The Importance of Compliance for International Trade
When the socioeconomic reality of China’s economic activity in Latin America is contrasted with Beijing’s stated goals for the region there is a certain gap between the two. Most notably, in terms of respect for environmental standards. In 2016, China’s policy towards Latin America stated that Beijing would cooperate with the region in terms of environmental protection and work with local authorities to ensure legal regulatory compliance. However, there are numerous cases of Chinese companies acting in defiance of regulatory and national authorities as it relates to environmental regulation. For instance, in 2014, the Comptroller General of Colombia cited the Chinese state-oil giant Sinopec in 2014 for not paying the US$500.000 mandatory investment towards natural and habitat conservation required by national law and promised to the Ministry of the Environment and Sustainable Development in 2008.
The Importance of Compliance for International Trade
Fortunately, these cases are becoming more isolated and regulatory compliance is increasing when it comes to foreign direct investment (FDI). In recent years, Colombia’s Ministry of Mines and Energy streamlined its process for awarding exploration and exploitation licenses in such a way that foreign and private companies must now work closely with local authorities from the very beginning of their operations. This means that some rural communities are now able to provide greater input as to the economic activity being developed in their regions and that they are even able to prevent projects that are excessively harmful to the environment through popular referendum. This modus operandi is indeed much closer to the spirit of China’s stated policy approach towards Latin America, which promotes “Cooperation on Environmental Protection, Climate Change and Disaster Reduction”.
Regulatory compliance within Colombia’s mining sector is extremely important because this industry represents a major percentage of the national economy. Therefore, as new opportunities for exploration and exploitation continue to open up throughout Colombia, it is key that the operations are managed in a socially responsible and environmentally sustainable fashion. During 2016, mineral products as a whole represented 48% or US$14.6 billion of Colombia’s total exports. In turn, this export sector is composed mainly of coal, crude petroleum, and refined oil. Furthermore, the mineral products exports category continues to gain importance, though slowly, within Colombia’s national economy. The 2016 quantities represent a slight increase from 2006, when mineral products accounted for 41% or US$10.8 billion of Colombia’s total exports.
(Read more about Fostering Sustainable Development in Colombia)