Could a new NAFTA really promote better enforcement of environmental laws?

By Supriya Tandan September 19, 201819 September 2018

Could a new NAFTA really promote better enforcement of environmental laws?


As NAFTA negotiations have moved from deadline to deadline, the Canadian government has so far maintained its position that wants to include environment and climate provisions in an updated trade deal.

The question is they could ever be meaningfully enforced.

Both Canada and the U.S. agree that provisions on the environment should be addressed in the main body of the new trade deal, instead of in a side accord as they currently are. As things stand today, the Commission for Environmental Cooperation (CEC), created under the North American Agreement on Environmental Cooperation (NAAEC), handles environmental issues raised under NAFTA. It receives complaints from the public where they suspect a lack of environmental law enforcement.

The CEC's powers are mostly limited to fact-finding. It can publish a factual record documenting the alleged violation, effectively naming and shaming governments into doing the right thing. But it does not have the power to hand out sanctions or even give recommendations. This method of handling environmental complaints, known as the Submissions on Enforcement Matters process, is a unique feature of NAFTA. It is not replicated in more modern trade agreements such as the defunct Trans-Pacific Partnership (TPP) or the Canada-European Union (EU) Comprehensive Economic and Trade Agreement (CETA). However, the process is not without its fans. Armand De Mestral and Markus Gehring, both fellows with the CIGI's International Law Research Program argue that it would be a mistake to entirely do away with it:

The Submission on Enforcement Matters process remains one of the most accessible international environmental processes that exist today. NAFTA renegotiation should envision improvements to the environmental provisions already which are likely to be included. For example, it might be desirable to constrain the Council's powers not to authorize preparation of factual records and publication of them by requiring a negative consensus, in which all three Ministers must decide together. Ensuring that factual records are prepared and made public unless there is a negative consensus of the Council would make more valuable information about the North American environment publicly available, as well as encouraging more positive environmental action by each state.

Hugh Benavides, the former legal officer at the Commission for Environmental Cooperation also offers a series of recommendations on how to improve the process:

A new process should provide for complaints, not only about enforcement but about backsliding as well, to be filed with a body that is at arm's length from governments and staffed by competent experts. Other recommended improvements include allowing a factual record to proceed when just one party to the agreement, rather than a majority, recommends it (this is a feature of the US-Central America and US-Dominican Republic trade agreements, for example), and allowing the expert body to draw conclusions and make recommendations, rather than limiting its reports to facts.

It is possible that these types of recommendations could still make their way into an updated chapter on the investor-state dispute settlement provisions, found in NAFTA’s Chapter 11. Chapter 11 remains one of the more controversial aspects of NAFTA, as it allows companies to sue NAFTA’s parties for unfair treatment, which the U.S. tends to view as infringing on its sovereignty. Its terms were watered down in the U.S.’ bilateral agreement with Mexico, struck last month. Even in the scenario that Canadian Foreign Affairs Minister Chrystia Freeland does succeed in retaining investor-state dispute, trade specialists are doubtful that even these updated provisions would be effective, given today’s political climate. Dan Ciuriak, a Fellow-in-Residence with the C.D. Howe Institute writes that Canada’s progressive trade agenda, conceived to counter the rise of anti-globalization populism:

A not insignificant problem in transposing such measures into the NAFTA is the Trump Administration’s overt hostility to the US Environmental Protection Agency (EPA) and its past policies. While the administration has been constrained by Congress in implementing radical cuts to the EPA budget (Meyer 2018), it would be an open sham to sign onto NAFTA measures that purport to prevent use of weak or non-enforced environmental standards for trade advantage while the Trump Administration tables budget proposals that would have just that effect.

As for enforceability:

In the NAFTA negotiation, Canada’s PTA faces what can only be described as hurricane-level headwinds. Raising the status of the existing side agreements on labour and the environment by including them in the main text of a revised NAFTA and making them enforceable through trade sanctions would be consistent with what the NAFTA parties agreed to in the original TPP. However, these measures would have little, if any, practical impact on Canada in terms of addressing the distributional and labour market concerns that motivate the PTA, as they would not affect either Canadian or American laws or regulations, nor materially change wage differentials between Canada and Mexico.  Moreover it would be problematic for Canada to sign an agreement purporting to be progressive in these areas with an American administration that does not obviously identify with these views.

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