Canadian Options in North America

Thinking North American Environmental Management

Scott Vaughan, with commentary by Debora L. VanNijnatten August 11, 2004

There is a rich tradition of co-operation on environment matters in North America that goes back at least to the Boundary Waters Treaty of 1909. Areas of co-operation range from habitat conservation to a migratory bird convention to water basins and management of the intern ational waterways. The North American Free Trade Agreement (NAFTA) and its parallel enviro nmental agreement, the North American Agreement on Environmental Cooperation (NAAEC), a re seen as accelerating, deepening and codifying environment co-operation in North America. This paper by Scott Vaughan examines the extent to which trade and market integration agendas arising from NAFTA have proven to be a sufficiently durable foundation upon which to build a North American vision of environment management.

The author describes the principle defensive feature of NAFTA’s environmental regime, comprised of provisions aimed at stopping any rollback or chilling of regulatory enforcement. He goes on to summarize what is known about the scale effects of trade liberalization. The most significant impact of NAFTA on the environment is associated with income growth, contraction and divergence within and between the NAFTA partners.

In the concluding section of the paper Vaughan examines specific institutional features of the North American Commission for Environment Cooperation (NACEC). In many ways, he says, the NACEC was conceived to help overcome the democratic deficit that civil society often associates with free trade. He also briefly examines other ways in which North American environmental management continues to unfold, using the electricity sector as an example. While there is considerable co-operation in continent-wide energy standards and labels, the split between the US on one side and Canada and Mexico on the other over implementation of the Kyoto Protocol is likely to overshadow almost all of North American environment management programs.

There was ample concern raised during the acrimonious debates surrounding environment co-operation in 1991 and 1993 that NAFTA would create pollution havens and there would be a “race to the bottom” in domestic environment regulations, the finishing line being the lowest common denominator. But looking at those claims a decade later, there is little empirical evidence showing any systematic occurrence of either. In fact, one of the clearest documented cases was from 1993 to 2000 when there was a 400 percent increase in hazardous waste trade going from the US to Canada.

The author says there were rollbacks in the last 10 years, including several keystone federal environment laws that have been weakened such as the Clear Skies initiative. In both the US and Canadian cases, it is unlikely that NAFTA played any part in affecting these regulatory rollbacks, the author concludes. But Mexico is diff e rent because NAFTA has had a pro f o u n d effect on that country ‘s trade and economic growth. So, while Mexico’s manufacturing sector has expanded by 4 percent per annum, its real spending on pollution monitoring and on site inspections has declined by 45 percent.

Analysts conducting environmental reviews continue to struggle with how to balance the net environmental impacts of trade liberalization. The Mexico example is attracting attention because while Mexican trade has clearly increased and its economy is stronger, income inequality has grown. More jobs are lost in the agricultural sector than are created in the manufacturing sector. And while the top 10 percent of household incomes has increased, the other 90 percent either has not grown or has lost share. Those hit hardest are farmers, people in rural areas and indigenous people. Put another way, NAFTA is one of the drivers of environmental degradation in Southern Mexico. It has not positively affected the poverty-environment nexus.

Looking ahead, there is a gap between vision and reality. The budget for NACEC has re m a i n e d static for many years. And with no programs being re t i red, there is little room to deal with new environmental pressures.

The opposition by the US to the Kyoto Protocol has probably done more than anything else to galvanize support for the complex and flawed agreement. But while Canada has supported Kyoto, it has not articulated a national energy policy plan since 1986. And there is no coherent North American climate policy.

In her comments on the paper, Debora Van Nijnatten points out that Vaughan, along with many other analysts, often looks to national governments to address environmental problems. In fact, she says, many North American environmental issues are regional in scope and much useful co-operation takes place at that level. Even in climate change policy, states and provinces retain key responsibilities. This takes some of the sting out of Vaughan ‘s evaluation of prospects for trilateral co-operation, although Van Nijnatten suggests that the NACEC could be more successful if it addressed problems on a more regional basis.

Thinking North America is based on presentations made at the biennial “Art of the State” conference held in Montebello in October 2003. It provides a comprehensive examination of the multifaceted challenges and opportunities presented by North American Integration.

More generous cash-transfer benefit would improve access to essentials, says IRPP report
More generous cash-transfer benefit would improve access to essentials, says IRPP report