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Multinational corporations already using new NAFTA to block action on plastics

October 20, 2020

4-minute read

The world is drowning in plastic. The sheer volume and variety of plastics on the market, and their persistence in nature, create significant risks for human and animal health and the survival of sensitive ecosystems, particularly in marine environments. To its credit, the Canadian government is trying to do something about it.

This month Canada released a scientific assessment of plastic pollution in the country, alongside a plan for managing the problem. Canada proposes to clean up its act by regulating plastics as a toxic substance under the Canadian Environmental Protection Act, and to ban many single-use plastics outright by 2021.

But the U.S.-based plastics industry is saying not so fast—and invoking provisions of the new NAFTA, the U.S.-Mexico-Canada Agreement (USMCA). In late September, a coalition of powerful U.S. industry associations representing chemicals, fossil fuels, food packaging and transportation wrote to Canadian Trade Minister Mary Ng, asserting Canada’s plan to ban certain single-use plastics, set recycled-content requirements for plastic products and packaging, and develop standards for extended producer responsibility violates international trade obligations.

Claiming Canada’s proposal “clearly meets the definition of a non-tariff barrier” and “directly threatens trade in plastic materials and products containing plastics, causing unintended consequences and commercial impacts across virtually every value chain,” the industry asked  the government to “refrain from releasing any discussion document” relating to the proposal until it gets its way.

On one level this was to be expected: no threat to corporate profits goes without challenge—in the backrooms of government or in the courts. Threats of future trade disputes are a common scare tactic used to discourage governments from regulating. What got our attention is the plastics lobby’s assertion that Canada’s scientific assessment of plastic pollution isn’t based on “sound science” and that its plan may violate USMCA provisions that commit all three NAFTA countries to engage in regulatory co-operation discussions and to endeavour to apply a “risk-based” approach to regulating chemicals.

The devastating consequences of global plastic pollution are so well-established and so significant that the United Nations has moved to urge action through the Basel Convention on hazardous waste. As the UN observes, “Over the last ten years we have produced more plastic than during the whole of the last century. Plastic accounts for around 10 per cent of the total waste generated and constitutes approximately 90 per cent of all trash floating on the ocean's surface, with 46,000 pieces of plastic per square mile. It is nearly impossible to clean the seas from plastic waste and microplastics.” The USMCA itself has language in the chapter on environment that each NAFTA country “shall take measures to prevent and reduce marine litter.”

Yet the chemical lobby makes the head-spinning claim not only that Canada’s proposed measures limiting plastic waste and pollution are unsupported by science, but that they would “undermine partnerships and progress against marine litter” pursuant to international commitments. Apparently, the chemicals industry is using the promise of future voluntary co-operation as a way to postpone or bar more effective regulatory measures now—relying on language in the USMCA to make its case.

Before the USMCA was finally approved by Canada, Mexico and the U.S., we warned that the chapter on “good regulatory practices” and the regulatory co-operation provisions in the chemical sector annex would provide opportunities for enhanced corporate meddling and an excuse to evade regulation and delay action to protect workers and the environment.

A Canadian Centre for Policy Alternatives report found that even voluntary regulatory co-operation has provided a forum for multinational business interests to weaken standards for rail safety, workplace hazard labelling and risk assessment of chemicals. We were concerned that incorporating these provisions into an enforceable international trade agreement would further undermine public protections.

Clearly, our fears were well-founded. Business interests have already cited these USMCA provisions to question Mexico’s law requiring junk food warning labels. The salvo against Canada’s proposed plastics regulation is part of a comprehensive international campaign to use free trade agreements to limit controls on plastic exports and regulation.

In August, The New York Times documented that many of the same lobby groups behind the September letter to Canada’s trade minister want the proposed U.S.-Kenya Free Trade Agreement to roll back the African nation’s 2017 ban on plastic bags and force the country to continue importing waste plastics from the U.S. The story prompted a bipartisan group of 62 U.S. lawmakers to urge the president and the U.S. Trade Representative not to undermine Kenya’s existing or planned policies to regulate plastic products and wastes.

This trade-based corporate strategy is crucial for the fossil fuel industry, which has pivoted hard into plastics in anticipation of a sharp drop in oil demand as countries try to lower their greenhouse gas emissions. The explosion of plastics products is not a response to real need or even a sign of healthy economic growth, but a crass and environmentally catastrophic money grab by an industry whose climate-heating legacy will assure its notoriety for generations to come.

All countries need the regulatory freedom to take the plastics crisis seriously. Expansive new language in the USMCA chips away at that freedom. Regardless of whether the oil, chemicals and plastics firms would have a winnable case against Canada, these provisions give deregulatory regimes like the Trump administration new powers to attack public protections anyway “to see what happens,” so to speak. Unfortunately, the Trump administration is using the USMCA text as a template for U.S. trade deals to come. Canada and Mexico are already facing the consequences of agreeing to corporate-written deregulatory text in the USMCA. Other countries, including Kenya and the United Kingdom, should steer clear of U.S. demands for new regulatory restrictions in any trade deals resulting from current negotiations.

Ultimately these measures will blow back on the U.S. as well. Future U.S. governments looking to rein in the fossil fuel sector and strengthen environmental protections may find themselves tangled in an avoidable trade dispute of their own making.

Stuart Trew is a trade researcher and Senior Editor at the Canadian Centre for Policy Alternatives, based in Ottawa. Sharon Treat is Senior Attorney at the Institute for Agriculture and Trade Policy, focused on international trade agreements and their intersection with environmental, food and public health policy. 

This article originally appeared in The Hill.

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