The Greening of US Free Trade Agreements

From NAFTA to the Present Day

Linda Allen

• Publisher: Routledge
• Year: 2018
• ISBN:
  9780429839627
• Edition: 1
• Topic: Droit
• Subtopic: Droit de l'environnement

This book provides an up-to-date critical analysis of the integration of environmental policies into US free trade agreements.

The work focuses on the evolution of the design of environmental policies and analyzes their effectiveness. Starting with the North American Free Trade Agreement (NAFTA) leading to the Trans-Pacific Partnership (TPP), the book examines the history of policy integration. In doing so, it provides an overview of the major trade-related environmental policies and presents empirical research on their effectiveness, a discussion of the continued demand for policy integration in light of the effectiveness, and recommendations for addressing shortcomings. The main objective of the book is to inform the ongoing policy debate over integration of environmental policies into trade agreements. The current renegotiation of NAFTA provides an opportune time for undertaking this critical review of trade-related environmental policies. As our understanding and knowledge of the environmental policies associated with US trade agreements, in particular for NAFTA, has grown significantly over the past twenty-five years, this book provides a timely and critical update for this policy debate.

Students and scholars of environmental law, trade and economics, and specifically US trade, environmental policy and law will find this book of great interest.

1
Introduction

Historically, trade agreements in the US were negotiated far from the public eye by a small group of policymakers and business leaders and rarely generated headlines. Although these agreements created winners and losers, the economic rationale for free trade was strong: on the whole it benefited the greater society and thus was desirable. The economic rationale for free trade has remained the same, but since the 1980s, trade agreements have garnered many headlines as the desirability of reducing barriers to trade has been increasingly brought into question. Trade agreements have led to major labor dislocations and impinged on issues unrelated to trade, such as labor rights, human rights, cultural heritage, public health, and environmental protection. In response to this changing view, the US has continued to pursue trade liberalization but sought to address some of these issues directly in its trade agreements. This book examines in detail its efforts to do so for one particular issue, environmental protection.

The story about the “greening” of US trade agreements begins with the North American Free Trade Agreement (NAFTA), probably the most studied trade agreement in history. In June 1990, the US and Mexico announced their intent to negotiate a bilateral trade agreement to reduce barriers to trade and improve protections for foreign investment for the two countries (Fletcher & Tiemann, 1992). This trade agreement, which eventually became NAFTA and included Canada as well, would establish one of the largest free trade blocs in the world and strengthen economic ties between the US and it two largest trading partners. Despite its potential to promote economic growth, the announcement on the trade agreement set off alarms for environmental-ists in the US and the other two countries, who quickly raised concerns that increased trade would weaken environmental protection in North America.

Initially, environmentalists had little influence on policymakers, and their concerns were barely on the radar at the onset of negotiation of NAFTA. However, by the time NAFTA was submitted for legislative approval in 1993, the inclusion of policies in the trade agreement to address the environmentalists’ concerns had become a political imperative required for its ultimate passage (Audley, 1997). The greening of NAFTA marked a watershed for US trade policy and established the precedent for incorporating environmental policies into all US free trade agreements. Since NAFTA, the US has included a suite of environmental policies in thirteen other bilateral or regional trade agreements with 24 countries. Although a few other countries have sought to do the same with their trade agreements, the US has been at the forefront, crafting some of the most far-reaching environmental policies for its trade agreements (Organization for Economic Co-operation and Development, 2007).

Despite these long-standing efforts by the US to address potential environmental impacts of trade liberalization through policy integration, the integration of environmental policies into US trade agreements remains contentious, and concerns over the adequacy of the environmental policies have also repeatedly surfaced over the intervening years. For example, the NAFTA environmental policies have been subject to repeated criticism with accompanying calls to renegotiate or strengthen the environmental provisions (see e.g. Mach, 2008; Knox, 2010; Kucik, 2017). At the same time, there has been limited research conducted on the effectiveness of many of the environmental policies in the various trade agreements, making it difficult to understand the tangible benefits of these policies in order to inform the policymaking process. It is now accepted as an article of faith that the US will continue to integrate environmental policies into its trade agreements and commit scarce human and financial resources to implementing them; thus, an objective and rigorous review of the environmental policies is warranted.

This book aims to address this gap and provides a broad overview of the major environmental policies in US trade agreements and assessment of the effectiveness of the policies for a limited number of agreements. The assessment is not intended to be a definitive determination of the policy effectiveness. Rather, it provides a snapshot of which policies have worked well and which have not worked well at one point in time and, in doing so, can serve as a basis for recommendations to address policy shortcomings as the US continues to integrate environmental policies into its trade agreements. This first chapter sets the historical context for trade and environmental policy integration. It provides an overview of the history of trade and environmental policy integration within the US, the major environmental concerns associated with trade liberalization, key players involved, and efforts to integrate policies in US trade agreements. The chapter then discusses the need for a policy review, and lastly provides an overview of organization of the book.

History of environmental and trade policy integration in the US

The integration of environmental policies into US trade agreements is a relatively new phenomenon that emerged in the early 1990s as a result of the convergence of a couple of factors, in particular, the increasing awareness and political saliency of the social costs of freer trade and a renewed involvement of Congress in trade policy negotiations through the delegation of fast-track authority. Thus, to set the context for the subsequent discussion on the history of environmental and trade policy integration for US trade agreements, a little background is first provided on the overall process for crafting and enacting trade policy in the US as well as the increased awareness of the social costs of trade liberalization in the 1980s.

Trade policymaking in the US

The US Constitution provides the legal foundation for formulating trade policy in the US; Congress has the sole authority to regulate foreign trade, while the president has the exclusive authority to negotiate treaties and international agreements with other countries (Fergusson & Davis, 2018). Trade policymaking for most of US history dating back to the late 18th century largely consisted of Congress directly setting tariffs (Fergusson, 2015). However, during the latter half of the 20th century, trade policymaking evolved into a more complex process that involved both the president and Congress and sought to balance competing economic policy interests as well as non-economic policy interests while also reducing tariff and non-tariff barriers to trade (Destler & Balint, 1999; Fergusson, 2015).

Prior to 1934, US trade policy was focused exclusively on setting tariffs, undertaken by Congress without the involvement of the president (USITC, 2009). These policies, however, were often strongly influenced by domestic politics, resulting in fluctuating tariffs and at times high levels of protectionism (Fergusson & Davis, 2018). To better insulate the setting of tariffs from the influence of domestic politics, a new approach to trade policymaking was established by the Reciprocal Trade Agreements Act (RTAA) of 1934 (Destler, 1991). Under the RTAA, the president was delegated temporary authority to negotiate and sign reciprocal trade agreements to reduce tariffs without any additional legislative action by Congress, and this approach to setting trade policy prevailed until the early 1970s (Fergusson & Davis, 2018). While presidents are also influenced by domestic politics, when it comes to trade policy, they are typically focused on serving a national constituency and thus are much less parochial in their policy goals than members of Congress (Destler, 1991).

By the 1970s, overall tariff levels on many goods had been significantly reduced, and trade policy was increasingly touching upon non-tariff barriers, such as subsidies, procurement codes, product standards, and anti-dumping measures (USITC, 2009; Aaronson, 2001; Fergusson & Davis, 2018). In response, Congress substantively modified the authority delegated to the president, under the Trade Act of 1974, to allow for inclusion of the non-tariff issues in trade policy negotiations (Fergusson & Davis, 2018). At the same time, Congress also reasserted its authority to approve any final trade agreement in the new Trade Act (Fergusson & Davis, 2018). Trade agreements now had to be submitted for Congressional approval but would be given expedited consideration without the potential for amendments, under a delegated authority known as “fast-track” authority (Fergusson & Davis, 2018; USITC, 2009). Similar to the delegated authority under the RTAA, the new fast-track authority was for a defined period of time and required periodic renewal by Congress (Fergusson, 2015).

In conjunction with the new requirement for Congressional approval of any final trade agreement negotiated by the president, Congress also set forth under the Trade Act of 1974 its authority to establish negotiating objectives for new trade agreements and other procedural requirements, such as the president notifying and consulting with the legislators before, during, and after the negotiation process (Fergusson & Davis, 2018). Overall, these changes to the delegation of negotiating authority to the president for trade policy allowed for a reintroduction of domestic politics to some degree into the ...