Peter Whitmore: The TPP and climate change

A coal-fired power station in Germany. Photo / AP
A coal-fired power station in Germany. Photo / AP

After more than seven years of negotiations on the Trans-Pacific Partnership, ministers from New Zealand and the eleven other countries involved have just met in Maui in a further attempt to progress this agreement to sign-off stage.

But over that extended period, it has become very clear that the need to control climate change by reducing emissions is the most critical and urgent issue facing the international community. If the agreement comes into effect will it help or hinder these efforts?

The TPP will reportedly allow foreign investors and their governments to bring dispute cases before independent tribunals when they believe their rights have been compromised or their profits affected. The so-called investor-state dispute settlement process is common in other trade agreements, but the downside is that it takes matters right outside the control of a government or its country's legal system.

Actions of this type are currently being lodged at an average rate of around one case a week and are increasingly being used to challenge environmental and climate policies.

For example, in 2013 a US-chartered company launched a $250 million case against the Canadian Government after fracking was banned for environmental reasons in an area of the province of Quebec. This case is apparently still not settled.

Under the TPP, if New Zealand took steps to improve the protection of our environment, such as putting major restrictions on the recovery of off-shore oil, would we open ourselves to massive claims made by foreign corporations and governments?

One way to lower emissions is to reduce the need to transport goods by relying more on local markets. This also provides employment opportunities and builds local knowledge, but it is not what trade agreements are typically promoting.

In 2009 the Canadian province of Ontario introduced an ambitious scheme to increase the use of renewable energy. Although highly effective, it had to be partly dismantled after a successful challenge was launched in 2010 by Japan and the EU on the basis that imported equipment received less favourable treatment than locally made options. There have also been other similar cases.

If the TPP comes into place, would we end up getting sued if, for example, we provided incentives for the development and use of local renewable energy sources that would allow us to reduce our dependence on fossil fuels, reduce our emissions, and at the same time create local jobs?

It is now widely accepted that to successfully limit climate change the world needs to start putting a significant price on greenhouse gas emissions. Sweden has already set an example of how this can work. Its charges are now up to around $NZ200 a tonne of carbon dioxide over some sectors of the economy, and its emissions have fallen by around 25 per cent since 1990.

Trade agreements generally aim to remove tariff barriers. What will happen though, if New Zealand introduces meaningful carbon charges that affect the pricing of both domestic and exported products, but one or more of our trading partners do not?

Under the TPP, would we be able to impose a carbon-related tariff at the border to ensure that local producers are not subject to unfair competition and that local consumers face appropriate prices? And would we be able to take action against countries we export to that prevent fair competition by imposing low or even zero carbon charges on their own manufacturers of competing products?

Any trade agreement we enter into needs to deal appropriately with these and other climate-related issues. According to information leaked last year the US wants to remove from the TPP any references to the international treaty dealing with this matter, the UN Framework Convention on Climate Change, and to commitments to cooperate on climate change initiatives. This is not reassuring.

The ability to trade efficiently is very important, particularly for a small country like New Zealand that is highly reliant on its export earnings. But the time for traditional free trade agreements has now passed.

If we are going to continue down the TPP path then we need to have confidence that it is not taking us in the wrong direction. This requires that the draft text of the agreement be made public so that wide and meaningful consultation can be entered into well before any sign-off.

Peter Whitmore is a former Auckland publisher with a background in engineering and science.

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