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CAFTA Investor Rights Undermining Democracy and the Environment: Pacific Rim Mining Case

By Public Citizen's Global Trade Watch

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Pacific Rim Mining Corp., a Canadian-based multinational firm, sought to establish a massive gold mine using water-intensive cyanide ore processing in the basin of El Salvador’s largest river, Rio Lempa. This proposed project as well as applications filed by various companies for 28 other gold and silver mines, generated a major national debate about the health and environmental implications of mining in El Salvador, a densely populated country the size of Massachusetts with limited water resources. Leaders of El Salvador’s major political parties, the Catholic Church and a large civil society network expressed concerns. In the face of growing opposition, Pacific Rim never completed a feasibility study necessary to obtain an exploitation permit for its mine, called “El Dorado,” and in July 2008 ceased exploratory drilling. In December 2008, the firm filed a claim under the Central America Free Trade Agreement (CAFTA), demanding hundreds of millions in compensation from one of the hemisphere’s poorest countries. Meanwhile, in El Salvador, the mining debate continues. Intimidation and threats against civic groups have escalated. In the past year, three prominent anti-mining activists were murdered. As the Obama administration begins talks on its first prospective trade pact, the Trans-Pacific Partnership, the Pacific Rim CAFTA case again spotlights the concerns that have led many in Congress and U.S. civil society to demand changes to the past model of trade pact investor rights and an end to their private enforcement. Tribunals have ordered over $200 million in payments to investors under similar terms in the North American Free Trade Agreement (NAFTA).