The UN’s new set of principles on critical minerals fudges the issue of trade
By: Cleodie Rickard
Date: 17 September 2024
Campaigns: Trade
This year, the UN Secretary-General convened a panel on critical energy transition minerals to address issues relating to equity, transparency, investment, sustainability and human rights in critical mineral supply chains. Now, the panel has published its report of principles and recommended actions.
The good news: the wider framing of justice and equity as enablers of climate action – rather than blockers of the transition – is a welcome paradigm shift, especially given that the panel includes only three official representatives from civil society organisations. The report outlines that human rights, the integrity of the planet, and justice and equity must be at the core of mineral value chains for the trust and cooperation necessary to accelerate the global energy transition.
It is also notable that the report’s ‘actionable recommendations’ consider material efficiency and circularity. However, this must be further strengthened – rather than merely “balanc[ing] consumption”, in the historical emitter countries of the global north we must be reducing demand or reallocating production to socially useful sectors.
However, the flagrant blind spot in these principles is around international trade, despite the best efforts of civil society organisations to highlight it during the drafting process.
The panel is right to argue that “development must be fostered through benefit sharing, value addition and economic diversification” of mineral-producing countries. It even admits that trade is “currently not sufficiently accessible or adequately tailored to the needs of the employers, workers, Indigenous Peoples, and communities in developing countries”.
Why, then, in Principle 5 on responsible and fair trade is the panel silent on those trade rules – binding and sanctionable, unlike these principles – that actively restrict the policy space of global south countries to develop their mineral sectors?
Arguing that “the current “trade system should be retained” implies a vacuity to the otherwise ambitious language around value addition’, that is, increasing the amount of downstream processing and development of countries’ resources for economic diversification and more local jobs. Encouraging domestic content while remaining silent on the international trade rules and WTO dispute mechanisms that bar or punish it and other key industrial policy tools – like mineral export restrictions and taxes, domestic processing and subsidies – is a glaring contradiction.
Leaving trade unscrutinised also means ignoring one of the deadliest weapons corporations have to obstruct climate and industrial policies – investor state dispute settlement clauses – aka ISDS. ISDS clauses are written into trade agreements and enable foreign investors to sue states over policies they allege harm their business interests. In this way mining companies can strongarm governments out of the very moves towards value addition and benefit sharing that the report urges, locking in big business as the sole profiteers of extraction.
Meanwhile, the welcome promotion of technology transfer rings hollow without confronting the trade rules which enforce prohibitively strict intellectual property regimes: without IP waivers, southern countries will be paying a ransom to patent owners in rich countries to access critical knowhow for green industrialisation.
Overall, where the centring of human rights takes steps forward, the panel falls short on rich countries’ responsibility. This risks adding greater regulatory burdens onto producing countries while transnational mining companies, and the countries pursing extractive trade deals to meet unsustainable levels of demand, enjoy the same trade rules that maintain the status quo of neocolonial extraction.
For the trade in critical minerals to herald genuine structural economic transformation in producer countries, we need to see transformations in the terms of trade and meaningfully reciprocal partnerships.
Transition mineral supply chains will come to define much of the global economy for a generation; as its underlying architecture, international trade is too fundamental to ignore.
Photo credit: United Nations
