NAFTA and Environment.

Key Points

* Free trade poses formidable challenges to the North American
environment that require careful monitoring and regulation.

* NAFTA's environmental institutions are performing valuable
functions but are insufficient to arrest pressures on the environment
arising from increased trade.

* NAFTA's environmental protections should be strengthened if it is to
serve as a model for future trade accords.

The North American Free Trade Agreement's impact on the trinational environment remains controversial. Since entering into force in 1994, NAFTA has significantly boosted regional trade. Environmental conditions in the North American region are stressed, and these trends are particularly evident along the U.S.-Mexico border, which figured prominently in the political debate leading to NAFTA's adoption. Yet assessments of NAFTA's environmental effects remain sharply divided. Public Citizen's trenchant 1996 critique of NAFTA as a "betrayal" of environmental promises still has bite. Other groups, such as the Environmental Defense Fund, argue that NAFTA's presumed short-term environmental effects may be more properly attributed to macroeconomic and social trends evident in 1994, that regional trade integration would have intensified with or without the agreement, and that NAFTA strengthened governmental support for environmental protection within the North American region that would otherwise have been unattainable.

Environmental concerns were afterthoughts to NAFTA, forced on the governments by environmental and labor groups. In response, the three governments wrote sustainable development into NAFTA's preamble, strengthened sanitary and phytosanitary (plant health) trade requirements, and vowed that NAFTA would not drive down the region's environmental standards. NAFTA's critics also gained new institutions and programs, including side agreements on North American environmental cooperation and infrastructure development along the U.S.-Mexico border. Linking trade to sustainable development for the first time in a multilateral trade agreement, NAFTA set an important precedent, challenging Free Trade Agreement of the Americas negotiators and the World Trade Organization to write environmental protection directly into future trade accords. Such measures are vital if sustainable development is to be given meaning at the global level.

Taken as a precedent, however, NAFTA and its environmental side agreements have their flaws. Intended to promote intraregional economic integration, NAFTA privileges trade and investment over the environment, its preambular rhetoric of sustainable development notwithstanding. National environmental regulations are thus suspect and must prove they are not cleverly disguised barriers to trade if they are to be enforced. Trade competition and the harmonization of trade and investment practices in North America may boost production, physical infrastructure, and government policies that support environmental values while accelerating trends that degrade the environment. Tariff elimination, for example, may hasten the decline of traditional farming in Mexico, with adverse conservation and biogenetic effects. Mitigating NAFTA's environmental effects thus requires careful monitoring and regulation, as well as a critical fine tuning of its implementing instruments.

The new environmental institutions and programs spawned by the NAFTA debate also warrant scrutiny. On the positive side, the Commission for Environmental Cooperation (CEC), a trinational body based in Montreal, provides a mechanism both for investigating allegations of nonenforcement of national environmental laws and for monitoring the adverse environmental impacts of the NAFTA trade system. The CEC has emerged as a useful monitor of environmental trends in the region and an important advocate of trinational environmental solutions that advance regional sustainable development. A 1999 CEC report, for example, shows industrial emissions in Canada and the U.S. modestly declining since 1995--an incentive to both governments to maintain emissions regulations currently in place. The CEC is also working on a trinational agreement regarding transboundary environmental impact assessment that will be a milestone in regional environmental cooperation.

On the U.S.-Mexico border, the Border Environment Cooperation Commission (BECC) and its sister institution, the North American Development Bank (NADBank), have infused much-needed resources for environmental infrastructure into cash-strapped border communities, promoting sustainable development and public participation in environmental decisionmaking. The Border XXI Program, a complex of national and binational initiatives aimed at environmental improvements in the border area, has strengthened binational cooperation regarding environmental enforcement and devised key environmental indicators for sustainable development mutually acceptable to both countries.

Yet, NAFTA's environmental agencies and programs are institutionally weak and deficient in government support. These problems should be corrected to protect the North American environment and to refine NAFTA as a model for future trade negotiations.

Stephen P. Mumme, Colorado State University