Trans-Pacific Partnership: Leading the Way to an Environmentally Sustainable Global Economy - Global Trade Magazine
  March 24th, 2016 | Written by

Trans-Pacific Partnership: Leading the Way to an Environmentally Sustainable Global Economy

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  • The U.S. is one of the world’s largest producers of green goods and the TPP will lower barriers on their trade.
  • TPP allows countries on both ends of an investment to demand more from investors for the betterment of the environment.
  • Countries can implement sustainability requirements on investors without fear of triggering a dispute.
  • Those who fear that free trade is a race to the lowest common denominator might reconsider if they read TPP carefully.

As one of the largest, most comprehensive trade deals in history, it is no surprise that the Trans-Pacific Partnership (TPP) has elicited much discussion. But despite all of the debate, one thing is clear: the TPP is a huge step forward for the environment because it promotes trade in green goods, protects sovereign rights to legislate for environmental protection, and identifies environmental protection as a priority for trade.

Promoting trade in green goods

The TPP offers measurable progress in protecting the environment by encouraging trade in green goods such as renewable energy products. The U.S. is one of the world’s largest producers of green goods and the TPP will lower longstanding trade barriers on their trade. Once the treaty goes into force, fledgling businesses in green goods and services will be able to compete in a broader market to bring renewable technologies at cheaper rates to new business and residential consumers. This means that American-made wind turbines that face tariffs of up to five percent in TPP countries will enter duty-free into quickly growing TPP markets.

The TPP reflects an innovative international governance framework to replace the increasingly anachronistic World Trade Organization (WTO). Parties to the WTO have been dragging their feet since 2001 on lowering barriers to trade in green goods and services.  At a recent WTO meeting on this topic, the parties still failed to agree to lower tariffs on clean energy products. What this means is that parties outside of the TPP who have made commitments in Paris at the United Nations Framework Convention on Climate to limit global warming to below 2°C will have to invest more to achieve national targets unless they already have the national capacity to produce clean energy goods. In the long run, this may mean more money being spent by many nations to achieve less ambitious emission reductions.

Securing Sovereign Rights to Protect Environmental Regulations

The TPP also confirms the sovereign rights of each member state to legislate on matters of public interest including environmental protection without being threatened by an investor-state dispute claiming a regulatory expropriation. In earlier investment treaty disputes, states faced arbitral decisions that challenged their ability to adopt and enforce environmental regulations because of the chilling effect of investment expropriation claims. The TPP is clear that every party to the partnership has the authority to adopt, maintain, and enforce law “that it considers appropriate to ensure that investment activity in its territory is undertaken in a manner sensitive to environmental, health or other regulatory objectives.” This language not only empowers countries where the investment is being made, but also the countries where the investment originates. Therefore, the TPP allows countries on both ends of the investment to demand more from their investors for the betterment of the environment.

The TPP also enables countries to control company-sourcing practices for the purpose of environmental sustainability. The TPP is clear that countries can place requirements on the purchase or use of goods within its territory that justifiably protect “human, animal or plant life or health” or conserve “living or non-living exhaustible natural resources.”

From a supply chain perspective, this is important because this signals support of a race to the top for states that are serious about sustainability. Countries can now implement sustainability requirements on domestic and foreign investors without fear of triggering an investor state dispute.

Sets Framework For Trade To Support The Environmental Protection

The TPP is many steps ahead of other trade treaties in taking environmental matters seriously by introducing a dedicated chapter on the environment and identifying specific environmental issues as trade priorities. While the U.S. has negotiated free trade agreements with environmental chapters among other trade partners, the TPP contains the most comprehensive environmental provisions of any prior agreement. Where the WTO has done little to ensure that trade supports environmental objectives, the TPP explicitly states that its intent is “to promote high levels of environmental protection and effective enforcement of environmental law.” Moreover, the environmental commitments in the treaty are enforceable through the treaty’s dispute settlement process. This means that individual countries retain the right to make and monitor their own laws, but all signatories must also ensure that efforts are environmentally sound in the areas of trade and investment. Countries in the partnership can no longer turn a blind eye on polluting industries within their borders simply because they fuel a robust export business.

The TPP is perhaps most pioneering as a trade treaty in its treatment of issues that have been largely regarded as environmental issues but not as trade priorities, such as sustainable fisheries management. The TPP demands that states address the sustainability of marine capture fisheries with the expectation that TPP partners eliminate overcapacity of fishing vessels and deter illegal, unreported, and unregulated fishing. In a move that fishery managers have been waiting decades for, the TPP requires countries to remove subsidies given to the fishing industry that negatively impact global fish stocks. This can have real implications for threatened species with Japan as a signatory of the TPP, which has historically assigned sizable subsidies to its distant water tuna fleets.

Those who fear that free trade is a race to some lowest common denominator might reconsider their views if they read the TPP carefully.  The TPP breaks from past trade deals by specifically addressing the environmental concerns of our day and crafts a trade system that protects those interests for the future. This deal offers a rare opportunity for the 12 partners to demonstrate to the rest of the world that trade and environmental protection are not mutually exclusive.

Anastasia Telesetsky is a professor at the University of Idaho College of Law. Prior to that, she practiced as an attorney focusing on environmental and public international law.