Neoliberal Trade Deals Will Kill the Planet

The proposed UK-Australia trade deal could enshrine the right of corporations to sue our government – which would spell disaster for our public services, for our food standards, and for the environment.

Boris Johnson’s commitment to protect food standards and farming in any trade deals he signs has been shown to be just so much hot air. British farmers are rightly concerned that the UK-Australia trade deal will throw them open to competition with Australia’s industrial farming sector, where lower food standards, including on hormone-treated beef, are routinely employed.

While the impact of an Australian deal would be less dramatic than a US deal, owing to the smaller size of the Australian economy and its distance from us, the direction of travel is clear; this government will use trade deals to force down standards here and around the world. And while that’s bad news for our food standards, it’s a disaster for the climate.

Promoting industrial agriculture and long-distance food exports runs completely counter to the government’s claim to be a world leader on climate change. Last week, trade minister Gregg Hands gave another blow to our environmental protections when he told Parliament that there was a good chance the Australia deal would include a mechanism to protect investors with secretive ‘corporate courts‘.

The corporate court system can be written into trade rules. It allows multinational corporations from a trade partner country—in this case Australia—to sue the British government for any law, decision, or regulation they regard as unfair.

The cases usually take place behind closed doors, in a secret tribunal, with corporate lawyers presiding in place of judges.

Governments get no right of appeal, and these tribunals are not bound to balance the investor’s claims against the public interest, human rights, or the climate imperative. They only have to look at the effect on the investor, and do not have to pay attention to the reasons for the measure being disputed. Unsurprisingly, what such tribunals regard as ‘unfair’ is pretty much any government action that threatens corporate profits.

While these ‘courts’ have been used repeatedly to challenge public interest regulations—from putting cigarettes in plain packaging to banning toxic additives in petrol—it’s environmental regulation which has been a particular target. Right now, the Dutch government faces being sued by two energy multinationals over its decision to phase out coal power.

Previous cases have seen governments sued for placing a moratorium on fracking and for forcing a power station to improve its environmental standards. One tribunal even ruled the Canadian government violated an investor’s rights simply by carrying out an environmental impact assessment, a judgement which even one of the arbitrators dissented from, saying the ruling ‘will be seen as a remarkable step backwards in environmental protection.’

If Johnson’s government gets away with inserting a corporate court into the Australia deal, the rest of us could pay a very heavy price in the years to come.

In Cumbria, the county council has authorised a new coal mine. After many months of campaigning, the mine will now be subject to a full inquiry, which could see the proposal overturned. But the mine’s parent company is an Australian multinational. If we had a corporate court system with Australia, that corporation could sue Britain, in secret, for a fortune for backing away from the mine.

It’s no wonder that countries from Ecuador to Indonesia, and South Africa to Pakistan, are ripping up treaties containing these blatantly anti-democratic courts. The EU is trying to reform them, albeit with a proposal that would leave important elements of the toxic system in place, while even Donald Trump partially removed the system when renegotiating the North American Free Trade Agreement (NAFTA).

Britain stands pretty much alone in its desire to put the full-blooded system into as many trade deals as it can, allowing massive corporations and super-rich investors to challenge and discipline future British governments in perpetuity.

For Johnson, this was always the plan – to use Brexit as a way to deregulate and hand ever more portions of British society over to the market, regardless of the environmental consequences.

Trade deals are a perfect vehicle to do this because our modern trade system is based on clearing away any obstacles to the free movement of goods, services, and money around the world. Those ‘obstacles’ are often our most cherished food standards, protections for public services, and our right to regulate corporations.

Elsewhere in the world, there are signs that these lessons are just starting to be heeded. Biden has explicitly said he’s not interested in more trade deals, preferring instead to build resilience and jobs in the US economy. The EU is struggling to get any trade deals agreed, with the proposed deal with the Latin American Mercosur bloc looking increasingly unlikely to be ratified over controversy around to its environmental implications.

But here in the UK, Brexit has created a sort of panic—among remainers as well as leavers—that we simply need as many trade deals as quickly as possible: if we can’t sign one with Australia, the logic goes, who can we sign one with?

In reality, the issue at stake is not how we feel about Australia, Canada, or any other country. Nor is it about trade per se. After all, we already have historically low tariffs, at least with most Western countries, and as the Australia deal shows, it simply isn’t true that new trade deals add thousands of jobs to our economy. Any claims of boosting growth are of a fraction of a percent over fifteen years – basically a rounding error and completely unnoticeable compared to the effects of the pandemic.

At the end of the day, the problem is with the type of trade deals we’re signing. The endless drive towards more globalisation, more liberalisation, and more power to big business has failed to make the world a more equal or fair place. And it’s played a significant role in wrecking our environment.

It isn’t simply a case of needing to produce more of what we need locally, rather than flying it around the world. International rules which constrain government action are anathema to the sort of green new deals which are now widely accepted as necessary to deal with the climate crisis.

The choice for the British government in this trade deal is clear. We can have a habitable planet with a sustainable domestic agriculture industry, or we can have a system of trade that puts governments in tow to big polluters, helpless to take action on the climate. Our government’s obsession with deregulatory trade deals isn’t just a threat to the UK. It could endanger the whole world.