The Environmental side accord of the North American Free Trade Agreement

Ly Pham - Paper 1 EC327W International Trade Dr. Michael R. Myler Sep 19th, 2011

The North American Free Trade Agreement (NAFTA) is an agreement signed by the governments of the three governments of the United States, Canada, and Mexico to create a trilateral trade bloc to reduce and eliminate most regional barriers to trade among participating countries. The North American Free Trade Agreement (NAFTA) has two supplement agreements, which are the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC).The purpose of this paper is to present the environmental agreement the NAAEC. The paper, therefore, will proceed in the following order. First, I will briefly present the objectives of the Environmental Side Accord and the Commission for Environmental Cooperation. Second, some issues regarding the establishment of NAFTA will be discussed. Third,

Second, I will present the most important environmental fear along with the establishment of NAFTA. Third, the effect of the environmental agreement to one countrys stringent standards and the possibility of whether or not these standards could be successfully approved as nontariff trade barrier will be discussed throughout. Finally, the paper ends with a summary. The Environmental Side Accord and the Commission for Environmental Cooperation The NAFTA agreement was initiated by Mexican government to revitalize its economy. Before 1970s, Mexico achieved growth by import substitution and direct subsidies to promote production and restricting imports with high tariffs and non-tariff barriers. However, continuous amount of inefficient subsidies led to high inflation and depreciation of its currency. Tight money policies in the US kept the US dollar value stable and in US dollar value of Mexican debt. In addition, oil prices of early 1980s fell then decreased Mexican oil export revenue and

the worldwide recession also hit Mexican economy. August 1982, the Mexican government announced that it could not make scheduled debt payments. Recognizing the need to expand exports, Mexico signed an agreement with the Unites States, later joined by Canada, to create a mechanism for trade consultation, dispute resolution, and mutual reduction of trade and investment barriers. (Husted, 256) The agreement was signed and became effective on January 1, 1994. It consisted of two parts: the environmental side accord and the labor side accord which seek to enforce environmental and labor laws and provide funding for labor retraining and environmental cleanup. (Husted, 251) The environmental side accord, called the North America Agreement on Environmental Cooperation (NAAEC) can be found on its organization the Commission for Environmental Cooperation website. The agreement of NAAEC consists of seven parts: Objectives, Obligation, Commission for Environmental Cooperation, Cooperation and Provision of Information, Consultation and Resolution of Disputes, General Provisions and Final Provisions. The accord aims to guarantee the right of each country to safeguard its environment in other words, to enforce its law to protect environments of all countries at high levels, enhance environmental cooperation, reduce potential trade and environmental conflicts, and promote the effective enforcement of environmental laws. CEC was established in part three of NAAEC, with its council is made up of top environmental officials of the three countries. International regime theory and the concept of Global governance are concerned with cooperative processes of the trade blocs authority to address problems.

Environmentalists believed that the basic concept of free trade would lead to further deregulation in the environmental field, a lowering of the standards, and harmonization to the lowest comment denominator (Lopez, 26). It is the main reason why certain environmental groups were against the agreement. Nevertheless, NAACE was considered an opportunity to avoid making the same mistakes during Canada U.S. FTA. (Lopez, 24) Many environmental groups had demanded that the dispute settlement procedure under NAFTA, be significantly opened p to public participation, especially when environmental laws or regulations were under challenge. However, there is nothing modifies the NAFTA dispute settlement procedures but a broad consensus of its role in dispute settlement in Part Five Consultation and Resolution of Disputes, including: responsibility for consultation (NAACE, Article 22 & 23), creation of expert and technical working groups (NAACE, Article 24), selection of environmental experts for the dispute settlement roster (NAACE, Article 25 &26), the provision of expert and scientific boards and commenting on the interim reports of panelist (NAACE, Article 27). The effectiveness of NAAEC was reviewed in an article by Jonathan Dorn on AllBusiness.com. By analyzing six case disputes of citizen submissions against Mexico, the author concluded that while NAAEC has not contributed significantly to domestic law enforcement in Mexico, NAAEC has improved Mexico's environment by stimulating corrective actions by non-compliant industries and federal agencies before domestic law enforcement becomes involved (Dorn.) The first case discussed in his article was the dispute in Jan 1996 when three non-government organizations Mexican Centre for Environmental Law, Committee for the Protection of Natural Resources and International Group of One Hundred together files a submission against Mexico with CEC about the construction of a cruise ship pier

in Cozumel. The three organizations concerned that the construction and operation of the pier would significantly damage and jeopardize the survival of Paradise Reef and Caribbean Barrier Reef because of the lack of proper assessment (Dorn.) Later, the secretary and Council determined that the the evidence was sufficient, and a final Factual Record was released to the public on Oct 1997. The Factual Record contained the acknowledgement of the local government on the issue of damage to Paradise and Caribbean Barrier reefs. However, it was not helpful to change the Mexican law to prohibit the development of other projects in protected areas, and the cruise ship pier was still completed. The only ability of the Factual Record was to improve Mexicos legislation regard coral reefs (Dorn.) In further analysis of CEC procedure, Dorn mentioned its potential weakness including complexity of the submission procedure and limited submitter oversight, unlimited time for review of submissions, confidentiality provision, and the lack of follow-up after publication of a Factual Record, conflict of interest in council, and failure to convene an arbitration panel under Article 24.

References
Dorn, Jonathan. "NAAEC Citizen Submissions Against Mexico: An Analysis of the Effectiveness of a Participatory Approach to Environmental Law Enforcement." AllBusiness.com (2007): n. pag. Web. 19 Sep 2011. <http://www.allbusiness.com/legal/environmental-law-us-environmental/8890906-1.html>.

Government of Canada, the Government of the United Mexican States and the Government of the United States of America. North American Agreement On Environmental Cooperation. 1994. Web. <http://www.cec.org/Page.asp?PageID=1226&SiteNodeID=567&BL_ExpandID=,>. Lopez, Leonor Alvarado. "Evaluating the effectiveness of the North American Agreement on Environmental Cooperation (NAACE): Towards a Holistic Approach." National Library of Canada n. pag. Web. 19 Sep 2011. <http://spectrum.library.concordia.ca/2090/1/MQ77933.pdf>. Husted, Steven, and Micheal Melvin. International economics. 7th ed. Person Education, Inc, 2007. Print.