TPP environmental accord: can it change bad business practices?

As negotiators in Hawaii work arduously to hammer out the details of the Trans-Pacific Partnership, a controversial free-trade deal between the United States and eleven Pacific nations, an agreement on one crucial issue was reached Thursday night: the environment.

The TPP, which is set to be the largest trade agreement in history, representing around 792 million people and accounting for 40 percent of the global economy, has come under fire from environmental activists, labor representatives, and privacy advocates, who say that the deal will harm the environment, endanger US jobs, and impose restrictive intellectual property laws around the world. But the masterminds behind the deal, including US President Barack Obama, point to Thursday’s agreement as a step toward addressing this myriad of concerns.

The 12 countries “cover environmentally sensitive regions from tundra to island ecosystems, and from the world’s largest coral reefs to its largest rain forest,” reads a summary of the environment chapter obtained by The New York Times. The document claims to “addresses these challenges in detail.”

But another complaint lodged against the TPP is that the conditions of the partnership are too secretive, as only members of congress and staffers with security clearances have been granted access to the documents. Nevertheless, while the details of the environmental agreement have not been released in full, some of the information obtained by the Times provides an outline of the new regulations. If enforced, such rules have the potential to pressure businesses around the world to alter their operations, experts say.

“In most international trade agreements, and international agreements of any sort, enforcement is always an issue because no country wants a violation of their sovereignty. But trade sanctions as part of trade agreements have turned out to be pretty effective relative to anything else in enforcing international agreements,” says Jeffery Frankel, professor of capital formation and growth at the Harvard Kennedy School. “So if part of this is a ban on subsidies for activities that lead to overfishing, for example, that seems to me like great progress.”

Many of the countries included in the trade agreement are known for illegal fishing, logging, and wildlife trafficking, practices that proponents of the TPP say the trade agreement regulations could crack down on.

“Environmental protection is a core American value,” the government’s website reads. "Through the TPP, the United States is negotiating for robust environment standards and commitments from member countries, and addressing some of the region’s most pressing environmental challenges."

But the organization Wikileaks, which obtained an earlier version of the environmental agreement in January 2014, criticized the previous environmental chapter for its lack of enforcement mechanisms.

“When compared against other TPP chapters, the Environment Chapter is noteworthy for its absence of mandated clauses or meaningful enforcement measures. The dispute settlement mechanisms it creates are cooperative instead of binding; there are no required penalties and no proposed criminal sanctions,” the authors note. “With the exception of fisheries, trade in 'environmental' goods and the disputed inclusion of other multilateral agreements, the Chapter appears to function as a public relations exercise.”

Nevertheless, supporters say that the threat of trade sanctions should be enough to motivate countries to crack down on nefarious business practices.

“Failure to comply would subject the signing nations to the same government-to-government compliance procedures as any other issue covered by the trade agreement, potentially culminating in trade sanctions,” the Times reported. “United States negotiators hope that just the threat of economic sanctions would bolster relatively weak environmental ministries in countries like Peru, Malaysia and Vietnam.”

Under the latest version of the agreement, countries would be obliged to obey existing wildlife trafficking treaties and ban government subsidies that are harmful to the environment, such as those that support cheap fuel or vessels for illegal fishing in over fished waters. Port inspections and other supervisory measures will also be strengthened, according to parts of the agreement outlined by the Times on Friday. Additionally, signing countries would be obligated to act if they discover contraband within their jurisdiction that has been produced illegally.  

Moreover, the chapter also includes protections for at-risk species such as sea turtles and marine mammals.

Meanwhile, the countries involved in the treaty account for more than a quarter of the world’s seafood trade and a quarter of the global timber and pulp production. Consequently, the impact of the TPP environmental regulations, if properly enforced, could be extremely far reaching.

Still, many environmental organizations have expressed doubt that the agreement’s regulations will be enforced, and point to past instances, such as a free-trade deal between the United States and Peru, when violations of environmental regulations went unaddressed.

Nevertheless, Dr. Frankel says there are precedents, such as the Montreal Protocol on Substances that Deplete the Ozone, when an environmental agreement was successfully enforced by the threat of trade sanctions.

Summing up the environmental challenges and opportunities inherent in trade deals in a research paper on the TPP, Joshua Meltzer, a global economy and development fellow at the Brookings Institute, wrote:

“Additionally, a number of environmental harms, such as illegal logging and over fishing, can be magnified by international trade, which expands the market for these goods. Yet trade agreements can be used to reinforce existing rules prohibiting trade in these products, thereby strengthening conservation efforts.”  

To be sure, environmentalists will be anxiously awaiting the release of the chapter’s final version, and keeping a watchful eye on the long-term effects of the trade deal.

“There are times when trade can be bad for the environment, but there are times when trade can be good for the environment, too,” Frankel concludes.