The Environment & Free Trade

Chris Gaal

U.S. CORPORATIONS OPERATING plants in Mexico’s free trade zone treat the local environment in much the same way that they treat their workers. These corporations cut costs when it comes to wages, and cut costs in the same way when it comes to protecting the local environment Indeed, along with extremely low wages, a major part of the whole attraction that investment in Mexico’s zone offers U.S. companies is the ease with which they can ignore environmental laws. Mexico’s existing environmental laws, in some cases stricter than those in the United States, are not enforced.

This scenario represents a micro-version of the kind of economics that transnational corporations want to expand to include the whole of North America. If they are successful in promoting their vision, justified by the need to be competitive in the ‘90s, then the stage will be set for undoing environmental protection in all three countries.

Fortunately, most people in the United States don’t believe that the North American Free Trade Agreement (NAFTA) is a good idea. Opinion polls have consistently shown majority opposition to the treaty.(1) Its unpopularity is likely to grow as more people find out what it really means in terms of labor and the environment.

However, public opposition does not necessarily mean NAFFA will be stopped in Congress. This is especially true since both the Mexican government and large transnational corporations have launched one of the biggest and most expensive lobbying and ‘education’ campaigns in the history of this country.(2) Nevertheless, at this point people seem to see NAFTA for what it is, a plan cooked up to meet the current needs of the trans-national corporations to restructure and cut ants.

Dirty Little Secrets

A program in which society takes the cuts in wages, environmental protection, health and safety and the ability to set its own country’s policies in order to stimulate the economy is a losing game. It results in what has been called a ‘downward harmonization” of all these conditions as U.S. and Canadian workers are pitted against Mexican workers and communities compete to attract investment In fact, we can already glimpse the environmental conditions that will come into play under NAFTA by examining environmental conditions in the maquiladora industries today.

The La Paz agreement, a law signed in 1983, requires that all U.S. companies operating in the maquiladoras account for the toxic chemicals they use. It further requires them to ship these substances back to the United States for treatment after their use in production, since Mexico does not have the capacity to dispose of these chemicals safely.

According to the Border Ecology Project, based in Naco, Arizona, U.S. corporations have not been able to account for 95% of the waste they have generated in the past twenty years during operations in Mexico. The EPA’s own records show that in 1988 less than 1% of U.S. firms with production plants in Mexico shipped any hazardous waste back to the United States.3 Where did it go?

The National Toxics Campaign may know the answer, based on their study of river water and soil samples from city streets and backyards in Mexican border towns in the maquiladora zone. Of the twenty-three samples taken, seventeen were found to contain discharges of toxic waste, with eight of these severe, exceeding U.S. standards by hundreds of times. One factory, owned and operated by Tonka, was pouring raw sewage mixed with 9% petroleum into the Tijuana River.

In Nuevo Laredo, along the border, xylene was found in drinking water at levels twenty times higher than tolerated by U.S. standards. This particularly toxic solvent causes kidney, lung and liver damage, along with internal bleeding. Outside Matamoros, at a GM plant, they found xylene at 2,800 parts per million. (The accepted U.S. standard is ten parts per million.) Other toxic substances widely found were heavy metals, such as chromium and copper, along with many types of solvents.

These findings led the National Toxics Campaign to issue a report entitled “Border Trouble” in which they characterized the border region as a 2,000 mile-long Love Canal According to Marco Kaltofen, the director of the NTC’s Citizen’s Environmental Laboratory,

“We didn’t see 10% more pollution [than in the United States] but thousands of times more pollution from similar factories with similar numbers of employees. These are not massive factories. These are little white buildings, like you would see in an American town’s industrial park, discharging massive amounts of pollution. Chemicals that are going to target every organ in the human body are being released in amounts great enough to catch fire.”(4)

The Rio Grande, which divides the United States and Mexico, receives the flow from most of the smaller rivers and streams in the border bioregion. It is an irreplaceable water source for some 1.5 million people, many of whom bathe in and drink directly from the river. One might reasonably expect a serious impact on the health of these people due to the massive pollution of this resource. According to recent studies this is exactly what has been occurring.

On the United States side of the river there has been an epidemic of babies born with anencephaly, a condition in which large portions of brain tissue are missing. Epidemiological studies show this has occurred in the Texas border region at a rate three times the national average.(5) At one facility in Brownsville Texas, during Spring 1990, three children were born with anencephaly within one thirty-six-hour period.(6) A recent University of Texas study also found levels of liver and gallbladder cancer in the thirty-three U.S. counties that line the Rio Grande to be well above the national average.(7) The American Medical Association issued a report which described the border as “a virtual cesspool and breeding ground for infectious disease. … [in which] the major factors affecting environmental health in the area are water and air pollution.”(8)

The Real Environmental Agenda

U.S. corporations operating in the maquiladoras have had an abysmal environmental track record. They have created desperate conditions with which U.S. communities must compete to attract investment But NAFTA’s impact will be much worse These are merely dirty little secrets compared to the true agenda, which is to deregulate trade in the Americas. NAFTA would make it impossible for one country to pass strider regulations than another trading partner, opening the door for a rollback of regulation to the lowest common denominator.

If, for instance, the United States were to ban the use of a dangerous pesticide or chemical, such as Alar, DDT or asbestos, our refusal to buy that product could be ruled an illegal restriction of trade. This decision would be reached by an unaccountable board of unelected trade officials, bankers and financial experts appointed by the executive branches of each country. In that event, then our government could then be forced to pay damages based on the reasonable revenues that the foreign company would have expected from the sale of that particular commodity.

This is exactly what happened in the case of asbestos. Canadian industry wanted to export asbestos to the United States. But the United States had import restrictions based on health and safety arguments under the EPA’s Toxic Substances Control Act. The Canadian government challenged those restrictions under the U.S.-Canada Free Trade Agreement as an illegal restraint of trade. Although asbestos had been shown to be carcinogenic, the banning of which was expecting to save 1,900 lives over the next ten years, the U.S. law was overturned, with the possibility of monetary damages to Quebec’s asbestos industry.(9)

This can happen not only with dangerous substances, but also with “safe” products which nonetheless use a destructive process in their manufacture-That includes processes that destroy natural resources, poison the environment or exploit workers. For example, a ban on unsustainably harvested rainforest timber would be an unacceptable restriction of trade due to a “process standard.”

For a real world example, one can look to a recent ruling reached through the General Agreement on Trade and Tariffs (GATT). A 1991 GATT dispute resolution panel ruled that the United States could not legally bar the entrance of Mexican tuna, which had been caught using a process that killed dolphins.(10) The United States had a nationally enforced trade boycott against tuna caught using the drift-net process under the Marine Mammal Protection Act GATT ruled that this “process standard” was an unfair restriction of trade. Now Mexico is free once more to kill dolphins using this process, with possible U.S. compensation for lost revenues during the brief time in which they could not sell drift-net tuna.

For another example of NAFTA’s impact, one may look to the raw log export ban on timber cut from public lands in the Northwest This measure sought to discourage the export of unprocessed logs while encouraging value-added processing in this country, leading to the creation of more secure wood products jobs—an important point of unity between the often fractious labor and environmental communities. No such trade restrictions will be tolerated under NAFTA.

Because of these consequences, NAFTA will make it next to impossible for governments to protect the environment For a vision of things to come, it is again instructive to look to the changes already seen from the U.S.-Canada Free Trade Agreement According to the British journal The Ecologist,

“Canadians have been forced to abandon measures to protect the threatened Pacific salmon. Canada is also prevented from restricting the sale of its water resources to the USA, even in times of local water scarcity. Moreover, the Canadians have been forced to bring their pesticide regulations in line with far laxer U.S. standards. Canada’s ban on irradiated foods has also been judged illegal as have Canadian proposals to reduce emission from lead, zinc, and copper smelters.”(11)

Recently The Ecologist reported:

“Besides blocking efforts to achieve a more sustainable agricultural system, the U.S.-Canada agreement was a setback for environmental protection in general. It almost eliminated Cana-dim government spending on ecological efforts such as wetlands protection and forest replanting. These types of government subsidies were labelled “trade distorting” and essentially banned. .. . Among the wide range of environmental protection measures that have been challenged as unfair trade barriers are U.S. laws banning asbestos… and requirements that newsprint must contain recycled paper.”(12)

One must remember that the legal and economic differences between the United States and Canada are not nearly so great as those between the United States and Mexico. Thus NAFTA’s downward harmonization of regulatory conditions is likely to be much more severe.

Corporations will have a freer hand all over the hemisphere as other countries from South America sign on to the treaty. Large businesses will enjoy fewer restrictions on pollution and easier access to cheap resources such as timber and minerals. This is in their interest, since from their narrow point of view it simply means bigger profits. For society and the environment it is an ugly step in the direction of irreversible damage.

Moreover, one must also consider the use of child labor, estimated by the Mexican Center for Children’s Rights at a third of Mexico’s workforce. Concerns over the production process, environmental or social, will become inadmissible as reasons for the restriction of trade.

What One Hand Giveth…

Despite the problems associated with NAFTA, those responsible for selling the agreement to the public have argued that the more pernicious aspects can be avoided through side agreements which would set standards for labor and the environment George Bush originally floated this idea, even though he insisted that the treaty as it stood was the greenest trade agreement ever negotiated.

More to the point, the Bush administration promoted the idea that NAFTA was simply a limited trade agreement and not an environmental agreement, and therefore should not be judged on environmental grounds. The obvious reply, stated clearly by Canadian environmentalist Zen Makuch is that “if trade agreements are not environmental agreements then environmental regulations and natural resource conservation measures should be exempt from trade rules.”(13)

The just announced “side agreements” on labor and environmental standards are a gimmick to deflect the high tide of hostile public opinion in both the United States and Canada. (The texts haven’t been published as ATC goes to press—but once NAFTA is ratified they won’t much matter anyway!)

The idea of setting international standards for labor and the environment is certainly an idea that most progressives would support. This was seen in the United Nations Council on Economic Development (UNCED) Global Climate Change Convention. This measure, intended to stabilize the emission of greenhouse gases, found wide support, even in many corporate constituencies. But in the context of free trade such agreements will be rendered largely useless. International standard setting bodies, such as GATTs Codex Alimentarius, have tended to the lowest common denominator of regulatory levels. NAFTA will exacerbate the pressure of deregulation.

The free trade agreement and there-negotiated version of GATT seek to establish an economic order in which corporations will be above the ability of national governments to regulate them. At the same time, proponents of the treaty assure the public that the ploy of “side agreements” will adequately address concerns for labor and the environment This leads to a major contradiction, if not an insurmountable obstacle.

Corporations will be in a position of dictating the kind of regulation that is compatible with their vision of the global economy. The global reorganization that will occur will necessarily reflect their needs.

Challenging their vision will require both non-governmental and governmental organizations to appeal to unelected international trade boards. While once activists attempted to gain recourse through writing their congressperson, under GATT this will require a flight to Geneva to demonstrate outside the office of an official who is under no obligation to even listen.

Apart from the skewed playing field upon which legal provisions are to be worked out, there is the added problem of the enforceability of these provisions. Already the maquiladoras are regulated by an international agreement on shipping waste back to the United States for processing. Already Mexico has relatively strict environmental laws on the books, which are not enforced. Neither case has made a difference in the unfolding of the existing maquiladora system. Indeed, being able to pollute freely is one of the hidden comparative advantages that Mexico offers corporations.

Treaty advocates argue that Mexico will be in a better position to deal with environmental cleanup after the economic growth and rise in tax revenues that will result from NAFTA. Although a major factor in Mexico’s lack of regulatory enforcement is funding, the assumption that further rapid industrialization is the solution is at best dubious. For that matter, the United States, despite its affluence, has an embarrassing history of failed enforcement of its own existing environmental laws, such as the Endangered Species Act, the Wetlands Protection Act, the National Environmental Policy Act and countless others that have been challenged by corporate interests.

The environmental movement is well schooled in understanding that the existence of a law and its enforcement are two utterly different concepts. For that reason there is a pervasive skepticism reading the promised side agreements. It is widely acknowledged among activists that these are intended more for the sale of NAFTA in a repackaged, more acceptable format than to advance any green cause. They are not likely to make much of a difference with the overriding pressures created in the context of NAFTA.

Indeed, it is not clear which provisions of a particular side agreement will be legally binding, let alone enforceable, until they are tested in practice for possible trade restriction. This legal quagmire would at least create employment for armies of environmental and international corporate lawyers.

Given this intuition at the grassroots, it is dismaying that many of the large environmental lobbying organizations decided to go along with NAFTA and the promise of side agreements. Any possible gains negotiated in favor of the environmental lobby will be quickly eroded under NAFTA.

In May, a group of seven of the largest environmental lobbying organizations drafted a letter outlining the conditions of their support for NAFTA. These include the World Wildlife Fund, the National Wildlife Federation, the National Audubon Society, the Natural Resource Defense Council, the Environmental Defense Fund, Defenders of Wildlife and the Nature Conservancy.

Their most specific request was the establishment of an international commission on the environment. Writing for the Nation, columnist Alexander Cockburn correctly points out the inauspicious track record other such international bodies have had in dealing with environmental problems. For example, charged with a single task of overseeing the cleanup of the Great Lakes, the International Joint Commission has not even completed a toxic discharge inventory, let alone begun to meet its goal of zero toxic dischare.(14) Cockburn reminds us that a commission to oversee “environmental concerns under NAFTA would be far more vague in its mandate.

It is useful to note that the financial backers of the group of seven include some of the most powerful corporate backers of NAFTA. For instance, the “World Wildlife Fund just received $2.5 million in a single donation from Eastman Kodak, whose C.E.O., Kay Whitmore, is co-founder of USA”NAFTA the big corporate lobby for the treaty. Other donors include such NAFTA boosters as Hewlett-Packard and Waste Management, both in the $100,000 to $250,000 range; also Du Pont and Philip Morris each in the $50,000 to $100,000 range.(15) Kodak’s Whitmore, along with retired Philip Morris chairman Joseph Cullman, sit on the World Wildlife Fund board.

Other “big seven” players have similar connections to pro-NAFTA corporate circles, receiving large donations from the likes of Dow, Monsanto, 3M, Shell, Duke Power, Pennzoil, General Electric, Proctor and Gamble, and Cargill among others. One can readily understand the reluctance of the “big seven” professional lobbying groups to disturb their funding by failing to compromise on an issue so dear to the interests of their supporters.

Because of this situation it is imperative that grassroots environmental organizations begin making NAFTA a central part of their discussions, and put pressure on the more bureaucratized groups to reconsider their position. While labor unions have been consistently and actively opposed to NAFTA, at the national level the environmental community is divided. At the grassroots, however, the possibilities for labor-environmental coalitions around NAFTA and mutual communication between these two social forces remain an optimistic possibility.

Notes

1. “Happily Never NAFTA” Thea Lee, Dollars and Sense, January/February 1993, 15. (“A CBS-New York Times poll in July found that Americans thought NAFTA was a “bad idea” by a 2-to-I margin. Another poll cited by the Los Angeles Times last September found only 16% of the population believed NAFTA would create jobs in the United States.)
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2. “The Big Buy” by Charles Lewis and Margaret Ebrahim, The Nation, June 14, 1993.
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3. The Toxic Price of Free Trade in Mexico,” William K. Burke, In These Times, May 5, 1991.
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4. Ibid.
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S. “Free Trade, The Politics of Toxic Waste,” Mary Kelly, NACLA Report on the Americas, Volume XXVl, No.2, September,

5. 
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6. “The High Cost of Pollution,” On the Issues; Win Some, Lose Some, ad. Beverly Lowy, Summer 1992, 5.

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7. “The Toxic Price of Free Trade in Mexico.”
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8. “Free Trade and the Environment,” Zen Makuch, Crossing the Line, Canada and Free Trade with Mexico, ad. Sinclair, Jim (Vancouver: New Star Books, 1992) 74-75.
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9. “Free Trade and the Environment,” 68.
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10. Ibid, 69.
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11. “The Uruguay Round: Gunboat Diplomacy by Another Name,” Edward Goldsmith (editorial), The Ecologist, Vol. 30, No. 6, November/December 1990.
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12. “Free Trade versus Sustainable Agriculture, The Implications of NAFTA,” by Mark Ritchie, The Ecologist, Vol. 22 No. 5, Sept/Oct. 1992 224-225.
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13. “Free Trade and the Environment,” 77.
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14. “Beat the Devil: NAFTA and the Shameful Seven,” Alexander Cockburn, The Nation, June 28, 1993, 894-895.
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15. Ibid.
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September-October 1993, ATC 46