A look into the TPPA: Environmental risks abound

The Trans-Pacific Partnership Agreement (TPPA) is a free trade agreement in the process of negotiation by 12 countries including Malaysia, the United States, Australia, Brunei, Canada, Chile, Mexico, New Zealand, Peru, Singapore, Vietnam, and Japan. It contains 29 chapters covering trade and other aspects, and is controversial for its opacity, as the content of the agreement is kept secret before signing.

Over the weekend, the Bar Council’s Environment and Climate Change Committee organised a forum on the TPPA, which shed light on why the TPPA is so potentially dangerous to the environment in Malaysia and beyond. For the benefit of those who couldn’t make it, I thought that I would write down some of the things that I learnt from the forum, with its splendid line up of panel members who had done in-depth analysis into the matter, and were able to explain clearly and concisely why the TPPA is such a “monster in the making”. The quick and dirty list of why TPPA is a problem:

1. The Environmental Chapter of the TPPA is weak and vague

The good news is, there is a chapter on the environment in the TPPA. The bad news is, the chapter is virtually useless given that the writing is weak and vague, and other parts of the agreement overrides it (see points below). The TPPA’s definition of environmental laws is very narrow and does not touch on wider laws such as resource management laws. It also focuses on central/federal laws, not sub-federal environmental regulations and decisions. The text does not include enforcement mechanisms. What I found particularly interesting is the following slide, on how feeble the whole chapter seems to look, based on the choice of words.

Chapter on the environment is vague and weak

Chapter on the environment is vague and weak (Source)

 

2. The Investment Chapter of the TPPA overrides the Environment Chapter anyway

The chapter on investment is the biggest threat on the environment for several reasons which can be further explored in the comprehensive presentation slide by Fauwaz Abdul Aziz from Majlis Tindakan Ekonomi Melayu (previously from Third World Network). As he explained in the forum, signatory governments can do anything for environmental protection, except when it runs against the content within the investment chapter. The language is quite convoluted, as follows:

Excerpted from the Investment Chapter

Excerpted from the Investment Chapter (Source)

The investment chapter paves the way for corporations to sue governments through the investor-state dispute settlement (ISDS). Upon signing the TPPA, governments agree that investors can take them to court if the investors think that government regulations may affect their profits (or expected profits). Corporations can therefore challenge governmental ruling on things like bans on fracking and nuclear energy, higher environmental standards and tighter resource management, among many other things. (Point 4 below gives some examples.)

3. The other chapters also impact upon the environment, favouring commercial interests rather than public interest

I didn’t know that, for instance, GMO labelling can be construed as “technical barriers to trade”, because the labels may discourage people from buying the products. Consumers’ right to information is therefore trampled upon. Another example is that governments will not be able to ban products that are suspected to be hazardous to the environment or public health (e.g. certain pesticides), unless it is “scientifically justifiable”. This is particularly problematic for products that might have harmful effects in the long term, because the “precautionary principle” (just in case it’s harmful, let’s not use it) cannot be applied in this case. In some cases, the scientific community may not even agree on whether some elements are toxic or not.

4. Corporations have sued governments before, and they will do it again. With the help of lawyers and arbitrators that profit out of this process.

Some of the notes that I took include the following. Upon signing the TPPA,

  1. Governments can be taken straight to international court by foreign investors without seeking local legal remedies,
  2. Corporations can sue not only based on real, physical property loss, but also loss of expected profits.
  3. Only corporations can sue governments, and not vice versa. In most cases, the arbitration process and decisions are kept secret.

There have been multiple occasions where corporations have taken governments to court, burning taxpayers’ money, and creating a “regulatory chill” – meaning that governments will hesitate to regulate businesses because they are at risk of being sued. The following table provides some quick examples (covering not only the environment but also other issues of public interest):

Country Uruguay and Australia Germany South Africa
Corporation Philip Morris Vattenfall Piero Foresti and some other Italian corporations
Industry Tobacco Energy Mining
Public issue Public health Environmental protection Affirmative action
Basis Bilateral investment agreements Energy Charter Treaty Bilateral investment agreement
What happened Both countries were sued over their anti-smoking laws. The requirement to put large warning labels on the cigarette packages was argued to have obstructed the display of PM’s trademarks, hence causing it to lose market share. Germany was sued twice by Vattenfall. In 2009 Vattenfall sued Germany (for 1.4bil euros) because of environmental restrictions on their coal power plant, causing Germany to water down their standards; in 2012 they sued again (for 3.7 bil euros) because Germany closed down their nuclear power plants after the Fukushima incident. The investors sued South Africa over their Black Economic Empowerment Act, which seeks to redress some of the injustices of the apartheid regime, by requiring mining companies to transfer a portion of their shares into the hands of black investors, for instance. The dispute was closed in 2010, with the foreign investors receiving new licenses with much lower divestment of the shares.

The above table is adapted from information within a very interesting publication “Profiting from injustice”, distributed during the forum, which explains how a small group of law firms, arbitrators and financiers are profiteering from free trade agreements such as the TPPA by encouraging corporations to sue governments, especially vulnerable ones, for taxpayers’ money.

Conclusion

From the above, it is apparent that signing the TPPA renders any country vulnerable against corporate interests. It is not only risky from an environmental standpoint, but also the loss of national sovereignty on dealing with issues of public interest in general.

The question that then arises is: Why are we signing it at all?

——

P/S:

Welcome to MESYM!
Connecting the green dots

MESYM.com is a crowd-sourced platform and a living database for environmental movements in Malaysia. There are many good actions being done out there. Our goal is to bring them together. We connect the green dots.