THE TPP, NAFTA, AND THE ENVIRONMENT

May 27, 2015

 

It’s official: the Trans-Pacific Partnership (TPP) process has become absurd. Last week Julian Assange announced a plan to offer a $100,000 reward to anyone willing to share the document. Unfortunately, the reality of the TPP is anything but funny. To date, most of the debate has centered on jobs, with only cursory attention to the environmental implications. Of course, any serious public debate is precluded by the absence of specifics. However, we might look to the recent past to anticipate the future: NAFTA. Signed only 21 years ago and considered to be a pivotal step towards neoliberalism, it is likely that the environmental institutions, processes, and outcomes associated with NAFTA, will echo in the TPP. Equally important to consider are larger trends in U.S. environmental governance.

 

 To begin with, we must not divorce the process of adopting the TPP from its actual substance. The fact that it is being debated in secret and produced with the participation of over 600 “corporate advisors”, while the public is stunningly excluded, is significant and cannot be forgotten. This is not merely an undemocratic process. Rather, this is a massive transfer of power from nation-states, local communities, and domestic firms, to transnational corporations. Supporters say that this is how such proposals are traditionally developed and that public participation would be unwieldy. They may be right, but that is no excuse to continue an acceptable practice. Messy? Absolutely. But that is the only way to challenge this monumental transfer of power to global capital whose commitments are to profits and shareholders – not to communities, workers, and the environment. Actions speak louder than words.

 

Let’s look more closely at NAFTA and its environmental outcomes, particularly in terms of Mexico. First, we must recall that environmental considerations were explicitly excluded from the agreement. Activists wanted the environment to be on the table, hoping for an upward harmonization, rather than a ‘race to the bottom.’ In response to activists’ demands, however, several side agreements, including the North American Agreement on Environmental Cooperation (NAAEC), were created to promote environmental quality. Research suggests that the NAAEC’s results have been mixed at best. While some scholars have argued that NAAEC, and its progeny, the Commission for Environmental Cooperation (CEC), have largely failed to protect the environment, others insist that they have enhanced Mexico’s environmental capacity.

           

Despite being excluded from negotiations, the environment loomed large over the debate. One major concern was that Mexico would become a ‘pollution haven,’ as heavily regulated U.S. industries would flee to a more lax regulatory environment. There was not a wholesale flight to Mexico for environmental reasons, but there certainly was a selective one. For instance, southern California’s furniture industry largely relocated to northern Mexico to take advantage of less stringent air regulations. More recently, U.S. power plants have clustered along the northern Mexican border, sometimes called, “energy maquiladoras.” Some plants adhere to U.S. standards, while others do not. All claim that the permitting process is much easier in Mexico – which is undoubtedly true.

           

Another worry was that the U.S. environment and its regulations would be degraded by NAFTA. There has, in fact, been evidence of both. Some may recall the fierce debate about allowing Mexican trucks, with lower emission standards, to enter the U.S. Although President Clinton had negotiated a phased-in entrance, environmentalists and labor sued. Ultimately, President Bush said that he had “no choice” but to let the trucks enter.

           

The erosion of domestic environmental laws and practices has also occurred, although not all of this can be directly attributable to NAFTA. Nor has it been limited to the U.S. Mexico’s environmental performance has unquestionably improved. While some attribute this to NAFTA, it is also true that such movement was underway beforehand. In any event, all signatory countries’ regulations are subject to erosion through Investor-State Dispute Settlements (ISDS). ISDS arise when foreign investors claim unfair trade barriers, such as environmental rules. Such charges are adjudicated before a tribunal - usually retired corporate attorneys. Not only can domestic rules be overturned, but the respondent may have to compensate the claimant. One of the most egregious examples was in Guadalcazar in the state of San Luis Potosi. Metalclad, a U.S. waste management firm, sued Guadalcazar for denying it a permit to expand its toxic waste facility. Metalclad argued that this denial was an expropriation without compensation. The Mexican people had to pay Metalclad $16 million to compensate it for lost anticipated profits. According to a 2014 United Nations Conference on Trade and Development (UNCTAD) report, ISDS are skyrocketing. The vast majority of claimants are wealthy countries, led by the U.S.

           

But the environmental consequences of NAFTA cannot be considered in isolation from domestic environmental practices. The larger neoliberal shift exists both domestically and transnationally and has a synergistic affect. Graham Kates found that of the 64,000 EPA violations in 2014, “fewer than ½ of 1 percent trigger criminal investigations.” This number has been declining since 2000. Such patterns, coupled with the American Legislative Council writing model environmental legislation, and congressional leaders who, like Senator Inhofe (R-OK), liken the EPA to the Gestapo, do not inspire confidence.

           

Two things that make the TPP different from NAFTA is the size of the partnership, which will be the world’s largest, and global warming. Although we knew about global warming in 1994, it was not on the public’s radar and scientific consensus had not been established. We now have both.

           

I do not believe that we can or should return to a world of barriers. If anything, we need to work more closely than ever and we need binding agreements. However, those agreements must support local communities, workers, and the planet at large – not multinational capital. 

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