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What You Need To Know About The Biggest Free Trade Agreement Ever And How It Affects Climate Change

By Ari Phillips on October 3, 2013 at 11:57 am

"What You Need To Know About The Biggest Free Trade Agreement Ever And How It Affects Climate Change"

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President Obama and U.S. Trade Representative Ron Kirk at a 2011 meeting of the Trans-Pacific Partnership.

President Obama and U.S. Trade Representative Ron Kirk at a 2011 meeting of the Trans-Pacific Partnership.

CREDIT: AP Photo/Charles Dharapak

President Obama planned this week to embark on a multi-stop trip to Asia, with the goal of concluding talks on a Trans-Pacific Partnership trade pact. The Trans-Pacific Partnership (TPP) is well on its way to becoming the largest Free Trade Agreement in the world, and it has major implications for efforts to curb climate change and protect the environment.

But thanks to the government shutdown, two of those stops have been canceled and the others are in question.

Still, the twelve countries involved will go on despite the President’s absence, and the potential economic impacts of the agreement are tremendous: The total gross domestic product (GDP) of the current TPP parties — which include Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore, the United States, and Vietnam — is approximately $27.5 trillion. They comprise 40 percent of global GDP and one third of world trade. Of this amount, the United States accounts for approximately $15.5 trillion, or almost 60 percent of TPP GDP.

Negotiations And Background

Negotiations over the TPP have been held out of public view, making it the first-ever classification of a trade agreement, according to the Montreal-based Centre for Research on Globalization (CRG). The United States currently has 20 active free trade agreements (FTA) in place, including major ones like the North American Free Trade Agreement (NAFTA). According to Public Citizen, while TPP information has been kept from the public, more than 600 corporate advisers have access to the treaty’s text — including companies such as Halliburton, Monsanto, the American Petroleum Institute, and Chevron. As a result, CRG believes the TPP will, amongst other negative things, empower corporations to attack environmental and health safeguards.

To implement the TPP, the Obama administration seeks to gain “fast-track authority,” a provision under the Trade Promotion Authority that requires Congress to review an FTA under limited debate, in an accelerated time frame subject to a yes-or-no vote by a simple majority vote rather than a two-thirds vote, as required for the ratification of a formal treaty.

This secrecy and eschewal of Congress has given rise to protests from unlikely congressional bedfellows, including Sen. Elizabeth Warren (D-MA), former Rep. Alan Grayson (D-FL), Rep. Michelle Bachman (R-MN), Rep. Walter Jones (R-NC), and Sen. Rand Paul (R-KY). According to CRG, earlier this summer, Grayson stated that “this, more than anything, shows the abuse of the classified information system,” calling the treaty an “assault on democratic government.” Sen. Warren noted in her letter to U.S. Trade Representative Ron Kirk, “if transparency would lead to widespread public opposition to a trade agreement then that trade agreement should not be the policy of the United States.”

According to Flush The TPP!, an action campaign to stop the TPP, unpopular trade agreements have been stopped many times when subjected to public scrutiny. Starting this month, Flush The TPP! is visiting congressional offices every week to determine how representatives plan to vote on the fast track provision and to maintain a public database of their responses.

A recent Financial Times analysis says some of the stated aims of the TPP are to “deepen trade by addressing government procurement, intellectual property protection and the conduct of state-owned enterprises.” In addition, it is “meant to update trade agreements by dealing with post-WTO developments, including e-commerce and cloud computing, as well as addressing labor and environmental standards.”

The FT analysis also reveals the tension surrounding the TPP, stating some it as the “gold standard” of trade deals that will enforce best practices, some view it as a giant, sovereignty-eroding corporate power grab, and others regard the project as a, “commercial irrelevance, or at best a U.S. geopolitical exercise in Asian re-engagement gussied up in free-trade clothing.”

The Opportunities

Joshua Meltzer, a fellow at the Brookings Institute, authored a chapter about the environmental and climate change aspects of the TPP for the forthcoming book, “Trade Liberalisation and International Co-operation: A Legal Analysis of the Trans-Pacific Partnership Agreement.”

He opens the chapter by explaining that trade can lead to increased economic growth that can in turn result in increased consumption of non-renewable resources and greater environmental harms, such as increasing air pollution and worsening water quality. However, he argues that trade agreements can also increase capacity for governments to respond to environmental concerns. For instance, by reducing trade barriers on environmental goods such as green technologies.

“A primary concern of some is that governments will sign up for trade agreements and then a race to the bottom will ensue, leading to the worsening of environmental standards in some areas,” Meltzer said in an interview in his D.C. office.

He thinks this isn’t likely to be the case, though, and noted NAFTA actually led to an an increase in environmental standards to meet the higher level of standards in the U.S. “In trade agreements now they actually make it illegal under the agreement to lower environmental standards to attract trade investment,” he explained.

Meltzer argues that businesses don’t so much want lower environmental standards, but rather certainty in standards and practices so they can design processes around them.

As far as climate change is concerned, he makes the case that trade agreements could play a leadership role in how we think of environmental impacts and goods.

“What is an environmental good? It’s an emissions lifecycle issue and we should focus on that rather than on end use,” he said. “I think we should be lowering tariffs on goods with low life-cycle emissions and therefore creating an incentive to import those goods. The idea that lifecycles are important has yet to be tied to the idea of tariff reductions.”

Meltzer summed up his thoughts, and his book chapter, by saying, “At the end of the day, particularly on the climate change front, ultimately what we’re talking about is economic reform. It’s really about reducing greenhouse gas emissions that are deeply embedded in the economy — energy generation, industrial processes, vehicular issues — trade agreements can get a lot of these issues and using economic tools can be a good way to address climate change.”

The Risks

Far from everyone agrees with Meltzer’s assessment of free trade agreements in relation to environmental and climate change issues, however. In May 2007, advocacy groups such as the Sierra Club forged an agreement that set the minimum standards for environment, labor and other provisions to be included in future trade agreements. There is concern that these standards are being ignored or at least ineffectively addressed with the TPP, as has been observed in leaked sections of the TPP draft.

According to an Inside U.S. Trade article from last year, the environmental chapter has emerged as a formidable challenge partly due to the U.S. proposal to make tough environmental protections and obligations binding and which other countries, such as Australia, consider too prescriptive.

In 2010 testimony before the Senate Subcommittee on International Trade, Customs and Global Competitiveness, Mark Linscott, Assistant U.S. Trade Representative for Environment and Natural Resources, said, “An environment chapter in the TPP should strengthen country commitments to enforce their environmental laws and regulations, including in areas related to ocean and fisheries governance, through the effective enforcement obligation subject to dispute settlement.”

The Green Party of New Zealand, the Australian Greens and the Green Party of Canada have released a joint declaration on the TPP, observing that more than just another trade agreement, the TPP provisions could, among other things, hinder the ability of future governments to legislate for the good of public health and the environment.

The TPP And Natural Gas

The Sierra Club warns that the TPP, “may allow for significantly increased exports of liquefied natural gas without the careful study or adequate protections necessary to safeguard the American public. It would also likely cause an increase in natural gas and electricity prices, impacting consumers, manufacturers, workers, and increasing the use of dirty coal power.”

A recent DeSmogBlog piece picks up on this theme. It explains that currently, before natural gas from the U.S. can be exported the Department of Energy is required by law to determine if exporting the gas is in the “public interest,” a process that is open to public input where concerns about increased prices or community impacts from the production progress can be raised. But thanks to a 1992 amendment to the Natural Gas Act, “any LNG imports or exports to America’s free trade partners is automatically considered to be in the public interest.”

According to the Sierra Club’s Ilana Solomon, the TPP is expected to apply to Liquefied Natural Gas — which would mean exports to treaty countries would get automatic approval without public hearings. This includes countries like Japan, the world’s biggest LNG importer.

The U.S. Energy Information Administration has estimated that the U.S. could become a net exporter of LNG by 2016 with more than 60 percent of the exported gas coming from newly drilled wells.

Another Major Treaty For The Atlantic

The TPP isn’t the only major trade agreement in the works. In Obama’s State of the Union address this year he declared his intent to complete negotiations for a Trans-Pacific Partnership and announced the launch of talks, “on a comprehensive Transatlantic Trade and Investment Partnership (T-TIP) with the European Union.”

Together, the European Union and the Unites States account for about half of the world GDP and one third of global trade flows.

The White House T-TIP fact sheet says that the partnership aims to reduce the cost of differences in regulations and standards by promoting greater compatibility, transparency, and cooperation, while maintaining our high levels of health, safety, and environmental protection. However, many of the concerns held regarding the TPP also apply to the T-TIP.

With both partnerships gaining steam it will be up to an informed and proactive global citizenry to make sure that scenarios involving environmental harm, social and economic exploitation or other negative impacts don’t become the norm — rather that positive opportunities are taken advantage of, such as proliferation of green technologies and elevation of environmental regulations.

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