NAFTA is not the "greenest"
by davidtolo123 on February 24, 2017 - 11:08pm
In 1993, the Clinton administration called the North America Free Trade Agreement (NAFTA), the “greenest” trade agreement that has ever been completed. NAFTA and its environmental impact has been a great debate across the globe. A decade after NAFTA started, environmentalists, politicians and American citizens began to disagree with some of the facts NAFTA presented. This article will discuss the environmental point of view and economical point of view on the North American Free Trade Agreement.
According to Vaughan (2004), analysis have confirmed that NAFTA’s affects is two different major kinds of effects on the environment. The North American Free Trade Agreement’s first affect on the environment is called “environmental quality”, which is the increasing on the scale of economic activity. The scale is orchestrated by a variety of factors, such as; new technology and composition changes (from agriculture to services). Second, the trade can affect environmental policy by affecting domestic food safety policies and environmental and conservation regulations that conditions the market access of goods based on the well-being of the characteristics of the environment.
The second effect has been the main argument of the decade-long debate on NAFTA. In which environmentalists fear that environmental laws will be weakened because of the trade (in favour of the trade).
The right for free trade in North America has affected the environment throughout various different sectors; Industrial and Manufacturing sectors, Resource baed sectors and Renewable Resource sectors. However, not much focus on the environmental impacts of NAFTA’s agricultural provisions. The farm trade/ agriculture sector, is the sector with closest relationship with the environment. “Farming is the leading source of pollution in Canada, Mexico, and the United States.” (Vaughan, 2004)
Environmentalists believe that the main weakness of NAFTA is the organizations in charge and their ability to enforce these environmental policies. They lack the want to ensure adherence to the environmental policies and promises of the Free Trade Agreement.
In Elbert (1994) he discusses the agreement that states each party must maintain their existing policies on health, safety and environmental standards to prohibit any good that may threaten one of those policies. Also, the parties are enforced by providing limits on trade goods, set standards on environmental regulations on new investments so that NAFTA parties do not lower it’s environmental standards to attract new investments.
However, in Canada environmental laws are provincial regulations. Thus every Canadian province has their own laws and regulations and the Free Trade Agreement does not bind provincial governments. This results in mass production in those provinces, resulting in mass pollution.
Nafta’s expectations on the economy was that it will improve the competitiveness of US firms, by giving them access to Mexican labor and Canadian resources. The domestic firms have gained a bit of a larger market share. However, the expense of that was a loss of jobs in the U.S.
The manufacturing industry was heavily impacted by Nafta causing steel-production centres in states like Michigan, Indian, Ohio and Pennsylvania to shut down. statistics show “that over 30% of these people were not reemployed and dropped out of the workforce altogether.”
In Figure 1-A we can see the tremendous impact on unemployment in the U.S. over 765, 000 jobs lost in the U.S due to NAFTA and cheap labour in Mexico.
That left a substantial amount of Americans unhappy with the Agreement. Resulting in many unanswered questions by the parties in charge. That enabled President Trump to capitalize with strong rhetoric condemning the agreement and vowing to renegotiate it. President Trump says that he is in the process of renegotiating Nafta and has not yet terminated it.
On the other hand, many who are in favour of the trade argue that it is beneficial to the economy as business would have more profit at more competitive prices because of the cheaper labour in Mexico. Economist would also argue that the trade would create more jobs and more businesses which would further expand the market.
The reason the Americans are not nearly as concerned with trade with the Canadians are because the trade has proven to be far more fair. Many Canadian businesses’ purchase from the United States as well so it if of American interest to have free trade with the Canadians.
The American President Donald J. Trump has stated that he would renegotiate NAFTA. However not much was discussed. They have been far more concerned with the Chinese and Mexicans. They have been especially concerned with the extremely competitive pricing in Asia. Canada has made some priorities in the upcoming and plausible re-negotiation of Nafta. Focusing on increasing the Lumber trade, as well as allowing Canadian businesses to have more access to American construction.
As you can see, their is a debate on both the positive and negative impacts on the environment and economy.
Although the North American Free Trade Agreement has been beneficial to the overall economy, it still caused many businesses to lay off people as they moved jobs to Mexico for cheaper labour. Companies began to compete with the Mexicans production and over produce. The organizations in charge of NAFTA’s poor ability to enforce the environmental regulation agreed upon is the reason companies don’t obey them. If the organizations in charge had kept their promise to ensure that the environmental laws guarantee high levels of environmental protection. Then we would be able to call NAFTA the “greenest” trade agreement, as Hilary Clinton said.
Vaughan, S. (2004). HOW GREEN IS NAFTA? Environment, 46(2), 26-42. Retrieved from https://search.proquest.com/docview/224020387?accountid=9991
Ebert, M., & Spielmann, S. B. (1994). The north american free trade agreement (NAFTA): A summary of its major provisions. European Business Journal, 6(1), 25. Retrieved from https://search.proquest.com/docview/205281033?accountid=9991
Makuch, Z. (1993). A critic's view of NAFTA's environmental side agreement. Alternatives, 20(1), 34. Retrieved from https://search.proquest.com/docview/218795333?accountid=9991
Villarreal, M. A., & Fergusson, I. F. (2014). NAFTA AT 20: OVERVIEW AND TRADE EFFECTS*. Current Politics and Economics of the United States, Canada and Mexico, 16(3), 343-382. Retrieved from https://search.proquest.com/docview/1655115585?accountid=9991