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 It expanded exports in dirty fossil fuels in a time when we should be moving beyond these outdated fuels and investing in clean energy.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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Filed Under: economics, economy, environment, korus, nafta, tafta, tpp, ttip
Reader Comments
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Laws are hammers, they nail everything and everyone indiscriminately, it is a poor solution for anything and still we need some, exactly to stop big players from eliminating the good ones for their own benefit while leaving the most harmful ones to small players in place.
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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."
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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?
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I'm guessing some industrial waste.
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How does that work - exactly.
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US Trade
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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.
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I really do not feel like addressing the points you raised, so I'll pretend to not understand - and then state the answer to the not understood issue is to continue the present horrible policies.
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Response to: Anonymous Coward on Oct 23rd, 2013 @ 5:40am
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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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