Post-Brexit, UK trade policy must work for climate goals
Brexit creates significant uncertainty for UK trade relations. However it also presents an opportunity to invent a new approach to trade and investment. In particular, it offers the opportunity to shape an approach that supports climate goals.
A new report by the Trade Justice Movement exposes how current trade and investment deals are blocking moves to achieve climate change goals.
The 2015 Paris climate agreement commits countries to keep any rise in the global temperature to below 2 degrees Celsius. Given that fossil fuel use is the single biggest source of CO2 emissions, a radical transition in energy policy is necessary to achieve this goal. The clear and growing consensus is that three quarters of all existing reserves of oil, gas and coal need to be left in the ground. However, countries signing the COP agreement have overlooked a very large elephant in the room: international trade and investment deals are a major barrier to the energy transition.
The report finds that:
- The global network of investment protection provisions is allowing companies to sue governments for measures to tackle climate change, often costing taxpayers billions of dollars. The energy sector is both the biggest recipient of international investment and the sector responsible for the highest number of investment disputes.
- Plans to expand the network of trade and investment agreements, for example through a new International Energy Charter, the Transatlantic Trade and Investment Partnership (TTIP) the Trans-Pacific Partnership (TPP) and the Trade in Services Agreement (TISA) will further limit government policy space for tackling climate change and increase the ability of foreign investors to challenge such measures.
- WTO rules, which form the basis of many trade agreements, do nothing to support efforts to transition to sustainable energy production. Countries including Canada, the US, India, China, Italy and Greece have all been challenged for measures to support renewable energy. Despite strict WTO rules on subsidies and international commitments to reduce them, not one case has been brought against fossil fuel subsidies.
A fundamental rethink of trade and investment is necessary to ensure that they are put at the services of climate goals. There are a number of things the UK can do now to ensure its new approach supports climate goals. It can insist that trade and investment agreements are subordinate to climate agreements - this would mean for example that investors would not be able to sue in response to measures taken to meet climate targets. It could ensure negotiations are conducted in a democratic way so that the deals can be properly scrutinised to ensure they are in line with climate agreeements.
If we want to invent a climate-friendly future for trade, we need to start making our voices heard now – saving the battle for another day will be too late.