Environmental Factors That Affect Trade Between United States And Mexico Essay

Global business environment is increasingly being determined by prevailing environmental concerns. Trade regulations between countries are being benchmarked on the decisions made on environmental policy. Even though there exists an underlying inadequacy in negotiating international trade agreements in conjunction with multilateral environment agreements, formulation of trade policy has been forced to move hand in hand with requisite environment policy creating a situation that only promotes a complimentary of the policies for sustainable economic development. In the same fray is the North American Free Trade Agreement (NAFTA). NAFTA which includes several guidelines that detail environmental related provisions. The accord as agreed provides trilateral cooperation on matters concerning the environment and it also contains specific provisions that seek to pressurize members to enforce environmental law. The United States and Mexico has also instituted a bilateral establishment called the Boarder Environment Cooperation Commission. Together with the North American Development Bank communities around the boarder areas are financed to enable them complete environment infrastructure projects. Despite the agreement these are still ongoing discussions on NAFTA’s possible environment effect, implementation of pending NAFTA’s provisions and border funding modalities (may Tinmann, 2000) During the negotiations carried out in the context of liberalizing investment and trade rules between the two countries, environmental issues arose due to the existence of a more stringent standards on one country while the other country had only weak environmental protection measures. Such differences could be challenged with notable success as non tariff barriers that only serve to stifle trade between the two countries. Another issue was whether the existence of weaker environment protection measures on one side could created an unfair competitive advantage and hence encourage businesses to relocate production to areas that are least regulated in terms of environmental protection measures. Strict environmental regulations on the United States soil pose a considerable non tariff trade barrier hence the requirement for the need of harmonization of environmental provisions, health and safety standards. Relocation of industries to least environmentally regulated zones created a new challenge with increasing population. To offset this a mechanism had to be put in place to regulate all border environmental projects. Under the auspices of General Agreement on Tariffs and Trade (GATT) on which NAFTA operates new environmental issues are arising. In 1991 a dispute arose after the United States banned importations of tuna as Mexico had violated GATT’s trade rules. The ban imposed under the Us Marine Mammal Protection Act sought to limit the killing or the causing of serious injury to dolphins together with other marine animals in the course of commercial fishing. Mexico contested the ban but the court order was not lifted. Following the hearings of the case it was proposed that congress would lift the ban temporarily and Canada made a 5 year moratorium commitment that stated on March 1, 1994. Presently proposed changes on key environmental provisions that affect trade are focusing on non tariff barriers and the expansion on GATT discipline for Agriculture. (Trade and the Environment, 1993) There is no certainty to the conclusion of NAFTA debates and discussions taking into account that they had stalled several times earlier. The effects of additional changes are likely to brew new wave of conflict between GATT and environmental provisions. The relationship between international environmental agreements and GATT is another concern. Included in the International environmental agreement are 17 multilateral environmental agreements. These agreements cover key environmental problems such as stratospheric ozone depletion, hazardous waste and endangered species. There is concern that other multilateral environmental agreements such as limits to green house gas emissions may be included in the trade agreements further straining Mexico trade as importation of products that do not comply with both the GATT provisions and multilateral environment provisions will be banned. At the moment it still remains to be seen whether another GATT member can successfully challenge a trade measure leveled upon it by another member in pursuant of the multilateral environmental agreements. The growth of conflicts may in the future discourage GATT from acquiring agreements that would make trade impossible in addition to making GATT’s resolutions ineffective and difficult to enforce (Trade and Environment, 1992). There is need to reduce the functions between trade and environmental concerns. The North American Free Trade Agreement seeks to increase economic activity in Mexico and Boarder regions of the United States by negotiating a trade agreement that is agreeable to all the trade partners. However, there are concerns that unless the agreement puts in place adequate environmental safeguards, additional economic growth would worsen the already serious environmental health problems. There are also concerns that these trade agreements may weaken or undermine the existing United States Environmental standards. Mexico’s commitment to environmental legislation and protection and commitment to attaining high environmental compliance is important. The laxity of the Mexican authorities to enforce strict environmental standards has seen some United States’ industries migrating to Mexico’s duty free export zones. These factories relocate mainly to erode the strict United States Environmental Protection Standards and also to utilize cheap labor in Mexico. Their proximity to the United States markets creates a competitive advantage as compared to the industries operating in the United States If all trading partners agree and conduct environmental reviews affecting Trade agreements as a unified standard procedure the environment and underlying economic implications will be adequately analyzed through expert opinions and public debate. In line with environment, health and safety standard risks from traded products can be curtailed. However, this required a standardized method of that product risk assessment and testing is done strictly to the recommended stringent domestic and international guidelines. (Paul Cough, 1993) New interpretations of GATT guidelines could threaten domestic regulatory regimes hence posing a new risk to trading partners. There are environmental concerns that inadequate regulation and low levels of environmental regulation in pursuit of trade liberalization may be used as an incentive to attract foreign investment as the production costs would be very low compared to countries with stringent guidelines. There are those who argue that environmental problems have limited impact on international competitiveness however if countries could impose a large carbon tax aimed primarily at reducing the emission of green house gases, the impact would be considerably huge. Conflicting interests particularly the Trade and the Rio Declaration declares that all states have got the right and sovereign authority to exploit their resources according to their own national environmental and development policies so long as their activities do not offer an environmental threat to that of other states or areas beyond their jurisdiction. The underlying fact that some states might lower their environmental protection measures is a threat to agreements that struggle to foster free trade between countries. This paper analyzes such concerns and offers recommendations to the extent of the present regulatory frameworks. Border waste Trade between the United States and Mexico The United States border lies within the jurisdiction of six Mexican states and four United States. Even though each state preserves and governs its won jurisdiction there has always been a very central and longstanding environmental pollution issue that is exacerbated by industrial and municipal wastes being discharged to the rivers that flow from the Mexican frontiers to the United States. Mexican wastes municipal treatment system are obsolete or non existent. This is further worsened by companies that operate in a less strict environmental regulatory jurisdiction. These companies are inclusive of United States companies and they engage in illegal dumping of untreated wastes into the river systems. This has created a disparity in the levels of development as well as fresh concerns on priorities of development and trade with specificity to the use of underground and surface water that are becoming increasingly polluted. There is another problem of illegal dumping sites that pose a threat to health of inhabitants of the cities along the United States-Mexico border. The Border Environmental cooperation Agreement has been mandated to coordinate boarder water quality and sanitation services. However, disputes are ripe and every country is presenting its own interpretations of treaty. This has worsened the trade between countries as discussions and debates carried out under the auspices of NAFTA though fruitful have failed to provide an innovative, comprehensive and internationally binding agreement to forestall the potential health effects of continued trade.