There are worrying omissions in the new ‘trailblazing’ trade deals with Canada and Mexico

Posted on May 24, 2021
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There is little guidance on how the government’s new deals will translate into jobs and prosperity, let alone how they align with commitments on climate and the environment, writes Ruth Bergan .

The UK is about to begin negotiations to upgrade its trade deals with Canada and Mexico. International Trade Secretary Liz Truss has said that “This next generation of deals will be trail-blazing, securing more access for British goods and services, which will support jobs and prosperity across the UK in industries that will shape the future of the global economy.” But is the Government’s ‘trail-blazing’ approach really fit for the future global economy?

Post-pandemic, it will be vital to rebuild the UK economy and create good jobs. Deals with countries like Canada and Mexico could be part of that process. However Truss’s statement says little about what role these deals will play and in particular how they will help to ensure that we get a recovery that helps us tackle climate change and environmental degradation. Given the UK’s commitments on net zero, and iIn the year that the UK hosts both the G7 and COP26, this is a worrying omission.

UK trade’s impact on climate

In 2020 the UK, Canada and Mexico committed to negotiating new deals that go much further than existing rollovers. It is apparent that the UK wants to deepen existing deals and sign new ones. However there is nothing that sets out how they believe this will translate into jobs and prosperity, let alone how it aligns with commitments on climate and the environment.

As currently designed, trade deals aim above all to increase trade volumes, with little to guide which industries benefit. This means that highly-emitting industries such as cement or steel can expand as a result of trade deals. Worse than this, trade deals can prevent countries from taking the urgent action that is needed to address climate change. Unless the UK takes the opportunity to rethink the way it does trade deals so they are designed to support good jobs and climate action, it risks undermining its own objectives - including the latest target to reduce emissions by 78% by 2035.

Investors sue for climate action

One of the most significant barriers created by the trade system to action on climate change is the creation of investment courts. The UK has already agreed some investment protections with Canada and Mexico and will likely seek to deepen them. These private courts allow international investors to challenge governments directly for policies that undermine their profits.

The number of legal challenges that have been raised against governments in response to climate policies is growing. Challenges have been brought in response to a number of important policy measures. Right now, energy companies RWE, Uniper and Westmoreland are suing the Netherlands and Canada for phasing out coal-fired power stations. Despite this, the Government chose to appoint RWE to its new investment council, which will guide future UK investment policy.

Countries often withdraw or amend policies in response to cases. However countries are also being scared off taking action because of the mere threat of a case. There is evidence that countries wait to see the outcome of cases before taking action. However cases can play out over several years, costing millions, and leaving governments uncertain about outcomes. This inevitably leads to policy delays. The current climate crisis demands urgent action, we cannot afford these delays.

No way to ensure local benefits

Investment courts are not the only way that trade deals hamper climate action. The trade deals with Canada and Mexico have to build on rules agreed at the WTO. These rules have already been used to challenge efforts to support regional economies in the process of decarbonisation. For example, when Quebec and India tried to ensure that their new renewable energy programmes benefited local communities, they were successfully challenged under WTO rules by the EU and the US respectively, and the programmes were withdrawn. Countries have also been challenged for subsidising their green industries as they attempt to expand jobs, know-how and infrastructure to support climate-friendly industrial strategies.

Food standards

Trade deals can put downward pressure on standards, particularly in relation to food and farming. These issues have been flagged in relation to the US trade deal, however similar issues apply to deals with Canada and Mexico. Canada’s standards are lower than the UK’s in a number of areas, including genetically modified foods, pesticides, food dyes, chlorinated chicken and hormone treated beef. A report from the House of Lords International Agreements Committee flags potential threats to UK fruit and vegetable producers from the provisions of the UK-Mexico deal.

Radical change and bold action will be required if the UK government wants to position itself as a leader on climate change, and if it is serious about complying with the objectives of the Paris Agreement. Only if the UK’s new trade deals with Canada and Mexico address the above issues will the deals really be trail-blazing.

This opinion piece by Ruth Bergan originally appeared in the Independent on 24 May 2021.

Ruth Bergan is Senior Advisor at the Trade Justice Movement, which represents NGOs, faith groups and trade unions campaigning to ‘make trade work for people and planet’. She tweets at @RuthBergan.


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