Evaluating the NAFTA and Commission for Environmental Cooperation: Lessons for Integrating Trade and Environment in Free Trade Agreements

Abstract

The Tuna/Dolphin dispute awakened environmentalists to the General Agreement on Tariffs and Trade (GATT), and galvanized them to try to influence the ongoing negotiations among Canada, Mexico, and the United States over the North American Free Trade Agreement (NAFTA). Environmentalists ultimately succeeded in shaping the debate over how NAFTA should address the impacts of trade on the environment. While they did not succeed in reopening the NAFTA to revise the substantive rules of trade liberalization, they did successfully convince the NAFTA parties to adopt an environmental side agreement formally known as the North American Agreement on Environmental Cooperation (NAAEC). The NAAEC, widely regarded as innovative, includes its own international institution, the Commission for Environmental Cooperation (CEC) designed not only to address trade-environment linkages, but also to coordinate environmental policy throughout North America. It also includes a process that allows citizens to make allegations that a NAAEC party is failing to enforce environmental law effectively.

The initial achievement to establish the NAAEC, however, has masked its relatively modest achievements and thwarted questions about what we want to achieve with trade-environment linkages. Despite some clear environmental successes, the NAAEC has fallen short of comprehensively addressing trade-environment issues largely due to its inherent structural flaws. Nonetheless, the United States has incorporated its central components into subsequent FTAs without recognizing that the NAAEC was a specific response to U.S.–Mexico border concerns — concerns that are not necessarily relevant to other free trade agreements (FTAs). While some modifications to the NAAEC model have been made, they have been relatively minor and reflect a reactionary political effort by the United States to seize control of trade-environment matters and limit independent assessment of those issues. While some changes have been included in subsequent FTAs, they have been minor and none of the changes reflect any real attempt to individualize the environmental needs of the US’s trading partners. This article concludes that the model created in the NAAEC has impaired the creation of suitable institutions and mechanisms to address trade-environment issues within subsequent FTAs.

Keywords: Trade, GATT, NAFTA, NAAEC, free trade agreements

JEL Classification: K32, K33