Conservation as Anti-Development

By Victoria Leung*

This past October, Congress has been asked to decide whether to pass the United States (US) entry into the Trans-Pacific Partnership (TPP).  The TPP is a free trade agreement between the US, Australia, Canada, Japan, Malaysia, Mexico, Peru, Vietnam, Chile, Brunei, Singapore, and New Zealand.[1]  While proponents claim that TPP will benefit the member nation’s economies, they ignore the potentially disastrous consequences on the environment.  TPP follows in the footsteps of the North American Free Trade Agreement (NAFTA) and Central America Free Trade Agreement (CAFTA), which have been criticized for their environmental consequences.[2]  While these trade agreements claim they support the environment, they all contain provisions that corporations can use to strike down environmental regulations in the member countries.

NAFTA’s Legacy

The first of these trade agreements was NAFTA, implemented on January 1, 1994.[3]  Under NAFTA chapter 11, claims can be brought under the investor-state dispute settlement procedure, in which a company can sue a country for policies that violate its rights or decrease the values of its investment in private tribunals.[4]  According to a report created by the Sierra Club, NAFTA created new grounds for corporations to inhibit countries’ environmental regulations.[5]  An examination of NATFA’s impact on Canada illustrates the Sierra Club’s findings.  Since 2005, Canada had borne the brunt of the claims brought under NAFTA, with over 70% of the claims against Canada.  Out of these claims, ~63% were about environmental and resource management issues.  In total these claims have cost Canada a significant amount, paying out $170 million in damages total for six cases and blocking environmental regulations.[6]  However, Canada is not alone in accruing losses.  Mexico has lost five cases, paying out $240 million in damages.[7]  And while the US has not lost any cases yet, it still had ~20 cases brought against it.[8]  The two following cases show how the NAFTA tribunals have set a precedent for disregarding environmental concerns and affecting environmental policies.

ETHYL v. CANADA

Ethyl Corporation (Ethyl) brought a case against Canada in 1997 for its ban on the import of methylcyclopentadienyl manganese tricarbonyl (MTT), a gasoline additive that Ethyl manufactured and imported to Canada.[9]  This ban effectively eliminated MTT from gasoline in Canada.[10]  Previously, California and the EPA had issued bans on MTT due to uncertainty of its environmental and health impact.[11]  This was a concern because the manganese in MTT is a known neurotoxin, a significant health risk.[12] Ethyl claimed that the ban on MTT was an indirect expropriation of Ethyl’s assets.[13]  Canada settled the case for $13 million and got rid of the import ban.[14]  This case demonstrates the way a corporation can use NAFTA to eliminate inconvenient environmental policies, destroying countries’ abilities to control their own environment.

S.D. MYERS v. CANADA

In 1998, S.D. Myers Inc., a US waste treatment company, brought a claim against Canada for its ban of exportation of polychlorinated biphenyls (PCBs).[15]  Canada’s ban was enacted in 1995 due to a number of factors.  At that time the US laws banned the importation of PCBs due to its toxicity to humans, but the EPA had an informal policy contradicting the laws and allowed PCBs from Canada.[16]  In addition, Canada had signed the Basel Agreement, an international agreement that requires that toxic waste be disposed as close as possible to its origin.[17]  Despite these legitimate reasons, the NAFTA tribunal found in favor of S.D. Myers.[18]  It held that as an importer S.D. Myers was an investor in Canada and that Canada had violated several provisions of NAFTA’s “investment rules.”[19]  This set a precedent that NAFTA could override other international environmental agreements that countries have signed and prevent the inaction of environmental protection policies.[20]

It is clear from these cases that environmental protection measures are not free from NAFTA’s reach.

CAFTA: Following NAFTA’s Footsteps

CAFTA is another free trade agreement between the US, Costa Rica, Dominican Republic, El Salvador, Guatemala, Honduras, and Costa Rica.[21]  The US entered into the agreement in 2005.[22]  Like NAFTA, corporations have used CAFTA to attempt to strike down environmental policies that are unfavorable to their business.[23]  In Guatemala, the Pacific Rim Mining Corp.’s is suing Guatemala for its requirements to obtain approval for gold mining.[24]  Costa Rica has also been sued by Spence International Investments for taking land to create a public park. [25] However, unlike Canada, the governments of these countries have far less monetary resources and the threat of costly legal fees has a huge influence on their decisions to control the environment.[26]  Guatemala’s Marlin Mine illustrates this danger.[27]  The Marlin Mine had been slated to close due to its environmental impact, however, the mine remained open because the government was worried about the possibility of a law suit under CAFTA.[28]

TPP: Will it be different?

With the new TPP, there was a glimmer of hope that it would not fall into the tradition of NAFTA and CAFTA, and would contain substantial changes to limit its impact on the environment.  However, in the current iteration of the agreement, there is no mention of climate change prevention policies.[29]  When asked about the lack of environmental provisions in TPP, U.S. Trade Representative Michael Froman stated that a trade agreement is not the correct venue for climate change.[30]  This is an odd proposition considering the impact environmental policies and the economy have on each other.  Just looking at the history of NAFTA and CAFTA, it is clear that environmental protection and trade must intersect and will come into conflict.  There is a clear need to place provisions concerning the environment into such trade agreements or else the flaws of NAFTA and CAFTA will start impacting new nations.  Instead, the lack of mention of climate change may suggest that the focus is on benefiting corporations rather than ensuring the protection of the environment and consequently the people’s health.  Whatever economic benefits TPP might bring, we must consider if it is worth the cost to our environment.  As for me, I hope that Congress does not approve the agreement.

 


The views and opinions expressed in this blog are those of the authors only and do not reflect the official policy or position of the Michigan Journal of Environmental and Administrative Law or the University of Michigan.

*Victoria Leung is a General Member on the MJEAL.  She can be reached at vpleung@umich.edu.

[1] Michael Brune, Congress Should Oppose TPP on Environmental Grounds, (Oct., 7, 2015), http://www.nytimes.com/roomfordebate/2015/10/06/the-future-of-trans-pacific-trade/congress-should-oppose-tpp-on-environmental-grounds

[2] See  Manuel Perez-Rocha and Julia Paley, What “Free Trade” Has Done to Central America, (Nov. 21, 2014), http://fpif.org/free-trade-done-central-america/ and Public Citizen, NAFTA’S THREAT TO

SOVEREIGNTY AND DEMOCRACY, (Feb. 2005) http://www.citizen.org/documents/Chapter-11-Report-Final.pdf

[3] http://big.assets.huffingtonpost.com/NAFTAReport.pdf

[4] NAFTA report Id. at 11

[5] Id.

[6] Sunny Freeman, NAFTA’s Chapter 11 Makes Canada Most-Sued Country Under Free Trade Tribunals, (Jan. 14, 2015), http://www.huffingtonpost.ca/2015/01/14/canada-sued-investor-state-dispute-ccpa_n_6471460.html

[7] Id.

[8] Id.

[9] Public Citizen, NAFTA’S THREAT TO SOVEREIGNTY AND DEMOCRACY, (Feb. 2005) http://www.citizen.org/documents/Chapter-11-Report-Final.pdf at 48.

[10] Id.

[11] Id.

[12] Id.

[13] Id.

[14] Id.

[15] Id. at 68.

[16] Id.

[17] Id.

[18] Id. at 69.

[19] Id. at 69-70.

[20] Id. at 70.

[21] Central America-Dominican Republic Free Trade Agreement (CAFTA-DR), (last accessed Jan. 22, 2016), http://www.cbp.gov/trade/free-trade-agreements/cafta-dr

[22] Central America Free Trade Agreement (CAFTA), (last accessed Jan. 22, 2016), http://www.citizen.org/Page.aspx?pid=1046

[23] Manuel Perez-Rocha and Julia Paley, What “Free Trade” Has Done to Central America, (Nov. 21, 2014), http://fpif.org/free-trade-done-central-america/

[24] Id.

[25] Id.

[26] Id.

[27] Id.

[28] Id.

[29] David Sirota and Andrew Perez, Top U.S. Trade Official Defends Exclusion Of Climate Change From Trans-Pacific Partnership, (Jan. 22, 2016), http://www.ibtimes.com/top-us-trade-official-defends-exclusion-climate-change-trans-pacific-partnership-2276835

[30] Id.

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