Canada's role in promoting mining and development policy reforms in Sub-Saharan Africa By John H. Jacobs A thesis submitted to the Faculty of Graduate and Postdoctoral Affairs in partial fulfillment of the requirements for the degree of Doctor of Philosophy In Public Policy with Specialization in Political Economy Carleton University Ottawa, Ontario ©2017 John Jacobs Abstract Accessing sufficient capital on terms conducive to development is a major challenge in achieving Sub-Saharan Africa’s (SSA) mining potential. The effects of neoliberal policy reforms promoted by the IMF and World Bank and other Western actors has ensured that mining and development policies are dominated by foreign direct investment (FDI)-led approaches. The disappointing development benefits generated in SSA by the 2000s commodity boom has led to a re-evaluation of these FDI-led development models and to SSA calls for country-led development strategies wherein states play an increased role. Canada has become a major source of mining capital and policy advice for SSA. This dissertation examines Canada’s interventions in SSA mining and development policy reforms, specifically related to the promotion of bilateral investment treaties (BITs), global mining policy diffusion networks and best practices. The core question is whether Canada’s interventions support the development of the policy options needed in SSA to ensure that mining contributes to sustainable social and economic development. Chapter 1 provides an orientation to mining and development issues in SSA, examining the continued influence of the FDI-led model that was central to the World Bank’s 1990s mining policy reforms that focused on generating revenue and rejected state-led socio-economic development mining policies. Chapter 2 examines Canada’s recent conclusion of nine BITs with SSA countries. The chapter analyzes the potential development impacts of Canada’s BITs, finding that they are particularly economically liberalizing and that they undermine the ability of SSA states to generate socio-economic benefits. Chapter 3 examines the role played by Canadian funded institutions and networks in the diffusion of the FDI-led mining and development model. The chapter contends that Canada is playing a central role in reducing the parameters of what are considered viable policy options for SSA states. Overall, this dissertation argues that Canada’s interventions have promoted policy reforms that focus on increasing and protecting opportunities for Canadian registered mining companies and that these policies undermine the ability of host countries to ensure that FDI contributes to economically sustainable development, thereby undermining the emergence of developmental states and regional initiatives such as the Africa Mining Vision. i Acknowledgements I wish to thank my thesis supervisors Dr. Laura Macdonald and Dr. Manfred Bienefeld for their contributions to the development of the ideas and research that inform this thesis. Their support was essential to the completion of what has been a long-term project. I also want to acknowledge the support and advice I received from Dr. Graeme Auld who participated on the supervisory committee. I would like to thank the members of the thesis examination committee, Dr. Henry Veltmeyer and Dr. Blair Rutherford, for their thoughtful and constructive questions and feedback. My parents, John and Maria Jacobs, have had a major influence on the content of this document through instilling in me social justice values, internationalism and intellectual curiosity. These values both stimulated the pursuit of a PhD and informed the content of this thesis. The support of my family has been essential to the completion of this PhD – it has been a long journey! For Erik and Anton, I hope the experience has been somewhat intellectually stimulating and perhaps even entertaining at times. And finally, I would like to express my sincere and deep appreciation to my partner Anne Webb without whom this thesis and PhD. would not have been possible. Anne shared the challenges and sacrifices and her support was central to this accomplishment. In this sense this thesis is an accomplishment for all of us: thanks Anton, Erik and Anne! ii Contents Abstract ............................................................................................................................................ i Acknowledgements ......................................................................................................................... ii Table of Figures .............................................................................................................................. v Abbreviations ................................................................................................................................. vi Introduction ..................................................................................................................................... 1 Overview of the dissertation chapters ..................................................................................... 7 Methods and Contributions ................................................................................................... 10 Framework: Conceptualising Canada’s Role as Lead Promoter of FDI-led Mining and Development Strategies ................................................................................................................ 14 Canadian Policy, Economic Elites and Supports for International Mining .......................... 27 Chapter 1- An Overview of Revenue Flows from the Mining Sector: Impacts, Debates and Policy Recommendations.............................................................................................................. 37 Abstract ..................................................................................................................................... 37 Introduction ............................................................................................................................... 37 World Bank mining strategy in Africa: Ghana, Mali, the DRC and an Overview ................... 39 Certain Key Issues Concerning Mining Taxation ..................................................................... 47 Revisiting Questioning Mining and Development – Evolving Responses ............................... 55 Addressing power asymmetries and the role of public actors: areas of ongoing debate .......... 62 Current Approaches and Policy Implications ........................................................................... 66 Strengthening Negotiating and Administrative Capacity ......................................................... 68 Conclusion: Mining Revenue and Economic Transformation ................................................. 69 Notes ......................................................................................................................................... 74 Chapter 2: The Impact of Canada’s Bilateral Investment Treaties on Mining and Economic Development Strategies in Africa ................................................................................................. 75 Abstract ..................................................................................................................................... 75 Introduction ............................................................................................................................... 76 Mining and FDI......................................................................................................................... 78 The Implementation of FDI-led Mining in SSA ................................................................... 81 Bilateral Investment Treaties ................................................................................................ 83 Reorienting Mining and Development in SSA: The emergence of a new mining policy framework? ............................................................................................................................... 86 iii Canada as an Emerging Home for Transnational Mining Capital ............................................ 91 Canada’s Investment Protection Agreements In Sub-Saharan Africa ...................................... 93 Canada’s FIPA Provisions ........................................................................................................ 97 Right of Admission ............................................................................................................... 98 Local content requirements (performance requirements) ..................................................... 99 Investor-State Dispute Settlement WTO enforcement ....................................................... 102 FIPA’s Joint Determination regarding taxation disputes .................................................... 103 Determination of FIPA regulatory exemptions................................................................... 104 Indirect impacts of FIPAs on development ............................................................................ 106 Conclusion .............................................................................................................................. 111 Chapter3: Canada’s Role in Mining and Development Policy Reforms in Sub-Saharan Africa 113 Abstract ....................................................................................................................................... 113 Introduction ............................................................................................................................