I. Introduction
The ‘Going Out’ strategy that China began in 1999 was elevated to a core foreign policy strategy with the launching of the ‘Belt and Road Initiative’ (BRI) in 2013. This geopolitical and geoeconomic plan for worldwide connectivity and infrastructural development, includes principles of integrity, transparency and accountability, which have been highlighted as a blueprint for Chinese business by the head of the Asian Infrastructure Investment Bank, Jin Liqun, and by President Xi Jiping.Footnote 1 However, recent studiesFootnote 2 show that Chinese development banks have lower standards and less demanding enforcement mechanisms than the western multilaterals. Moreover, Chinese investors have relied on host governments to set corporate rules, and scholars often highlight that many of those governments have low levels of legitimacy, high degrees of corruption, or have diminished environmental and social standards to attract new capital.Footnote 3
Thus, the acceleration of BRI projects might be a double-edged sword: Chinese companies enter the world stage with relatively little experience in navigating the changing international investment terrain and in dealing with social and political risks.Footnote 4 Scholars suggest that although the BRI might promote economic growth in national economies, local communities might bear the social and environmental costs.Footnote 5 The lack of a clear international framework for corporate accountability accentuates this situation. Corporations in fact operate in a legal and policy vacuum,Footnote 6 navigating between binding national laws, global accountability standards (only to some degree enforceable), and voluntary sectoral codes of conduct.
The definition of human rights standards for Chinese investments is crucial given its controversial performance in recent years. Some studies in Africa, Southeast Asia and Latin America argue that Chinese investments have tended to accentuate local environmental degradation and social conflicts.Footnote 7 In Latin America violations of human and environmental rights would not be isolated incidents, but a pattern of behaviour.Footnote 8 Other studies highlight that the actual impacts of Chinese investments are not substantially different from other international investments; the performance depends on the sector (for example, mining, oil and agribusiness) rather than company nationality.Footnote 9 Some case studies in Latin America found in this regard that Chinese companies do not perform significantly worse compared with other companies in the region.Footnote 10 A related discussion is about who must hold the main responsibility for enacting and enforcing human and environmental standards: the Chinese companies (and the home regulators) or the host governmentsFootnote 11. Whereas most authors agree that the potential negative impacts of Chinese investments in infrastructure and extractive projects could be reduced if host governments develop innovative policy responses and regulations,Footnote 12 they tend to emphasize the need for a shared responsibility between Chinese regulators, banks, firms, and the host governments.
This article contributes to previous discussions by engaging with the scholarly framework of international norm localization to analyse the enactment of Chinese human rights standards and their concrete application. This is an exploratory study based on an extensive review of academic and policy research as well as the analysis of the case study of Las Bambas, led by the Chinese Minerals and Metals Group (MMG) and located in the central highlands of Peru. As an exploratory study, the case has been addressed by the analysis of policy documents, national regulations, corporate policies and public declarations of the company, and public declarations of peasant organizations. The case was selected because of its national and international relevance. Las Bambas is one of the largest copper mines in the region and one of the largest mining projects in Peruvian history with an approximate investment of 10 billion dollars,Footnote 13 whose production represents around 1 per cent of the national GDP,Footnote 14 and is expected to consolidate the country as the second copper producer in the world.Footnote 15 The recent announcement of the suspension of activities because of local conflicts has not only produced an economic loss for the firm, the local governments and the national government, but also would impact the price of copper in international markets.Footnote 16
The case analysis shows how international standards of businesses and human rights such as due diligence, citizen participation and the right of Indigenous peoples to free, prior and informed consent have competing interpretations in the everyday operations of international investments. The main problem is not the lack of incorporation of these standards into national laws and the guidelines of companies’ home regulators, but the different ways they are interpreted by social actors on the ground. Local communities are not passive receptors of those norms but norm makers who appropriate them and provide new meanings in line with their self-determination. Despite Chinese regulators and companies, state authorities and local communities coincide in the necessity of following these standards, the content of these norms, the degree of engagement and their scope are subjected to deep disputes that affect the project’s economic and social viability. Chinese and national authorities and firms, therefore, need to engage with human rights norms from the perspective of local people.
Section II provides the background of international norm localization in relation to human rights standards for corporations. Section III explores the economic, geopolitical and developmental meaning of Chinese investments for the global political economy, and analyses the performance of Chinese regulators in adopting human rights standards. Section IV analyses the way Chinese corporations are engaging with human rights norms in Latin America and explores the case study of Las Bambas. Section V provides a reflection on the localization of human rights standards in contexts marked by huge inequality and social unrest.
II. Localization of Human Rights Standards for Corporations
The diffusion of human rights norms has been largely theorized in the International Relations and Comparative Politics literature. In the original diffusionist framework,Footnote 17 norm diffusion and incorporation into national systems respond to a norm ‘life cycle’ heavily dependent on transnational networks: it starts by the persuasion of norm entrepreneurs that seek to diffuse the norm (often international organizations and international advocacy networks), the dynamic imitation by national leaders (authorities that seek international legitimation and local leaders that seek to advance their political agenda), and finally norm internalization by the beneficiaries of the norm.
Either to compliment or criticize diffusion theory, scholars have focused on complex local dynamics of norm resistance and adaptation through processes of ‘localization’,Footnote 18 ‘national interpretationFootnote 19 or ‘vernacularization’,Footnote 20 where local actors and domestic factors have a prominent role. This branch of scholarship has criticized the top-down dissemination of global norms as a mere mechanic and linear process of diffusion and incorporation.Footnote 21 Critical views observe how domestic political structures, local agents and the particular framing of international norms might transform those norms into ones with different meanings and with different degrees of adaptation into national and subnational contexts.Footnote 22 This analysis identifies enabling and constraining factors for norm incorporation. They include the importance of political systems and local opportunities structures such as societal openness, the absence of strong elites or veto players, and favourable decision-making environments.Footnote 23 Acharya,Footnote 24 for instance, notes that the success of norm diffusion is dependent upon norm-takers to build congruence between global norms and local beliefs and practices, and explains that norms differ to what extent they offer opportunities for such localization.Footnote 25
The localization of norms, therefore, might be a complex practice as it often takes place in national contexts of conflicting policy preferences, power asymmetries and poor governance capacity, which undermine the ability of marginalized actors to influence the process.Footnote 26 For this reason, authors conceive as crucial the cooperation between actors at different levels to build coalitions from outside and within the state; these ‘brokers’ with high degrees of legitimacy can mediate among grassroots organizations, state agencies and international partners.Footnote 27 These brokers are local NGOs or local experts also conceived as ‘vernaculers’ who translate the meaning of international norms into one acceptable for the norm beneficiaries.Footnote 28 The notion of vernacularization has been formulated in the context of the diffusion of women’s human rights as a process by which ideas from transnational sources travel to small communities and are adapted to local institutions and meanings.
A third scholarly branch focuses on norm contestation, namely focusing on norm politics rather than norm diffusion.Footnote 29 It is not only a critique of the top-down conception of norm diffusion but to the fact that even those bottom-up approaches still conceive cultural adaptation of international norms without questioning the core of its ‘fixed meaning’Footnote 30 and without problematizing the agency not only of the local brokers but also of the beneficiaries of the norm, often marginalized people. In fact, scholarship on norm localization and vernacularization acknowledge that norm incorporation contains more friction than flows as global human rights ideas are reframed to fit into local ideologies, but the key actors in these frameworks are still ‘the people in the middle’: those who translate the discourses and practices from the arena of international law and legal institutions to local communities in a way to obtain acceptance from the beneficiaries.
While attention to translators is useful to problematize the power relations in which legal norms are negotiated, the very meaning of translation is not enough problematized as it does not stop at professional translators: users, clients, subjects of law themselves make meaning of legal norms and thus extend the chain of translations.Footnote 31 For instance, the forest steward norm that conceives Indigenous peoples as ‘forest protectors’ have been diffused by international and national NGOs to promote titling projects of Indigenous land as a means to fighting deforestation and climate change; however, Indigenous nations conceive this norm as an expression of their self-determination and, as a consequence, they not only demand the titling of their land but the recognition of their character of nations with territorial rights.Footnote 32 Acknowledging the agency of those marginalized people entails engaging in a process of reverse translation,Footnote 33 in which the claims that are expressed through local interpretations of law would be translated back in such a way that they have the possibility of influencing the global rights discourse. Thus norms appropriation and contestation might inspire the further interpretation and elaboration of human rights norms at levels ranging from the domestic to the global.Footnote 34
In sum, to overcome the general tendency to ignore or downplay the agency of potential norm beneficiariesFootnote 35 it is crucial to conceive these beneficiaries not as norm takersFootnote 36 but as norm makers. This entails a meaningful engagement with subaltern uses and conceptions of rights discourses, a ‘law and globalization from below’,Footnote 37 in which national and global competing meanings might emerge from social struggles. For instance, the standard of free, prior and informed consent (FPIC) of Indigenous peoples, first recognized in the ILO Convention 169 and then developed by the United Nations Declaration on the Rights of Indigenous Peoples of 2007 (UNDRIP) and international jurisprudence of human rights, have at least three meanings. ILO Convention 169 recognizes the right of Indigenous peoples to be consulted before the approval of any regulation or decision able to affect their collective rights, and in case of displacements, the state needs to obtain the consent. The UNDRIP, a declaratory non-binding instrument, establishes that all consultation processes should try to obtain the consent, and adds that states need to obtain consent in cases of displacement, storage, or disposal of hazardous materials in indigenous territory, and the use or occupation of indigenous material and immaterial property. The Inter-American Court of Human Rights asserted that consent is also necessary in cases of ‘large-scale development or investment projects’ that would have a ‘major impact’ on ‘a large part of their territory’ (Saramaka v Suriname). On their part, multilateral organizations such as the World Bank, the International Finance Corporation – IFC (2012), the Inter-American Development Bank – IADB (2006), and private global organizations such as the International Council on Mining and Metals – ICMM (2013) have approved guidelines on FPIC as a limited participatory right (consultation) instead of an expression of indigenous self-determination.Footnote 38 Therefore, there is a consent standard, which includes the obligation to obtain consent in those cases recognized by the UNDRIP and international jurisprudence; the consultation standard as a limited right of participation recognized in the binding ILO Convention 169 and most guidelines of multilateral organizations (where actual consent is an exception); and consent as an expression of self-determination as a total power of decision of Indigenous peoples (where actual consent should be the rule), not fully recognized by national and international standards.Footnote 39
Whereas human rights international organizations and most international NGOs advocate for the consent standard, multilateral banks, companies and governments follow the consultation standard. Indigenous movements and organizations, in turn, conceive FPIC as an expression of self-determination. A similar dynamic might be seen in other norms such as citizen participation in the approval and implementation of investment projects or the extension of the duty of due diligence of corporations.
Localization of Human Rights Standards for Corporations
What is the process of diffusion and incorporation of business and human rights standards? International organizations and human rights NGOs have been struggling to diffuse these standards into national jurisdictions. The UN Protect, Respect and Remedy Framework for Business and Human Rights of 2008 and the UN Guiding Principles on Business and Human Rights (Guiding Principles) adopted in 2011 proposed a set of global standards designed to prevent and address adverse impacts on human rights caused by business activities.Footnote 40 These principles regulate the duty of due diligence as a global standard of expected conduct for all enterprises to identify, prevent, mitigate and account for how corporations address their adverse human rights impacts.Footnote 41 In 2019, the Inter-American Commission on Human Rights enacted the Thematic Report on Business and Human Rights: Inter-American Standards, which analyzed the UN Guiding Principles and systematized the relevant standards developed by the Inter-American Commission and Human Rights Court. However, neither of these instruments establish binding obligations for corporations. Inter-American standards apply to states that do not fulfil their duty of regulating corporations. The Guiding Principles encourage companies to follow the standards, but they cannot be forced to do so on the basis of the Principles alone.Footnote 42 While these norms define clearly the state obligation to protect human rights under international law, the norms applicable to business actors rely on soft regulation, meaning a moral or voluntary ‘responsibility to respect human rights’ (Guiding Principle 11). Without the complement of stricter national legal obligations, this privatized voluntary process cannot be more effective than other voluntary self-regulation regimes.Footnote 43
In this context, victims use civil and criminal remedies in national systems.Footnote 44 In fact, allegations of human rights violations committed by a corporation should be in principle addressed by the host country where business is conducted, a duty that has national and international sources.Footnote 45 However, many studies argue that host states in the South often lack the ability, resources, bargaining power or the political will to effectively regulate transnational corporations.Footnote 46 Rather than incorporating the highest human rights standards into national systems, often host governments compete in ‘a race to the bottom’ to lower their requirements on human rights compliance to attract foreign investments.Footnote 47
Relying on home countries’ regulations is also problematic because they have no clear obligation under international law to control corporations operating outside their territory.Footnote 48 Some countries have incorporated extraterritorial legislation, such as the Modern Slavery Act of 2015 of the United Kingdom or the more comprehensive Duty of Vigilance of Parent and Instructing Companies Law of France, adopted in 2017.Footnote 49 High Courts’ interpretations have also opened a space for suing corporations in their home countries for human rights violations abroad, such as the Supreme Court of Canada on the case Araya v Nevsun Resources Ltd;Footnote 50 the UK Supreme Court in Okpabi and others v Royal Dutch Shell Plc (2021);Footnote 51 and the Court of Appeals of the The Hague in The Netherlands in Milieudefensie et al v Shell (2021).Footnote 52 In the United States, the courts reinterpreted the Alien Tort Claims Act to allow victims to sue in US federal courts over events that occurred in foreign countries,Footnote 53 but this trend has been rejected by recent US Supreme Court decisions such as Kiobel v Royal Dutch Petroleum C Footnote 54 and the majority opinion in Jesner v Arab Bank, PLC of 2018.Footnote 55
Other more ambitious proposals include the creation of an international reparations courtFootnote 56 (like the International Criminal Court) or adopting a multilateral investment agreementFootnote 57 to hold corporations responsible for human rights violations. The problem with these proposals is their feasibility because of the continuous disagreement on the specific content of any such global arrangementsFootnote 58 Others suggest incorporating human rights obligations for corporations in bilateral investment treaties (BITs).Footnote 59 In fact, most BITs arbitral tribunals only have jurisdiction to adjudicate claims brought by investors; and even if a BIT allows a host country to institute arbitral proceedings, arbitral tribunals often adjudicate those disputes originating from alleged breaches of a treaty provision.Footnote 60 Only in recent decisions, such as Urbaser, arbitral tribunals have focused on human rights issues,Footnote 61 but this responded to the host country’s counter-allegations and is not a general trend.
Finally, some scholars propose hybrid solutions. In this respect, DevaFootnote 62 argues that, as corporations are difficult regulatory targets, no single regulatory initiative – soft or hard, domestic, regional or international – would be effective in addressing human rights abuses by businesses. What is needed, then, is the combination of multiple regulatory tools at national, regional and international levels.
These legal approaches discuss the way to incorporate human rights obligations for business into national systems and corporate practices. They also conceive these norms as having a fixed and universal meaning shared by all actors (home and host regulators, companies, and local communities). In this view, the main problem is incorporation of norms and once they are integrated into national systems the analysis is limited to the level of implementation, a problem often associated with the deficient enforcement capacity of national agencies. However, international norms that establish specific duties for corporations such as due diligence, citizen participation and FPIC have been included in many national systems through compulsory laws and have been established not only by the companies’ codes of conduct but by their own home authorities as is the case of Chinese investments. Even though the lack or weak enforcement mechanisms are issues at stake, social disputes around implementation are deeply related to how different actors interpret the content and scope of these norms.
III. China’s BRI: Matching Geoeconomic Imperatives and Human Rights Standards
Since market reforms in the 1970s, Chinese macroeconomic performance has registered a 10 per cent growth rate for over three decades. Chinese foreign investments had a sharp rise from $10 billion in 2005 to more than $100 billion by 2015.Footnote 63 In contrast to the overall trend of global direct investment, which shrank annually by 8 per cent from 2011 to 2014, China’s overseas direct investment grew with a compound annual rate of 16 per cent.Footnote 64 In 2019, Chinese investors invested directly in 6,535 overseas companies in 167 countries across the world, with a total amount of investment reaching US$117.12 billion.Footnote 65
Gonzalez-VicenteFootnote 66 identifies two modalities of Chinese overseas investments. Chinese businesses use ‘embedded investments’ when existing sectors suffer from high levels of complexity and difficult relationships between governments and civil society. They rely on local expertise via subcontracting, collaboration and hiring of qualified local and international staff. The other modality is ‘state-coordinated investment partnerships’, when a target sector is under-developed and the necessary expertise is lacking in the host country. These projects are often the result of government-to-government negotiations rather than market acquisitions or open bids. At the centre of these partnerships stand two Chinese policy banks (the China Eximbank and the China Development Bank) that fund projects globally, and China’s central government, which seeks deals with foreign governments. The State-owned Assets Supervision and Administration Commission (SASAC) gives guidance and coordinates the 102 centrally owned state enterprises (SOEs).
Market reforms achieved sustained growth, but this trend could not continue if limited to the domestic market. China’s policy of ‘going out global’ was an effort to enhance the country’s global standing and address domestic needs, such as a rapid increase in demand for natural resources, high domestic labour costs, and the efficient use of abundant foreign exchange reserves. This policy also seeks to encourage domestic investors to look outside the country to acquire high-tech, reduce the knowledge gap, and explore new markets for Chinese products.Footnote 67 In this context, the multibillion dollar Belt and Road Initiative (BRI), announced in 2013, is the natural expansion of the ‘going out’ strategy as it seeks to expand China’s growth model into new market frontiers.Footnote 68 This comprehensive programme for economic integrationFootnote 69 means a significant shift in the composition of the country’s growth drivers and a worldwide reallocation of economic activities.Footnote 70 The Chinese government has committed an investment of up to US$150 billion per year in projects to develop international connectivity, networks of economic interaction, and corridors of trade and investment in what can be understood as a new phase of neoliberalism under Chinese characteristics.Footnote 71 Other scholars conceive the BRI as the export of the Chinese development model of infrastructural ideology.Footnote 72 Chinese officials proudly promote the BRI as a blueprint for global development and as a ‘great milestone in human civilization’.Footnote 73
Geopolitically, the BRI became an umbrella term that encompassed many of China’s external activities. Narins and AgnewFootnote 74 argue that the absence of an official BRI map might promote a globalist or imperialist agenda. The first one refers to the development of a borderless and expansionist geopolitical identity, including a ‘Pacific Silk Road’, a ‘Silk Road on Ice’ that crosses the Arctic Ocean, and a ‘Digital Silk Road’ through cyberspace’.Footnote 75 The imperialist agenda is represented by the expansion of China’s state-owned enterprises that in practice challenges the sovereignty of other states by acting as the primary instrument for expanding the BRI architecture. These global ambitions would not correspond to the – still relevant – principles of harmonious co-existence proposed by China diplomacy since the middle of the last century.Footnote 76 Under principles of mutual respect for sovereignty and territorial integrity, mutual non-aggression, equality and mutual benefit, peaceful coexistence, and especially mutual non-intervention into internal affairs, the Chinese approach to international relations has historically justified the emphasis on compliance with host country laws as a social responsibility strategy rather than following stricter rules.Footnote 77 This trend, however, might change with the recent enactment by the Ministry of Commerce and the Ministry of Ecology and Environment of the Guidelines for Green Development in Foreign Investment and Cooperation on 15 July 2021. These guidelines encourage companies to ‘adopt international or Chinese standards in investing activities where local laws and regulations are non-existent or too lenient’.
In this context, whereas for some authors managing adverse impacts of development activities does not seem an integral part of the BRI blueprint,Footnote 78 othersFootnote 79 find in Chinese social responsibility guidelines – based on UN and OECD environmental and human rights global norms – a sign that China is displaying itself as a responsible actor on the international stage, even though it has not the same commitment to human rights standards at home.
Standards Made in China
The implementation of the BRI has increased the urgency for China to build a more positive image of its overseas investments.Footnote 80 Gallagher and QiFootnote 81 found that although the Chinese governance system for overseas investments has matured in recent years, enforcement mechanisms are still relatively weak. For Paulina Garzon, Director at the China-Latin America Sustainable Investments Initiative,Footnote 82 Chinese enterprises do not have the regulatory and institutional tools of Western companies and multilateral financial institutions. Most Chinese companies would lack a department of public relations or an office in the host country to ensure direct engagement with local communities.Footnote 83 Procedures to achieve dialogue on the ground, file complaints or access to information are weak.
Certainly, China has not enacted a formal law that regulates corporate activities abroad; China’s Supreme People’s Court has just issued an opinion on how the judiciary system should support the BRI, calling Chinese courts to strengthen environmental public interest litigation and tort litigation outside China’s borders.Footnote 84 Nonetheless, Chinese investments are subjected to a bunch of policies that encourage voluntary compliance with social responsibility norms. The main policies are listed below.
The Guide on Social Responsibility for Chinese International Contractors (2012), formulated by the China International Contractors Association (CHINCA) under the supervision of China’s Ministry of Commerce (MOFCOM)
This aims at establishing a benchmark of social responsibility for the industry and to encourage enterprises to uphold their global responsibility to operate overseas contracting projects. It highlights the importance of ‘evaluat[ing] the potential impacts of project activities on the community, learn the needs of the community, and identify development priorities’ (SC1) and ‘actively communicate project related information and learn and respond to the opinions and suggestions of stakeholders’ (SC2).
The Guidelines for Environmental Protection in Foreign Investment and Cooperation (2013)Footnote 85, enacted by MOFCOM and the Ministry of Environmental Protection (MEP)Footnote 86
The guidelines cover community relations, environmental policies, and guidance on legal compliance. It highlights the importance of ‘timely identify and prevent environmental risks, guide enterprises to actively perform their social responsibilities of environmental protection, set up good international images for Chinese enterprises, and support the sustainable development of the host country’ (Article 1). Regarding local communities, it encourages companies to ‘take full into account of the impacts of their development and construction as well as production and operation activities on the social environment … and to take reasonable measures to reduce possible adverse impacts’ (Article 9). In addition, it states that ‘in the course of active performance of their responsibilities of environmental protection, enterprises should respect the … customs of community residents of the host country …’ (Article 3).
The Guidelines for Social Responsibility in Outbound Mining Investments (2014)Footnote 87, instructed by MOFCOM and the China Chamber of Commerce of Importers and Exporters of Metals, Minerals, and Chemicals (CCCMC)
These guidelines emphasize the corporate responsibility to protect human rights under the UN Guiding Principles, including stakeholders’ interests and development (Article 2.5). In this respect, companies shall take active measures to avoid causing or exacerbating the adverse impacts on human rights (Article 3.4). It also states that companies should ensure that all operations shall be in line with the UN Guiding Principles during the entire life cycle of the mining project (Article 3.4.1), and ensure non-complicity in human rights violations, ‘in particular that private security personnel or public security forces designated to protect the mining and production operations do not violate human rights’ (Article 3.4.2). These guidelines have also specific provisions for local participation and indigenous rights. It is a corporate duty to ‘directly consult with potentially impacted communities, with the objectives of ensuring that the development of mining projects fosters respect for their rights, culture, and natural resource-based livelihoods’ (Article 3.4.4). It also states that ‘prior to any mining operations, the free, prior and informed consent of affected local communities (including Indigenous peoples) shall be pursued’ (Article 3.4.5). The standard is as strict as the UNDRIP: companies should obtain the consent for new projects or for changes to existing projects located on lands traditionally owned by Indigenous peoples and are likely to have significant adverse impacts on them ‘irrespective of recognition by the state’ (Article 3.4.5).
The Due Diligence Guidelines for Responsible Mineral Supply Chains (2015),Footnote 88 prepared by the CCCMC in cooperation with the OECD
These guidelines provide guidance and support to companies that are extracting and/or using mineral resources and their related products to identify, prevent and mitigate their risks of directly or indirectly contributing to conflict, serious human rights abuses, and risks of serious misconduct. The guidance formulates a risk-based and flexible due diligence approach, meaning that the intensity of a company’s due diligence requirements is proportional to the risks it faces. For instance, it considers the lack of FPIC to local communities and Indigenous peoples as a high risk of contributing to serious misconduct (Article 5.2.1). In these guidelines, the rights of communities do not depend on state recognition but ‘where there are pre-existing legitimate claims to the land by local populations, including those which are under customary, traditional or collective land tenure systems’ (Article 5.2.1.6). The duty of due diligence has also been incorporated into the Human Rights Action Plan of China (2021–2025),Footnote 89 which ‘encourage Chinese businesses to abide by the UN Guiding Principles on Business and Human Rights in their foreign trade and investment, to conduct due diligence on human rights’ (Section VI: Participating in Global Human Rights Governance).
Chinese Financial Institutions that Provide Credits to Chinese Eorporations have also their own Voluntary Standards
The Green Credit Guidelines,Footnote 90 issued by the China Banking Regulatory Commission (CBRC) in 2012, advises banks to adopt relevant international best practices when evaluating projects’ environmental risks. The Guidelines for Establishing the Green Financial System of 2016,Footnote 91 in turn, support and encourage domestic financial institutions and multilateral development banks with China’s participation to strengthen environmental risk management, environmental information disclosure, and explore the use of instruments such as environment pollution liability insurance to manage environmental risks in implementing BRI projects. These guidelines only include weak mechanisms of enforcement, such as the potential loss of business qualification.Footnote 92
In April 2017, the Ministry of Environmental Protection (MEP), together with the Ministry of Foreign Affair (MFA), the National Development and Reform Commission (NDRC) and MOFCOM, published the Guiding Opinions on Promoting the BRI, which put forward more detailed suggestions for corporate social responsibilities under all Chinese guidelines. The MEP also enacted the BRI Ecological and Environmental Cooperation Plan ‘to strengthen cooperation and enable eco-environmental protection to serve, support and guarantee the Belt and Road construction towards environment-friendly routes’. Under the principle of ‘government guidance and diverse participation’, the plan also states that ‘the whole society will be mobilized to actively participate in environmental governance with the business sector bearing the main responsibility and the market playing the due role’. This approach has been strengthened by the previously mentioned Guidelines for Green Development in Foreign Investment and Cooperation of July 2021 as it put on Chinese firms the responsibility to apply Chinese and international standards stricter than national regulations if host countries lack their own standards or those are weak.
In sum, some analyses concur that the main concern behind Chinese policies is the management of risk to ensure profitability;Footnote 93 others, such as Garzon,Footnote 94 acknowledge their limitations given its non-binding nature but emphasize that they are positive steps because they indicate that Chinese banks and companies are aware of the importance of minimizing or avoiding negative impacts of Chinese investments. Indeed, Chinese standards have incorporated UN human rights norms and are supposed to be applied by their investments abroad. The next section assesses the implementation of these standards in Latin America.
IV. Human Rights and Chinese Corporations in Latin America
China’s main economic interaction with Latin America has been through trade: between 2007 and 2012 Latin America became the region where Chinese trade increased the most, even eclipsing the European Union.Footnote 95 Nonetheless, since 2013, Chinese finance has increasingly focused on infrastructure development.Footnote 96 In fact, many countries have shown their interest in developing mega-projects of infrastructure under the BRI.Footnote 97 For instance, the former President of Argentine, Mauricio Macri, asserted: ‘We have interest in articuling the BRI with the Initiative for the Integration of the Regional Infrastructure of South America (IIRSA) to prompt between our regions one of the key elements of the XXI century: connectivity’.Footnote 98 Other mentioned projects have been the Corredor Ferroviario Bioceánico Central (CFBC), connecting the Pacific of Peru with the Atlantic of Brasil;Footnote 99 the Hidrovía del Paraná-Paraguay, aimed at transporting commodities between Argentine, Bolivia, Brasil, Paraguay and Uruguay from and towards the Atlantic Ocean; and the Dam Tele Pires, located in Brazil Amazonia.Footnote 100
The dimension that has reached the BRI generates expectations on potential partners, but also concerns regarding the social costs of the projects, the possible lack of reciprocity in shared benefits between host countries and China, and the lack of regional environmental standards.Footnote 101 In fact, civil society organizations and Indigenous peoples see the past Chinese extractive and infrastructure initiatives in the region as precedents of what might occur with future BRI projects.Footnote 102
A 2018 report by the International Federation for Human Rights (FIDH) and the Collective on Chinese Finance and Investment, Human Rights and Environment (CICDHA) featured case studies from 18 Chinese-led projects in Argentina, Bolivia, Brazil, Ecuador and Peru.Footnote 103 The document points out that violations of human and environmental rights are not isolated incidents, but a pattern of behaviour.Footnote 104 In Brazil, for instance, meat and soy production, main exports to China, are related to the growth of deforestation and displacement of local communities;Footnote 105 besides, NGOs and stakeholders questioned environmental impact assessments of dams such as Sao Manoel, developed by the Chinese State Grid and Three Gorges Corporation, for not considering the socio-environmental impacts over Indigenous communities.Footnote 106 Local communities have made a similar critique to the environmental impact assessment of the oil company Emeral Energy Plc Colombia (a subsidiary of Sinochem) regarding the oil block El Nogal in the Colombian Amazon.Footnote 107 In Peru, indigenous organizations have strongly criticized the Amazonian Hydroway led by the Chinese Sinohydro for the insufficient assessment of its social and health impacts over local communities.Footnote 108
Other studiesFootnote 109 found that Chinese companies do not perform significantly worse compared with other companies.Footnote 110 For instance, in Peru, the mining project Antamina led by the Chinese Shougang produced environmental impacts not substantially worse than the cooper complex La Oroya (by the American Doe Run) or gold mines of Yanacocha (by the American Newmont).Footnote 111 Other scholars found: ‘some instances of Chinese firms outperforming their competitors, especially with proper incentives from governments and civil Society’.Footnote 112 They showcase the Jungie tin mine in Bolivia and the Toromocho copper mine owned by Chinalco in Peru (where the company built a new city for the community) as examples of success.Footnote 113 Other studiesFootnote 114 highlight the experience of SAPET, a filial of the China National Petroleum Corporation (CNPC). After acquiring Block 113 in Peru and knowing the situation of Indigenous peoples in voluntary isolation in the area, SAPET decided not to exploit the block, following a high standard of corporate responsibility even against the host government. The Chinese Sinohydro took a similar decision in Honduras when they gave up the dam project Agua Zarca due to local opposition.Footnote 115 These actions seem show that Chinese investors are concerned about the social impact of their investments.Footnote 116
In sum, the performance of Chinese investments regarding the respect of human rights seems to be highly contextual; there is not a ‘Chinese way’ of doing business.Footnote 117 It depends on the economic sector, the strength and involvement of host governments and social movements, and strategic decisions taken on the ground. It must be also noted that Chinese investments are often the result of negotiations between governments, and representatives of Chinese institutions that conceive host authorities as being the representatives of the general expectations of the country. However, this image is problematic given the social fragmentation and grievances in regions with a high Indigenous population.Footnote 118 Sometimes, these different variables coincide in pushing Chinese firms to follow high human rights standards, but sometimes this is not the case.
In this context, among analysts, contrasting opinions exist about who must hold the main responsibility for upholding human rights standards and preventing human and environmental rights violations: if Chinese companies (and their home country regulators) or the host governments are blamed for lacking strong social and environmental standards, as well as enforcement capacity.Footnote 119 Scholars tend to coincide on the need for shared responsibility between China and host governments in the establishment and fulfilment of social and environmental standards.Footnote 120
The problem, however, is how different actors interpret the proper application of these standards. For example, in the Mirador Project located in the Ecuadorian Amazon, Ecua-Corriente SA (a subsidiary of the Chinese consortium CRCC-Tongguan) opted to buy the territories of some of the community’s inhabitants from the Shuar nation.Footnote 121 During this process, the company believed that was enough to propose to the Ministry of Environment ‘a program of negotiation and use of the land’ as part of its management plan with compromises of transparency and ‘adaptation’ to the cultural context of the área;Footnote 122 whereas the communities explicitly demanded the need to provide their consent to allow any activity. In the end, the people who refused to sell the land suffered intimidation and forced evictions with the support of public security.Footnote 123 The competing views on how to engage with these standards generate not only human rights risks but also jeopardize the economic viability of the projects. In 2016, the Supreme Court of Justice of Argentina suspended Argentina’s Patagonia dam project, the most expensive financed by China abroad (4.7 million dollars) because of deficiencies of the environmental impact assessment (EIA) and the lack of proper citizen participation.
In general, participation in mega investment projects has become a crucial standard in the region, even recognized at supra-national level by the Regional Agreement on Access to Information, Public Participation and Justice in Environmental Matters in Latin America and the Caribbean or ‘the Escazú Agreement’, adopted in the city of Escazú, Costa Rica, on 4 March 2018. To date, the Agreement has been signed by 24 countries in the region and ratified by 12,Footnote 124 entering into force on 22 April 2021.Footnote 125 The Escazú Agreement focuses on the recognition and promotion of the rights of environmental defenders,Footnote 126 but also highights the need for meaningful participation ‘since the early stages in decision-making processes’ (Article 7.4) and the dissemination of decisions resulting from the environmental evaluation, which ‘must be done through appropriate means’ (Article 7.4). For Ray et al,Footnote 127 Escazú will impact the new wave of Chinese investments, as they will face a changing environmental governance, with local and international actors claiming for more levels of transparency and accountability. This situation is particularly problematic in contexts of huge inequality and historical grievances where Chinese investments take place.
The Case of Las Bambas
Mining is a crucial economic activity in Peru. It accounts for 10 per cent of the GDP and 60% of exports,Footnote 128 making the country highly dependent on mining revenues. The legal framework promotes mining investments and, at the same time, incorporates business and human rights standards. National authorities must approve the citizen participation plan delivered by companies for the elaboration of the EIA. The final approval of the EIA by national authorities is a requirement to start operations. Besides, Indigenous peoples hold the right to be consulted before the state approves the commencement of mining activities under the Prior Consultation Law, enacted in 2011 based on ILO Convention 169. In addition, specific guidelines on due diligence have been recently incorporated in Peru’s National Plan of Action on Business and Human Rights.Footnote 129 Indeed, the Courts have already incorporated the duty of due diligence when ruling cases of oil and mining concessions without prior consultation. The argument is that even though these concessions were granted before the enactment of Consultation Law in 2011, companies had to apply the duty of due diligence and implement a consultation: ‘The existence of … an international obligation of the Peruvian state to consult Indigenous peoples since 1995 [year of ratification of ILO Convention 169] generates in interested companies … a reasonable due diligence of any international investor … they should know that Indigenous peoples’ prior consultation was an unbreakable standard’.Footnote 130
The contentious implementation of these standards has generated social conflicts around mega-mining projects and, eventually, activities had to be suspended in projects such as the gold mining project Conga by Newmont Mining CorporationFootnote 131 and Tia María Copper Mine by Southern Copper Corporation.Footnote 132 One case of persistent conflict and recent suspension of activities is La Unidad Minera Las Bambas, a copper and molybdenum mine located in the provinces of Cotabambas and Grau, in the Department of Apurimac.
In August 2004, the Swiss company Xstrata acquired concession rights for exploration. As part of its investment, the company created a trust of US$63 million designated for the development of Cotabambas, managed under a Social Fund. The transport of minerals starts from Apurimac and crosses the provinces of Chumbivilcas and Espinar in the department of Cusco to arrive at the molybdenum plant of the mining project Tintaya, owned by Xtrata. Given these dimensions, authorities name the total area of operation as the ‘South mining corridor’. According to the EIA, the districts directly affected by the operation encompass 17 peasant communities, six of them inside the mining complex. However, the National Coordinator of Human Rights (2019) has reported that through the highway that transports minerals there are 72 communities, many severely affected by the dust generated by the constant circulation of trucks.
The first conflicts around this project started in 2008 with demands of increasing jobs for locals and higher wages. In 2010, the community of Fuerabamba agreed to be relocated to a new town built by the company. In 2013, Glencore-Xstrata (the fusion of these two companies) acquired the ownership of the project and in 2014 the Chinese Minerals and Metals Group (MMG) acquired all rights. Since the approval of the EIA for mining exploitation in 2011, the EIA has been modified eight times: three of them through the regular procedure of EIA modification (which include a stage of citizen participation and opinions of different state agencies with competencies in those aspects to be modified) and five were made using the ‘Informe Tecnico Sustentatorio’ (ITS), a simplified procedure with no citizen participation allowed by the new legislation for ‘non-significant changes’.Footnote 133
In March 2014, a month before the formal involvement of MMG in Las Bambas, Glencore-Xstrata filed the second modification of the EIA to update the system of water management and the environmental and social baselines. This petition did not mention a change in the mode of mineral transport, planned through a pipeline. The EIA executive summary stated that ‘the regular access to the mining area is the same as the original EIA’. For this reason, the modification procedure did not include as a requirement the technical opinion of the Ministry of Transport and Communications, and the stage of citizen participation did not include issues of mineral transportation. After an initial assessment, the Ministry of Energy and Mines (the authority in charge of approving the EIA modification) issued one observation stating that the company ‘must provide details on the possible changes in general information (such as transport, plan of management, among others)’.
In October 2014, when MMG was already in charge of the project, the company filed complementary information. This information mentioned a change in the form of mineral transport, from a pipeline to overland transport on the highway. This change also reduced the project’s area of influence, excluding those communities considered in the initial pipeline plan.Footnote 134 With this information, state authorities approved the EIA modification in November 2014 (Directorial Resolution 559-2014-MEM-DGAAM). The lack of provision of information from MMG to local communities about these changes created distrust in a population with high expectations about promised benefits.Footnote 135 As a result, a series of protests began in February 2015 and continued until 2016, resulting in the death of at least four peasants by police gunfire.Footnote 136 In fact, since 2015 both the government and the company have incriminated peasant leaders for exercising their right to protest,Footnote 137 requesting up to 17 years of prison to 19 peasants of the Cotabambas community and civil reparations.Footnote 138 Protest criminalization has also entailed the use of decrees that declare the ‘state of emergency’ in the área.Footnote 139 In October 2017, a writ of habeas corpus was filed requesting the suspension of Article 2 of Supreme Decree No. 101-2017-PCM, which declared a state of emergency in the provinces of Cotabambas (Apurímac) and Capaccmarca (Cusco). Three years later, the Constitutional Tribunal declared the lawsuit well-founded. Nonetheless, the government has continued enacting emergency decrees in part of the Apurimac road corridor.Footnote 140
The main conflict today involves the communities of the province of Chumbivilcas in Cuzco and has environmental and economic angles, both related to the lack of participation. From the environmental angle, communities complain about the dust generated by the in-road transport of minerals. They argued that the modification of the EIA had to be subjected to citizen participation to establish adequate mitigation measures and compensation, as well as correctly define the area of influence. They ask for proper compensation to address the damage suffered over their health and environment and to be included in the area of influence. From the economic angle, the communities demand to be transport suppliers of the mine and thus be part of the supply chain and obtain permanent earnings from mining activities.Footnote 141 These demands were part of an agreement with the company in October 2021 but there are disagreements about when communities would start operations and the amount of the economic reattribution.Footnote 142
These apparent contradictory demands (environmental and economic) are indeed expressions of the communities’ self-determination. In their view, participation is not simply a right to be heard by the company but to have direct incidence in the activity, so they might participate in the economic cycle of the mine under proper environmental conditions. However, given the lack of agreement between the company and the communities, MMG decided to progressively wind down operations.Footnote 143 The company alleges that it has experienced 400 days of stoppage due to road blockades since it began operations.Footnote 144
V. The Politics of Localizing Human Rights in Unequal Contexts
Business and human rights standards are critical in Latin America, given the possible expansion in the region of BRI projects and the legacy and ongoing development of Chinese infrastructure and extractive investments. A first view would show a gap between what has been enacted as international standards to guide ‘good practices’ for Chinese investments and how companies commonly implement these standards on the ground. However, more deeply, there are also competing views over the meaning and scope of these standards especially in relation to citizen participation and due diligence.
In the case of Las Bambas, even though the company shows general commitments to human rights (in the Report of Sustainability 2018, MMG stated that ‘it has the commitment to respect human rights under UN Principles’Footnote 145) and the Chinese Guidelines for Green Development in Foreign Investment and Cooperation encourage companies to apply stricter standards of those of the host governments, MMG just relied on the formal approval by Peruvian authorities of the EIA modification following strictly the requirements of national authorities and regulations. In fact, on the ground, the company did not pay sufficient attention to the local dynamics and the fact that deep participation is a sensitive issue given the long history of broken promises for communities living close to mining projects.
Other Chinese standards are relevant in this case. For instance, whereas the company minimized communities’ concerns and provided limited information about the EIA modification, the Guide on Social Responsibility for Chinese International Contractors expressly establishes that companies must ‘learn the needs of the community’ and ‘actively communicate project related information’. Moreover, MMG considered the problem of the dust as non-relevant when the Guidelines for Environmental Protection in Foreign Investment and Cooperation state that companies must ‘take full into account of the impacts of their development and construction as well as production and operation activities on the social environment’ (Article 9).
The deepest problem, however, is not the mere incorporation and application of these standards into national systems. For instance, the Business and Human Rights Inter-American Standards states that ‘Ensuring mechanisms for participation in the issues that involve the field of business and human rights must be broad, and must aim to effectively listen to the directly affected persons, communities, and populations’.Footnote 146 This binding standard has been also incorporated into national legislation but the term ‘effectively listen’ might mean different things to peasant leaders, state officials and company representatives. Similarly, under the firm perspective, it might not be clear about the level of ‘community needs’ that they must consider as mentioned by the Guide on Social Responsibility for Chinese International Contractors. Whereas companies and governments are more restrictive in the application of these standards, peasant organizations seek to maximize and enlarge the meaning of participation to have meaningful decision-making power over the project destiny as it deeply affects their everyday lives. Thus, under the standard of participation, they struggle not just to be heard but to have direct economic benefits from the operation under proper environmental safeguards.
This case thus shows how many local communities are not just ‘norms takers’ or simple norm beneficiaries, namely, passive receptors of international human rights norms. They do not require experts to properly translate these norms into their cultural values either. They are actually norms makers, they appropriate the norms and enlarge their meaning under their own views of self-determination. In this context, Chinese and other international investments should implement a ‘walk and talk strategy’:Footnote 147 Chinese companies should make efforts to continuously cooperate with indigenous organizations and other local actors to contextualize these standards. This is particularly relevant in contexts of profound social inequality where colonial legacies still reproduce patterns of social exclusion and social movements are very active to engage with international investments on their own terms.
VI. Conclusions
Debates around Chinese investments tend to focus on the level of negative impacts they have produced on local communities (if systematic or dependent on specific companies and sectors) and the level of responsibility that must be held by either Chinese regulators and companies or host countries. These discussions assume that the problems with international norms of business and human rights are the lack of incorporation in national systems and corporate practices and the deficient capacity of national governments to enforce those norms.
Whereas the ‘implementation gap’ is an actual problem and many communities must deal with weak enforcement mechanisms to make human rights norms’ effective, it is also relevant to note how local stakeholders have their own interpretation of the content and scope of these norms, contrasting to the way those are conceived by national authorities and international firms and regulators. Rather than having a fixed meaning, international standards, such as citizen participation and due diligence, are disputed by these different actors.
In fact, Chinese authorities have included these standards into their policies and guidelines following the highest international instruments and practices. In Peru, they have also been included in national legislation and in the judiciary. Indigenous and local organizations, in turn, continuously appeal to them in their social mobilizations. However, whereas national authorities and companies’ conception of participation is limited to providing a voice to the communities in specific formal channels in the process of approving significant EIA modifications, indigenous and peasant organizations conceive participation as means to express their self-determination regarding any change that might affect their collective rights. Building on the literature on norm localization, this paper argues that those marginalized communities are not simple beneficiaries of the norm or norm takers, but actual norm makers. They enlarge the meaning of the norms towards their own views of social development.
The expansion of Chinese investments worldwide has incentivized Chinese authorities to enact human rights standards to be applied to their firms as guidelines of good corporate conduct. Although these guidelines are relevant steps in recognizing the responsibility of their international firms, they will remain ineffective if the predominant approach of Chinese investments is just following national laws and the formal decision of national authorities; or even if they just apply higher standards but under restrictive interpretations. In contexts of high inequality, poverty and historical grievances, it is crucial to pay special attention to how the communities engage with human rights standards. If this is not the case, local communities through protests, litigation and the building of transnational networks of support might oblige national authorities and international firms to reinterpret those standards under their own terms.
The localization of business and human rights norms is therefore a political process, not simply a matter of legal implementation or a corporate or NGO technocratic strategy to convince the locals about the benefits or risks of the projects. Depending on the development vision of local actors, localization might be a very contentious process. Conceiving these norms from the perspective of marginalized people might reduce the gap between flows of investment and development outcomes in countries that need not only economic growth but also address historical grievances and deep inequality.
Acknowledgements
I thank the Global Development Policy Center at Boston University for supporting the research for this paper, and Professors Cynthia Sanborn and Rebecca Ray for providing important feedback to the first draft.
Conflicts of interest
The author declares none.
