The Ecologist | 2 April 2024
Trade and climate internationalism
by Cleodie Rickard
Trade deals are used to extract valuable resources from the Global South - but a recent victory shows we can make a difference.
An internationalist approach to the climate and ecological crises compels us to look at the current global systems which are structuring how we can respond.
One crucial aspect is the international trade system. What’s written into nations’ trade and investment agreements today encompasses far more than the exchange of goods between countries – it sets the rules of the global economy and defines the policy space countries have for tackling challenges like the climate crisis.
A flagrant if little known example is what’s called the ‘investor-state dispute settlement’ or ISDS: this describes provisions contained in trade deals enshrining the right of foreign investors to investment arbitration. This gives multinationals a right to sue countries in secretive tribunals outside national legal systems over any change in policy they allege harms their profits.
Breakdown
We recently had a big win against this profoundly anti-democratic regime in the UK, forcing our government to leave the Energy Charter Treaty. The treaty is a huge multilateral deal regulating energy sector investments that fossil fuel companies have been using to sue governments over their phase-out policies.
As the most litigated of all ISDS treaties, sinking the Energy Charter Treaty takes away a powerful secret weapon fossil fuel giants can draw from our global economic architecture to block the ‘green transition’.
Growing consensus around the need for such a transition to renewable energy is driving shifts in the legitimacy of the ISDS regime, insofar as it can deter or punish government intervention to drive it forward. The US, Australia and New Zealand have foresworn it in future deals.
This reflects wider shifts, namely the breakdown in the consensus around ‘free trade’ that has reigned throughout the globalisation era: there’s an acceptance even among some of its former stalwarts that endless trade liberalisation is not working to meet modern challenges.
Costs
The rhetoric is about the need for green transition. The drivers are more materially geopolitical. This includes national security concerns, such as those relating to China’s dominance over supply chains.
But the fact is that the US and the EU are diverting from the World Trade Organisation rulebook that they have long championed, in order to ‘onshore’ essential industries of the future and capture as large a share as possible of new ‘green’ value chains. This feeds into the Inflation Reduction Act and the EU Green Deal.
Whether these measures really constitute public stewardship of the energy transition, or hand-outs funnelling public money to corporations, is a pressing issue.
But more broadly, those of us concerned with a globally just transition perceive richer countries enjoying unilateral trade protectionism while still forcing poorer countries to comply with the old neoliberal system that has never worked for the latters’ sustainable economic development.
Countries like the UK are seeking more trade agreements to gain unfettered access to those parts of green technology supply chains they cannot onshore, such as critical minerals like lithium, cobalt and copper. This functions to externalise the severe human and ecological costs of critical mineral mining to those lands and communities already most impacted by the climate crisis.
Weaponising
These metals and minerals are a crux around which a new dual world turns: trade liberalisation imposed on the resource-rich poor, while major powers can exempt themselves from it. But a new status quo has not yet taken hold.
Some countries in the global south are taking a stand, deciding to control the terms of access to their mineral reserves: Indonesia banning raw material exports to grow local processing, Mexico nationalising its lithium sector, Panama shutting a copper mine that caused outrage over land grabs and ecological destruction.
In response, rich countries are weaponising trade rules to lock poorer, resource-rich countries into their role as raw material exporters, rather than coordinating just and equitable global governance over the resources we all need to face the global climate challenge.
To safeguard the latter, the very real mechanisms of a colonial, extractive logic and corporate capture of the ‘green transition’ need exposing in their trade deal cocoons.
We need to push back against the same old provisions that have historically decimated the infant industries of poorer countries – banning export restrictions, subsidies, local content requirements – being included in the new critical mineral agreements our governments are seeking, which bar use of the same policy tools they are using to home-grown green industries.
Dispossession
We need to force our governments to scrap ISDS in all agreements, that beyond blocking fossil phase-outs are now being used by mining giants to deter or punish countries seeking resource sovereignty and make corporations the sole profiteers from transition.
And we need to address intellectual property rules that mean countries having to pay a ransom to rich patent owners to access critical green technologies.
Disarming trade must go hand in hand with other major economic transformations, of tax, debt, finance. Simply better distributing the benefits of critical mineral mining will only go so far in addressing local elite capture, ecological harm and the dispossession of Indigenous peoples’ land.
But taking the teeth out of new agreements on the horizon will help level the global playing field and force imperative conversations about demand-side solutions in countries like the UK, such as a massive reduction in material use, energy efficiency, a mobility revolution and a circular economy.
There is real stuff to dismantle in the global economy, through its webs of trade rules, to make space for these radical ecological futures.
This Author
Cleodie Rickard is a policy and campaigns manager at Global Justice Now.
