From: harelb@math.cornell.edu (misc.activism.progressive co-moderator)
Subject: RESPONSE TO NAFTA(Press Release) by Sierra;FOE;Publ-Citz;...
Followup-To: alt.activism.d,misc.headlines
Organization: misc.activism.progressive on UseNet ; ACTIV-L@UMCVMB
Date: Mon, 5 Oct 1992 21:36:05 GMT


    "The effect of this provision would be to throw disputes before a
    NAFTA panel, which would judge the slippery terms of "equally
    effective", "reasonably available" and "least inconsistent".  As
    noted above, the trade dispute resolution process under NAFTA is
    extremely problematic and closed to public participation and
    monitoring.
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
    "The NAFTA only allows countries to set standards that apply to
    what a product might do within that country's geographic borders.
    Under the NAFTA, product prohibitions based on environmentally
    damaging production methods such as driftnet fishing remain
    exposed to challenge.
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -

A) SUSTAINABLE DEVELOPMENT: A RHETORICAL GAIN NOT REFLECTED IN 
NAFTA'S ACTUAL DEVELOPMENT MODEL 
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
B) FUNDING: NO MECHANISM EXISTS IN THE AGREEMENT FOR INFRASTRUCTURE 
DEVELOPMENT, ENVIRONMENTAL ENFORCEMENT, OR CLEAN-UP 
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
C) ENFORCEMENT: WEAK IMPLEMENTATION OF ENVIRONMENTAL LAWS THREATENS 
TO CREATE 'POLLUTION HAVENS' 
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
D) DISPUTE RESOLUTION: TIGHT SECRECY MAINTAINED 
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
E) THE SANITARY AND PHYTOSANITARY STANDARDS (SPS) AND THE TECHNICAL 
BARRIERS TO TRADE (TBT) SECTIONS,  ALTHOUGH IMPROVED COMPARED TO 
THE GATT DRAFT, STILL LEAVE U.S. LAWS OPEN TO CHALLENGES AS TRADE 
BARRIERS 
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
F) INTERNATIONAL ENVIRONMENTAL AGREEMENTS: MAY GLOBAL TREATIES RUN 
INTO COMPLICATIONS WITH THE NAFTA 
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[Via misc.activism.progressive from PeaceNet's trade.library]
 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - -
[Inquiries by email, please, to harelb@math.cornell.edu, for more
information about PeaceNet/EcoNet or about misc.activism.progressive]
******************************************************************
Topic 61        Enviro Response to NAFTA 
iatp    Library of trade-related documents.      1:12 pm  Oct  5, 1992 
******************************************************************
Subject: Enviro Response to NAFTA 
From foedc@igc.org Fri Oct  2 12:21:44 1992 
To: FAX:12022346577, FAX:12027372164, FAX:14157887324, FAX:15124788140, 
        FAX:16024327390, FAX:16024327473, FAX:16172323945, foedc, iatp, 
        jbarnes 
Subject: NAFTA Statement 
Cc: FAX:12023324865, FAX:12024624507, FAX:12025476009, FAX:12025477392, 
        FAX:12027835197, FAX:12027976646, FAX:12028333349, FAX:12066331935 
******************************************************************

MEMORANDUM 

October 2, 1992 

To: List Below 

From: Alex Hittle, FoE-US 

RE: NAFTA Environmental Reply 

Lori Wallach -- Public Citizen 
Paul Orbuch/Rob Housman -- CIEL 
Larry Williams -- Sierra Club 
Bill Snape -- Defenders 
Andrea Durbin -- FoE-Northwest 
Cam Duncan/Bill Barclay -- Greenpeace 
Lee Jenkins -- HSUS 
Stewart Hudson -- NWF 
Justin Ward -- NRDC 
Scott Hajost -- EDF 
Hawley Truax -- Environmental Action 
Phil Williams -- IRN 
Randy Hayes -- RAN 
Steve Shenkin -- Audubon 
Tia Nelson -- Nature Conservancy 
Doug Siglin -- WWF 
Craig Van Note -- Monitor 
Dick Kamp -- Border Ecology Project 
Mary Kelly -- Texas Center 
Sanford Lewis -- National Toxics Campaign 
Michael Phillips -- Earth Island  
Linda Galodner -- National Consumer League 
Michael Gregory -- Arizona Toxics 
Jay Feldman -- NCAMP 

     Attached is document drafted by FoE, Sierra Club, Public 
Citizen, Defenders of Wildlife and CIEL.  Although not an exclusive 
list, it does run through some of the major issues and problems of 
the North American Free Trade Agreement (NAFTA).   

     We hope to have a large number of groups signing on to the 
document, which would then be available to all for press, hill 
work, etc.  While finding the NAFTA wanting, we do not try to 
prescribe whether the needed improvements can be worked into the 
existing process (e.g. tinkering with sections, separate 
agreements, implementing language) or whether the NAFTA needs to 
flat out rejected and renegotiated.  It is the drafters hope 
therefore, that it can serve either agenda.  

     Please call or fax me with comments and/or sign ons.  We are 
hoping to have a number of groups signed on by Tuesday, October 6, 
so that we can release it to the press in conjunction with Bush's 
San Antonio signing ceremony on the 7th.  Obviously, many groups 
cannot make this sort of decision so quickly, and we will continue 
to take sign ons as they come in. 

      
     My telephone number is (202)-543-4992 (direct) or (202)-544- 
2600 (voice mail).  My fax is either (202)-543-4710 or (202)-543- 
5304.  Also, I have an intern helping me named Scott Nilson, who 
can be reached at (202)-543-5295.  Also, if there is anyone else 
who you think should receive the document, please suggest it to 
Scott or me or feel free to send it to them yourself. 

-------------------------------------------------------------- 

                                             30 September, 1992 

DRAFT RESPONSE OF THE ENVIRONMENTAL COMMUNITY TO THE SEPTEMBER 6, 
1992 TEXT OF THE NORTH AMERICAN FREE TRADE AGREEMENT 

September 30, 1992 

     The Administration has labelled the North American Free Trade 
Agreement (NAFTA) "the greenest ever" and, given that previous 
trade agreements almost entirely ignored environmental issues, the 
statement does have a grain of truth.  Indeed, in some areas, 
particularly the sections on Sanitary and Phytosanitary Standards 
and on Technical Barriers to Trade, the negotiators produced a text 
that is an improvement over the proposals of the latest draft of 
the General Agreement on Tariffs and Trade (GATT).  That said, the 
undersigned organizations still have grave concerns about the 
NAFTA, both for what is in the Agreement and for what has been left 
out. 

     This document lays out six major problems areas and briefly 
sketches proposals to address these issues.  It does not, however, 
seek to prescribe exactly how improvements should be made.  Some 
believe issues can be addressed in the implementing legislation.  
Others suggest that sections might be quietly re-worked with the 
Mexicans and Canadians as occurred in the U.S.-Canada Agreement.  
Some think that flat out rejection is the only solution.  
Regardless of the vehicle, the undersigned groups believe these 
issues must be addressed in a meaningful fashion. 

A) SUSTAINABLE DEVELOPMENT: A RHETORICAL GAIN NOT REFLECTED IN 
NAFTA'S ACTUAL DEVELOPMENT MODEL 

     The NAFTA preamble states that it is to "promote sustainable 
development." Sustainable development, endorsed at the United 
Nations Conference on Environment and Development in Brazil earlier 
this year, is the idea that development must meet the needs of 
people today, without jeopardizing the ability of future 
generations to meet their needs.  

     The NAFTA's rhetorical gain of exhorting sustainable 
development is, unfortunately, not matched by measures within the 
agreement to promote the idea or by the development model endorsed 
by the Administration.  The Administration's model, outlined by 
officials such as William Reilly, EPA Administrator, and Carla 
Hills, the U.S. Trade Representative, might well be called 
'environmental deficit financing'.  This concept posits that 
current wealth must be generated first, and that wealth will, in 
turn, allow future generations to pay for clean-up.  In effect, the 
NAFTA does not promote sustainable development, but rather hopes to 
meet the needs of people today while gambling with the ability of 
future generations to meet their needs.  

     Most environmental organizations would prefer a 'pay as you 
go' approach to the environment, rather than putting off clean-up 
to an unspecified time in the future. Thus, our most basic concern 
with the NAFTA is that it lacks any mechanisms to guarantee that an 
appropriate share of the wealth it may generate will go towards 
environmental and infrastructural improvement. 

     The issues raised in the following sections largely stem from 
and elaborate this concern. 

B) FUNDING: NO MECHANISM EXISTS IN THE AGREEMENT FOR INFRASTRUCTURE 
DEVELOPMENT, ENVIRONMENTAL ENFORCEMENT, OR CLEAN-UP 

     A large environmental and developmental bill accompanies the 
NAFTA, especially in the U.S.-Mexico border region.  Funds must be 
found to: 

     A) Pay for the clean-up of the existing environmental 
     problems caused by the Maquiladoras, 

     B) Pay for basic sanitation and other infrastructure for 
     the inhabitants of both sides of the U.S.-Mexico border, 
     who have been drawn there by trade-related economic 
     opportunities, 

     C) Pay for the further expansion of infrastructure in the 
     U.S., Canada and Mexico so that the greater trade caused 
     by NAFTA can be accommodated in an environmentally sound 
     fashion, 

     D) Pay for expanded environmental inspection, testing, 
     and enforcement in Mexico to help insure that 
     environmental laws are implemented, 

     E) Pay for the creation and maintenance of the proposed 
     North American Environmental Commission whose creation is 
     now being negotiated following the meeting of 
     Environmental Ministers on September 17, 1992. 

     The Administration relegates discussions of such funding to 
the so-called 'parallel track' on the environment, which has 
culminated in the February, 1992, Integrated Environmental Plan for 
the Mexican-U.S. Border Area.  This plan has been sharply 
criticized by environmentalists from the border region for its lack 
of concrete policy recommendations, timetables, and firm funding 
commitments.  Even were the Border Plan more substantial, the fact 
remains that funds for these necessary expenditures would be 
subject to the vagaries of the appropriations process in the U.S. 
and to equally uncertain funding in Canada and Mexico.  Under the 
parallel track, it seems highly improbable that appropriate funding 
levels will ever be realized, especially once the political 
spotlight drifts away from NAFTA.  

     Consequently, the undersigned groups believe it is crucial 
that funding for these necessary NAFTA-related expenditures be 
explicitly linked to the Agreement itself. 

       This linkage could be achieved either by connecting  trade 
liberalization phase-out schedules to the achievement of clean-up 
targets or through mechanisms such as including a cross-border tax 
as part of the agreement itself, as has been suggested by House 
Majority Leader Richard Gephardt. 

C) ENFORCEMENT: WEAK IMPLEMENTATION OF ENVIRONMENTAL LAWS THREATENS 
TO CREATE 'POLLUTION HAVENS' 

     The environmental community has been concerned that firms may 
relocate in Mexico to avoid stronger pollution control standards 
(particularly the enforcement of standards).  In addition, and 
perhaps more common, firms may relocate in Mexico primarily for 
other reasons, especially cheap labor, and then find they can give 
profits an additional fillip by violating environmental standards.  
A dramatic example of such behavior has been the failure of over 
two thirds of the Maquiladora firms to return their hazardous 
wastes from Mexico to the U.S. for proper treatment.  Similarly, 
independent testing outside Maquiladora facilities has revealed 
enormous toxic loads that indicate pervasive violations of 
environmental laws.  An August GAO Report disclosed that none of 
six U.S. majority-owned Maquiladoras established in 1990 and 1991 
had complied with a 1988 law requiring such facilities to undergo 
an Environmental Impact Assessment.  Environmentalists are 
concerned that these conditions would only worsen under a NAFTA 
unless aggressive steps are taken to curb these abuses. 

     The NAFTA takes no such steps.  It comes closest to addressing 
the problem in its investment chapter which meekly encourages, in 
non-binding language, countries not to lower their standards in 
order to attract investment.  Where standards seem to be lowered to 
attract investment, the agreement allows only for consultations 
(Section 1114.2).  Formal dispute resolution is not possible.  The 
measure fails on two additional counts: 

     1) It misses the main current problem which is lax 
     enforcement of existing laws, rather than the lowering of 
     standards to attract investment, 

     2) It does not address the problem that regulatory 
     disparities may widen if one country tightens its 
     regulations, while the other partner countries leave 
     their standards at current levels. 

     Environmentalists had hoped that the NAFTA would explicitly 
affirm that lax environmental regulations or enforcement constitute 
unfair trade practices.  If polluters are not paying for their 
pollution the NAFTA will simply create a large distorted market.  
Several suggestions have been brought forward to avoid this 
problem.  Countervailing duties could be imposed on specific 
sectors to even out the cost advantage enjoyed by firms that profit 
from lax regulatory environments.  Funds from such duties could be 
channeled into the lax country to help firms bolster their 
environmental controls.  A second proposal would be to set ambient 
standards in the border regions which, if exceeded, would trigger 
a cross-border tax to pay for clean-up until the region is brought 
back under the ambient targets.  A third proposal would be to allow 
citizens access to the courts in the country of a facility's 
investor to seek redress for environmental transgressions. 

     Interestingly, the Agreement does provide enforcement 
mechanisms for companies whose intellectual property rights are 
violated and for investors who believe they have not received the 
full benefits and protection of the NAFTA's investment section.  

D) DISPUTE RESOLUTION: TIGHT SECRECY MAINTAINED 

     Environmentalists had hoped that the NAFTA would feature a 
more open dispute resolution mechanism than those found in other 
trade treaties.  This demand is important for two reasons.  First, 
giving citizens access to the documents and to the proceedings 
themselves is an important step towards democracy and is a means of 
ensuring that governments vigorously defend challenged laws.  
Second, a further broadening to allow citizens and other interested 
parties to submit documents could allow for the inclusion of 
broader social concerns in the dispute resolution panel's 
judgement.  Such broadening is crucial since a wide range of 
measures traditionally considered domestic and social legislation 
is coming under attack as trade barriers. 

     To our disappointment, NAFTA dispute resolution maintains the 
tight secrecy that was present in the negotiations, and even 
surpasses that of GATT.  Absolute confidentiality is required on 
all documents submitted in dispute resolution, during the dispute 
proceedings, and on panel reports until absolutely finalized.  This 
procedure leaves the Executive branch as the sole protector of 
challenged environmental and consumer laws. 

     The dispute resolution process does allow for participation of 
scientific review boards, but only at the consent of both disputing 
parties.  If the Parties agree to such input, the NAFTA requires 
the dispute panel to take it into account, however, the scientific 
boards are limited to questions of fact.  Thus, NAFTA allows for 
secret proceedings by five person dispute panels, who are empowered 
to second guess core issues underlying an environmental or consumer 
standard. 

     Finally, the Free Trade Commission, as created by NAFTA, is 
given broad powers to establish Model Rules of Procedure for NAFTA 
dispute resolution.  Few of these rules are printed in the text and 
are left to the Commission when they should already be an integral 
part of the text.   

E) THE SANITARY AND PHYTOSANITARY STANDARDS (SPS) AND THE TECHNICAL 
BARRIERS TO TRADE (TBT) SECTIONS,  ALTHOUGH IMPROVED COMPARED TO 
THE GATT DRAFT, STILL LEAVE U.S. LAWS OPEN TO CHALLENGES AS TRADE 
BARRIERS 

     The standards provisions of the NAFTA, the SPS and TBT 
sections, are improved over those in the GATT Uruguay Round.  
Despite this improvement, the TBT and particularly the SPS text 
still may leave legitimate U.S. consumer and environmental safety 
laws open to challenge by other NAFTA countries.  

     From the outset it must be understood that the real impact of 
the SPS and TBT sections is small since the General Agreement on 
Tariffs and Trade (GATT) is the principal forum where these 
disciplines are developed.  At best, the NAFTA could protect U.S. 
laws from Canadian and Mexican challenges -- just two of the over 
one hundred nations participating in GATT.  Therefore, the true 
forum for reform of these clauses is the GATT and not NAFTA.  
Still, improvements in these sections could conceivably become the 
basis for revisions of the GATT codes in these areas. 

     Most encouragingly, these sections do set forth a shift in the 
burden of proof in the case of challenges.  Unlike the GATT, under 
NAFTA the burden rests with the challenging nation rather than the 
defendant. 

     Despite these improvements, the SPS text may still expose 
numerous U.S. national and state laws to challenge and could slow 
progress in environmental protection.  In accordance with the idea 
of "harmonization of standards", U.S. standards that are more 
protective than named international standards must meet a series of 
procedural requirements or they can be considered illegal barriers 
to trade.  Unfortunately, the named international standards for 
food in the NAFTA are those of the Codex Alimentarius, many of 
which are lower than current U.S. law.  A U.S. food safety standard 
that is higher than Codex that is subject to a challenge must meet 
a series of strict procedural requirements.  

     Specifically standards must be shown to: 
      
          A) Be scientifically based, 

          B) Be based on a risk assessment, 

          C) Be 'consistent' in its level of protection with other  
             national standards, 
      
          D) Be 'necessary' to achieve a NAFTA-approved policy aim. 

Each of these requirements may open U.S. laws to challenge.  Most 
disturbing are the last two -- the "consistency" and "necessity" 
tests.  For example, the consistency clause could be used to attack 
standards such as the Delaney Clause, which simply forbids adding 
carcinogens to processed food -- a standard inconsistently high 
compared to that applied to fresh foods.  Similarly, determining 
whether a law is 'necessary' is a highly subjective task, which 
opens up the possibility of a challenging country suggesting a 
politically impossible but technically feasible means of achieving 
a policy goal.  A challenged standard is judged by a pro-trade 
biased dispute panel, in secret (see section above on dispute 
resolution).  

     Furthermore, the NAFTA text does nothing to address a 
fundamental problem of the trading system which was highlighted by 
the August 1991 GATT panel ruling on the Marine Mammal Protection 
Act.  Current world trade rules, including the NAFTA, do not allow 
countries to regulate products based on their production method.  
The NAFTA only allows countries to set standards that apply to what 
a product might do within that country's geographic borders.  Under 
the NAFTA, product prohibitions based on environmentally damaging 
production methods such as driftnet fishing remain exposed to 
challenge.  

     Finally, the NAFTA requires the national governments to 
"ensure that all necessary measures are taken in order to give 
effect to the provisions of this Agreement...by state and local 
governments."  The NAFTA text may force the federal government to 
preempt state and local environmental laws.  This could prove 
detrimental because states have traditionally played the role as an 
engine to pull forward federal standards. 

     The NAFTA TBT text covers those standards-related measures not 
covered in the SPS text and contains some improvements on the GATT 
TBT text.  This section is an improvement over the GATT, but its 
effectiveness is undermined by two important clauses.  Like the SPS 
text, the TBT text does not allow a country to regulate based on 
the process of production.  

     That said, the NAFTA TBT text would allow a country to 
maintain a wider range of standards than the SPS text.  It does not 
require science or risk assessment in the setting of levels of 
protection and it considers a wider range of objectives for 
regulation to be legitimate.  The TBT text also allows for 
different levels of protection across different regulatory 
circumstances. 
      
     The TBT text encourages countries to follow international 
standards.  It does, however, allow higher standards if an 
international standard fails to meet a country's chosen level of 
protection.  In all, the NAFTA TBT text seems the least likely to 
promote a downward harmonization of standards, as compared to the 
NAFTA SPS and the GATT SPS and TBT. 

     We are, however, deeply concerned by the provisions of Annex 
2004 which appears to hold out the possibility that the U.S. might 
have to pay "damages" even if U.S. standards meet those spelled out 
in NAFTA.  Called "Nullification and Impairments," the section 
seems to allow countries to bring non-violation cases in the SPS 
and TBT areas for national measures that do not violate the NAFTA 
rules, but that cause another NAFTA country to miss an economic 
opportunity it could have expected.  
   
F) INTERNATIONAL ENVIRONMENTAL AGREEMENTS: MAY GLOBAL TREATIES RUN 
INTO COMPLICATIONS WITH THE NAFTA 

     Article 104 of the NAFTA sets forth the relationship between 
the NAFTA and International Environmental Agreements (IEAs) whose 
provisions include specific trade obligations.  While the language 
of Article 104 would appear to protect these international 
agreements, it nevertheless opens up two possible complications 
that could easily be addressed with relatively minor adjustments to 
the September 6 text. 

     The first concern is that, for the treaties listed under the 
NAFTA, the NAFTA itself becomes the arbiter of what is, and what 
is not, allowed under the treaty.  The language states that the 
obligations in the IEAs shall prevail, "to the extent of the 
inconsistency, provided that where a Party has a choice among 
equally effective and reasonably available means of complying with 
such obligations, the Party chooses the alternative that is the 
least inconsistent with the other provisions," of NAFTA.  The 
effect of this provision would be to throw disputes before a NAFTA 
panel, which would judge the slippery terms of "equally effective", 
"reasonably available" and "least inconsistent".  As noted above, 
the trade dispute resolution process under NAFTA is extremely 
problematic and closed to public participation and monitoring.  It 
is not the appropriate forum for judging the legitimacy of measures 
taken under IEAs. 

     We would therefore propose that, either through amendment to 
the text or through supplementary agreements, a greater standard of 
deference to a party's choice of what constitutes the proper means 
of implementing an IEA be created.  The language could be modified 
to state that a Party's choice of implementing such obligations, 
"will be respected unless there is no rational basis for that 
choice."  This definition should also make clear that 
administrative efficiency alone is enough to justify the choice of 
a particular implementation method. 

     The second concern with IEAs is that Article 104.2, which 
requires all signatory nations to submit in writing their desire to 
include new IEAs under the NAFTA, may open up an opportunity for 
countries to sign the IEA, but, by not including it under NAFTA, 
retain their ability to seek redress under NAFTA dispute rules 
against actions taken by another signatory to the NAFTA which is 
implementing the IEA through trade measures.  Moreover, The 
difficulty in getting all NAFTA's parties to agree to add other 
IEAs could be compounded if additional countries accede to the 
NAFTA.  The NAFTA must provide a simpler mechanism for recognizing 
other IEAs and must differentiate between trade measures taken to 
implement the IEA and other types of trade measures. 

     This potential problem could be addressed through a minor 
change in Article 104.2 which would delete the phrase, "may agree 
in writing to modify (the listed IEAs)" such that any trade 
amendment of the listed IEAs or addition of other IEAs which 
contain trade provisions and that are signed in an international 
context by all the parties will automatically be added to the 
NAFTA.  This change could be augmented by agreement between the 
parties providing for consultations between the parties with an aim 
towards integrating IEAs into the NAFTA so that the IEAs are given 
full force and effect.