TPP Dallas Rounds, The New Banzai Pipeline? – OpEd

By Arnie Saiki

Convergences being what they are, the 12th round of negotiations for the Trans-Pacific Partnership Agreement (TPPA) will be meeting next week in Dallas, TX. For those unfamiliar with the TPPA, that’s no surprise, considering that the details of the negotiations are held in secrecy, mostly between the primary stakeholders, governments, investors and corporations.

Often referred to as the “NAFTA of the Pacific,” the TPPA is what Obama describes as a “landmark, 21st Century Trade Agreement” that improves on and rectifies past problems in U.S. trade and investment treaties. Nine countries are currently negotiating the TPPA: the United States, Australia, New Zealand, Chile, Peru, Brunei, Vietnam, Malaysia, and Singapore. Despite large protests at home against accession into the TPPA negotiations, Japan, Canada and Mexico are also expected to join, and although the negotiations are being held in secret, leaked documents confirm that contrary to democratic practice, the documents connected to the negotiations will remain secret for four years after being signed or dismissed.

The United States is leading the negotiations and has a great deal of influence over the outcome of the agreement, which covers a vast range of subject matters, including tariffs on goods, trade in services, labor and environment, telecommunications, intellectual property, and energy– natural gas and oil.

Thou Shale not Frack

Oil and gas exploration and production is one of Texas’ most established industries and the Barnett Shale natural gas reserves—just below the Dallas/Ft. Worth area—covers more than 5000 square miles across North Central Texas. Many experts believe that Barnett Shale may be the largest onshore natural gas field in the United States, containing more that 40 trillion cubic feet of natural gas. According to the Texas Economic Development Division, cumulative economic benefits of the Barnett Shale from 2001-2011 include 80.7 billion in commodity output for the state.

According to the industry website, EnergyFromShale.org, the production of natural gas from Barnett Shale contributed more than $133 billion in all economic activity to the state of Texas in 2008 alone, and has helped create more than 99, 000 jobs. Although the website doesn’t elaborate on those numbers, it is clear that the natural gas industry is promoting the economic and environmental benefits of natural gas exploration, despite the controversial methods for extracting the gas. Fracking is a process that utilizes a massive volume of water, sand, and chemicals that is injected underground at high pressure to break up rock formations allowing oil or gas to flow up the well.  Even though the natural gas industry promotes itself as a green, “clean-energy” alternative to oil– a viable substitute to nuclear energy– personal testimonies have concluded how dirty fracking really is while environmental impact studies remain controversial and inconclusive.

What may come as a surprise is that a little over a year of the Fukushima Daiichi meltdown in Japan, Prime Minister Yoshihiko Noda announced the shutdown of the last of its 50 usable nuclear reactors. As the Mainichi Daily News reports, Japan will be spending billions of dollars importing extra oil and gas to meet the demand, projecting concerns that this will result in producing an additional 180 million to 210 million tons of emissions this year.

Japan’s Economic Meltdown

From an economic standpoint, much of Japan’s historic financial success has been reliant upon nuclear energy, despite their decades-long history of anti-nuclear protests. There is a growing sense that the economic profits that had been gained from nuclear energy have now been washed away in the Tsunami-sized accumulation of debris into the Pacific Ocean. With a looming trade deficit and its currency trading at its weakest against the dollar, economic recovery will “be hit hard against the background of increasing energy imports,” says Masaaki Kanno in a recent New York Times article. Japan, the world’s third-largest economy after the U.S. and China has seen opposition by U.S. industries like the Big Three (Chrysler, Ford, General Motors), as well as by U.S. lawmakers confronting longstanding barriers to Japan’s auto and insurance markets.

When Obama met with Noda in April, the White House released a fact sheet on the United States-Japan Cooperative Initiative which launched three new initiatives in the area of “clean energy,” initiatives that employs both public/private development and deployment of clean energy technologies. In his remarks at the Joint Press Conference, Obama thanked Prime Minister Noda for updating him on his reform efforts liberalizing trade and for playing a leading role in Asia Pacific’s economy, and for continuing consultation regarding Japan’s interest in joining the Trans-Pacific Partnership.  In addition Obama added that their, “shared vision also calls for the strengthening of energy cooperation, and discussed expanding Liquid Natural Gas exports from the United States to Japan.”

As a side note, it should be added that Japan has other energy options for purchasing natural gas from China or Russia, countries not included in the TPPA. The China-Russia partnership has its own tremendous reserve of oil and natural gas that it sells on the open-market from Pacific ports near Vladivostok and soon, from North Korea’s Rajin-Sŏnbong port, both which are a stones throw from Japan, compared to the vast distance required to ship liquid natural gas from the Gulf States. As part of the U.S. containment policy towards China, countries in this TPPA partnership are being pushed towards further economic and military cooperation with the U.S., while several TPPA partners have already expressed discomfort over this arrangement.

I should also note that coincidentally, the U.S. happens to have a glut of natural gas, which has caused commodity prices to fall. Now that Japan is in the market to fulfill its energy needs, new TPP initiatives could have natural gas investors scrambling for opportunities in a new banzai pipeline.

Pipeline Fever

As the TPPA negotiations approach its twelfth round, Canada is seeking admission at the same time as Japan and Mexico. According to Canada’s Financial Post, Canada’s admission to the TPPA will be easier alongside Japan’s and Mexico’s accession to the TPPA than if they were to try to enter later. If Canadian businesses are to compete in a world dominated by growth in Asia-Pacific economies, Canada needs to “be at the bargaining table [sic] to shape the new rules of the game.”

Last year, when Obama vetoed TransCanada’s Keystone XL project, environmental activists rallied in hopes that public outcry of a pipeline carrying dirty crude through the pristine Ogallala water aquifer from the Canadian Tar Sands to the Gulf States would be forever put to rest. However, last Friday, TransCanada reapplied to the U.S. State Department to restart the project, redirecting the route away from the aquifer. President Obama has consistently supported the Keystone XL pipeline project, but the combination between environmental protests as well as the 60-day deadline for approval that was attached as a provision by the Republican payroll tax cut bill, forced his veto.

As a cautionary tale against further “free-trade” agreements like the TPPA, in the unlikely scenario that Obama were to veto the entire Keystone XL project after signing the agreement, the U.S. would likely be in front of an international tribunal that would result in huge taxpayer compensation to TransCanada for the loss of “expected future profits.” Vetoing this project would open US taxpayers to an international tribunal system that imposes huge fines that favor foreign-investor privileges on states, privileging corporations and investors over state’s rights. Canada’s accession to the TPPA would expand their investor reach to fast-track investments to the other TPPA partners, including Japan (should Japan also accede) who is now likely to be a major buyer of gas and oil.

As the Wall St. Journal reports, TransCanada’s Keystone XL is not the only proposal on the table, as Houston-based Enterprise Products Partners LP and Calvary-based Enbridge Inc are also competing in this massive project to move crude from Alberta to U.S. refineries. Incidentally, the route of these oil and natural gas pipelines stop at Gulf States ports where the demand for shipping oil and gas to Asia has long been anticipated.  Investment in infrastructure has not only increased domestically, but regionally as well, since infrastructure figures into the $133 billion analysis of Barnett Shale.

Widening Trade Routes

The Panama Canal expansion projects seems to have already beaten out the Long Beach or West Coast ports proposal for oil and gas exports. According to the LA Times, the $5.25-billion project will make the canal wider and deeper, allowing huge freighters from Asia to bypass West Coast ports and head straight to terminals on the Gulf Coast and East Coast. The neighboring ports of Los Angeles and Long Beach, which together handle about 40% of the nation’s imported Asian goods, could lose as much as a quarter of their cargo business by some estimates after the Panama expansion is completed in 2014.”

Just before the U.S.- Panama FTA was signed last year, Newsroom Panama reported that Panama Ports operators were planning on spending $1 billion on improvements to meet an expected increase in business, if the FTA with the  United States was signed. “Balboa will get three new giant cranes for unloading containers and eight “yard” cranes. The Port of Colón will add four container cranes and dredging operations will allow for the bigger post-panamax ships to dock when the canal expansion is finished.”

Heavyweights on the Sidelines

If the TPPA Dallas rounds raises expectations by leading key stakeholders to attempt to rewrite the rules for “clean energy,” then fair-trade advocates and environmentalists too, may need to reframe their opposition, and consider how the rules over energy investment may end up as one of the major sectors challenging the Trans-Pacific FTA.  It is unlikely that any new energy rules would be played out with Canada, Mexico, and Japan sitting in the sidelines, and am suggesting that investors may focus on energy to counter imbalances with other trade sectors.

With such large scale international investments looming over the horizon, negotiators for the TPPA should release the texts disclosing these agreements rather than screwing public scrutiny with their secrecy.

Arnie Saiki is the writer/director for Statehood Hawaii/Imipono Projects. He coordinated the Moana Nui 2011 conference in Honolulu with Pua Mohala I Ka Po and the International Forum on Globalization.