Proceedings of the Standing Senate Committee on
Foreign Affairs and International Trade
Issue 9 - Evidence - Meeting of May 1, 2014
OTTAWA, Thursday, May 1, 2014
The Standing Senate Committee on Foreign Affairs and International Trade met this day at 10:30 a.m. to study security conditions and economic developments in the Asia-Pacific region, the implications for Canadian policy and interests in the region, and other related matters.
Senator A. Raynell Andreychuk (Chair) in the chair.
[English]
The Chair: Honourable senators, we have before us, first of all, from MiningWatch Canada, Ms. Catherine Coumans, Research Coordinator and Asia-Pacific Coordinator, in person here today. From the National Endowment for Democracy, Mr. Brian Joseph, Senior Director for Asia and Global Programs is coming to us from Washington, D.C., by video conference.
I will take you in the order that you are on the panel paper. Ms. Coumans, I will start with you. The committee is studying security conditions and economic development in the Asia-Pacific region, the implications for Canadian policy and interests in the region, and other related matters. You are before us as experts in your fields to tell us what you think might be helpful in our study. We generally start with opening statements and senators then like to ask questions.
Welcome to the committee.
Catherine Coumans, Research Coordinator and Asia-Pacific Coordinator, MiningWatch Canada: Thank you, madam chair and honourable senators, for inviting me to present to you today.
I appreciate that you've invited me realizing that I will address the broad issues that you're examining, the security conditions and economic developments in the Asia-Pacific region in the context of Canadian policy and interests from the perspective of one critical Canadian sector, the mining sector.
My personal understanding of the impacts of this sector in the region started in 1988 when I was studying for my PhD on a small Philippine island where a major Canadian mining company was mining for copper and gold. I will return to this issue shortly.
Since 1999, the year MiningWatch Canada was founded, I have worked for MiningWatch as research coordinator and Asia-Pacific program coordinator, a role that has allowed me over the last 15 years to assess the impacts of Canadian mining companies in countries from India to New Caledonia. Given the time constraints and the countries on which this committee has decided to concentrate, I will focus my brief, country-specific comments on the Philippines, Burma and Indonesia.
Additionally, I hope to have time to address some larger policy issues related to economic development in the region, in particular with respect to the ways in which Canadian policy related to mining could lead to more beneficial outcomes than is currently the case. In this respect, I will focus on the role of international investment agreements, tax avoidance and evasion, and remedy for harm caused by our mining companies overseas.
Starting with the Philippines, I will preface my comments by noting that in an increasing number of countries around the world mining is, in fact, the face of Canada abroad. This is certainly the case in the Philippines, where the largest industrial disaster of the past two decades is widely known to be the Marcopper toxic mine waste spill of 1996, which has left the country not only with a very serious and unresolved environmental legacy, but also, as a consequence, this mining disaster has continued to dominate the conversation about mining in the Philippines.
In a nutshell, the Canadian mining company Placer Dome operated a copper mine on a small island province of Marinduque between 1969 and 1996. In that time, three major ecosystems were contaminated by mine waste: a bay where the company purposefully dumped 200 million tons of mine tailings over 16 years, and the island's two major river systems that were flooded by mine waste due to failures of dams. In one of these cases, two children were drowned in the mine's waste as it flooded down the river. After the final disaster in 1996, Placer Dome left the island and the Philippines. The contaminated ecosystems remained unremediated and the case has become a festering wound in the country's policy discussions about mining, particularly around foreign investment in mining.
Following a lawsuit launched almost 10 years ago in the U.S. against Placer Dome and its successor company Barrick Gold, Barrick is now offering the Philippine province around $13 million, after legal fees, to settle the suit out of court. This amount is far short of what is needed to remediate the damaged ecosystems, but even worse is the fact that Barrick has placed unreasonable conditions on this money, including that it cannot be used to remediate damaged ecosystems, effectively obliterating the purpose of the lawsuit.
Mining, even responsible mining, frequently leaves behind sites that will need perpetual care and maintenance, and this is language that the industry uses. This is a very high cost for developing countries that effectively creates a development deficit. It is critically important that Canadian mining companies show leadership by accepting responsibility for the care and maintenance of mined-out sites rather than off-loading this expense on poor and developing countries. Barrick has an opportunity to show such leadership in the Philippines. By providing adequate funding to remediate the damaged ecosystems on the island, Barrick could also start to rehabilitate the image of Canadian mining in that country.
The second example I want to give you from the Philippines relates to one of the themes of your investigation, security. It is important that you understand that mining can not only exacerbate security conditions in countries where law and order are already a concern, such as in the Congo, but also that mine sites themselves often become conflict zones and militarized, even in areas that were previously relatively peaceful.
In the Philippines, extra-judicial killings of citizens who oppose the damaging impacts of large-scale resource extraction projects, including mining, have become nothing short of epidemic. In March, three family members from an indigenous region of the Philippines were brutally killed. They had opposed the activities of a Canadian mining company on their ancestral lands. I will read to you a short excerpt from a letter to the Philippine President by the Canadian chapter of the International Coalition on Human Rights in the Philippines.
We condemn in the strongest terms the brutal killing of Freddie "Fermin" Ligiw, Edgar Ligiw and their father Licuben Ligiw on March 2, 2014 in Baay-Licuaan, Abra. The massacre of the Ligiw family is just the latest in the spate of killings, abductions and similarly grievous human rights violations committed against leaders and members of people's organizations that have been reported since January 2014. Freddie was a member of a youth organization, Sidakan-Anakbayan, and with his brother and father and other family members was a member of the Cordillera People's Alliance, KASTAN (People Defending the Ancestral Land) and Baay Licuaan (Stand Up for Your Rights) that successfully resisted the exploration activities of Canadian company, Olympus Mining Co.
On April 15, Global Witness issued a report called "Deadly Environment," which details the sharp rise in extra-judicial killings between 2002 and 2013 of people protecting the environment and rights to land. Disputes over mining are mentioned as one of the key drivers. The Philippines was singled out as the third most dangerous place to defend rights to lands and the environment.
Turning now to Burma, I want to preface my comments on Burma by reminding this committee that there is very well-established literature on the relationship between weak governance jurisdictions, which Burma certainly still is, and negative development outcomes related to resource extraction.
I submitted a brief on this topic to the House of Commons Standing Committee on Foreign Affairs and International Development in their study on the role of the private sector in achieving Canada's international development interests. I did this in January 2012 and I would be happy to provide this committee with a copy of that brief.
Large-scale resource extraction and corruption is a very toxic mix that leads to development deficits. Corruption is a major problem in Burma. The Revenue Watch Institute recently ranked Burma fifty-eighth out of 58 countries examined for revenue transparency. The military does not have to report its revenues or expenditures to the government. The military owns the two biggest holding enterprises in the country — the Union of Myanmar Economic Holdings and Myanmar Economic Corporation. Other big business players are cronies of the former military regime, and some of these businesses are owned by individuals who are still on the Canadian Special Economic Measures Act, SEMA, sanctions list, for example Tay Za.
Another major concern related to resource extraction is conflict over land. Land is the biggest issue on rural people's minds in Burma right now, and these people make up 85 per cent of the population. Concerns about land tenure and land rights are the main factors making "development" a dirty word for rural people in Burma, where it is seen as being related to military invasion and annexation.
A graphic example of this reality are the protests at the Letpadaung copper/gold mine, in north-central Burma, where farmers and monks who have conducted marches against the mine have been attacked by the military and police with white phosphorous. When the farmers went back to till their land, they were imprisoned as political prisoners. These current and ongoing protests are rooted in land seizures and abuses that occurred under Canadian mining company Ivanhoe's tenure and, even though Ivanhoe now no longer owns this property, these protests continue.
Turning now to Indonesia, Indonesia is rapidly developing, but, according to a Pew Research Centre poll released in 2013, only 37 per cent of Indonesians feel that their economy is doing well, with rising prices, growing income disparity and unemployment being major concerns. With its large population, conflict over land use is common. Additionally, the relentless pressure to strip the country of its remaining forest cover, even in protected areas, is ongoing.
Toronto-listed East Asia Minerals Corporation has been at the centre of a major controversy in this regard. The company has been seeking to strip 1.6 million hectares of forest cover in Aceh province, on the island of Sumatra, of its protected status in order to allow continuation of the company's drilling program. The company was very up front that it was actively working with the government to reclassify the land from "protected forest" to "production forest," allowing for nearly 1 million hectares to be opened up for mining.
Significant news has recently come out of Indonesia that allows me to transition out of a country-specific discussion to consider some related emerging policy issues with relevance to this committee.
I will look first at the issue of international investment agreements. Last month, the Indonesian government announced that it plans to terminate its bilateral investment treaty with the Netherlands. Indonesia's move to cancel its investment treaty with the Netherlands comes as the country faces a rising number of treaty-based investment arbitration cases, with transnational companies claiming hundreds of millions of dollars in damages.
Bilateral investment treaties contain far-reaching investment protections, backed up by an increasingly controversial dispute settlement procedure, ISDS, that allows transnational corporations to directly sue sovereign states over actions and policies that might affect the profitability of their investments.
Indonesia has been challenged recently over an act meant to protect the environment against mining companies. Under threat of debilitating investment claims, payable, if awarded, out of public money, Indonesia has seen itself forced to change or repeal regulatory measures. In the most recent, highly controversial treaty-based arbitration case, a London-based company called Churchill Mining is suing the Indonesian government to the tune of $1 billion to $2 billion.
There needs to be a serious debate in Canada about Canada's international investment agreements that prioritize protective measures for Canadian investment abroad while imposing conditions that may undermine development in developing countries and may lead to conflict in these countries. These agreements can be transformed into vehicles for enhanced sustainable development in host countries. I suggest that this committee invite Professors Anthony VanDuzer, Penelope Simons and Graham Mayeda, of the University of Ottawa, who have just published a groundbreaking book on this topic and will be able to enlighten you on the issue far better than I.
Turning now to tax avoidance and tax evasion, the Philippines government is on record as saying that it is seeking greater benefits in terms of taxes and royalties from mining companies that operate in the country. Interestingly, this issue is not solely about raising tax and royalty rates, but also about actually collecting monies on the established rates. Canadian multinational companies, including mining companies, are using subsidies and tax havens, such as Bermuda, the Cayman Islands and Switzerland, to carry out transactions using the accounting practice known as "transfer mispricing" to shift profits into these tax havens and reduce the taxes they pay in the countries where they are extracting resources.
Global Financial Integrity estimates that between 2001 and 2011 Bangladesh lost $14 billion to transfer mispricing, corruption and tax evasion. Seventy-five per cent of this was due to transfer mispricing. This deprives Bangladesh of $310 million per year in tax revenue that has moved into tax havens.
This is also happening in Canada. While Canadian taxpayers may be willing to forgo billions in taxes, this is an extremely harmful practice in poor and developing countries. A first step the Canadian government could take to reverse this harmful practice would be to require all Canadian companies to publicly list their beneficial owners. This will provide us with oversight of which companies have related businesses in tax havens.
The next step is automatic information exchanges between jurisdictions. Canada led resistance to automatic information exchanges in the last G20 meeting in 2013. It does not make sense to provide aid to countries in the Asia-Pacific but not to help them to combat illegal capital flight. If I may, I would recommend that this committee invite Dennis Howlett, of Canadians for Tax Fairness, to present on this issue.
The final topic I'd like to address today is the topic of remedy. I would like to say a few words about remedy for human rights abuses. As you will appreciate from the few examples I've provided today, mining can have devastating consequences for people impacted by mining projects. When those affected people live in so-called weak governance zones, access to remedy for the harm that they have endured can be all but impossible. This problem has been recognized by the United Nations and remedy is one of the three pillars in the UN Guiding Principles on Business and Human Rights.
One way to provide access to remedy for people who have been harmed by Canadian mining companies operating overseas is by creating access to our courts in Canada and by creating an effective extractive-sector ombudsman in Canada who can hear complaints by people from overseas. This ombudsman would be able to investigate these complaints, report on these investigations and make recommendations for remedy to the company, as well as policy recommendations to the Canadian government.
I'm happy to answer any questions about this, and you can certainly find more information about this request for access to remedy in Canada through the Open For Justice campaign site of MiningWatch Canada and the Canadian Network on Corporate Accountability.
Brian Joseph, Senior Director for Asia and Global Programs, National Endowment for Democracy: Madam Chair and honourable senators, thank you for inviting me to appear before your committee this morning to talk about political developments in Southeast Asia. Today I will focus on Burma, a state in transition.
I am the Senior Director for Asia and Global Programs at the National Endowment for Democracy, a Washington, DC-based, Congressionally funded, non-governmental organization dedicated to promoting democracy and freedom around the world. We have worked in Asia since the early days of the endowment in 1984 and now have a robust program across the Asian continent, from Pakistan to China.
In Burma, where we have worked for over 20 years, we support over 65 organizations working to promote independent media, human rights, women's organizations, ethnic nationality groups, labour associations and civic education efforts. The reforms introduced by the Thein Sein government over the past two years are far-reaching and ambitious. Despite the breadth, depth and speed with which they've been introduced, to date the process of transition in Burma has left nearly all institutional power in the hands of the military or former generals, raising questions about the aim of the reforms.
For the international community, which played a critical role in pushing Burma toward a more open and free society, the challenge is figuring out how to engage in a manner that supports Burma's transition without distancing itself from its commitment to human rights and democracy. It is exactly those issues that motivated the international community previously. Respect for minority rights, tolerance, political freedom, access to independent information, labour and environmental protections and the rule of law are the essential building blocks of a modern democratic state and which, if unattended, threaten to derail the entire reform process.
Until 2010 the military, which assumed power in 1962, showed no signs of easing its control despite the persistence and demonstrably strong opposition led by Aung San Suu Kyi. The country's atrocious human rights record was well known and extensively documented. Moreover, the country's decline, poverty, infrastructure, health, education and agricultural production made the prospects for change appear distant.
Yet, by May 2012, things had clearly begun to change. The long era of overt military rule had given way to something else. No longer ruled by sitting generals, the country now had a nominally civilian president and speaker. Aung San Suu Kyi was free and now a member of Parliament, as were 43 other members of the National League for Democracy.
In other promising developments, the government released the vast majority of political prisoners, allowed the formation of civil society organizations and relaxed restrictions on the press. The government began to open its economy and re-engaged the international community and positioned itself to assume the chairmanship of the Association of Southeast Asian Nations, ASEAN, in 2014. The government also began to engage in a nationwide ceasefire effort, tackling one of the most important and intractable problems facing the country and the problem most likely to test a relationship between the military and the new government.
I should also note here that this is also the area where most of the country's natural resources lie, and extracting them and dealing in a responsible manner there, as Catherine mentioned, will be of paramount importance as the country looks to improve its economy.
In short, the reforms, although far-reaching, have yet to progress enough to threaten the military's domination of the state. The reforms have led to new centres of power, as I noted, allowed for the emergence of an independent media and civil society, and are beginning to introduce checks on power, but, constitutionally and in practice, Burma remains a military-dominated state. Not only does the constitution ensure the military's prerogative politically, but virtually all of the new democratic institutions, the executive, the legislature, and the judiciary remain under the control of generals or former generals. For example, the President, the Speaker of the house and the Senate leader are all former generals, as are 13 of the 14 appointed chief ministers of local states and divisions.
Although the list of priorities is nearly endless in Burma, there are five that I believe warrant serious attention and consideration. I'm happy to go into more detail if there are questions but, in respect of your time, let me simply note them briefly here.
First, Burma recently completed a national-level census. This was the first census in over 30 years, and the first serious census since the British era in the 1930s. The census, although an essential part of building a modern democratic state, has exposed a number of serious problems, most important of which is the categorization or classification of the ethnic nationality groups. The ethnic nationalities make up anywhere from 30 to 40 per cent of the population, and how they're counted and how they're categorized will have a profound impact on the nature of the state.
The other troubling aspect of this has been the categorization or the allowance of how one accounts for the Rohingya or Muslim population living in Arakan state who are technically, by the 1982 citizenship law, not citizens of Burma but who have resided in the country for hundreds of years.
Second is Burma's constitution, which was introduced and adopted by the military in 2008 but which contains a number of provisions that limit the scope for democratic development. Let me mention two in particular. Article 59(f) prohibits individuals married to or who have spouses or children who have non-Burmese citizenship from contesting for the presidency. This provision in effect prohibits Aung San Suu Kyi from serving as the president of the country.
The other essential provision that needs to be addressed is the provision which provides for 25 per cent of the seats in Parliament to be reserved for the military. This provides an essential veto power for the military, even if it won no other seats in the upcoming 2015 national level elections. The Parliament established a review commission called the Constitutional Review Joint Committee to consider these and other amendments. It was hoped that they would amend some of the most problematic parts of the Constitution before the 2015 elections but, as of today, it looks like that will not happen.
Third, in 2015 Burma will hold national elections. Although the constitutional flaws that I noted previously make a free and fair election technically impossible, the results will still bear watching closely. It will raise questions about whether the National League for Democracy and Aung San Suu Kyi will participate despite their inability to have the Constitution amended. It will raise questions about whether the military will allow the results to go forward if it loses overwhelmingly, as it did in the 2012 by-elections. It will also raise questions about how the National League for Democracy aligns or associates itself with the ethnic nationality parties as it did in 1990.
The fourth and perhaps most troubling development in Burma recently is the widely reported increase in anti-Muslim violence and the related increase in Buddhist nationalism. These issues are not new in Burma, particularly not in Arakan state where the Rohingya live. The Rohingya are a Muslim population of roughly 1 million people who have experienced, over the last 30 years, waves of displacement, including at times up to a quarter of their population. This had once been seen as an isolated problem to Arakan state between the Buddhists and the Muslims, but over the last year and a half the rise of Buddhist nationalism and forces aligned with it have begun to target other minority communities and Muslims throughout the country. The country will need to find a way to control, deal with and promote tolerance if it is to overcome any of these problems.
Finally, as I noted earlier, one of the most fundamental issues facing Burma is the relationship between the ethnic nationalities and the government. Although the ceasefire talks, which government is engaged in, have grabbed everyone's attention, it is the subsequent and, more important, political discussions that will follow that need to be watched closely.
I will make one note on this: When people think about Burma it is essential to understand that the Burmese military's reason for existence, which is one of the largest standing armies in Asia, was the pacification and control of its border and periphery, not any external force. So, if the military is to give up power in Burma and turn control of the state over to a civilian government, it will first need to be convinced that the ethnic nationality problem has been resolved in a way that doesn't threaten what it defines as the Burmese state.
Thank you very much.
Senator Downe: I'd like to go back to your comments about the tax evasion. You mentioned the revenue loss to Canada. Do you have a figure for that?
Ms. Coumans: There is one really striking example that has just come out. I do not have a global figure yet because, as you will appreciate, the point of these accounting practices that allow companies to transition money that should be provided in taxes in Canada into tax havens tends to be done very secretively. There are not, at the moment, the mechanisms in place that we need to really get a handle on this. Those are the mechanisms we're calling for.
There is one striking example, and the reason we know about this is because our tax agency has actually sued a company called Cameco. Cameco is a Canadian mining company that mines uranium. Revenue Canada is suing Cameco because it set up a subsidiary in Geneva. What Cameco then started to do was to dig the uranium out of the ground in Canada, but then sell it to its subsidiary in Geneva at a very low cost. Cameco nominally made no profit in Canada, or very low profit, so there was little that could be taxed in Canada. Then Cameco's subsidiary in Geneva sold that same uranium on the world market at market prices and made a hefty profit. Lo and behold, in Switzerland, of course, you don't pay very high taxes. That is a way of shifting your tax burden into a location where the tax burden is much lower. So Canadians have lost out. The case is still rolling through the courts, but it's at least $800 million, possibly going up to $1 billion. That is money that has been lost to Canadian taxpayers that we could have used to develop roads, public services, et cetera, in Canada.
As I said, somewhat sarcastically I suppose, perhaps Canada considers itself wealthy enough that we can wave that money goodbye. That is just one company in one case; this is happening across the board. Certainly, in developing countries like the ones we mentioned today — Philippines, Burma, Indonesia and others around the world — these lost revenues are money that could have been used to develop those economies. It has been estimated that the amount of money globally that has been siphoned off through these illicit capital flows from developing countries absolutely dwarfs the amount of aid money that countries like Canada are providing to these poor countries.
Senator Downe: On the one hand, your testimony is that not only are we losing the tax revenue in Canada, but we are then turning around and giving additional money in aid, so we are losing at both ends.
Ms. Coumans: That is very true. Because of issues around the resource curse, often those countries that rely on those resources to develop their economies who then find themselves 10 years later to be poorer than they were when they started relying on resource extraction are also the countries that we put a lot of aid dollars into because they are poor countries. Often we put aid dollars where our mining companies are operating; there are other politics happening there. However, the irony is that by actually pumping aid dollars into these countries, you exacerbate the resource curse, so it's sort of a double whammy.
We would be better off if we put some mechanisms in place in Canada, and there are certainly efforts to grapple with this problem. The G20 has been examining this problem, and there are two pieces that we see as first steps. The first step is that we need to have a public registry of all what we call the "beneficial owners" of a company. For example, for the mining company Barrick Gold, we would know who all the owners and subsidiaries of that company are. Then we would know how much of these holdings are in places like the Cayman Islands and Barbados.
The second step would be to have information exchanges between jurisdictions so that we could find out how much money is flowing into those jurisdictions.
Those are the big steps that are being pushed for internationally. In Canada, Canadians for Tax Fairness are really leading the charge on this.
Senator Downe: For the case you referenced about the revenue agency, the allegation is that this Canadian company was selling uranium to a company in Geneva. They actually didn't ship it there, but it was on a paper transfer; I assume that is the allegation. They sold it to Geneva and then shipped to Canada directly to whoever purchased it, trying to bypass the Canadian tax system. That is the allegation.
Ms. Coumans: It is a way of bypassing the Canadian tax system.
I should be clear. I think I said "Geneva" when I meant to say "Switzerland," because I am not sure where exactly that subsidiary is housed in Switzerland. It's probably in Zug, but it's in Switzerland.
I am not entirely clear whether the uranium actually went to Switzerland, but certainly it was sold through the subsidiary in Switzerland and, through that subsidiary, sold on the market, but it was sold at a below-market, very cut-rate price to the subsidiary, so that the profits were not made in Canada where they would have been taxed. We are estimating between $800 million and $1 billion lost in taxes. Then the subsidiary in Switzerland sold that uranium on the market for its normal price and made the profits but doesn't have to pay much in taxes.
The Chair: I know this company and I know this case, as I come from the province where they are situated. It is an allegation. It is a court case.
Ms. Coumans: It is a court case.
The Chair: It is a disputed case. The claims of the Canada Revenue Agency are being disputed by the company. The one fact, however, is I don't think either the Canada Revenue Agency or Cameco is saying they were sold on the world market. They were sold within the European market, which is the rebuttal, rather than a world market.
Is that your understanding, because that is certainly the understanding I have heard?
Ms. Coumans: Yes, what I meant to say by "world market" is "world market prices." The uranium was then sold at prices that would normally be transparently the right price for that uranium.
Senator Johnson: I am referring to September 2013 when the Asia-Pacific Foundation of Canada published a report advancing Canada's engagement with Asia and human rights, integrating business and human rights.
One of its recommendations is that Canada should "adopt regulations that require Canadian mining and energy investors to report their payments to foreign governments" — and you've touched on this somewhat — "consistent with the principles underlying the Extractive Industries Transparency Initiative and the U.S. Cardin-Lugar amendment."
Can you comment on this, and do you agree with this recommendation?
Ms. Coumans: There are two parts to this problem. One part is the issue of corruption. If resource extraction companies are paying their taxes, then what happens to that money? How is that money used once it reaches the national governments and host countries? The Extractive Industries Transparency Initiative, EITI, really deals with that piece of the problem.
Another way of casting this is to say this is the part of the problem that is "publish what you pay." If companies were to publish project by project the amount of payments that they make to governments and then, if governments would also separately publish what they have received, we could see if there is a discrepancy. But if governments have to say, "We have received so much money," then the public of that country — the civil society — could then say, "If you have received so much money in taxes and royalties, why do we not see improved services in this country?" That is the "publish what you pay" part of the problem.
Of course, the other side is what I was talking about, which is "publish what you don't pay," trying to get a handle on money that is not being paid in revenues, taxes and royalties but being siphoned off.
Senator Johnson: You touched on Canada at the G20 in terms of revelations. Could you expand on that, and we were against? What, exactly, is that about?
Ms. Coumans: Canada has been supportive recently of the notion that resource extraction companies should be publishing the payments that they make to governments and, in fact, also wants to see those payments reported in Canada, which would be extremely helpful. Right now, it is difficult to know what just the mining sector on its own is providing in taxes and royalties in Canada, because those numbers are amalgamated with oil and gas. We are keen on this, and we are happy that the Canadian government has accepted the recommendations from the working group — which included Publish What You Pay, Revenue Watch, the Mining Association of Canada and the Prospectors and Developers Association of Canada — who have pushed for this, and the Canadian government has accepted this.
The problem that is being looked at internationally is this other problem of "publish what you don't pay." This is the problem of trying to figure out what subsidiaries international and multinational companies have in tax havens and then try to figure out how money may be flowing into those tax havens.
In the recent meeting of the G20, there were two parts to this. The one part is to come up with registries of beneficial owners. I think that Canada may be moving in that direction, but the second part of that is to get automatic information exchanges between countries so that you can trace these revenue flows. At the last meeting of the G20 in 2013, Canada led the resistance against these automatic information exchanges. This topic will keep coming up because other countries are actually supporting that.
Senator Johnson: Is the United States supporting it?
Ms. Coumans: I don't know. Perhaps our colleague will know.
Senator Johnson: Do I have time to ask Mr. Joseph a question?
The Chair: Yes.
Senator Johnson: Good morning. We have heard a number of developments in the Asia region concerning the curtailment of rights despite many nations being democracies, and we both know true democracy is only four or five years away from a general election.
Could you comment on which nations have shown progress in strengthening the institutions that underwrite a true democracy, such as an independent judiciary, electoral commissions and protection for minorities? If you have the time, could you comment on which have experienced creeping authoritarianism?
Mr. Joseph: Could you repeat that last part, please?
Senator Johnson: Which have experienced some creeping authoritarianism?
Mr. Joseph: That is an important question in the sense that most of Asia now has elections, but there are very few established liberal democracies in the region. If you look around the region over the last 10 years, you see clear progress in Indonesia, the Philippines and South Asia, if you want to go that far. Pakistan has made some remarkable progress despite of all of its problems.
In the Philippines and Indonesia, you have had the creation of independent institutions, more civil society organizations have become active, and the political parties are developing and beginning to introduce policies and moving away from personality politics. They have a long way to go, but I would put those countries in the category of countries making significant progress.
Where you have seen backsliding across the Asia region, in South Asia, the principle country would be Sri Lanka, which used to be one of the region's most successful nascent democratic states. Over the last 10 to 15 years, it has really made a precipitous turn in the wrong direction, including its targeting of minority populations with 40,000 people killed in the last weeks of the civil war there.
In Southeast Asia, Thailand is clearly going through a troubled period right now, with a revolving door of anti-democratic forces fighting for power in the country.
The other countries in the region are harder to put on a plus or minus scale. Malaysia has a lot of developments going for it with its economy and its institutions, yet it also remains basically a one-party-dominated state despite the emergence of an opposition party that is proving stronger and more durable than most people would give it credit for.
China, obviously, is a big country where I would hesitate to put an arrow on the up or down as far as democratization goes.
Senator Johnson: Thank you for your answer.
[Translation]
Senator Fortin-Duplessis: Thank you both for your testimony. Ms. Coumans, Burma opens up major business opportunities for mining industries.
Based on your presentation, my understanding is that Canadian companies are now involved in mining development in Burma. Are our mining competitors from other countries more respectful than Canadian companies of the rights of the Burmese, of their human rights, land rights, property rights, water rights and labour rights?
[English]
Ms. Coumans: At the moment, there may be some exploration going on by Canadian companies, but there is no big operating mine that I am aware of.
During the military regime, we did have a Canadian company operating in Burma called Ivanhoe. That was a highly militarized operation with a lot of reports of human rights abuses and land conflicts around that mine. That mine is no longer in the hands of Ivanhoe, but the conflict continues. That is the mine that I mentioned.
I think any mining companies from anywhere in the world thinking of operating in Burma will have to be very careful, particularly because of some of the issues that have been raised by my co-presenter, the fact that the military still controls a lot of the economic development in the country. If a mining company wants to operate in a place where people are living and there will be land disputes and conflicts over land, the military easily steps in and quite brutally deals with people that they need to move off land for mining.
Until the military control of economic development in rural areas is less prominent, it will be a place where Canadian mining companies will have to be very careful to consider whether this is a place they can do business without being implicated in human rights abuses.
[Translation]
Senator Fortin-Duplessis: Ms. Coumans, could you tell me whether there are other organizations such as yours in the world that monitor countries in the Asia-Pacific region? If so, do you have ties with those organizations?
[English]
Ms. Coumans: Yes. MiningWatch Canada was created in 1999 to oversee the activities of Canadian mining companies with respect to environmental and human rights impacts, but we were late on the scene. In the U.S. there is an organization called Earthworks that already existed and in Australia there is an organization called the Mineral Policy Institute which already existed.
They were dealing with the impacts of Canadian mining companies around the world, because there was no MiningWatch Canada yet. When we were created in 1999, they moved all of these issues that they were dealing with, because Canada has a huge footprint globally in terms of mining. Something like 60 per cent of all Canadian mining companies are registered on Canadian stock exchanges. Mining and Canada are seen as quite synonymous around the world.
When we were created, a lot of the problems that our sister organizations were dealing with were shifted to us to deal with, but we still work closely with these organizations.
There are others. There is also a network in London, and there are international networks in the various regions where we are working. There are also regional networks that we work closely with. We are a small organization, and we really work in coalition.
In Canada, for example, there is a Canadian network on corporate accountability which has about 26 member organizations, everything from Amnesty International to labour unions to environmental groups and human rights groups, that all work only on mining.
[Translation]
Senator Fortin-Duplessis: Thank you and congratulations on your work, Ms. Coumans. I now have a question for our second witness.
Mr. Joseph, you may have previously answered my question in part, but I will ask it just the same. When President Thein Sein of Burma came to power, he expressed his desire for democratic reform and he took action along those lines.
However, as of late, Aung San Suu Kyi has criticized the dithering by President Thein Sein and has questioned his commitment to democratic reforms.
In your view, is President Thein Sein a democrat of convenience or is his desire to establish the rule of law in Burma real?
[English]
Mr. Joseph: To be honest, I don't know. I have followed this closely. I know many of the people, ministers beneath him and their staff who work for him, and there are a lot people who believe he is a true reformer trying to help introduce a democratic system in the country. At the same time, he is a former general who came out of the same power system that now dominates the state.
Aung San Suu Kyi's frustration with him that is now coming to the fore is a frustration that many people have had for years. The reforms and the changes that have been introduced, although significant, have not eroded the military's hold on power.
I think her frustration is in line now with others where they are suggesting that these reforms have been a sense of political liberalization. There is more room for political thought, political expression and political organizing, but the actual institutions of the state will remain under the control of the military, and Thein Sein's reform efforts can only go so far because of the other competing military forces in the country. So the military itself, and the Parliament which is controlled by Thura Shwe Mann, another general who, in a sense, is now a rival in some ways to Thein Sein and is seen by some as more in line with Aung San Suu Kyi these days. I think it is hard to put him in either category.
My personal feeling is that we should be looking at the opportunities that the reforms have presented for the international community and domestic actors to help push democracy forward, but not assume that any of these generals who are now running big institutions in the country are trying to push them more towards democracy.
Aung San Suu Kyi's concern is really that if they don't address these fundamental issues prior to the 2015 elections, then they will in essence ensure that this non-democracy, which has a lot of the trappings of a democratic state — a parliament, an executive and a judiciary — that after the 2015 elections it will freeze development. She is pushing hard now to deal with constitutional amendments and the other impediments to the establishment of true democracy in the country.
Senator Dawson: I will ask both witnesses questions, but first a clarification. You talked about "transfer missed pricing" or "mixed pricing" — what is the expression?
Ms. Coumans: The expression is "transfer mispricing." Transfer pricing is legal. Companies can set up these kinds of transfers between themselves and subsidiaries, but "transfer mispricing" is illegal. That is where you purposefully misprice the value of the good you are transferring to a subsidiary in order to avoid taxes.
Senator Dawson: Would these issues be covered under the EITI? We had a witness come here to talk to us about the Extractive Industries Transparency Initiative in which countries are cooperating and trying to get more of a level playing field and transparency in the mining and extraction sectors. Would these issues be covered by that initiative?
Ms. Coumans: No, not directly. EITI is about publishing what you do pay as opposed to publishing what you don't pay and finding out how companies are creating illicit capital flows out of a country.
However, I do believe that if we were to get really good numbers on what extraction companies are paying, we may be able to look at those numbers and say, "That is awfully low. Why are you not paying more on taxes and royalties?" That could open a door to understanding why that number is as low as it is.
The two things go hand in hand. One is "publish what you pay;" the other is finding a way to figure out what is not being paid.
Senator Dawson: Mr. Joseph, I know the National Endowment for Democracy is doing a great job, but are there any other big players that are trying to promote real democracy in Southeast Asia? The UN has not had a very strong performance on promoting parliamentary democracy in the world over the last few years. Are there other players like you? What role is Canada playing?
In a case like Burma, we understand that because of the constitution, there are things that won't be happening as far as real democracy, but should we offer to have participation in monitoring elections in Burma?
Mr. Joseph: The democracy-promotion field is large and quite diverse these days. In Asia, there are a number of big institutions. The largest private institution in this field, aside from the National Endowment for Democracy, is the Soros foundation, the Open Society Foundations, which have a large presence cross the region.
You also have a number of bilateral aid agencies that have been consistently involved in the region, primarily from Western Europe and Scandinavian countries. Canada has played a role in that in certain countries.
You also have the emergence in Asia of a number of small, Asian-based foundations and others looking to advance democracy and human rights around the region.
It really is a global effort and it varies from country to country as to who the big players are and where their engagement is.
In places like Burma, every country providing foreign assistance now is looking to — the democracy and governance sphere. What you have in Burma now is almost a crowd-sourcing. Before, you had few institutions engaged in looking to advance human rights in Burma. Now with the openings, for a whole host of reasons, some of which Ms. Coumans touched on, there are a lot of opportunities in Burma. With that comes development assistance and aid. That is something to watch carefully to make sure that it is coordinated and done in a productive manner.
To be honest, I do not know what Canada's role in Burma could be. In the past, Canada has been supportive of the democracy and human rights efforts that defined the period in 1988 until 2011 and 2012. How Canada plays it now and in what role — I am not sure how you would engage in that.
However, I would second what Ms. Coumans has said: I think the resource extractive industries will be extremely important for the reason she mentioned, but also in Burma due to the politics of it. The extractive resources in the industries and the wealth in Burma lie in the ethnic areas, so the power-sharing agreements and financial arrangements between the government and the periphery will be central to any effort to establish rule of law and democracy in the country. Clearly, Canada has a role to play in that.
As far as monitoring elections, at this juncture, I think it is a bit premature to make that call. Everybody should be putting pressure on the government to ensure that enough change and enough reforms are in place that the election can be free and fair. If anyone monitors the election, it lends itself more to a pre-election assessment mission or an analysis of the electoral framework more than an on-the-day-of electoral process.
My concern would be that if you have an election take place where the outcome ensures the military still holds the veto in the parliament, it cannot be a free and fair election. Certifying that election as a democratic election will have implications on how the country is perceived globally; whereas looking at the systems, the electoral laws, the constitution — all the machinery of the elections — an assessment of those measures might be more beneficial.
Senator Dawson: Good point. Thank you.
Senator Demers: Ms. Coumans and Mr. Joseph, thank you so much for your presentations.
Water is extremely important for health, children, any human beings and animals. In the Asia-Pacific region, particularly Indonesia, 70 per cent of the population does not have access to safe drinking water. We also know that along with mining projects comes the risk of water contamination.
I would like to know how important is this problem in the Asia-Pacific region at large and if mining companies are taking the necessary steps to ensure safe-water-monitoring practices.
Second, how could Canada help these countries protect their clean-water sources and enhance their population's access to drinking water?
Ms. Coumans: It is absolutely a fact that in the Asia-Pacific region, particularly Southeast Asian islands where you have high-population density on relatively small amounts of land, water is critical. It's critical for human consumption, but also for everything that human beings would want to do in terms of agriculture or any other industrial development. If you don't have clean water, you are in big trouble.
It is also true that mining is problematic from a water perspective. Mining has a very large footprint. Often there is contamination of groundwater and surface water associated with mining.
In fact, I am involved in an effort to create a certification system for mining — or I was involved in that for many years. We have had meetings with the mining industry. One of the things we wanted to create a standard around was that a mine could only be certified if it would not contaminate ground or surface water. The communications we had with the mining industry was that it was an unattainable standard. Even the industry recognizes that it is very hard for them to point to a mine where they have not contaminated ground or surface water.
This leaves us with the question: What needs to be done? First, best practices need to be employed. We now have Canadian mining companies that are literally dumping their mine waste directly into river systems, such as Barrick Gold in Papua New Guinea. We have mining companies that are not creating tailings and waste impoundments in a manner that would be considered best practice, so these impoundments are breaching and contaminating water resources, such as the one I mentioned in the Philippines.
Containing waste, particularly in an area where a lot of metal resources in Southeast Asia are in what they call "the Rim of Fire" — a lot of the resources are in the mountains — is very problematic because you have high rainfall and it's a high earthquake zone. You have to contain your waste, but you are up in the mountains. If a dam breaches, that all comes downstream and that has been happening.
It is challenging and costly. The biggest problem is that mining companies often try to cut costs and so they don't do what they really need to do to contain their waste.
The second part of this story, though, is the issue that I mentioned around legacies.
Once a mine is mined out, if it's something called a sulfite ore body and they have problems with acid mine drainage, which is very common, that is a chemical process that can go on for literally thousands of years. That mine needs to be maintained in perpetuity to maintain the waste from that mine so that it doesn't contaminate surface and groundwater. That is incredibly costly.
We often see that once a mine is reaching the end of its lifetime, the big mining company will sell it to a small holding company or a less responsible company and not have to deal with the closure. The bonding that needs to be in place to ensure closure is often not in place, and the big mining companies like the Canadian companies don't end up actually closing the mine properly. They end up selling it when it's at the end of its life and they end up leaving.
This is a huge topic you've touched on. It's highly important and critical for future development in these countries.
Senator Demers: We are talking about human lives here. It's going on at the moment we speak, and we are in 2014. I have a hard time with this.
Your explanation was very clear. I'd like us to understand that we have to think about this seriously, more than ever. This is 70 per cent. That is just a comment, and I thank you very much for your answer.
The Chair: Mr. Joseph, did you wand that add anything in this area?
Mr. Joseph: I'm not a water expert, but I echo the senator's concern. It is of paramount importance across the region and it affects relationships between countries. There are significant efforts on the lower Mekong to develop dams. One of the principal drivers in the early stages of the transition of Burma was the Myitsone Dambeing built by the Chinese. You have a lot of issues surrounding water — pollution, lack of access, drought — and you have also seen flooding across the region. That is a related aspect of this.
Yes, without question, water and water management issues are of paramount importance to every single country in the region.
Senator Oh: My question is for Ms. Coumans. In Southeast Asia, for the mining companies to be able to get a licence, they have to team up either with a military junta or someone in a high position in the government. Otherwise, it is impossible to get a licence. That brings up the problem of corruption. Can you comment on that?
Ms. Coumans: This is absolutely a problem, not just in the Asia-Pacific region but in also Africa and Latin America. A lot of wealth is generated by resource extraction in a very short amount of time. If you're mining gold, that is a lucrative project and a lot of money is generated during the mining process itself. There are not good controls on what happens even with the resource itself. There are real concerns about where the physical gold that's smelted on site actually goes. There is just not good tracking for the resource itself or for the money that's generated by the sale of that resource.
It is also very true that obviously mining companies need to have good relationships with the political leadership in any company in which they are operating. I was at Barrick Gold's annual general meeting just yesterday, in which Peter Munk, who is now the outgoing chairman, spent quite a lot of time talking about this, about how one of the most important things that any executive from that company can do is have good relationships with governments around the world because that's how they get access to the ore bodies and the licences they need.
As we know, some of these governments are in what we call in weak governance zones, and these are governments that have problems with corruption historically and ongoing. How are those licences obtained? How is the wealth that is generated by those mines distributed? It's a big problem.
I do think that the Extractive Industries Transparency Initiative is an initiative that was created particularly to deal with that problem of corruption. It is an important initiative and is now supported by Canada. Canada was late coming on board, but Canada does support EITI now and we are very happy to see that.
Senator Ataullahjan: Mr. Joseph, you have supported ethnic nationality projects in Burma, especially Burma's Rohingya population, and your website mentions the Exiled to Nowhere project and building international support Burma's Rohingya population project. Can you tell us about the projects and what the results have been, if any?
Also, the world's attention is focused on Burma, and the United States has been very vocal about the violence in Burma. Last week, U.S. officials warned Burma about the violence and pushed for aid groups to return. Can you comment on that, too?
Mr. Joseph: Thank you.
The National Endowment for Democracy, from the beginning of our program in Burma, has understood that the ethnic nationality program is central to any resolution of the problems in Burma. We have always understood our work in Burma as requiring a multi-ethnic approach. For 20-some years now, we have supported the development of independent media, civil society, political parties, trade unions, everything in the ethnic area, so developing these areas to have their own independent societies, to develop their own voice politically so they can participate as equals in discussions with the government.
As far as the Rohingya go, this is an issue we have been working on for over 20 years now with documentation and advocacy. We are not a relief organization, so I will stick to the political side of this. This is, in a sense, as the United Nations noted, one of the world's most repressed, discriminated-against minorities. In 1982, there was a citizenship law passed that, in essence, made them a stateless population. For years, it was more or less contained within Arakan state. Arakan state is the state that borders Bangladesh and is populated primarily by Rakhine Buddhists and then Rohingya Muslims. Even the term Rohingya is not widely accepted in the country. The government refuses to use that terms. They refer to them as Bengalis or other names.
Over the years, we have tried with this community to document the violations, both of the displaced communities but also the violations that take place in those areas, to support the development of moderate voices from within that community who can advocate on their own behalf and then, through this project you mention, Exiled to Nowhere, with policy makers in relevant countries around the world. This project, if I'm not mistaken, has taken place in Bangkok, Jakarta; Washington, D.C.; and Tokyo. It is an international effort to say there is significant documentation to the problem. There are no easy solutions or answers, but there is a human component to this. In a sense, if it is not dealt with, it has the potential to undermine other efforts going forward in the country.
We look at this as a long-term problem that can't be isolated and that cannot be thought of separately from the other issues the country is grappling with. But the rise of anti-Muslim violence and the rise of Buddhist nationalism in the country is a new and particularly troubling development in the country. The country needs to ensure that it has laws in place that enforce questions of tolerance and pluralism, that parties are mobilized for the 2015 election, and that there are restrictions or limitations on hate speech and other things that could really turn what is now a problematic situation into things that are much, much worse.
As far as what the U.S. is pushing for in the Rakhine state is the return of the humanitarian assistance organizations. I'm not sure exactly what they're pushing these groups to do, but over the last few weeks there has been increasing politicization of how the aid agencies work in these areas. Are they focused just on the Rohingya population? Are they also focussed on the Rakhine or Arakan populations that have been displaced as well?
When you look at this, it's not a black and white situation. The Rakhine have suffered, but not to the same degree the Rohingya have suffered, and there is a lot of concern that the aid agencies are working to benefit one side, intentionally or unintentionally. It has been highly politicized. The local community is politicizing every engagement in the area, and the aid agencies will simply have to be very careful how they work in that area to not exacerbate it.
Senator Ataullahjan: Witnesses said that Burma will not progress until they change their constitution. Would you agree with that? You keep mentioning the rise of Buddhist nationalism. What do you attribute that to?
Mr. Joseph: The constitutional reform is essential. As we've seen across Asia, you can have countries that are not democracies and don't promote liberal values progress. They can develop their economies. They can improve the environment. They can address the educational and employment needs of their citizens to a degree. My personal opinion is that, to truly progress and ensure that these are sustainable, you need political development to track with that.
In Burma, constitutional reform is a critical element of how the country will develop. Without it, you cannot develop independent institutions. You cannot have true democratic checks and balances. Without that system in place, that macro structure, there is no way to have the rule of law because, in essence, the military stays above the rule of law over the current constitution. It has veto power in the Parliament and controls the national security and defence council, so rule of law is almost meaningless without constitutional change.
As the other speaker mentioned, two of the larger holding companies in the country are controlled by the military, so you do have to have constitutional revision for the country to progress.
The staging of it and the timing of it is debatable, as are which provisions are the most important to address at which juncture, but, without question, the constitution is part of the problem.
As for the rise of Buddhist nationalism, it's hard to put my finger on what exactly to attribute it to. It is not a new phenomenon. What is new about it is how politicized it has become and how widely spread it has become how quickly. All of the new liberal space in the country — the space that has allowed for new press, new communication, cellphones, travel and association — has allowed these forces to mobilize and organize in a way that they simply were not allowed to previously. In fact, some of the leaders of this movement had been in prison under the state peace and development council previously, but now they are free. They're out and they're mobilizing.
As we get to the 2015 elections, these issues of ethnicity and identity will become extremely important. The Burman majority, in the heartland of the country, is overwhelmingly Buddhist. The minorities are of the whole range of different religions and ethnicities. There are some Christians. There are some Hindus. There's a Muslim community. There are Animists. Some of the Burmans are concerned that the state will be redefined in a way that undermines their domination of the state.
Senator Housakos: My question is for Ms. Coumans.
Can you tell the committee which are the top five mining nations in Southeast Asia right now and where Canada would fall on that list?
Ms. Coumans: I will have to take a stab at this. I haven't looked this up recently, but certainly China is very prominent within Southeast Asia. There are also national mining companies. For example, in India, mining is almost entirely dominated by Indian companies. Australia, obviously, has a presence in the Asia-Pacific region in mining. Australia is very similar to Canada in being a big mining nation. That is their backyard, so they definitely have a presence there.
I would say that Canada is certainly in the top five, particularly with respect to our exploration companies. We have the largest number of exploration companies of any nation in the world. So there is lot of exploration going on, but then those exploration projects often get flipped to larger mining companies. Those may or may not be Canadian. I'm not sure where we fit within the top five, but we certainly have a presence in the region.
Senator Housakos: Is it fair to say that, in the Southeast Asia-Pacific region, Canada, compared to what we are doing in the rest of the world, is probably at about 10 or 12 per cent of our mining exploration capacity compared to what we are doing in the Americas, Europe and other parts of world?
Ms. Coumans: Certainly, the Americas are way bigger. Something like 70 per cent of our activity outside of Canada is in the Americas. Africa would be second, and Asia-Pacific would be third. The exact percentages I would not be able to tell you.
Senator Housakos: I have a comment and question, which I'll wrap up into one. Mining is a substantial commercial interest for Canada, worldwide and in Canada, and mining has been an important part of economic development for thousands of years, going back to the Roman Empire, the Ancient Greeks and the Phoenicians. It is not a new hobby and it is certainly not a new technology. Of course, there have been challenges, throughout the centuries, when it comes to environmental responsibilities.
As a country, I think we should be very proud. I think Canadians are very proud of the fact that we have some of the most socially and environmentally responsible mining companies in the world, and we also have some of the most rigid mining regulations in the world. I think it's important to be cognizant of this, and I would like you to comment on it.
Mr. Munk, at the annual meeting of Barrick Gold, pointed out that it is essential that CEOs and mining companies have good relationships with governments around the world, but we have to underline and understand that we can choose to have good relationships with governments all around the world in order to continue to expand our mining interests. However, we cannot choose governments for countries and we cannot, as a country, put in place rules and regulations that are acceptable to us and impose them on other countries. We also have to be cognizant that, when Canadian companies go and work in any part of the world, they work under Canadian rules and regulations, as Canadian entities, but they are obligated to respect and work under the rules and regulations of the region of the world they're working in.
Last year, I was visiting a country in the Balkans where we have a Canadian mining company that's very active. I sat down with their parliamentarians and they had certain environmental and social concerns. I sat down and made a comparison, a balance list, of all of the rules and regulations of that country vis-à-vis our rules and regulations, and I saw that the company was not only respecting the rules and regulations of that country, but also respecting ours. Our list was a lot longer and a lot more rigid.
My question — and I have a long preamble to that question and would like your comments on that — is: Maybe, instead of focusing on what we can do as a country to impose our rigid rules on South Asia-Pacific countries, what has your organization been doing in order to educate those countries that they have to improve their governance, weed out corruption and become a bit more socially and environmentally responsible, as we have been?
Ms. Coumans: Thank you for that question. That's a big question. It's that question of governance, what Canada can do to improve governance where our multinational corporations are operating and what civil society organizations like mine can do.
To be very clear, when our Canadian-based mining companies operate overseas, Canada has no grip on what those companies do. We don't, in any way, regulate or set standards for what companies do. Some companies may say that they are operating according to best practices when they operate overseas, but there is no way to actually monitor, evaluate or assess that.
All mining companies, if you look at their websites, will have a lot of pages dedicated to various global standards that they say they adhere to, but I have to say that, in practice — because we go to these countries and meet with the communities around the mines — it is not always the case that they are living up to those higher standards. It is certainly the case that, in many countries around the world where our companies operate, there is a problem with weak governance, and so they are operating to much, much lower standards than they would operate to here. That does create environmental and social impacts that create conflict around these mines, and that conflict can get quite heated. These mines can become militarized and there can be all kinds of human rights abuses that derive from that.
When you come to sort of asking what an organization like MiningWatch does, we work closely with all kinds of civil society organizations in the countries where our Canadian mining companies are operating. Those civil society organizations are the front lines. The communities are the very front line around the mine, but they often then work with their own civil society organizations in those countries to try to put pressure on their own governments to enhance the protections they need, both from an environmental and human rights point of view.
We then provide support to them, but they often turn to us and say, "This is a Canadian company. What are you doing in Canada?" It's fine that we're helping to put pressure on their government by providing information about the kind of bonding regimes and environmental regulations that should be in place, but we also need to play a role in Canada.
That's a tricky question because, as you said, we can't impose Canadian regulations on other countries. But there is a large suite of measures we can take in Canada to actually control the activities of our companies operating overseas within our own boundaries.
One is what I mentioned, the campaign we have right now called Open for Justice, together with the Canadian Network on Corporate Accountability. We firmly believe that, when people have been harmed by our companies operating overseas, it is almost impossible for them to get access to justice and remedy in their own countries. Many of these legal systems are inept and/or corrupt, and they don't have the capacity to deal with these difficult issues. There's no international court that people who have been harmed by a multinational can turn to, as there is with the International Criminal Court. The only place where access to justice could be received is in the home countries.
The work that the United Nations has done through the UN Guiding Principles on Business and Human Rights is very clear that there is no impediment to national courts opening themselves up to hearing complaints from people in other countries if it's against a company that's national to that country. In other words, Canadian courts could start to hear these complaints from people. We firmly believe that if court cases against mining companies were brought in Canada and were successful, this would have a huge impact on how Canadian mining companies see the risk that they are taking if they are not operating to very high standards. We think that would have an impact.
We also think there should be a non-judicial remedy process in Canada that is effective, so we're calling for the creation of an ombudsman in Canada who would be able to hear these complaints and do fact-finding, report out on those fact-finding missions and recommend remedy as well as policy for the Government of Canada.
The final thing I want to say is what we have to understand is that we provide very direct support to Canadian mining companies, both financial support through Export Development Canada and other financial means. Right now we are even putting official development assistance in the hands of Canadian mining companies for their corporate social responsibility projects around their mine sites. This is only since 2009. This never used to happen, but it does now.
We also provide a lot of political support as well, as Mr. Munk said at the AGM yesterday. They rely on the embassies in these countries to provide political support to our mining companies when they go abroad. This gives us some leverage. Although we can't impose standards, we can say that if they're not meeting the standards, if complaints come to the ombudsman and the ombudsman investigates the complaints and it is proven you are not meeting the standards we here in Canada set, then we have the right to withhold financial and political support. That's something we can do internally.
There is more that we can do. We can also address this issue of tax avoidance and evasion through measures that we take in Canada. Without leaving our borders, there is more we can do to improve performance.
Senator Housakos: I appreciate the answer to the first question, yet the challenge still remains and I would like your comments on it.
How do we overcome the challenge that exists between having Canadian companies be competitive in international forums and maintaining an edge when our standards in Canada, imposed in international forums, are clearly higher than the local ones?
When we're competing in Burma or any other part of the world against the Australians, the Chinese, the Indians and everybody else working clearly under the standards of those local territories, which are again understandably far below ours, and we want to impose, from Canada, an ombudsman or other mechanisms that say they have to work under the standards in Canada, do we not put Canadian enterprises at a clear disadvantage compared to other international players?
Ms. Coumans: That is certainly the concern that the industry itself does and will raise. We need to start looking at trends here. Because countries like the Philippines and others that have now had some experience with mining and have seen some of the harm that is actually caused when mining is not done well or responsibly, that harm has huge political ramifications. Every time a mine wants to get going in the Philippines, this case of Marinduque and the Placer Dome disasters there are raised time and time again. It makes it difficult for the government to promote mining in that country because the harm caused by mining that has not been remediated and dealt with keeps getting raised.
It's also the case that some countries are now starting to face, and the Philippines is a good example, mines where the companies have left and have left behind really toxic environmental situations.
You mentioned mining from the Roman era. There are Roman-era mines still leaching acid into the Baltic Sea. Acid mine drainage is a chemical process that can go on for thousands of years. That is why many mines have what they call the need for perpetual care and maintenance. That's expensive. If a mine doesn't leave the money behind to do that perpetual care and maintenance, that reverts to the taxpayers to pay for.
A lot of countries are starting to realize that mining is a mixed blessing. Yes, you get a quick influx of money if taxes are paid, but you could have many decades after that when you have to deal with the social conflicts and environmental issues that remain and fester.
If Canada could promote our flagship industry, if you want to call it that, as the industry that is not only going to mine responsibly and pay its taxes but also will be the one that will leave the least amount of conflict behind once they finish mining, that could help to brand our companies in a competitive way.
If we're competing for an ore body with the Chinese but we can assure a government that we're going to mine in a more responsible way so there is less political conflict and environmental damage, then that could give us an edge.
I'm looking at this as something of a trend. As people become more concerned about water resources, conflicts over land and the political ramifications of those conflicts, I think this kind of branding will have a positive impact.
Senator Housakos: Thank you for your answer, and I hope we meet that challenge.
The Chair: Just picking up on that, corporate social responsibility was not a phrase we used 20 years ago. It's become current and it's not just a phrase. It's being implemented, and the question is if it is being implemented correctly, exclusively, et cetera.
My concern in the investigations I've done, and I'm wondering if it's the same in your case, is we are addressing Canada. There is a response from Canada, whether it is to your liking and the method may be all for good debate, but has there been any response from China, particularly, that is so pervasive in the Asia area to address those concerns? I see they, in many places, have not, but increasingly they are having to deal with this issue within their own country.
We know they are starting to even think about it. You can look at the smog and everything else going on, the fast pace of development in China, but have they transferred that awareness to the other countries where they are so pervasive in Asia?
Ms. Coumans: I don't normally speak for China, but it is certainly the case that there are a lot of concerns, particularly around resource extraction by Chinese companies and particularly with respect to the environment.
They're not necessarily that different from the concerns raised around Canadian companies. For example, Papua New Guinea is a place I work a lot, and for a long time Canadian companies pioneered dumping their mine tailings directly into the ocean through pipes called submarine tailings disposal. This is highly controversial; it wouldn't be allowed in Canada. Recently, a Chinese company moved into Papua New Guinea and is now using that same method of tailings disposal and always points to Canadian companies as having initiated that there. In a way we need to raise the bar globally. All of us need to raise the bar, and these issues need to be brought up with the Chinese.
The one thing that is ironic about when China goes abroad, particularly now to Africa, to do resource extraction, on the environmental side there are many concerns, but on the social side a lot of countries are happy to deal with the Chinese. Because they are often state-owned enterprises, the state can bring not just the mining but also huge packages of infrastructure development that is, to some extent, related to the mine but also unrelated. If a particular country wants a port, a harbour or a railroad, China, with their mine, brings these other infrastructure developments. Sometimes Chinese companies are considered the more preferable company to go with because they are state-owned and the state can bring in other sorts of development projects with the mine. They have often been seen as relatively useful from the perspective of infrastructure development. More problematic is that they often bring in their own workers. They will import Chinese workers as opposed to using local workers.
However, the issue with mining is that it is very capital intensive, but it is not very labour intensive. For any major mine, many of the really good jobs tend to be done by expats anyway. Even Canadian mining companies will fly people in at the higher levels.
It is a mixed story and I do think leadership is needed by countries that can provide that leadership. Because mining is so important to Canada, we can provide that kind of leadership. We certainly need to pull other countries along and hold them responsible as well.
The Chair: Mr. Joseph, I have one question. You have concentrated on the fact that there may be an issue around the constitution. That has been an impediment for the party in opposition to gain more foothold.
Do you work with other parties? Are there other institutions forming? I see these two as the traditional: You have the military party now and Aung San's party. Are there any other democratic movements, and are you nurturing more multi-party activity?
Mr. Joseph: For the record, we don't support the National League for Democracy, so we don't provide direct support to the parties.
In the country, our program is premised on the idea of many different voices participating in the political process. What you had in Burma recently in the National League for Democracy is the dominant opposition party. In the 2012 by-elections, they won overwhelmingly. In the 1999 elections that gave rise to them in the first place, they were also the dominant opposition party, but at that time they had to form coalitions with ethnic nationality parties. In the run-up to the 2015 elections you will see the emergence of other parties competing for power, particularly from the ethnic nationality areas. You can have literally dozens if not hundreds of parties representing all the different ethnic nationalities, the states, but even within the states there are lots of ethnic nationalities, sizable communities of 2 million, 3 million or 4 million people within these larger states that will form their own parties. You have other parties emerging from within the Burman heartland that are alternatives to the National League for Democracy.
Although the 2015 election will most likely see two dominant parties, the USDP, which is the military-backed party, and the NLD, there will be many players in the field. How they associate with each other, the alignments, the coalitions that are built will be of extreme importance.
Senator Robichaud: Ms. Coumans, have you taken a look at the benefits to Canada of the mining companies' activities, let's say in Asia, Indonesia or the Philippines? Is that a case where 1 per cent of the population gets to benefit 90 per cent of whatever is produced there and 99 per cent just get the rest of the scrap?
Ms. Coumans: For clarification, are you asking me to comment on the benefits that accrue in Canada?
Senator Robichaud: Yes, in Canada.
Ms. Coumans: That is an interesting question. It is one that we do often grapple with. It is certainly the case that our large mining companies benefit, obviously. That is a direct benefit to those companies. Canada is a big mining country because there are an awful lot of other sectors that support mining that are based here in Canada and that have expertise here in Canada, such as the legal profession. We have a lot of law firms that work on mining issues that are to do with legal issues. We also have contractors in Canada that do contract work for mining companies, everything from dealing with governments to dealing with communities to environmental contractors, big environmental consulting firms that we have here in Canada. We also have equipment. There is a lot of mining equipment built in Canada and is then exported and used around the world.
The spinoff of the benefits to Canada from the operations of our companies overseas is more than just to the mining company itself. However, it is certainly the case that a certain number of sectors or companies benefit. It does leave a lot of problems. The problems are more where the operations are happening and the benefits are more in Canada. That is one way of looking at it.
Senator Robichaud: If you were to have a few recommendations for our report in relation to the mining industry, where would you go? You mentioned remedy for arms; you mentioned an ombudsman and some other suggestions. Where would you put your eggs?
Ms. Coumans: The three areas I decided to focus on were the issue of the international investment agreements. This is a really large problem and a growing problem for a lot of countries. They sign these international investment agreements and then later, when they realize the harm that may be caused by a particular mining project, they want to tighten their environmental regulations or tighten their social or human rights protections and find that they can't do that because they have been locked into what they call stabilization agreements, bilateral trade agreements or sometimes they are investor state agreements. Sometimes they are state-to-state agreements, that protect the investments of Canada when they go overseas. The arbitration for these cases is then done through an international arbitration body that may then find in favour of the investment and may, in fact, charge countries even billions of dollars. The amounts are going up all the time and the number of cases that are being brought against governments is going up exponentially. What you are now seeing is pushback on this by countries like Indonesia, which is now looking at its bilateral trade agreements and saying we want to renegotiate these; we want to take another look at them.
Recently, there was an important report from the University of Ottawa. A number of professors that I mentioned in my presentation have taken a hard look at these investor state agreements and bilateral agreements to see how they could be restructured so they would be fair, particularly with respect to a country's ability to develop and to develop better protections for their environment and for their populations. That is certainly one.
The other one is definitely this issue of tax avoidance and evasion. I think there are some concrete steps that can be taken in that regard in Canada that I mentioned in my presentation.
The final one is the issue of access to justice; access to remedy for people who have been harmed.
I am happy to provide you with a copy of the presentation that might be helpful.
Senator Robichaud: Please, yes. That would be helpful.
The Chair: We have a copy of your speaking notes but they were only in one language so we will have them translated and circulated to the committee.
We have run out of time. As you can see, both of our presenters have certainly generated a lot of discussion on a lot of areas and provided some new information to us as we develop our understanding of Asia-Pacific and particularly the countries that we are focusing in on. We thank you for coming before us and for putting your point of view to us. We trust that some of what you have said here will echo somewhere in our report.
(The committee adjourned.)