Unexpected Alliances

In November 2013, Minister of International Trade Ed Fast reemphasized Canada’s commitment to “ensure a prosperous Canada that remains a global champion of trade” with the Global Markets Action Plan.  The plan makes clear that Canada’s stated goals of increasing economic opportunities at home and promoting democracy, human rights, and good governance worldwide are irrecoverably intertwined.

This is hardly a revelation. Since the global financial crisis of 2007-08, developing countries have been increasingly acknowledged as leading drivers of global economic growth. The range of investment opportunities in these countries continues to steadily grow, as do the number of investors seeking to take advantage of them. “Africa rising” is now a stock storyline for media worldwide.

Amidst the hype is a nugget of true potential. Foreign direct investment offers developing countries an important opportunity to generate sustainable and independent funds that can be used to enhance the lives and livelihoods of their citizens. That said, we also cannot ignore that democracy, preservation of human rights, and improved governance practices do not automatically spring forth from a booming economy.

One industry that exemplifies both this opportunity and risk is the global extractive sector. In Sub-Saharan Africa, oil, gas, and mining account for an average of 40 percent of government revenues in resource-rich countries. This jumps to an average of 60 percent in oil-producing countries. Profits from natural resource extraction are also far greater than foreign aid funding: in 2011, Nigeria’s oil revenue alone was 60 percent more than the total international aid for all of Sub-Saharan Africa.

The Global Markets Action Plan calls for Canada to focus on initiatives that play to the country’s strengths, including developing “an extractive sector strategy to further the interests of Canadian companies abroad.” The government is right that our country already has a strong competitive advantage in the global extractive sector: almost 60 percent of the world’s mining companies and 35 percent of the world’s oil and gas companies are listed on Canadian stock exchanges.

But this is why an extractive sector strategy that seeks solely to further the financial interests of Canadian companies is not good enough. Canada has a unique opportunity and a vital responsibility to create a strategy that also improves the ability of citizens in resource-rich countries to ensure they receive full social benefits, including health services, education systems, and infrastructure, from the minerals, oil, and gas they supply to the world.

A first step that Canada can take in this direction is to draw attention to the need for – and take action to increase – transparency and accountability around the revenues that governments receive from extractive industry activity. Canada has made significant strides towards leadership on this issue. The country is home to a unique multi-stakeholder partnership that demonstrates that the need for greater transparency in the extractive sector is a rare point on which industry, investors, civil society, and citizens – in both Canada and emerging markets – agree.

In September 2012, Canada’s largest mining industry associations – the Mining Association of Canada and the Prospectors and Developers Association of Canada – joined Publish What You Pay Canada and the Revenue Watch Institute in a commitment to increase extractive sector transparency. These groups co-created recommendations for a framework that would make it mandatory for Canadian-registered mining companies to report all payments they make to governments, both at home and abroad. Investors from Canada and around the world have also expressed clearsupport for a more transparent extractive sector.

This rising momentum clearly caught the attention of the Government of Canada. Just before last summer’s G8 Summit Prime Minister Stephen Harper announced that the government would “[establish] new mandatory reporting standards for Canadian companies operating in [the extractives] sector.” A growing number of Canadian citizens are adamantly pressing Canada to fulfill this commitment, as demonstrated by recent country-wide actions in support of Engineers Without Borders Canada’s TRACE Campaign for TRansparent and ACcountable Extractives.

The most powerful element of the Canadian movement for a more transparent extractive sector is that it is driven by a set of allies that some might find unlikely. These diverse actors are now working to engage Canada’s provincial governments in this issue, as it is the provinces that have the ability to make greater transparency a reality by including mandatory reporting requirements in their provincial securities regulations.

It will be globally significant when Canadian provinces implement these regulations, but it will not be the end of the pursuit of a more transparent extractive sector. The extractives are also just one of the numerous trade opportunities that Canada is pursuing.  Further, while transparency is a precondition to accountability, it is not a silver bullet for achieving that goal – or any of the broader social priorities that Canada has named. The international market is a complex system with many deep-rooted inequities, and Canada can – and should – do much more to be leader in both trade and human rights.

The movement for a more transparent extractive sector does however demonstrate that it is possible for industry, civil society, citizens, and government to align on a way to help address a critical human rights issue. It also illustrates that the collective effort of diverse actors has the potential to drive change more effectively than any one actor could alone. This is a promising way forward at a time when Canada greatly needs one.

This kind of collaborative effort is inevitably hard-won, requiring considerable open-mindedness, trust, and ongoing negotiation from all sides. But as lines between business and development objectives become ever blurrier, ignoring the importance of engaging with all stakeholders is not an option. If we want Canada to be not only a “champion of trade,” but also a champion of democracy, human rights, and good governance, we need more – and more diverse – stakeholders to undertake the often slow and challenging, but vital work of working together.