Is this land really our land? Impacts of free trade agreements on U.S. environmental protection.

Author:Hofgard, Jurt C.
Position:Trade and the Environment
 
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  1. Introduction

    A new economic order of liberalized trade for the North American continent is imminent, but it might usher in a bleak new environmental, order. Negotiations for the North American Free Trade Agreement (NAFTA) concluded on October 9, 1992, when the trade ministers of the United States, Canada, and Mexico initiated the agreement.(1) Now, then national legislatures of the three countries must ratify NAFTA, in order to implement the agreement as viable international law. Congress must balance the United States sovereign right to protect it's citizen health and environmental integrity, with Canada's and Mexico's rights to be free from unfair U.S. trade practices disguised as environmental or health protection measures. Will Congress accept the position set forth in the NAFTA before it?

    Consider the potential economic benefits of NAFTA for North America: 360 millicn potential consumers,, a gross continental product of over six trillion dollars,(2) numerous new markets as tariffs drop, abundant investment opportunities, and the stability and vitality to compete with European, and possibly Asian, trading blocks. Advocates of a general free trade agreement between the three nations optimistically view such an agreement as a "win-win" scenario for everyone involved. They hold forth the United States-Canada Free Trade Agreement (FTA) as proof that bilateral trade agreements between the United States and its neighbors soon either will complement or replace multilateral agreements such as the General Agreement on Tariffs and Trade (GATT). In 1990, two-way, trade between the United States and Canada totalled $175 billion, up from $167 billion in 1989.(3) The FTA effectively reduced tariffs on approximately 400 products for a combined savings of six billion dollars.(4)

    NAFTA advocates claim that extending more-favorable-than-most-favored-nation status to Mexico will fan Mexican development efforts into full-scale industrialization. New capital investment from the United States will infuse Mexico's infrastructure with strength and vitality. Mexican goods will find a highly lucrative, duty-free market in its northern neighbors, and capital from the United States and Canada will create new jobs for Mexican workers. Conversely, Mexico, with a rapidly growing population of over eighty-eight million, presents a favorable market for U.S. goods and services, as well as a fertile source of labor and natural resources. Advocates tout NAFTA as a "foundation for expanded trade, expanded Prosperity, [and] expanded jobs into the next century,"(5) NAFTA might lead to other free trade agreements with other Western Hemisphere countries in line with the Bush Administration's "Enterprise for the Americas" initiative.(6)

    But general free trade agreements do not necessarily make everyone a winner, especially where the environment is concerned.(7) In particular, legitimate environmental policies and regulations became the endangered prey of the FTA's vague nontariff barrier provisions because the agreement did not address specific environmental issues adequately. In Canada, conservationist energy policies were largely abandoned, subsidies for pollution abatement have been challenged as unfair nontariff barriers and stringent pesticide Policies are threatened by harmonization clauses under the FTA. Adverse Impacts for the United State include challenges by the Canadian government of U.S. Environmental Protection Agency (EPA) regulations for phasing out the use of asbestos and temporary lower border inspection standards for meat. Indirectly, the FTA is also hampering efforts to get U.S. citizens to conserve energy by offering them cheap nonrenewable resources, such as oil and natural gas, from Canada.

    Congress, before exercising all-or-nothing power over a final NAFTA under the fast-track process,(8) should take these lessons to heart when looking at U.S.-Mexican trade and environmental links. Negotiators apparently did not learn from the environmental failures of the FTA, because provisions in NAFTA endanger and exploit North American people and resources. In particular, NAFTA as its now stands(9 could have adverse impacts on U.S. efforts to regulate pesticide residues on agricultural imports and to uphold protective measures for marine life. Congress has the last word on whether NAFTA becomes binding on the United States as international law; it should use that power to condition ratification of NAFTA on renegotiation of the treaty to ensure sovereignty in environmental protection.

    Section II serves as a general introduction to the link between world trade and environmental concerns, and between U.S. international trade obligations and national legal structures. Section III looks at the environmental consequences of the FTA for those two countries. Section IV looks at two specific issues, marine mammal protection and pesticides, where the U.S. environment might be affected by free trade between the United States and Mexico, and draws conclusions about the role of free trade environmental protection. Section VI concludes by suggesting alternative approaches to environmental protection in NAFTA.

  2. World Trade and the Environment

    1. GATT and Nontariff Barriers

      Free market economies such as those of the United States, Canada, and Mexico base their international trade relations on the General Agreement on Tariffs and Trade (GATT), an economic agreement signed in 1947(10) GATT is authoritative international trade law for approximately ninety percent of world trade among almost 100 countries.(11) Many of the provisions in the FTA, and NAFTA were modeled after GATT. GATT's initial purpose was to lower tariffs between member nations, giving those nations "most-favored-nation" status in relation to each other. Seven rounds of negotiations have eliminated most overt tariffs. Current negotiation efforts at the Uruguay Round are aimed at reducing nontariff barriers (NTBs) to trade between member nations.(12)

      NTBs, defined broadly, are conditions existing in a particular country, other than tariffs, that unreasonably impede foreign imports from competition in that country's market. GATT parties frequently challenge other parties' regulations, subsidies, tax breaks, import quotas, and inspection standards as unallowable NTBs under GATT. In its Article XX, GATT purports to safeguard member nations against other members' unfounded NTB allegations when legitimate environmental protection or other health and welfare" import or export policies are at stake.(13)

      GATT strikes a precarious balance in attempting to uphold legitimate Article XX domestic measures, such as environmental laws affecting trade, while disallowing unfair NTBs disguised as Article XX measures. Some domestic measures, such as Thailand's former ban on U.S. cigarettes while allowing sale of its own domestic brands,(14) are blatant attempts to protect domestic industry from import competition disguised as Article XX measures. Thailand's policy violated a basic tenet of international trade law because its ban, which applied unequal standards to domestic products and imports, was aimed primarily at improving domestic economic conditions rather than addressing environmental or health problems.(15) However, arguably legitimate environmental and natural resource protective measures have been characterized as NTBs in trade actions, as in Mexico's GATT challenge of the U.S. Marine Mammal Protection Act(16) as an NTBT.(17)

      In reality, therefore, each GATT member's NTB claims can limit other GATT members' sovereign discretion over domestic environmental conditions. Because GATT lacks a clear definition to distinguish between NTBs disguised as environmental measures and legitimate environmental protective measures, nations increasingly use NTB accusations to assail other countries' environmental standards in international economic competition.(18) For example, one nation might claim that another's subsidies or tax breaks to domestic industries for pollution cleanup or abatement are NTBs.(19) GATT is particularly detrimental to members' efforts to protect the international environment.(20) GATT served as a model for the FTA and NAFTA; therefore, GATT's treatment of environmental protection as NTBs sets disturbing precedent for U.S. protective measures under NFTA.(21)

      Unfortunately, neither GATT nor most other trade agreements explicitly incorporate the over 300 international environmental agreements signed since the pioneering Stockholm Convention of 1972. In recognition of the increasing linkage between trade and the environment, the governing council of GATT recently revived the Working Group on Trade and the Environment, which had not met since its founding twenty years ago. However, the working group's resurrection seems directed toward addressing how environmental regulation will encroach on free trade rather than looking at how trade law and custom could benefit the environment(22) There is a tendency for trade negotiators to ignore environmental issues or deal with them in general phraseology such as that found in GATT. The FTA was no exception to this tendency, and the Bush Administration, in negotiating NAFTA, insisted on "parallel" environmental agreements rather that direct incorporation of environmental issues into trade talks.(23) Such textual segregation fails to recognize the negative impacts that trade agreements can have on nation's environmental policies.

    2. International Trade Law versus Domestic Environmental

      Law

      Failure to recognize the interdependence of domestic environmental protection and international trade unnecessarily pits these two objectives against each other. It presents the United States and other GATT members with the dilemma of conflicting national goals. A developed country such as the United States might have international economic goals of increased free trade with neighboring countries, increased opportunities for investment in foreign...

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