How Trade Agreements Stand in the Way of an International Green New Deal

To reduce emissions abroad, the U.S. must renegotiate its trade agreements.

How Trade Agreements Stand in the Way of an International Green New Deal

To reduce emissions abroad, the U.S. must renegotiate its trade agreements.

April 22 | May 2019 Issue

The United States is the only country withdrawing from the worldwide Paris climate agreement. U.S. liberals typically argue that we must rejoin, and I have no dispute with this. But liberal rhetoric often leaves the false impression that the Paris agreement represents a gold standard, attributable to U.S. “leadership” under President Barack Obama. Actually, the agreement is just one small step—and its weaknesses are substantively attributable to the negotiating position of the United States.

Scientific modeling shows the emissions reductions pledged in the agreement would result in a global temperature rise of 3 degrees Celsius above pre-industrial levels, well beyond the 1.5 degree increase that the Intergovernmental Panel on Climate Change estimates as the ceiling to avert some of the worst effects.

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Worse, pledges under the Paris agreement are wholly voluntary—in large part due to U.S. pressure. The charitable mainstream media interpretation is that this maneuver enabled the Obama administration to join the agreement without ratification by the Republican-held Senate, as binding treaties require Senate approval. But it is also likely the Obama administration was seeking to maintain the United States’ position as the world’s largest producer of oil and natural gas, a position in direct conflict with any ambitious climate commitment. U.S. crude oil exports increased more than 2,600 percent between 2010 and 2017, and we’re now a net exporter of natural gas. The Obama administration’s National Security Strategy document treated these exports as a national security imperative, needed to ensure the energy security of allies and “help build new markets for U.S. technology and investment.”

We must now chart an entirely new path on international climate policy, which starts with recognizing the outsize role of the United States in the crisis. Our country’s disproportionate wealth is related to our long history of industrialization and high energy consumption, often at the expense of the rest of the world. The United States is responsible for 25 percent of global cumulative emissions from 1870 to 2007, more than the 28 countries of the European Union combined. On a per capita basis, our current emissions rank near the top (behind a handful of small, fossil fuel-rich countries such as Bahrain and Qatar), more than twice those of China and 50 times those of Gambia.

By another metric, things are even worse. Most methods of tracking emissions are based on where goods are produced, even if they are produced for export. But there’s an argument that the responsibility for production emissions lies with the consumers of those goods, who drive the demand. The United States is the world’s third-largest importer of consumer goods, effectively outsourcing our emissions to poorer countries.

Our current commitment to climate action does not reflect this outsize responsibility. Climate Action Tracker, which calculates what a fair contribution toward meeting the Paris goals would be for each country (based on historic responsibility and present economic resilience), rated the U.S. emissions reduction pledge under Obama as “insufficient.” Under President Donald Trump, U.S. climate policy is rated “critically insufficient,” consistent with a disastrous warming of 4 degrees Celsius or more.

As a country that’s done a disproportionate share of the damage, we must take a disproportionate share of responsibility to set things right. We must rapidly eliminate our own emissions and put an end to the extraction of fossil fuels for export, but this isn’t enough. Because 85 percent of global emissions now come from outside the United States, the United States must play a major role in helping other countries through aid, technology sharing and trade reform.

Estimates of how much the world needs to spend annually to mitigate climate change range as high as $2.4 trillion. The United States, responsible for a quarter of both historical emissions and present global GDP, should arguably cover hundreds of billions of this cost. Yet the U.S. government spent only $13.2 billion in climate change funding in 2017, combining domestic spending and foreign aid. The pledged U.S. contribution to the Green Climate Fund, a multilateral financing mechanism for climate mitigation and adaptation in the Global South, is only $3 billion (and only a third has been delivered, the remainder suspended by the Trump administration).

To create a powerful political narrative in support of fair U.S. contributions, it’s critical to frame them as compensation, not charity—in effect, a form of reparations. Some of this compensation must also take the form of technology. Much of renewable energy tech, however, is patented by private companies—from Tesla to IBM—protected under intellectual property provisions in free trade agreements that allow them to charge higher prices and licensing fees.

But private intellectual property claims ultimately rely on publicly produced knowledge, and there is no justification for letting them get in the way of climate action abroad. For example, research funded through government programs, such as the Advanced Research Projects Agency-Energy (ARPA-E), has been a major driver of the falling costs of renewables, because open-ended, early-stage research is often not profitable enough to attract private sector funding.

Another obstacle posed by neoliberal free trade and investment agreements is investor-state dispute settlement (ISDS) provisions, which subject a country’s domestic regulations (including environmental protections) to legal challenges by corporations. Disputes are heard by unelected panels of trade “experts” whose decisions are final. In effect, corporations can block governmental climate action that interferes with trade. After Canada issued a moratorium on fracking in the St. Lawrence basin, for example, U.S. oil and gas company Lone Pine Resources sued Canada under NAFTA; the case is ongoing. The United Nations ISDS case database shows that 74 of 972 ISDS cases have been filed by fossil fuel extraction companies (about 7.6 percent), and another 173 by utilities, which include fossil fuel power and distribution companies (though also many renewable energy companies).

Agribusiness, timber, metals mining and other industries also use ISDS to block regulation, and are rapidly encroaching on the world’s forests—crucial carbon sinks. After the Tanzanian government canceled Swedish Agro EcoEnergy’s ethanol project in 2016 out of concern for forest wildlife, for example, the company sued Tanzania.

The impact of ISDS goes beyond individual cases to a chilling effect on any new regulation. Chevron acknowledged in meetings with EU officials that it lobbied for ISDS provisions as a “deterrent” on environmental regulation. In 2010, for instance, the Guatemalan government reversed a decision to close an environmentally destructive gold mine, fearing an ISDS lawsuit. The U.S. government should take action to reopen negotiations on these treaties, putting an end to ISDS.

As a country that’s done a disproportionate share of the damage, we must take a disproportionate share of responsibility.

In short, it is time for a complete reset in U.S. global climate policy. Instead of seeking “leadership” in climate negotiations, we should take responsibility for the historic harm we have inflicted and commit to our fair share—a disproportionately large share—of climate mitigation at home and financial assistance for the Global South. Simultaneously, we must abandon harmful national security and free-trade dogmas that detract from climate action by elevating corporate profit over people and planet.

That’s nothing short of a 180-degree turn from the ideology of American exceptionalism.

Basav Sen is the climate justice project director at the Institute for Policy Studies (IPS) and writes on the intersections of climate change and social and economic justice. Prior to joining IPS, Basav worked for 11 years as a campaign researcher for the United Food and Commercial Workers.