How an international trade deal will impact Western states

The Trans-Pacific Partnership could mean more beef imports and natural gas exports.

 

The largest ever free-trade agreement negotiated by the U.S., the Trans-Pacific Partnership, is on a fast track to national approval, and it could mean bonanza and bust for Western states and their traditional industries.

In the works since 2008, the TPP includes 12 countries (including Canada, Mexico, Japan, Vietnam, Australia, New Zealand, Chile, Peru) whose economies encompass nearly 40 percent of global GDP. The partners represent many of the U.S.’s largest export markets; 85 percent of American agricultural exports go to TPP countries. The agreement would expand that robust trade in the Asia Pacific, removing tariffs and investment barriers and facilitating regional supply chains. Notably, the deal could increase exports of liquefied natural gas (LNG).

Protestors at a rally to oppose the Trans-Pacific Partnership in 2014.
Flickr user AFGE
Support and opposition fall along somewhat familiar lines. Big corporations – from Apple and Facebook to Coca Cola, Halliburton and Monsanto – and ag-industry trade groups back the agreement and increased market access from Saigon to Santiago. Labor unions, environmental groups, and small food producers loathe the TPP, saying it will weaken domestic environmental regulations while boosting corporate power. They call the deal “NAFTA on steroids,” referring to the 1994 North American Free Trade Agreement, which triggered more fuel- and fertilizer-needy agribusiness in place of family and subsistence farms, and contributed to increased deforestation, mining, and oil and gas drilling.

Here are five ways the agreement would play out in the Western United States: 

The rundown

Whatever is known about the TPP has mainly come through Wikileaks, which has published draft sections of the pact. The agreement will include an Environment Chapter, addressing illegal logging, overfishing, illegal wildlife trade, and indigenous people’s rights in Asia-Pacific countries. Proponents say the text includes the strongest environmental controls ever in a trade deal. Critics, however, say other pacts have set a low bar and that the measures from the draft Environment Chapter fall below U.S. standards for trade deals, and also rely mostly on voluntary protections.

Gas up and go

Since the 2011 Fukushima meltdown, Japan has shut down nearly all of its nuclear power. Instead, the nation now imports more liquefied natural gas than any other country, accounting for 33 percent of global LNG imports. Meanwhile, there’s a natural gas glut in the U.S. fueled by shale gas drilling and hydraulic fracturing. Exports for LNG, however, are limited, in part, by a prolonged permitting process through two federal agencies and public opposition to export terminals. Two proposed terminals in Oregon have faced stiff resistance: One planned for Astoria received approval in 2014 after years of controversy, and regulators are reviewing another in Coos Bay.

The opening of Japan’s LNG market could pay huge dividends for the West’s energy industry. In 2013, Japan announced nearly $11 billion in credit guarantees to fund Japanese investments in U.S. shale gas. More exports would also support an increase in gas drilling and fracking and pipeline construction across Western states.

The TPP could also tilt the scales to approve more export terminals, since it would remove one leg of the permitting process. The Federal Energy Regulatory Commission would still have to OK projects. But if the TPP is in place, the Department of Energy's role of assessing whether a project is in the national interest would go away if a terminal is being developed for trade with Japan or other TPP countries.

“Oil and gas, as free-trade goods and services, and every LNG facility, would be de facto approved (by the Energy Department),” says Jake Schmidt, director of the Natural Resources Defense Council’s International Program.

No fracking? Sue you

Local bans and moratoria have limited or prohibited fracking – sending chemical-laden water underground to crack formations and reach gas and oil – in communities in Colorado, New Mexico, Texas and California. Those efforts have faced legal challenges from domestic energy companies, and the TPP could bolster industry’s stance. The TPP would allow corporations to sue foreign governments over lost profits. Through a similar provision in NAFTA, a U.S. company won its case this March after Nova Scotia denied an open-pit mine and quarry in the Bay of Fundy. The company is seeking $300 million in compensation. In 2013, an American energy company also sued Canada for $250 million because Quebec’s fracking moratorium barred oil and gas drilling along the St. Lawrence River.

The TPP could allow international companies to sue over fracking bans in Western states, and if they win in court, receive huge settlements. That wouldn't reverse the anti-fracking measures, but the NRDC's Schmidt says the threat of massive payouts to corporations would have “stifling impacts” on existing and future bans.

Where’s the beef…from?

The increased trade with Japan could reap big profits for American farmers and ranchers, says David Salmonsen, senior director of congressional relations for the American Farm Bureau, noting that the U.S. already annually exports $14 billion in meat and crop commodities there. But producers also now face steep tariffs on meats and dairy. Under the TPP, Japan’s current 38.5 percent tariff on beef could drop to 9 percent, paying off for ranchers.

But some Western ranchers worry the trade deal would also increase U.S. imports and reduce tariffs on foreign beef from places like Mexico, Australia and Vietnam. That could offset or compete with U.S. exports to Japan. “The United States keeps mounting a horrendous deficit in the trade of live cattle, beef, and processed meats,” says Bill Bullard, CEO of R-CALF, a Billings, Montana-based rancher-advocacy group. “If we continue, we will erode the financial viability of our industry.”

The TPP could also undermine the U.S.’s country-of-origin labeling (COOL), which ensures packaged beef, pork and lamb is labeled with where it’s from. Bullard and others consider COOL and labeled American-raised beef as an important competitive advantage. 

Relaxed food-safety rules and inspections, which have occurred under other pacts, also worry Bullard. Most concerning would be imports of live animals – not just beef – into the U.S. That opens domestic herds to risks from foreign parasites, bacteria or other infections that could decimate animals and threaten consumers, Bullard says.

Fast track or rapid demise

Western congressional representatives are deeply involved in the progress of the TPP. Sen. Orrin Hatch, R-Utah, and Sen. Ron Wyden, D-Oregon, cosponsored legislation to give President Barack Obama “fast-track” authority to negotiate the agreement. Fast-tracking means Congress agrees to only vote yes or no on the TPP once the nations finalize the pact, and not amend the agreement. Fast-track authority is one of the few things that the president and congressional Republicans agree on, while Democrats are split on the bill. Hoping to slow down the TPP and allow domestic debate over its contents, environmental and labor groups are targeting Dems, including Rep. Jared Polis, D-Colorado, to oppose the deal.

But those efforts may come up short. The Senate Finance Committee and House Ways and Means Committee approved fast-track legislation this week, and both full chambers are expected to vote on the bill within the next few weeks.

Joshua Zaffos is a contributing editor for High Country News. You can follow him on Twitter.

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