Issue of November, 25, 2003
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Report
No Green in Trade Treaty of the Americas
By Stephen Leahy

The environment is notably absent from the negotiations of the Free Trade Area of the Americas. The costs of this omission could be enormous, but analysts say there is little chance that effective "green clauses" will be included in the hemisphere-wide treaty.

TORONTO, (Tierramérica).- In spite of the clear linkage between trade and the environment, the green agenda is being ignored in the scramble to create a pan-American trade deal, critics say.

There was not much "green" at the closed-door ministerial conference of the Free Trade Area of the Americas that took place last week in the southeastern U.S. city of Miami.

Indeed, environmental issues have played little part in the FTAA negotiations since they were launched during the 1994 Summit of the Americas by the 34 countries of the western hemisphere, all except Cuba.

"The FTAA negotiators aren't even playing lip service to environmental impacts of trade," says Bill Moore-Kilgannon, communications director for the non-governmental Council of Canadians, a leader of the anti-FTAA fight in Canada.

The proposal by the United States and Brazil, co-chairs of the negotiations, presented at the start of the Miami conference allows countries to opt in and out of various FTAA provisions does not even mention the word environment, Moore-Kilgannon told Tierramérica.

"The overarching principle here is that there can be no undue restriction on corporations," he said, in reference to the governments' justifications.

There is wide agreement that trade and investment flows affect the environment.

Even the World Trade Organization acknowledges that without proper environmental policies, trade liberalization can lead to more pollution and unsustainable resource use, Monica Araya and Daniel Esty of Yale University write in a paper "Bridging the Trade-Environment Divide in the FTAA".

For that reason, trade deals must include an environmental policy component and NAFTA (North American Free Trade Agreement), despite its flaws, may be a good model for the FTAA they argue.

NAFTA, which involves Canada, Mexico, and the United States, took effect Jan. 1, 1994, after five years of intense debate.

It contains environmental provisions and side agreements on environmental cooperation that did not become a new tool for protectionism nor did it harm Mexico economically as was feared, the paper concludes.

Highly criticized by civil society in all three nations for its corporate focus, public pressure forced negotiators to include separate, parallel accords on labor and the environment.

Moore-Kilgannon does not think NAFTA is good model but believes trade deals could be constructed to include effective environmental protection and economic benefits.

A small number of corporations and governments reject any environmental restrictions because a lack of standards is their competitive advantage, he says. "That's how they entice other corporations to come to their country."

But NAFTA's environmental provisions failed to protect the Mexican environment, a three-year study by the Global Development and Environment Institute found.

"The big wave of direct foreign investment has been a categorical failure with regard to the introduction of environmentally friendly technology in Mexican industry," says Florencia Copley, executive director of the Fundación Pacificar of Costa Rica.

"Since NAFTA entered into force, real spending on the environment has fallen by 45 percent and environmental inspections of industrial plants have fallen by a similar margin."

And then there are the notorious problems with NAFTA's Chapter 11 on investment, a provision which is also being proposed for the FTAA.

Chapter 11 was intended to protect foreign investors when they put money into projects in NAFTA member countries, Daniel Magraw, president of the Center for International Environmental Law (CIEL), told Tierramérica.

According to these rules, host governments cannot expropriate property of foreign investors without due process nor can different standards be applied to foreign-owned companies.

Furthermore, companies can initiate a binding dispute resolution process for monetary damages before a trade tribunal if they believe a NAFTA country violated their investor rights.

Ironically, Chapter 11 was originally touted for its environmental provision that states NAFTA countries promise not try to attract investment by relaxing or ignoring domestic health, safety or environmental regulations.

However, there is no enforcement mechanism to ensure compliance.

"The problem is that Chapter 11 is very poorly drafted," says Magraw who helped write the agreement as a senior member of the U.S. Environmental Protection Agency.

"Everyone agrees some of it makes no sense while other sections don't mean what they're supposed to."

In 1999 Canada's Methanex Corporation used Chapter 11 to try to prevent the U.S. state of California from banning gasoline additive MTBE, which may pose health risks. The company asked for nearly one billion dollars in losses of potential profits, but a NAFTA arbitration panel ruled against the company last year.

Methanex has filed a new complaint and California has delayed its ban on MTBE.

The costs of defending against the Methanex case have been enormous, and "There's no way small countries like Bolivia could afford to do it," said Magraw.

In his opinion, most countries would be far better off without a Chapter 11 in the FTAA, since it only benefits U.S. corporations, although environmental protection should be part of the agreement. "But I'm not very optimistic," said Magraw.

Governments' lack of interest in greening FTAA stems from a belief that environmental issues need to be dealt with separately, Gustavo Alanis, director of the non-governmental Environmental Rights Center of Mexico, told Tierramérica.

But the NAFTA Commission for Environmental Protection (CEC) does provide an arena for public complaints. "It carries a lot of weight although they do not involve sanctions," he says.

"I believe that this could be used as an example for the FTAA," adds Alanis

Latin American non-governmental organizations are working together and are creating pressure groups to ensure that the environment is duly incorporated in the FTAA negotiations yet to take place in 2004 and 2005.

According to the FTAA's original timeline, the agreement is to be finalized in early 2005, and then put up for parliamentary ratification in each of the 34 countries, with the aim of launching the free trade zone in by early 2006

But there is still plenty of skepticism.

"NAFTA's environmental provisions have been a total failure. Trade barriers were brought down by reducing environmental standards," argues Anuradha Mittal, co-director of Food First/Institute for Food and Development Policy.

The FTAA will be another race to the bottom, powered by corporate greed, Mittal said in an interview.

"We're not against trade but against the way they want to trade. This is the old struggle against colonization by the North," she said.

While Canada's Moore-Kilgannon does not go that far, he agrees the FTAA cannot be "greened".

"The essence of the FTAA is to allow corporations to move where ever they want and do whatever they want," he said.

* Stephen Leahy is a Tierramérica contributor. With reporting by Diego Cevallos in Mexico.

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