A water truck in Port Louis, Mauritius. Credit: Nasseem Ackbarally/IPS

By Carey L. Biron
WASHINGTON, Dec 4 2013 (IPS)

As government representatives gather Tuesday in Indonesia for what could be final negotiations towards a global trade agreement under the World Trade Organisation (WTO), environmentalists and social justice campaigners are urging them to specify that water resources cannot be treated as commodities.

Critics of the privatisation and “financialisation” of natural resources are pointing to mounting interest by multinational investors in viewing common water resources as tradable, a change that development advocates worry could impact particularly on poor and marginalised communities. While international agreements enshrined a universal right to water (and sanitation) in 2010, international trade agreements have yet to follow suit – a gap that some say is becoming increasingly dangerous.“These entities have made bets that water will eventually be distributed and sold much like petroleum is today." -- William Waren

“Our concern is that the financialisation and privatisation of water is already very much a long-term goal of major multinational companies and investors,” William Waren, a trade policy analyst with Friends of the Earth U.S., a watchdog group, told IPS.

“These entities have made bets that water will eventually be distributed and sold much like petroleum is today. They know that global warming will make water resources increasingly scarce, so they want to get ahold of these resources and eventually sell it at their asking price.”

Of those who have made such bets so far, Waren mentions Suez Environment, the French water giant, as well as T Boone Pickens, the U.S. oil tycoon-turned-alternative energy magnate. Regardless of where these investors are based, however, their focus is international.

Just ahead of the start of the WTO ministerial talks, taking place Tuesday through Friday in Bali, Friends of the Earth International offered a series of case studies on the experiences of a dozen countries around the financialisation of common water resources. The report argues that a confluence of international financial institutions and corporations are “paving the way” for this process.

Yet these forces are being offered crucial aid by international trade agreements, both the vagaries of current accords and the more explicit strategies in those still under negotiation, particularly spearheaded by the United States.

These “key drivers of the deregulation and liberalization processes that have opened the water and sanitation sectors to corporate profiting-making, and as key building-blocks to the architecture of impunity that protects it,” the report states.

“Standing out amongst them are the new and increasingly less transparent and non-democratic modalities of transoceanic partnerships led by the United States … and the World Trade Organization’s agenda on environmental services.”

Old public commons

Key in this discussion is an international trade agreement signed more than a half-century ago. The predecessor to today’s WTO, created in 1995, was an accord known as the General Agreement on Tariffs and Trade (GATT).

Today, GATT provisions continue to coordinate policy for the trade in physical goods. Yet Waren says neither GATT nor the WTO has ever clearly defined what constitutes a “good” or whether it includes water.

“The traditional view in international law is that water belongs to the public commons, so back in 1948 there was no consideration of what the big corporations are contemplating today – the complete control of the system from well to tap,” he says.

“So, we need to make sure there’s language in new trade agreements offering specific assurances that water is regarded as part of the public commons that is not a good or product.”

Likewise, the WTO’s discussion on trade in services remains under negotiation, largely made up of countries offering their own commitments. Yet thus far no country has made substantive commitments regarding domestic water supplies, while advocates worry that a suite of GATT commitments could substantially increase corporate control over common water resources.

Meanwhile, this week’s discussions in Bali are being seen as a last chance for the WTO to come to a multilateral agreement, as negotiations have dragged on under the current round of talks for a decade. Amidst mounting frustration, much of the momentum has instead shifted to state-to-state trade treaties and investment agreements.

Two of the largest ever contemplated are currently under negotiation, both led by Washington: the 12-member Trans Pacific Partnership and another free trade area between the United States and the European Union. If the two were to come to fruition, they would cover the vast majority of the world’s economy.

Yet these so-called U.S. models also come with stringent pro-business requirements and quasi-judicial enforcement mechanisms that put investors on the same level as sovereign states.

“There is a clear and present danger in these investment agreements, and water policy is an almost constant issue,” Waren says.

“Part of the problem is that much of investment case law has an explicit right to export. So countries acting to deal with a dwindling water supply, especially in the Global South, may not realise they’re giving the right to investors both to make investments and to export.”

And despite the United Nations’ 2010 agreement on the universal right to access to water, the international tribunals that adjudicate disputes under investment agreements typically don’t recognise international humanitarian law. For critics, such a system underlines the importance of the WTO explicitly engaging with the issue of water as a tradable good.

A third more expensive

It is somewhat ironic that the push towards increased multilateral financialisation of water could be coming from the United States, where the experience surrounding the privatisation of public water utilities has been notably negative.

The country’s largest private water company, American Water, was formerly owned by a German company. But that owner pulled out in large part due to public resistance towards both private and foreign ownership of water resources.

“There has clearly been resistance to private ownership,” Mary Grant, a researcher with Food & Water Watch (FWW), an advocacy group, told IPS. “Communities have made clear that they want local ownership of their systems in order to control both quality of service and the rates charged.”

FWW surveys have found that investor-owned utilities in dozens of U.S. states have typically charged a third more than those owned by the public, a lack of efficiency corroborated by other investigations. Profit-driven systems also experience problems in deciding where to extend service, with companies at times proving reluctant to do so in low-income areas or very small communities.

“The U.S. experience shows that water privatisation has been a failure,” Grant says. “It hasn’t resulted in better services even while it has led to higher rates and, often, worse service. Local, public provision is the most responsible way to ensure that everyone has access to safe and affordable water.”

A young boy works on the subsistence crops raised on his family’s parcel of land in Quiché, Guatemala. Credit: Danilo Valladares/IPS

By Danilo Valladares
GUATEMALA CITY , Sep 18 2012 (IPS)

The Association Agreement between Central America and the European Union (EU) will increase environmental and social pressures on the region, warn experts and activists. But some observers stress its potentially positive impacts.

“We can expect an increase in the activities of extractive industries,” which bring about “negative environmental and social repercussions,” said Juventino Gálvez, the director of the Institute of Agriculture, Natural Resources and Environment at Rafael Landívar University, a Jesuit university.

This is a delicate issue in several countries of the region. In Guatemala, for example, Montana Explotadora, a subsidiary of the Canadian mining company Goldcorp, has been accused of contaminating rivers and affecting the water supply of 18 indigenous communities in the western department (province) of San Marcos, through its activities at the Marlin gold mine.

In May 2010, the Inter-American Commission on Human Rights called on the Guatemalan government to suspend the operation of the mine, but it continues to operate.

“National institutions are precarious, and there is a well-known tendency to disrespect legislation, which is vague and permissive to begin with,” Gálvez commented to Tierramérica*.

The entry into force of the Association Agreement, signed on Jun. 29 by the EU, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Panama, depends on its ratification in the European Parliament and the legislatures of the six Central American countries.

The agreement establishes mutual commitments in three areas: political dialogue, cooperation and trade.

With regard to trade, it will eliminate tariffs on agricultural products (such as coffee, fruit, vegetables and meat), textiles and manufactured goods, while opening up markets to financial, telecommunication, transportation and other services, as well as government procurement.

As for cooperation, the agreement aims to promote technical assistance and exchange in the use of clean energies, mining, tourism, fishing, transportation, sustainable development and the environment.

The most significant section of the agreement with regard to the environment is found in this chapter, under Title V, which also addresses natural disasters and climate change – two key issues for the region.

In the area of political dialogue, one of the aims is to establish common ground in areas such as the rule of law, good governance, democracy, human rights, gender equality, the rights of indigenous peoples, poverty reduction and migration, among others.

For Gálvez, when the “potential” expansion of monoculture plantations is added to the equation, the result will be greater conflict “due to competition between agroindustrial operations and rural communities for access to strategic resources.”

Oil palm plantations, which tripled in size between 2003 and 2010, have given rise to violent land disputes, especially in northern Guatemala, where hundreds of peasant farmers have been displaced and a number have been killed in clashes with the police.

Miguel Mira of the non-governmental Centre for Investment and Trade Research of El Salvador believes that “the only interest behind these agreements is to open up more markets to trade and investment for big transnational corporations, while labor and environmental issues are considered irrelevant.”

In Central America, with roughly 43 million inhabitants, half of the population is poor. And poverty is deeper in rural areas.

There is an obvious asymmetry with the EU, home to 500 million inhabitants and one of the wealthiest areas on the planet, which until now has represented barely 10 percent of Central America’s foreign trade.

In 2011, the EU sold 36 billion dollars in goods to Central America, and purchased the equivalent of 31.6 billion dollars, resulting in a trade surplus of 4.4 billion dollars for the EU, according to European Commission figures.

Central American sales are concentrated in telecommunications and office equipment (53.9 percent) and agricultural products (almost 35 percent in 2010). In the meantime, the main goods imported from the EU are machinery and transport equipment (48 percent) and chemicals (12 percent).

“The logic of the Association Agreement is that of free trade, and all other aspects of international relations are subject to this,” said activist Erik Van Mele of the international non-governmental organisation Oxfam Solidariteit.

Although the agreement addresses sustainable development and the environment, there is no guarantee of protection for Central America, one of the regions with the greatest wealth in biodiversity in the world.

Article 284 on trade and sustainable development “stipulates that these matters are excluded from the procedures established for the settlement of eventual conflicts,” Van Mele stressed.

Moreover, there are various interpretations of sustainable development, he said.

For example, the promotion of agrofuels as “green energy” to replace fossil fuels “could give rise to deforestation to allow for the planting of monocultures, or to hunger caused by an increase in the price of corn, a staple food in the region, due to its high demand for conversion into ethanol,” he warned.

An evaluation of the agreement requested by the European Commission in 2009 concluded that, in addition to its economic and trade benefits, it would generate greater pressure on land, coastal and maritime resources, with a specific warning on the potential increase in monocultures. It also recommended measures to minimise the impacts, to be adopted in the framework of cooperation.

Gustavo Hernández, the coordinator in Brussels of the non-governmental Latin American Association of Development Promotion Organisations, told Tierramérica that the sanctioning mechanisms for non-compliance stipulated “are not binding” and that there is “little participation by civil society, particularly the majority sectors of the population who will be the most affected” by the agreement.

As far as Luis Muñoz of the Guatemelan Centre for Cleaner Production is concerned, however, the experience of the free trade agreement with the United States, in force in Guatemala since 2006, demonstrates that agreements like these can generate positive demands.

“When the environment is linked to the economy, it is more advantageous for companies to invest time and resources in environmental aspects,” he explained.

Moreover, the transfer of technology and the drive for competitiveness also need to be considered, he added. “Before, the pressure to approve environmental laws was very low, but after the free trade agreement with the United States, regulations on wastewater were adopted,” he noted.

Muñoz recognises that all industries generate impacts, but believes that it is necessary to “seek a balance.”

“Without the profits from coffee, for example, how many people would be left without an income? And I’m not talking about the plantation owners,” he said.

* This story was originally published by Latin American newspapers that are part of the Tierramérica network. Tierramérica is a specialised news service produced by IPS with the backing of the United Nations Development Programme, United Nations Environment Programme and the World Bank.

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