Linking Trade, Environment, and Social Cohesion

NAFTA Experiences, Global Challenges

John J. Kirton, Virginia W. Maclaren

• Publisher: Routledge
• Year: 2018
• Topic: Politics & International Relations
• eBook ISBN:
  9781351745352
• Subtopic: Politics
• Index: Politics & International Relations

This title was first published in 2002: Focusing on the central issues of the contemporary trade-environment-social cohesion debate, this compelling book analyzes the social and environmental impacts of existing trade liberalization through the World Trade Organization (WTO), North American Free Trade Agreement (NAFTA) and other key regimes. It also explores new strategies for regulation and risk assessment, environmental information, standard setting, voluntary activities, sustainability assessments of trade agreements, and participation by civil society. Features include: -suggests ways in which the NAFTA model might be improved -explores the NAFTA regime with regards to its environmental and social impacts -evaluates the experience and improvement of NAFTA and how it might assist the broader international community Characterized by its meticulous scholarship and fluid style, this authoritative work is an indispensable guide for all those concerned with trade liberalization, environmental enhancement and social cohesion.

Chapter 1

Forging the Trade-Environment-Social Cohesion Link: Global Challenges, North American Experiences

John J. Kirton and Virginia W. Maclaren

Global Problems, North American Solutions

Linking trade liberalisation, environmental protection, and social cohesion in mutually supportive ways has long been a challenge for the global community. The connection among these three realms was first forged in practice almost a century ago with the emergence of the first multilateral environmental agreements with trade-restrictive provisions. It was identified in principle three decades ago when the Stockholm Conference of 1972 first advanced a series of environmental precepts distinctively different from those at the heart of the traditional multilateral trade regime. By the late 1970s, the Group of Seven (G7), now Eight (G8), major industrial democracies began to articulate the principles by which potential tensions among trade, the environment, and their social dimensions should be governed. In the ensuing decades, the General Agreement on Tariffs and Trades (GATT) and its successor, the World Trade Organization (WTO), have also taken up the task of identifying the ways environmental values could be protected within the ongoing process of trade liberalisation (Esty and Institute for International Economics 1994).

The decade and a half following the 1987 publication of Our Common Future, known as the Bruntland Report, saw a major expansion of the effort to forge an acceptable link (World Commission on Environment and Development 1987). The G7 and the United Nations (UN) developed a rich normative framework through which to link trade liberalisation and environmental protection, while incorporating a wide range of social considerations. The Organisation for Economic Co-operation and Development (OECD) devised a methodology for assessing the environmental impacts of trade and a broad array of environmental indicators by which to measure the changing state of the global environment. Within North America, the North American Free Trade Agreement (NAFTA), which took formal force on 1 January 1994, offered a pioneering, new regional free trade regime that included extensive environmental provisions and an accompanying organisation to help give them effect (Mayer 1998; McKinney 2000; Cameron and Tomlin 2000).

Despite this considerable progress, however, very few would claim that the challenge of forging an appropriate trade-environment-social cohesion link has now been adequately met. At the global level, the sustainable development principles articulated by the G7/8 have been translated most imperfectly into the ongoing practices of the international institutions governing the world’s trade regimes. The WTO, beginning work in 1995, contained only rudimentary environmental and social provisions in its governing agreements and ongoing work (Sampson 2000; Sampson and Chambers 1999; Schrecker and Dalgleish 1994). Attempts to produce stronger ones as part of a new comprehensive round of multilateral trade negotiations were delayed by resistance from many developing countries at the WTO ministerial meeting in late 1999. They were aided by some civil society protesters, who claimed that trade liberalisation itself was antithetical to the environmental and social values they held dear. At the regional level within North America, despite some successes, efforts to deepen the environmental and labour provisions of the NAFTA regime and extend them to similar and related free trade arenas on a wider geographic plane, across the Pacific in the Asia-Pacific Economic Cooperation (APEC) forum or across the Americas through the prospective Free Trade Agreement of the Americas (FTAA) have proven difficult indeed.

Citizens throughout the global community have now come to see trade liberalisation as the core of a profound and proliferating process of globalisation that has reached into their daily lives, and that can cause, or has already caused, widespread environmental and social costs through processes that they can neither fully comprehend nor control (Deardorff and Stern 2000). Indeed, visible and effective opposition to trade and investment liberalisation from civil society and from the streets has mushroomed. It has followed from the defeat, led by nongovernmental organisations (NGOs), of the OECD’s effort to create the Multilateral Agreement on Investment (MAI) in 1997, through ever larger and more violent protests at the Seattle WTO ministerial in 1999, the United Nations Conference on Trade and Development (UNCTAD) in Bangkok and the International Monetary Fund (IMF) in Washington and Prague in 2000, and the Quebec City Summit of the Americas, the European Council at Gotenberg, Sweden, and the G8 in Genoa, Italy, in 2001. This proliferation of violent protest has left many wondering whether globalisation or its critics have gone too far (Rodrik 1997).

Within this cascading confrontation over the effects of globalisation, the debate about the links among trade, the environment, and social cohesion has had a central place. While the concept of social cohesion has been invested with many meanings, it focusses here on how trade liberalisation and its link with environmental protection can either contribute to or detract from the propagation of shared values, democratic participation, and equal opportunities for all citizens of a country, across its many regional, linguistic, economic, generational, and gender divides.

The failure to sustain the momentum of trade and investment liberalisation through the conclusion of a multilateral agreement on investment at the OECD and the WTO’s launch of the Millennium Round of trade negotiations as the twentieth century closed was due in part to intensified demands that the values and voices of the environment, labour, and, more generally, civil society be given a more integral and equal part in the new international economic regimes being forged. The global financial crisis of 1997-99 seemed to show that the liberalisation of finance could unleash devastating, widespread destruction on the ecological resources, material well-being, and social stability of countries around the globe, and that the previously attractive model of export-led growth provided no sure and stable route to sustainable development (Kaiser, Kirton, and Daniels 2000). The sometimes violent protests against the work of the IMF at its ministerial meetings in 2000 and mounting concerns over trade in genetically modified food showed that the resistance to continued trade and investment liberalisation was by no means ephemeral. More generally, among publics in North America, Europe, and Asia, the earlier consensus on the value of trade liberalisation began to erode as anxieties about the social and environmental impacts of globalisation grew. In the judgement of many, if the existing hard-won advances in trade liberalisation were to be preserved and extended, a better way to make trade liberalisation promote environmental enhancement and social cohesion would have to be found (Pettigrew 1999; Hockin 2001).

At the start of the twenty-first century, then, the challenge of designing regimes for global governance that simultaneously enhance trade liberalisation, environmental protection, and social cohesion has acquired a compelling claim. In taking up this task, there are good reasons for scholars and policy makers alike to conduct a close and critical examination of the experience of North Americans under the NAFTA regime. In many respects, those in the North American community had crafted in their NAFTA a set of principles, norms, rules, decision-making procedures, and institutions that led the world in affirming ecological and social values and linking them to the far-reaching trade, investment, and finance liberalisation it brought (Kirton 1996; Johnson and Beaulieu 1996; Audley 1997). While NAFTA was by no means initially conceived as an instrument for advancing sustainable development, when the core text was finally negotiated in 1992 it declared that the purposes of this full free trade agreement included promoting sustainable development and strengthening environmental laws and enforcement (North American Free Trade Agreement 1994, 1). It gave life to these principles by placing several innovative environmental and social norms and rules throughout its lengthy text. Moreover, it came with two parallel and interlinked accords — the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC) — that extended these links and created new regional organisations for their implementation — the Commission for Environmental Cooperation (CEC) in Montreal and the Commission for Labor Cooperation (CLC) in Washington. Perhaps most important, these three agreements gave the corporate community, NGOs, and interested parties of civil society an unparalleled degree of direct access to, and a role in, these international institutions and organisations to ensure that their provisions and their member states’ regulations for environmental, labour, and investment protection were upheld. With its pioneering links among trade, environment, and society, with its unprecedented creation of regional organisations in North America to govern two of the richest and most powerful countries in the world together with a leading developing country, and with its path-breaking provisions for civil society participation, NAFTA appeared to have much to offer the wider world.

Is this distinctive North American trade-environment-labour regime in fact a model for the global community as it seeks to move forward to secure the gains that trade and investment liberalisation can bring? Or does it — more modestly — contain valuable lessons, learned over almost a decade of often difficult and controversial operation, about what and what not to do? As the NAFTA regime approaches the end of its first decade in operation, considerable controversy and uncertainty continue about the appropriate answers to these key questions.

On the oppositional side, there were many who felt, as NAFTA was being negotiated, that it would destroy social and environmental values. Those criticisms continue to this day. Others have focussed on how NAFTA has operated in practice, but offer widely varying assessments of, and often profound disappointment about, whether its innovative provisions for environmental enhancement, social protection, and civil society participation have unfolded as its founders and promoters had hoped. These critics say that if NAFTA has not worked and cannot be made to work for people and their habitat, it should be replaced by new governance arrangements that can. Still others have argued that too little is known about how to assess accurately the multifaceted, complex, cumulative, long-term ecological, and social impacts of trade and investment liberalisation. They thus argue that more adequate analytical frameworks, indicators, and information must be devised at the international, national, and local levels. Following a political version of the precautionary principle, they are reluctant to replicate this — still unfolding and uncertain — NAFTA experiment in other geographic domains. Other observors doubt that the North American model, even if it works well enough in its home region, provides a realistic or appropriate framework for the broader international community, with its very different circumstances and constituents. And even if it does so in theory and practice, there could well be severe practical difficulties in having it accepted politically by other countries in other regions, with much different levels of development, economic, and legal traditions, and far less attachment to democracy, rule of law, and a politically empowered and engaged citizenry.

Yet NAFTA’s defenders have a strong case as well. Almost a decade since it formally took effect, they claim that among the world’s many trade and investment liberalisation agreements, NAFTA remains a lonely high watermark of respect for environmental and social values and the incorporation of those values. Similarly, they argue that it stands out as a unique innovator of transparency and public participation, at a time when the global demand for such processes is proliferating. Indeed, they suggest that among the world’s actual operating trade and investment regimes, for devotees of sustainable development there is ‘nothing but NAFTA’ to inspire or to build and improve upon.¹ Moreover, NAFTA’s defenders point out that its environmental, social, and participation provisions are being replicated in large part in many of the numerous bilateral free trade agreements signed by Canada and the United States within the western hemisphere and beyond. In this sense, citizens of Chile, Costa Rica, Central America, Jordan, and prospectively of the Caribbean, have — along with Americans, Canadians, and Mexicans — already said ‘yes’ to the NAFTA model.

Perhaps most strikingly, at a time when doubts and dissent about globalisation have burgeoned around the world, most North Americans have come to accept their NAFTA as it has actually operated and evolved. At the most minimal level, the annual ministerial meetings of NAFTA’s trade and environment ministers have attracted none of the protests and the violence that such political level gatherings of other multilateral and regional institutions now routinely do. Americans are now supportive both of NAFTA and of trade liberalisation, but demand that the latter have strong environmental and social protections built in (Kirton 2000; Program on International Policy Attitudes 2000). Canadians in particular, who were highly negative about NAFTA at the start and who remain regionally divided on so many issues within their diverse country, now express a surprisingly strong degree of support for NAFTA (Mendelsohn and Wolfe 2001 ; Parkin and Centre for Research and Information on Canada 2001). A February 2001 national poll found that almost two thirds of Canadians support NAFTA, down from the peak of 70 percent in 1999, but substantially higher than the 29 percent who were in favour of it in 1993 during negotiations over the agreement (Tuck 2001 ; Gallup Canada 1993). That Canadians have also been highly unified for well over a decade about the need to put global environmental protection in first place when they look abroad (Gherson 1998) suggests that they may see in the realised NAFTA— as opposed to the rhetorical NAFTA — an instrument for doing real environmental good.

Yet even if most Americans and Canadians have come to accept their NAFTA, to varying degrees, several elements of this consensus are profoundly clear. First, it is not so much trade itself but the broader process of globalisation and the values it affects that concern citizens. Second, it is the impact of trade on those other values, above all environmental quality, rather than its consistency with neoliberal precepts or its ability to raise job prospects and incomes, that cause the most consternation. Third, the consensus over NAFTA is neither automatically nor easily transposable to the other bilateral, regional, plurilateral, or multilateral trade liberalisation projects in which the United States, Canada, and Mexico are engaged. And the consensus on the home continent may itself disappear if NAFTA should fail to provide the promised and desired environmental and social goods. In short, NAFTA, with its pioneering provisions and performance, cannot be taken for granted by citizens of North America or by those in the wider world.

To address these concerns, and the core issues they create, this book explores the experience of the North American region under NAFTA in linking trade, environment, and social cohesion, within the context of a rapidly globalising world. Its central purpose is to assess, on the basis of the best and most current analysis and evidence, just how effective the NAFTA regime has been after almost a decade in operation in integrating and promoting trade, environment, and social values in ways that realise the shared sustainable development ideal in a globalising world. To fulfil this purpose, it takes up five specific tasks.

The first is to identify how the general process of, and debate about, globalisation on a world scale has an impact upon and is informed by the NAFTA-centred experience of North Americans in their home region. There is likely to be a great amount of overlap between these global and regional processes and anxieties. Many of the concerns about the social and ecological impact of trade, investment, and finance liberalisation featured in the NAFTA debate of the early 1990s are those that have now arisen globally. Since 1996, G7 policy makers have taken up the growing anxieties about globalisation and scholars have asked the basic question: Has globalisation gone too far (Rodrik 1997)? With far-reaching provisions for the liberalisation of foreign direct investment (FDI), and ones that the broader multilateral community could not secure in the OECD with an MAI, NAFTA could serve the global community as a leading indicator — some might say a regional canary in the globalisation mineshaft — of what to do or what not to do in the investment field. The NAFTA experience could say much about where the global community might want to go, particularly along the highly and long integrated border between countries so similar and yet so different as Canada and the United States. In any event, the three North American countries are large enough, in economic weight, territorial expanse, ecological capital, international institutional influence, and social, cultural, and linguistic reach, that their own extensive experiment is likely to have a global impact, whatever the outside world intends. At the same time, through NAFTA’s pioneering integrated trade-environment-labour provisions and institutions, North Americans are doing things regionally in a very different fashion than other regional communities or the global community have done thus far. There may thus be much to learn from North America about how to proceed in the twenty-first century.

The second task is to assess the current record of the NAFTA regime in integrating trade, environment, and social concerns, and to compare it to major efforts at the global level (in the WTO and G7/8) in this regard. After almost a decade, just how well have the NAFTA regime and its institutions fulfilled their promise of producing the economic benefits of trade, investment, and finance liberalisation in ways that promote environmental and social values and also empower citizens? With at least three years of anticipation and almost ten years of formal operation, the NAFTA regime, its additions, and its mid-course corrections are ready to be thoroughly reviewed, not only for their immediate impact, by also for their delayed, long-range, and complex, cumulative interactive effects. Even major disturbances from within or without — the Mexican peso devaluation of 20 December 1994, periodic drought, or the 1997-99 Asian-turned-global financial crisis (Kaiser, Kirton, and Daniels 2000) — cannot cloud what NAFTA itself has brought. Indeed, they help demonstrate, as the years pass, how robust the regime is at its core in delivering its declared results. Moreover, as these years accumulate, they allow for greater confidence that some of the initial ...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Contents
• Global Environmental Governance Series
• List of Tables
• List of Figures
• List of Contributors
• Preface and Acknowledgements
• List of Abbreviations
• Chapter 1 Forging the Trade-Environment-Social Cohesion Link: Global Challenges, North American Experiences
• PART I Linking Trade, Environment, and Social Values: The Glob Aland Nafta Experiences
• PART II Investor Protection: Evaluating the Nafta Chapter 11 Model
• Part III Environmental Protection: Evaluating The Nafta Commission for Environmental Cooperation Model
• PART IV Worker Protection: Evaluating the Nafta Commission for Labor Cooperation Model
• PART V Assessing Environmental Effects: Local, North American, and Global Perspectives
• PART VI Concluding Reflections
• Index