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Trans-Pacific Partnership ‘full of empty promises’ for the environment

Annette Gartland photo
Annette GartlandMalaysia
Trans-Pacific Partnership ‘full of empty promises’ for the environment
The US Trade Representative has hailed the TPP as a 'historic opportunity to advance conservation and environmental protection across the Asia-Pacific', but it's been described as a 'ticking time-bomb' for climate policy.

The United States government says the Trans-Pacific Partnership (TPP) has environmental stewardship as a core value. Critics say the agreement will be a disaster for the environment and will make governments more vulnerable to lawsuits by corporations that allege a loss of profits because of a particular law or policy.

Under the Investor-State Dispute Settlement (ISDS) mechanism, rulings on these lawsuits will be made by the members of unaccountable panels, sitting outside of any existing court system, and there is no appeal procedure.

Friends of the Earth International’s economic justice coordinator, Sam Cossar-Gilbert, says that, because of the ISDS mechanism, the TPP is “a ticking time-bomb” for climate policy.

“Many government policies needed to address global warming will be subject to suits brought before biased, non-transparent, and undemocratic international investment tribunals."

Friends of the Earth says the environment chapter only deals with a narrow range of conservation measures, is largely unenforceable, and is substantially weaker than trade deal conservation provisions negotiated by former president George W. Bush.

The organisation’s president, Erich Pica, said: “President Obama has sold the American people a false bill of goods. The Trans-Pacific Partnership fails President Obama's pledge to make the TPP an environmentally sound trade agreement.”

The Office of the US Trade Representative (USTR) says the TPP – also referred to as the TPPA – includes the most robust enforceable environment commitments of any trade agreement in history, but environmentalists say the opposite is the case.

The TPP, which was negotiated behind closed doors, doesn’t even mention climate change and includes no commitments that are not already present in existing international and regional agreements for regulating the wildlife trade, or preventing wildlife trafficking.

Critics say the agreement is regressive and vague, and facilitates the build-out of new liquefied natural gas (LNG) terminals.

“More LNG trade means more fracking for natural gas and more emissions of methane, a greenhouse gas 85 times more powerful than CO2,” said research specialist at Greenpeace USA, Charlie Cray.

In its report “A Dirty Deal”, the US grassroots environmental organisation, the Sierra Club, says the TPP would require the US Department of Energy to give automatic approval to LNG exports to countries in the agreement, which include Japan, the world’s biggest natural gas importer.

In its analysis of the agreement, the organisation says the TPP will not only fail to protect our environment, but will threaten our air, water, and climate.

Cray also says the agreement is a threat to communities and the environment, and Congress should reject it.

Speaking when the TPP text was first released in November, he said: “By introducing this treaty on the cusp of the Paris climate summit, President Obama has contradicted his own stated commitments to do everything in his power to solve the climate crisis.”

Cray says the text includes “toothless ocean conservation provisions with slippery language that encourages, but does not require bans on trade in illegal timber; shark finning; commercial whaling; and illegal, unreported, and unregulated fishing”.

The Washington D.C.-based organisation Defenders of Wildlife says the environment chapter of the TPP is weak and “falls far short of the desperately-needed policy changes that would make a real difference for the world’s wildlife and their vanishing habitat”.

The organisation’s president and CEO, Jamie Rappaport Clark, says the chapter fails to provide the requirements and stronger penalties urgently needed to fight poaching, protect wildlife habitat, and shut down the illegal wildlife trade.

“The agreement also leaves our own domestic environmental laws vulnerable to legal challenge internationally, outside of our own judiciary system.”

Rappaport Clark says it is ridiculous that, in 2015, twelve of the world’s nations would construct a trade deal of such magnitude and not even consider the effects of climate change on industries like agriculture or fishing, or ways to prevent worsening global warming.

“Climate change is happening right now. Species are disappearing and extreme weather events like hurricanes, crippling drought, and wildfires are become more prevalent across the world. Yet this trade agreement won’t even acknowledge it.”

'A missed opportunity'

In his analysis of the TPP, leading environmental law professor Chris Wold (pictured left) says it is “a document filled with vague and empty promises”. Its provisions, he says, are largely unenforceable.

“The TPP’s environment chapter is a missed opportunity to tackle some of the region’s most serious environmental issues through concrete domestic legal obligations and international cooperative action.”

Wold, who is director of the International Environmental Law Project at the Lewis & Clark College in Portland, Oregon, in the US, also cites the problem of shark finning, along with overfishing and the illegal trade in rhino horns.

He says the TPP contains odd language that presumably refers to climate change while avoiding any mention of it, or even carbon dioxide (CO2).

The TPP doesn’t even mention The United Nations Framework Convention on Climate Change (UNFCCC), he says.

The US says TPP members will cooperate on energy efficiency. It says cost-effective, low-emissions technologies and clean, renewable energy sources will be developed, and there will be emissions monitoring.

Wold says parties to the TPP may acknowledge that a transition to a low-emissions economy requires collective action, but the agreement doesn’t identify the kind of emissions economy that requires collective action.

The TPP provisions relating to the protection of marine animals, including fish, are “long on aspiration, but short on obligation”, Wold says.

Singapore, Malaysia, and Vietnam are among the six nations consuming most shark fins, he says.

“Nonetheless, the TPP does not ask parties to take any specific measures to conserve sharks, although parties should, ‘as appropriate’, collect data or impose catch limits, mitigation measures, or ban finning.”

The TPP does prohibit fisheries subsidies that “negatively affect fish stocks that are in an overfished condition”, but even this provision, is limited in its effectiveness, Wold says.

“By not eliminating fisheries subsidies that contribute to overexploitation and overcapacity, the TPP has missed an extraordinary opportunity.”

The Sierra Club says TPP procurement rules will restrict governments’ autonomy to mandate green purchasing and such policies could be challenged for having the unintended effect of creating an unnecessary obstacle to trade.

The environment chapter should set strong and binding regulations to address conservation challenges, but “its rules will likely be too weak to have an impact on the ground and are unlikely to be enforced, rendering the chapter essentially meaningless”, the Sierra Club states.

Rather than prohibiting trade in illegally taken timber and wildlife, which are major issues in TPP countries like Peru and Vietnam, the agreement only asks countries to “combat” such trade.

For compliance, the TPP requires only weak measures such as “exchanging information and experiences”. Stronger measures like sanctions are only listed as options.

'TPP offers rights to polluters'

The USTR has never once brought a trade dispute against another country for failing to live up to its environmental obligations in trade deals, even when there is documented evidence of non-compliance with environmental safeguards, says the director of the Sierra Club’s responsible trade programme, Ilana Solomon.

Any potential benefits of the TPP’s environment chapter would be overwhelmed by other dangerous provisions of the deal, she says.

“Corporations including ExxonMobil, Chevron, and Occidental have used rules in the investment chapters of trade pacts and bilateral investment treaties to bring more than 600 investor-state cases against nearly one hundred governments.”

Such lawsuits are increasingly posing a challenge to policies designed to protect our air, water, and climate, the Sierra Club says, citing the Renco case in Peru.

Peru has a free-trade deal with the US that includes a section aimed at stopping the illegal timber trade between the two countries, but this has not ended the trade.

Solomon says the TPP offers broad new rights to thousands of corporations, including major polluters.

“The JX Nippon Oil & Energy Corporation from Japan and BHP Billiton Limited from Australia, both with significant investments in coal, oil, and gas in the United States, are just two of the 9,000 subsidiaries of companies that would be newly empowered to challenge US climate and energy policies as a result of the TPP.

“And, more than 19,000 subsidiaries based in the United States would be newly empowered to challenge the laws and policies of the other eleven countries in the pact.”

'Impact will be worse than expected'

The executive director of New Zealand’s Sustainability Council, Simon Terry, has written a paper on the environment chapter of the TPP in which he says the impact on the environment will be even worse than expected.

“Analysis of the final text shows that the gains for the environment are few and small scale,” he stated. “By contrast, foreign investors can sue the government for compensation if they believe new environmental protections will reduce their future profits, and this is a serious threat.”

Terry (pictured left) says the environment is a significant casualty under the TPP. “The overall result for environmental governance is window dressing on the upside, and serious threats on the downside. The environment has ranked very poorly in the allocation of political capital, with other corners gaining at its expense.”

The TPPA process, Terry says, has delivered “clip-ons” that fail to meaningfully advance protection of the environment, other than in a few instances that will have only a tiny impact overall.

In addition to the “no show” on effective positive measures, he adds, the agreement contains provisions that actually work against environmental protection, for which there are no effective exemptions in the text.

'A chilling effect on environmental reform'

There are provisions that protect governments from being sued for acting to reduce smoking, Terry says, but there are no similar protections for acting to protect the environment or tackle climate change.

The risk that a government could be successfully sued means the ISDS provisions would have a “chilling effect” on a government’s willingness to undertake progressive environmental reform.

“What the TPPA has delivered are provisions that completely fail to protect governments from being sued when taking such action. This favours retaining low standards when these need to rise markedly.”

The Democratic Senator for Massachusetts, Elizabeth Warren (pictured left), says ISDS rulings will be made in “industry-friendly arbitration panels that sit outside any court system”.

These panels can force taxpayers to write huge cheques to big corporations with no appeals, Warren says. “Workers, environmentalists, human rights advocates; they don’t get that special right; only corporations do.”

She added: “Most Americans don’t think of keeping dangerous pesticides out of our food, or keeping our drinking water clean, as trade issues, but, all over the globe, companies have used ISDS to demand compensation for laws they don’t like.”

“Just last year, a mining company won an ISDS case when Canada denied the company permits to blast off the coast of Nova Scotia. Today, Canadian taxpayers are on the hook for up to 300 million dollars, all because their government tried to protect its environment and the livelihood of local fishermen.”

Warren cites the case of the Keystone XL pipeline. Last year, the US state department concluded, and President Obama agreed, that the pipeline would not serve US interests. “The administration, applying American law, decided that the pipeline was a threat to our air, to our water, and to our climate, and denied the permit.

“But the oil company that wants to build this pipeline doesn’t think the buck stops with our president. Now this foreign oil company is using the ISDS provision in NAFTA (the North American Free Trade Agreement) to demand more than 15 billion dollars in damages from the United States.”

More than 40,000 people rallied next to the Washington Monument in February 2013 and demanded that President Obama reject the Keystone XL pipeline.

Warren says experts in law and economics have warned that, if ISDS panels force countries to pay high enough fines, the countries will “voluntarily” drop the health, safety, labour, and environmental laws that big corporations don’t like.

“That is exactly what Germany did in 2011 when it cut back on environmental regulations after an ISDS lawsuit.”

Warren added: “I’m glad that tobacco laws are protected from ISDS, but what about food safety laws, or drug safety laws, or any other regulation that is designed to protect our citizens? Under the TPP, every other company, regardless of the health or safety impact, will be able to use ISDS.”

Environmentalists in Australia, meanwhile, are concerned that ISDS claims will be brought by mining and coal seam gas companies if environmental regulations hamper their expansion.

ISDS hits Canada and Germany

Expert on trade and investment rules Sanya Reid-Smith (pictured below), who is the legal advisor and senior researcher at the international coalition the Third World Network, spoke at length about the TPP at a recent NGO workshop in Malaysia.

Reid-Smith cited several cases of governments being sued by corporations, and highlighted one case in which Canada tried to comply with the Basel Convention on Transboundary Movement of Hazardous Waste. Canada put a moratorium on the waste going out, to see if it was in compliance with the convention.

“For 16 months, they didn’t let it go out. The investor who wanted the waste to process sued the Canadian government under basically the same provisions that Malaysia has agreed to in the TPP. And they won.”

Canada’s intention was to check compliance with an international environment treaty, but the company recuperated the amount it said it had lost in profits over the period of the moratorium, Reid-Smith said. 

“Even when you want to comply with an environment treaty, or your human rights treaty, it doesn’t get you off the hook; the investor can still sue, and can still win.”

Canada is the country most sued under NAFTA, and a study published last year shows that most of the disputes involve investors challenging the country’s environmental laws. The 35 claims brought against Canada made up 45 percent of the total number of claims under NAFTA and have led to the country paying out a total of US$170 million in damages.

The US government has never lost a single ISDS case, but American companies have used ISDS 132 times (22 percent of global ISDS claims since 1987) and have won or settled 48 cases and lost 35.

The German government has been sued twice in recent years. The first case was over a coal-fired power plant. After reading the Stern Report on climate change, the government decided to start restricting its coal-fired power plants, and impose environmental requirements.

When the Hamburg Environmental Authority issued a licence imposing water quality standards on a coal-fired power plant, the energy giant Vattenfall began investor-state arbitration against the German government, seeking about €1.4 billion (about US$1.5 billion), plus arbitration costs and interest.

Germany and Vattenfall settled the dispute, with Germany agreeing to weaken environmental standards in favour of the corporation.

Vattenfall then started proceedings claiming a reported €3.7 billion (about US$4 billion) in compensation as a result of the German government's decision to phase out nuclear power after the Fukushima nuclear disaster.

Twenty-two ISDS cases have been brought against the Mexican government and the country has lost five cases and paid out US$204 million in damages.

In one case, the municipality of Guadalcazar refused to issue a permit to build a waste dump because of the impact on the eight hundred local residents. Under ISDS provisions, US$16.6 million was awarded to the dump's owners in the US.

Tom Warne-Smith, who is a policy and law reform lawyer at the Environment Defenders Office in the Australian state of Victoria, writing for ABC’s The Drum website in 2014, said: “Imagine that there's been a bushfire, and an endangered Australian species has suffered a huge loss of habitat.

"If any Australian government then wanted to change a permit to stop a foreign company from clearing habitat that had become vital to the survival of this species, we would have to pay the company 'compensation'.

“Similarly, if our government made a decision to protect a rural community from coal seam gas extraction, a foreign investor could potentially take Australia to court and be compensated for their loss of earnings.”