How trade deals are fuelling climate breakdown

How trade deals are fuelling climate breakdown

By: Jean Blaylock
Date: 7 August 2020
Campaigns: Trade

The US-UK trade deal isn’t just a threat to our food standards and public services, it’s also a threat to our world. The whole model of corporate globalisation that drives international trade today is a major cause of climate breakdown. At Global Justice Now, we see campaigning on trade and climate as interconnected. In particular, we need to take action on trade rules if we are to have any hope of tackling the climate crisis.

Here are three reasons we need to connect trade and climate struggles.

1) Trade deals are powerful

The first thing to say is that trade deals are powerful. A trade treaty will override a climate treaty because trade deals have teeth. They have been written to have strong enforceable rules with penalties if they are broken, whereas climate treaties have targets and goals and aspirations but have nothing to back that up.

The climate crisis has been turbo-charged by an extremist ‘market knows best’ global economic system, and trade deals have become a key structural tool for embedding this in our lives. When alternative approaches and policies are suggested that could create a more sustainable world, all too often the reply is ‘we can’t do that because it is against trade rules’.

Our response is simple: we need to change the trade rules.

2) Trade deals can make the climate crisis worse

Trade deals can actively encourage trade in dirty fossil fuels at a time when we should be keeping them in the ground. This is notable in recent deals the US has done. Trump’s administration recently renegotiated the trade agreement between the US, Canada and Mexico. The new deal makes it cheaper for oil corporations to export more Canadian tar sands oil. Similarly, the US-China ‘phase one’ deal requires China to import fossil fuels. And it’s not just the US. Canada used the negotiations for the EU-Canada trade deal CETA to insist that the EU imported more tar sands oil, overriding a regulation that would have prevented that.

Trade deals also encourage trade in carbon intensive sectors. When the EU was negotiating a trade deal with the US (the now shelved TTIP deal), it predicted an additional 11 million metric tons per year of CO2 as a consequence of that agreement.

3) Trade deals can block climate action

To tackle the climate crisis we need strong binding regulation that can shift us out of decades of inertia and business as usual. Yet trade rules are written to prioritise voluntary self-regulation – exactly the approach that has resulted in continued inaction. In the US-UK trade talks, the US has emphasised that it wants an approach that always prefers self-regulation.

This has far-reaching effects. A US trade deal would not directly rewrite the UK’s climate change targets, but it could be used to repeatedly knock down proposals made to reach those targets.

If meaningful regulation on climate issues is passed in a country, this is where the teeth of trade deals’ are really felt. Countries can challenge each other through trade rules. Many have used them to dispute other countries’ subsidies and support for renewable technologies. But trade deals also allow corporations to sue governments directly in corporate courts (formally known as ISDS).

We have already started to see this happen on climate issues. The Netherlands recently took the decision to phase out coal power over the next decade. In response a German energy company, Uniper, which owns a power station in the Netherlands, has started threatening to sue in a corporate court. In Canada, a coal mining company, Westmoreland, is over the province of Alberta’s similar decision to phase out coal power, and another energy company, Lone Pine, is challenging Quebec’s moratorium on fracking. Cases like this have a chilling effect, intimidating other countries who may be considering taking similar action.

What can we do?

Campaigning on trade is a key part of campaigning on climate – we need to make sure trade rules do not wreck any chance of tackling the climate crisis. That means we have to stop high risk deals like the US trade deal before they can do more damage. It also means we need to challenge the basic assumptions behind trade deals.

Trade itself is something that has always been part of society, and always will be, but trade rules have become fossilised and extremist. Instead of being based on assumptions of endless growth and leaving everything to the market, trade rules need to be about managing trade so that it supports goals of social, environmental and climate justice. And we need to reverse the power hierarchy – if trade rules conflict with climate goals, then trade rules must change.

Find out more

Photo: A bucketwheel reclaimer, used at tar sands mines in Alberta, Canada. Credit: Frontpage/Shutterstock