------------------------------------------------------------
RRojas Databank Journal /January 1997
-----------------------------------------------------------------
RECONCILING TRADE AND THE ENVIRONMENT:
LESSONS FROM THE NORTH AMERICAN FREE TRADE AGREEMENT
by Robert Housman
This paper provides an overview of the integration of trade and environment
in the North American Free Trade Agreement. The paper focuses on the lessons
that the North American Free Trade Agreement can provide for further efforts
directed at reconciling trade and environment.
UNITED NATIONS ENVIRONMENT PROGRAMME
The United Nations Environment Programme was launched by the UN Conference on
the Human Environment, held in Stockholm in 1972. Its mandate is to catalyze
and coordinate activities to increase scientific understanding of
environmental change and develop environmental management tools. Among its
milestones over the past two decades is the creation of Earthwatch to gather,
analyse and convey information about the state of the global environment. In
the form of environmental management tools, UNEP's efforts have led to
conventions to protect stratospheric ozone, to control the transboundary
movement of hazardous wastes and to protect the planet's biological
diversity, among others.
ENVIRONMENT AND TRADE SERIES
UNEP's Environment and Trade Series is intended to provide both trade and
environmental decision-makers with background analysis of various policy
issues of relevance to the trade and environment debate. Views expressed in
this paper are not necessarily those of the United Nations Environment
Programme. To obtain additional free copies of this article, please write
to:
Environment and Trade
UNEP
15, chemin des Anemones
CH-1219 Chatelaine
Geneva, Switzerland
Fax: 41.22.796.9240
Series Coordinator: Scott Vaughan
THE AUTHORS
This paper was prepared for the United Nations Environment Programme by
Robert Housman with the assistance of Durwood Zaelke, the Center for
International Environmental Law (CIEL), Washington, D.C. The author wishes to
thank Gary Horlick, Dan Esty, Ambassador Ambler Moss, Ambassador Mike Smith,
Professor John Jackson, Mark Ritchie, David Hunter, Konrad Von Moltke, Justin
Ward, Mary Kelly, Gustavo Alanis and the Mexican Center for Environmental
Law, Scott Vaughan, and Art Farrance for their assistance. CIEL also wishes
to thank the Pew Charitable Trusts, the C.S. Mott Foundation, the Jesse Smith
Noyes Foundation and the U.S. Environmental Protection Agency for additional
financial support for research on trade and the environment. This paper does
not represent the views of the United Nations Environment Programme or any
other individual or organization named above. Any errors are the author's.
THE CENTER FOR INTERNATIONAL ENVIRONMENTAL LAW
The Center for International Environmental Law (CIEL) was founded in
Washington, D.C. in 1989 to strengthen and develop international and
comparative environmental law, policy and management throughout the world.
CIEL provides legal assistance in both international and comparative
environmental law, including independent research, advice and advocacy, and
education and training.
CIEL's Trade and Environment Program provides legal counsel and policy
support to other nongovernmental organizations, national and sub-national
governments, and international organizations as they attempt to understand
and address the interplay of trade and the environment.
For further information contact:
CIEL
1621 Connecticut Ave., N.W.,
Suite 300
Washington, D.C. 20009-1076
Phone: 202-332-4840
Fax 202-332-4865
E-Mail: cielus@igc.org.
FOREWORD
The 1992 "Earth Summit" found common ground upon which human development can
be put on an environmentally sustainable footing. In 1993, completion of
negotiations for the Uruguay Round set the course for a further
liberalisation of international trade. One of the most pressing and complex
challenges facing our generation is the search for a workable synthesis of
the two, of economic relations and environmental realities.
We must embark upon this course, not because it is easy, but because it is
necessary. Our planet's ecological vital-signs continue to warn us of an
accelerating rate of degradation -- depletion of the ozone layer that shields
us from harmful solar radiation, erosion of productive soils needed to grow
food, contamination of freshwater with hazardous wastes, depletion of fish
stocks, the massive loss of biodiversity, the threat of climate change and
global warming.
An important challenge identified at the Earth Summit is ensuring that trade
and environment are "mutually supportive." It is hoped that this series,
providing analysis on selected environmental issues of relevance to the
environment - trade debate, will contribute to the search for solutions now
underway.
Elizabeth Dowdeswell
Executive Director
.
=============================================================================
CONTENTS
1. INTRODUCTION
2. PROCESS ISSUES
- The Role of Regional Trade Agreements in the Integration of Trade
and Environmental Policies,
- Integration of Environmental Issues Within the NAFTA Process,
- Participation of Environmental Agencies in the Formal NAFTA
Process,
- Participation of Environmental Groups in the Formal NAFTA Process,
- Participation by Sub-Federal Entities,
- Participation by the Public,
- Environmental Assessments of NAFTA,
3. SUBSTANTIVE ISSUES
Provisions of the NAFTA Text,
A. Preamble,
B. Investment,
C. International Environmental Agreements,
D. Standards Provisions,
i. Right to Set Appropriate Levels of Protection,
ii. Right to Apply Standards,
iii. Role of Science,
iv. Harmonization,
v. Precautionary Principle,
vi. Production Process Methods,
vii. The Impact of NAFTA's Standards Provisions,
E. Dispute Resolution,
Elements of the Parallel Track,
A. The Mexican-U.S. Border Plan,
B. The North American Agreement on Environmental Cooperation,
i. General Obligations,
ii. The Commission for Environmental Cooperation,
a. NAFTA Activities,
b. Enforcement Activities,
C. The U.S.-Mexico Border Environment Cooperation Agreement:
The Funding Package,
i. The BECC,
ii. The NADBank,
D. Impact of Efforts on the Parallel Environmental Track,
4. CONCLUSION
5. ENDNOTES
======================================
INTRODUCTION
The North American Free Trade Agreement1 (the NAFTA) creates a free trade
zone that stretches from the Yukon to the Yucatan, encompassing Mexico,
Canada and the United States. The NAFTA has been touted as creating a $6
trillion market made up of some 360 million consumers - the world's largest.2
While these numbers were the primary driving force behind the agreement,
the NAFTA's importance is not limited solely to the size of its market or the
number of its consumers. As the first major free trade agreement adopted
after the recent attention to the integration of trade and environmental
policies, the NAFTA, and the process by which it was negotiated, provide many
valuable lessons for future trade agreements and other efforts that will
address trade and environment.3 This paper summarizes these lessons. Part II
discusses the process of the NAFTA's creation. Part III discusses the
substantive environmental issues related to the NAFTA.
==
"On one level, the NAFTA process
shows that a trade agreement can integrate trade
and environmental issues, however
late in the process."
PROCESS ISSUES
THE ROLE OF REGIONAL TRADE AGREEMENTS IN THE INTEGRATION OF TRADE AND
ENVIRONMENTAL POLICIES
Although some may fear the negative impact of regional trade agreements on
the international trading system,1 the confluence of regional interests
clearly played a major role in allowing the parties to achieve the
environmental gains provided by the NAFTA package. This dynamic is of
particular note when one considers the disparate political, social, and
economic situations of the three NAFTA parties.
The importance of the NAFTA and other regional trade agreements as a
testing ground for addressing environmental concerns can be seen in the
NAFTA-inspired advances in the final Uruguay Round text2 of the General
Agreement on Tariffs and Trade (the GATT).3 The NAFTA parties were able to
bring to the GATT table environmental provisions that were demonstrably
workable. This, coupled with U.S. political pressure and green pressure from
within Europe, allowed the NAFTA gains to be accepted at the wider
international level.4
INTEGRATION OF ENVIRONMENTAL ISSUES WITHIN THE NAFTA PROCESS
How to integrate environmental and trade issues into a coordinated and
cohesive policy making framework is central to the trade and environment
debate. Closely related is the question of when such integration between
trade and environmental issues should occur. The NAFTA experience speaks to
both questions.
Environmental issues related to the NAFTA first rose to prominence
during the U.S. Congressional debate over the granting of "fast track"5
authority to the President to commence formal negotiations over a free trade
agreement with Mexico and Canada.6 In order to secure the votes necessary to
obtain fast track authority then-President Bush was compelled to provide
Congress with a plan to address the environmental ramifications of the
NAFTA.7
During the early stages of the NAFTA negotiations, and following the
Bush environmental response, the three parties agreed that environmental
discussions related to the NAFTA would occur on a parallel track separate
from the actual trade negotiations.8 The parties argued the parallel track
approach was necessary to keep the trade negotiations as streamlined and
straightforward as possible.9 During this early stage environmental issues
were raised directly in the trade agreement negotiations only within the
discussions over the NAFTA's standards provisions - an area where the parties
acknowledged such linkage was inherently unavoidable.
The decision to address environmental issues separate and apart from
trade issues was widely criticized by the environmental communities of all
three nations.10 Environmental groups argued that placing environmental
issues on a parallel track would seriously limit the parties' ability to make
the cross-track trade offs necessary to "green" the NAFTA.11
As pressure continued to grow from environmental groups and members of
the U.S. Congress, environmental issues began to take on greater significance
for the agreement's chances of obtaining Congressional approval in the United
States. Environmental efforts gained further momentum through alliances among
environmental groups, labor, and consumer organizations.12 Groups outside
the United States began extensive efforts with their governments as well.13
These trilateral efforts ultimately caused the distinctions between the
environmental and trade tracks to implode. A number of environmental issues
then made their way onto the trade track and some of these, in turn,
ultimately made it into the trade agreement's text.14
While environmental changes to the agreement occurred, in principal,
during the tenures of Messrs. Bush, Salinas and Mulroney, some of the most
important NAFTA-related trade and environment integration efforts came after
the change of presidential administrations in the United States. During the
1992 U.S. presidential campaign, the NAFTA's impacts on both labor and the
environment were important issues.15 Recognizing the difficulties the
agreement faced, particularly in the U.S. Congress, candidate Clinton called
for supplemental agreements to address at least some of the outstanding labor
and environmental concerns.16 Candidate Clinton's NAFTA position was
straightforward; there would be no NAFTA without these supplemental
agreements.17
Shortly after the U.S. election, representatives of the Clinton
Administration, and their counterparts from Mexico and Canada, began working
in earnest on developing the labor and environmental supplemental agreements.
Completed on September 14, 1993, these supplemental agreements,18 coupled
with other NAFTA-related environmental efforts, became the NAFTA parallel
environmental package.
Although the parallel track approach was intended to ease the NAFTA
process, ultimately it had the opposite effect. The failure to integrate
trade and environmental issues from the outset created obstacles to a final
agreement both during negotiation and Congressional consideration. During the
negotiations it became clear that environmental issues would have to be dealt
with to some degree in the agreement itself, and new and unanticipated issues
had to be added to an already extensive negotiating docket.
Had these emerging issues been on the negotiation docket from the outset
they could have been handled more effectively and deliberately. Instead,
their late addition caused difficult eleventh hour negotiations that delayed
and threatened passage of the agreement as a whole.19 At the Congressional
stage, the fact that the environmental supplemental agreement was not part of
the NAFTA proper raised serious concerns as to the side agreement's
effectiveness.20 Congressional members questioned the binding qualities of
the supplemental agreement, and the commitment of each party to its
mandates.21 These concerns made the process of building early Congressional
support for the NAFTA package unnecessarily difficult.22 In the end, however,
the relative weaknesses of the supplemental agreements may have allowed more
Republicans in the U.S. House of Representatives to support the agreement.23
The NAFTA's lessons here are two fold. On one level, the NAFTA process
shows that a trade agreement can integrate trade and environmental issues,
however late in the process. On a second level, the difficulties caused by
the NAFTA parallel track approach suggest that both from a trade perspective
and an environmental perspective, it would have been far better to integrate
trade and environmental concerns from the outset.
Finally, despite its positive lessons for integrating trade and
environment, the NAFTA also suggests the difficulties that face broad-based
integration of trade and environment. While the NAFTA was successful at
addressing relatively discrete environmental issues (e.g. the effect of
certain standards provisions on certain environmental laws),24 the process
was less successful at dealing with larger macro-issues that were raised
during the debate (e.g. the environmental effects of NAFTA driven
agriculture).25 This aversion to complex macro-issues seems to plague the
trade and environment debate generally. The NAFTA, however, suggests the
value of parcelling the trade and environment debate into issues or issue
groups that are easier to handle. Parcelling may even assist the debate to
more easily deal with the macro-issues that must be addressed at the outset
of any meaningful integration effort.
PARTICIPATION BY ENVIRONMENTAL AGENCIES IN THE FORMAL NAFTA PROCESS
One of the most important examples of the NAFTA success in integrating
environmental and trade issues was the high degree of participation by the
federal environmental agencies of each of the parties. This sharply
contrasts with prior efforts on trade and environmental issues, where the
trade (or, at times, environmental) agency with primary jurisdiction over a
matter traditionally operated without the degree of consultation found during
the NAFTA process.26
Not only did the environmental agencies of all three parties lead
efforts on the parallel track, but, in addition, they all played substantial
roles in developing the NAFTA's sections on environmental issues.27 For
example, in the United States, the Environmental Protection Agency and the
Food and Drug Administration served as co-chairs of the U.S. delegation to
two of the three standards-negotiating sub-groups.28
Without the involvement of both the trade and environment agencies the
NAFTA could not possibly have addressed the complex interactions of trade and
environment as successfully as it did. Thus, the NAFTA's lesson here is the
value of blending regulatory expertise in coming to grips with trade and
environment issues. The NAFTA experience argues strongly for involving from
the outset both trade and environment agencies as co-equals in efforts to
address the linkages between trade and the environment.
PARTICIPATION OF ENVIRONMENTAL GROUPS IN THE FORMAL NAFTA PROCESS
In addition to the significant role played by the environmental agencies,
non-governmental environmental groups also played an expanded role in the
U.S. and Canadian formal NAFTA trade advisory processes. In Canada,
environmental representatives were appointed to the International Trade
Advisory Committee and to eight of the Sectoral Advisory Groups on
International Trade.29 Similarly, as part of his NAFTA environmental package,
U.S. President Bush placed five representatives of national environmental
groups on committees within the Private Sector Advisory Committee System. As
private advisors with government clearance, both the Canadian and U.S.
environmental representatives enjoyed access to confidential negotiating
texts, and were able to provide direct input into the NAFTA environmental
process.
While serious concerns were voiced, particularly in the United States,
about the small number of environmental advisors and the narrow scope of
constituencies and views they represented, these advisors arguably played a
significant role in the NAFTA's environmental efforts.30
The NAFTA lesson here is that non-governmental environmental groups can
play an important role in shaping trade agreements without compromising the
ability of the parties to negotiate effectively. This experience provides the
foundation for incorporating additional non-governmental environmental
consultation into future trade negotiations.
PARTICIPATION BY SUB-FEDERAL ENTITIES
Because all of the NAFTA parties have federal systems of government, and many
of their environmental protection responsibilities are delegated to the
sub-federal level,31 the role of sub-federal governmental entities in the
NAFTA process is also important. Concerns over the NAFTA's effects on the
ability of sub-federal governments to enact and implement environmental
protections were heightened because of two recent challenges by Canada to
U.S. state practices: (1) a challenge to Puerto Rico's milk safety laws32 and
(2) a GATT's panel decision finding that U.S. state practices related to beer
violated the United States' GATT obligations.33 Environmentalists,
analogizing developments within the NAFTA process to the GATT case and the
milk challenge, expressed serious concerns over the NAFTA's effects on state,
provincial, and local environmental protections.34
In response to these concerns all three parties attempted to coordinate
developments in the NAFTA process with affected sub-federal authorities to
ensure that their views and needs were considered. For example, Canada formed
a Federal-Provincial Committee on the NAFTA at both the ministerial and staff
levels.35 This committee met regularly during the course of the NAFTA process
to ensure that Provincial officials had a voice in the NAFTA developments.36
Also of interest is the degree to which sub-federal environmental
efforts related to the NAFTA were coordinated internationally. For example,
the California Environmental Protection Agency worked with the environmental
protection authorities from the neighboring Mexican State of Baja California
Norte to, inter alia: (1) increase enforcement capacity in the two states;
(2) adopt protocols and procedures for information sharing; and (3) address
air pollution from Tijuana.37 These sub-federal efforts designed to address
the localized impacts of the NAFTA provide an important model for ensuring
greater local input into future trade agreements.38
The NAFTA's lesson here is that sub-federal entities can and must play
a role in addressing any potential impacts of trade agreements. First,
sub-federal entities must play a role because they often have legally
mandated responsibilities that must be integrated into the framework of any
trade agreement. Second, sub-federal entities have a unique ability to
ameliorate the localized impacts of such agreements.39
PARTICIPATION BY THE PUBLIC IN THE NAFTA PROCESS
The NAFTA also proved notable because of the general and widespread interest
the agreement generated throughout the North American citizenry.40 Although
sub-sectors of the private industry typically are involved in developing
specific provisions of trade agreements that could affect their pecuniary
interests (for example, French agriculture or the American film industry),
the public interest in the NAFTA process was decidedly different in several
respects.
First, public interest in the NAFTA extended to the grassroots level.41
Local groups throughout all three nations significantly affected the course
of the NAFTA.42 Local efforts on the NAFTA were uniquely strong in the
U.S.-Mexico border region where special trade rules have already caused
serious local environmental threats.43
Second, public interest in the NAFTA process involved significant
coordination of non-governmental activities across national borders. Here
again, the efforts were particularly strong in the U.S.-Mexico border region,
but also existed among the nationals of all the parties.44
Third, while public interest in the NAFTA at times stressed the specific
impacts of select NAFTA provisions, in general this interest focused on
larger trade policy issues, such as the NAFTA's potential effects on:
sustainable development and environmental protection; democracy; sub-federal
environmental protections; industrial relocation and investment flight; and
employment.
Fourth, public participation in the NAFTA process was unique because it
was actively facilitated by the parties. Nothing demonstrated this more than
the nationally televised debate held in the United States between Vice
President Gore and Texas billionaire and NAFTA naysayer Ross Perot.45 In
addition to this highly publicized debate, the parties conducted a range of
activities designed to build public support for the NAFTA. For example, the
United States conducted a series of hearings both within the border region
and beyond concerning the Border Plan, where testimony was provided by more
than 650 witnesses.46
Governmental responses to public attention to the NAFTA, however, were
not uniform.47 For example, the Mexican government has been criticized for
its failure to engage the general public in a debate over the NAFTA.48
Although the Mexican approach may have enabled the government to streamline
negotiations of the NAFTA, this approach is already raising questions as to
how the agreement will be received by the Mexican people when implemented.49
The nature of public interest in the NAFTA highlights an important trend
for trade policy-making. As economic development increasingly emphasizes
expanded international trade, international and domestic public interest in
these new policies is likely to continue expanding. Additionally, increasing
public attention to trade matters is also likely to continue to place heavy
emphasis on how these newly emerging trade policies will affect non-economic
interests. Faced with growing public pressure from the grassroots level, it
will be difficult for trade negotiations to continue shading themselves from
the spotlight of public attention.
The NAFTA experience here has two central lessons for public
participation in trade and environment. First, with rising public interest in
trade agreements, the public will increasingly demand to participate in
crafting these agreements.50 The failure to provide for such participation
will only serve, in the long term, as an impediment to the acceptance of any
trade agreement.51 Thus, it is in the best interests of the involved parties
to ensure that this participation is informed, and considered in the
decision-making process. Second, the NAFTA holds an important lesson for
environmental proponents: international alliances among environmental groups
are vital to advancing an environmental agenda in trade fora.
ENVIRONMENTAL ASSESSMENTS OF NAFTA
Although public interest in the NAFTA was intense, effective public
participation in the NAFTA debate required information about the potential
environmental impacts of the NAFTA. This raised the issue of whether
environmental assessments must be prepared for the agreement.
In general, environmental assessments are designed to provide
information to government decision-makers (both negotiators and
parliamentarians) and the public, to assist in understanding the
environmental effects of proposed policies and projects, thereby allowing
adverse impacts to be eliminated or minimized or the action in question
rejected.52 From a trade perspective, some argue that the public disclosure
required in an environmental assessment process conflicts with the need of
each party in trade negotiations to keep its own negotiating positions
secret.53 The NAFTA process not only displays this tension, but it also shows
how this tension can be reduced.
The NAFTA parties took different approaches to environmental
assessments. At the beginning of the NAFTA process in the United States a
number of environmental groups petitioned the Bush administration to prepare
an Environmental Impact Statement (EIS) for the NAFTA in accordance with the
U.S. National Environmental Policy Act of 1969 (NEPA).54 The Bush
administration refused this request, but did prepare a very limited
"Environmental Review" of the agreement.55 Despite its limitations, the
Review did identify environmental problems with the NAFTA, which in some
instances, enabled the three parties to alter the agreement to address these
concerns.56
The Bush administration's Review admittedly did not satisfy the legal
requirements of NEPA, causing three environmental groups (Public Citizen,
Sierra Club, and Friends of the Earth) to use judicial means to require the
United States to comply with NEPA as it applied to the NAFTA.57
With the change of administrations in the United States, further
attention was focused on the application of NEPA to the NAFTA. Although the
Clinton administration continued fighting the application of NEPA in the
courts, the new administration did recognize that the environmental
information remained incomplete and inadequate.
Even though a U.S. Court of Appeals held that the administration could
not be required to comply with NEPA for the NAFTA,58 in an effort to address
the need for more complete environmental information the Clinton
administration prepared and submitted to Congress along with the NAFTA a
"Report on Environmental Issues."59 While the Report came late in the NAFTA
process, it proved to be one of the most detailed and balanced environmental
overviews of the agreement. Most notably, the Report dealt with both the
macro-effects of the NAFTA on the hemispheric environment and the
environmental impacts on the entire U.S. Mexico border region, although it
did not focus on discrete domestic environmental impacts of the NAFTA.60
Each of the other two NAFTA parties also took its own distinct approach
to the NAFTA environmental review process. On the one hand, the Canadian
government also refused to prepare a formal Environmental Impact Assessment
(EIA) for the NAFTA, sparking debate within the Canadian House of Commons.61
However, the Canadian government moved more quickly to address the root cause
of the debate the need for environmental information pertaining to the
agreement. Acting on its own initiative, the Canadian government prepared an
"Environmental Review" for the NAFTA.62 By initiating this review, the
Canadian government avoided the somewhat bitter battle in the United States
over whether to prepare an environmental assessment. Instead, the major issue
in Canada focused on the limited public consultation process provided in
formulating the environmental review.63
On the other hand, although Mexico prepared environmental studies for
the NAFTA, it never released a public environmental review for the
agreement.64 Mexican environmental groups sought to use the administrative
means provided by Mexican law to force the government to prepare an
environmental statement on the NAFTA.65 However, the limited access citizens
enjoy to the Mexican courts allowed Mexico largely to avoid the public
scrutiny that accompanied the U.S. decision not to apply NEPA to the NAFTA.
Although the Mexican and Canadian processes both avoided the tension
over an environmental assessment that marked the U.S. process, the results of
each of these alternative processes were markedly different. Because Canada
chose to prepare and release an environmental assessment for the NAFTA,
Canadian citizens had access to environmental information specific to their
interests that allowed for a more informed debate. In contrast, Mexican
citizens had more limited access to such information.66 Much of the NAFTA
environmental information available in Mexico was "imported" from Canada and
the United States.67 The limited access of Mexican citizens to such
information hindered their effective participation.68
There are several lessons suggested by the different approaches to an
environmental assessment taken by each of the parties. At the most basic
level these assessments show that it is possible to successfully craft basic
environmental assessments of trade agreements.69 More importantly, they
illustrate that environmental assessments can be useful policy tools, which
can actually lead to environmental improvements of a given trade agreement
without fundamentally altering the process of trade negotiation or
compromising the agreement or the benefits sought from the agreement.
Moreover, the NAFTA experience demonstrates that the failure to comply with
procedural laws, such as NEPA, can needlessly endanger the underlying trade
treaty.70 The NAFTA's environmental assessment efforts, however, represent
only the first steps in the process of determining how such assessments for
trade agreements may best be conducted. The NAFTA environmental assessment
efforts leave unanswered a range of questions concerning the scope, timing,
and justiciability of such assessments. For example, in the United States,
despite two separate lawsuits and appeals, the NAFTA process left unanswered
whether and how NEPA's EIS requirements apply to trade agreements.71
Despite these uncertainties, the NAFTA's overall lesson on environmental
assessments is that it is not only possible to prepare such assessments for
trade treaties, but it is preferable to prepare them early and on the
government's own initiative.
=====
"The Parties recognize that it is
inappropriate to encourage investment
by relaxing domestic health, safety,
or environmental measures."
- NAFTA Article 1114.2
SUBSTANTIVE ISSUES
The heightened attention to the environmental aspects of the NAFTA resulted
in an agreement that breaks new environmental ground both within the
agreement's provisions, and through the developments on the parallel track.
While many of the NAFTA's environmental efforts are modest, others are truly
ambitious. Each offers insights into the path that future trade agreements
are likely to follow on environmental issues.
PROVISIONS OF THE NAFTA TEXT
A. PREAMBLE
The central and self-proclaimed goals of most modern trade agreements are
directed at trade liberalization. Coming on the wake of the United Nations
Conference on Environment and Development, the NAFTA differs somewhat from
previous trade agreements in that it places the goal of trade liberalization
in the context of the over-arching goal of sustainable development. To this
end the NAFTA's preamble specifically provides that the agreement is intended
to:
Contribute to the harmonious development of world trade . . . in a
manner consistent with environmental protection and conservation; . . .
promote sustainable development . . .; [and] strengthen the development
and enforcement of environmental laws and regulations.1
Although this preambulatory language is without binding effect, the
basic premise that trade should advance sustainable development remains
important.2
B. INVESTMENT
The NAFTA's approach to environment-driven industrial relocation and
investment flight is one example of how the agreement seeks to implement its
commitment to sustainable development. Throughout the NAFTA process various
interests feared that Mexico's nascent environmental protection and
enforcement system, relative to the systems of its NAFTA partners, provided
businesses operating in Mexico a competitive advantage vis-a-vis their
American and Canadian competitors.3 This, in turn, fueled concerns that lower
environmental costs of operation in Mexico could contribute to both
industrial relocation and investment flight to Mexico by Northern
industries.4 Although the actual impact of differences in the environmental
costs of doing business on industrial relocation and investment flight
remains a hotly debated topic, the NAFTA parties sought to address this issue
within the agreement.
To this end, Canada proposed that a party's lowering or waiver of an
environmental protection standard to encourage investment should be an
actionable violation of the NAFTA.5 Although this proposal would have
provided a significant incentive to the parties to avoid officially lowering
or waiving standards to encourage investment, it suffered from a number of
significant shortcomings.
First, the proposal would have applied only where a party officially
waived or lowered an existing standard. Thus, the proposal did not cover the
far more common instances where the waiver or lowering was not provided
through the "official" regulatory or legislative process. For example, the
provision would not have applied where the regulatory body provided tacit
approval of an action or inaction that violated an environmental law.6
Second, it was feared that the proposal's emphasis on tightly binding
the parties to existing laws and rules, without addressing a party's failure
to regulate, could inhibit the enactment of new environmental protections.
Without an incentive to act a party might refrain from regulating in fear of
binding itself into a rigid legal requirement.
While the NAFTA did not adopt the Canadian proposal, it did adopt a
provision designed to address the issue of investment flight. Article 1114.2
of the NAFTA provides that:
The Parties recognize that it is inappropriate to encourage investment
by relaxing domestic health, safety, or environmental measures.
Accordingly a Party should not waive or otherwise derogate from or offer
to waive or otherwise derogate from, such measures as an encouragement
for the establishment, acquisition, expansion, or retention in its
territory of an investment of an investor.7
If a party believes that another party has violated this prohibition,
the party may request official consultations with the party whose actions are
in question.8 These consultations are to be conducted with a view towards
avoiding the waiver or derogation from the environmental protection at
issue.9
Article 1114.2 differs from the Canadian proposal in that it applies to
a far greater range of activities aimed at encouraging investment at the
expense of environmental protection. In exchange for its expanded scope,
article 1114.2, however, limits an aggrieved party's recourse to
consultations and publicity.10 Article 1114.2's lack of enforcement measures
has raised serious questions regarding the provision's ultimate ability to
discourage investment flight.11 In addition, even if Article 1114.2 proves
effective in dealing with future problems, it fails to address pre-existing
differences in regulatory programs that may encourage industrial relocation
or investment flight. In effect, Article 1114.2 simply preserves the legal
status quo.
Despite its limitations, the NAFTA investment provision may have a
significant impact internationally. As more nations require their domestic
industries to adopt increasingly stringent environmental measures, it is
likely that the investment flight and environmental competitiveness concerns
that drove the NAFTA's investment provision will spread.12 The NAFTA
investment provision is one of the first instances where a group of nations
has determined that the failure of environmental protection is an
unacceptable means of encouraging investment and development, and has
addressed this objectionable behavior in a trade agreement. Clearly, there
are more effective ways to thwart investment flight and industrial relocation
than those provided in the NAFTA, however, the NAFTA provisions are a first
step in this direction.13
Ironically, while environmental attention to the NAFTA's investment
provisions has focused on the relative merits or flaws of article 1114.2, the
more traditional investment provisions of the chapter may be equally
important for environmental protection. The vast majority of the NAFTA
investment chapter sets forth protections that the NAFTA parties agree to
extend to foreign investors to provide them with the confidence necessary to
invest throughout the NAFTA trade block.
Although these more traditional investment provisions are not generally
thought of as having a positive environmental impact, these provisions are
important for providing the environmental goods and services industry and
other environmentally sound investors with the security needed to invest
abroad and bring their technologies and expertise with them. Coupled with the
NAFTA's basic trade obligations (i.e., national treatment)14, these
investment security provisions may assist the diffusion of environmental
technologies and expertise to take place at a faster pace.15 In addition, the
investment provisions can be expected to promote a stronger role, especially
in Mexico, for law in general and the judiciary in particular essential
conditions for further environmental protection.
C. INTERNATIONAL ENVIRONMENTAL AGREEMENTS
The NAFTA's approach to the inter-relationship between international
environmental agreements ("IEAs") and trade rules is one of the agreement's
most aggressive attempts to advance the trade and environment debate.
Throughout the trade and environment debate a great deal of emphasis has been
placed on the preference for multilateral solutions to multilateral
environmental problems. Thus, it follows that there has been considerable
support for protecting the trade provisions of certain widely accepted IEAs
from trade challenges.16
Article 104 and its annexes attempt to realize this protection.17 These
provisions of the NAFTA list three multilateral agreements18 and two
bilateral agreements19 for protection. (The parties have subsequently agreed
to list two other bilateral treaties once the NAFTA takes effect.20) Article
104 then provides that in the event of an inconsistency between the NAFTA and
the trade provisions of these listed IEAs, the obligations of a party under
the IEA "shall prevail to the extent of the inconsistency, provided that
where a Party has a choice among equally effective and reasonably available
means of complying with such obligations, the Party chooses the alternative
that is least inconsistent with the other provisions of [the NAFTA]."21
Although the parties fully believe that article 104 preserves their ability
to take actions that would otherwise be inconsistent under the NAFTA,
environmentalists fear that article 104's "least inconsistent" language can
be used to challenge such actions.22
The NAFTA also provides that the parties may add other existing and
future IEAs to the protected list through the unanimous consent of the NAFTA
parties.23 Environmental groups have expressed concern that the requirement
of unanimity to add additional IEAs24 may unnecessarily hinder the ability of
the parties to list other IEAs. Although the requirement of unanimous consent
raises serious concerns, the parties have succeeded in adding at least two
bilateral treaties to this list.25 In the future, however, if the parties
prove less successful in adding additional IEAs to the protected list, the
flaws of this listing approach will become apparent. In the meantime, there
is the danger that listing certain treaties leaves all unlisted treaties open
to challenge without any additional protection.
Despite the limitations of article 104's protection for IEAs, the
ramifications of the provision cannot be easily discounted. The NAFTA
parties' ability to agree on article 104 serves as important notice that the
provisions of certain IEAs must and can be protected from challenge. More
broadly, the provision also affirms the belief of three important nations
within the world trade system that there are instances where trade
restrictions are both necessary and proper to advance environmental goals.
Moreover, the fact that the NAFTA parties were able to reach agreement
on this provision may also provide much needed stimulus to move similar
protection for IEAs forward at the international level, where widespread
agreement has yet to translate into any concrete protection. The NAFTA's
lesson here is that it is possible to provide added protections from trade
challenges for IEAs without undercutting the goals of a trade agreement.
D. STANDARDS PROVISIONS
Within the trade and environment debate, many of the most difficult issues
revolve around standards, the requirements a party imposes on its domestic
products and also on products in international commerce when they enter its
market. The difficulty here lies in the tension that exists between the trade
community's desire to eliminate unnecessary trade barriers26 and the
environmental community's desire to preserve the rights of each nation to
enact and implement needed environmental protections.27
The frictions that exist in the area of standards can be divided into
three general categories: (1) frictions over the role of the harmonization of
standards; (2) frictions over the trade rules that will be used to determine
when an environmental standard violates a trade obligation; and (3) frictions
over the right or ability of a party to use standards that discriminate
between products because of differences in their production process methods.
The NAFTA standards provisions are arguably the first systematic attempt
to develop, within a trade agreement, a comprehensive set of standards rules
that address environmental concerns.28 Thus, the NAFTA's standards provisions
provide valuable lessons for balancing trade and environmental concerns.
The NAFTA's standards provisions are set forth in chapters 7 and 9 of
the agreement. Chapter 7, section B, establishes sanitary and phytosanitary
(SPS) measures. Chapter 9 sets forth rules on all other standards-related
measures (SRM), except those covered under the SPS and government procurement
rules. The standards rules set forth in both chapters 7B and 9 are unique in
a number of respects important to environmental protection.
i. Right to Set Appropriate Levels of Protection
First, both the SPS and SRM rules begin with the basic premise that all the
NAFTA parties have the right to establish their own "appropriate levels of
protection."29 Thus, if a party determines that the risks from a given
product or service are too great, the party can choose to ban that product or
service outright set a zero risk standard and so long as that ban is
implemented in a non-discriminatory fashion, the ban cannot violate the
NAFTA.30
Thus, while the NAFTA generally requires that scientific evidence
support the finding of a potential risk to the environment, health or safety,
the social value judgement as to what level of risk is acceptable is left
solely to each party without any requirement of scientific justification.31
In insulating the risk management decisions of the parties from trade
challenges the NAFTA differs sharply from what has been, prior to the close
of the Uruguay Round, the emerging practice under GATT.32
ii. Right to Apply Standards
Despite the NAFTA's gains in recognizing the right of a party to set its own
appropriate levels of protection, the NAFTA still leaves environmentalists
concerned over disciplines on the manner in which a party may apply their
standards once a level of protection has been selected. The NAFTA SPS text
requires a party to apply its standards "only to the extent necessary to
achieve its appropriate level of protection, taking into account technical
and economic feasibility."33 The SRM text similarly requires parties not to
create "unnecessary obstacles" to trade in applying their standards.34
Environmentalists believe that this "necessary" language is subject to
interpretation under GATT jurisprudence, which could require environmental
standards to be "least trade restrictive" as applied.35 Such a reading could
seriously hinder the abilities of the parties to enact and implement
environmental protections. The NAFTA parties, however, do not believe that
this test lends itself to the development of a least trade restrictive
jurisprudence under the NAFTA.36
The NAFTA standards provisions are also notable because they avoid the
concept of proportionality where the environmental gains of a measure must be
proportional to the trade burdens the measure imposes.37 While the NAFTA
requires disciplines on a party's application of its standard, it does not
require that the burdens of application be proportional to the ends; so long
as the standard satisfies all other tests its burdens are irrelevant.
iii. Role of Science
The NAFTA also differs in the requirement imposed on a party \to advance a
scientific justification for its standard. Under NAFTA's SPS rules a party
does not need to prove a scientific justification for its measures. It must
only show that its standards are "based on scientific principles"38 and the
product of an acceptable risk assessment process.39
Similarly, under chapter 9's SRM rules a party need not conduct a risk
assessment before setting a standard.40 Nor does the SRM text require a party
to advance a scientific rationale for its standard; all a party must do is
ensure that the "demonstrable purpose" of its standard is to advance the
legitimate goals of, inter alia: "safety"; "protection of human, animal or
plant life or health, the environment, or consumers"; or "sustainable
development."41 While the NAFTA requires that environmental, health and
safety decisions are informed by scientific evidence,42the NAFTA leaves the
value laden process of risk management up to the domestic experts.43 Once a
risk has been identified (not proven) by a NAFTA party, that party is free to
decide how much of that risk is acceptable (e.g., a 1 in 100 risk of cancer
versus a 1 in 10 risk).
Thus, the NAFTA SRM and SPS provisions attempt to prevent "duelling
science" from serving as a justification to find an environmental, health or
safety measure inconsistent with the NAFTA's standards obligations. These
provisions are among the NAFTA's most important accomplishments in dealing
with environmental protections. They provide a valuable lesson about the
important role science can play in trade and environmental decision-making
without unduly burdening the ability to preserve and protect country's
standards.
Although the NAFTA makes progress in eliminating the problem of "dueling
science," the somewhat rigid risk assessment requirements of the NAFTA SPS
text could inadvertently serve as an obstacle to enhanced environmental,
health and safety protection.44 A technical reading of the SPS text would
require that a risk assessment must be available to the actual
decision-makers prior to the enactment of a standard. Such a reading raises
four concerns.
First, it is unclear how such a requirement would apply where a standard
is adopted as a political decision, without a prior risk assessment, but a
subsequent risk assessment confirms the risk addressed by the standard.
Second, it is unclear how such a requirement would apply to
environmental standards adopted by referendum or popular vote. These
unanswered questions place at potential risk a wide range of environmental,
health, and safety protections especially at the sub national (state,
provincial and local) level in the United States.
Third, the human and fiscal costs associated with requiring a risk
assessment before any SPS measure is taken may have a chilling effect on
future environmental, health and safety measures, especially at the sub
federal level.
Fourth, the NAFTA's risk assessment requirement may also place at risk
environmental standards that are based on consumer preference (such as
Europe's leghold traps law) and not scientific data.
iv. Harmonization
The NAFTA also attempts to chart a new path for the harmonization of
standards. First, the NAFTA seeks to ensure that the harmonization of
standards will not occur in a downward fashion towards a lowest common
denominator. To this end, the NAFTA's SPS rules explicitly provide that any
harmonization is to occur "without reducing the level of protection of human,
animal or plant life or health."45
In addition, although the NAFTA maintains clear preference for the
increased harmonization of environmental, health and safety standards,46 the
NAFTA seeks to address the threat of downward harmonization by concentrating
on alternative means of encouraging voluntary harmonization. Internationally,
the drive to harmonize standards has focused largely on either mandatory
rules aimed at requiring the use of international standards, or rules that
provide significant incentives to adopt international standards at the cost
of domestic standards.47
The NAFTA's harmonization efforts rely principally on technical
cooperation and increased transparency to facilitate: (1) the actual
harmonization of standards and (2) where technical standards may be different
but provide similar protections, equivalency determinations.48 Thus, while
the NAFTA encourages harmonization and the use of international standards,49
it does so with the explicit recognition of each party's right to exceed the
protections of such international standards.50
v. Precautionary Principle
The standards provisions of the NAFTA also break new ground for trade
policy-making by explicitly recognizing the precautionary principle of
environmental law.51 Articles 907.3 of the SRM text and 715.4 of the SPS text
each allow the NAFTA parties leeway to adopt environmental, health and safety
measures where the scientific evidence is insufficient to determine the
actual risk posed by a given product or service.52 Whereas the other NAFTA
standards provisions, discussed above, provide leeway for environmental
protections where the science is conflicting,53 these precautionary
provisions provide leeway where the science in incomplete. A party must,
however, revisit a precautionary standard once adequate information becomes
available and eliminate the standard if no scientific basis can be found for
it.54
These provisions allow the domestic authorities of each party to adopt
measures aimed at avoiding environmental, health and safety risks before
real, and often times irreversible, harms actually occur. Thus, for example,
although some may still question the environmental risks associated with
global climate change, even in the absence of perfect science the NAFTA
parties remain free to take measures aimed at addressing the threats from
climate change.
vi. Production Process Methods
Negotiations over restrictions based on production process method (PPMs)
proved more difficult than in other standards areas. The essential issue in
the NAFTA and other PPM negotiations is determining when a party may restrict
trade in products based upon the PPMs of the products in question.55 Given
the United States and Mexico's history on PPM issues,56 the difficulties
encountered during the PPM negotiations should come as no surprise.
Going into the NAFTA negotiations a number of U.S. environmental groups
sought to have the NAFTA provide disciplines on PPM-based SRMs that would
differentiate between allowable and disallowable restrictions (as opposed to
the current GATT framework, which generally disallows all PPM-based
restrictions). Although PPM-based restrictions were the topic of much
discussion, in the end the NAFTA text did not adopt this approach.
The NAFTA's SRM text provides that a standard may include rules that
apply to "goods or related processes and production methods."57 Although,
article 915.1 of the SRM text recognizes PPM restrictions as standards,
neither articles 907 nor 915 explicitly include PPM-based restrictions as
"legitimate objectives" that are protected from challenge.58 Thus, it appears
that while an environmental PPM-based restriction may be considered a
standard, it may not be able to receive the additional protections the SRM
text typically provides for other environmental SRMs. The effect of this
duality may be to leave PPMs essentially in the same posture as they are
under the GATT: at risk in all instances.59
The NAFTA's inability to resolve the PPM issue reflects the issue's
inherent difficulty. From an environmental perspective, the manner in which
a product is produced is an essential element of the product that cannot be
parceled off in determining how a given product is to be treated at market.
This perspective finds support in the fact that the greatest environmental
impacts of most products often occur not at the consumer or post-consumer
stages, but at the production stage.
The trade perspective, however, views PPMs as the proverbial slippery
slope allowances for regulating environmental PPMs will open the door for
restrictions on a vast array of issues related to production (e.g., labor
standards) that will completely disrupt international trade.60 The NAFTA's
inability to resolve the PPM issue simply reflects the incredible
difficulties this issue will pose for future trade negotiations.
vii. The Impact of NAFTA's Standards Provisions
The NAFTA's standards provisions have already begun to affect international
trade decision-making. In the final days of the Uruguay Round many of the
premises underlying the NAFTA SPS provisions were incorporated into the Final
Uruguay Round SPS text.61 For example, the final Uruguay Round SPS text
incorporates the basic premise behind NAFTA's affirmation of the right of the
parties to adopt their own appropriate levels of protection, even where such
levels exceed international standards.62 Similarly, the Uruguay Round SPS
text on harmonization acknowledges the NAFTA's premise that any harmonization
should not compromise the protections afforded by a party's chosen level of
protection.63
Although the final Uruguay Round text adopted many of the NAFTA SPS
changes, the parties refused to adopt a similar set of changes proposed by
the United States for the Technical Barriers to Trade text (the GATT
equivalent to the NAFTA SRM text).64
While the NAFTA standards rules are likely to play a substantial role in
future standards rule-setting efforts, it is likely that the NAFTA's
standards rules are only an intermediary step. The failure of the Uruguay
Round to incorporate the SRM rules suggest that the NAFTA provisions are not
the last word and future negotiations will be needed to address the
unresolved environmental issues. The remaining shortcomings of the NAFTA text
also show that additional refinements will be needed to the NAFTA framework
before the proper trade and environment balance can be found.
That the NAFTA's standards rules may serve an interim function is,
however, not to downplay the effect these rules will have on future trade
negotiations. The NAFTA's rules are already playing a major role in setting
the terms of the debate for future efforts in this area and this is likely to
continue at least for the foreseeable future.65 Moreover, assuming that the
NAFTA rules are applied fairly and rationally, they will be refined and the
weight accorded these rules in international circles is likely to increase.
Thus, while the NAFTA standards rules do not solve all the standards issues
in the trade and environment debate, they are a substantial step forward.
E. DISPUTE RESOLUTION
The NAFTA's dispute resolution provisions also attempt to move the trade and
environment debate forward. First, the NAFTA provides that in disputes among
the NAFTA parties concerning IEAs or an environmental, health or safety
measure, the challenged party has the right to have the case heard
exclusively under the substantive and procedural provisions of the NAFTA.66
This provision secures the added protections the NAFTA provides to
environmental measures by preventing the challenging party from undercutting
these protections by bringing the dispute under GATT where no such
protections exist.67
The NAFTA also explicitly provides that a NAFTA party challenging
another NAFTA party's environmental, health or safety standards bears the
burden of proof in the dispute.68 The Canadian government has summarized the
effect of this provision: "in the event of a dispute, the environment would
be given the benefit of the doubt."69 The degree of protection actually
provided by these burden shifting provisions is, however, unclear because the
NAFTA text is silent as to the level of burden imposed on the challenging
party (e.g., prima facie or reasonable doubt).70
In addition, the NAFTA clarifies the role of experts in trade disputes
and seeks to provide dispute panels with greater access to such experts.
Trade panels are typically made up solely of international trade experts.
Thus, the panel members' access to environmental expertise in disputes
concerning environmental issues is of great importance to environmentalists.
The NAFTA provides two different mechanisms for panels to receive
environmental expertise. First, subject to the terms and conditions set by
the parties to a dispute, dispute panels can request formation of an
independent Scientific Review Board to prepare a "written report on any
factual issue concerning environmental, health, safety and other scientific
matters raised" in a dispute.71 Only if both parties disapprove this request
can the panel be denied access to such a Review Board.72 The Review Board's
membership is selected by the panel in consultation with the parties.73
Second, on request of a party, or at its own initiative, a NAFTA panel "may
seek information and technical advice from any person or body that it deems
appropriate subject to the approval of, and conditions set by, the parties to
a dispute. . . ."74
Following the NAFTA model the final Uruguay Round text also provides for
access of panels to outside expertise. This movement in the Uruguay Round
suggests that the NAFTA's increased access for panels to outside expertise
has already influenced other international trade fora.75
Despite the advances made in the NAFTA dispute resolution provisions,
these provisions have come under strong criticism for their failure to
provide greater public participation and transparency in trade disputes.
Under the NAFTA's dispute resolution provisions interested members of the
general public and non-governmental organizations cannot participate in or
have access to the hearings or consultations conducted during a dispute.76
Nor can these individuals and groups obtain the filings of the parties in a
dispute.77 Similarly, in certain instances the public can even be denied
access to the panel's final decision.78
The NAFTA's failure to reflect greater transparency and participatory
rights in trade disputes will diminish the long-term viability of the NAFTA
procedural rules as a framework for future trade agreements.79 For example,
although the Final Uruguay Round text is itself weak on transparency and
public participation, the text does surpass the NAFTA's by providing that, at
the request of one of the parties to a dispute, the parties must make their
briefs, or summaries of their briefs, available to the general public. The
NAFTA's lesson for transparency then seems to be that while increased
transparency and access to trade decision-making seems inevitable, it is
likely to be an incremental process.80
ELEMENTS OF THE PARALLEL TRACK
Although the NAFTA text breaks new ground in the trade and environment
debate, many of the most interesting NAFTA trade and environment developments
occurred on the parallel environmental track.
A. THE MEXICAN-U.S. BORDER PLAN
From the outset of the NAFTA process the deplorable environmental
situation on the U.S.-Mexico border was one of the most pressing issues
confronting further hemispheric economic integration. "Driven by the
commencement of the Maquiladora Program, a program of U.S. trade incentives
. . . , and the liberalization of Mexican trade rules in 1987, industrial
development in the [b]order [r]egion has turned the area into a `virtual
cesspool and a breeding ground for infectious disease.'"81
In an effort to deal with the border's problems, in February of 1992 the
environmental ministers of the United States and Mexico released the
Integrated Environmental Plan for the Mexican-U.S. Border Area (the Border
Plan).82 The Border Plan focuses on four major objectives: (1) cooperative
efforts to strengthen the enforcement of environmental laws relating to
polluting activities; (2) increases in investments for pollution control
efforts; (3) cooperative efforts to increase the understanding of pollution
problems confronting citizens in the border region; and (4) cooperative
efforts in environmental education and training.83
Although the Border Plan makes an effort to deal with the region's
environmental problems, the plan was criticized for failing to provide: (1)
sufficient financing to conduct the actions called for;84 (2) adequate
enforcement strategies to deal with polluters who use the border as a shield
from prosecution; and (3) effective means to deal with the region's
tremendous water quality and supply problems.85
The Border Plan provides at least two important lessons. First, despite
its shortcomings, the plan provides a model for future economic integration
among parties that share common borders. While the severity of the
environmental problems on the U.S.-Mexico border may be somewhat unique,
where economic integration occurs over a shared border, the environmental
effects of such integration tend to concentrate at border crossings. The
Border Plan provides one strategy for dealing with the concentrated
environmental effects of economic expansion. Future efforts at addressing
similar concentrated impacts would do well, however, to learn from the NAFTA
experience and avoid the sometimes substantial flaws in the plan.
Second, and more importantly, the plan's shortcomings stand as a vivid
example of why environmental protection must occur contemporaneously with
economic development. Despite the added growth obtained through the largely
unregulated economic expansion in the region, the resources now available
appear insufficient to correct the current environmental situation. Thus, the
border region is an apt reminder that when it comes to environmental issues
"an ounce of prevention is truly worth a pound of cure."
B. THE NORTH AMERICAN AGREEMENT ON ENVIRONMENTAL COOPERATION
The North American Agreement on Environmental Cooperation (the NAAEC)
supplements the NAFTA and commits the NAFTA parties to a series of
obligations and institutions intended to advance both environmental
protection and the environmental sustainability of NAFTA-related trade.
Specifically, the NAAEC's stated goals include the promotion of sustainable
development, support for the environmental objectives of the NAFTA, and the
promotion of transparency and public participation in the development and
enhancement of environmental protections.86
i. General Obligations
Under the NAAEC, the parties are obligated, inter alia, to: (1) ensure high
levels of environmental protection and strive to improve these levels;87 (2)
effectively enforce their environmental laws;88 and (3) ensure that the
procedures for developing and implementing their environmental laws are
impartial, transparent, and equitable.89
One of the most important commitments secured by the NAAEC is the
agreement of the parties to provide citizens access to judicial and
administrative procedures for the enforcement of environmental laws.90 While
this provision does not guarantee that citizens will have actual standing in
domestic courts to secure the enforcement of environmental laws, it does
ensure that, consistent with a party's laws, citizens will have the right to
petition their governments to enforce these laws. This provision also
requires the parties to provide citizens who have suffered real damages
because of an environmental harm the right to sue the person or legal entity
that caused the harm.91
ii. The Commission for Environmental Cooperation
The NAAEC also establishes a new trilateral Commission for Environmental
Cooperation (the CEC).92 The CEC is a continent wide institution that is
intended to complement existing bilateral environmental institutions in North
America. The CEC is headed by the environmental ministers of the three
parties who sit as the governing Council of Ministers.93 The day-to-day
affairs of the CEC will be directed by an independent Secretariat serving an
Executive Director selected by the Council of Ministers.94 The Secretariat
and the Council of Ministers will also have input from a Joint Public
Advisory Committee made up of five non-governmental individuals from each of
the member states.95
Although the CEC has a wide range of responsibilities related to
environmental protection, for the purposes of this paper its most important
responsibilities are those that relate directly to the NAFTA. These
NAFTA-related responsibilities fall into two general categories: (1) the
CEC's responsibilities towards the NAFTA institutions and (2) the CEC's
responsibilities directed at ensuring effective enforcement of environmental
laws.
a. NAFTA Activities
The CEC is charged with a number of responsibilities that relate directly to
the NAFTA. The CEC is responsible for serving as a point of public inquiry
and comment concerning the fulfillment of the NAFTA's environmental goals.96
Additionally, the CEC may be called upon to provide information when under
article 114.2 of the NAFTA a party seeks consultations with another party
concerning the alleged derogation from environmental laws for the purposes of
attracting or securing investment.97
The CEC is also charged with helping to avoid environmental trade
disputes under the NAFTA. To this end the CEC shall provide recommendations
to the NAFTA Free Trade Commission, the trilateral NAFTA oversight body, as
to how such disputes may be avoided.98 The CEC is also responsible for
identifying experts to assist NAFTA panels hearing trade disputes that
involve environmental matters.99
b. Enforcement Activities
The CEC will also play a role in encouraging the enforcement of national
laws. One of the principal motivations for the creation of the CEC was the
need to address the potential that the NAFTA would encourage industrial
flight as companies seek to avoid environmental laws and regulations.
Although, for the most part, all three NAFTA countries have similar
environmental regulatory requirements, serious concerns were raised
concerning the failure to enforce those requirements.100 Absent effective
environmental enforcement in all the NAFTA parties, some feared the NAFTA
could encourage industrial flight and investment displacement as companies
relocate to avoid the costs of environmental compliance.101 The fear that
NAFTA might become an instrument for environmental degradation lead the NAFTA
parties to provide the CEC with ground-breaking responsibilities and powers
to oversee environmental enforcement.
The NAAEC establishes, under the auspices of the CEC, a dispute
resolution procedure to help ensure that the parties effectively enforce
their environmental laws.102 Under this procedure, a party may request an
arbitral panel be formed:
where the alleged persistent pattern of failure by a Party complained
against to effectively enforce its environmental laws relates to a
situation involving workplaces, firms, companies or sectors that produce
goods or services:
(a) traded between the territories of the Parties; or
(b) that compete, in the territory of the Party complained against, with
goods or services produced or provided by persons of another Party.103
This request for a panel requires a two-thirds vote of the CEC.104
Article 45.1 of the NAAEC provides guidance regarding what constitutes
effective enforcement for the purposes of the NAAEC:
a Party has not failed to "effectively enforce its environmental laws"
. . . where the action or inaction in question by agencies or officials
of that Party:
(a)reflects a reasonable exercise of their discretion in respect of
investigatory, prosecutorial, regulatory or compliance matters; or
(b)results from bona fide decisions to allocate resources to enforcement
in respect of other environmental matters determined to have higher
priorities[.]105
Panels will be made up of five members selected from a previously agreed
upon roster of independent and objective experts with experience in
environmental law and its enforcement or the resolution of international
disputes.106 Once a panel is formed, it shall review the information provided
to it by the parties to the dispute and any other interested NAAEC party.
Additionally, on the approval of the parties to the dispute, an arbitral
panel "may seek information and technical advice from any person or body that
it deems appropriate."107
After hearing all the evidence in a dispute, the panel will furnish an
initial report to the parties.108 If after receiving and consulting on the
initial report the parties are still unable to resolve the dispute, then the
panel shall prepare a final report to the parties and the CEC.109 This final
report shall be made public five days after its submission to the CEC.
If the final panel report finds that the challenged party has
persistently failed to enforce its environmental laws effectively, then the
parties may agree upon a corrective "action plan."110 If the parties cannot
agree on a plan, then the panel may impose one.111
Panels are also empowered under article 34.4 of the NAAEC to impose a
"monetary enforcement assessment" against the party found to have failed to
enforce its laws.112 For the first year after the entry into force of the
NAAEC these assessments are limited to $20 million (U.S.).113 Thereafter, no
single assessments can exceed .007 percent of the total trade in goods
between the parties in the most recent year for which data is available.
Monies obtained through an assessment are paid into a fund established under
the CEC, and the CEC is directed to expend these monies to improve or enhance
enforcement of environmental law in the party complained against.114
If a party fails to pay a monetary assessment or continues in its
failure to enforce its environmental laws, the complaining party or parties
may suspend annually the application of the NAFTA benefits (i.e., tariff
reductions) in an amount no greater than the monetary assessment imposed by
the panel.115 The suspension of benefits provisions of the NAAEC is not
applicable to Canada. Instead, if the Canadian government fails to pay an
assessment, the CEC, on the request of the complaining party, will collect
the assessment through a summary proceeding before a Canadian court of
competent jurisdiction.116 The different direct collection approach for
Canada was necessitated because of provisions within the Canadian
constitution. Because this approach uses the power of the domestic judiciary,
it may prove more effective in securing compliance over the long-term.
While the dispute resolution provisions of the NAAEC are ground breaking
they suffer from important limitations. First and foremost, the dispute
proceedings are government-to-government; the public is not accorded any role
in these proceedings nor is the public entitled to obtain information from
these proceedings. Second, the range of disputes that may be brought to an
arbitral panel is limited. For example, the definition of effective
enforcement eliminates entire classes of potential disputes from these
proceedings. Third, the standard for what disputes may be heard is high in
that it requires a "persistent pattern" of non-enforcement. Fourth, the
definition of what constitutes enforcement also allows the parties tremendous
leeway to avoid having a dispute brought to a panel. Fifth, the entire
dispute process is unnecessarily time consuming and convoluted, raising
serious concerns as to whether the process will ever result in environmental
gains.
In addition to the dispute resolution procedures set up under the NAAEC,
the Secretariat of the CEC is also charged with a special role in ensuring
enforcement. Under article 14 of the NAAEC, the Secretariat "may consider a
submission from any non-governmental organization or person asserting that a
Party is failing to effectively enforce its environmental laws."117 The
Secretariat then will determine, on the basis of a number of explicitly
delineated criteria, whether the submission warrants a request for a response
from the party complained against.118 If the Secretariat finds that a
response is warranted, then the Secretariat shall ask for such a response and
provide the party with the submission and any supporting materials. The party
must then provide a reply to the Secretariat.
If, after the party's reply, the Secretariat believes that the
submission deserves further consideration, then the Secretariat may request
authorization from the CEC to prepare a "factual record."119 Such
authorization requires a two-thirds vote of the CEC in favor of the
Secretariat's request.
Once approval is granted by the CEC, the Secretariat then prepares a
factual record from publicly available information, information submitted by
the public, information developed by or for the Secretariat, and information
provided by the party or parties.120 Upon completion of its efforts, the
Secretariat submits a draft and then a final factual record to the CEC.121
This final factual record may be made public by a two-thirds vote of the CEC.
These factual reports, however do not necessarily trigger any process to
correct any problems identified. This is a significant shortcoming in the CEC
structure.
While these factual records do not necessarily lead to anything more
than a report, they do offer two advantages for NAFTA-related environmental
protection. First, they allow the public to focus attention on the behavior
of the NAFTA parties. Second, these factual records can be used to identify
"persistent patterns" of non-enforcement that can lead to formal dispute
resolution proceedings as described above.
The Secretariat inquiry process is not without limitations, or in the
eyes of others, checks. For example, the Secretariat can be prevented from
developing a factual record if two-thirds of the Commission vote against
allowing the Secretariat to proceed.122 Similarly, the party complained
against can preclude further inquiry by the Secretariat if the party asserts
that the "matter is the subject of a pending judicial or administrative
proceeding...."123 Whether or not these limits will detract from the value of
the Secretariat's role in ensuring enforcement of environmental laws remains
to be seen.
THE U.S.-MEXICO BORDER ENVIRONMENT COOPERATION AGREEMENT: THE FUNDING
PACKAGE
Throughout the NAFTA process a great deal of attention was focused on the
serious environmental problems present in the U.S.-Mexico border region.
Although a number of bilateral agreements exist that are aimed at addressing
elements of these border problems, these agreements have been unable to stem
the tide of environmental degradation that plagues the region.
Building upon the U.S.-Mexico Border Plan, and in an effort to address
the environmental plight of the border region, the United States and Mexico
agreed to the U.S.-Mexico Border Environment Cooperation Agreement (the
BECA).124 The BECA establishes two new institutions dedicated to rectifying
the environmental problems of the border: The Border Environment Cooperation
Commission (the BECC); and, the North American Development Bank (the
NADBank).125
i. The BECC
The BECC is intended to work with local communities and state governments to
coordinate and facilitate environmental infrastructure (such as sewage
treatment plants) development in the region. The BECC will be headed by a
binational Board of Directors drawn from both government and non-governmental
sectors.126 On major issues the Board is required to consult with an Advisory
Council drawn predominantly from the border area and representing community,
business and environmental interests. The Advisory Council will consult on
issues regarding the project certification process, general guidelines, and
environmental criteria. The BECA also provides that the BECC must give the
public notice and an opportunity to comment on important decisions.127
The BECC will not develop projects itself, instead it will work with
interested governmental and non-governmental groups and entities on
implementing the projects they determine are necessary. One important element
of the BECC is its coordination function. The BECC will assist in
coordinating border efforts to help ensure that the most effective solutions
are brought to bear on environmental problems. This is of particular
importance because many of the problems present in the region straddle the
border, thus necessitating internationally coordinated efforts to address
them effectively.
The BECC will also play an important role in developing the financing
necessary to implement these infrastructure projects. The BECC will help in
the financial planning of projects and will assist project sponsors to obtain
public and private funding. To this end, the BECC is authorized to certify
projects for NADBank funding.128
For a project to obtain NADBank certification, the project must meet all
environmental requirements of the applicable jurisdictions. In certifying a
project the BECC must also determine, in consultation with affected states
and localities, whether the project will provide a significant level of
environmental protection.129
ii. The NADBank
The NADBank is designed to address the environmental impacts of prior
unregulated and concentrated economic activity in the border region.130 The
NADBank is intended to supplement other sources of financing for the border,
in particular national government assistance and World Bank and
Inter-American Development Bank funding. All told the two countries estimate
that approximately $7-8 billion (U.S.) will be made available for
environmental projects in the border region.
The NADBank will be capitalized and governed equally by the United
States and Mexico.131 The NADBank's principal purpose is to provide the
financial resources needed to carry out projects certified to it from the
BECC.132 The total initial paid in capital of the NADBank is $450 million
(U.S.), and its callable capital amounts to $4.55 billion (U.S.). Based on
these capital contributions, Mexico and the United States believe that the
NADBank will be able to provide roughly $2 billion (U.S.) for loans and
guarantees to infrastructure projects, with an upper limit of $3 billion
(U.S.).
While the funding package for the border includes a substantial sum of
money and provides perhaps the most publicly accountable institutions in the
entire NAFTA package, the funding package is not without its limitations.
First, the package only really attempts to deal with infrastructure projects,
such as sewage treatment plants, most of which are over the long-term revenue
generating. The package does not seriously address the costs of environmental
cleanup of existing problems, such as toxic hot spots, which do not generate
revenue.
Second, the overall cost of rectifying the border's environmental
problems is estimated by some experts as up to $20 billion (U.S.). Assuming
that the financing package is capable of generating $8 billion (U.S.), if
these cost estimates prove accurate, that leaves a shortfall of $12 billion
(U.S.) in needed additional funding. Thus, while the NADBank will play a
major role in funding environmental activities related to the NAFTA, it
cannot be looked at as the sole environmental funding source for the
environmental needs of the border region.
D. IMPACT OF EFFORTS ON THE PARALLEL ENVIRONMENTAL TRACK
One of the most interesting features of the entire NAFTA process is the
relative success of the efforts on the parallel track. Although each of the
institutions and processes created on the parallel track has its flaws, these
institutions without question break new ground. The success of the parties in
developing these institutions may be a result of the mix of institutions that
were created. The ability of the parties to agree on a CEC with both monetary
assessment and trade sanction powers seems to have been aided by the offer of
a substantial funding package aimed at solving some of the worst
environmental problems shared by at least two of the parties. This
combination of carrots and sticks provided each party with incentives
necessary for accepting the least appealing elements of the package. Now, as
the NAFTA is implemented, it will be interesting to see what effect any shift
in the balance between carrots and sticks will have on the efficacy of the
parallel track efforts.
In addition to the process-based lessons of the parallel track as a
whole, the efforts on the parallel track are also each important in their own
respect. For example, the linkages in the CEC between the failure to provide
adequate environmental protection, the competitiveness impacts of this
failure, and the ability of a country to use a trade measure to address these
impacts are important steps in the trade and environment debate. If the CEC's
dispute resolution processes, as implemented, can function in a
non-discriminatory, non-protectionist fashion that results in increased
environmental protection, then these processes will serve as an important
model for future trade and environment efforts.
Similarly, the NAFTA funding package provides an important lesson in how
developed nations can provide assistance to developing nations to enable them
to conduct trade more sustainably. These incentives for environmentally sound
trade may, in the long run, prove equally or more important to environmental
protection than the coercive elements of the package.
Moreover, the NAFTA's approach of linking the funding incentives to
binding responsibilities backed by sanctions is also informative. While this
approach is less coercive than the pure sanctions approach, it avoids the
perception that plagues the pure positive incentive approach that every
environmental gain must be purchased. This carrot and stick model may hold
the solution to many of the most difficult issues at play in the trade and
environment debate.
Although the specific structures and functions of the NAFTA parallel
track institutions are perhaps best suited to the particular circumstances of
the NAFTA, the basic premises behind each of these institutions are important
for charting the course of future trade and environment efforts.
----------------------------------------------------
CONCLUSION
The environmental provisions of the NAFTA all hold important lessons for
future trade and environment efforts. As these provisions are implemented,
their successes and shortcomings will serve as an important laboratory for
cultivating solutions to many issues in the trade and environment field.
.
----------------------------------------------------
ENDNOTES
1. Introduction
1. North American Free Trade Agreement Between the Government of the
United States, the Government of Canada and the Government of the United
Mexican States, Dec. 17, 1992, 32 I.L.M. 289 (1993) (preamble to chapter 10);
32 I.L.M. 605 (1993) (chapter 10 to Errata table)[hereinafter NAFTA].
2. Actually, the Canada-U.S. market, alone, reached the $6 trillion mark
in 1990 operating under the 1988 Canada-United States Free Trade Agreement.
See William A. Orme, Jr., Myths Versus Facts; The Whole Truths About the Half
Truths, 72 For. Affairs 2, 3-4 (1993). The NAFTA both brings Mexico into the
fold and expands the range of areas (such as financial services) covered by
the hemispheric trade rules. In fact, however, claims as to the NAFTA's
market are often misleading. Id. For example, the NAFTA does not create the
world's largest market. Id. When fully implemented, the European Union,
which entered into effect November 1, 1993, will be more integrated and
larger than the NAFTA zone. See generally Peter Ludlow, The Maastricht Treaty
and the Future of Europe, 15 Wash. Q. 119 (1992). Although the accords
setting up the Union do include certain environmental provisions, they are
less comprehensive and require less integration of trade and environment than
occurred in the NAFTA.
3. See Ambler H. Moss, Jr., Free Trade and Environmental Enhancement:
Are They Compatible in the Americas?, in Durwood Zaelke, et al., eds., Trade
and the Environment: Law, Economics and Policy, 109, at 116 (1993) ("It
necessarily follows that environmental concerns should be integrated into the
actual text of future free trade agreements. The model to follow is
NAFTA....").
2. Process Issues
1. See Michael Aho, More Bilateral Trade Agreements Would Be a Blunder:
What the New President Should Do, 22 Cornell Int'l L.J. 25, 25 (1989)
(arguing that bilateral agreements harm international trade system). But see
C. Michael Hathaway & Sandra Masur, The Right Emphasis for U.S. Trade Policy
for the 1990's: Positive Bilateralism, 8 B.U. Int'l L.J. 207, 211-16 (1990)
(arguing that bilateral agreements can help extend and develop international
trade system).
2. See infra notes 135-37 (discussing NAFTA-like changes in Uruguay
Round final text); see also Trade Negotiations Committee, Final Act Embodying
the Results of the Uruguay Round of Multilateral Trade Negotiations, Dec. 15,
1993, MTN/FA-UR-93-0246 [hereinafter Uruguay Round Final Act].
3. General Agreement on Tariffs and Trade, opened for signature Oct. 30,
1947, 61 Stat. A3, 55 U.N.T.S. 187.
4. See supra notes 135-37 and accompanying text (discussing
NAFTA-inspired changes in Uruguay Round of GATT).
5. Trade Act of 1974, 101-102, 151, Pub. L. No. 93-618, 88 Stat.
1978, 1982, 2001 (1975) (codified at 19 U.S.C. 2101, 2111-2112, 2191
(1988)); Omnibus Trade and Competitiveness Act of 1988, Pub. L. No. 100-418,
102 Stat. 1107, 1102-03 (codified at 19 U.S.C. 2902-2903). Fast track
procedures limit Congressional input into the negotiation of trade agreements
to ease the President's ability to enter into such agreements. See Alan F.
Homer & Judith H. Bello, The Fast Track Debate: A Prescription for
Pragmatism, 26 Int'l Law. 183, 184 (1992).
6. See Robert F. Housman & Paul M. Orbuch, Integrating Labor and
Environmental Concerns Into the North American Free Trade Agreement: A Look
Back and a Look Ahead, 8 Am. U. J. Int'l L. & Pol'y 719, 724-25 (1993)
(discussing role of environmental issues in the fast track debate).
7. Executive Office of the President, Response of the Administration to
Issues Raised in Connection with the Negotiation of the North American Free
Trade Agreement, May 1, 1991.
8. See Unions, Employees, and Federal Government Debate Effect of NAFTA
on U.S. Safety Rules, Daily Labor Rep. (BNA) A8 (1992) (discussing parallel
tracks).
9. Id.
10. David Marchick & Amit K. Misra, Trade Wars, Atl. Const., Apr. 11,
1991, A19.
11. Housman & Orbuch, supra note 9, at 768.
12. See Bruce Stokes, Greens Talk Trade, Nat'l J. 863, Apr. 13, 1991, at
864.
13. See, e.g., Regina Barba, NAFTA and NACE: A Mexican Perspective, in
Sarah Richardson, ed., Shaping Consensus: The North American Commission on
the Environment And NAFTA, May 1993, 10, 10-12 (discussing Mexican efforts);
Steven Shrybman, Trading Away the Environment, 9 World Pol'y J. 93, 93-110
(Winter 1991-1992) (Mr. Shrybman served as Counsel to the Canadian
Environmental Law Association).
14. See Housman & Orbuch, supra note 9, at 768.
15. See James Risen, Dynamite Deal; Trade Pact Could Backfire on Bush in
the Rust Belt, L.A. Times, Aug. 7, 1992, at B5-B6.
16. See Governor Clinton Expanding Trade and Creating American Jobs,
Remarks of Governor William J. Clinton at North Carolina State University
(Oct. 4, 1992). While certain aspects of the supplemental environmental
agreement were discussed on the parallel track, the election fundamentally
changed the direction of these negotiations. For example, prior to the U.S.
election, a North American Commission on the Environment had been agreed to
in principle. See NRDC Warns Administration Not to Rush Creation of NAFTA
Environmental Body, Inside U.S. Trade, Oct. 30, 1992, at 14. However, the
Commission as envisioned during the Bush administration bears little
resemblance to the one ultimately created.
17. See Governor Clinton, supra note 19.
18. See North American Agreement on Environmental Cooperation Between
the Government of the United States of America, the Government of Canada and
the Government of the United Mexican States, Sept. 13, 1993, 32 I.L.M. 1480
(1993) [hereinafter NAAEC]; North American Agreement on Labor Cooperation
Between the Government of the United States of America, the Government of
Canada, and the Government of the United Mexican States, Sept. 13, 1993.
19. See Administration to Release NAFTA Text Next Week as Officials
Scramble to Finish, Inside U.S. Trade, Sept. 4, 1992, at 1, 11.
20. See Gephardt Criticizes NAFTA Side Accord as `Not Supportable',
Inside U.S. Trade, Aug. 16, 1993, at S-5, S-6.
21. Id. For example, the failure of the supplemental agreement's
withdrawal clause to include a penalty to inhibit parties from dropping out
from their environmental responsibilities but continuing to participate in
the NAFTA's trade benefits was a subject of much concern. See Janet Perez,
Opponents Voice Fears on NAFTA, Phoenix Gazette, Nov. 6, 1993, at E1; Peter
Behr, U.S. Tells Canada, Mexico Side Agreements are Vital, Wash. Post, Oct.
30, 1993, at A4.
22. See Gephardt Criticizes, supra note 23.
23. Cf. Letter from Ambassador Kantor, U.S. Trade Representative to the
Honorable Bill Archer, reprinted in, Inside U.S. Trade, Oct. 22, 1993, at
16-17.
24. See, e.g.,infra notes 100-37 and accompanying text (discussing the
NAFTA's advances in the standards area).
25. See, e.g., Mark Ritchie, Free Trade versus Sustainable Agriculture:
The Implications of NAFTA, 22 Ecologist 221 (1992).
26. See generally Jan C. McAlpine & Pat LeDonne, The United States
Government, Public Participation, and Trade and Environment, in Durwood
Zaelke, et al., eds., Trade and the Environment: Law, Economics and Policy,
at 203 (1993). This criticism is more commonly directed at trade agencies,
which tend to hold greater sway in many government decision-making fora
related to trade and the environment. Id.
27. Peter L. Lallas, NAFTA and Evolving Approaches to Identify and
Address "Indirect" Environmental Impacts of International Trade, 5 Geo. Int'l
Envtl. L. Rev. 519, 543 (1993). (Mr. Lallas is an Attorney Advisor with the
U.S. Environmental Protection Agency's Office of the General Counsel; he also
served as a member of the EPA's NAFTA delegation.)
28. Id.
29. Government of Canada, North American Free Trade Agreement: Canadian
Environmental Review, Oct. 1992, at 1.
30. See Daniel C. Esty, Integrating Trade and Environment Policy Making:
First Steps in the North American Free Trade Agreement, in Durwood Zaelke, et
al., eds., Trade and the Environment: Law, Economics and Policy, 45, 48
(1993).
31. See Anne L. Alonzo, Mexico, 15 Loyola of Los Angeles Int'l & Comp.
L. J. 87, 89 (1992) (discussing Mexico's environmental regulatory system)
(Ms. Alonzo is an attorney with the U.S. Environmental Protection Agency, at
the American Embassy in Mexico City, Mexico); M. Paul Brown, Environment
Canada and the Pursuit of Administrative Decentralization, 29 Can. Pub.
Admin. 218 (1986); D. Selmi & K. Manaster, State Environmental Law (1989).
32. See In re Ultra-High Temperature Milk from Quebec, No.USA-92-1807-02
(1992)(appearing before a panel convened pursuant to Chapter 18 of the CFTA)
(Puerto Rico is a commonwealth of the United States and for the purposes of
both setting standards and trade challenges to these standards it functions
similar to a state). The milk case involved a Canadian challenge to the
testing and certification standards imposed on facilities manufacturing
ultra-high temperature processed milk for sale in Puerto Rico. Id. The
standards in question required, inter alia, the use of certified inspectors
and laboratories to test the milk's safety, and periodic (as opposed to one
time) certification of all manufacturing facilities. Id. All manufacturers
of ultra-high temperature milk are required to meet these standards. Id.
Canada argued that the standards were an unnecessary and discriminatory trade
barrier.
33. See GATT, United States Measures Affecting Alcoholic and Malt
Beverages, Report of the Panel (Feb. 7, 1992). Prior cases have raised
similar problems that federal systems face with regard to the actions of
their sub federal entities. See Canada Import, Distribution and Sale of
Alcoholic Drinks by Canadian Provincial Marketing Agencies, (adopted Mar. 22,
1988), BISD (35th Supp.) 37 (1988); Springfield Rare Coin Galleries, Inc. v.
Johnson, 115 Ill.2nd 221, 503 N.W.2d 300 (1986). The proximity in time of
the beer and milk cases to the NAFTA, however, caused them to play special
roles in the NAFTA process.
34. See, e.g., Kate Tambour, NAFTA's Cloud Over the States, 9 Policy
Alternatives on the Environment - A State Report, 1992, at 1, 5.
35. Canadian Environmental Review, supra note 32, at 6.
36. Id.
37. Gail Severns, NAFTA Prompts Environmental Cooperation on California
Border with Mexico, 2 EnviroMexico, Dec. 1993, at 4.
38. See Scott McCallum, Local Action in a New World Order, 23 Envtl. L.
623, 623-634 (1992) (discussing the important role cross-border
state-to-state coordination must play with the increasing
internationalization of commerce). (Mr. McCallum is the Lieutenant Governor
of the U.S. State of Wisconsin.)
39. See McCallum, supra note 41.
40. See George E. Brown, Jr., J. William Goold & John Cavanagh, Making
Trade Fair, 9 World Pol'y J. 309, 315 (1992) (discussing development of
public participation in U.S., Canada and Mexico on trade issues).
41. See Lori Wallach, Panel Discussion: Environmental Standards,
Enforcement and NAFTA, 5 Geo. Int'l Envtl. L. Rev. 568, 569 (1993) (noting
that the U.S. "Congress received a monumental 20 million postcards" in the
wake of the Tuna/Dolphin case).
42. Id. at 573 (discussing role of a citizens trade network made up of
40 million citizens in all 50 of the United States).
43. See, e.g., Texas Center for Policy Studies, NAFTA and the
U.S./Mexico Border Environment: Options for Congressional Action, Sept. 1992;
Letter to Ambassador Kantor, U.S. Trade Representative, from Texas Center for
Policy Studies, Southwest Voter Research Institute, Mexican American Legal
Defense and Education Fund, Border Ecology Project, Udall Center for Public
Policy, Arizona Toxics Information, International Transboundary Research
Center, and Domingo Gonzales, May 18, 1993 (regarding U.S.-Mexico border
issues).
44. See, e.g., supra note 46, Coalition for Justice in the Maquiladoras,
Annual Report 1990 1991, at 19 (listing diverse membership including groups
from all of the NAFTA countries); North American Institute, The North
American Environment: Opportunities for Trinational Cooperation by Canada,
the United States, and Mexico Report and Recommendations, Feb. 12 14, 1993
(trilateral colloquium report). These cross-border efforts build upon
similar efforts between U.S. and Canadian groups aimed at the environmental
effects of the Canada U.S. Free Trade Agreement. See, e.g., Steven Shrybman,
9 World Pol'y J. 93, 93-110 (Winter 1991-1992).
45. See, e.g., Nancy Dunne, Gore Up Front and Deals in the Backrooms
What Turned the Tide in the Fight for NAFTA, Fin. Times, Nov. 19, 1993, at 6.
46. See Lallas, supra note 30, at 543. The Border Plan is discussed
more fully at notes 155-59 and accompanying text.
47. See, e.g., Regina Barba, Nafta and NACE: A Mexican Perspective, in
Sarah Richardson, ed., Shaping Consensus: The North American Commission on
the Environment and NAFTA, Apr. 7, 1993, 10, 10-12; Adolfo Aguilar Zinser,
Authoritarianism and North American Free Trade, in Ricardo Grinspun & Maxwell
A. Cameron, eds., The Political Economy of North American Free Trade, 205,
205-11 (1993).
48. See Zinser, supra note 50, at 207. One critic summarized the
Mexican government's approach to the NAFTA as giving the "negotiations
equivalent status of a national security affair, keeping information almost
a state secret, preventing any meaningful public debate, maintaining a close
vigilance on its opponents, and transmitting only general propaganda messages
to the public." Id. The lack of public debate in Mexico produced startling
results. For example, one survey of Mexican citizens found that 45.8 percent
of those interviewed supported the NAFTA because it would make it easier for
Mexicans to get jobs in the United States. Jorge G. Casta¤eda, Can NAFTA
Change Mexico, 72 For. Affairs 66, 74 (1993).
49. See, e.g., Tod Robertson, How Mexico Brewed a Rebellion, Wash. Post,
Jan. 9, 1994, A31 (discussing the NAFTA as a root cause of the Chiapas
uprising).
50. See Wallach, supra note 44, at 571-72; See also David B. Hunter,
Toward Global Citizenship in International Environmental Law, 28 Willamette
L. Rev. 547, 552 (1992) (discussing need to democratize international
institutions). This trend toward public involvement in trade decision-making
reflects a general trend in international law toward the recognition of
non-governmental organizations and persons. See John H. Barton & Barry E.
Carter, International Law and Institutions for a New Age, 81 Geo. L.J. 535,
538 (1993).
51. See Nancy Dunne, Clinton Woes Environmentalists: Washington Seeks
Support in Congress for GATT Accord, Fin. Times, Dec. 22, 1993, at 4
(discussing U.S. opposition to Uruguay Round).
52. See World Bank, Environmental Assessment Source Book, Vol. I, 1
(1991); UNEP, Concepts and Principles in International Environmental Law: An
Introduction, Jan. 1994, 26-27.
53. See Brief of Amici Curiae American Automobile Manufacturers
Association, et al., Public Citizen v. United States Trade Representative,
No. 92-2102 (CRR), at 27-29.
54. 42 U.S.C. 4321-4370c.
55. See Interagency Task Force Coordinated by the Office of the United
States Trade Representative, Review of U.S.-Mexico Environmental Issues (Feb.
1992).
56. For example, the Review recommended that the NAFTA "respect existing
international agreements to which the U.S. is a party." See id. at 217.
This recommendation provided a framework for the agreements' protections
provided to certain international environmental agreements. See infra, notes
91-99 and accompanying text (discussing NAFTA article 104).
57. See Public Citizen v. United States Trade Representative, 782 F.
Supp. 139 (D.D.C.), aff'd, 970 F.2d 916 (D.C. Cir. 1992) (finding that
plaintiffs' claims were not yet ripe for review because no agreement existed
at that time).
58. See Public Citizen v. United States Trade Representative, 5 F. 3d
549 (D.C. Cir. 1993) (holding that because the President submitted the NAFTA
to Congress there was no "final agency action" upon which plaintiffs could
seek review of the decision not to prepare an EIS). No U.S. federal court
has held that NEPA does not apply to trade agreements. The cases involving
the NAFTA merely discuss the procedural impediments to judicial review of the
decision not to apply NEPA to the NAFTA. Id.
59. U.S. Trade Representatives Office, NAFTA: Report on Environmental
Issues, Nov. 1993 [hereinafter Report on Environmental Issues].
60. See generally id.
61. See Constance D. Hunt, A Note on Environmental Impact Assessment in
Canada, 28 Envtl. L. 789 (1990).
62. See Canadian Environmental Review, supra note 32; see also Robert
Page, Negotiating the Environmental Provisions of NAFTA: What Gains Were
Made, in Sarah Richardson, ed., The North American Free Trade Agreement and
the North American Commission on the Environment, at 10, 10-13 (1993)
(prepared for the National Roundtable on the Environment and the Economy,
Canada).
63. Page, supra note 65.
64. See Mark Ritchie, The Green Lobby Raises a Red Flag on Agreement,
Int'l Bus., Nov. 1991, at 82, 82; Mexican Environmental Groups File Suit
Challenging NAFTA, Outlook Dim, Sept. 1, 1993 Daily Exec. Rep. (BNA), at 168
d13.
65. See Mexican Environmental Groups File Suit, supra note _.
66. Cf. Zinser, supra note 50, at 207-11 (discussing lack of NAFTA
information in Mexico).
67. Id. at 207 (noting that Mexicans learned that their government was
negotiating a NAFTA from a leaked Wall Street Journal article).
68. Id. at 207-11.
69. In contrast, the NAFTA process shows the difficulties faced with the
preparation of more in-depth environmental analyses, or EISs, for trade
agreements. No party prepared either an EIS or an EIA for the NAFTA process.
See supra note 61 (discussing Public Citizen case).
70. See Susan Dentzer, Hasta la Vista, In Court, U.S. News & World Rep.,
July 12, 1993, at 47 ("What [NEPA's application to NAFTA] means is that the
proposed free-trade zone . . . could be in more limbo than ever.");
Constitutional Issue Main Focus of NAFTA EIS Hearing, World Envt. Rep, July
23, 1993 (available on NEXIS, current file) ("An EIS, in fact, would put some
members of Congress at ease, helping to dismiss doomsayers who say the
environment will suffer tremendously as a result of [NAFTA].").
71. See supra notes 60-61 (discussing Public Citizen suits).
3. Substantive Issue
1. NAFTA, supra note 1, at Preamble, 32 I.L.M. at 297.
2. See Lallas, supra note 30, at 544. But see, John Audley, Why
Environmentalists Are Angry at NAFTA, in Durwood Zaelke, et al., eds., Trade
and the Environment: Law, Economics, and Policy, 191, 198 (1993) (arguing
NAFTA's preambulatory language on sustainable development "is difficult to
take seriously" given the environmental questions the agreement leaves
unanswered).
3. See Senator Max Baucus, NAFTA Needs Environmental Side Agreement, 10
Envtl. F. 30, 30 (1993); Jane Bussey, Trade Pact Doomed if It Ignores Labor,
Environment, Critics Warn, Miami Herald, Apr. 4, 1993, 28.
4. See, e.g., U.S. Government Accounting Office, U.S.-Mexico Trade: Some
U.S. Furniture Firms Relocated From Los Angeles to Mexico, Report to the
Chairman, Comm. on Energy, House of Representatives, 1-4, GAO/NSIAD-91-191
(Apr. 1991) (furniture firms relocated to Mexico to avoid environmental
compliance costs). But See United States Trade Representative's Office,
Myths & Realities: The North American Free Trade Agreement 2 (Oct. 1992)
(arguing that no pollution haven problem exists).
5. See Steve Charnovitz, NAFTA: An Analysis of its Environmental
Provisions, 23 Envtl. L. Rep. 10067, 10072 (1993).
6. The only scenarios where the Canadian proposal would have definitely
applied were: (1) a legislature changed or eliminated a law specifically to
induce investment; or (2) a regulatory agency altered a rule specifically to
induce investment.
7. NAFTA, supra note 1, at art. 1114.2, 32 I.L.M. at 642.
8. Id. at art. 1114.2, 32 I.L.M. at 642.
9. Id. at art. 1114.2, 32 I.L.M. at 642.
10. Id. at art. 1114.2, 32 I.L.M. at 642; see also Michelle Swenarchuk,
The Environmental Implications of NAFTA: A Legal Analysis, in Canadian
Environmental Law Association, The Environmental Implications of Trade
Agreements, 101, 125 (Aug. 1993) (prepared for the Ontario Ministry of
Environment and Energy).
11. See Esty, supra note 33, at 53 ("There has been considerable debate
over this `pollution haven' provision because the remedy provided to a party
that believes another has induced investment through a reduction in the rigor
of its environmental regime is consultations and not binding dispute
resolution.").
12. See Europeans May Consider Trade Sanctions for Environmental
Violations, Envtl. Pol'y Alert, Oct. 27, 1993, at 39.
13. See generally, Robert Housman, Paul Orbuch & William Snape,
Enforcement of Environmental Laws Under a Supplemental Agreement to the North
American Free Trade Agreement, 5 Geo. Int'l Envtl. L. Rev. 593, 593-622
(1993).
14. See U.S. Government Accounting Office, Report to Congress: North
American Free Trade Agreement Assessment of Major Issues, Sept. 1993, Doc.
No. GAO/GGD-93-137B, Vol. 2, 21 (discussing basic obligations under the
NAFTA).
15. Cf. Interagency Environmental Technologies Exports Working Group,
Environmental Technologies Exports: Strategic Framework for U.S. Leadership,
Nov 1993, Appendix A: Mexico, NAFTA, and Environmental Export Opportunities,
at 33 (noting the NAFTA will stimulate environmental technology exports
through the removal of non-tariff barriers).
16. See, e.g., Michael Smith, Afterword, in Durwood Zaelke, et al.,
eds., Trade and the Environment: Law, Economics and Policy, 287, at 292
(1993) ("While a recognition of environmental trade measures contained in
multilateral agreements is not a panacea, it is a major and necessary first
step.").
17. NAFTA, supra note 1, at art. 104, Annex 104.1, 32 I.L.M. at 297-98.
18. See id. at art 104, 32 I.L.M. at 297-98. The multilateral
agreements are: (1) The Montreal Protocol on Substances that Deplete the
Ozone Layer, adopted and opened for signature Sept. 16,1987, entered into
force Jan. 1, 1989, S. Treaty Doc. No 100-10, 26 I.L.M. 1541 (the Montreal
Protocol); (2) the Basel Convention on Transboundary Movements of Hazardous
Wastes and Their Disposal, opened for signature Mar. 22, 1989, U.N. Doc.
EP/16.80/3, 28 I.L.M. 649 (the Basel Convention); and (3) the Convention on
International Trade in Endangered Species of Wild Flora and Fauna, Mar. 3,
1973, 27 U.S.T. 1087, 993 U.N.T.S. 243 (CITES).
19. See NAFTA, supra note 1, at art. 104, Annex 104, 32 I.L.M. at
297-98. The listed bilateral agreements are: Agreement on Cooperation for
the Protection and Improvement of the Environment in the Border Area, Aug.
14, 1983, T.I.A.S. No. 10,827; Agreement Between the Government of Canada and
the Government of the United States of America Concerning the Transboundary
Movement of Hazardous Waste, signed Oct. 26, 1986, T.I.A.S. No. 1109.
20. See infra note 99; Report on Environmental Issues, supra note 62, at
11. The United States has obtained commitments from Canada and Mexico to
list: The Convention on the Protection of Migratory Birds, Aug. 16, 1916,
U.S.-Great Britain (on behalf of Canada) 39 Stat. 1702, T.I.A.S. No. 628 ;
and The Convention Between the United States of America and the United
Mexican States for the Protection of Migratory Birds and Game Mammals, Feb.
7, 1936, 50 Stat. 1311, T.I.A.S. No. 912.
21. NAFTA, supra note 1, at art. 104.1, 32 I.L.M. at 297-98.
22. Id. at art. 104.1, 32 I.L.M. at 297-98; see also Housman & Orbuch,
supra note 9, at 754-55. Environmentalists argue that article 104 only
protects the IEAs proper and not the domestic laws of the NAFTA parties
implementing these IEAs; the implementing laws of the parties are required to
be "least inconsistent with the other provisions of [NAFTA]." Housman &
Orbuch, supra. note 9, at 754-55. Thus, while the terms of a listed IEA may
prevail, the law implementing the IEA may not.
23. NAFTA, supra note 1, at art. 104.2, 32 I.L.M. at 297-98.
24. Environmentalists fear that the unanimity requirement will allow one
foot-dragging NAFTA party to undermine the ability of the other NAFTA parties
to implement non-listed IEAs effectively. This fear is compounded by NAFTA's
accession clause, which does not require acceding parties to also accede to
the IEAs listed under article 104. Thus, if the list of NAFTA parties grows,
the requirement of unanimity could prove increasingly troublesome.
25. The original NAFTA text failed to list for protection the Convention
on the Protection of Migratory Birds and the Convention Between the United
States of America and the United Mexican States for the Protection of
Migratory Birds and Game Mammals. See Key Officials Address House Committee
on Environmental Benefits of Agreement, Int'l Trade Daily (BNA), Nov. 15,
1993. In an effort to secure the support of the U.S.-based National Audubon
Society, the Clinton administration was able to obtain the consent of Canada
and Mexico to place these bilateral treaties on the list of protected IEAs.
This process, however, occurred at a time when the leverage for environmental
gains was at its highest. Whether the parties will be able to agree on
future IEAs absent that leverage remains to be seen.
26. See, e.g., GATT, International Trade 20 (Vol. I, ch. III)
(1990-1991), at 24, 31 (Report on Trade and Environment).
27. See, e.g., John Audley, Why Environmentalists Are Angry About NAFTA,
in Durwood Zaelke, et al., eds., Trade and the Environment: Law, Economics,
and Policy, 191, 195-96 (1993); Patti A. Goldman, Resolving the Trade and
Environment Debate: In Search of a Neutral Forum and Neutral Principles, 49
Wash. & Lee L. Rev. 1278, 1292-96 (1992).
28. The NAFTA's attempt to craft "environmentally friendly" standards
provisions can be traced, in large measure, to the "Waxman/Gephardt"
resolution. H.R. Cong. Res. 246 2, 102d Sess., 138 Cong. Rec. H7699 (Aug.
6, 1992). This resolution provided that the U.S. House of Representatives:
"[would] not approve legislation to implement any trade agreement
including [GATT and NAFTA] if such agreement jeopardizes United States
health, safety, labor, or environmental laws (including the Federal Food,
Drug, and Cosmetic Act and the Clean Air Act).
Id. Thus, the fate of NAFTA was intimately tied to the agreement's
standards provision.
29. NAFTA, supra note 1, at art. 712.2, 904, 32 I.L.M. at 377-78, 387;
see also Report on Environmental Issues, supra note 62, at 6, 7, 9; Lallas,
supra note 30, at 545.
30. See Page, supra note 65, at 12.
31. See NAFTA, art. 712.3, 32 I.L.M. at 378; see also Report on
Environmental Issues, supra note 62, at 5-6.
32. See United States Restrictions on Imports of Tuna, adopted Sept. 3,
1991 (Panel Report No. DS21/R), at 46. The panel decision found that the
U.S. restrictions were not "necessary" within the meaning of GATT article XX
because the link between the restriction's means and its ends was not tight
enough. See id.; see also Robert F. Housman & Durwood J. Zaelke, The
Collision of Environment and Trade: The GATT Tuna/Dolphin Decision, 22 Envtl.
L. Rep. 10268, 10273 (1992); infra note 130 (discussing limits of
extrapolating from the Tuna/Dolphin decision).
33. NAFTA, supra note 1, at art. 712.5, 32 I.L.M. at 378.
34. Id. at art. 904.4, 32 I.L.M. at 387.
35. See Thailand Restrictions on Importation of and Internal Taxes on
Cigarettes, (adopted Nov. 7, 1990), BISD (37th Supp.) 200-23, para. 74
(1990).
36. Report on Environmental Issues, supra note 62, at 6-10. Cf. Lallas,
supra note 30, at 545.
37. Jeffrey L. Dunoff, Reconciling International Trade with Preservation
of the Global Commons: Can We Prosper and Protect?, 49 Wash. & Lee L. Rev.
1407, 1446-48 (1992) (discussing proportionality). Cf. Lallas, supra note
30, at 545.
38. NAFTA, supra note 1, at art 712.3, 32 I.L.M. at 378. The NAFTA
further provides that a "scientific basis" is "a reason based on data or
information derived using scientific methods." Id. at art. 724, 32 I.L.M. at
382.
39. See id. at art. 712.3, 32 I.L.M. at 378. While this standard seeks
to prevent "duelling science," it does provide discipline against
protectionism by requiring that some science must support a measure (except
in the case of precautionary standards, see infra notes 125-28 and
accompanying text). If a party can show that no scientific basis exists for
a standard, the standard would violate the NAFTA. This balance was vital to
the United States in that it preserved the United States' long-standing
position, as seen in the U.S.-E.C. beef hormone dispute, that standards must
have some scientific basis to be proper. See Holly Hammonds, A U.S.
Perspective on the EC Hormones Directive, 11 Mich. J. Int'l L. 840, 840-44
(1990).
40. See NAFTA supra note 1, at art. 907.1, 32 I.L.M. at 387-88 (a party
"may" conduct a risk assessment).
41. See id. at art. 904.3 and 915.1, 32 I.L.M. at 387, 391-92. The
"demonstrable purpose" requirement does provide discipline to prevent
unbridled protectionism. Under this test, if a party can show that the
purpose of a provision was to erect a discriminatory barrier to trade, for
example where science shows that the harm the standard is predicated on is
nonexistent, then the standard would violate the NAFTA.
42. See id. at arts. 712.3, 907.1,32 I.L.M. at 378, 387-88.
43. See Comment, Ellen J. Case, The Public's Role in Risk Assessment, 5
Geo. Int'l Envtl. L. Rev. 479, 494-95 (1993). While risk assessment focuses
the science of identifying risks, risk management is the process of
determining how to address such risk. Id. Risk management decisions must
weigh not only science, but also ethical, social, political and economic
considerations. Id.
44. See The Role of Science in Adjudicating Trade Disputes Under the
North American Free Trade Agreement: 1992 Hearing Before the House of
Representatives Committee on Science, Space and Technology, 102d Cong., 2d
sess. 38, 50-51 (statement of David Wirth). Interestingly, the NAFTA's risk
assessment requirement substantially buoys the discipline of risk assessment,
which has faced considerable criticism within the United States. See
Comment, Ellen J. Case, The Public's Role in Scientific Risk Assessment, 5
Geo. Int'l Envtl. L. Rev. 479, 480 (1993) ("The science of risk assessment
has suffered from its inability to deliver a foundation and credibility for
regulatory decisions and policies.").
45. See NAFTA supra note 1, at art. 713.1, 32 I.L.M. at 378.
46. See, e.g., id. at art. 906, 32 I.L.M. at 387.
47. See, e.g., Trade Negotiations Committee, Draft Final Act Embodying
the Results of the Uruguay Round of Multilateral Trade Negotiations, at art.
2.4.
48. See NAFTA, supra note 1, at art. 714.1, 32 I.L.M. at 378.
49. See id. at art. 713, 905, 32 I.L.M. at 378, 387.
50. See id. at art. 713, 905, 32 I.L.M. at 378, 387. For example,
article 905 provides, in pertinent part:
1. Each Party shall use, as a basis for its standards-related measures,
relevant international standards . . . except where such standards would be
an ineffective or inappropriate means to fulfill its legitimate objectives,
for example because of . . . the level of protection that Party considers
appropriate.
2. A Party's standards-related measure that conforms to an international
standard shall be presumed consistent with [the Party's Basic Rights and
Obligations].
3. Nothing in paragraph 1 shall be construed to prevent a Party, in
pursuing its legitimate objectives, from adopting, maintaining or applying
any standards-related measure that results in a higher level of protection
than would be achieved if the measure were based on the relevant
international standard.
Id. at art. 905, 32 I.L.M. at 387.
51. See UNEP, Concepts and Principles in International Environmental
Law: An Introduction, Jan. 1994, 25-26.
52. See NAFTA supra note 1, at art. 715.4, 907.3, 32 I.L.M. at 378-79,
387-88.
53. See supra notes 100-137 (discussing NAFTA standards rules).
54. Id. at art. 712, 715.4, 907, 32 I.L.M. at 377-79, 387-88.
55. For an excellent discussion of the PPM issues, see John H. Jackson,
World Trade Rules and Environmental Policies: Congruence or Conflict?, in
Durwood Zaelke, et al., eds., Trade and the Environment: Law, Economics, and
Policy (1993), 219, at 226-29.
56. See United States Restrictions on Imports of Tuna (adopted Sept. 3,
1991) (Panel Report No. DS21/R) (panel decision finding U.S. Marine Mammal
Protection Act failed to comply with GATT because, inter alia, it applied to
the production process methods of tuna harvesting outside the territory of
the United States and not to tuna as a product). While the Tuna/Dolphin
decision is generally informative, its further application may be limited.
Generally speaking, the facts of the Tuna/Dolphin decision presented a bad
test case. The case involved standards that applied to PPMs outside U.S.
territory. In addition, these standards were arguably somewhat
discriminatory. The decision has never been adopted by the GATT Contracting
Parties.
57. NAFTA, supra note 1, at art. 915, 32 I.L.M. at 391-92.
58. Id. at art. 904, 907, 32 I.L.M at 387-88.
59. See Richard B. Stewart, The NAFTA: Trade, Competition, Environmental
Protection, 27 Int'l Lawyer 751, 761 (1993); Housman & Orbuch, supra note 9,
at 738-39. The only exception to this statement is with regard to the
PPM-based restrictions provided for in the IEAs listed under article 104 of
the NAFTA. See supra notes 91-99, and accompanying text (discussing article
104). By protecting the PPM provisions of these IEAs, the NAFTA has
essentially recognized certain internationally agreed-to PPMs.
60. See Smith, supra note 90, at 287. Ambassador Smith eloquently
summarizes this fear:
Today we will use trade to dictate to the rest of the world how many
parts per million of benzene is permissible, tomorrow it will be how many
hours in the day a worker can work, next, it will be the per capita number of
schools a country must have. Surely, these seemingly innocent and laudable
social goals will sooner or later be hijacked by protectionist interests....
We will have opened a Pandora's box of protectionism.
Id.
61. See GATT TBT Agreement Reveals Failure of U.S. to Secure Changes,
Inside U.S. Trade, Dec. 24, 1993, at 11.
62. See Uruguay Round Final Act, supra note 121, at Agreement on the
Application of Sanitary and Phytosanitary Measures, preamble, art. 11, 11
note 2.
63. See id. art. 11 note 2.
64. See GATT TBT Agreement Reveals Failure of U.S. to Secure Changes,
Inside U.S. Trade, Dec. 24, 1993, at 11.
65. See supra notes 135-137 (discussing NAFTA's effect on the GATT
Uruguay Round).
66. See NAFTA, supra note 1, at art. 2005.4, 2005.3, 32 I.L.M. at 684.
67. See Esty supra note 33, at 54.
68. See NAFTA, supra note 1, at art. 723.6, 914.4, 32 I.L.M. at 382,
391.
69. Canadian Environmental Review, supra note 32, at 70.
70. See Housman & Orbuch, supra note 9, at 744; James E. Bailey, Free
Trade and the Environment Can NAFTA Reconcile the Irreconcilable, 8 Am. Univ.
J. Int'l L. & Pol'y 839, 853 (1993).
71. See NAFTA, supra note 1, at art. 2015.1, 32 I.L.M. at 696-97.
72. Id. at art. 2015.1, 32 I.L.M. at 696-97.
73. Id. at art. 2015.2, 32 I.L.M. at 696-97.
74. Id. at art. 2014, 32 I.L.M. at 696.
75. A panel's access to outside expertise is not without precedent. In
the Thai Cigarettes case, the GATT dispute panel consulted with and received
a submission from the World Health Organization. See Thailand - Restrictions
on Importation of and Internal Taxes on Cigarettes, supra note 109, at 201,
216-20. Thus, the NAFTA related movements in the Uruguay Round may be seen
as a clarification or enunciation of the existing status of expert
information under the GATT.
76. See NAFTA, supra note 1, at art. 2012.1(b), 32 I.L.M. at 696.
77. See id. at art. 2012.1(b), at 32 I.L.M. at 696.
78. See id. at art. 2017.4, 32 I.L.M. at 697.
79. Cf. Jackson, supra note 129, at 232 (discussing need for greater
transparency in international trade decision-making).
80. See id. at 234 (noting that changes to GATT in the area of
transparency are "longer term action[s]").
81. See Housman & Orbuch, supra note 9, at 777 (quoting American Medical
Association report) (citations omitted).
82. EPA-SEDUE, Integrated Environmental Plan for the Mexican-U.S. Border
Area (First Stage, 1992-1994).
83. See Timothy Atkeson, The Mexican-U.S. Border Environmental Plan, 1
J. Envt. & Dev. 143, 147 (1992).
84. Ironically, the U.S. Congress cut the already small amounts of
funding that were to be made available for these efforts. See Report of the
Administration on the North American Free Trade Agreement and Actions Taken
in Fulfillment of the May 1, 1991 Commitments, Sept 18, 1992, at 126.
85. See Jan Gilbreath Rich, Planning the Border's Future: The
Mexican-U.S. Integrated Border Environmental Plan, U.S.-Mexican Occasional
Paper No. 1, Mar. 1992, at 1, 4.
86. NAAEC, supra note 21, at art. 1, 32 I.L.M. at 1483.
87. Id. at art. 3, 32 I.L.M. at 1483.
88. Id. at art. 5, 32 I.L.M. 1483-484. This obligation includes the
responsibility to: appoint and train inspectors; monitor compliance with
environmental laws; investigate suspected violations of environmental laws;
seek voluntary compliance agreements to avoid or end violations of
environmental laws; and use legal proceedings and sanctions, or otherwise
seek appropriate remedies for violations of environmental laws. Id. A
party's failure to fulfill its article 5 obligations can serve as grounds for
dispute settlement and sanctions under the other provisions of the NAAEC.
89. Id. at art. 4, 32 I.L.M. at 1483.
90. Id. at art 5,6, 32 I.L.M. at 1483-484.
91. Id.
92. Id. at art. 8, 32 I.L.M. at 1485.
93. Id. at art. 9, 32 I.L.M. at 1485.
94. Id. at art. 11, 32 I.L.M. at 1487
95. Id. at art. 16, 32 I.L.M. at 1489.
96. Id. at art. 6(a), 32 I.L.M. at 1486.
97. Id. at art. 6(b), 32 I.L.M. at 1486.
98. Id. at art. 6(c), 32 I.L.M. at 1486.
99. Id. at art. 6(c)(iii), 32 I.L.M. at 1486.
100. See supra notes 77-78 (discussing concerns over enforcement of
environmental laws).
101. The actual effect of environmental regulations on investment and
industrial siting decisions is heavily disputed. Compare Friends of the
Earth, Standards Down Profits Up!, Jan. 1993 (finding that the failure to
comply with environmental laws can increase some industries' profits by
upwards of 200%) with Patrick Low, Do Dirty Industries Migrate? in World Bank
Discussion Papers, International Trade and the Environment, 89, 103 (1992)
(finding that environmental costs of compliance are too low to affect
investment and siting decisions). Most economic studies tend to find that,
in most instances, current environmental regulations do not alone play a
major role in such decisions. See Norman A. Bailey, Foreign Direct
Investment and Environmental Protection in the Third World, in Durwood Zaelke
et al., eds., Trade and the Environment: Law, Economics and Policy (1993), at
133, 135-36.
102. NAAEC, supra note 21, at art. 22-36, 32 I.L.M. at 1490-94.
103. Id. at art. 24.1, 32 I.L.M. at 1490. Disputes concerning laws
primarily aimed at managing natural resources are, however, excepted from
these procedures. Id. at art. 45, 2(b), 32 I.L.M. at 1495.
104. Id. at art. 24.1, 32 I.L.M. at 1490.
105. Id. at art. 45.1, 32 I.L.M. at 1494-495.
106. Id. at art. 25, 32 I.L.M. at 1491.
107. Id. at art. 30, 32 I.L.M. at 1492.
108. Id. at art. 31, 31 I.L.M. at 1492.
109. Id. at art. 32, 32 I.L.M. at 1492.
110. Id. at art. 33, 34, 32 I.L.M. at 1492.
111. Id. at art. 34.4, 32 I.L.M. at 1493.
112. Id. at art. 34.5, 32 I.L.M. at 1493.
113. Id. at Annex 34.1, 32 I.L.M. at 1496.
114. Id. at Annex 36A, 32 I.L.M. at 1496-497.
115. Id. at art. 36, 32 I.L.M. at 1493-494. A party cannot without
violating the NAFTA unilaterally suspend benefits; it may only do so at the
direction of the CEC.
116. Id. at Annex 36A, 32 I.L.M. at 1496-497.
117. Id. at art. 14.1, 32 I.L.M. at 1488.
118. Id. at art. 14.2, 32 I.L.M. at 1488. For a submission to be
considered it must: 1) be in the party's designated notification language; 2)
clearly identify the individual or group making the submission; 3) provide
sufficient information to allow review; 4) appear to be aimed at promoting
enforcement and not harassment; 5) indicate that the matter has been raised
with the party in question; and 6) be filed by an individual or group
residing in a NAFTA territory. Id. at art. 14.1 (a)-(f), 32 I.L.M. at 1488.
If a submission meets the above criteria, then the Secretariat is to look at
the following criteria to determine if a response is appropriate: 1) does the
submission allege a harm to the submitting individual or group?; 2) does the
submission, alone or in conjunction with other submissions, raise issues for
which further study would advance the goals of the NAAEC?; 3) have the
private remedies available under law been pursued?; and 4) is the submission
drawn exclusively from mass media reports? Id. at art. 14.2 (a)-(d), 32
I.L.M. at 1488.
119. Id. at art. 15, 32 I.L.M. at 1488-89.
120. Id. at art. 15.2,4, 32 I.L.M. at 1488-89.
121. Id. at art. 15.5, .6, 32 I.L.M. at 1488-89.
122. Id. at art 15.2, 32 I.L.M. at 1488.
123. Id. at art. 14.3(a), 32 I.L.M. at 1488.
124. Agreement Between the Government of the United States of America
and the Government of the United Mexican States Concerning the Establishment
of a Border Environment Cooperation Commission and a North American
Development Bank, Nov. 16, 18, 1993, 32 I.L.M. 1545 [hereinafter BECA].
125. Id.
126. Id. at I.I.3, 32 I.L.M. at 1551.
127. Id. at I.I. 4, 32 I.L.M. at 1550.
128. Id. at I.I.3, 32 I.L.M. at 1549-50.
129. Id. at I.I. 3(c)(2), 32 I.L.M. at 1549-50.
130. But see NADBank to Start Soon_How Long Will it Last?, Bank Letter,
Dec. 20, 1993, 4,4 (discussing U.S. Congressional critics attempts to limit
NADBank to one year duration).
131. BECA, supra note 198, at II.II.2, II.VI.2, 32 I.L.M. at 1557, 1564.
132. In addition to its environmental component, each country can elect
to have the NADBank use up to ten percent of its capital payments for
community adjustment and investment.
.
=============================================================================
RRojas Research Unit/1996
|
