Eye on Washington: Seeking Green Trade in North America

Dan Sealy, NEC Legislative Analyst

Trade is an important mechanism whereby a nation can not only protect its economic interests and trade priorities, but assure fair treatment of labor laws, civil rights, and public and environmental health that goes beyond a nation’s borders. A trade agreement among Canada, the United States and Mexico should be relatively simple, considering the relatively good diplomatic and economic relationships among the three countries. Particular provisions of the new United States – Mexico – Canada Trade Agreement (USMCA) are seen by some economists as a roadmap for agreements with other countries such as China and Europe. This article concentrates on environmental provisions of the USMCA, but it is important to recognize there are very significant impacts to agriculture (especially trade in dairy products) energy, fair labor practices and civil rights. Readers can hopefully find extensive coverage of those aspects in other publications.

How did we get here? President Clinton signed the original North American Free Trade Agreement (NAFTA) in 1993. At that time, citizen Trump said he didn’t like the deal and in 2016, presidential candidate Trump promised to rip it up. Most analysts describe the changes represented in the USMCA as relatively minor vs. “ripping it up.” Differences in reception to the new agreement, however, vary widely from Green New Deal progressives who are fighting for more protections, to die-hard conservatives who claim the new deal is a product of the conservative boogieman “Deep State.” If passed by all three countries, the USMCA would be in place for 16 years from the date of enforcement with reviews every 6 years.

Where the legislation stands: H.R.5430 (S.3052) United States-Mexico-Canada Agreement Implementation Act (USMCA) passed the full House on December 19 with 385 votes for and 41 against. All but two of the no votes were Democrats, including Congressman Huffman (D-CA) who stated, “Democratic negotiators did a lot to improve Donald Trump’s weak trade deal, especially in terms of labor standards and enforcement, but the final deal did not reach the high standard that I had hoped for… Sadly, because the Trump administration denies climate change and is beholden to the fossil fuel industry, this agreement does not even mention climate change.” Huffman was particularly concerned that the length of the Act and the lack of addressing climate change set the US on a lengthy course that allows little ability to adapt conditions for the rapid impacts of climate change nor the opportunities to implement solutions, some of which are included in the aspirational “Green New Deal.” Regarding lack of strong enforcement measures, Senator Wyden (D-OR) stated “I have concerns about enforcement because the new NAFTA carries over the weak enforcement system of the old NAFTA.”

The Act’s complete lack of recognition or mention of climate change, along with smoothing the way for increased fossil fuel production and trade in North America were, to many conservationists, the most egregious problems.

A coalition of national conservation groups identified seven areas of concern covering strengthening various enforcement actions, removal of provisions that allow breaks for corporate polluters and stronger climate change provisions.

Yet, with this administration’s clear lack of support for the Paris Accord or any other strong program to address climate change, and this administration’s linking of a strong economy to energy production, any reference to climate change in this trade deal was practically impossible.

So, what is the verdict? Good? Bad? As most legislation that passes to law, the new trade act is a mix.

The original NAFTA was written with practically no reference to environmental concerns. This was not only disappointing for environmental protection advocates but also added costs to US production, while Mexico and Canada were not bound by these regulations. This hobbled some sectors of US commerce, agriculture in particular. Many economists felt that inequity led to some US businesses moving to Mexico. To address these concerns amendments were adopted in 1994: the North American Agreement on Environmental Cooperation (NAAEC) and the North American Agreement on Labor Cooperation (NAALC), which prevent businesses from relocating to other countries, exploiting lower wages and looser health, safety and environmental regulations. The NAAEC also set up a multi-national council to enforce the new provisions, though enforcement has always been considered very lax.

The USMCA continues this three-nation council and instructs it to “… carry out an assessment of the environmental laws and policies of the USMCA countries— (1) to determine if such laws and policies are sufficient to implement their environmental obligations; and (2) to identify any gaps between such laws and policies and their environmental obligations.” Some lawmakers and conservation organizations feel even this new iteration of the council will lack the teeth to address environmental law enforcement.
Chapter 24 of the USMCA includes general guidance that emphasizes USMCA parties’ need to cooperate to protect and conserve the environment. It requires each country to maintain an environmental impact assessment process that covers protecting the ozone layer, protecting the marine environment from ship pollution and marine debris, improving air quality, preventing the loss of biodiversity, preventing, detecting and controlling invasive alien species, protecting and conserving marine species as well as promoting sustainable forest management.

The US legislation includes budgetary authorizations for the various federal agencies to engage in environmental review and enforcement. The budgets which cover the period till 2023 include over 44 million dollars, with some restrictions.
The new USMCA is expected to be taken up by the full Senate by the end of January and signed into law by the President soon thereafter.