October 30, 2018

The Side-Agreement Takes Center Stage: Environmental Surprises in the Draft U.S-Mexico-Canada Agreement

Posted on October 30, 2018 by Tracy Hester

NAFTA’s successor – the awkwardly named U.S Mexico Canada Agreement (USCMA) – has already stirred up a swarm of commentary.  The initial draft tackles major economic questions among the three countries, including important decisions about agriculture, intellectual property, telecommunications, and energy.  These big issues have provoked a welter of summaries, analyses, attacks, and punditry.

Except, surprisingly, for environmental issues.  Only a small percentage of the popular and political coverage has picked up on the USMCA’s new environmental provisions.  That silence is especially puzzling because the draft agreement contains some important environmental provisions.

First, a little background.  When the U.S, Mexico, and Canada negotiated the original North American Free Trade Agreement, the backlash over its perceived neglect of environmental concerns led the parties to negotiate the North American Agreement on Environmental Cooperation (NAAEC) as a parallel side-agreement.  NAAEC established a permanent Commission on Environmental Cooperation (CEC) to provide a framework for coordinated environmental actions by the three nations, and the side-agreement also created a ground-breaking environmental enforcement review process to let private citizens request inquiries into alleged failures by any of the three nations to enforce their own environmental laws.  While this process suffers from several important shortfalls, it nonetheless remains a trailblazing step to emphasize environmental concerns by assuring private citizens a voice in international trade relations.

Despite their importance, NAAEC and its environmental enforcement review process have languished in a diplomatic netherworld for years.    As each country shifted leadership and political alignment, the CEC and its enforcement review unit suffered from periods of malnourished funding, benign neglect, or even outright hostility.  When Canada, Mexico, and the U.S. negotiated the TransPacific Partnership, that agreement did away with NAFTA’s and NAAEC’s separate environmental approaches in favor of a unified environmental section that included specific requirements for certain industry sectors (such as fishing), and substantially watered down the enforcement review process.   Given the TPP’s change in course, the prospects for NAAEC, the CEC, and its enforcement review process looked dim when the Trump Administration forced a renegotiation of NAFTA earlier this year.

Those fears now seem a bit unfounded.  The draft USMCA text adopts several key structures of NAAEC, leaves clear room for the CEC to continue, and contemplates entry of an Environmental Cooperation Agreement (ECA) to ultimately replace NAAEC.  While we have yet to see the draft ECA, the USMCA’s environmental provisions already affirm NAAEC’s enforcement review process and even incorporate some reforms sought by commentators for years.  The USMCA also includes some of the TPP’s express environmental mandates for particular industries without that agreement’s troubling retreat from NAAEC’s review process.  The USMCA, notably, consigns all fights to the dispute resolution process of the overall trade agreement, which potentially gives its environmental obligations a much sharper bite.

The USMCA remains only a draft, and the pending ECA may take its environmental directions entirely astray.  But in the meantime, the current draft USMCA’s environmental provisions promise a surprising, and promising, move away from the side-agreement sideshow and into the heart of the parties’ main trade agreement.

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