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The Planet

November 1997, Volume 4, number 9

Why the Club Says No to NAFTA Expansion

How the World Trade Organization Struck a Blow Against Family Banana Farms -- and Other Cautionary Tales From the Free Trade Front

by John Byrne Barry

Elizabeth May: "If the NAFTA panel rules in favor of Ethyl, then every time a country bans a toxic substance, that ban could be overturned as a trade barrier. " Joanne Lesher: "We support responsible trade. But current trade policy gives corporations new rights at the expense of public health and environmental protections."

If you tell a friend that the Sierra Club is working to protect wetlands or endangered species, there's usually a nod of understanding. Of course, of course. But when you start explaining why we're fighting the expansion of the North American Free Trade Agreement, you're likely to be met with a blank look.

After all, don't free-trade proponents just want to eliminate tariffs and trade barriers to make it easier to transfer goods and investments across national borders? Where's the problem?

For starters, among the "trade barriers" they want to eliminate are environmental-protection laws.

Last year, the Canadian government banned MMT, a manganese-based gasoline additive. A neurotoxin, MMT has been banned in the United States and most industrialized countries.

But under NAFTA's investor chapter, the U.S.-based manufacturer of MMT -- Ethyl Corp. of Virginia -- has sued Canada for $250 million in lost profits. That suit will be decided by a Paris-based investors' tribunal with no input from the public.

"If the NAFTA panel rules in favor of Ethyl, then every time a country bans a toxic substance, that ban could be overturned as a trade barrier," says Elizabeth May, executive director of the Sierra Club of Canada. "The globalization of trade is as much about eroding democracy as it is about increasing trade," she says. "Through trade agreements like NAFTA and the World Trade Organization transnational corporations usurp the rights of countries to govern and the rights of citizens to advocate for environmental protection."

Here's how Mark Abley put it in a story in the Montreal Gazette: "If you think of threats to the world's environment, you tend to imagine bulldozers laying waste to the Amazon rainforest [or] dirty factories spewing chemicals into the atmosphere . . . . You don't normally think of middle-aged men in suits working in Geneva, one of the world's most graceful cities."

But those anonymous and unelected bureaucrats of the Switzerland-based WTO (and their counterparts in the NAFTA dispute panels) have the power to overrule or weaken domestic environmental protections.

The WTO's first decision, in 1996, ruled that a provision in the U.S. Clean Air Act of 1990 was a trade barrier because it discriminated against reformulated gasoline imported from Venezuela and Brazil that was dirtier than domestic gas. The WTO required the Environmental Protection Agency to rewrite clean-air rules or face retaliatory trade sanctions on the order of $150 million per year. The EPA rewrote the rules, weakening monitoring and enforcement, which could have the effect of increasing smog in some of our most polluted cities.

Free Trade Is Far From Free

"The Sierra Club is not opposed to trade per se," says Joanne Lesher, chair of the Club's International Campaign Steering Committee. "We support responsible trade. But current trade policy gives corporations new rights at the expense of public health and environmental protections."

The goals of the Club's responsible trade campaign are to protect the environment from dangers posed by trade agreements and economic globalization and to draw attention to how the undemocratic nature of current trade institutions and policy-making further degrades the global environment. The Club's most pressing priority, says Dan Seligman, trade specialist in the Club's Washington, D.C., legislative office, is to deny President Clinton the "fast-track" authority he seeks to negotiate more trade deals.

In September, Clinton presented a draft bill to Congress that would give the U.S. trade representative broad authority, lasting up to eight years, to negotiate expansion of NAFTA to Chile and other Latin American nations, as well as implement a set of investors' rules called the Multilateral Agreement on Investment. The Sierra Club opposes fast track because it effectively bars environmental standards from trade agreements and authorizes new trade rules that can weaken our environmental laws.

No Checks and Balances, Just Checks

One of the most notorious environment-related trade decisions concerned the U.S. dolphin-safe tuna law. The law prohibited the practice of encircling dolphins in long drift nets in order to catch the tuna that tend to school beneath. It also banned imported tuna caught that way.

But Mexico challenged the U.S. law as a trade barrier and a dispute panel under GATT -- that's the General Agreement on Tariffs and Trade, the global big brother of NAFTA and the precursor to the WTO -- ruled against the United States.

In making its rulings, the WTO looks only at the product, not the process. "This runs counter to the environmental philosophy that we have to look at the whole life cycle of a product," says Sierra Club Chairman Mike McCloskey. "The product itself might be benign, but manufacturing or, in this case, catching it, might not be."

It's not just U.S. laws under attack. The United States, on behalf of Cincinnati-based Chiquita Brands, recently won a WTO suit against the European Union, challenging its preferential treatment for small banana farmers from the Caribbean. Europe could clearly not be accused of protecting its domestic banana growers. It has none. The idea was to support the small Caribbean nations that depend on the banana exports to Europe. And there are no bananas grown in Ohio either, but the principal owner of Chiquita is a top contributor to both major political parties in the United States.

A typical WTO trade-dispute panel consists of three trade experts, usually corporate lawyers, who meet in secret. Their judgment can only be overruled if more than 100 countries, including the country that initiated the case, unanimously vote to overturn it. The WTO cannot actually force a country to weaken its laws, but it can impose a stiff tariff for not doing so.

While there is great concern about how economic globalization accelerates the pace of natural-resource exploitation and increases pollution, what gives the Sierra Club and other opponents of free trade the greatest worry is the way that trade agreements turn critical public health and environmental protections into "trade barriers."

It's one more way the transnational corporations -- both U.S. and foreign -- are attempting to weaken environmental standards. But at least when they attempt to do so through their proxies in the U.S. Congress, we can shine the spotlight of public outrage on the process and use the leverage of elections to hold the senators and representatives accountable. The trade rules, however, are crafted in back rooms with no input from environmentalists, labor unions or public-health groups.

The Club is not only concerned about the weakening of existing standards, but about the chilling effect on improving them. "Under current and proposed trade rules, countries will be hesitant to improve their environmental standards," says Lesher, "because it may put them at a competitive disadvantage. Also, new standards could be challenged as trade barriers."

Tainted Berries, Toxic Border

It's not just the trade agreements that pose a threat to environmental protections, but the process of globalization itself, in which corporations move operations to countries with the lowest wages and weakest environmental oversight.

"The consequences are as near as your dinner table," says Seligman, noting that 270 schoolchildren in Michigan got hepatitis A after eating strawberries imported from Mexico and thousands have been sickened the past two springs by a dysentary-like disease caused by a parasite traced to Guatemalan-grown raspberries.

As a result of NAFTA and other trade deals, food imports to the United States have doubled, but food-safety inspections have dropped to less than half of what they were five years ago. NAFTA rules also require border food inspectors to accept safety certificates in place of making actual physical inspections. When NAFTA was approved by the U.S. Congress in 1993, it included an environmental side agreement, which called for the three member nations to monitor the environmental effects of free trade. Funds for such studies have been set aside, but the governments have not proceeded with them. Another agreement called for the cleanup of pollution on the U.S.-Mexico border -- recently characterized by Texas Business magazine as "one of the most polluted regions on the globe." Just inside the Mexican border are more than 2,500 mostly U.S.-owned factories known as maquiladoras. The promised cleanup has never been realized.

Building Coalitions, Making Our Case

The Club is working closely with organized labor in the United States, Canada and Mexico to call for responsible trade. Labor groups are especially alarmed about how globalization and trade agreements contribute to job loss and downward pressure on wages.

In Canada, where the parliamentary system gives Prime Minister Jean ChrŽtien and his party fast-track authority, the Club is working with the Common Front on the World Trade Organization, a coalition with labor and nationalist groups, to draw attention to the threats the MAI poses to their health and safety protections.

In the United States, the Club is working with the AFL-CIO and the Citizens' Trade Campaign on lobbying members of Congress against fast track and educating the public at events like the Children's Summit last June in Denver. (See Grassroots Activists Tackle Global Issues) The Club is also running radio ads in six cities.

Making the case that free trade is a threat to the environment is a key challenge for the Club. But as Executive Director Carl Pope said in March 1997 testimony to the U.S. Congress, "The environment is not irrelevant to trade policy. Literally everything produced in the global market originates in the environment as natural resources and returns eventually to the environment as waste or pollution."

To take action: In the United States, call or write your senators and representative today. Urge them to oppose the fast-track authority for NAFTA expansion now being debated in Congress.
Call the Capitol Switchboard at (202) 224-3121.
Write a letter to the editor of your local paper explaining how proposed trade rules undermine our domestic environmental laws. For more information: Contact Dan Seligman in Washington, D.C., at (202) 675-2387; dan.seligman@ sierraclub.org or Elizabeth May in Ottawa at (613) 241-4611; elizabeth.may@ sierraclub.org. Visit our Web site at www.sierraclub.org/trade/tindex.html.


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