Global Justice Now – Written Evidence (CPT0017)

Introduction

Global Justice Now welcomes the opportunity to make a submission to the International Agreements Committee in their inquiry on the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Global Justice Now is a democratic social justice organisation working to create a more just and equal world.
We are submitting evidence because of our long history of campaigning for trade justice. Modern trade agreements impact on many areas of public policy and everyday life that might seem initially unconnected to trade, including climate, health, international development and digital rights.

General

We believe the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) is a high risk deal, which it is unwise for the UK to join. If the UK proceeds with the accession process that it has started, it should make the most of any and all possibilities for including safeguards and exemptions – although the possibilities are limited by the nature of joining an existing agreement.
The CPTPP was negotiated by the US as well as the existing members of the agreement (at that point named simply the Trans-Pacific Partnership or TPP). President Trump withdrew the US from the agreement, but the deal had actually already been finalised by that point, and the US was the largest economy and most powerful voice throughout the negotiations. As a result, the deal is actually shaped very much by US interests and the US approach to standards and regulations.

Is there any scope for the UK to renegotiate parts of the CPTPP agreement, or can it only seek derogations and exceptions?

The CPTPP agreement is already in existence and the accession process does not provide for any renegotiation of the agreement itself. Within the existing rules and provisions of the agreement, the UK has scope to negotiate its precise market access offer – its tariff schedule and services exceptions.
The process itself is secretive and not transparent, so it is hard to know exactly what to expect. However in the experience of countries acceding to the WTO, the country seeking to join has no leverage and is usually asked to commit to more than the countries who were part of the agreement from the start. Thus the UK’s market access offer may have to be shaped more by meeting the interests of the existing members than its own.
We recommend that the International Agreements Committee and other parliamentary committees (both on trade and on policy areas affected by the trade deal) push for:

increased transparency during the accession process
debates on any important public policy questions that arise during the process
a debate and vote on the final outcome.

Side letters outside of the agreement itself are possible. New Zealand has negotiated side letters with several of the CPTPP member states to agree to exclude investor-state dispute settlement (ISDS) between New Zealand and the other countries. We recommend that the UK does the same.

Are there any relevant concerns about the implications of CPTPP for UK policy objectives on climate change and environmental protection?

The CPTPP follows a model and pattern of trade rules derived from earlier agreements – each new agreement tends to reuse much that was in earlier texts. These earlier texts were not designed with climate change and environmental objectives in mind – and indeed some of their provisions have been contributing factors in creating the climate crisis and environmental problems that we face.
There are therefore many areas of tension, some of them quite deeply embedded in the rules of the agreement. Where there is conflict between trade agreements and multilateral environmental agreements, including the climate treaty, experience shows that the trade rules usually win out. This is because trade rules have real, binding sanctions, whereas environmental agreements do not, but sadly also due to the continuing tendency for greater political weight and will to be given to narrow economic considerations rather than wider environmental and societal concerns.
The following points outline some of the areas of concern. Many of these points are not unique to CPTPP and may already be present in some trade deals the UK is already signed up to, including the WTO. However as the UK develops its independent trade policy in a time of climate crisis, we should be seeking to transform trade deals to be climate friendly, rather than further reinforcing the status quo and tying us into rules that hamper climate action.

Process and production methods: limiting the ability to distinguish goods and services by the carbon impact of the way they were made or other sustainability criteria – for instance so that higher tariffs could be set on carbon intensive production.
Deregulatory pressure: for the step change we need to tackle the climate crisis, we need strong, clear regulations setting boundaries and a common basis for engagement and strategically steering our economy and society into new directions. CPTPP by contrast will have a broad deregulatory effect. This is through the inclusion of necessity tests on regulations, through the Committee on Regulatory Coherence, through giving preference to voluntary self-regulation, through pressure on standards and through enabling ISDS challenges.
Spread of climate technologies: we need rapid adoption of climate technologies across the whole world – renewable energy, clean transport, building technologies, low carbon manufacturing, etc. CPTPP places limitations on the extent to which governments can take action to ensure technology transfer.
Levelling up: in seeking to manage the climate transition, the government may wish to ensure that communities feel the benefit of green growth – that jobs lost in one sector are replaced by decent jobs in another, that currently deprived areas might be able to take advantage of growth sectors. CPTPP places limitations on governments ability to target using domestic content requirements or to give preference to domestic producers.

These features will be reinforced by the inclusion of investor-state dispute settlement (ISDS, see below), which would enable transnational corporations to challenge the government on the basis of CPTPP rules, including those affecting climate.
There have recently been several ISDS challenges, using various treaties, on climate related issues, including:

RWE, an energy company, is suing the Netherlands over the phase out of coal-fired power stations, while another energy company, Uniper, is threatening to do the same
Lone Pine, an energy company, is suing Canada over a fracking moratorium in Quebec
Westmoreland, a mining company, is suing Canada over a phase out of coal-fired power stations in Alberta
Rockhopper, an oil company, is suing Italy over a ban on oil drilling in certain areas
Vattenfall, an energy company, sued Germany over environmental requirements for the operation of a power station. The case was settled when Germany relaxed the requirements.

In what areas should the UK seek general exclusions and exceptions, particularly with regards to public services?

The UK should seek a broad exemption for all public services based upon the definition of a public service by the European Federation of Public Services Unions.[1]
The CPTPP uses a ‘list it or lose it’ approach (negative list) for services. All public services are up for grabs, unless they are specifically excluded or fall within a very narrow exemption. The agreement only excludes public services if they are not provided on a commercial basis or in competition with other suppliers. This applies to few public services in the UK nowadays – for instance, the NHS has an internal market and competes with private healthcare. It is therefore vital that the UK should specify a broad public service exemption within its services schedule.
The UK should also consider very carefully what else should be exempted, because the negative list approach means that anything not specifically excluded is included. The government must be careful not to tie the hands of future parliaments in policy making. A blanket opening up on advertising, for instance, could limit the government’s ability to regulate junk food advertising to children.
The negative list also means that future services are all implicitly liberalised. Even things we haven’t thought of yet have already been given away. Nowadays the UK government regulates to ensure that broadband providers commit to offering a universal service; a couple of decades ago, the importance of this wasn’t clear and we might well have signed away our ability to require that. What might become vital in twenty years’ time?

Regulations and standards

Would accession to the CPTPP require any divergence from the regulatory standards that the UK and EU currently still share? What would be the implications of this?

Trade agreements are used by the world’s major economic powers to encode their own regulatory systems for their dealings with other countries. When the CPTPP was being negotiated, the US was the most powerful voice in the room, and it reflects the US’s regulatory system. This would pose challenges for the UK’s current regulatory approach, particularly including the aspects still shared with the EU.
The UK’s current approach, broadly, puts the burden on the manufacturer to prove that a product is safe before it can be sold. The US puts the burden on the regulator and the public to prove it is dangerous and should be taken off the market.
In this context, the US uses the term ‘science based’ not in a neutral sense, but to endorse its approach, particularly with regard to assessment of risk when the science is unsettled and there are still unknowns. The EU takes a precautionary approach – better safe than sorry, which the US then describes as not science-based. The US also uses ‘science based’ to disregard ethical, social and environmental considerations such as around animal welfare, local food or protecting natural landscapes.
The CPTPP uses this language and terminology. This could be a basis for either explicit challenges to the UK’s current regulations and standards, or for political pressure for change.
CPTPP also weakens the system currently used in the UK to protect local speciality foods made in traditional ways – Cornish pasties, Yorkshire Wensleydale, Scottish salmon, Whitstable oysters, Arbroath smokies and many others. These are currently protected by the system of ‘geographical indications’ (GIs). However the US opposes this system and uses a more limited approach of trademarks. CPTPP allows countries to opt to use US-style trademarks as an alternative. It also sets out procedures for countries to directly challenge geographical indications. Such a challenge could also come from a company producing a competing product because of the inclusion of ISDS is included in CPTPP.

How can the UK ensure that its food standards and animal welfare standards are not undermined?

Particular food, animal welfare and environment standards that could be undermined by CPTPP include:

hormone-fed beef: currently banned in the UK because of the risk of causing cancer. 40% of the Australian beef herd is implanted with hormones
pesticides: Australia authorises 8,000 different pesticide products, compared to the UK’s 2900. Australian apples, for example, are allowed to contain 300 times the amount of the insect growth regulator buprofezin than their UK equivalents. Buprofezin is classified by the WHO as a ‘possible human carcinogen’.
palm oil: the UK currently uses near zero levels of palm oil in biofuels and the government plans to introduce measures around due diligence in supply chains related to deforestation that could reduce its use in other sectors also. The Malaysian government has called on the UK to change it’s approach, and could use CPTPP to bring further pressure.
antibiotic resistance: measures to reduce routine antibiotic use in farming

Digital trade

CPTPP’s digital chapter is not really primarily to do with the mechanics of selling things online. Instead, along with the rules on services, it seeks to establish the digital landscape and marketplace as a deregulated space.
Over the past year or so, the increasing power of digital platforms like Facebook, Amazon and Google over our lives has been dramatically highlighted. Data leaks, fake news, election campaigning, algorithm biases, trolling and hate speech have all raised questions about who is or should be regulating the digital world and how. The answers aren’t necessarily straightforward, but parliaments need to be able to find the right balance without having their hands tied by trade rules – and to keep that balance as technology rapidly evolves.
CPTPP would require data to be able to be transferred and stored in other countries, even though privacy and consumer protection rules may be weaker. CPTPP does have exceptions for government data and incorporates some exceptions for privacy or ‘legitimate public policy objectives’, but these are so wrapped in conditions that they offer very little protection in reality.
CPTPP will prevent regulators from requiring corporations to disclose source code – the under the bonnet programming of products. The consequences of being unable to inspect this can be very real – for instance a bug in medical equipment that could cost lives, or the impact on the planet of VW’s gaming of diesel emissions mechanisms.

Investment

How should the UK approach the investor-state dispute settlement (ISDS) provision in CPTPP? Should the UK seek exemption from ISDS by signing side letters with CPTPP member countries? Should the UK push for a multilateral investment court system, if there is scope to do so?

Investor-state dispute settlement or ISDS allows foreign corporations to sue governments outside of the national legal system. It takes the arbitration model, common for commercial disputes, but applies it to a public policy setting. States and corporations are placed on an equal level – although only corporations can bring a case so they are actually in a stronger position. There is no requirement in CPTPP to bring a case in domestic courts before resorting to ISDS, even though such exhaustion of local remedies is a customary principle of international law.
ISDS in CPTPP allows corporations to challenge laws and policies on far reaching and loosely defined grounds of fair and equitable treatment and indirect expropriation. Cases are heard by arbitrators, usually corporate lawyers who may be unfamiliar with other areas of international law. The arbitration tribunals are not obliged to consider the provisions and precedents of national law in the country involved, but only investment law, and they have typically interpreted investors 'rights' very broadly.
Para 13 gives some examples of ISDS cases with particular impact on climate action. Some further examples illustrate the impact ISDS can have in other policy areas:

Cargill, an agribusiness company, sued Mexico when it first introduced tax on sugary drinks and won.
Infinito Gold, a mining company, is suing Costa Rica over the introduction of a ban on open-cast mining for metals.
Ethyl, a chemical company, sued Canada over a ban on the chemical MMT in petrol, which is suspected of causing nerve damage and won

Another notorious example is that Philip Morris, a tobacco company, sued Australia over plain packaging on cigarettes. It ultimately lost the case on a technicality, but it had a chilling effect on public policy making around the world while it was happening. As a result, the CPTPP includes a specific carveout for tobacco measures from the ISDS provisions. This illustrates the weakness of relying on general exceptions or rhetorical reassurances about the ‘right to regulate’ – faced with the reality of the Philip Morris case, Australia felt the need for something a lot stronger. However there is an element of shutting the stable door after the horse has bolted, here and it begs questions about the continuing risk to all other areas of public policy making.
There was a change in government in New Zealand after the CPTPP had been finalised. The new government has negotiated side letters with several of the CPTPP member states to agree that investors from their respective countries will not have recourse to the investor-state dispute settlement provisions in disputes between their countries.
The EU’s proposal for a Multilateral Investment Court merely papers over the cracks in ISDS. It seeks to deal with some of the process elements - cases would be public, heard by a permanent roster of judges paid by salary not by the case, and there would be a right to appeal. However, this does not address the essential problem that ISDS gives transnational corporations their own special legal system to challenge democratic decisions. Some of the most controversial ISDS cases could have happened just as easily under these other courts.[2]
If the UK does join the CPTPP, it should follow the example of New Zealand and negotiate side letters to exclude ISDS between the UK and the other members of CPTPP.
For more information see:
Global Justice Now, The case against corporate courts, 2019
Global Justice Now case studies

Intellectual property

The original TPP included controversial clauses around patents on medicines, which would have damaged access to medicines. These clauses would have delayed the point at which cheaper generic versions of medicines can be introduced and made it harder for manufacturers of generic medicines to operate.
These clauses were suspended when the US left the agreement, but were not removed completely. They remain in place ready to potentially be reactivated. If that happened, it would affect access to medicines for millions of people.

March 2021