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Oh Well, What's a Poor Canadian Corporation to Do?

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BARACK OBAMA GRIDIRON DINNER

President Obama's step-father's experience at the hands of an American-backed dictator in Indonesia gave him a chilling view into how empire looks from the receiving end. His visit this week to El Salvador gives him a chance to do something about it.

Candidate Obama campaigned in favor of reforming America's trade agreements with Latin America--the North American Free Trade Agreement (NAFTA) and the Central American Free Trade Agreement (CAFTA)--because both are one-sided and favor predatory business practices over worker rights and environmental protection. Sometimes as president, as in his path-breaking Cairo speech, he seems to be charting a new path. But at other times he seems a prisoner of his predecessors, saying that reforms would have to wait until the economic crisis had passed.

El Salvador demonstrates why reform cannot wait. After allowing foreign mining, logging, and agribusiness companies to devastate its landscape for decades, the Salvadorean government has finally put its foot down: It suspended permits issued to a Canadian mining company because its operations would take scarce water supplies from a community and because the cyanide used in the gold mining might contaminate the area's entire aquifer. (The mining company's defense was that while cyanide perhaps be toxic, the human body is able to "assimilate" it, since it occurs in natural form in foods like cassava, grapes and almonds.)

Pacific Rim, the Canadian company that had proposed the mining operation in one of El Salvador's poorest regions, wasn't going to let this pass. It lacked legal recourse under Canadian trade agreements, so it shed the maple leaf for the stars and stripes, moving one of its subsidiaries from the Cayman Islands to Nevada, thereby entitling it to status as a "U.S. investor." As such, it then sued El Salvador for $100 million. Under CAFTA, U.S. companies have the right to challenge the environmental standards set by Central American nations. (An ordinary citizen of the Cayman Islands might have a hard time getting a green card, but for a mining company--hey, no problem.) Pacific Rim's argument for being entitled to $100 million in damages is that it filled out its application correctly--and that's all the environmental protection El Salvador is entitled to!

Pacific Rim is not relying solely on CAFTA; it's also pushing its right wing allies in the Salvadorean parliament to take away the government's authority to deny mining permits. Under the new law proposed by Pacific Rim, a commission would be established which could give mining concessions for 46 years--during which time CAFTA would protect mining companies from any further environmental regulation.

Obama has to decide where he stands. El Salvador's bishops oppose Pacific Rim, and 19 Democratic members of Congress and more than 140 organizations including the Sierra Club have asked the president to defend El Salvador in the Pacific Rim case--and to use this outrage as a template for reform of the "investor rights" provisions in CAFTA, NAFTA, and other pending U.S. trade agreements.

I hope the president tells his trade staff to read his campaign pledges--and pages 44-45 of Dreams From My Father. That would remind them that this President uniquely understands what a foreign policy that puts greed over decency means to people on the other side of the equation.

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