New Trade Agreements Gut Environmental Protections

Deals affecting U.S. neighbors to the east and west make the case that corporations are countries, too.

From the start, negotiations over the Trans-Pacific Partnership were hush-hush. For five years, 12 nations around the Pacific Rim had been conducting talks on the trade deal—the largest in history—entirely in secret; few people on the outside even knew the discussions were taking place. Then, last January, whistleblower site WikiLeaks released a working draft of the agreement. Suddenly the world got to see the government—industrial complex for what it has truly become.

Most of the alarm expressed so far about the TPP has centered on economic injustice--and, as with NAFTA and the United States' other trade agreements with countries in the developing world, there is ample reason for concern there. But the draft proposal also revealed an utterly hollow set of environmental provisions, a sign of how conservation was a mere footnote to the group's obsession with the flow of goods and capital across international borders.

It probably astounds no one that the language in the draft's environmental chapter on such issues as deforestation, overfishing, and illegal wildlife trade is anemic. The terrible surprise for environmentalists actually lies elsewhere in the document, where it details how the agreement would shift power away from the governments of member countries and over to the companies trading among them. "The environment chapter is not the only environmental issue in the trade deal," says Jesse Prentice-Dunn, a representative for Sierra Club's Responsible Trade Program. "This is really about elevating corporations to the level of nations."

The most powerful tool the TPP gives to big multinationals is what's know as the "investor-state provision," which grants a foreign corporation the power to sue the government of any participating country where they do business if they believe that country's environmental safeguards are cutting into its bottom line. (Yes, you read that correctly.) Again, NAFTA and other agreements with similar language give us a very clear view of how the investor-state provision would probably play out if the TPP were passed: Under existing trade deals, roughly 500 such lawsuits are already before the WTO, including one brought by Lone Pine Resources, an oil and natural gas company incorporated in Delaware, against the Canadian government. That suit uses the provisions in NAFTA to demand in excess of $250 million in damages from Quebec for placing a moratorium on fracking operations beneath the St. Lawrence River pending an environmental safety assessment. (Yes, you read that correctly, too.)

This investor-state provision for settling such company vs. country disputes is proving to be a one-size-fits-all solution.

A similar provision has burrowed its way into another behemoth trade pact hurtling toward ratification—The Trans-Atlantic Trade and Investment Partnership, potentially signed into law by the end of 2014. TPP and TTIP are perfectly symmetrical; one entwines the economies of the Pacific Rim states, the other those of the U.S. and every E.U. member country. They're mirror images down to occasionally identical language, including the investor-state provision. TTIP, or TAFTA as it's called by those struck by the less-than-charming similarities to that other North Atlantic trade deal, could catalyze another onslaught of lawsuits to disappear behind the closed doors of the WTO.

If the TPP and TTIP were ratified as currently written, companies within signatory countries, which contribute over 55 percent of the world's gross domestic product—in other words, 55 percent of everything that's made, bought, and sold on earth—would be handed similar means of intimidation.

That sort of shift in the balance of power between governments and corporations could amplify habitat degradation across the entire Pacific Rim, and much of the Atlantic Rim. Of particular concern are the TPP's consequences for the Monterey Shale, a natural gas-rich slab of earth beneath most of coastal California. TPP could render sensitive areas across the free trade zone, including the Monterey Shale, ever harder to defend against resource extraction companies.

And when it comes to TTIP, the threat is not abstract there, either. Germany's recent decision to halt fracking within its borders is a triumph for conservation and water safety activists, but the new rule would leave the country open to attack by natural gas companies put out by the conservation effort. Germany has already weathered an investor-state dispute, when Swedish power company Vattenfall tried to take it for $3.7 billion over its 2012 nuclear power phaseout.

Compounding both agreements' egregious investor-state provision is the fact that under American law, any natural gas export to a country with which we have a free trade agreement is deemed to be in our national interest, a special status that strips away additional layers of regulation. Perhaps the only remaining question is whether any environmental safeguards would be left in tact.

As negotiations churn on, the next battle will be over ratification. Up for debate in Congress is whether to grant President Obama trade-promotion authority, also known as the fast-track authority, which gives him the power to sign trade deals without taking amendments from the legislature. Though more and more senators and representatives are standing up against the TPP itself, fast-track authority could further dismantle the pact's already rickety environmental standards. "The worry is that the authority tends to cut corners when it comes to environmental agreements," says Michael Sutton, Audubon's vice president for the Pacific Flyway. "This is déjà vu from the NAFTA negotiations," he adds. "We cannot sacrifice the environment on the altar of free trade. "

This story ran as "Trading Down" in the July-August 2014 issue. It has been updated to reflect recent developments.