The Fatal Flaw in NAFTA, GATT and All Other Trade Agreements

McGee, Robert W. | January 1, 1994

Although the North American Free Trade Agreement, (NAFTA), contains more detailed environmental provisions than any previous trade agreement,’ only some of them are mandatory. These mandatory NAFTA environmental rules purport to prevent the use of environmental policy instruments as disguised barriers to trade. Since most human activities have some impact on the environment, a vast array of government regulation could potentially be characterized as relating to the environment. This fact increases the risk that domestic industries will exploit political discretion over environmental policy implementation to put foreign competitors at a disadvantage by raising non-tariff barriers to trade. It is important to distinguish between the selection of environmental policies and their implementation; that is, between means and ends. The NAFTA preserves political discretion to determine policy goals themselves and favours political solutions to conflicts that arise between trade and environmental policy. However, it restricts the use of trade restrictions to implement environmental policies. Environmental policy instruments must be chosen for their effectiveness in achieving environmental goals, not their effectiveness as a means by which to restrict trade or to protect domestic industry.