The Progressive ResponseVolume 3, Number 36
Editor: Tom Barry (IRC)
Table of ContentsI. Updates and Out-TakesNAFTA & ENVIRONMENT FREE TRADE AND ENVIRONMENTAL POLICYMAKING IN MEXICO
I. Updates and Out-Takes
ENVIRONMENT IN FOCUS: ON THE ROAD TO SEATTLEThe impact of international trade on the environment was not a topic of negotiation during the Uruguay Round, and it is not scheduled to be one for discussion at the Seattle Ministerial (November 30-December 3). After having successfully used the Uruguay Round to advance its economic liberalization agenda (not only in the trade of goods but also in services and intellectual property rights), Washington is hoping that a new round of trade talks--called the Millennium Round--will maintain the free market momentum by going forward with the "built-in agenda" of liberalization negotiations on services and agriculture, as well as by addressing a new schedule of industrial liberalization in eight sectors, including environmental goods and services. Washington has not opposed addressing environmental issues as part of the Seattle Declaration but neither has it expressed strong leadership. Its proposal for Trade and Sustainable Development does not suggest that the environment should be "mainstreamed" within the WTO. Rather the U.S. suggests the Committee on Trade and the Environment (CTE) continue to be the main forum for discussion of environmental issues. And in keeping with its fixation on liberalization schemes, its approach to environmental concerns centers on eliminating governmental subsidies in the fisheries sectors, elimination of agricultural export subsidies, and on advancing a "transition from domestic subsidy programs that encourage the degradation of natural resources and distort trade." At a September 1999 meeting, the G-77 group of developing countries opposed proposals that environment and labor concerns be addressed in Seattle. The following is a brief summary of some of the leading trade and environment issues that have surfaced as part of the WTO's "Road to Seattle": Aid Not Protectionism: A common concern expressed by Southern nations is that Northern countries, having higher standards of living and a relatively high level of environmental regulations already in place, use environmental and consumer protection as a cover for economic protectionism that limits Southern export markets. Rather than resorting to trade sanctions against poorer nations with limited regulatory infrastructures, the industrialized nations should aim to increase sustainable development in the South by providing easy access to environmental technology, funding for environmental protection, and technical support. In particular, Southern nations and NGOs have objected that the Trade-Related Intellectual Property Rights (TRIPS) agreement has been used to enable technology owners to reap profits from monopoly pricing while hindering the transfer of technology and that nontariff barriers are commonly in place in sectors, such as agriculture and textiles, that are not competitive with Southern exports. Committee on Trade and Environment (CTE): Established at the conclusion of the Uruguay Round, the CTE is "to identify the relationship between trade measures and environmental measures in order to promote sustainable development" and "to make appropriate recommendations on whether any modifications of the provisions of the multilateral trading system are required, compatible with the open, equitable, and nondiscriminatory nature of the system." According to the WTO, the CTE has "brought environmental and sustainable development issues into the mainstream of WTO work." Most observers disagree, with many in the environmental community calling for the committee's termination on the grounds that it keeps environment off the main negotiating agenda. Eco-Labeling: At issue within the WTO is the extent to which eco-labeling functions as a barrier to imports and as protection for domestic production. U.S. environmentalists widely support a broad right to eco-labeling--meaning voluntary systems that promote a consumer's right to know through objective, transparent, and scientifically defensible labeling systems. Environment as a WTO Concern: The absence of the environment or other trade-related social concerns--such as respect for core labor rights--from the WTO's negotiating agenda reflects the traditional narrow view of international trade prevalent in the corporate world, opposing perspectives of North and South governments, and the lack of a clear NGO agenda for environmental global governance. Although hardly in the mainstream, environment does have a place within the WTO not only in the form of the CTE but also in the Marrakech Agreement that established the WTO. The preamble notes the importance of "allowing for the optimal use of the world's resources in accordance with the objective of sustainable development, seeking both to protect and preserve the environment and to enhance the means for doing so in a manner consistent with their [member countries] respective needs and concerns at different levels of economic development." As evidence of this concern, WTO points to a provision in the Agreement on Agriculture that exempts direct payments under environmental programs from rules requiring members to reduce support for agricultural production. Similarly, the Agreement on Subsidies and Countervailing Measures treats as a nonactionable subsidy cases where governments cover up to 20% of an industry's costs of adapting existing facilities to new environmental legislation. Additionally, the new Agreements on Technical Barriers to Trade on Sanitary and Phytosanitary Measures take into account the use by governments of measures to protect human, animal, and plant life and health and the environment. Institutional Balance: Swirling around the contentious issues of trade and environment within the WTO is a larger debate of the proper institutional framework for global governance with respect to international environmental protection and preservation. Multilateral Environmental Agreements (MEAs), although varying widely in effect, are the most effective form of global environmental governance because they have steadily created a new set of international norms that are slowly gaining acceptance. NAFTA's environmental side agreements created an important layer of trade-related regional environmental governance that environmentalists advocate should be a minimum for future trade agreements. Some have proposed the creation of a new multilateral environmental organization similar to the International Labor Organization (ILO), but this proposal has been criticized on several grounds: 1) that like the ILO a new environmental organization would be sidelined by such organizations as the WTO and would be without enforcement power, 2) that there already exist such multilateral environmental organizations as the Commission on Sustainable Development (CSD), UN Environmental Program (UNEP), and Global Environmental Facility (GEF). It has been argued that rather than relying on its internal advisory committee, the WTO should rely on these multilateral environmental organizations in coordination with other UN entities such as UNDP and UNCTAD to set trade and environment guidelines. Impact Assessment, Not Further Liberalization: Many NGOs have forcefully expressed the view that there should be no further liberalization of global trade and investment without a serious impact assessment of the liberalization advanced by the Uruguay Round, and numerous governments have noted the same concern, especially with respect to intellectual property rights. Mainstreaming the Environment: Some Northern trade representatives have advocated that the WTO "mainstream" environmental issues within WTO trade rules rather than having environmental concerns ignored, left to one powerless committee, or worse yet seen as the source of actionable trade barriers. Such demands are routinely opposed by Southern countries on the grounds that economic development and poverty alleviation should be the top priorities of trade rules and that Northern countries will use any new environmental language as justification for nontariff barriers to Southern exports. MEAs and WTO: Within the CTE and among the international environmental community, the relationship between the WTO and Multilateral Environmental Agreements (MEAs) must be worked out. There have been proposals that the WTO rules acknowledge that member countries can modify their trade practices as deemed necessary to abide by MEAs. Northern countries have expressed some support for modifying Article XX to ensure that measures taken by nations to comply with international norms and standards as established by international treaties will not be regarded as violations of free trade rules. Within the environmental community, there is a strong conviction that the environmental regimes created by Multilateral Environmental Agreements (MEAs) should be extended and enforced--and that WTO rules should not have priority over MEA-related measures even when one of the disputing parties has not ratified the MEA in question. Sustainable Development: Most WTO members favor a conservative interpretation of sustainable development that sees no contradiction between environmental protection and increased trade and economic growth. They argue, in fact, that trade and growth facilitate environmental protection by advancing more efficient technology and decreasing poverty (regarded a major cause of environmental destruction because of associated land- and fuel-use practices, for example). Although there are many environmental NGOs who are comfortable with this conservative spin on sustainable development, many others assert that there are ecological limits to trade, growth, and consumption that must be acknowledged if sustainable development is to be meaningful. U.S. Leadership: The United States has been a leading although not forceful supporter of integrating environmental concerns into WTO rules. President Clinton has expressed the need to ensure that trade rules support national policies providing for high levels of environmental protection, support for the demand of environmental NGOs that there be greater inclusiveness and transparency in WTO proceedings, and opposition to environmentally damaging subsidies. But this rhetorical commitment by Washington has not been backed up by effective leadership either in vigorous intervention in disputes that challenge the country's right to implement higher standards of environmental protection or in facilitating an increased voice of environmental NGOs in trade negotiations. The U.S. government has not used its influence to forge a consensus position within the CTE and the WTO membership at large that advocates stronger trade and environment protection linkages. Moreover, the U.S. government tends to support elements of the business community that warn against the use of the precautionary principle (Lack of full scientific certainty should not be used as a reason for postponing cost-effective measures to prevent environmental degradation, where there are threats of irreversible or serious damage) or that work to ensure that international treaties (such as climate change and biodiversity) do not adversely impact important elements of the U.S. business community. Win-Win-Win Scenario: Increasingly, proponents of new WTO commitments to environmental protection argue there is no inherent contradiction between sustainable development and increased international trade. They advocate identifying measures that will lead to trade liberalization, better environmental protection, and improved economic and social development of developing countries. Ending environmentally destructive subsidies by governments would be one such measure. For More InformationTrade and Environment, FPIF Policy Brief World Trade Organization (WTO) International Center for Trade and Sustainable Development (ICTSD)
NAFTA & ENVIRONMENT Five years and counting since the NAFTA accords took effect, there is much to be done to realize its promise of supporting sustainable development. It is now plain that NAFTA's rules protecting trade and investment in the trinational region are an invitation to the private sector to challenge environmental regulations. These rules and their implementation procedures must be shored up if a gradual erosion of state and provincial standards is to be avoided. At minimum, NAFTA's trade officials should be required to consult with the CEC and national environmental ministries in dealing with environment-related trade disputes. In the matter of NAFTA Chapter 11 challenges to environmental rules, the CEC has already proffered its advisory services to the Free Trade Commission, an offer the FTC should accept. NAFTA's most constructive policy contribution has been the development of new international institutions and initiatives for environmental protection in the trinational region. Operating with very limited resources, these institutions have performed judiciously and shown their value. Thus far, however, the three governments have not allowed these auxiliary bodies to function to their potential. Neither the CEC, BECC, nor NADBank have been adequately funded, resulting in staff shortages, fewer programs, and less efficient performance of mandated functions. The federal governments should augment budgetary support for these institutions and allow them to respond more effectively to public concerns. Additional refinement at the level of operating procedures and organizational practices is also necessary. The CEC should strengthen its ties to NAFTA's economic institutions and deepen its consultative relationship with other NAFTA environmental bodies and programs. CEC's council should move quickly to develop the necessary procedures to implement its Chapter V dispute resolution process. The CEC secretariat must continue to monitor and assess its citizen submission process, taking care, on the one hand, to support and improve citizen access to these procedures and, on the other, to preserve and strengthen its reputation as an independent and fair-handed body. At the program level, if the CEC is to emerge as the leading independent body for assessing NAFTA's impact on the North American environment, then it must move quickly to refine its evaluation framework and to apply it broadly to the analysis of sectoral trade and environmental issues. The CEC should also hasten to conclude a trinational agreement on transboundary environmental impact assessment. Along the U.S.-Mexico border, after a slow start, both BECC and NADBank have made headway in certifying and funding projects for needy communities. BECC is unquestionably an institutional model of transparency and public participation in developing water and wastewater projects that serve both environmental and social aims of sustainable development. BECC should, however, show that it is willing to consider meritorious projects not specifically tied to urban water provision and wastewater treatment. It should also be encouraged to make better use of its advisory board and to take every opportunity to ensure that the Mexican public is participating in decisions that affect Mexican communities. Notwithstanding its recent efforts to better utilize BECC as a platform for soliciting public input in funding decisions, NADBank is still too insular and should open its doors to greater public scrutiny. Together, these linked institutions must strive to improve public access and input opportunities and must insure that interested parties and stakeholders are better informed. The Border XXI Program also needs attention. Its current menu of federal, nation-to-nation projects is not enough. The two governments should give greater attention to the practical matter of bolstering the capacity of state and local regulatory bodies, NGOs, and the social sector. In this regard, the governments should lend their support to such innovative grassroots initiatives as the El Paso-Ciudad Juárez binational air shed task force, an outstanding model for involving local actors in long-term cross-national efforts to mitigate pollution and improve public health. At the program level, leading initiatives should be clearly prioritized, consistently funded, and better coordinated amongst participating agencies. For instance, Border XXI's national coordinators should hasten to apply and refine its new environmental indicators so that accurate appraisals of environmental conditions can guide public policy improvements. In sum, NAFTA is a first step in the direction of bridging the policy gap between trade and environment. NAFTA's various environmental initiatives should be supported and strengthened, and, at minimum, incorporated into future trade agreements. At the global level, NAFTA's shortcomings indicate what should be done to strengthen the prospects for sustainable development in future accords. First and foremost, environmental machinery, now largely relegated to secondary or sideline status, should be built into trade agreements along with action-forcing compliance mechanisms. Environmental ministers should be able to vet and veto environment-degrading trade initiatives. Environment secretariats should be strengthened and made more autonomous, with independent investigative abilities. Trade and investment panels should coordinate their work with the environmental secretariats to insure consideration of environmental values. Second, participating governments must pay greater attention to implementing details. They must follow through with procedural rules and practices that give substance to formal mandates. Third, governments must invest additional resources in the institutions charged with monitoring and enforcing these agreements. Sustainable development requires no less. (Visit the FPIF website to read entire policy brief: http://www.fpif.org/briefs/vol4/v4n26nafta.html) For more informationCommission for Environmental Cooperation International Institute for Sustainable Development Southwest Center for Environmental Research and Policy Texas Center for Policy Studies Udall Center for Studies in Public Policy Border Ecoweb Border Information and Outreach Service (BIOS) Action Kit Canadian Global Change Program North American Institute Trade and Environment Database U.S.-Mexico Border XXI Home Page
FREE TRADE AND ENVIRONMENTAL
POLICYMAKING IN MEXICO As leaders of the first Latin American nation to join in the U.S. project
to forge a "Free Trade Area of the Americas," Mexico's authorities
have, for over a decade, been largely successful in shaping a new policy
setting, one in which unprecedented institutional changes are occurring.
At the same time, and as part of the same process, pressures from international
environmental groups with influence in the political processes in their
own countries or in international organizations are also increasing their
effectiveness in placing their concerns on the policy agenda in Mexico.
Additionally, NAFTA's environmental side agreement, with its new consultative
bodies--institutions the Mexican government was "forced" to
accept in exchange for approval of the expanded free trade agreement As positive as these developments may be, however, it is clear that, in spite of a new awareness of and sensitivity to environmental issues in Mexico, the tremendous increase in speculative international financial flows, the surge in direct foreign investment, and the volume of trade sparked by NAFTA are having a significant deleterious impact on the environment. The prevailing opinion in official circles that economic growth is the best remedy for environmental problems is not only unwarranted but also probably wrong, at least in the short run in Mexico. The combined result of the far-reaching changes implemented following Mexico's accession to GATT and the signing of NAFTA has been a new period of free market activity. This has substantially polarized Mexican society and reorganized the geographic distribution of economic activity, placing mounting pressures on fragile ecosystems and unsustainable demands on land and water resources throughout the country. In addition to the rapid but troublesome growth of maquiladora plants along the border and other investments in the semi-arid North, Mexican policymakers intensified their assault against peasants, transferring official corn supports from rain-fed regions to wealthier irrigated regions. Indeed, one of the most significant changes resulting from Mexico's reckless entrance into the global economy has been a marked deterioration in the material conditions of workers and peasants throughout the country. When the complex support system that had for so long shaped their way of life and patterns of economic activity was suddenly dismantled, workers and peasants found themselves both without a means of income and, frequently, uprooted. Many people were forced to migrate, further reducing the quality of life as families were separated, and large portions of the national population began to engage in more marginal activities, with pronounced impacts on the environment. In other sectors, the side effect of these "adjustment aftershocks" was a lack of human, material, and financial resources; businesses and government were obliged to take shortcuts in environmental management chores or simply to postpone maintenance and investment in capital improvements, such as environmental infrastructure for toxic waste reduction and emission controls. Additionally, though Mexico's entry into the global marketplace has helped foster a sophisticated discourse about protecting the environment, there are still many problems within Mexico's institutional structure that prevent implementation of the advanced regulatory package. Even more serious, however, is the considerable bureaucratic resistance to the efforts of grassroots groups and intermediate nongovernmental organizations (NGOs) advocating more socially and environmentally responsible policies. Mexico's present model of economic development, based on export-oriented production, low wages, and a rapid rate of urbanization, cannot help it address the underlying problems of a deteriorating quality of life. Nor is it consistent with the accepted precepts of sustainability. That being said, there have been some positive developments in recent years, as the global discourse on environmental issues has become sharper. For example, the CEC has become effective in channeling discussion about the respective responsibilities of private industry and government into more productive directions. Though it is premature to offer a final judgement about its efficacy, the CEC is part of a widening process of incorporating environmental considerations into the Mexican policymaking process. Similarly, the environmental NGO community has become increasingly effective in making its voice heard, sometimes by ignoring local authorities and appealing directly to international organizations where an NGO can, ironically, oftentimes find a more sympathetic hearing. In Mexico, these changes have become especially important in intensifying the pressures for a fuller consideration of the environmental consequences of economic and trade policies. In the ultimate analysis, however, Mexico's political leadership is still convinced that economic growth is primary and that the unfettered market should be the primary tool for imposing environmental responsibility-a dismal prospect in a highly polarized society, where people and resources are still significantly devalued. (Visit the IRC's borderlines Website for the entire September borderlines article: http://www.irc-online.org/bordline/1999/bl60/bl60free.html.)
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