NAFTA's Impact on the Environment

Leading up to US congressional approval of NAFTA in early 1993, President Bill Clinton confronted the difficult task of appeasing the public’s concerns about the impact of trade liberalization on US labor and the environment. In order to address these concerns, the Clinton Administration negotiated side agreements with Canada and Mexico on labor (the North American Agreement on Labor Cooperation, NAALC) and the environment (the North American Agreement on Environmental Cooperation, NAAEC). The NAAEC led to the creation of the Commission for the Environmental in 1994, an international organization intended to address regional environmental concerns, help prevent potential trade and environmental conflicts, and to promote the effective enforcement of environmental law. In light of uncertainties about the environmental effects of the first regional trade agreement between a developing country and two developed countries, the CEC was given a mandate to conduct ongoing ex post environmental assessment of NAFTA [http://www.ingentaconnect.com/content/beech/iapa/2006/00000024/00000004/art00002] .

The framework for the environmental assessment of NAFTA

Prior to beginning its environmental assessment of NAFTA, the CEC created a framework for conducting its analysis, one of the first ex post frameworks for the environmental assessment of trade liberalization. This framework was designed to produce a focused and systematic body of evidence concerning the initial hypotheses about the environmental effects of NAFTA, such as, the creation of a “race to the bottom” in environmental regulation among the three countries, or an increase in pressure for the three governments to increase their environmental protection mechanisms [http://www.cec.org/programs_projects/trade_environ_econ/pdfs/frmwrk-e.pdf] . The CEC has held four symposia using this framework to evaluate the environmental impacts of NAFTA and has commissioned 47 papers which were presented at these symposia. In keeping with the CEC’s overall strategy of transparency and public involvement, the CEC commissioned these papers from leading independent experts [http://www.cec.org/symposium] .

The results of the assessment

Overall, none of the initial hypotheses were confirmed. NAFTA did not inherently present a systemic threat to the North American environment, as was originally feared, but NAFTA-related environmental threats instead occurred in specific areas where government environmental policy, infrastructure, or mechanisms, were unprepared for the increasing scale of production under trade liberalization. In some cases, government policy was neglected in the wake of trade liberalization; in other cases, NAFTA’s measures for investment protection, such as Chapter 11, and measures against non-tariff trade barriers, threatened to discourage more vigorous environmental policy [http://www.ingentaconnect.com/content/beech/iapa/2006/00000024/00000004/art00002;jsessionid=1dy4980hq7bq0.alexandra?format=print ] . The most serious overall increases in pollution due to NAFTA were found in the base metals sector, the Mexican petroleum sector, and the transportation equipment sector in the United States and Mexico, but not in Canada [http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Reinert.pdf ] .

Analysis of economic sectors

Much of the focus of sector-specific analysis was on agriculture and manufacturing. In the case of agriculture, not as much environmental strain was found as was expected [http://www.cec.org/files/PDF/ECONOMY/Gareth-PorterExSum_en.pdf, http://www.cec.org/files/PDF/ECONOMY/Cooper-ExecSum_en.pdf] ;however, in some regions of Mexico, NAFTA was found to increase strain on aquifers and agrochemical use [http://www.cec.org/files/pdf/ECONOMY/Martinez-ExecSum_en.pdf] . Some studies found that NAFTA caused production in Sinaloa, Mexico to shift from small to industrial farmers, resulting in increased intensification and fertilizer use [http://www.cec.org/files/PDF/ECONOMY/DeIta-ExecSum_en.pdf, http://www.cec.org/pubs_docs/documents/index.cfm?varlan=english&ID=1880, http://www.cec.org/pubs_docs/documents/index.cfm?varlan=english&ID=2274] ; one the other hand, a national-level study of Mexican Maize diversity found that maize agriculture was not curbed as was expected, and some commercial agriculture was converted to subsistence practice, conserving maize diversity [http://www.cec.org/files/PDF/ECONOMY/Dyer-Yunez-ExSum_en.pdf] . In the case of Mexican meat production, environmental policy did not keep up with post-NAFTA increases in the scale of meat production [http://www.cec.org/files/pdf/ECONOMY/Cloutier_etal_en.pdf] .

In the manufacturing sector, differences in environmental regulation were a factor in the relocation of some specific industries, such as the relocation of El Paso’s stonewashing industry to Mexico [http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Abel.pdf] . Overall, however, a study found that increases in pollution after NAFTA resulted from intensification of trade in polluting industries, but not from relocation to Mexico due to Mexico’s lower environmental standards [http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Schatan.pdf] . In some specific areas of manufacturing, Mexican pollution regulation did not keep up with the rapidly increasing scale of some sectors, such as the maquiladora electronics manufacturing along Mexico’s northern border [http://www.cec.org/files/PDF/ECONOMY/Final-Schatan-T-E-Symposium05-Paper_en.pdf] . Conversely, in the Mexican automobile industry, NAFTA led to pressures for Mexican manufacturers to meet the higher US and Canadian environmental standards [http://www.cec.org/pubs_docs/documents/index.cfm?varlan=english&ID=1878] .

Regional analysis

At the outset, Mexico was a primary area of concern and the focus of many of the studies, particularly with respect to concerns that Mexico would become a pollution haven due to its lower environmental standards, triggering a “race to the bottom” in environmental regulation among the three countries. No race to the bottom was found to have occurred [http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Fredri2e.pdf] . In general, factors other than environmental regulation caused business to relocate to Mexico, and no overall pollution haven effect was identified, though specific examples of pollution havens were identified.

One unexpected pollution haven was observed in Canada, where lower costs of complying with hazardous waste disposal regulations led to a 400% increase in hazardous waste shipments to Canada after the implementation of NAFTA, an example of the kind of policy lapse that can have serious environmental impacts after trade liberalization [http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Cielp.pdf] .

Analysis of the NAFTA architecture

With respect to the architecture of NAFTA itself, areas of concern and study were primarily focused on changes in tariffs, measures against non-tariff trade barriers, and investment protection provisions, particularly Chapter 11 and Chapter 19. At first, much of the criticism of NAFTA focused on the threats to the environment of Chapter 11 and measures against non-tariff trade barriers. However, more recently, the environmental threats presented by these aspects of NAFTA were found to have diminished [http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Chomo-e.pdf, http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Guerre-e.pdf, http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Elwell-e.pdf, http://www.cec.org/programs_projects/trade_environ_econ/pdfs/Mann2-e.pdf, http://www.cec.org/pubs_docs/documents/index.cfm?varlan=english&ID=1825] .

Environmental assessment papers presented at the symposia

2000 Symposium

*NAFTA Environmental Impacts on North American Fisheries
*The Forestry Industry in the State of Chihuahua: Economic, Ecological and Social Impacts Post-NAFTA
*NAFTA Effects on Water: Testing for NAFTA Effects in the Great Lakes Basin
*The Industrial Pollution Impacts of NAFTA: Some Preliminary Results
*The Generation and Management of Hazardous Wastes and Transboundary Hazardous Waste Shipments between Mexico, Canada and the United States, 1990-2000
*Assessing the Impact of NAFTA on Environmental Law and Management Processes
*Is there a Race to the Bottom in Environmental Policies? The Effects of NAFTA
*The Relocation of El Paso’s Stonewashing Industry and its Implications for Trade and the Environment
*NAFTA Transportation Corridors: Approaches to Assessing Environmental Impacts and Alternatives
*Mexico’s Manufacturing Exports and the Environment under NAFTA
*Services Trade Liberalization: Assessing the Environmental Effects
*Will Free Trade in Electricity between Ontario/Canada and the United States Improve Air Quality?
*Improving Wastewater Infrastructure along the Arizona-Mexico Border: An Analysis of Trends and Ideas

2003 symposium

*Open Trade with the US without Compromising Canada's Ability to Comply with its Kyoto Target
*Energy Use in the Cement Industry in North America: Emissions, Waste Generation and Pollution Control, 1990-2001
*The Conflicting Economic and Environmental Logics of North American Governance: NAFTA, Energy Subsidies, and Climate Change
*Historical and Current Impacts of Trade on Indigenous Groups in North America
*Agricultural Trade Liberalization and the Environment in North America: Analyzing the 'Production Effect'
*Some Domestic Environmental Effects of US Agricultural Adjustments under Liberalized Trade
*Aquifers and Agrochemicals in a Border Region: NAFTA Challenges and Opportunities for Mexican Agriculture
*The Socio-economic and Environmental Effects of the Trade Liberalization of Basic Grains within the Context of NAFTA: The Case of Sinaloa
*NAFTA and Conservation of Maize Diversity in Mexico
*The Economic and Environmental Impacts of Agricultural Subsidies: An Assessment of the 2002 US Farm Bill and Doha Round
*Comparative Standards for Intensive Livestock Operations in Canada, Mexico, and the United States
*Local Environmental Protection and Trade: The Cases of Hog Production in Canada and Mexico
*Invasive Species, Agriculture and Trade: Case Studies from the NAFTA Context

2005 symposium

*Learning Processes in the Maquiladora Export Industry and Environmental Technologies in Three Northern Border Cities in Mexico: Tijuana, Mexicali, and Ciudad Juárez
*Business Environmental Decisions in the Context of the Free Trade Agreement
*Environmental Policy Implications of Investor-State Arbitration Under NAFTA Chapter 11
*Trade Liberalization and the Porter Effect: Theory and (Preliminary) Evidence from Mexico
*The Effect of NAFTA on Energy and Environmental Efficiency in Mexico
*NAFTA and the Mexican Automobile Industry: the Road Towards Harmonization of Environmental Standards on a North American Basis
*Scale, Technique and Composition Effect in the Mexican Agricultural Sector: The Influence of NAFTA and the Institutional Environment
*The NAFTA environmental agreement: The Intersection of Trade and the Environment
*The Maquiladora Electronics Industry and the Environment along Mexico’s Northern Border
*"Push" and "Pull" Impacts of NAFTA on Environmental Responsiveness and Performance in Mexican Industry
*Opportunities and Barriers for Renewable Energy in NAFTA

2008 symposium

*Structural Changes in Mexico; Economic Growth, Trade Liberalization, NAFTA and the Environment
*Pollution and International Trade in Services
*Liberalization of Financial Services Under NAFTA and its Effect on the Environmental Performance of the Agricultural Sector in Mexico
*NAFTA, Tourism and the Environment in Mexico
*Tourism, Trade and the Environment: Tourism and Coastal Development in the Mexican Portion of the Mesoamerican Reef
*Transportation Services, Air Quality and Trade
*Environmental Implications of Trade Liberalization on North American Transport Services: The Case of the Trucking Sector
*The Evolution of the Environmental Services Industry in Mexico, 1995–2005
*Effects of Trade Liberalization on Provision of Urban Solid Waste Collection, Recycling, and Final Disposal Service: The Case of Mexico’s Northern Border Region
*Growth in the Supply of Municipal Environmental Services to Communities on Mexico’s Northern Border (1995–2005)

References

External links

* [http://www.cec.org/symposium/ Official Site for the Commission for Environmental Cooperation's Symposia on NAFTA and the Environment]