THE NORTH-AMERICAN FREE-TRADE AGREEMENT - AN ECOLOGICAL-ECONOMIC SYNTHESIS FOR THE UNITED-STATES AND MEXICO

The prospect of a North American Free Trade Agreement (NAFTA) has alar med environmentally concerned professionals and citizens because of po tential for exacerbated environmental destruction in each country. The concern in the trade and business community is that provisions for en vironmental protection would hobble the trade agreement and could effe ctively negate the positive economic benefits. The purpose of this pap er is to consider the various environmental and economic implications of NAFTA and suggest policies that should allow for both a functional NAFTA and environmental protection. This paper summarizes the various potential environmental impacts along with existing free-trade mechani sms for environmental protection. It evaluates the rationale for a tra nsition from current free-trade doctrines to those of sustainable free trade. Also recommended are several suggestions including the creatio n of a companion North American Environmental Protection Treaty (NAEPT ). This treaty would contain trade-related policies beneficial to the environment, but inappropriate to a trade agreement. It would include short-term expansion of GATT articles for protection of the environmen t, and longer-term transformation of GATT into a General Agreement on Trade and the Environment (GATE). A form of countervailing duties call ed recompensing duties, and a form of Pigovian tax called a retributiv e environmental impact (REI) tax designed to ease adverse social, econ omic and environmental impacts during the transitional period of upwar d harmonization of standards are proposed. Specific recommendations fo r NAFTA, NAEPT and GATE are provided.