Diverse Perspectives on Trade, Investment, and the Environment

The relationship between liberalized trade, investment rules, and environmental protection has long been contentious. The rise of international cooperation on environmental protections in the 1960s and 1970s led to concerns by countries of the Global South that these environmental norms might prevent them from pursuing industrial development pathways, that environmental considerations might create new restrictions on trade, or that stricter environmental standards might have a negative impact on exports.Footnote ⁴

The 1991 Tuna/Dolphin case brought to public consciousness the potential conflict between trade and environmental law and sparked a decade of debate on environmental impacts of liberalized trade, and strategies for integrating environmental considerations in the international trading regime. Environmental activists from the Global North and the Global South often disagreed on the desirability of such integration: while Northern environmental groups sought to integrate environmental protection within the international economic regimes, many environmentalists from the Global South saw this as “an imposition of Northern values and preferences on less powerful nations,”Footnote ⁵ disguised protectionism, or ecological imperialism.

Paradigm shifts in both international environmental governance and international economic ordering enabled a growing convergence between these fields.Footnote ⁶ The concept of “sustainable development” legitimated the institutionalization of the “compromise of liberal environmentalism.”Footnote ⁷ This assumes that the promotion of an open international economic system will lead to economic growth and sustainable development,Footnote ⁸ and that “an enabling environment for investment” is the “basis for sustainable development.”Footnote ⁹ Conversely, the trade regime recognized the objective of sustainable development;Footnote ¹⁰ it committed to making trade and the environment “mutually supportive,”Footnote ¹¹ adopted institutional reforms,Footnote ¹² and incorporated environmental considerations in its jurisprudence.Footnote ¹³ Since the 1990s and 2000s, free trade agreements and international investment agreements increasingly incorporated environmental chapters or language on environmental concerns.Footnote ¹⁴

Environmental justice activists have opposed both the precepts of market-oriented environmentalism as well as the assumption that liberalized trade and investment can lead to ecologically just futures. They have mounted a structural critique of how the international economic regime entrenches the power of multinational corporations and enables the expansion of an uneven, extractive, capitalist economy that is ecologically destructive and produces drastic inequalities in wealth alongside poverty and precarity.Footnote ¹⁵ Transnational environmental justice movements have sought to build solidarity with, and amplify, local struggles of grassroots environmental defenders to protect their lands and livelihoods from extractive and polluting projects. This “environmentalism of the poor”Footnote ¹⁶ has closely aligned with peasant and Indigenous movements engaged in distributive struggles over access to land and resources, and has, at times, resisted externally imposed environmental measures that risk dispossessing or harming local communities, such as coercive conservation, carbon offsets, or large hydro or wind projects.Footnote ¹⁷ For many environmental defenders and their communities, international trade and investment agreements have appeared as external impositions that strengthen the power of the corporations and governments who are seeking to exploit their lands and resources.Footnote ¹⁸ The sections below show how environmental justice activists have contested the authority and legitimacy of international economic regimes, and have articulated radically different visions of socially embedded, ecologically sustainable economic activity.

Disrupting Negotiations

The “alter-globalization” movement of the late 1990s and early 2000s identified capitalism, not just “free” trade, as “the root cause” of social and ecological problems.Footnote ¹⁹ However, the movement directed much of its energy and anger at the international trade and investment regimes, especially the World Trade Organization (WTO), for creating the “extra-economic conditions for safeguarding capitalism at the scale of the entire world.”Footnote ²⁰ In contrast to some environmental organizations who sought greater participation within the WTO,Footnote ²¹ more radical environmental justice groups used tactics such as summit protests to raise awareness about the environmental consequences of international economic law and to delegitimize international economic norms and institutions. In open letters, the movement called not for reform, but for limiting and curtailing the growing power of international trade institutions through a “moratorium on any new issues or further negotiations that expand the scope and power of the WTO,”Footnote ²² demanding to “roll[] back the power and authority of the WTO.”Footnote ²³ The so-called “Battle of Seattle,” outside the third WTO Ministerial Conference, in November 1999, challenged the “centralization and concentration of power under corporate control in neoliberal globalization,”Footnote ²⁴ while inside the Summit representatives from Africa and the Caribbean refused to agree to a proposed new round of trade liberalization.Footnote ²⁵

The WTO's failure to conclude any agreement between 1999 and 2013 was due to many factors. However, the mass resistance from social movements brought greater scrutiny to these negotiations and helped shape international norms by catalyzing reforms, generating a climate in which it was more possible for countries of the Global South to block consensus.Footnote ²⁶

In response to stalling multilateral negotiations, there was a proliferation of bilateral and subregional trade and investment agreements, arguably a tactical maneuverFootnote ²⁷ to weaken the power of developing countries to negotiate collectively.Footnote ²⁸ The resulting fragmentation of international economic law made it more challenging for environmental activists to organize internationally. While some environmental activists continued to engage with the WTO,Footnote ²⁹ generally environmental activism addressing the impact of the global trade regime became more nationally focused.

De-legitimating Investment Arbitration

Environmental activists became increasingly aware of how international investment law and the process of investor-state dispute resolution were constraining national governments’ ability to regulate in the environmental interest and undermining local environmental victories.Footnote ³⁰ These concerns are particularly acute in the extractive sector—now the second most disputed industryFootnote ³¹—given how international arbitrations have been launched in response to environmental movements’ successful campaigns to have permits withdrawn or cancelled.Footnote ³² In contrast to trade questions, there has been greater alignment between the perspectives and interests of environmental organizations from the Global South and the Global North, with the latter using their platform to document how international arbitration has undermined local environmental struggles, and decry investor-state dispute resolution as “corporate weapons against the public interest.”Footnote ³³

In the aftermath of the Global Financial Crisis, there was a sense that the international investment regime was “in flux.”Footnote ³⁴ Building on the 2012 Rio+20 Summit and the subsequent Sustainable Development Goals,Footnote ³⁵ were renewed efforts to develop “new generation” investment policies that purported to “place inclusive growth and sustainable development at the heart of efforts to attract and benefit from investment.”Footnote ³⁶ While some environmentalists supported such integration, many pointed to the limited practical effect of environmental exception clauses in investment treaties, and stressed the need to radically rethink the underlying structure of investment treaties.Footnote ³⁷ Generally, international environmental groups have been skeptical about the possibility or desirability of reforming investor-state dispute resolution processes, concerned that “further ‘legitimiz[ing]’ this inherently flawed system would only perpetuate inequality and corporate impunity,”Footnote ³⁸ and calling for “dismantling the mechanism/system in its entirety.”Footnote ³⁹ International environmental organizations have also played a key role in internationally coordinated campaigns against the inclusion of investor-state dispute resolution provisions in new “mega-regional” agreements.Footnote ⁴⁰

Climate Change and Decarbonization

The global nature of the climate crisis has resurfaced tensions between the different tactics environmental activists use to engage with international economic regimes, but also presents a unique opportunity to build North/South solidarities and radically transform international economic ordering. Some Northern environmentalists have sought to leverage international trade rules to discourage trade in polluting goods and promote sustainable industries, for example, through targeted tariff reductions on “green goods,” border carbon adjustment mechanisms, and banning fossil fuel subsidies.Footnote ⁴¹ In response, some environmentalists from the Global South have warned that technical trade solutions may reinforce existing power differentials,Footnote ⁴² while others have criticized policies, such as border carbon adjustments, for failing to recognize how international institutions and corporations are implicated in the financing of, and are key beneficiaries of, investments in mining, oil, and gas in the Global South.Footnote ⁴³ There has been growing attention to how investor-state dispute resolution processes may threaten decarbonization efforts.Footnote ⁴⁴ By 2020, climate activists were describing the Energy Charter Treaty as the “biggest climate action killer nobody has ever heard of,” and calling on governments to exit or jointly terminate the agreement.Footnote ⁴⁵

More radically, activists have highlighted the incompatibility of a continuously expanding global economy and the need to rapidly reduce greenhouse gas emissions.Footnote ⁴⁶ The recognition that international economic law enables the extraction, combustion, and global circulation of fossil fuels driving the climate crisis has led to growing calls for “reimagining the laws and regulations that have been implicated in years of extraction of natural resources.”Footnote ⁴⁷ Climate justice activists have shown how the globalized neoliberal economic system has created “extreme carbon inequality,” and called for systemic change and new economic models.Footnote ⁴⁸ Finally, demands for historical and contemporary polluters to repay their “carbon debt” offer ways to radically reconfigure the global political economy, through debt cancellation, the facilitation of technology transfers, or the remaking the global financial architecture.Footnote ⁴⁹

Articulating Alternative Visions

Environmental justice movements and grassroots environmental defenders offer compelling visions of more equitable and ecologically just forms of global economic cooperation. Their critique of the dependencies created by the neoliberal global economy and the “mono-cultures associated with the supremacy of corporate rule” is intertwined with a commitment “to preserve ecological and cultural diversity,”Footnote ⁵⁰ by fostering diversified economies, the capacity for local self-reliance, and participatory democracy.Footnote ⁵¹ Such visions are frequently grounded in the “epistemologies of the South,”Footnote ⁵² and seek to create space for diverse cosmologies expressed in concepts such as buen vivir or sumak kawsay (“good living”), or the “commons.”Footnote ⁵³ Pointing to how economies based on social ownership and global fair-trade networks already exist, some environmental activists suggest that a key challenge is “scaling up” economic justice solutions in order to reshape the global economy toward sustainable societies.Footnote ⁵⁴ Yet enacting this would require structurally rebalancing global inequalities of wealth and power, including through tax justice, corporate accountability, and reparations for ecological harms. How such visions could be achieved concretely, and particularly how they could be shaped and enabled by law, remains underexplored. Yet in this time of intersecting social, economic and ecological crisis where the need for systemic change is acutely evident, the need for international economic law scholars and practitioners to listen to and learn from these marginalized voices is more urgent than ever.