In the world of trade negotiators who spend their days discussing tariffs, subsidies and current accounts, environmental issues rarely play a major role. And when they come up, they're often treated as protectionism in veiled form -- as they were in 1998 when an international trade panel ruled against a U.S. ban on shrimp imports from nets that drowned sea turtles.
At the Free Trade Area of the Americas talks in Miami this week, the environment will have a place at the table, although it will be a limited place. When Congress gave the Bush administration wide authority to negotiate the agreement, it required the inclusion of provisions to protect the environment. But Brazil and other developing countries oppose environmental safeguards as "green protectionism," an attempt by wealthy countries to maintain the lead they developed over the past 100 years by operating their own industries without strong pollution controls.
Still, many analysts expect the language in the agreement to be modeled on a recent trade pact between the United States and Chile, which provides for penalties if either country lowers environmental standards to attract jobs. Environmentalists say such protections will mean little in countries whose environmental laws and enforcement mechanisms already are much weaker than those of rich countries. They say the FTAA talks represent the latest step in the drive by corporations and their pro-business allies in government to strip nations of the power to protect their air, water and land.
"These negotiations are developing new rules that shift the balance of power toward private property rights and away from the ability of governments to legislate in favor of the public interest," said Dan Seligman, trade program director for the Sierra Club.
Like the debate over the FTAA and jobs, the environmental debate is rooted in the experience of the North American Free Trade Agreement. After NAFTA was ratified, more U.S. companies moved their factories over the border, where they contributed to a major air pollution problem. But many experts say this transfer of factories wasn't the most significant environmental impact of NAFTA. More important was a rule that allows foreign investors to challenge other countries' decisions on the environment and other issues, a rule that is likely to be replicated under the FTAA.
"Yes, some businesses relocate because of trade agreements -- but more often this is to find low-wage havens, not pollution havens," said Eric Dannenmaier, director of the Tulane University Institute for Environmental Law and Policy, who has been an environmental advisor to the governments of Argentina, Chile, Bolivia, Peru and Ecuador. "And yes, as businesses find low-wage havens, pollution intensity increases in countries less equipped to handle the load. Yet the real environmental problems with trade agreements are far more complex and subtle."
NAFTA allows companies or individual investors to file claims for damages over any action by a national or local government that deprives them of the value of their investment. The complaints go to a three-member trade panel whose hearings are closed to the public.
For example, Metalclad Corp., a U.S. company, filed a claim after a local government in Mexico rejected its request for a permit for a hazardous waste landfill. Metalclad won damages of $16.7 million. And last August, after California passed a tough mine cleanup law, the Canadian company Glamis Gold Ltd. filed a claim for damages with a NAFTA trade panel. Glamis said the new law destroyed the value of its mining concession on 1,500 square miles of desert. That case is pending.
So far, just four claims have resulted in money judgments. And the total amount awarded -- about $28 million to all four successful claimants -- is modest compared to the scope of trade among the three countries. But legal experts say the threat of an investor-protection suit could have a chilling effect on proposals to strengthen environmental laws in the United States and the other countries in the agreement. And they say it's unfair and undemocratic for companies to be able to challenge such laws in closed tribunals.
"It is fundamentally wrong for the validity of important national and international environmental measures to be decided in closed private arbitration proceedings that take place outside the jurisdiction where such measurestake effect and outside of any meaningful public review or awareness," wrote attorneys Stephen L. Kass and Jean M. McCarroll in the New York Law Journal.
The FTAA draft provides for similar panels, and environmentalists fear it could be used to circumvent the laws of the United States and those of other countries. For example, the Sierra Club says the Venezuelan oil company Citgo, which sells gasoline in the United States, could challenge U.S. air and water standards. Or U.S. companies could file a claim against the Brazilian government over the right to operate gold mines in the Amazon.
FTAA supporters say such investor-protection rules are necessary to protect U.S investors in countries with less-than-reliable legal systems. "In many countries, the same standards of rule of law and transparent administration are not universally adhered to," said John Murphy, vice president for western hemisphere affairs at the U.S. Chamber of Commerce. "It's very useful to have recourse to an international arbitrator."
And some experts say increased foreign trade can improve environmental performance because it thrusts corporations into the glare of international publicity. No one wants to face the sort of boycotts over labor and environmental practices that hit Nike, Exxon and The Gap. So a Brazilian shoe company, for example, would acquire a strong interest in improving its standards if it wanted to export to the United States.
"Once you're competing in the international market, the demand side has a very high environmental concern," said Ronaldo Seroa de Motta, coordinator of regulation studies at the Institute for Applied Economics in Brasilia. "They're not doing that for the citizens of Brazil, they're doing that for the international market. They're doing it for clean propaganda for the outside world."
The impact of increased trade and investment also depends on how well a country can enforce environmental standards. Among the least prepared are Guatemala, Honduras, Nicaragua, Panama and Ecuador, said Robin Rosenberg, deputy director of the University of Miami's North-South Center. These countries lack strong environmental agencies, databases, inspection systems and courts that will stand up to the money and influence of big polluters, he said. And even countries with adequate laws may not enforce them.
"Is El Salvador going to close down a tanning factory that's polluting a river?" Rosenberg asked. "They need the jobs. And how many inspectors do they have? And is the court system going to back them up?"
And the FTAA could have a profound impact on South America's vast Amazon rain forest, which extends into eight countries. The forest is home to jaguars, scarlet macaws, howler monkeys and more than 1,000 species of butterflies. It is also home to deposits of gold, nickel, oil and natural gas, and environmentalists fear that the FTAA will encourage more companies to go after them.
"I think you will create the climate for increased natural-resource extraction, with governments trying to link their energy infrastructure," said Atossa Soltani, executive director of Amazon Watch. "What we fear is there will be less scrutiny and less intervention by civil society."
David Fleshler can be reached at dfleshler@sun-sentinel.com or 954-356-4535.
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