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Trade agreements’ influence on the global mineral transition in critical raw materials

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Photo by Focus on the Global South

Bilaterals.org - 22 March 2024

Trade agreements’ influence on the global mineral transition in critical raw materials

By Bilaterals.org

The global transition to a low-carbon economy is driving up demand for critical raw minerals like lithium, cobalt, and nickel, which are required for the development of electric vehicle batteries, renewable energy technology, and other green technologies. But this transition is not just about technology; it is also geopolitical and economic. Trade agreements shape the global minerals transition by determining access to essential raw materials, influencing investment decisions, and enforcing environmental and social regulations. This article examines the under-lying agenda of trade agreements in shaping the global minerals transition, including how they affect the distribution of benefits and risks. It also considers the implications for sustainability and environmental justice.

(Un)Just transition agenda of global North
The demand for critical minerals, driven by industrial growth in the Global North, poses socioeconomic and environmental threats to mining communities in the Global South. International predictions highlight the crucial role of raw materials in the energy transition, emphasizing China’s dominance in critical raw materials supply chains. As countries consider export restrictions for domestic processing, careful regulation is essential to mitigate potential risks. Trade policies, such as Regional Comprehensive Economic Partnership, Comprehensive and Progressive agreement for Trans Pacific Partnership, and US agreements, shape global dynamics, while the EU aims to diversify supply chains and enforce trade agreements. Despite “sustainability” elements, these parts of the agreements often lack enforceable obligations, contributing to sacrifice zones in the energy transition with adverse environmental impacts.

Countries may use trade agreements to gain access to critical raw resources required for the transition to renewable energy. For example, Japan’s pursuit of an Economic Partnership Agreement (EPA) with Mercosur reflects a strategic interest in gaining access to the region’s enormous mineral resources. By partnering with Central and South American countries to se-cure raw materials for “sustainable” technology, Japan hopes to boost its position as a vital participant in the global transition to a low-carbon economy. The European Union is one of the world’s top raw material importers, with its firms relying heavily on mineral extraction in other regions of the world. As a result, the EU intends to reduce reliance on China and explore other sources by expanding trade relations with a number of important countries, including Indone-sia, Chile, Mexico, New Zealand, Australia, and India. Existing EU free-trade agreements with Canada, Chile, Japan, and Vietnam include provisions on raw resources. There are also current talks about incorporating a raw material chapter in trade deals with Australia, and Indonesia.

At the same time, Canada’s own geopolitical tensions with China are prompting it to rethink its supply chains. Lacking certain raw materials such as cobalt, Canada seeks external sources, often in Africa and the deep sea, with diplomatic support despite the human rights and environmental abuses associated with mining. Legal frameworks, like the "Build More Mines Act," aim to expedite impact assessments, but struggles persist with pollution and indigenous community challenges. And Indonesia is strategically strengthening its industry policies by focusing on securing supply chains and advancing its national economic sovereignty. The government emphasizes downstream industries, implementing mandatory domestic processing for mining products and protecting exports. With a focus on Electronic Vehicles (EV) development, Indonesia plans a comprehensive ecosystem, addressing upstream mining, processing, downstream activities, and charging stations. The nation seeks to become an EV hub, acknowledging dependencies on foreign investments, including Korean and Japan, to expand its markets. As Indonesia adopts international trade standards through RCEP and other FTAs, it faces new challenges, highlighting the need to understand the implications of these agreements, which are often negotiated behind closed doors.

Voices unheard: local and community perspectives in the global race for resources
The global energy transition, largely driven by powerful corporations, requires a broader policy agenda that addresses justice and workers concerns, especially as production shifts to machines, impacting job security and working conditions. Strategic projects of this agenda involve fast-tracking mining licenses, improving geodata, and emphasizing mining standards. However, there is a notable absence of attention to the demand side, product design, indigenous rights, the right to refuse, global justice, and community participation in protecting human rights and the environment.

Structural issues affecting women, loss of access to nature, and exploitation underscore the need for rejecting harmful practices. Across regions like Mozambique and Indonesia, promises of positive changes from mining activities often fall short, leading to protests and calls for solidarity. Campaigns against false climate solutions and irresponsible mining, alongside efforts in frontline struggles, emphasize the importance of international solidarity for a just and sustainable transition. The overarching goal is to reshape global trade dynamics, protect mining-affected communities, and explore alternative strategies aligning with social and economic justice.

The global landscape is witnessing the resurgence of unjust trade agreements and extractivist economic frameworks, camouflaged under the rhetoric of "just transitions." These false solutions perpetuate existing historical inequalities, compounding economic, trade, and climate injustices. Rooted in exploitation and extractivism imposed by colonialism and imperialism, the global expression of this injustice unfolds through multilateral and bilateral agreements, exacerbating the loss of ecological protections and sacrificing communities, environments, and livelihoods for profit. Amidst global trade inequalities and monopolies, national protectionist frameworks often favours a select wealthy elite, as in Indonesia. Multiple standards in trade policies that allow foreign direct investments, while implementing protectionist measures, amplify suffering for communities.

Strategies of resistance have been implemented to reverse the trend. These include dialogues, protests, and advocacy in Africa, while Indonesian women connect mining impacts to systemic patriarchal issues. Indonesian trade unions focus on reclaiming "just transitions" to prevent corporate cooptation. Peruvian and Chilean groups have proposed national meetings before the next global forum on mining and extractive economy to strategise, coordinate and unite in solidarity with the challenges faced by Indonesian communities.

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This article was made from the Workshop on Global Trade, Supply Chains, and Transition Minerals held at the Thematic Social Forum on Mining and Extractive Economy in Semarang, Indonesia, in October 2023. The event was collaboratively organized by the Transnational Institute, SOMO, APWLD, CCPA, bilaterals.org, Sahita Institute, Solidaritas Perempuan, Indonesia for Global Justice, and Focus on the Global South.


 source: Bilaterals.org