Is Free Trade Blocking Climate Action?

By Justine Moonens

Yesterday, I went to a panel about climate change and trade. A topic often omitted from the climate talks, but very influential on current and future climate action. In light of the two new trade agreements being negotiated at the moment, TTIP (Transatlantic Trade and Investment Partnership) and TPP (Trans-Pacific Partnership) this is a very crucial topic to be informed about. These agreements play a key role in constraining the possibilities of governments of developing effective climate policies. Corporate watchdog organisations describe the situation as, « it is either trade agreements or the climate ». The panel consisted of representatives from Global Forest Coalition, Corporate Europe Observatory, Attac France, Friends of the Earth Europe, Sierra Club, AITEC and the Institute for Agricultural and Trade Policy. The following information is a summary of the panel discussion.

Trade agreements are multilateral agreements that deal with trade barriers. These barriers are financial such as export taxes, but also non-financial, such as environmental regulation, food security standards, etc. These agreements are solely concerned with investor’s rights and most of them give corporations the opportunity to sue governments when they pass regulations that restrict their profits. These cases do not take place in courts, but in investor-state dispute settlements presided by private corporate lawyers. The legal fees for these courts often amount to millions of dollars for countries, even if they win the lawsuit. If they lose, countries have to pay astronomically high fines too. Being threated by such high public costs, countries think twice before passing environmental regulations. And guess who are one of the most fervent users of dispute settlements. Fossil fuel companies indeed. A recent emblematic case is Germany being sued for putting restrictions on coal plants.

Addressing free trade in climate negotiations is crucial for multiple reasons.

  1. It strongly promotes the flow of goods. The more export, the better. Meaning more green house gas emissions from transportation.
  2. Most free trade agreements prohibit differentiating fuels by their carbon content. This means that countries are not able to develop policies that stimulate the use of fuels with low carbon contents. It also restricts countries from having policies that promote local green energy.
  3. Free trade promotes intensive, export-oriented agriculture and works against food security by lowering food safety and environmental standards, and increasing dependency in importing countries. Food security is an important issue in climate negotiations, because climate chaos will cause decreased agricultural yields all over the planet. At the moment food security & agriculture is addressed in 80 % of the Intended Nationally Determined Contributions (INDC’S) countries have prepared for this COP.

While TTIP is being negotiated, it is already blocking future climate action. (Sorry, for who is more interested in TPP. The panel mainly focused on Europe). A few days ago, a memo from the European Commission was leaked, where the EU stated that EU negotiators have to go against any mention of trade in the Paris Agreement. According to Maxime Combes (Attac France), this also blocks the mobilization of finance for mitigation and adaptation, because some financing mechanisms could be a distortion of free market trade. Having effective finance mechanisms within the Paris Agreement is crucial for developing countries to be able to take mitigation and adaptation measures.

TTIP not only blocks climate action, but also hands over a lot of power to corporations. According to Pascoe Sabido (Corporate Europe Observatory) most of TTIP’s content comes directly from business lobby proposals. 92% of the EU commission’s consultations on TTIP were with industry. Here is a quick wish list of TTIP’s biggest lobby group and one of the most regressive anti-climate lobby’s, Business Europe.

  • Stopping environmental policies
  • Stop governments from restricting polluting products
  • Enhance the carbon market (Carbon offsets are a great way for them to keep emitting greenhouse gases)
  • No differentiation in mitigation efforts between developed and developing countries, so that every country stays equally competitive on the market.

Looking at these wishes it is chilling to realise that at the heart of TTIP lies something called ‘regulatory cooperation’. A system that gives corporations from sectors involved in TTIP the ability to comment on new regulations at the regional, national and EU level. TTIP would probably mean the end of Europe strong food standards on GMO’s and additives in animal food. The US has already challenged the EU to court for its food regulations. Ben Lilliston (Institute for Agriculture and Trade Policy) told that these kinds of trade agreements are a threat for local agriculture. It boosts the use of patenting rights for agricultural seeds, increasing the power biotech companies have over local farmers.

It is also very interesting that climate change and deforestation are never mentioned in World Trade Organization (WTO) negotiations, which you would expect for being such a big issue and considering the role trade can play in combating climate change and deforestation. Even if, like Mary-Louise Malig (Global Forest Coalition) says, a significant number of UNFCCC negotiators present here in Paris are also involved in WTO negotiations and will fly after COP 21 to Nairobi for a new round of WTO negotiations. In contrast to UN agreements that are weakly to mostly not enforceable, WTO agreements are extremely secretive and enforceable. In my opinion, this fact should really make you think about whom our governments are protecting and being held accountable to. The principle of these two kinds of negotiations is the same: governments from all over the world coming together to make decisions about global issues. One often heard argument for making UN agreements not too legally binding is that this would mean handing over a part of national sovereignty. While, loosing national sovereignty is exactly what mechanism such as regulatory cooperation and investor-state dispute settlements imply.

Disclaimer: The views and opinions expressed in this blog are those of the author and do not necessarily represent those of the International Forestry Students’ Association.

 

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