Free trade deals, and in particular the proposed Trans-Pacific Partnership (TPP), have taken a beating this election season. Most of the noise on trade from Presidential candidates Donald Trump and Hillary Clinton has focused on the loss of jobs linked to the offshoring. Much less attention has been paid to the serious impact the TPP and past trade agreements will have on our ability to respond to climate change.
In a new report on the TPP and climate commitments made by countries as part of the Paris climate agreement, we found that trade rules consistently benefit multinational corporations in high greenhouse gas emitting sectors like agriculture and energy, while creating barriers for governments in setting climate-related policies.
Our analysis found that the Trans Pacific Partnership expands the scope of past trade agreements to harm the climate in three important ways:
1. Countries and corporations can challenge climate-related policies.
A series of rulings at the World Trade Organization (WTO), most recently in February against India, have ruled against renewable energy programs that incentivize local production and green jobs. Many countries, and several U.S. states, have similar green jobs programs. The TPP goes further than WTO rules by also including special corporate rights provisions called the Investor State Dispute Settlement system. Under investor state, foreign corporations can sue governments when they feel government action impinges on their future profits. In June, TransCanada formally filed an ISDS suit seeking $15 billion in damages from the U.S. government under NAFTA, charging that the Obama administration had unfairly rejected the Keystone pipeline. Other corporate rights cases have challenged bans on offshore drilling to protect wildlife, and a ban on fracking to protect waterways. (For more, see Buzzfeed’s excellent investigation of ISDS in action)
2. A structure to challenge new regulations that could benefit the climate.
The TPP, like other free trade agreements, reinforces an industrial model of agricultural production favored by agribusiness companies like Monsanto, Smithfield and Cargill that is significant contributor to climate change. The global food system, including agricultural production and associated land use, is responsible for one-third of global GHGs. The TPP tips the scales in favor of these agribusiness giants by ensuring food safety standards prioritize trade over public health or environmental sustainability, for example. Biotech companies benefit from the TPP’s intellectual property rights provisions related to seeds and new rules to handle cases of genetic contamination (when a genetically engineered food approved in one country is traded to another country that has not approved it). Restrictions on protecting local markets enable agricultural dumping (exporting at below cost) into TPP countries. And corporations from many sectors will benefit from a committee on regulatory coherence, which provides an early warning system on new regulations in any TPP country.
3. New climate policies will likely conflict with trade rules.
As we enter into this new era of post-Paris climate policy, approaches like a carbon tax or carbon markets will undoubtedly be affected by trade rules. The practice of moving GHG emissions from one country to another (ie moving manufacturing from the U.S. to China), without actually reducing the total level of global emissions, (aka carbon leakage) remains a serious challenge for carbon taxes and markets. One leading proposal to address carbon leakage is through border taxes or tariffs, though doing so would run counter to the trade liberalization goal of tariff reduction or elimination found in the TPP and other trade regimes.
The success of TPP countries in meeting their climate goals is critical in the global race to slow climate change. TPP countries like the U.S., Australia and Japan are major global producers, buyers and users of oil, natural gas and coal. Other TPP countries like Malaysia, Peru and Chile are dealing with expanded mining and agriculture operations that are leading to massive deforestation. TPP countries like the U.S., Mexico, Canada, Japan, New Zealand, and Chile are already developing various types of carbon pricing policy.
As countries take action on climate, conflicts between trade rules and climate goals will escalate. Unfortunately, in most cases trade concerns will win out. While trade deals like the TPP include strong enforcement tools to settle disputes, the Paris climate agreement relies on voluntary pledges.
The good news is that the TPP is in trouble. With its surprisingly high profile in the Presidential campaign, and plummeting public support, there’s a real opportunity to stop the TPP in its tracks, and to take bold steps toward reforming existing trade deals.
It is impossible to separate the outcomes of current trade regimes from the ways in which they were negotiated – often in secret, with heavy corporate influence and very little public scrutiny or input. Further, trade agreements should no longer be considered in isolation, or given legal priority over other global agreements. Trade policy is too influential, and provides too many obstacles for successful governing on issues like climate change, health, food security and natural resource management.
The official signing of the Paris climate treaty is an important first step toward a global response to climate change. But no climate deal will work if it is not supported by other policies. The TPP and the WTO are outdated trade regimes modeled on 19th century ideas. The 21st century demands something very different—trade rules that move countries together towards sustainability, starting with the urgent need to curb greenhouse gas emissions and support adaptations to climate change.
You can read the full report: The Climate Cost of Free Trade: How the TPP and trade deals undermine the Paris climate agreement.