Will the green transition be globally just, or a neocolonial resource grab? Trade rules are key

By: Cleodie Rickard
Date: 22 May 2024
Campaigns: Trade

A serious overhaul of how we run the economy and live our lives is needed to tackle the climate crisis – and there are signs that decision makers are recognising, even if nowhere near fast enough, the urgent need for a ‘green transition’: a massive shift from fossil fuels to renewable energy systems.

But there are different possible versions of this new green economy. Will the global majority benefit? Or will it maintain the power dynamics that currently ensure big business and wealthier countries keep the largest share of the pie?

Trading in transition

Powerful countries and corporations are shifting into gear to capture the lion’s share of the green economy. Part of this reflects profound changes in the ‘free trade’ ideology which has reigned in the era of globalisation. There’s an acceptance even among some of its former stalwarts that endless trade liberalisation is not working to meet modern challenges.

The rhetoric speaks to the need for green transition. Just as many drivers are geopolitical: national security concerns relating to China’s dominance over ‘clean’ technology supply chains. We’re seeing the US and the EU diverting from the World Trade Organisation rulebook, which they have long penalised other countries for going against, to ‘onshore’ and capture as large a share as possible of new ‘green’ value chains.

These legislative packages of subsidies and incentives for home-grown green industries – for example the US Inflation Reduction Act and the EU Green Deal – are only one side of the coin. The other shows neoliberal trade dynamics continuing apace.

The scramble for critical minerals

The same governments are once again scrambling for raw materials – the basic metals and ‘critical minerals’ needed for renewables technology, such as electric batteries and solar panels.

The UK like its allies is seeking more trade agreements to gain unfettered access to those parts of green technology supply chains it cannot onshore, such as lithium, cobalt and copper. This is driving more and more demand for mining, often on Indigenous communities’ land, and the human rights abuses and environmental damage that so often comes with it.

But a new status quo has not yet taken hold. Some countries in the global south are taking a stand, deciding to control the terms of access to their mineral reserves: Indonesia banning raw material exports to grow local processing, Mexico nationalising its lithium sector, Panama shutting a copper mine that caused outrage over land grabs and ecological destruction.

Free trade for some

The response to this is trade deals that seek to lock poorer, resource-rich countries into their role as raw material exporters, rather than coordinating just and equitable global governance over the resources we all need to face the global climate challenge.

The complexity here lies in the contradiction: just as richer countries are now giving themselves a much greater degree of freedom from neoliberal trade rules, they are still forcing poorer countries to comply with them – drawing up extractive agreements that stipulate market access for Western companies and bar global south governments from adding value to their industries by developing more downstream processing of minerals in the country for more local jobs, tax revenue and sustainable development.

To safeguard fairer, more distributive and local governance of critical minerals, we must expose the trade rules that are enshrining a colonial, extractive logic and corporate capture of the ‘green transition’.

The climate opportunity to equalise terms of trade

The imperatives of tackling climate change bring an opportunity to challenge the unjust terms of trade between north and south for good.

We need to push back against the same old provisions that have historically decimated the infant industries of poorer countries – bans on export restrictions, subsidies, local content requirements – being included in the new critical mineral agreements the UK has in its sights.

These policy tools, kept from poorer countries, are the same that richer countries see as their route to become ‘green export superpowers’, to use the UK Labour Party’s narrative.

We need to continue to push the UK, following its commitment to exit the Energy Charter Treaty, to scrap investor-state dispute settlement in all agreements. Beyond blocking fossil fuel phase-outs, these corporate courts are now being used by mining giants to deter or punish countries seeking resource sovereignty and to make corporations the sole profiteers from transition.

And we need to address intellectual property rules that mean countries having to pay a ransom to rich patent owners to access green technologies, and instead condition access to mineral reserves on the transfer of such critical technologies.

Releasing the bonds on our radical futures

Simply better distributing the benefits of critical mineral mining will only go so far in addressing local elite capture, ecological harm and the dispossession of Indigenous peoples’ land. But taking the teeth out of new trade agreements on the horizon is a first step in levelling the global playing field and forcing necessary conversations about demand-side solutions in countries like the UK.

Current global demand for renewables will mean consuming more minerals in the next generation than in the last 70,000 years. The only logical answer to this is a massive reduction in material use, energy efficiency, a mobility revolution and a circular economy.

Those in power are trying to sidestep this in favour of short-termist, extractive solutions which throw the majority of the world under the bus. But by dismantling their neoliberal trade deals, we make room for the radical alternatives we need for a transformed global economy.

Our new policy briefing, Resisting green colonialism for a just transition: Trade and the scramble for critical minerals

Photo: Indigenous communities of the Salinas Grandes protest against lithium mining on their territory in San Salvador de Jujuy, Argentina. The banner reads: ‘We don’t want pollution, our future is in danger’. Credit: Felix Malte Dorn / Shutterstock.com