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Trade committee hears more witnesses on dangers of Panama FTA

Parliament’s international trade committee continues to hear from witnesses on the already signed Canada-Panama Free Trade Agreement. The deal is clearly pointless and also dangerous considering Panama is a notorious tax haven with lax labour standards, and that the FTA investment provisions will encourage a race to the bottom on environmental protection. On November 29, the committee heard from Jamie Kneen of MiningWatch Canada on existing threats to Indigenous peoples and the environment in Panama. Then on December 1, Teresa Healy of the Canadian Labour Congress commented on the weak labour protections in Canada’s bilateral trade agreements. Here’s a summary of their presentations, which are not posted to the committee’s website yet.


MiningWatch Canada is a pan-Canadian coalition of environmental, Aboriginal, social justice, development and labour organizations that researches and advocates for responsible mining practices and policies in Canada and by Canadian companies abroad. Jamie Kneen’s November 29 presentation to the Commons International Trade Committee (CIIT) highlighted the following:

– The environmental impact of this FTA is impossible to gauge because it hasn’t been made public as it was supposed to be after the signing of the FTA. The report about that assessment is devoid of meaningful information on the environment but manages to stress, “[t]he main effect [of the FTA] is likely to be greater protection for existing Canadian investment in Panama.”

– The report also predicts no changes in existing commodities trade despite recent changes in commodity markets (increased prices making extraction much more attractive globally). Given this reality, “it is more reasonable to assume that the FTA could lead to increased Canadian mining investment in Panama with major implications for the environment.”

– Examples of Canadian mining projects in Panama include: the proposed Cobre Panamá open-pit copper project by Inmet Mining on the Petaquilla concession west of Panama City, which “is forecast to deforest 5900 hectares of mostly primary rainforest in the middle of the Mesoamerican Biological Corridor”; the controversial Molejón gold mine project of Petaquilla Minerals, repeatedly accused by nearby communities of “deforestation and contaminating local rivers, and fined almost $2 million for environmental violations,” and; Corriente Resources’ illegal activity in the Ngöbe-Buglé indigenous territory, “trying to overcome community opposition to a huge open-pit copper mine project so they can first obtain and then sell the property to a larger mining company for development.”

– “This Canadian investment is not a problem in itself; the problems have to do with the conditions of investment and the probable effects of the FTA on those conditions. Environmental protection and legal enforcement and compliance in general in Panama are notoriously weak, even within the framework of existing laws and regulations… The danger is that the FTA’s investment protections will end up protecting mining investments that are taking advantage of lax governance and the resulting low-cost operating environment, undertaking projects that would be extremely unlikely to be approved in Canada or any other country with more stringent controls, while the Agreement on the Environment provides no enhanced protection, nor recourse for affected communities or public interest organizations.”

– There are precedents in the region to prove companies will use investment arbitration this way. These can be threats, such as that from Glencairn Gold (now Central Sun Mining) to sue the Costa Rican government under the Canada-Costa Rica FTA regarding a ban on open-pit gold mining. Or “they may also involve actual lawsuits as in the current case of Pacific Rim Mining, using its US subsidiary to sue the government of El Salvador under the United States-Dominican Republic-Central America FTA (DR-CAFTA) for not issuing operating permits, despite the company’s failure to complete the filings required to obtain such permits and inconsistencies in the information it did submit.”

– In conclusion, “while the objectives of enhancing both investment stability and environmental protection are laudable they are not well met by the present text, although determining the likely impacts of the agreement is made difficult by the absence of a serious environmental assessment, and there is no attempt to frame any aspect of the agreement in terms of sustainable development.”


The Canadian Labour Congress represents 3.2 million workers across the country and has a very critical stance toward neoliberal trade regimes, with their emphasis on protecting investment (employers) versus protecting workers. Teresa Healy presented some of the following points to CIIT on December 1:

– Chapter 18 of the FTA “is a two-and-a-half page outline of objectives and obligations on labour issues, which are elaborated separately in the Agreement on Labour Cooperation. As in previous labour side agreements, the focus is on enforcing domestic labour law rather than raising standards. In line with Canada’s recent commitments, international labour organization core labour standards are invoked.”

– The labour agreement is better than in NAFTA or the Canada-Chile FTA, and the language on acceptable minimum standards is broader than in the Colombia and Peru FTAs, but it does not include the right to strike. “It provides instead for the ‘effective’ recognition of the right to collective bargaining. On trade union rights, then, the agreement is weaker than previous agreements.”

– A problematic non-derogation article (Article 2) in the labour side agreement, which asks Parties to the FTA not to weaken international labour standards, actually means that any violation of those standards “cannot be raised if the requesting party cannot demonstrate the violation was a means to encourage trade or investment.”

– The Institutional Mechanisms are also problematic because there is no means for workers, unions or human rights organizations to directly invoke complaints against companies of the other Party. They must rely on their government to request a consultation, and to request a panel if one is deemed appropriate. At the end of the process, if it gets that far, the offending Party can ignore the panel recommendations as long as it pays a fine of no more than $15 million.

– “The requesting party must establish that the violation arose in order to encourage increased trade and investment. There is no independent review. The process is entirely controlled by the two governments and the bureaucracies established for this purpose. There is no judicial process. The process is not transparent. Again, it’s not independent.” It is also much weaker than the investment provisions.

– Panama is the second most unequal society in the region, with 40 per cent of the population in poverty and 27 per cent in extreme poverty, with acute poverty among Indigenous communities.

– “President Ricardo Martinelli announced unilateral changes to labour law in the summer of 2010. The law ended environmental impact studies on projects deemed to be of social interest. It banned mandatory dues collections from workers. It allowed employers to fire striking workers and replace them with strike-breakers. It criminalized street blockades. And it protected police from prosecution.” Protests against this shift in policy were met with violence by police with six people killed and many more injured. The government was forced to revoke the new labour rules but there are other problems.

– The Panama Canal upgrades and free trade zone established in the adjacent District of Baru are designed to attract investment and facilitate trade but on the back of workers. An oil refinery, agribusiness and warehousing space are envisioned. Article Seven of the law creating this zone makes collective bargaining discretionary for the first six years of operation. There is little job security in the zone either.

– “New laws are outrightly contrary to the non-derogation provisions of the labour chapter, and if these new laws had been established after the free-trade agreement came into force, they would be considered contrary to the agreement. It would appear that not only are the free-trade zones exempt from national labour laws; they are also above international labour provisions as well-and the spirit of those.”