: Mining, Communities and the World Bank, Hart Publishing, Oxford, 2007. [2] Lisa North, Timothy David Calrk and Viviana Patroni, Community Rights and Corporate Responsibility: Canadian Mining and Oil Companies in Latin America, Between the Lines, 2006. [3] Canadian Network on Corporate Accountability, “Dirty Business, Dirty PRactises: How the Federal Government SUpports Canadian Mining, Oil and GAs Companies Abroad,” Ottawa, May 2007. [4] International Allies with the National Roundtable on Metallic Mining in El Salvador, “Debunking Eight Falsehoods by Pacific Rim Mining/OceanaGold in ElSalvador,” March 2014. [5] Sarah Anderson and Manuel Perez-Rocha, “Mining for Profits in International Tribunals: Lessons for the Trans-Pacific Partnership,” Institute for Policy Studies, April 2013.