A basic principle in free trade deals and investment treaties that prohibits countries from treating foreign products, services or investments differently than domestic equivalents once they have entered or become available on the domestic market. Favouring local products, local companies or local workers can have positive social and economic effects, such as good job creation and industrial development, but these policies are often prohibited in trade deals for allegedly creating “inefficiency” in the global economy. Moreover, a regulatory action that applies to all corporations, but that may have a disproportionate impact—real or perceived—on a foreign investor, could be targeted under this rule in investor–state dispute settlement.
Modern trade deals often include language that says nothing in the agreement prevents countries from regulating in the public interest for legitimate purposes like protecting the environment, public health or animals, etc. But these same deals also include caveats that even legitimate regulations and other government measures must be the least trade-restrictive options available for achieving a public interest goal. Why should trade lawyers and tribunals have the final say on what is a legitimate or illegitimate response to climate change, or inequality, or redressing historical wrongs to Indigenous and racialized peoples?
Technical barriers to trade (TBT):
Almost anything a government does runs the risk of being declared a technical barrier to trade if it affects 1) the movement of goods, people, investment and data across borders, or 2) the provision of consumer, business and government services within countries. Cigarette health warnings, GMO labelling, and high animal welfare standards have all come under fire as TBTs for being burdensome to business or allegedly not based on sound (read: industry-backed) science.
Good regulatory practices:
Who wouldn’t support “good” regulations? Well, it depends on what you mean by “good.” Regulatory practices are “good,” according to the OECD and recent North American trade deals, if they are developed closely with industry, have as little impact on trade and business as possible, and can be enforced without much or any government supervision. “Good” regulatory practices, including international regulatory cooperation, are mainly interested in reducing “red tape” for multinational corporations. But in doing so, they can delay public efforts to destroy markets in undesirable products such as fossil fuels, plastics, endocrine disrupting chemicals, and harmful pesticides.
Common but differentiated responsibility:
The lion’s share of global pollution, including the emission of greenhouse gas emissions, can be laid at the feet of rich countries that have literally exhausted the environmental space left for pre–climate crisis modes of development. While we are “all in this together,” developing and poorer nations should not have to shoulder an equal burden when it comes to cleaning up the mess. Global North nations have a responsibility to “lead by example,” according to Martin Khor, by using their wealth and technological knowhow to radically reorient economic production and consumption patterns for a climate-constrained world. But rich nations also have a responsibility and the means to fund and transfer technology to the South so that all countries have the resources to follow the North in this transition, albeit at an appropriate pace and with their own developmental needs in mind. The 2012 UN asserted that “green economy” policies “should contribute to eradicating poverty as well as sustained economic growth, enhancing social inclusion, improving human welfare and creating opportunities for employment and decent work for all, while maintaining the healthy functioning of the Earth's ecosystems.” Likewise, the first principle of the is that participating countries: “should protect the climate system for the benefit of present and future generations of humankind, on the basis of equity and in accordance with their common but differentiated responsibilities and respective capabilities." Accordingly, the developed country Parties should take the lead in combating climate change and the adverse effects thereof.”