US Free Trade Agreements Are Bad Not Just For The Economy, But For The Environment, Too

from the what-was-the-benefit-again? dept

A couple of months ago, we reported on some interesting research into the reality of US trade agreements, in contrast to the rosy pictures always painted when they are being sold to the public by politicians. In particular, it turned out that far from boosting US exports and creating more jobs, both the North American Free Trade Agreement (NAFTA) and KORUS, the free trade agreement with South Korea, actually did the opposite — increasing the US trade deficit with those countries, and destroying hundreds of thousands of American jobs.

But of course bare economic statistics don’t capture the full effect of free trade agreements. For example, there is also the environmental impact to consider. An interesting press release from the Sierra Club reports on a meeting held to consider that aspect. It turns out that things look as bad there as they do on the economic front:

“Nearly 20 years into NAFTA and the evidence is in,” said Ilana Solomon, director of the Sierra Club’s Responsible Trade Program. “NAFTA led to an expansion of deforestation and unsustainable water use in order to support export-oriented agriculture. It gave massive rights to corporations to challenge environmental and climate safeguards in private trade tribunals. It expanded exports in dirty fossil fuels in a time when we should be moving beyond these outdated fuels and investing in clean energy. Governments must take a page out of the history books and stop negotiating trade pacts that gut protections for our air, water, land, workers, and communities.”

That last comment is a clear reference to TPP, but applies equally to TAFTA/TTIP. Both of these are likely to include investor-state dispute settlement (ISDS) measures that allow companies to sue entire nations for alleged “expropriation” of future profits in the “private tribunals” referred to above. One of the ways that governments can be accused of doing that is by strengthening safeguards for the environment, since that often has the knock-on effect of increasing costs for businesses, and thus reducing their future profits. Companies then try to claim ISDS provisions in trade agreements give them the “right” to sue for compensation — Techdirt recently wrote about a case involving the Canadian province of Quebec.

The problem with ISDS is not just the literally limitless awards that can be made against governments, which have to be paid out of public funds. The mere threat of such actions can have a chilling effect on the formulation of national policy. It’s been happening in Canada for over a decade, thanks to the ISDS chapter in NAFTA, as a former government official in Ottawa explained:

“I’ve seen the letters from the New York and DC law firms coming up to the Canadian government on virtually every new environmental regulation and proposition in the last five years. They involved dry-cleaning chemicals, pharmaceuticals, pesticides, patent law. Virtually all of the new initiatives were targeted and most of them never saw the light of day.”

What this means in practice is that ISDS clauses in major US trade agreements currently being negotiated are likely to have the same negative effects on the environment as NAFTA, but on a much greater scale. That’s because they involve far larger trade blocs, and recourse to ISDS tribunals has increased greatly in recent years, adding to the credibility of threats to use them unless plans for more stringent environmental policies are dumped. So alongside the dubious economic claims being made for them, which are undermined by the failure of both NAFTA and KORUS to produce the predicted exports or jobs, we can now add the hidden environmental damage as yet another reason to call into question the alleged benefits of both TPP and TAFTA/TTIP.

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Comments on “US Free Trade Agreements Are Bad Not Just For The Economy, But For The Environment, Too”

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Anonymous Coward says:

One word: PROFIT. Anything that interferes with a corporation’s profit is to be eliminated, be it people, other companies, the environment, or governments. Corporations are soulless blind money generators. Voting stockholders guarantee that. If left up to corporations, this planet will be stripped to the point of not being able to sustain human life in a short period, less than 200 years. Programs like NAFTA, and TPP only make it easier for them. I pity our great-grandchildren. They will have nothing left.

Anonymous Coward says:

Re: Re: Re:

Additional case in point: the ISDS the article above speaks about. They can be good for freeing trade but all to often they allow foreign investors to sue a government even when a law doesn’t discriminate against them. Effectively it’s protectionism in that case since it protects foreign investors from felling the full force of a law the same way a domestic firm does. Basically it’s protectionism for whichever country has the richer corporations when the agreement is signed.

Pragmatic says:

Re: Re:

Artificially reducing competition is EXACTLY what capitalism IS. Are you having a unicorns and rainbows moment? Capitalism is about the economy, stupid. Our economy is their playground and they will add and subtract according to their bottom line. And they will leave, like migratory beasts, for fresh pastures, when these ones dry up.

That’s why the jobs got outsourced to India. When the Indian workers demanded higher pay, the jobs began to trickle back here. That’s why China is falling out of favor and Vietnam is becoming the Next Big Thing.

Pay attention, you might learn something, starting with “Capitalism is not intrinsically good, it’s all about the bottom line.”

Pragmatic says:

Re: Re: Re: Re:

Fair enough, AC, but that has always happened, since Captitalism was first conceived. The Opium Wars were a result of the UK govt. messing with China to fix the trade deficit; basically, China wanted nothing they had so the East India Company got the people hooked on dope, then the UK govt. waded in to help when the Chinese started trying to stop it.

Since corporations are a creature of govt., which OFTEN intervenes to protect their bottom line (how many examples do you need?) how do you separate the two?

Ninja (profile) says:

Truth be said, if companies could do away by throwing untreated effluents they would. They already do despite environmental laws forbidding them since the governmental agencies in charge do not have the resources to catch everything and are often tied by bad laws (and seemingly treaties). Corporate America only cares about the environment in front of their customers. Actually, any corporation anywhere.

Anonymous Coward says:

Couple abject misconceptions from the article:

Free trade isn’t about boosting US exports. It’s about increasing trade in general, which always makes everyone better off, and NAFTA has for sure done that.

There were no ‘jobs lost’ to NAFTA or likely any other free trade agreement. That’s just made-up numbers based on examining tiny sections of the economy when the full picture is the economy as a whole. It ignores what free trade is actually for: shifting production away from things our economy doesn’t do well and toward things it does do well. Comparative advantage, look it up.

The US centrism is pretty disgusting. NAFTA is directly responsible for a dramatic upswing in the quality of life in Mexico, as an example. A stable democracy south of the borders, modernizing itself rapidly is not only decidedly in the US interest but a good thing in general.

The fact of the matter is that when manufacturing spreads individual pieces of the process to wherever it makes the most sense to use them within the free trade area everyone in the free trade area is better off. In NAFTA’s first five years the US added half a million manufacturing jobs on net. Where’s the ‘hundreds of thousands’ of losses? Imagined. Made up. It’s only there if you blind yourself to where jobs were added and completely ignore the way a free trade agreement is supposed to work.

Kevin says:

Re: Response to: Anonymous Coward on Oct 23rd, 2013 @ 5:40am

If no “net” jobs were lost as you claim to NAFTA in the US why does the Magority of Americans oppose free trade deals? No! A prosperous Mexico does nothing to expand US prosperity. Things the US does not do well are simply sent to free trade nations that do that portion of production better. Incorrect,we were producing those things very well for decades prior to “free trade”. Production is sent to nations who have lower labor cost not because they produce better. Free trade is designed by big corporations for big corporations. Hence a Wal mart in every town that once stood a family run and owned business. If free trade is so great ask any American over the age of fifty if they would rather have the economy we had prior to free trade. My answer would be an overwhelming yes.

Anonymous Coward says:

Fracking for oil and natural gas is a bad idea. All those chemicals that are mixed with the water and pumped down a hole at high pressure.

Then all those chemicals contaminate the ground water. Which is our drinking water!

Nothing like poisoning the local populous’ drinking water for hundreds of years just so a company can frack an area for 10 years.

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