Trade agreements

Ilana Solomon: "In terms of climate and energy policy, TTIP takes us exactly in the wrong direction"

There’s been a lot of talk recently about the risks of the transatlantic trade and investment partnership (TTIP) project for Europe and its regulations. But the consequences on the other side of the Atlantic could be just as dramatic, particularly in the boost it could give to further large-scale shale oil and gas developments. Interview with Ilana Solomon, director of the Sierra Club’s "responsible trade" programme.

How did the Sierra Club, one of the most long-standing environmental organisation in the US, get involved in international trade issues ?

The Sierra Club is the oldest and largest grassroots environmental organisation in the United States. It was founded in 1892 by the conservationist John Muir. We now have 2.4 million members and supporters across the United States. Our power lies in our ability to mobilize our grassroots. We do a combination of research and advocacy to amplify our work with our grassroots. One of our major campaigns at the moment is on climate change. It’s about moving the US beyond coal, beyond oil and beyond gas, towards a renewable energy economy.

We have had a trade program for about 20 years. At the time of NAFTA (North American Free Trade Agreement), we were looking at how our current model of trade hinders the ability of the United States to tackle climate change and other progressive social and environmental issues. We opposed NAFTA and opposed every NAFTA-like agreement since then. This takes us today to the Transatlantic Trade and Investment Partnership (TTIP) with the European Union. It is an agreement that in theory we would love to be able to support, if the US and the EU could agree on strong standards. We were not against TTIP in the beginning, but after reading all the documents that are available to us on both the US and the EU side, it is very clear to us that this new agreement is shaping up to follow in the footsteps of NAFTA and other similar agreements. Transnational corporations which are advising US representatives are putting forward very concrete proposals on how this agreement could increase their profits at the expense of social and environmental values.

Why do you think trade agreements such as NAFTA or TTIP are harmful to the environment, at a general level?

Trade agreements such as NAFTA or TTIP usually include a chapter on ‘environment and sustainable development’, which deals with issues such as fishery, game, conservation, etc. These chapters are indeed important, but the biggest impacts to the environment lie outside of them, in energy trade, in investment rules, in agriculture, in rules around technical standards and labeling, and so on.

There are a couple of common themes with respect to how US trade agreements get developed. One is that they are developed under great secrecy. The public and civil society have basically no access to information. In contrast, large corporations such as Halliburton or Chevron are actively involved in the US trade advisory system. Our opposition stems in part from our opposition to investment rules that give new privileges and offer new rights to the very corporations who are advising our trade representatives. These rules allow corporations to challenge governments before private trade tribunals and ask compensation for any policy the corporation alleges reduces its profits. It is a symbolic issue of what’s wrong with our trade and investment system, but it is also more than a symbolic issue. We’ve seen corporations challenging energy or climate policies.

It intersects now with the fracking issue, to which I will come back. Recently, in September 2013, we’ve seen the first case directly challenging Canadian rules for fracking. A Canadian energy firm with a small subsidiary in the state of Delaware, in the United States, sued Canada for approximately 250 million dollars before a private trade tribunal simply because the province of Quebec had put in place a moratorium on fracking. All over the country, the Sierra Club chapters are calling for moratoriums or regulations on fracking. This is just an example showing how far investment rules have come. Any public interest policy could be subject to challenge. We’ve seen more than 550 cases against more than 95 governments, and increasingly they are being used to challenge public interest policies.

Can you give us concrete examples of how NAFTA has hindered environmental regulations in the US, Mexico or Canada?

It has happened in a number of ways. There was a significant proliferation of environmental cases, primarily against Canada and Mexico, under NAFTA. The United States has also been sued more than 15 times; we have never lost a case yet, but the two other countries continue to lose environmental cases, such as Canada trying to ban gasoline additives. In one specific case, Canada was trying to put a temporary ban on trade in toxic chemicals known as PCBs, actually following their obligations under an international environmental treaty. Still, a US company sued the government and Canada lost. There are numerous examples in Mexico, particularly in the mining sector. The government was trying to put obligations on corporations on toxic waste dumps, but Mexico had to pay million in dollars to corporations. Right now, there are about 12 billion dollars in claims to corporations under NAFTA alone. Corporations are quite interested in using that system.

Some other environmental impacts that we’ve been looking at is how NAFTA cemented a process already ongoing in Mexico – the liberalization of their agricultural sector while at the same time eliminating price supports for small farmers and increasing export-oriented agriculture. Mexico was very reliant on agriculture, and often subsistence agriculture. In order to prepare for NAFTA, the government had already started eliminating price supports for smallholders. After NAFTA, agribusiness expanded greatly and started exporting high-end fruit and vegetables to the US and Canada. Smallholder farmers couldn’t compete and started clearing their land to keep up. We’ve seen more deforestation, more depletion of water sources in already water-stressed areas of Mexico, and a tremendous influx of imports of pesticides and fertilizers that have an environmental impact in themselves.

There has been an alliance of sorts between unions and part of the environmental movement on trade issues since the fight against NAFTA, in the 1990s. Is it still true today, with the mobilization against TTIP?

In the US, particularly on trade issues, the union movement and the environmental movement have been quite aligned. When we fought the WTO expansion in Seattle in 1999, people talked of ‘teamsters and turtles’, the alliance between unionists and environmentalists. There is a long-standing history of joint work and solidarity in this area and it will continue to grow as we are fighting multiple massive trade agreements.

Today, in the United States, we are also fighting another large trade agreement, the Trans-Pacific Partnership (TPP). That has been going on for the last 4 years and has brought together trade unions, environmentalists, consumer rights organizations, food and farm organizations in the last several years. This is literally an expansion of NAFTA, as it includes all NAFTA countries in addition to nine other countries across the Pacific.

There is also growing concern among U.S. civil society about the impacts of TTIP. I think this is in part because a lot of the civil society groups see the European Union, for example in climate policy, as being far ahead of the United States in terms of ambition. Same with the chemicals policy: even if the REACH program in the EU is not perfect, it is better than its US equivalent, TSCA, which is completely outdated. Same for food safety: EU policies – whether relating to GMO labeling or bans, or restrictions on chlorinated poultry, etc. – are far ahead. The civil society sees TTIP as a threat of rolling back these progressive policies in the EU and thus capping the ability of the US to develop its own progressive policies in the EU’s footsteps.

There also seems to be a de facto alliance with the most conservative Republicans against these trade agreements. What are the actual chance of the federal administration succeeding in having these trade agreements approved in the Congress and the Senate?

It’s true that there is both bipartisan support and bipartisan opposition to these trade agreements. So it is an issue, unlike many in the US right now, which cuts across party lines. What’s interesting is that we have the most progressive part of Congress aligning with the most conservative, the tea party Republicans, that are deeply concerned about this agreement for different reasons. But there is a procedure called ‘fast-track’ which is aimed at facilitating the passage of trade agreements by removing the ability of Congress to substantively input on the agreement and ensure that it actually serves to protect the public and the environment. The Sierra Club and many of our allies strongly oppose fast-track.

In a recent article for Basta! [1], you emphasize that one of the likely impacts of TTIP will be to give a boost to the fracking industry in the US, by opening the EU market for natural gas exports. Can you elaborate?

We’ve seen a leaked draft version of the EU negotiation paper, which is a whole chapter on energy. It showed that the EU proposal would increase exports of fossil fuels, particularly natural gas but also crude oil, from the US to the European Union, while restricting the ability of governments to put in place energy policies that they deem necessary for their clean energy transition. It also aims to ban “buy local” clauses in their renewable energy programs. These are important tools that governments have to marry green jobs and renewable energy transition. We think this proposal is extremely dangerous. It could create a tremendous amount of pressure to frack for more oil and gas, by removing the ability of the US to even analyze if natural gas exports or crude oil exports are in the public interest. And I think it also undermines the EU and its clean energy transition, because of the amount of infrastructure necessary to receive, process and transport US gas and oil will require hundreds of millions of dollars of investments, which should be going towards clean energy.

There is a lot of debate about the economics of shale gas. European companies, such as GDF Suez, have invested in LNG infrastructure in the US to export its natural gas to Europe or elsewhere. But at the moment, it’s not economic to export natural gas to Europe; it is much more profitable to export it to Asia. Is this part of what’s at stake behind TTIP – making shale gas exports to the EU economic?

Without being an economist, the general picture is that in the US natural gas is increasingly cheap right now, because of all the supply we’ve had from shale gas fracking – 3 dollars per BTU. In the EU, it’s about 3 times that, and in Japan for example, it’s about 6 times that. Even if the European Union is interested in importing US gas, it will actually be the investors who will decide where the natural gas is going to go, and most will be primarily interested in selling to Asia. The other factor at play is that once the US industry starts exporting natural gas – which they haven’t done yet – the price of gas will also go up domestically. Estimates show that with a high export scenario, the domestic price could actually triple. Some people think that more expensive will mean more renewable energy, but actually the models show it will mean more coal.

One has the impression here in Europe that shale gas developments in the US are reaching their limit, because of the resistance of communities and increased regulation of their environmental impact. Could there really be a further development of shale gas and oil in the US?

It’s true that there is increasing resistance throughout the United States, and successful resistance in some cases – either through zoning restrictions, or moratoria, or regulations that make it essentially uneconomical. For the natural gas industry, exports have become its lifeline, because gas is so cheap in the US that is has become unprofitable. TTIP and the TTP (which includes Japan, the world’s biggest natural gas importer) would facilitate and expedite natural gas exports to all the major potentiel clients in the world. This would create an enormous amount of pressure from the natural gas industry to expand fracking. Right now, the natural gas industry is essentially exempt from the Clean Air Act and the Clean Water Act. So, even if resistance is increasing, the political pressure from the natural gas industry is getting stronger as well.

In Europe, TTIP is just starting to become a media topic because of the recent European elections. Is the case in the US at all?

The issue has remained under the radar for a long time, but it’s changing, particularly with the TPP, which is further along the negotiating process. We’ve done some polling recently, and interestingly the majority of the public believes that NAFTA has been bad for the US, because of the lost jobs (there’s evidence of 700 000 jobs leaving the US because of NAFTA). The polling on the TPP and large trade agreements in general is also very negative. The administration recognizes this and knows there is little support for these agreements. This is precisely why they conduct these negotiations in secrecy. There’s very little information going out to the public and the media. We are trying to do our part in bringing out information to our membership, but it is still and issue that does not get the attention it deserves. As soon as you explain to people what’s going on, they are very concerned about the risks.

What’s interesting though about the US is that Congressmen and Senators are much more accountable for their actual votes than here in France. You can actually target each representative individually based on their votes, and asking them not to vote for TTIP. In France, votes are more along party lines. Isn’t this why some of your previous fights against trade agreements where successful?

That’s right. This is about holding members of Congress accountable for their decisions, which is one of the reasons why we did this recent polling – to be able to show them how unpopular these trade agreements are among their constituents.

You were saying the US environmental movement looks up to the EU as having stronger environmental regulations. But now the Obama administration is issuing new regulations for greenhouse gas emissions, coal plants pollution, etc. It could seem that this sort of regulation, if effectively implemented, would actually be much more effective in trackling climate change than the European Union’s current energy-policy model, with its flawed carbon markets.

The US environmental community has been pushing the president to regulate and essentially phase out coal-fired power plants, existing ones and including the newer ones. The commitment to address pollution from coal fired power plants has been the pinnacle of Obama’s climate strategy. We were extremely pleased to finally see some rules announced formally. We do think that it will happen. It will force states to document how they will comply in reducing emissions by 30% compared to 2005 level.

I agree that the European ETS mechanism is not functioning, but with other things, such as the aviation emissions directive, it felt that the ambition in the EU has been stronger in terms of emissions reduction.

Could TTIP threaten these new efforts in the US?

Yes. The rule leaves a lot of flexibility to the states in how to reach their target. There are common sense policies in some states that might not want to address pollution from coal fired plants directly: they might want to develop a renewable energy portfolio standard that might have a ‘buy local’ component, or political support for a program that would require states to buy certain amounts of electricity from producers that source products locally. That would be banned in TTIP. So TTIP could reduce the ability of states to innovate in how they would want to meet this target. And the increased pressure to frack for oil and gas if TPP and TTIP are adopted would also undermine these targets significantly.

According to IPCC, two thirds of existing fossil fuels reserves should stay in the ground. What’s to be done? And what do you think of the fossil fuel divestment movement?

We agree that fossil fuels should stay in the ground and that we should utilize clean and renewable energy. That’s exactly why TTIP takes us in the wrong direction, by creating economic incentives to extract more oil and gas. We need to have every tool available to come up with a clean energy policy, and TTIP would reduce our toolkit dramatically. The more you export gas, the more incentive to frack you create; once it will start, it will be hard to stop the process. TTIP just creates new markets for the oil and gas industry, to increase their profits. These are just the opposite incentives for keeping fossil fuels in the ground.

Interview by Sophie Chapelle and Olivier Petitjean.