NAFTA and Environment Essay

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In 1947, i n the aftermath of World War II, 23 nations signed the General Agreement on Tariffs and Trade (GATT). Over time the number of signatory nations grew and by 1986, the year of GATT’s eighth round of trade negotiations (known as the “Uruguay” round), there were 75, including Mexico, which joined that year.

In 1989, at a time when market-based, low-tariff trade of goods and services between countries was being touted as a driver of investment and economic growth, the United States and Canada negotiated the U.S.- Canada Free Trade Agreement (CFTA). Soon after, Mexico, then governed by newly-elected, neoliberal president Carlos Salinas de Gortari, signaled a strong interest in enlarging the U.S.-Canada agreement.

After four years of tripartite negotiations, the expanded North American Free Trade Agreement (NAFTA) became law on January 1, 1994. NAFTA thus established the world’s largest free trade area-comprising the United States, Mexico, and Canada-populated by some 440 million people and producing about U.S. $12 trillion worth of goods and services.

As a commercial treaty, NATFA’s goals were to remove tariffs and nontariff barriers; enhance fair competition; promote investment; protect intellectual-property rights; institute practical procedures for resolving disputes; and facilitate trilateral, regional, and multilateral cooperation.

But while the agreement itself was intended as an economic instrument, NAFTA’s legacy may rest in its innovation in another domain: environmental protection. Prior to U.S. congressional approval, U.S. environmental groups, most of which initially resisted the accord, argued for institutional safeguards for the continent’s environment and especially the fragile, water-scarce U.S.-Mexico border region. To placate this influential sector of civil society, the signatories agreed to soften the potential environmental impacts of the expected growth in trade and economic activity by chartering three new environmental institutions: the trinational Commission for Environmental Cooperation (CEC), created through a side agreement amending NAFTA; and two binational institutions, the Border Environment Cooperation Commission (BECC) and the North American Development Bank (NADBank), negotiated between the United States and Mexico. This “greening” of a trade treaty was a novel idea in 1993 and it remains the most prominent instance of such a procedure.

The new triad of CEC, BECC, and NADBank was meant to fill significant lacunae in protecting the North American environment. In this, they joined a host of existing international institutions (treaties, organizations, and cooperative agreements) already addressing certain aspects of environmental protection. Most prominent among these are: the International Boundary Commission (IBC), created in 1889 and changed to the International Boundary and Water Commission (IBWC) in 1944, to resolve boundary issues between the United States and Mexico; the International Joint Commission (IJC), an analogous organization established in 1909 to deal with U.S.-Canadian water-related issues; the Colorado River Compact of 1922, which allocates use of that river and forms the basis of what has become known as the “Law of the River”; the 1944 United States-Mexico Water Treaty, governing the Colorado, Rio Grande, and Tijuana Rivers; the 1983 La Paz Agreement (or “Reagan-de la Madrid Accord”), the first comprehensive environmental treaty between the United States and Mexico; the Border XXI Program (1996-2000), a binational cooperative workplan designed to implement the terms of the La Paz Agreement; and Border 2012 (from 2003), the successor to Border XXI.

Among the three new institutions, CEC was the only one that was officially part of NAFTA (and is sometimes referred to as the “NAFTA Environmental Commission”). It was created under the North American Agreement for Environmental Cooperation (NAAEC) to address regional environmental concerns, help prevent potential trade and environmental conflicts, and promote effective enforcement of environmental law. Officially directed by the three participating nations’ environmental ministers, CEC operates via a secretariat based in Montreal, Canada, and is guided by three governmental advisory committees, three national advisory committees, and a trinational joint public advisory committee (JPAC).

Since 1994 CEC has addressed the state of the North American environment, the relation between trade and environment, and specific issues such as pollutant releases and registries and eco-regions. In its early years, its greatest influence was achieved through its judgments on enforcement matters under Articles 14 and 15 of the NAAEC, which allow nongovernmental organizations or individuals to file submissions claiming that one of the three countries is failing to enforce an environmental statute.

The Border Environment Cooperation Commission (BECC), headquartered in Ciudad Juarez, Chihuahua, and the North American Development Bank (NADBank), based in San Antonio, Texas, were designed to operate in tandem to improve environmental infrastructure-especially with regard to water-in the U.S.-Mexico border region (defined as a zone 100 kilometers on each side of the boundary). BECC was to encourage needy border communities to submit proposals for projects and then certify those projects meeting the commission’s criteria. NADBank’s role was to facilitate financing, that is, provide loans for the development, execution, and operation of BECC-certified environmental-infrastructure projects.

BECC has been managed binationally and, until 2006, directed by a board comprising representatives of each government and at-large community members. By its first year of operation, it had devised progressive criteria that required binationality; openness and transparency; bottom-up operation, with requirements for public participation at all levels; and assurances of environmental and financial sustainability. Although by some accounts the BECC process was initially slow, as of July 2006 it had certified 113 border environmental infrastructure projects-a total investment valued at $2.5 billion (not all these funds became available, however), affecting some 11 million residents.

Like BECC, NADBank is managed binationally, but its board-prior to 2006-consisted of the secretaries of the treasury, external affairs, and environment of Mexico and the United States. When the bank was created, it was capitalized at up to $3 billion in financing, with $2.55 billion in “callable” capital and $450 million in “paid-in” capital; but needs for border environmental infrastructure were estimated to be far higher. NADBank has provided about $350 million for projects providing cleaner water, land, and air in border communities. The bank also has administered $500 million in funds from the U.S. Environmental Protection Agency (EPA) through its Border Environment Infrastructure Fund (BEIF).

But while many residents benefited from the projects, the amounts expended remained well below the bank’s initial capitalization and far short of perceived needs. Thus, beginning in the late 1990s and accelerating in early 2001, during the first months of the George W. Bush and Vicente Fox administrations, many in Washington and Mexico City considered NADBank to be unsuccessful and BECC less than optimally effective. In September 2001, Presidents Bush and Fox agreed that “immediate measures were needed to strengthen the performance” of the bank and its sister commission. In March 2004, over the objections of environmental interests who feared that the called-for “reforms” would deemphasize BECC’s progressive features, the U.S. Congress enacted a bill, H.R. 254, which altered the mandate and structure of the bank and the commission. The zone of operation was expanded from 100 kilometers on each side of the border to 300 kilometers in Mexico; projects would no longer be restricted to the original charter of air, water, and waste; and most significantly, the two boards were to be replaced by a single one with representation from the two federal governments, the border states, and the public.

The changes were effected soon after but the new joint board did not meet until June 2006; the last time the NADBank board met was October 2003, and the last time the BECC board met was June 2004. In the meantime, hostility to the newly-reconstituted NADBank continued, especially in the U.S. Department of the Treasury and Mexico’s Secretaria de Hacienda y Credito P├║blico. During the first half of 2006, rumors of NADBank’s demise were rife. But the bank, and by extension, BECC, seemingly survived following strong expressions of support by the “Border Caucus” of the U.S. Congress, Texas and New Mexico federal senators, influential border-states governors, and advisory councils such as the Good Neighbor Environmental Board.


  1. Diana Liverman et al., “Environmental Issues Along the U.S.-Mexico Border-Drivers of Change and Responses of Citizens and Institutions,” Annual Review of Energy and the Environment (v.24, 1999);
  2. Gary Martin, “U.S., Mexican Officials Abandon Discussions to Close NADBank,” San Antonio Express News (March 2, 2006);
  3. Silvia Olvera, “Avala el NADBank Plan para Frontera” (NADBank plan for the border guaranteed), Reforma!El Norte (March 20, 2006);
  4. Alicia Salgado, “A quien interesa el NADBank?” (Who is interested in NADBank?), El Financiero, La Chequera, (March 20, 2006);
  5. United States Environmental Protection Agency, “Reforming the North American Development Bank (NADBank) and the Border Environment Cooperation Commission (BECC),” (Border XXI Archive, Public Fact Sheet, 2001);
  6. S. House of Representatives, H.R. 254, 108th Congress, “To authorize the President of the United States to agree to certain amendments to the Agreement between the Government of the United States of America and the Government of the United Mexican States concerning the establishment of a Border Environment Cooperation Commission and a North American Development Bank, and for other purposes,” Congressional Record (v.150, March 24, 2004);
  7. United States of America, The White House, Office of the Press Secretary, “Joint Statement by the Presidents of The United States and Mexico, Monterrey, Mexico,” (March 22, 2002);
  8. Robert G. Varady et , “The U.S.-Mexico Border Environment Cooperation Commission: Collected Perspectives on the First Two Years,” Journal of Borderlands Studies (v.11/2, 1996).

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