USCIB Comments on the Operation and Effectiveness of the

North American Agreement on Environmental Cooperation

February 1998

The United States Council for International Business (USCIB) welcomes the opportunity to comment on the operation and effectiveness of the North American Agreement for Environmental Cooperation (NAAEC) signed by Canada, Mexico, and the United States as a supplemental agreement to the North American Free Trade Agreement (NAFTA).

The USCIB believes that the original objectives of the NAAEC and the Commission for Environmental Cooperation (CEC), to increase cooperation on environmental issues, to avoid trade barriers, and to enhance enforcement of domestic environmental laws, are still valid and that the effectiveness of the agreement should be measured against these. Additionally, the USCIB strongly urges the CEC to resist pressure to move beyond these objectives as doing so would lead to a politicization of the CEC and undermine the positive efforts which have been made.

In key areas, including supporting a cooperative approach and instituting a sound process for enforcement submissions, the CEC has worked constructively to meet its main objectives. However, other areas, such as determining priorities for the CEC work program and ensuring public participation in the CEC at the project level, require improvement. The comments below set out specific comments on these issues.

1. Emphasize Environmental Cooperation Between the Parties:

As a supplemental agreement to NAFTA, the side agreement should support and contribute to the growing trade and other connections between the Parties which NAFTA is designed to create. The USCIB strongly supports the efforts of the CEC to enhance cooperation among the three countries on regional environmental issues, and believes that these activities should be strengthened.

The NAAEC and the CEC created a tri-national institution in which Canada, Mexico, and the U.S. can address a range of regional and transboundary issues and seek more efficient and comprehensive means to address common concerns. CEC work program activities on pollution prevention and capacity building, conservation, and the "green lane" environmental information programs have contributed to a positive, cooperative approach among the three countries which supports the intent of both the NAAEC and the NAFTA.

2. Maintain Reliable and Predictable Process for Enforcement Submissions:

With regard to the mandatory obligation of the CEC on enforcement submissions, the CEC has correctly focused on the objectives stated in the NAAEC. To date, the enforcement obligations have been implemented in a fair and balanced manner, with a clear and transparent submission process, sound criteria for selecting legitimate cases, and a proper focus on government enforcement. The cases which have been accepted appear to fit the profile set by the Parties: instances where government action exhibits a pattern of non-enforcement and domestic due process has been exhausted without result.

Indeed, the CEC has properly resisted efforts by some to expand the scope and nature of its enforcement submission obligations beyond its mandate, to allow for a review of the adequacy of each Parties' environmental laws. To do so would be clearly beyond what the Parties had agreed, and would place the CEC in the position of second guessing the elected legislatures of the three countries.

3. Set CEC Priorities to Correspond with Its Unique Role:

While the CEC has improved its ability to set priorities and focus on areas in which it can add value, in some areas the Commission remains unclear in its objectives and is thus subject to shifting agendas. This has resulted in resources diverted from priority areas to short term issues, such as the 1997 Regulatory Reform program which attempted to address domestic political issues which went far beyond the scope of the CEC. The CEC must assess the broad mandate of the NAAEC against the very limited resources available, and set its priorities to focus on areas where it can best contribute to tri-national cooperation and trade, and national compliance.

One such area is the relationship between trade and investment and the environment, and the need for an objective analysis of both the environmental effects of trade and investment flows, and the trade effects of environmental regimes. A practical issue in this areas is the development of solid and hazardous waste disposal capacity, particularly in Mexico, and the standardization of transboundary shipment controls and documents for such materials. A second area is building networks for communication and cooperation on environmental issues which will result in more efficient environmental protection. An example is the cooperative program between the CEC, the USCIB, and business organizations in Mexico and Canada to promote best practices environmental management.

4. Enhance Public Participation in CEC Programs:

The USCIB supports the CEC's extensive and largely successful efforts to promote transparency and seek public participation on a broad level. The JPAC and the National Advisory Committees have also proven to be effective means for input to the CEC on broad issues. However, awareness of and participation in individual CEC projects and enforcement matters remains uneven and has produced mixed results. Instances of limited announcements of meetings, inadequate advance notice, and inconsistent communication have reduced the ability of all interested groups to contribute at the project level. Comprehensive efforts are required to address the issue of project-level input consistently throughout the CEC to ensure that useful input can be sought and received from all who wish to do so.

Conclusion:

The USCIB believes that the original objectives of the NAAEC and the CEC are still valid, and that the CEC is working constructively to meet these obligations. The USCIB also believes that the CEC should resist pressure to move beyond these objectives. The CEC has been successful in the most critical areas related to its objectives, support for a cooperative approach to environmental issues and its implementation of a sound process for enforcement submissions. In others, however, such as the determination of its work program priorities and the transparency of project activities, the CEC must institute changes to address past shortcomings.

The USCIB is a business organization dedicated to promoting an open system of world trade, finance, and investment in which business can flourish and contribute to economic growth, human welfare, and the protection of the environment. As such, it represents American business in the International Chamber of Commerce (ICC), the Business and Industry Advisory Committee (BIAC) to the OECD, and the International Organization of Employers (IOE) in the ILO. The USCIB has lead U.S. business involvement in international environmental negotiations and discussions, and has worked extensively in the area of trade and environment.

For additional comments or more information, please contact:

Adam B. Greene

Director of Environmental Affairs

U.S. Council for International Business

1212 Ave. of the Americas, Suite 2100

New York, NY 10036

Tel: 212-354-4480

Fax: 212-575-0327

Email: agreene@uscib.org