Trans-Pacific Partnership to stall climate change action
Tony Abbott offers a slender list of achievements to justify his two-year occupancy of the prime ministership. He frequently cites the triumph of his campaign to “stop the boats”, and the manifold bounty to be delivered by trade agreements that have been signed off by minister Andrew Robb. Then there’s… err.
Let’s stick with the trade agreements, the most recent of which is the Trans-Pacific Partnership – a pact of 12 nations on the Pacific rim. Usually it’s a topic that renders insomniacs into the arms of Morpheus, but if trade is interlaced with the politics of global warming then at least there’s a frisson of sex appeal.
Whether the agreement will actually deliver more trade is a moot point. It is seriously doubted by the World Bank, whose staff recently produced a study that found the Trans-Pacific Partnership would boost Australia’s economy by a miserable 0.7 per cent by 2030.
Other participants in the multination collusion may do better, which wouldn’t be hard given the lift to Australia’s annual growth would be less than half of one-tenth of 1 per cent.
No sooner is the ink dry on the TPP than the trade minister announces his retirement from politics – but not before setting his sights on a new cohort of countries to form another Asia-Pacific trade club, the Regional Comprehensive Economic Partnership.
The aim here is to replace the “noodle bowl” of bilateral agreements with a massive piece of overarching trade “architecture”.
Also coming is the Trade in Services Agreement, with 23 parties – including Australia, the United States and the European Union – hitching a ride on the cross-border pollination of service providers such as lawyers, dental hygienists and life coaches.
The legal profession is blissfully happy with the TPP, which opens the possibility for conquest of neglected areas of human activity not yet fully colonised by lawyers.
Others, including heaps of American politicians on both sides, have complained bitterly that the TPP is a setback for humanity and a hindrance to policies seeking to address global warming – something that Robb can’t understand. He was quoted by The Sydney Morning Herald urging these critics to read the agreement more carefully.
“Study the 16,000 pages of the TPP text,” he said. “You will see we’ve made every possible effort to recognise the concerns people have had and to ensure we have addressed them.”
Those who have counted say it’s a mere 6000 pages, and to be fair to Robb he has said that the TPP is not a climate change policy. “It’s not an agreement to do with climate change, it’s a trade agreement … that can affect public policy in the environmental area. It does provide safeguards.”
But serious people who have read the document – all the pages – in the search for safeguards have been disappointed to find that the term “climate change” does not appear once, not even in chapter 20, which deals with the environment. The safeguards that are mentioned are pretty much unenforceable, as Columbia University economist Jeffrey Sachs points out: “Yes, they rhetorically defend global economic development, labour standards and environmental sustainability, but they do so without specific enforcement powers.”
Compare that sort of regime with the enforcement available to the providers of capital under the investor-state dispute settlement (ISDS) mechanisms contained in the agreement – secret arbitral bodies that trump the jurisdiction of domestic courts and the lawmaking sovereignty of the state.
Chapter 9 of the TPP, headed “Investment”, allows foreign corporations to sue governments in ISDS tribunals if domestic laws or regulations get in the way of the upward thrusting pistons of the free movement of capital.
In many instances, these tribunals are staffed by arbitrators who have worked as corporate lawyers.
By safeguards, Robb may be referring to what are known as “carveouts”, which seek to preclude litigation in certain areas and, in the process, create enormous complications that can only be resolved at a full-scale lawyers’ picnic.
The carved-out exceptions relate to domestic laws that protect “human, animal or plant life or health” or for the conservation of “living or non-living exhaustible natural resources” – as long as the protected measures are “not inconsistent” with the TPP.
For added complication, the domestic regulations must not be applied in a manner that would discriminate between investments or investors, or restrict international trade and investment.
Similar mechanisms are found in other trade arrangements, including in the agreement between Australia and Hong Kong for the promotion and protection of investments. This was the one that Philip Morris Asia used unsuccessfully in an attempt to overturn Australia’s plain packaging law, which had already been upheld in the High Court. In the process, the Commonwealth spent about $50 million in legal costs defending the legislation.
Happily, laws restricting the promotion and marketing of cigarettes have been explicitly carved out of the ISDS process. Maybe Philip Morris’s action against Australia proved too much of a negative to be allowed to happen again.
The North American Free Trade Agreement (NAFTA ) and other like-minded treaties have given rise to more than 600 dispute settlement arbitrations, many relating to the environment. Friends of the Earth estimate the attempts by multinational corporations to overturn environmental laws and regulations account for 60 per cent of the 127 ISDS cases brought by multinationals against EU countries in the past two decades.
In the process, European taxpayers forked out $US3.5 billion to investors. It has also been reported that the EU dropped an earlier commitment made in negotiations for the Transatlantic Trade and Investment Partnership for a carveout protection of laws relating to sustainable development, biodiversity, chemicals and the illegal wildlife trade.
We can get an idea of what’s ahead for any environmental initiatives by Australia from the cases that have been brought under NAFTA and other treaties with ISDS provisions.
First is Lone Pine Resources – incorporated in Delaware, but headquartered in Calgary, Canada – which successfully sued the state of Quebec for $250 million over its moratorium on fracking.
Then there’s Chevron, which has successfully taken Ecuador to arbitration because the energy giant wanted to be excused from paying an $US18 billion environmental damages judgement. It’s still unresolved.
The government of Germany settled a €1.4 billion claim by the Swedish energy company Vattenfall over restrictions on a coal-fired plant the company was planning to build. As part of the settlement, Germany withdrew the restrictions.
And still with NAFTA, Dow AgroSciences, a US company, served a notice of intent to go to arbitration for losses it alleged were caused by a Quebec ban on the sale and use of lawn pesticides containing 2,4-D. Quebec settled.
It’s not only corporations bringing proceedings in trade treaty arbitral bodies – governments, too, have instigated claims. For instance, the World Trade Organisation’s appeal body upheld complaints from the EU and Japan that Ontario’s program to promote green energy violates international trade rules. This was because the Green Energy Act required wind and solar projects to use goods and services sourced from Ontario-based companies.
So here we have a potential for environmental protections to be struck down, and where the consequences would be to create a chilling effect on governments that contemplate the introduction of new laws and regulations in this area. It would be like having a pro-fossil-fuel, anti-environmental Abbott-type government permanently in office.
And this doesn’t just apply federally. The laws of state governments and even local councils could be subject to the ISDS procedures. If a state government banned fracking, there is the risk of proceedings for damages arising from an alleged breach of the TPP.
The US-based Sierra Club, in its report called “A Dirty Deal”, says the TPP is polluter-friendly because it empowers fossil fuel corporations to attack measures to address global warming and would expedite the extraction and export of fossil fuel pollutants.
On this basis, the Paris climate agreement, which seeks to limit global warming, could be threatened.
While Andrew Robb and the government think we’ve got a marvellous deal, leading economists are not as impressed. Jeffrey Sachs says that, apart from the treaty’s provisions on the environment being “thin, unenforceable and generally unimaginative”, the regulations on investor rights are a “mix of the good, the bad and the ugly”.
He says the common denominator “is that they enshrine the power of corporate capital above all other parts of society, including labour and even governments”.
This is a recipe for economic growth at the expense of widening income inequality and the excessive might of sectors with strong lobbying power.
Another economist from Columbia, the Nobel laureate Joseph Stiglitz, hopes the TPP will be scrapped. It gets in the way of the shift away from fossil fuels and into a green economy.
“In 2016, we should hope for the TPP’s defeat and the beginning of a new era of trade agreements that don’t reward the powerful and punish the weak.”
Stiglitz thinks it is the worst trade agreement in decades. From the point of view of the environment, of action on climate change, already there’s plenty of evidence to show he’s right.
This article was first published in the print edition of The Saturday Paper on Feb 13, 2016 as "Tricks of the trade agreement".
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