From harelb@math.cornell.edu Mon Oct 18 09:18:05 1993
Date: Sat, 16 Oct 1993 00:22:40 -0400
From: Harel Barzilai
To: newman@garnet.berkeley.edu
Subject: NAFA submission: Public Citizen's Analysis
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Topic 69 Public Citizen's NAFTA anal
pcctw Library of trade-related documents. 10:57 am Oct 26, 1992
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THE NAFTA DOES NOT MEASURE UP
ON THE ENVIRONMENT AND
CONSUMER HEALTH AND SAFETY
WHY PUBLIC CITIZEN CANNOT SUPPORT THIS NAFTA
TEXT
TABLE OF CONTENTS:
INTRODUCTION 1
I.NAFTA EXPOSES U.S. FEDERAL AND STATE CONSUMER AND
ENVIRONMENTAL STANDARDS TO CHALLENGE AS TRADE
BARRIERS 2
SANITARY AND PHYTOSANITARY STANDARDS 2
TECHNICAL STANDARDS 5
NON-VIOLATION IMPAIRMENTS 8
II.NAFTA PROMOTES ENVIRONMENTALLY DETRIMENTAL
INVESTMENT 9
III.THE LONG LIST OF WHAT IS MISSING IN THE NAFTA ON
THE ENVIRONMENT 9
IV.DISPUTE RESOLUTION: TIGHT SECRECY MAINTAINED,
NON-VIOLATION IMPAIRMENT CASES ALLOWED 11
CONCLUSION 13
INTRODUCTION
Unfortunately, both in what it contains and what it omits,
the September 6, 1992 text of the North American Free Trade
Agreement is not good news for environmental or consumer health
and safety protection.
While Public Citizen has worked with Bush Administration
officials for over a year to ensure that to ensure that NAFTA
contains certain environmental and consumer safeguards, this text
does not measure up. Further, the September 6 text does not
measure up to the consensus position on minimal environmental
safeguards signed by 40 U.S., Mexican and Canadian environmental
and consumer groups presented to the Administration in May 1992,
nor to consensus documents, presented throughout the negotiation
process, signed by American groups.
The terms of the NAFTA text expose numerous existing U.S.
federal, state and local environmental and consumer laws to
challenge as nontariff trade barriers under chapters on Sanitary
and Phytosanitary Standards and Technical Standards. The standards
provisions also create downward pressure on industrial and
agricultural worker safety standards in the United States.
Further, NAFTA would promote environmentally unsound commercial
activity in the areas of agriculture, energy and in the incentives
it creates for manufacturers to relocate to Mexico to avoid strict
enforcement of environmental regulations. All of these problems
are intensified by the absence in the NAFTA of enforcement or
funding provisions for environmental protection. Moreover, the
NAFTA text establishes highly secretive negotiation and dispute
resolution processes that deny citizen oversight of NAFTA on vital
citizen concerns such as food safety, consumer product standards
and environmental regulations on hazardous substances.
The Bush Administration did take limited steps in the NAFTA
to address environmental and consumer health and safety criticisms
made about the final text of the Uruguay Round of GATT. The
existence of any progress on environmental and consumer issues in
the NAFTA has led at least one environmental group to support the
NAFTA as a good first step. However, for many of the groups most
involved in the NAFTA debate, the net negative effect of the
September 6 NAFTA text on the environment makes the text
unsupportable. Several baby steps forward cannot overcome the
sprint backwards in environmental and consumer protection the text
as a whole could cause.
As the following analysis of several of the key environmental
and consumer issues demonstrates, much of the Administration's
attention in the NAFTA to environmental issues is merely cosmetic.
The provisions that are substantive, though relevant, are not
nearly sufficient to outweigh the many undermining provisions of
the text. The extent and nature of the deficiencies will require
that sections of the NAFTA are renegotiated. These core problems
cannot be addressed in enabling legislation alone. The concepts
underlying the economic integration of the United States, Canada
and Mexico must be considered before any renegotiation of an
agreement is even undertaken.
I.NAFTA EXPOSES U.S. FEDERAL AND STATE CONSUMER AND
ENVIRONMENTAL STANDARDS TO CHALLENGE AS TRADE
BARRIERS
The NAFTA contains two section on standards. Sanitary and
Phytosanitary
(SPS) rules pertain to food and foodstuffs. Technical Standards
(TBT) cover all remaining manufacturing and agricultural
standards. The Sanitary and Phytosanitary Standards text and the
Technical Standards section can be thought of as rules for taking
exceptions to the NAFTA's primary goal of removing obstacles to
trade. In these two sections, the NAFTA lays out requirements that
restrict measures taken by NAFTA countries which might have the
effect of limiting trade. These measures must meet this
restriction or be considered illegal trade barriers.
The standards provisions of the NAFTA are slightly improved over
those rejected in the GATT Uruguay Round text by nearly every U.S.
environmental and consumer group. However, the SPS text in
particular exposes numerous U.S. national and state laws to
challenge. It could stop progress in environmental protection in
the area of pesticides and consumer health and safety in food
labelling, inspection and other contaminant standards such as
additives and preservatives. The TBT text's detrimental impact is
on the process by which U.S. standards are now set. For instance,
by requiring NAFTA countries to accept the conformity assessment
procedures and bodies of other countries, the TBT text would
undermine the role citizens and consumer and environmental
advocates now have on standard-setting. As written, neither the
SPS nor TBT text are acceptable from a consumer or environmental
protection viewpoint.
SANITARY AND PHYTOSANITARY STANDARDS
A goal of the NAFTA SPS text is "harmonization of standards."
Under the NAFTA SPS text, federal, state and local standards
that are more protective than named international standards must
meet a series of requirements, or they can be declared illegal
barriers to trade if challenged by another NAFTA country. Thus,
although the Bush Administration has stated that the U.S.
maintains the right to exclude products that do not meet our
current standards, the U.S. could face a trade challenge for doing
so. If the U.S. law was ruled not to comply with the terms of
NAFTA, the United States would be required to eliminate the law,
stop enforcing it against imports or pay "damages" to a successful
challenger. The pressure to lower standards would be great under
this paradigm.
Unfortunately, the named international standards
for food in NAFTA are those
of the Codex Alimentarius, a Rome-based UN subgroup whose
standard-setting process has involved numerous food, chemical and
agribusiness companies, but until recently no representatives of
consumer or health interests. Not surprisingly, many Codex
standards are lower than current U.S. law. For instance, Codex
allows chemicals long-banned in the U.S. such as DDT on grains,
meat and dairy products. Fruits and vegetables are allowed to
contain residues of many banned or severely restricted pesticides
such as heptachlor.
Only domestic standards that are the same as Codex are presumed
to comply with the NAFTA. If a U.S. food safety standard is higher
than Codex, it would only survive challenge if:
(*)The chosen level of protection it is meant to achieve is based on
risk assessment and science. Some of the strongest U.S. food safety
laws, such as the Delaney Clause which prohibits carcinogenic
additives in food and carcinogenic pesticide residues on processed
foods, are not based on risk assessment. Rather, the Delaney Clause
is based on a Congressional decision not to expose Americans to
carcinogens in the food supply. It is a health only, zero risk
standard.
(*)It is judged by a NAFTA dispute resolution panel to be
"necessary" to achieving a NAFTA-allowed goal, which does not include
environmental protection in pesticide standard-setting. The term is
otherwise undefined in the SPS text. It is understood in GATT
jurisprudence to have a limiting effect. This requirement raises
the question of why a NAFTA panel of trade officials should
second-judge a democratic decision on what is necessary in consumer
or environmental protection.
(*)It is not "arbitrary and unjustifiable" which is understood to mean
that it must be the least trade-restrictive measure possible to
achieve a level of protection regardless of political or other
considerations that might call for another measure.
(*)It is not inconsistent with the level of risk allowed in different
regulatory circumstances. NAFTA as written would require a country
to choose one acceptable level of risk. Thus, not only could the
differentiation between pesticide standards for raw and processed
foods under the Delaney Clause be exposed to attack, but different
levels of risk allowed for entirely unrelated areas of regulation --
salmonella in chicken versus carcinogenic food additives --could be
the basis for a challenge.
Further, the NAFTA only allows counties to set standards that
could have the
effect of limiting trade if such laws do not extend beyond their
geographic borders. This is a very important point because many
existing environmental laws particularly are aimed at protecting
the environment beyond U.S. borders. For instance, the Endangered
Species Act, laws banning whale and ivory products and the
provisions of the Clean Air Act prohibiting import of products
manufactured with ozone- depleting substances aim at protecting
the environment or species in the global commons or in another
country. One of the bases for a 1991 GATT ruling that declared the
Marine Mammal Protection Act of 1972, which prohibits import of
tuna caught killing large numbers of dolphins, to be an illegal
trade barrier was that the law was "extra-territorial," i.e. it
aimed to protect dolphins that were outside of U.S. territory.
Also, under the NAFTA SPS text, the U.S. cannot limit imports of
a product based on its production method. Thus, product
prohibitions based on child or other labor practices or certain
environmentally-damaging production methods such as drift netting
could be labelled trade barriers. Once so labelled, such measures
would have to be eliminated, or the U.S. would have to pay the
country which had made the successful challenge to maintain them.
The NAFTA text has more detrimental impact than the Uruguay
Round text on U.S. standard-setting procedures. For instance, the
rules for determination of equivalence of standards between
countries requires countries to accept other countries scientific
data as a basis for judging equivalence. Further, the NAFTA
weakens the U.S. requirement for safety pre-approval of additives
and other substances, by requiring consideration of using
international standards as interim measures. In another section on
notification and standards-setting, the NAFTA creates a right for
consideration of comments by the Mexican and Canadian governments
as to their interest in the setting of U.S., federal and state
food and agricultural standards.
The NAFTA SPS text applies to state and local governments, and
requires the federal government to take all necessary steps to
ensure state and local compliance. In a February 1992 GATT panel
ruling on U.S. state alcohol regulations and taxes, the Bush
Administration admitted in a panel submission that as a matter of
international law, terms of executive agreements such as GATT (and
NAFTA) trump state and local law. The GATT panel ruled that the
U.S. had failed to meet its obligation to take all "reasonable
steps" to ensure compliance of its subnational entities because it
had not taken all steps available within its
constitutionally-granted powers. Thus, under GATT the federal
government would be required to take preemptive legislative
action, sue a state for compliance or cut off any support of
non-complaint activities. The NAFTA text on state compliance is
even less forgiving than the GATT text that generated that strong
ruling. In NAFTA there is no limitation that the country take
only "reasonable" measures. This provision is very worrisome. It
could put the federal government into the position of preempting a
state law because of NAFTA requirements that it would have no
grounds to preempt under existing federal law. The impact of this
provision could be especially detrimental to the overall strength
and progress of environmental and consumer protection, because
states have traditionally played a role as an engine to pull
forward federal standards.
TECHNICAL STANDARDS
The coverage of the Technical Standards rules is quite broad,
applying to any standards-related measures of a Party not covered
in the SPS text that directly or indirectly affect trade in goods
or services. Unfortunately, the NAFTA TBT text does not provide
any exception for standards based on production or process methods
that limit trade, except those directly related to a product's
physical characteristics. Thus, except for specific exceptions for
labelling and packaging standards, under NAFTA rules countries
cannot regulate based solely on the process of production or
harvesting of a product, which as described in the SPS section is
a serious problem.
The NAFTA TBT text contains both some improvements on the
existing GATT and proposed Uruguay Round TBT texts, and also in
the area of standard-setting procedures, some additional problems.
However, Article 903 of the TBT text gives the existing GATT TBT
text precedent over the NAFTA TBT text in the case of conflict.
Thus, areas of greater trade liberalization, such as the NAFTA
standard-setting procedures, could be permissible. Areas of
greater restriction, such as the NAFTA recognition of environment
or consumer safety as a basis for a technical regulation, could be
in conflict with the GATT TBT text. This clause largely undermines
the real progress made in other sections of this text, as it
provides for the worst of both worlds.
The NAFTA TBT text would allow maintenance of a wider range of
standards related measures than the NAFTA SPS text. TBT does not
require science or risk assessment in the setting of levels of
protection. TBT considers a wider range of objectives for
regulation to be legitimate (including consumer issues relating to
quality and sustainable development.) TBT also allows for
different levels of protection across different regulatory
circumstances. Further, unlike the SPS text, the TBT text defines
what is an unnecessary obstacle to trade, and does so in a fashion
that would be less likely to ensnare legitimate regulatory
measures. Like the SPS text, the TBT text confirms that in the
case of a dispute resolution challenge under this text, the burden
to show a violation of the NAFTA would fall on the challenging
Party. Finally, the TBT text generally places slightly less
responsibility on the federal government than the rest of the
NAFTA to see that state and local governments comply.
Despite TBT's many superiorities to the NAFTA SPS
text, the TBT text still
requires that countries use international standards or
international standards whose completion is imminent except where
such standards would be ineffective or inappropriate. The TBT
text presumes only such standards not to be inconsistent with the
TBT text. However, it limits this requirement by allowing an
international standard's failure to meet a country's chosen level
of protection to be a legitimate excuse, which the GATT does not.
For international standards, the TBT text lists Codex, as well as
several standard-setting bodies not listed in the SPS text such as
the World Health Organization and the Food and Agriculture
Administration of the United Nations.
The clauses on the use of international standards highlight the
main goal of the TBT text, which is harmonization of standards. As
compared to the harmonization clauses of the NAFTA SPS text and
both the SPS and the TBT texts of the GATT, the NAFTA TBT text
seems least likely to promote downward harmonization of actual
standards. Rather, the harmonization clauses of the TBT text focus
strongly on processes to facilitate harmonization. Thus, Parties
are required:
(*)"to the greatest extent practicable, [to] make compatible their
respective standards-related measures so as to facilitate trade in a
good or service..."
(*)to "accredit, approve, license and otherwise recognize
conformity of assessment bodies in the territory of another Party on
terms no less favorable than those accorded to such bodies in its
territories" with a four year phase-in period before this clause
pertains to Mexico;
(*)"recognizing the existence of substantial differences in the
structure, organization and operation of conformity assessment
procedures in their respective territories, make compatible to the
greatest extent practicable such procedures."
(*)"upon the request of another Party, to promote compatibility of a
specific standard or conformity assessment procedure..."
(*)to "accept the results of a conformity assessment procedure
conducted in the territory of another Party, provided that it is
satisfied that such procedure offers an assurance..." and
(*)to treat the standard of another country as equivalent to domestic
standards if the exporting Party can show its technical regulation
adequately fulfills the importing Party's NAFTA-legitimate
objectives.
The impact of these procedural harmonization clauses of the
NAFTA TBT text
on current U.S. standards-setting procedures is very worrisome.
For instance, the notion of accepting another country's conformity
assessment that a U.S. standard and that of another NAFTA country
are equivalent, rather than following some publicly- accessible
U.S. notice and comment procedure under the Administrative
Procedure Act, means consumer and environmental advocates are cut
out of the standard- setting process. Similarly, accrediting the
assessment bodies of other countries as equivalent to parallel
domestic agencies eliminates the role of citizen and Congressional
oversight of the functioning of such bodies.
Throughout the TBT text, disturbing procedural issues are
raised. For instance, the TBT text establishes the same rights of
notice and comment for other NAFTA Parties as the SPS text. Thus,
the issue of the appropriateness of requiring special
consideration of Mexican and Canadian government comments on U.S.
rule-making is raised here as well. Further, the text establishes
another new organization, the Committee on Standards-Related
Measures, comprised of representatives from each government. The
Committee's main duty is to facilitate harmonization.
To accomplish harmonization goals, the Committee is required to
set up four subcommittees. The timelines and mandates of two of
those groups undermine environmental and consumer protection.
The Subcommittee on Land Transportation Standards is mandated to
implement the following work plan for making standards compatible
for motor carriers, although Mexican trucks have been granted
immediately effective additional rights for access to the U.S. in
anticipation of the NAFTA:
(*)one and one half years for non-medical driver standards such as
language use and age;
(*)two and one half years for medical-related standards for
drivers;
(*)three years for standards on emissions and environmental pollution,
inspection, maintenance and repair, brakes, securement of cargo,
weights and dimensions; and
(*)three years for standards on motor carriers' safety compliance.
Thus, despite immediate access for Mexican trucks to U.S. roads,
consistent environmental and safety rules will only apply after
years. For railroads, there is six year phase-in for compatibility
of rules on transportation of dangerous goods.
Another subcommittee on Automotive Standards is mandated to make
compatible standards concerning automotive goods based on impact
on industry integration, extent of barrier to trade, level of
trade affected and the extent of such disparity. The subcommittee
is allowed, but not required, to consider other closely related
measures such as emissions. Auto safety is not included. Finally,
for Automotive standards, a special stronger rule for state
compliance is established. The special rule replicates the GATT
language interpreted in the alcoholic beverages case described
above in which the federal government was required to take all
measures within its constitutional powers to force state
compliance. This clause seems aimed at states such as California,
which have led the country in auto standards. Because California
is such a large car market and production must be geared to meet
California's requirements, California's requirements have had the
effect of raising the standards of cars sold in other states.
Additionally, the text suggests the Committee set up working
groups on a variety of issues important to consumer and
environmental protection. Again, this section raises worrisome
procedural issues. While the TBT text allows that such working
groups should attempt to include state level representatives, it
does not provide a role for consumer or environmental advocates.
Thus, decision-making on issues currently accessible to citizens
and their representatives through the Administrative Procedure Act
and the legislative process would be moved to working groups of
government officials whose primary mandate is harmonization for
trade expansion.
NON-VIOLATION IMPAIRMENTS
While the specific rules of the NAFTA SPS and TBT text expose
legitimate U.S. consumer and environmental laws to being ruled
trade barriers, the U.S. could be forced to pay "damages" even if
a U.S. standard meets the NAFTA tests. In a section called
"Nullification and Impairments", the NAFTA allows countries to
bring cases in both 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 "reasonably" have
expected to accrue to it. This provision for "non-violation
impairments" is extremely troublesome, as it would put into place
the same pressures to lower and cap standards even for standards
that pass the NAFTA tests.
II. NAFTA PROMOTES ENVIRONMENTALLY DETRIMENTAL INVESTMENT
The Bush Administration initially argued that the
NAFTA contained provisions
that would limit the lowering of environmental standards to
attract investments. However, during intense questioning in a
Ways and Means hearing, EPA Commissioner Reilly admitted that in
fact, the only investment clause pertaining to the environment was
not enforceable. That provision states that countries "should not"
lower their standards to attract investment. Unlike the other
mandatory provisions of the investment text, failure to follow the
so-called "green" provision of the investment rules can not
trigger action through the NAFTA dispute resolution mechanism. In
effect, this provision meekly encourages countries not to lower
their standards in order to attract investment. Where standards
seem to be lowered to attract investment, the agreement calls for
consultations. This provision fails on two major counts:
(*)It misses the main current problem which is lax enforcement of
existing laws, rather than the lowering of standards to attract
investment.
(*)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.
Meanwhile, large portions of several U.S. industries with high
environmental
costs such as furniture manufacturing and smelting have moved to
Mexico where enforcement of environmental standards is minimal. An
August 1992 GAO Report studying a random sample of twelve U.S.
companies operating plants in Mexico found that not a single plant
was following Mexican environmental rules. Under NAFTA, the
products of such American companies, as well as those of Mexican
and Canadian companies, would have equal access to the U.S.
market. This would put U.S. companies who are following
environmental rules at a competitive disadvantage to those who
have relocated to Mexico to avoid environmental compliance. This
perverse incentive will both push downwards U.S. standards and
promote relocation of industry to the location of least
environmental protection.
III. THE LONG LIST OF WHAT IS MISSING IN THE NAFTA ON THE
ENVIRONMENT
Noticeably missing from the NAFTA are any mechanisms for strong,
enforceable, funded environmental provisions to shape the nature
of trade and investment under the NAFTA.
For instance, environmentalists have advocated for a "polluter
pays" provision to generate a steady source of income for the
environmental programs that will be needed to counter increased
industrialization from the NAFTA, and also to create a set of
incentives for environmentally-sound business practices.
Supporters of the NAFTA estimate that merely cleaning up the
environmental devastation along the U.S.-Mexico border caused by
unregulated trade in the Maquiladora zone will cost minimally $5
billion. Instead of providing for a "polluter pays" funding
provision, the Administration's funding focus has been to bash
Congress for cutting a $200 million request for water treatment
plants along the border. Although the Administration has touted
the construction of the much-needed plants as the programmatic
aspect of their border clean up, the plants were needed and
planned separately from the NAFTA. There is no program or funding
for clean up of the toxics contaminating the ground and air in the
border zone where the rate of toxics-related birth defects and
illness on both sides of the border has soared to many times the
national averages for such problems. There is no plan for
preventing further environmental damage from the increased
industrial activity that the NAFTA would promote.
Such clean up, and funding for environmentally sound practices
in the future, must come from the businesses who will benefit from
the NAFTA trade rules. It is unconscionable that the taxpayers of
the NAFTA countries should subsidize such business activity by
paying for corporate environmental expenses.
Even the four environmental promises, seen by many
environmentalists to be woefully inadequate, made by President
Bush to gain extension of the fast track procedure for
Congressional consideration of trade agreements have not been
meaningfully met:
(*) Comprehensive Border Environment Plan: The Bush Administration
released a plan which suggested no mechanism for enforcement or
funding for border cleanup or environmental protection in the
future. The plan has been harshly criticized as insufficient in
scope and enforcement by national environmental groups, who call it
the "Where's the bun and where's the beef plan. No real program and
no funding." The only actions under the plan are for several much
needed water treatment plants along the border. Other provisions
merely call for more study and better cooperation. What is needed
is a well-
funded plan for real action.
(*) Adequate Environmental Impact Assessment: The Administration
prepared a very limited environmental analysis of NAFTA premised on
a presumption that U.S. companies would not relocate to Mexico to
avoid environmental regulation. The study thus concluded that the
environmental impacts of the NAFTA would be negligible. The
Administration has refused to undertake comprehensive environmental
impact statements as required by the National Environmental Policy
Act (NEPA). Under the Act, Environmental Impact Statements are
required for all major federal actions, including international
agreements. For instance, the Panama Canal treaty was scrutinized
specifically in an Environmental Impact Statement. Public Citizen on
behalf of itself, the Sierra Club and Friends of the Earth are
currently suing for enforcement of NEPA in the U.S. District Court,
District of DC.
(*)Safeguard U.S. Environmental and Consumer Laws: As this memo points
out, numerous U.S. environmental and consumer laws are exposed to
challenge by the NAFTA text announced September 6.
(*)Parallel Negotiations on the Environment: To date, the
Administration has claimed no accomplishments in rule-making,
enforcement or funding except talk of cooperation between the U.S,
Mexico and Canada through a North American Environmental Commission.
What this Commission's jurisdiction, enforcement powers and scope
will be is unclear. Even if the Administration had negotiated
comprehensive parallel measures, history has shown that such
agreements are meaningless unless they have strong
economically-linked enforcement, for instance inclusion within the
NAFTA. For example, two long-standing pacts on border environmental
issues between U.S. and Mexico, the La Paz Agreement and the
Interboundary Water Commission, are not enforced and have had no
impact.
IV.DISPUTE RESOLUTION: TIGHT SECRECY MAINTAINED, NON-
VIOLATION IMPAIRMENT CASES ALLOWED
Under NAFTA dispute resolution:
(*)one country can challenge existing and proposed environmental or
consumer laws of another country as noncompliant with NAFTA rules,
and
(*)under a clause on "non-violation impairments," can bring cases
against measures that do not violate the NAFTA rules, but that cause
another NAFTA country to miss an economic opportunity it "could
reasonably have expected to accrue to it."
This latter provision is outrageous, allowing another NAFTA
country to bring
a U.S. federal or state environmental or consumer law into dispute
resolution merely on the basis that it has impaired an economic
expectation of the other country. This provision greatly
undermines the meaningfulness of the specific rules of the NAFTA.
It puts the United States in the position of having its trading
partners interfering with environmental and social choices that
could impact their trade, but meet the NAFTA requirements.
If a law is found either to violate the NAFTA's rules or to
cause impairment of an economic benefit, NAFTA dispute resolution
requires that the law be removed or not implemented. Failing such
a resolution, one NAFTA country can pay the challenging country
compensation for the economic loss caused by maintenance of a
successfully-challenged law. The possibility of paying to maintain
environmental and consumer laws is used by the Bush Administration
as support for the position that the United States can maintain
any law it chooses. However, considering current
budgetary constraints and political pressures for deregulation of
environmental and
consumer standards, it seems that the pressure to eliminate or
lower such a ransomed standard would be immense.
NAFTA dispute resolution maintains the tight secrecy that
plagued the NAFTA negotiations. In fact, the NAFTA secrecy
language is stronger than that of GATT, requiring strict
confidentiality on all documents submitted in dispute resolution,
actual dispute proceedings and panel reports until absolutely
finalized. Opening up trade policy to the sunshine of public
participation was a major goal of environmental and consumer
activists. This is particularly important because the NAFTA gives
to the Executive branch the sole role of protector of challenged
environmental and consumer laws.
While absolute secrecy is mandatory, the much-touted allowance
of scientific review boards for environmental, health safety or
other scientific matters is only allowed at the consent of the
disputing parties. If the Parties agree to allow such input, the
NAFTA text requires the panel to take it into account. However,
the scientific boards when allowed, are limited to questions of
fact. Thus, under NAFTA
dispute resolution, five person panels of trade officials meeting
in tight secrecy will be empowered to second guess the non-factual
aspects of environmental and consumer laws such as the priorities
set by national and state democratic political bodies.
The Bush Administration has made an important, though narrow,
improvement in the NAFTA dispute resolution in comparison to that
of GATT.
For two narrow categories of cases:
(*)those arising under the Sanitary and Phytosanitary or Technical
Standards texts concerning factual issues concerning environmental,
health, safety or conservation, including directly related
scientific matters,
(*) those concerning conflicts with three named environmental treaties
(Convention on Trade in Endangered Species, the Montreal Protocol,
and the Basel Convention)
a defending Party can insist that a case that could arise under
GATT or NAFTA be taken to NAFTA. It seems this provisions would
not apply to many environmental and consumer health and safety
issues because they do not rise under the SPS or TBT chapters.
Additionally, if a challenge of an environmental law does not
raise factual issues, it seems the defending Party would not have
the NAFTA option and could be forced into GATT dispute resolution
where the defending Party bears the burden of proof in all cases.
Finally, the NAFTA creates a new North American organization,
the Free Trade Commission. The Commission has broad powers to
interpret and apply the NAFTA. The Commission is empowered to
establish Model Rules of Procedure for NAFTA dispute resolution.
The only procedural rules the Commission is required to include
are for secrecy and the right to a hearing and the submission of
written documents to dispute panels. Yet, it seems that other
rules are contemplated though not set out in the text. For
instance, reference is made to "scientific bodies set out in the
Model Rules..." yet no such bodies are described. Why a complete
reporting of planned procedural rules wouldn't be part of the
NAFTA text is disconcerting.
CONCLUSION
The above analysis is only a summary of problems found in
several of the sections of the NAFTA important to environmental
and consumer protection. On the
basis of the information in this memo alone, the NAFTA text
published September 6, 1992 is not acceptable from an
environmental or consumer standpoint.
More detailed analysis of these issues is now available and
analysis is underway of other sections including: energy, trade in
natural resources, agriculture, impacts on international
environmental agreements, consumer issues in banking,
pharmaceuticals and health care.