NEW REPORT: Will NAFTA 2.0 Be For People Or Polluters?

LINK TO REPORT

WASHINGTON, D.C. -- Today, the Sierra Club, the Council of Canadians, and Greenpeace Mexico released a new report, NAFTA 2.0: For People Or Polluters? In the trinational report, leading economists from the U.S., Canada, and Mexico present original research on the North American Free Trade Agreement’s (NAFTA) obstacles to climate progress and quantify the climate pollution locked in by the controversial trade deal. As talks to renegotiate NAFTA intensify, the report reveals how the Trump administration’s NAFTA 2.0 agenda poses even greater climate threats. In contrast, the report lays out a new proposal for a climate-friendly NAFTA replacement.

“NAFTA was written to support corporate polluters, not climate-impacted communities. The deal must be fundamentally rewritten to benefit the working families hit hardest by the fossil fuel economy,” said Ben Beachy, report author and director of Sierra Club's A Living Economy program. “Instead, Trump's climate-denying agenda for NAFTA 2.0 would give corporations a new, backdoor way to block climate protections while letting them offshore more jobs and pollution. We cannot shift to a clean energy future if a corporate trade deal tethers us to the fossil fuel past."

Written with input from fossil fuel executives, NAFTA includes an array of little-known rules that bind North America to fossil fuel dependency. After more than two decades of NAFTA, the deal is finally being renegotiated, offering an opportunity to prioritize climate-impacted communities and workers, not corporate polluters. Instead, the Trump administration is entertaining new corporate-backed rules for NAFTA 2.0 that would pose additional barriers to climate action. Such terms, if accepted, would be an exercise in climate denial, with long-lasting consequences for workers and communities across North America.

“NAFTA’s little-known ‘proportionality’ rule locks Canada into perpetual production of climate-polluting tar sands oil and fracked gas, while giving corporate polluters a permanent green light to build tar sands oil pipelines to the U.S.,” said Dr. Gordon Laxer, report author, political economist, and founding director of the Parkland Institute at the University of Alberta in Canada. “For Canada’s transition to a clean energy economy to begin, this polluter-friendly rule must end.”

“NAFTA’s existing protections for oil and gas corporations are exacerbating Mexico’s dependence on fossil fuels, crowding out wind and solar power, and encouraging fracking,” said Dr. Alejandro Álvarez Béjar, report author and economics professor at the National Autonomous University of Mexico. “But proposals for NAFTA 2.0 could make matters even worse by locking in the deregulation of oil and gas in Mexico, creating long-lasting barriers to climate progress.”

“NAFTA 2.0 could expand the damage of Donald Trump’s attacks on climate policies by giving fossil fuel corporations increased influence over environmental regulations, or by pressuring Mexico and Canada to mirror Trump’s regulatory rollbacks,” said Dr. Frank Ackerman, report author and principal economist at Synapse Energy Economics in the United States. “Even if we are freed from Trump’s climate denialism in a few years, such NAFTA 2.0 proposals could prolong Trump’s polluting legacy for decades.”

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A telepresser on the release of the report will be hosted at 11:15 a.m. ET on Tuesday, April 17, 2018. More information can be found here.

Read the report here.

Read our blog here.

Key findings from the report:

NAFTA’s Obstacles to Climate Progress

• NAFTA’s “proportionality” rule locks in tar sands oil extraction and fracking in Canada, while giving investors a permanent green light to finance new tar sands oil pipelines to the U.S. If Canada tries to meet its climate goals but remains bound by this NAFTA rule, the country will produce nearly 1,500 metric megatons more climate pollution by 2050 than if it ditched the rule. This cumulative NAFTA climate pollution penalty is twice Canada’s current annual emissions and more than 12 times greater than its 2050 climate pollution target.

• NAFTA has facilitated a fivefold increase in U.S. gas exports to Mexico by requiring those exports to be automatically approved. This has fueled increased fracking in the U.S., expansion of cross-border gas pipelines, and a crowding out of solar and wind power in Mexico. Only 1 percent of Mexico’s electricity comes from solar and wind while half now comes from gas, which has contributed more than any other fuel type to Mexico’s increased climate pollution.

• NAFTA could prolong the climate damage from the Trump administration’s regulatory rollbacks if NAFTA’s private legal system for corporate polluters remains intact. If “investor-state dispute settlement” (ISDS) remains in NAFTA, it could delay or weaken the re-establishment of U.S. climate policies after the Trump administration leaves.

• NAFTA allows corporations to evade climate policies by offshoring their production, pollution, and jobs to countries with weaker climate standards. Policymakers across North America regularly cite this climate pollution loophole as a reason not to enact stronger climate policies, for fear that doing so would spell job loss and a mere exporting of emissions.

New Climate Threats in NAFTA 2.0?

• NAFTA negotiators have explicitly stated that they intend for NAFTA 2.0 to lock in the recent deregulation of oil and gas in Mexico, which has encouraged increased offshore drilling, fracking, and other fossil fuel extraction. A future Mexican government may want to restrict such activities to reduce climate, air, and water pollution. However, NAFTA 2.0 could bar such changes with a “standstill” rule that requires the current oil and gas deregulation to persist indefinitely, even as the climate crisis worsens and demands for climate action crescendo.

• NAFTA 2.0 includes expansive rules concerning “regulatory cooperation” that could require Canada, the U.S., and Mexico to use burdensome and industry-dominated procedures for forming new regulations, which could delay, weaken, or halt new climate policies. These rules also could be used to pressure Canada and Mexico to adopt climate standards weakened by the Trump administration, making it harder to resume climate progress in the post-Trump era.

A Climate-Friendly NAFTA Replacement

• To allow governments to take climate action without fearing the offshoring of jobs and pollution, NAFTA’s replacement must require each country to enforce robust climate, labor, and human rights protections, in line with the Paris accord and other international agreements. In contrast, the Trump administration is proposing that NAFTA 2.0 replicate the weak environmental text of the Trans-Pacific Partnership, which did not even mention climate change.

• To prevent climate and other public interest policies from being challenged in trade tribunals, NAFTA’s replacement must include a broad “carve-out” that shields such policies from challenge, while eliminating ISDS and other overreaching rules. The Trump administration has proposed an opt-out for ISDS, but negotiators have given no indication that they plan to curtail other overreaching rules or exempt climate and other public interest policies from those rules.

• To support a just transition to a clean energy economy, NAFTA’s replacement must allow governments to swiftly phase out fossil fuel exports. The deal must eliminate NAFTA’s proportionality rule and the rule that requires automatic U.S. approval of gas exports. Instead, negotiators are reportedly contemplating either maintaining or even expanding these rules.