Panel Paper: Effectiveness of Policies to Reconcile Trade and Environment: An Empirical Study of the N.A.A.E.C

Saturday, November 10, 2012 : 10:15 AM
Adams (Sheraton Baltimore City Center Hotel)

*Names in bold indicate Presenter

Linda J. Allen, American Public University

Twenty years ago, the U.S, Canada, and Mexico embarked on a groundbreaking effort to link their economies more closely together under the North American Free Trade Agreement (NAFTA). Although a controversial trade agreement, NAFTA has nonetheless served to strengthen economic ties between the U.S. and two of its largest trading partners and create one of the largest free trade blocs in the world. But this economic integration is only part of the legacy of NAFTA; it also was the first trade agreement to inextricably and explicitly link trade policy with environmental protection goals.

As part of the NAFTA negotiations, the U.S., Mexico, and Canada also negotiated the North American Agreement on Environmental Cooperation (NAAEC) to address the environmental impacts of trade liberalization in North America. Since the NAAEC entered into effect in 1994, the three countries have collectively invested over $160 million into its implementation and the U.S. and Canada have continued to use its policy framework as the model for addressing the environmental effects of other free trade agreements.

Despite the investment of considerable resources and the unquestioned precedence given to the NAAEC, there has not yet been a comprehensive assessment of its long-term effectiveness. Thus, it has been both difficult to gauge whether it has fulfilled its promises and potential, and difficult to substantiate its continued use as a model for other trade agreements. This paper documents an empirical assessment that was completed to assess the effectiveness of the agreement, which will provide not only a benchmark for future assessments of the NAAEC, but also a basis for comparative analyses with similar agreements.

The assessment consisted of an evaluation of the implementation of four principle policy mandates of the NAAEC from 1994 to 2004. Data sources and methods included review of pertinent documentation and archival records, interviews with key stakeholders, a self-administered stakeholder opinion survey, and direct observations at various NAAEC events or meetings. Overall, the assessment indicated that the effectiveness of the NAAEC has been extremely limited. Out of the four major policy mandates, implementation of only one mandate to undertake cooperation between the three NAFTA countries had been somewhat effective. This mandate affords the countries a high degree of discretion and control during implementation.

Implementation of the other three policy mandates to improve enforcement of environmental laws, to undertake independent reporting of environmental issues of regional significance, and to integrate trade and environment in support of the goals of NAFTA had been minimally effective to not effective at all. These latter three policy mandates were controversial when the NAAEC was negotiated but were included due to strong political pressure from the environmental lobby in the U.S. at the time. This political support is critical to ensure implementation of the policy mandates, but the support for the NAAEC that existed when it was created has been greatly diminished over the years, limiting the effectiveness of these more controversial policy mandates of the NAAEC.

Full Paper: