New Trade Deals Will Undermine Keeping Fossil Fuels in the Ground

C: Gary Knight

A new report, entitled Climate Roadbloacks, released by the Sierra Club today reveals how efforts across the United States to protect the climate could be threatened by two proposed trade deals, the Trans-Pacific Partnership (TPP) and Transatlantic Trade and Investment Partnership (TTIP).

There are already dangerous warning signs.

Any regular reader of the blog will know the long seven-year fight by First Nations, front-line communities and environmental groups to block the highly controversial Keystone XL pipeline, which resulted in President Obama rejecting the pipeline it in November 2015. At the time many hailed it as a significant victory.

But not so fast. History is littered with examples of big companies snatching victory from the jaws of defeat, as they have more money and more resources to out-pace and potentially out-smart the opposition.

As the report outlines “Just two months after the Obama administration rejected the pipeline, TransCanada announced it would retaliate by using rules in the North American Free Trade Agreement (NAFTA) that empower foreign corporations to challenge domestic policies in private tribunals.”

TransCanada now plans to ask a trbunal to order the US Government to pay more than $15 billion as “compensation” for the KXL decision.

The company’s actions are a clear warning about what might happen if the US signs TPP and TTIP. The TTP is a highly controversial pact between the US and 11 Pacific Rim countries that Congress may consider this year, whereas TTIP is a trade agreement between the US and the European Union.

The Sierra Club argues that “Both deals would dramatically expand the number of corporations that could follow TransCanada’s example and use private tribunals as a backdoor way to challenge and potentially undermine”.

It is not the only one worried by TTIP.

The UK-based campaign group, Global Justice, argues simply that TTIP is a serious threat to democracy. They argue that: “TTIP would give corporations the power to sue governments over decisions that could harm their future profits, undermining democratic decision-making made in the public interest.”

The finer details of these trade deals are shrouded in secrecy, so no one really knows how much power they are giving corporations.

But what we do know is that the Partnerships would allow for trade disputes to be settled by tribunals, whereby a select group of lawyers would review and rule on evidence in secret, under a process known as “investor-state dispute settlement” (ISDS).

“For the first time”, argues the Sierra Club, “the TPP and TTIP would enable some of the world’s largest fossil fuel firms to use ISDS to challenge U.S. policies to keep fossil fuels in the ground, including restrictions on fracking, offshore drilling, federal fossil fuel leasing, and dirty pipelines”.

The report outlines how law firms specializing in ISDS are already explicitly advising fossil fuel firms to see ISDS as a “tool” to “prevent” unwanted policies.

Indeed, policies targeted in recent ISDS cases include a fracking moratorium in Quebec, a court order to pay for oil pollution in Ecuador, and new restrictions on a coal-fired power plant in Germany. Shell, BP, Chevron, and ExxonMobil have already used ISDS, helping to spur a rapid rise in ISDS cases.

The report argues: “Just as the U.S. begins to transition away from fossil fuels, the TPP and TTIP would empower an unprecedented number of fossil fuel corporations to follow TransCanada’s lead in asking private tribunals to help maintain the crisis-prone status quo.”

It concludes: “The fight for climate progress already faces enough obstacles without the additional roadblocks imposed by the TPP and TTIP. Replacing these toxic deals with a new climate-friendly model of trade is an essential component of the growing effort to keep fossil fuels in the ground.”

And its not just in the US, either. According to an analysis by the Club, the trade deals could enable “45 of the world’s 50 largest corporate climate polluters to ‘sue’ governments in private tribunals over policies that keep fossil fuels in the ground”.

To look at an interactive map on the subject go here.