After observing the devastating impacts of the nuclear disaster in Fukushima, Japan, the German government accelerated its popular program to phase out nuclear power. Seizing on the dispute settlement provisions of the Energy Charter Treaty, the Swedish energy giant Vattenfall claimed that Germany’s decision would harm its profits and took the government to court, demanding $6 billion in compensation. Across the Atlantic and a few years earlier, El Salvador moved to put a moratorium on mining concessions, as a significant proportion of the country’s ground and drinking water had been contaminated by pollution. The Canadian-Australian mining company Pacific Rim responded by slapping El Salvador with a $301 million lawsuit.
When a country can be prevented by corporations from protecting its water resources, or creating national energy policies, democratic processes are nullified. The gravity of this threat is underscored in Pope Francis’ new encyclical. Calling for bold leadership on climate change, he warned that the “21st century, while maintaining systems of governance inherited from the past, is witnessing a weakening of the power of nation states, chiefly because the economic and financial sectors, being transnational, tend to prevail over the political.”
Groups fighting to protect workers’ rights, access to medication, food safety, internet freedom, and biodiversity are united in their opposition to the Trans-Pacific Partnership (TPP), the massive new trade agreement being negotiated between 12 countries. The climate movement, too, has a lot to lose. Aggressive energy reforms will be needed across the globe in order to ensure that we slash carbon emissions—but trade agreements create radical new legal powers for multinationals, which can be used to hold those policies hostage.
By further elevating the rights of corporations over citizens and governments, the TPP could open the door to corporate challenges to climate action as much as to minimum wage or affordable medicine laws. Dangerous legislation giving President Obama the authority to “fast-track” the TPP and other trade agreements—meaning they can be pushed through Congress with simple up-or-down votes, no revisions allowed—was passed by the House yesterday, just as the Pope was launching his climate plea to the world.
To put it mildly, 2015 is a big year for the world: A UN-brokered climate agreement will hopefully be reached in Paris this December to commit countries to protecting a habitable climate. But ambitious action could face major roadblocks from an array of trade agreements that the general public knows very little about. With countries currently submitting their plans for emission cuts to the UN, citizens, policymakers, and climate negotiators alike need to pay close attention to this threat.
The TPP is actually just one of several major trade agreements now in the works. Also contributing to the alphabet soup of hard-to-follow deals are the Trans-Atlantic Trade and Investment Partnership (TTIP) between the US and the EU and the Trade in Services Agreement (TiSA) at the World Trade Organization. These negotiations—conducted in secret by small groups of officials and their trade lobbyist “advisors,” with no opportunity for broader political or public review of the drafts—are marked by an astounding lack of democracy (a fact that many legislators from TPP countries are concerned about). In fact, the negotiating text of the TiSA is to be kept secret for five years after it comes into force.
Clearly crafted to serve corporate interests, free trade agreements have given rise to a multitude of legal challenges that are already derailing social, environmental, and health-related policies enacted by sovereign states. That’s in large part thanks to Investor-State Dispute Settlement (ISDS), included in a number of major deals including the North American Free Trade Agreement (NAFTA) and the TPP. ISDS provisions give foreign firms the right to directly sue governments for any policies seen to deprive them of potential profits, using secretive tribunals staffed by corporate lawyers. The US has been a keen proponent of this system despite the concerns of other countries, some of which are moving to reject ISDS.
As in Germany and El Salvador, governments can haemorrhage millions in taxpayer dollars defending national policies from corporate attacks, and can still lose. These are not isolated cases: the treaty invoked against Germany’s energy policy alone has triggered a staggering tally of 80 corporate cases to date. It is just one of several hundred trade deals currently in existence, and ISDS is being used with greater frequency as corporations become more aware of its power and more expert in its use.
As momentum for climate action builds around the world, corporate resistance in the form of trade challenges will surely continue to ramp up. National climate policies should include strong legal protections against these attacks. Climate negotiators should be well-versed in potential trade obstacles to the commitments they put forward, and the primacy of climate imperatives over trade could even be acknowledged explicitly in a final UN agreement.
Looking further ahead, countries should consider ditching these agreements altogether. Ecuador, Venezuela, and now South Africa have taken the bold step of scrapping damaging trade deals, and other countries are poised to follow. ISDS clauses and other similar provisions that erode national sovereignty should be removed from agreements that remain in place. At a minimum, strong climate safeguards need to be included in all trade deals. But in a deadly ironic twist to the US fast-track drama, Rep. Paul Ryan proposed a last-minute amendment to “ensure that trade agreements do not require changes to U.S. law or obligate the United States with respect to global warming or climate change.” A strongly worded response from the Sierra Club and Natural Resources Defense Council called this a move in “the exact wrong direction.” As 350.org noted, “we need global trade deals to do their part in the fight against climate change by eliminating fossil-fuel subsidies, and this new language would prevent that entirely.”
Trade agreements can never be allowed to help corporations subvert democracy. Ultimately, we need to re-imagine the role of international commerce in a just, fair, and habitable world. One thing is clear: for climate action to succeed, we desperately need trade reform.