Trade deals and the energy transition: whose voices count?

Trade agreements are a key part of legal frameworks governing the energy transition. Drawing from research on lithium mining in the Atacama, Lorenzo Cotula calls for the people most affected to have a greater say.  

Lorenzo Cotula's picture
Insight by 
Lorenzo Cotula
Principal researcher and head of IIED's law, economies and justice programme
23 April 2024
 A salt mine, with a white cliff against a blue sky and a tiny lorry in the distance.

Lithium mining operations in the Atacama salt flat (Photo: Lorenzo Cotula, IIED)

As large economies strive to power the energy transition amid growing geopolitical rivalries, a race for raw materials is fuelling the negotiation of trade and partnership agreements. 

For consumers in wealthier countries, new or closer trade relations can help substitute one commodity for another, shifting to lower-carbon energy sources without fundamentally changing consumption habits. But the trading arrangements expose probing questions about the energy transition – who benefits, who bears the costs and on what terms. 

Minerals are inherently tied to specific locations, each with its ecological and sociocultural richness, inhabited by people whose lives are intimately connected to their surrounding territory. Mineral extraction and trade often cause far-reaching impacts and transform these realities. 

Research in the Atacama desert, in northern Chile, in collaboration with Valparaíso University, generated insights into the profound changes associated with lithium extraction; how trade agreements drive those changes by connecting extraction sites to global markets; and the need for the deals to be more responsive to local concerns and aspirations.

The Atacama in the global spotlight

With global demand for lithium projected to grow, the Atacama salt flats – a wonder of nature and, at the same time, a key lithium mining site – are increasingly sought-after: Chinese and United States (US) capital is already invested in extraction and access to this lithium was a central issue in trade negotiations with the European Union (EU). 

Living on the arid highlands around the salt flats, the Lickanantay (or Atacameño) Indigenous People consider this territory integral to their culture and social identity. And over the course of generations, population movements – from the Inca to the Spanish colonisers and later waves of settlers – have woven a tapestry of communities with both Indigenous and non-indigenous heritage that are profoundly attached to this land.

Seen from here, the energy transition represents the latest in a series of resource rushes, including nitrate for fertiliser in the 19th century, large-scale silver mining in the 1870s and, from the late 1800s, industrial copper mining, which would become the bedrock of Chile’s economy and a key stake in the country’s political struggles.

Perceptions about lithium, then, are coloured not just by present experiences, or expectations of mining expansion as global demand increases, but by this longer history of extraction and its impacts on society and the environment. 

In the Atacama, many people have embraced the economic opportunities lithium brings: they consider opposition futile and welcome the funds that now flow into the territory. But many also lament fragmentation among and within communities, loss of traditional culture and the erosion of a deep-seated connection with nature

The invisible matrix of treaties

New settlements, schools and community buildings are the material manifestations of these changes. Less immediately visible are the ways in which, like an underlying digital matrix, a web of international treaties sustains the changes.

Agreements between Chile and China on trade and investment and a comprehensive economic treaty with the US facilitate commodity exports and protect foreign investments in lithium mining. 

A 2002 agreement with the EU liberalised trade, and growing EU demand for lithium is expected to intensify the deal’s local impacts. The treaty was renegotiated in 2022; the new version includes dedicated chapters on raw materials, investment and sustainable development. Chile and the EU also agreed a strategic partnership to promote cooperation on raw materials.

The agreements integrate the Atacama salt flats into global supply chains, crystallising assumptions and trade-offs about economic growth, territory and the environment – and ultimately about different visions of ‘development’. 

Whose lithium, for whose benefit?

In Santiago, national leaders are hopeful about the development opportunities that lithium will provide to ‘all Chileans’, not only through mining but also expanded processing that would reduce the country’s dependence on exporting raw materials. 

In the Atacama, many consider these ambitions as far removed from the daily challenges they face – such as limited public services – and claim a greater say over what some call the ‘Atacameño lithium’. Others feel that Chile is ‘selling an image’ of sustainability but neglecting the environmental impacts of lithium extraction. 

While many in the Atacama are mindful of the growing interest from mining companies, few seem familiar with the international deals that underpin this lithium rush, let alone had a say in their negotiation. 

It is thus not surprising that those deals speak to the concerns of the governments that drafted them, in conditions of unequal negotiating power, more than of the people whose lives stand to be most affected. 

Who defines ‘sustainable development’?

The sustainable development chapter (PDF) of the renegotiated Chile-EU treaty illustrates these asymmetries. In line with wider EU practice, it largely focuses on labour rights and the environment – two issues the EU is particularly sensitive to, prompting questions as to whether a key aim is to avoid European businesses being undercut by firms applying lower labour and environmental standards in the ‘global South’. 

The treaty also contains general provisions on responsible supply chains, which could apply to wide-ranging situations, and on Indigenous practices that conserve biodiversity. But issues related to Indigenous Peoples’ rights and to free, prior and informed consent, which the Lickanantay are calling for, are absent from the treaty.  

In addition, the Chile-EU agreement considers trade and climate action as mutually supportive (PDF), based on a global outlook whereby lithium imports fuel Europe’s energy transition. Yet, local concerns about environmental impacts in the Atacama salt flats, particularly around water, highlight trade-offs between economic and ecological objectives.

While the treaty requires environmental impact assessments (PDF) for new mining projects, project-by-project assessments do not necessarily address the cumulative impacts of multiple activities. 

Shifting focus from resource to territory 

Trade deals typically involve give-and-take across wide-ranging sectors. As regards lithium, the negotiations are over accessing or leveraging the mineral as a ‘strategic resource’. 

But this resource is embedded within territory and social fabric. And while bilateral treaties entail negotiations with each trading partner, the aggregate changes they bring call for a more systemic approach that places the territory and its people at centre stage. 

Such an approach mainly hinges on effective, inclusive governance systems from local to national levels. But trade agreements can reinforce these systems, for example by mandating respect for the rights of Indigenous Peoples and of communities living in the territory.  

In addition, the far-reaching implications of trade deals highlight questions about voice, whose vision shapes key decisions, and what arrangements can enable people in the territory to have a greater say on legal instruments that so fundamentally affect their future.  

This insight is part of a series on critical minerals, developed through a collaboration between IIED and the University of Valparaíso (Fondecyt 11220095 project).