Not-so-free trade.

The U.S.-Chile Free Trade Agreement signed by representatives of the two countries on June 6 and passed by the U.S. House of Representatives on July 23 has been hailed by supporters as the first, trade pact to integrate trade and environmental goals. But opponents contend that the agreement's environmental provisions are a retreat even from those of the North American Free Trade Agreement (NAFTA)--which many experts hold to be questionable at best--and bode poorly for future regional trade deals for which the Chilean pact may provide a model.

Members of an advisory committee of the U.S. Trade Representative reported with some satisfaction in February that the integration of environmental goals into a free trade agreement was a "singular achievement" that would incorporate environmental considerations into trade negotiations. "Trade opens markets, creates business and employment opportunities, and can increase economic growth," the Trade and Environmental Policy Advisory Committee reported. "This can lead to increased wealth, which provides opportunities to enhance environmental protection, including the creation of a political will in favor of such protection."

But critics claim that the opposite--a weakened set of environmental safeguards--may result. "The only truly enforceable environmental requirement [of the pact] is that Chile effectively enforce its [current] laws," says David Waskow, an international policy analyst and trade policy coordinator for Friends of the Earth, an international pro-environment advocacy network. "It doesn't require them to improve them in any way. It doesn't even require them not to lower them."

Waskow says his organization is concerned about the broad impact of the U.S.-Chile agreement because "Chile has some of the most sensitive and vulnerable and important forests in the world. Increased trade could lead to increased trade in forest products, and I think there's a lot of concern that Chile isn't doing an effective enough job at protecting its forests."

Chris Slevin, press secretary of the Washington, D.C.-based public interest organization Public Citizen, assesses Chilean environmental laws as not strong to begin with, and agrees with Waskow that there are no assurances that Chile won't weaken its own laws. "It's no secret that countries have dropped standards in order to attract investment," Slevin says, "and this agreement with Chile moves in that direction."

Another aspect of the U.S.-Chile pact that troubles environmentalists is its section called Chapter 10, which refers to "investor protection" for shareholders in companies that do business in Chile as part of the pact. The investor protection provisions, similar to those in NAFTA, provide foreign corporations the right to sue for damages in trade tribunals if a federal, state, or local law impedes or diminishes the company's chance to make a profit.

As NAFTA has demonstrated, companies do take advantage of such provisions. In 2000, an international NAFTA tribunal ordered the Mexican government to pay the U.S. waste disposal company Metalclad $16.7 million because the state of San Luis Potosi had refused permission to operate a waste disposal facility, the company had built there. The state governor had ordered the site closed following a geological study which found that the operation would pollute the local water supply. This prompted Metalclad to charge that the governor's action was an act of expropriation.

Although it's impossible to know how that matter would have turned out had it involved an American governmental defendant and an American court, Waskow is confident that the procedure would have been different; a plaintiff like Metaldad would , have a tougher time winning a case like that if it were a U.S. matter. "Under U.S. law, there would be a quite complicated analysis that would have to be done," he says, "but that wasn't done by the tribunal."

The aspect of the U.S.-Chile pact that makes environmentalists even more nervous is its apparent consideration by the U.S. Trade Representative (which declined to comment for this article) as a model for the Free Trade Area of the Americas (FTAA), a much larger geographical zone comprising the' 34 democracies in North, South, and Central America and the Caribbean. "Some people on Capitol Hill are saying the Chile agreement is a model for the FTAA as if that is a good thing," Slevin says. "Chile's a relatively small country, and its impact on the U.S. economy won't be substantial. But if the labor and environment provisions in FTAA are like what they are in [the Chile agreement], it will make for more difficult passage when you're talking thirty-four countries in a proposed FTAA."