THE MEXICAN ENVIRONMENT AFTER NAFTA
| Jurisdiction | United States |
(Feb 1995)
THE MEXICAN ENVIRONMENT AFTER NAFTA
Hughes & Luce, L.L.P.
Dallas, Texas
TABLE OF CONTENTS
A. INTRODUCTION
B. ENVIRONMENTAL LAWS AND ENFORCEMENT IN MEXICO
1. Legal Provisions
a. The General Law and Other Environmental Legislation
b. Regulations and Standards
c. Permitting and Licensing Requirements
d. The Environmental Impact Regulation
2. Enforcement Procedures
a. Office of Attorney General
b. Inspection Activity
c. Citizen Complaints
d. Sanctions for Failure to Comply
3. Mexican Environmental Law vs. U.S. Environmental Law
C. MEXICAN-UNITED STATES BORDER INITIATIVES PRE-NAFTA
1. Mexico-United States Integrated Border Environmental Plan
2. Maquiladoras
E. NAFTA AND THE ENVIRONMENT
1. NAFTA Environmental Commitments
2. The NAFTA Supplemental Agreement (the "Side Agreement")-The North American Agreement on Environmental Cooperation
a. Preamble and Objectives
b. Obligations
c. The North American Commission For Environmental Cooperation
d. Dispute Resolution
4. NAFTA And The Border
F. THE MEXICAN ENVIRONMENT AFTER NAFTA
1. The Side Agreement and CEC Today
2. The New River -- A NAFTA First Test?
3. NAFTA's Effect on the Future Mexican Environment
4. The Future Mexican Environment
5. Environmental Trends in Mexico
6. New Market Opportunities for Environmental Services and Products
G. CONCLUSION
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A. INTRODUCTION
The debates leading up to the U.S. Congress' decision in May, 1991 to approve the extension of the "fast-track" procedure in the negotiation of the North American Free Trade Agreement ("NAFTA") voiced the concerns of environmentalists and businesses with respect to the reputedly limited environmental regulation in Mexico and the potential comparative economic advantages of Mexican companies, due to lower required investments in pollution control and abatement systems.1
Companies, investors and lenders should be aware that these characterizations no longer reflect the current reality in Mexico. Environmental regulation in Mexico is rapidly approaching U.S. levels. Specifically, the Maquiladora industry is the focus of public and private sector scrutiny from both sides of the Mexico-U.S. border,2 regulations and technical standards are being drafted and enforced at a rapidly increasing pace, greater funding is being channeled into solving Mexico's environmental problems, and enforcement of the environmental laws and regulations has increased tenfold.
In March 1991, President Carlos Salinas de Gortari ("Salinas") ordered the shutdown of Atzcapotzalco Refinery in Mexico City, one of the largest PEMEX oil refineries in Mexico, costing an estimated U.S. $500 million and the loss of 5,000 jobs. This closure ushered in a new era of environmental policy in Mexico.
President Salinas can legitimately point to a number of environmental achievements in the six years of his administration. Overall, spending on environmental protection rose to about one percent of GNP, a significant expenditure for a developing country when compared to about two percent of GNP currently spent on environmental protection in the United States.3 In 1993
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Mexico also increased its spending for the Mexican-U.S. Integrated Border Environmental Plan ("IBEP") from a promised U.S. $460 million over a 3-year period to about U.S. $500 million in just two years.4 It is, in fact, one of only two countries worldwide that is expected to have a greater than ten percent annual growth in environmental expenditures. Private sector environmental investment and expenditures alone are projected to increase fifteen percent annually for the foreseeable future.5 In addition, just a few years ago most state governments lacked environmental programs and technical standards; now the majority of the Mexican states and the Federal District, as well as municipalities have issued their own environmental legislation. Through "coordination agreements" they establish their jurisdiction so that it does not overlap.6
In June 1993, President Salinas criss-crossed Mexico by jet and by helicopter for three days, accompanied by representatives of international and U.S. environmental groups, inspecting the various tropical forests and ecologically sensitive zones and spreading a pointed political message for local residents and international environmental groups — Mexico will protect its jobs and its environment. At some stops, President Salinas offered specific budget data on how much money had been invested in environmental programs during the four years of his administration. "This year, federal, state and local governments will spend more than three billion new pesos (the exchange rate is about 3.1 peso per U.S. dollar) for ecological projects," he said. "This is the only way we can improve conditions so that we leave something for future generations."7
The Salinas government has not, however, acted alone. The environmental consciousness of, and pressure from, the population and associations in Mexico have provoked the enactment of new laws and regulations and, most importantly, their enforcement.
At this new era, businessmen and women who are operating or intending to operate in Mexico, must become familiar with Mexican environmental laws and regulations. As in the United States, failure to comply with the legislative and regulatory standards may result in the imposition of fines or imprisonment. More importantly, Mexican environmental laws provide
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the government with greater latitude than U.S. law in shutting down facilities and operations for failure to comply.
B. ENVIRONMENTAL LAWS AND ENFORCEMENT IN MEXICO
1. Legal Provisions
a. The General Law and other Environmental Legislation.
Mexico's primary environmental statute, The General Law of Ecological Equilibrium and Environmental Protection, also known as Ley General or General Law, is the legal foundation for Mexico's environmental protection program. It became effective March 1, 1988,8 replacing the previous law on environmental matters. The spirit of the General Law was taken notably from the legislation of the United States. What may surprise most Americans is that where Mexico's program differs, it is sometimes more stringent than the United States counterpart.
The Law contains specific provisions regarding ecological policy, environmental impact, ecological planning and regulation, ecological criteria on development, protected natural areas, air, water, soil, noise, vibrations, nuclear energy, thermal and luminous energy, odors and visual pollution, toxic substances, hazardous activities and hazardous waste. It is administered by the Secretariat de Desarollo Social (the Ministry of Social Development) "SEDESOL" (formerly SEDUE), Mexico's equivalent of the United States Environmental Protection Agency (the "EPA").
Additional relevant Federal Environmental Legislation includes the Natural Waters Law,9 the Decree Relating to Import of Hazardous Materials or Residues that by Their Nature May Cause Damage to the Environment or to Property or Constitute a Risk to Public Health or Welfare, and the National Program for Protection of the Environment, 1990-1994 (the "Program"), which the entities and agencies of the Federal Public Administration must observe
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in facilities. The Program, which has five chapters, follows the premise that was established under the National Plan for Development, 1989 — 1994, of harmonizing the general process of development and modernization with the reestablishment of quality of the environment for the conservation and respect of natural resources. The first chapter contains the diagnosis that describes the geographical characteristics of the territory, the general elements of the environmental problems, and the present situation of the natural resources, including Ecological Regulation-the process of planning directed at evaluating the scheduling of land use and management of natural resources in Mexico and the zones over which the nation exercises sovereignty and jurisdiction in order to preserve and restore ecological equilibrium and to protect the environment. The second chapter deals with objectives such as environmental management as one of the basic instruments for the modernization of national development. The third chapter includes the general, territorial, and environmental management strategy. The fourth chapter establishes the goals, and chapter five establishes the mechanisms and instruments to solve specific problems.10
There are also related federal laws and regulations, such as the Mexican Political Constitution, the General Health Law, the Social Security Law, the Federal Law of Measures and Standards, the Federal Labor Law, Regulations for Occupational Health and Safety, the Forest Law, the Fishing Law, the Federal Hunting Law, and the General Law of Human Settlements. Mexico is also a signatory to various international treaties including the Montreal Protocol and the Basel Convention.
b. Regulations and Standards.
Regulations and standards explaining and implementing the Law are developed and updated chiefly by an agency of SEDESOL, Instituto Nacional de Ecologia (the National Institute of Ecology) or "INE". INE is divided into four operating divisions: environmental planning, technical standards, development of natural resources and research and development.
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In addition to developing and evaluating environmental policy and standards, INE issues permits, licenses and regulations. Some of the most relevant regulations include:
• Regulations of the General Law of Ecological Equilibrium and Environmental Protection Regarding Environmental Impact
• Regulations of the General Law of Ecological Equilibrium and...
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