Opponents of proposals to expand capabilities for exporting liquid natural gas (LNG) and coal from one port in Oregon and two ports in Washington state are fighting on a number of fronts – playing in races to elect local candidates, campaigning to sway public opinion, and leveraging political connections to erect a prohibitive permitting process.
However, according to a report co-authored by former World Trade Organization judge James Bacchus, efforts to block the projects could ultimately run afoul of international trade treaties and produce negative consequences for the US.
(Click to download and read the full report.)
In preparing the report commissioned by the National Association of Manufacturers, Bacchus sought answers to two questions.
First, have there been “unreasonable” delays by the U.S. Department of Energy in approving licenses to export LNG, delays that would constitute violations of international treaties? Second, have steps taken by state and local jurisdictions to dramatically redefine the environmental review process for such projects also violated key provisions of international trade agreements?
The report answered “yes” to both queries, specifically asserting that these delaying actions are artificial barriers to trade that are prohibited under rules the US agrees to through membership in the WTO.
Specifically, the NAM report cites slower-than-usual issuance of LNG export licenses through the U.S. Department of Energy and the creation of new and extreme environmental impact criteria by the Washington State Dept. of Ecology and local agencies.
“The United States has always been a strong advocate of rules that forbid export restrictions and has been forceful in challenging export restrictions imposed by other countries,” said Bacchus in a statement accompanying the report. “[T]he tables may be turned on the United States directly in the WTO, but also through other countries walking away from core principles that have long been critical to U.S. success in the global economy.”
Under Gov. Jay Inslee, the Dept. of Ecology has reached far beyond the normal scope of environmental impact studies for the proposed projects (to be sited in the vicinities of Longview and Bellingham, Wash.) to consider not only how the local environment might be affected, but how the use of exported coal in overseas energy production would impact the global climate.
In a letter sent by NAM to Inslee on Saturday, the industry group stated that Washington’s proposed ad hoc process “would in and of itself constitute a violation of [US] obligations under the WTO.”
We reached out to Inslee’s office for comment, but have not heard back.
The opinion of Bacchus raises enough serious questions to wonder whether Inslee and his close advisors have thought carefully about where this episode of eco-brinksmanship will take us.
How much self-inflicted damage to the US economy and our trade relations is acceptable to environmental activists in pursuit of objectives that seem too often to only achieve ideological, not environmental, goals?
If US coal exports are blocked, that will not prevent growing nations in desperate need of energy from acquiring elsewhere, most likely buying cheaper (but dirtier) coal. Among those energy-greedy nations is China, a major trading partner critical to the Washington state economy and a holder of the lion’s share of US federal debt, an estimated trillion dollars or more.
In addition to the obvious incentive for the US to begin bringing some of our dollars back home from increased LGN and coal exports, there are other strategic components worthy of consideration. The Chinese government has a solid track record on unilaterally defining linkages in economic disputes and foreign affairs, often writing its own rulebook when determining in what will suffice in rectifying perceived injustices.
Until the US is back in the driver’s seat of the relationship again – a reality that we may not see again in this writer’s lifetime – a more conservative approach to issues affecting trade with China seems prudent; avoiding actions that could yield opportunities for China to obtain cost-free advantages in negotiations a smarter path for US economic and real security.