free trade and the environment by: marcel dulay. outline proponents to free trade opponents to free...
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Free Trade and the Environment
By: Marcel Dulay
Outline
Proponents to Free Trade
Opponents to Free Trade
North American Commission on Environmental Cooperation
NAFTA:
Free Trade
US, Mexico, Canada– 1990 trade doubled– $700 billion in 2000
US-Canada largest bi-lateral trade in world Mexico 2nd largest trading partner 80% of Mexico trade w/ US
Proponents of Free Trade
Trade and Welfare– Trade = economic growth– Economic growth = higher wages– Higher wages = brings more taxes– Higher taxes = more enforcement resources
Higher income = people want better environment
Kuznets Curve Countries grow out of pollution with wealth
Proponents of Free Trade
Environmental Kuznets Curve
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
0 2,000 4,000 6,000 8,000 10,000
Per Capita GDP (US$)
Am
ou
nt
of
Po
llu
tio
n
(
tota
l em
issi
on
s p
er y
ear)
Proponents of Free Trade
Exchange of freedom makes environment clean– Technology– Management– Capital
Stay globally competitive
Opponents to Free Trade
Free trade vs economic growth– Week empirical direct link– Literature infers link– Open policies tend to grow faster
Trade vs Environment– Week
Deal with predictive assessments Difficult to see how the environment as a whole is doing
Studies
Un-democratic Un-participatory Improvement depends on pollutant
– Data shows green house continue to increase– Some losses are permanent– US/Mexico = CO higher
Transportation causes air pollution Chapter 11 investment (expropriation) Hazardous waste increase (positive cor) Fear of trade will do to the environment
Opponents to Free Trade
Problem:– Volume increases (input & output)– Growth stresses on infrastructure
Offset by: – Different kinds of pollution– Less inputs/output (energy)– Technology
Opponents to Free Trade
Scale Effects
Problem:– Jobs vs. environment– Government race to the bottom
Offset by:– Kuznet’s curve
Opponents to Free Trade
Competition Effects
Problem:– Pollution havens– Get up and move– Best example: hazardous waste
Offset by:– Little evidence – Other factors are more important– Existing capital does move easy
Opponents to Free Trade
Location Effects
Problem:– Trade rules vs environmental regulation
Offset by:– Regulation has no correlation– Smart laws– Laws with growth
Opponents to Free Trade
Regulatory Effects
Free Trade
VOCs caused by petroleum, metals, and transportation
CO increased from Metals sector Petroleum increases CO, NOx, SO2
Transportation increases VOCs Chemical sectors relates to toxic releases Natural resources mixed, depends
NAFTA Effects
NAFTA
Basic Agreements– Doc. 1: 22 Chapters (11 is controversial)– Doc. 2: Understandings
Side Agreements: Environment and Labor– Doc 3: NAAEC – 51 Articles
Art 8: CEC Art 14-15: Submission on Enforcement Matters
– Doc 4: Guidelines for submission: Art. 14 & 15– Doc 5: NAALC
Dispute Resolution– Doc 6-10: Codes and procedures
Mexican Invest Law, and US Implementation Act
Chapter 11: Regulators fear conflicts with domestic laws – Ethyl Corp. settled out (MMT)– Three others have gone to court
NAFTA
Council: governing body– Forum for discussion– Implement agreement– Handle dispute resolution– Consider/develop technical recommendations
Secretariat: Executive Director and staff– Produces annual, information, and factual record reports– Receives submissions on enforcement matters
Joint Public Advisory Committee
CEC
Commission for Environmental Cooperation
Public involvement– Past behind closed doors– Non-democratic
CEC approach: Involvement at all levels Dispute settlement: Not very transparent to
society Public Submittals to date
– 8 Factual records– 11 Active– 31 no public record or action
CEC
8 Factual Records
Canada: 4, 49%
US: 1, 13%
Mexico: 3, 38%
CEC
31 Closed files
Canada: 6, 26%
US: 7, 30%
Mexico: 10, 43%
CEC
Number of Submittals
0
1
2
3
4
5
6
7
8
9
1995 1996 1997 1998 1999 2000 2001 2002 2003
US
Mexico
Canada
CEC
Submissions: Factual Record (8) Canada – Fisheries (4) United States – Migratory birds Mexico
– Coastal: environmental impact announcement– Habitat protection– Hazardous waste repatriate
CEC
Does not conform to 14(1) 11
Submission warrants no response 2
No action warranted based on response 5
Response identifies judicial order 2
Council vetoes Secretariats request for factual record 2
Submitter removes submission 1
Factual record published 8
Total 31
Submissions on Enforcement
CEC
Submissions: No factual records More than 3 cases
– Aquatic Habitat– Fisheries
3 Cases– Endangered species– Air pollution– Groundwater contamination– Hazardous waste landfills
CEC
As countries transition out of development need accompany environmental policy
Slow liberalization to allow environmental policy time to adjust
Global markets and capital move fast today, can’t be caught of guard
Environmental policy should go in parallel to economic decisions, not after the thought
Public needs to be involved Assessments “environment first” Need more data
Conclusions/Path Forward
Studies show no significant winner over the debate on whether free trade is good or bad for the environment.
– 1. Which side of the argument do you sit on, why?– 2. How can we better the assessment?
NAFTA has very weak legal mechanism for environmental enforcement, and can be said to actually clash with regulation.
– 3. Did NAFTA fall short in addressing environmental concerns?– 4. Is public participation realistic?
The agreements clearly are the start of bi-national cooperation to improve the environment.
– 5. How can the Parties work together to continue this effort?– 6. What policies should be implemented?
Discussion