Chairman's Prologue The growing connection between trade and environment has taken center stage over the past year with the negotiation of the North American Free Trade Agreement. The result of fourteen months of negotiations the NAFTA has been cited as "the most environmentally-sensitive trade agreement ever negotiated anywhere." While the NAFTA debate captured much of the spotlight, there has been a growing awareness in international policy circles of the ever-increasing link between trade and environment. A prominent politician recently expressed the commendable thought that "trade and environment can no longer be separated into neat boxes." I quarrel only with the words: "no longer." The following report is one piece of evidence that thoughtful people had already begun to give long and serious consideration to the trade/ environment connection before the recent NAFTA headlines appeared. The Trade and Environment Committee of the National Advisory Council on Environmental Policy and Technology, which prepared this report, was created in November 1990, at the request of the EPA Administrator. It brings together representatives from the environmental, industrial, public policy, and international affairs communities to share their insights and generate guidance for EPA policy-making in areas of trade/environment overlap. Perhaps the most encouraging aspect of the initial deliberations of the Committee and its three Working Groups is a general optimism about the opportunities for positive synergy between trade and environment. Trade can be a means of helping the world face up to environmental problems, many of which are already global in nature. Facing environmental issues, in turn, can create new opportunities for trade, as well as insuring that trade becomes a means of strengthening rather than evading environmental responsibilities. However, the fact that these opportunities exist is no guarantee that they will be realized. Efforts to find common ground, understand the background of potentially disputed points, and encourage public participation and involvement are prerequisites. The Trade and Environment Committee's report, and the Phase I recommendations it includes, are a first step. We present them not as answers, but as contributions to an ongoing dialogue. Samuel A. Schulhof Trade and Environment Committee Trade and Environment Committee Executive Summary PREFACE In August 1991 the General Agreement on Tariffs and Trade (GATT) dispute resolution panel ruled on the United States Marine Mammal Protection Act (the Tuna/Dolphin dispute). The GATT panel decreed that the U.S. had violated international trade laws because it had tried to ban the importation of tuna from countries (Mexico and Venezuela) which permitted larger dolphin kill rates during commercial fishing operations than allowed by the U.S. Marine Mammal Protection Act. The panel ruled that a country could not use trade embargoes to impose its environment laws extraterritorially. One year later, in the Summer of 1992, the U.S., Mexico and Canada completed negotiations on The North American Free Trade Agreement (NAFTA). The drafting of the NAFTA engendered intense public debate over the ramifications of negotiating international trade agreements without integrating proper environmental safeguards. While slow to gain significant public attention, once showcased, both events created major headlines and heated debate around the world. The two cases illustrate the overlapping of two policy areas once perceived as wholly separate cultures: Trade and Environment. The NAFTA negotiations process demonstrated that trade and the environment are inextricably linked by the need to ensure the achievement of economic development, and the lowering of trade barriers, without harming the environment. The Tuna/ Dolphin dispute, while illustrating the same point, also placed the spotlight on sovereign rights, and the tension around the need to meet positive trade objectives and craft more environmentally sensitive bilateral and multilateral agreements. ESTABLISHMENT OF THE TRADE AND ENVIRONMENT COMMITTEE However, before the occurrence of these two pivotal events, the Environmental Protection Agency (EPA) anticipated the potential conflicts between trade and environment. EPA recognized the need to reconcile trade and environmental objectives when carrying out its mandated tasks. In November 1990, the EPA Administrator requested that the National Advisory Council on Environmental Policy and Technology (NACEPT) address the intersection of trade and environment policy. In response, the Council reconstituted its International Environment Committee as the Trade and Environment Committee. The Committee's mandate was to provide guidance to EPA in formulating the agency's policy on trade and environment, as well as in EPA's participation in the development of U.S. Government policy on trade and environment, as a member of the Executive Branch. Recognizing the wide range of interests and disciplines inherent in the trade and environment dialogue, the Committee made a deliberate effort to ensure that its membership include representatives of the trade, industrial, environmental, public policy and international affairs communities. The Committee was then divided into three working groups which reflected the key focal areas of EPA's participation in the trade and environment dialogue: the General Agreement on Tariffs and Trade (GATT); the Industrialized Countries for Economic Cooperation and Development (OECD); and the Western Hemisphere. The diversity and expertise of its members and the issues charged to its review gave the Committee a unique status within the current U.S. Government dialogue on trade and environment. Over the next ten months, the Committee and its three working groups held a total of thirteen meetings. The Committee's initial effort was devoted to building a common ground of understanding among its members. Developing a common ground of understanding among the members was no simple task. International trade is conducted in the language of finance and enjoys a long history. U.S. trade policy is well developed and inherently international, while U.S. environmental policy is historically domestic and less developed. U.S. trade policy offers the vision that it is trade that fuels the global economy and that increased trade will result in a better world for all. There is currently no coherent, articulated U. S. international environmental policy. Committee members repeatedly referred to the "clash of cultures" between the trade and environment fields. The knowledge of the Committee, coupled with the information provided to the members by a series of analytical papers and the testimony provided by 31 expert witnesses formed the framework that was essential for the Committee to engage in substantive discussion and debate over the myriad issues involved in the trade and environment debate. From this a general consensus emerged: the world can achieve both expanded free trade and enhanced environmental protection. COMMITTEE DISCUSSION ON TRADE AND ENVIRONMENT With the expansion of global markets, nations are more interdependent today than ever before. Since 1950, trade in manufactured goods has increased twenty-fold while world output has only increased eightfold. The ability of industry to compete successfully in global markets plays a critical role in determining the overall competitiveness of nations and companies, whether they manufacture computers or sell soft drinks. By the end of the decade, overseas sales will represent 90% of Coca-Cola's earnings. From the U.S. perspective, the conduct of trade and trade policies will have a significant impact on its economic future as we prepare to enter the second millennium. Similarly, over the past twenty years, it has become clear that nations are interdependent environmentally. Environmental threats, that were once viewed as localized, like air pollution, have now materialized into global perils like ozone depletion and global warming. The manner in which these threats are addressed |