Trade deals now in the works could disadvantage socially responsible companies, cool enthusiasm for green business and strangle local economy initiatives.
By Francesca Rheannon
The Trans-Pacific Partnership (TPP) and its sibling, the Transatlantic Trade and Investment Partnership (TTIP), are supposed to be pro-business. They are being heavily pushed by pro-corporate political leaders, like President Obama, and huge multinational corporations like Walmart, Cargill and Chevron, who have been involved in the negotiations.
But not all business is on board. In fact, many in the sustainable business community are adamantly opposed, not only to the trade agreements the US is negotiating with Europe and the Pacific nations, but also to “Fast Track” authority the Congress might pass to strike the deals.
The objections are on both principle – the ethics and mission that drive companies committed to sustainability – and the bottom line: the Triple Bottom Line. The trade agreements are seen as threatening the very ability of sustainable businesses to survive and thrive. In fact, many businesses are asking about the proposed trade agreements, “Who are they actually good for?”
Threats to Innovation, Environmental Regulation, Fair Trade, Responsible Supply Chains
According to documents revealed by WikiLeaks, the trade agreements appear poised to strangle any policies by governments or business activities that are deemed inimical to the profits of foreign-based corporations. They could threaten attempts to improve wages and working conditions, pass protective environmental laws, promote renewable energy over fossil fuels or “green chemistry” over toxics and rein in climate change. They could thwart innovation through extreme interpretations of intellectual property rights. They could crush nascent attempts at “New Economy” solutions to the crisis in capitalism that strive to create a fair, equitable economy.
In short, they could attack the very foundation on which sustainable enterprise stands.
Green business could stand to lose the most. According to Arthur Stamoulis of the Citizens Trade Campaign in an interview with CSRwire:
"These [provisions] have huge environmental implications, not only through the TPP's environment chapter, which leaked documents suggest will now be unenforceable and voluntary, but also through other provisions of the TPP, which give corporations new tools to attack virtually any environmental regulation, environmental law and permitting decision as a so-called barrier to trade and investment and to demand millions and in some cases billions of dollars in taxpayer compensation for the cost of complying with that environmental policy."
Eliminating the Level Playing Field for Business
The American Sustainable Business Council has come out against the threat posed by the TPP and TTIP. The organization represents some 200,000 small, medium and large enterprises across a broad array of sectors. They include such well-known brands as Ben and Jerry’s, Patagonia, Seventh Generation, Domini Social Investments and Trillium Asset Management.
ASBC Co-founder and CEO David Levine is concerned that the trade agreements will undermine the level playing field that is a requirement for sustainable business to survive. He told CSRwire:
"Our perspective is that businesses actually flourish when they hold the triple bottom line perspective: when they try to account for the full cost of doing business – when we account for externalities – and that means creating a level playing field for all businesses.
"[With the trade agreements,] a company that does not need to operate under any rules or restrictions, is not held accountable for the impact it is having on society, is able to lower its prices because it is not accounting for its externalities – this impacts negatively on socially responsible or sustainable businesses that are trying to be honest, fair, transparent and do the right thing in business and their community.
"It is ripping apart the rules that actually create a fair and level playing field, and instead gives unfair competitive advantage to those with the deepest pockets and the most political influence."
Trade Negotiations: Small- and Medium-Sized Businesses Not Welcome
Levine also points to the lack of transparency and inclusiveness of the trade deal negotiations:
"There are a number of players – mostly very large corporate entities – that have been able to participate in these dialogues. It has not been inclusive, particularly of small and medium enterprises, which are normally lacking the resources to be able to participate in these discussions. More importantly, they have not been invited to the table. The American business community as a whole should understand what's actually in these trade agreements and be able to engage in the full dialogue around what's beneficial for business."
Many small- and medium-sized businesses are the backbone of the drive to create thriving local economies—and they will be among the casualties of the trade deals. For example, it’s possible that under the trade agreements now being negotiated, a foreign corporation could sue a local municipality for damaging its profits if the government chose to go with local suppliers over the company.
The Metro Independent Business Alliance, a business group in the Twin Cities region represents some of those businesses. Executive Director Mary Hamel echoes Levine’s concerns about exclusivity. She wrote CSRwire in an email:
"We at the Metro Independent Business Alliance have grave concerns about the Trans-Pacific Partnership negotiations. Not only have none of our businesses had an opportunity to weigh in, there has been virtually no small business representation at the table, despite the fact that small businesses are the economic engine and job creators in our country."
Local Procurement Agreements Threatened
Hamel is fearful the TPP could choke off local procurement policies with municipal governments. She told CSRwire:
"We know that currently some of our government agencies do have local procurement policies in place or are considering them, so we know that would put our businesses at a definite disadvantage. They would undermine the work that we've done to impress upon our elected officials how important it is to support these businesses and in some cases give them preferential procurement policies and an opportunity to get a foot in the door, for example, in some fields that have been dominated by large multinational corporations. This would take that opportunity away."
Trade Deals Could Slam Consumer Market
But it’s not just small- and medium-sized companies that fear the impact of the proposed trade agreements on their bottom line. Ben and Jerry’s is the top purveyor of ice cream in the US and is one of the most prominent jewels in the necklace of its parent company, Unilever. Yet the company has come out strongly against Fast Track authority and the trade deals. Its opposition is partly mission-based, but there’s a business case, as well. Christopher Miller is Ben and Jerry’s Social Mission Activism Manager. He told CSRwire:
"The business reason is that you can't grow a healthy business on a sick economy. We believe our business does best when we lift up [people] throughout our supply chain, in the communities where we manufacture our product and where we sell our products.
"We have a long-standing commitment to sourcing fair trade ingredients so we don't just buy cocoa on the commodity market at the cheapest possible price. We work with the communities in which we source and pay a premium to support them. We believe that makes a better product, it tells a better story, and it is a better, more sustainable way of doing business."
Miller also points to the hollowing out of the middle class that has already occurred through previous international trade agreements, like NAFTA (the TPP is called “NAFTA on steroids”). He says the offshoring of production from countries with high standards on labor and environmental regulations to countries that have few or none has caused wages for the working and middle classes to stagnate and even decline, with a widening gap between rich and poor.
That threatens Ben and Jerry’s market niche, because the company produces a quality product at prices affordable to the middle class, but steep for people struggling to stretch their food budget to survive. “At the end of the day,” Miller says, “we require middle class people to buy our ice cream.”
It’s not impossible that the trade deals could do some good, if they were serious about enforcing a race to the top of socially responsible business practices. Stamoulis of the Citizens Trade Campaign points out the opportunity the TPP (and other trade deals by implication) to do good:
"One of great innovations of trade policy is that it includes enforcement mechanisms. Unlike other international treaties, like arms control, the TPP would have built-in mechanisms to force countries to do what they say they are going to do. There's no reason why there couldn't be stronger enforcement mechanisms put in place for child labor protections, environmental protection, etc. The US government is pushing for the enforcement of some environmental treaties, but the WikiLeaks documents show that most countries aren't going along with that. And so it remains to be seen what the outcome will be."
The ASBC and its members are hoping to influence that outcome in the direction of transparency and social responsibility. The fate of sustainable business may hang in the balance.