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One step forward…

28 July 2010

With the failed state of Arizona about to devolve back to the Mississippi of the 1950s, a word should be said in favor of the United States Congress, for a small legal change that is of vital importance to the lives of Latin Americans. One provision in the Dodd-Frank Wall Street Reform and Consumer Protection Act requires oil, gas, and mining companies registered with the US Securities and Exchange Commission (SEC) to publicly disclose their payments to governments for the extraction of natural resources on an annual basis.

From Earth Rights International:

Once the provision takes effect — likely beginning in 2012 — payments to governments will be publically available to citizens in resource-rich countries, providing crucial information to hold governments accountable for the spending of this revenue. Senator Cardin (D-MD), one of the transparency provision’s lead supporters added, “This provision is a critical part of the increased transparency and corporate responsibility that we are striving to achieve in the financial industry. Given the catastrophic events in the Gulf of Mexico, oil companies, in particular, should well understand that secrecy fosters instability, corruption and greater risk. We now have the tools to help people in resource-rich countries hold their leaders accountable for the money made from their oil, gas and minerals.”

Corresponsales Indígenas, quoting a spokesman for the Spanish-based Economic Justice organization InspirAction, writes:

In many of the developing countries where InspirAction works, there is a wealth of natural resources, despite which the population lives in poverty as a result of tax evasion and corruption. The transparency provisions of the new law will ensure an increase in corporate responsibility, giving civil society and political leaders a much more precise understanding of the nature of agreements between their governments and extractive industries, making corruption more difficult. The adoption of this law marks a major step forward in the fight for transparent information on the taxes paid by multinationals.

While Mexico has so far been able to resist pressure to sign extraction agreements with foreign oil companies, and most of the mining companies are Canadian, as are most small (and socially irresponsible or downright exploitative mining companies in Latin America), by making the U.S. listed firms disclose their agreements, it will be harder and harder for others NOT to disclose, and give communities affected by mining operations more leverage to demand the information.

And, to ask their own governments why, if the state is receiving X million dollars in revenue from their local mine, their community is not reaping the benefits.

I recognize that the new law was for the protection of U.S. investors, but protecting the investor has the happy effect of protecting (or at least somewhat equalizing) the position of the producer… making “free trade” a bit more “fair trade” and that should be celebrated.

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