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Broken Promises: How the Clinton Administration is Trading Away Our Environment Promise #2. We'll Do Better Next Time "Our agenda must, therefore, be far-reaching. We're determined that dynamic trade cannot lead to environmental despoliation. We will seek new institutional arrangements to ensure that trade leaves the world cleaner than before." -- President Bill Clinton, White House Signing Ceremony for the NAFTA, Dec. 8, COSICS (U-WSHDC-UNGR-0490), p. 13. Arguably, the Clinton Administration inherited a difficult situation. The Uruguay Round talks were well underway before it came to office. NAFTA was nearly completed. To put its own stamp on trade policy would have required major changes in agreements substantially locked into place. Key Administration officials, starting with Vice President Gore in his best-selling book, Earth in the Balance, made repeated statements that they appreciated the fundamental environmental challenges posed by trade policy. Such statements gave grounds for hope that the Administration would pursue a trade policy substantially more environmentally sound than its predecessors, correcting the errors of the past. Reality Check #7. The Committee on Trade and the Environment Did Nothing When the Clinton Administration was seeking to secure congressional approval of the WTO Agreements, many members of Congress expressed concern about their environmental implications. Creation of the Committee on Trade and the Environment (CTE) in the WTO at the Vice President’s insistence was meant to allay their concerns and marked a new commitment by the Clinton Administration to resolve trade and environment conflicts. As Vice President Gore stated at the signing of the Uruguay Round agreement in Marakesh, "As the world moves to resolve environmental problems and strengthen environmental protection, the corresponding trade implications will have to be discussed openly in the World Trade Organization, as well as other fora. The decision to create the Committee on Trade and Environment within the World Trade Organization provides the formal means to do so.... This Committee... has a mandate to develop recommendations for necessary change." Once the political spotlight faded, however, the Administration failed to push for real progress in the CTE. "In fact, nothing was done," noted one close observer of the process. "In the two years leading up to the first WTO Ministerial [in December 1996] the United States did not generate a single pro-environmental proposal." When the European Union offered proposals on rules to govern the use of trade measures in multilateral environmental agreements, the Administration neither supported the European position nor produced one of its own. "Other countries grew bitter at the lack of leadership coming from the United States, the country that had called for the creation of the CTE. A flurry of proposals arose that placed greater constraints on the ability of multilateral environmental agreements to use trade measures." The WTO’s first three rulings on environmental and health issues underlines the urgency of new guidelines. Reality Check #8. "NAFTA on Steroids": The Multilateral Agreement on Investment Far from using the opportunity of new trade negotiations to resolve trade and environment issues, the Clinton Administration has pursued new trade agreements that substantially increase the dangers. The Multilateral Agreement on Investment (MAI) was designed to protect investor property rights worldwide, but it could stifle environmental protection across America and around the world. The MAI could undermine virtually any local, state, or federal environmental law in the name of investor rights. Under the MAI, foreign investors could sue taxpayers for compensation in an international court stacked with trade lawyers for any law that hurts their profits. Supposedly, the goal was to prevent governments from "expropriating" -- or taking -- an investor’s property. But the MAI’s rules on expropriation are so broad that even "a lost opportunity to profit from a planned investment" could justify a complaint. The US environmental community has reacted in alarm to these provisions, and "recommended strongly that the United States call for termination of these negotiations." If implemented, the MAI would establish "takings" rules far more onerous than allowed under U.S. law. Already, the Ethyl Corporation of Virginia has sued Canada for $251 million under a similar provision of NAFTA. Canada’s "crime" was to ban a toxic gasoline additive manufactured by the company. Rulings under the MAI would be final and binding. Governments would then have to change the law or compensate the investor. Talks on the MAI began quietly in 1995 among the relatively "rich" nations of the Paris-based Organization for Economic Cooperation and Development. But eventually, the MAI would be opened up to poorer countries on a "take it or leave it" basis. Diffusing the MAI’s "takings" language globally would put a deep chill on environmental protection worldwide. The Environment at Risk in the States The MAI's broad expropriation rules could undermine a host of state and local conservation laws and agreements if a foreign enterprise loses an "opportunity to profit." (US companies would have the same advantages abroad). Here are just a few examples:
Exporting Extinction The earth’s shrinking natural resources would come under increasing pressure with the MAI. Many poor countries restrict access by transnational corporations to their natural resources, limiting their exploitation. But the MAI would require that countries treat foreign and domestic investors the same and allow equal access. Giant timber, mining, and oil companies would then quickly snap up extraction rights in the world's last wilderness areas. For example, Brazil recently opened its mining sector to equal access by transnational companies. In just one year, mining investment leapt from a mere $60 million to over $2.5 billion from Canadian and American companies eager for Brazil's untouched reserves of gold and copper. Unfortunately, most of the minerals lie beneath the Amazon rainforest. As mining and timber companies flock to the Amazon, deforestation rates have tripled. Even worse, to keep the investors happy, Brazil has weakened protections for indigenous land rights and pulled the enforcement teeth before adopting new environmental legislation. The MAI would force countries to do what Brazil did on its own. Here at home, MAI obligations to treat foreign and domestic investors the same would prevent allocation of fishing rights to US fishermen only, adding to over-fishing. And states could not sanction companies that do business in countries such as Nigeria that violate human and environmental rights. Importing Suburban Sprawl The MAI could even increase the scarring of America's landscape by suburban sprawl. One provision of the MAI bars governments from imposing non-market obligations on how investors use their property -- so-called "performance requirements." This provision could be used to eliminate the federal Community Reinvestment Act (CRA). Investors don't need the MAI The 2,500 polluting maquiladora assembly plants on the US-Mexico border dramatize the new face of foreign investment. In the past, almost all foreign investment was between the "rich" countries of Europe, North America, and Japan. But between 1990 and 1996, investment from the "rich" countries to the "poor" countries jumped from $60 billion to $250 billion. The MAI would reduce risks for these investors, claims the US Council for International Business. But the risks can't be that high if investment is growing so fast. The real risks are to the environment and workers in countries where standards are lax. The CRA requires banks to reinvest a portion of their deposits in communities where they do business. It helps to keep inner-city neighborhoods alive and to concentrate development in urban cores. But the CRA could violate the MAI's restrictions on performance requirements. If the law were challenged successfully by a foreign-owned bank, the federal government would either have to eliminate the law or compensate the complaining bank. Other laws that could be ruled illegal "performance requirements" under the MAI include recycled-content laws, bans on log exports, and requirements to use best available pollution control equipment -- the very heart of the Clean Air and Clean Water Acts. Up to Top HOME | Email Signup | About Us | Contact Us | Terms of Use | © 2008 Sierra Club |
