Kevin Gallagher: Bring a greener trade bill to Senate
Reprinted Oped from the Providence Journal

04/19/2002
MEDFORD, Mass.

IN NOVEMBER, by a single vote, the U.S. House passed a "fast-track" bill
that gives the Bush Administration free reign to negotiate trade deals that
give short shrift to the environment. With critical negotiations looming for
the World Trade Organization and a hemispheric free-trade pact, the
Senate should correct this when considering its version within the 18-day
deadline decreed by the president on April 5.

The House bill is guided by the tired mantra on trade and environment:
Free trade will lead to rising incomes, which by themselves will trigger
citizen demands for a cleaner environment and foreign investment, which
is assumed to translate into greater use of cleaner technologies.

The Senate doesn't need to travel far to see how misguided this notion is.
Recent statistics from Mexico's National Institute for Statistics, Geography
and Information Systems document how environmental degradation has
diminished the benefits of trade-led economic growth in Mexico, the nation
the Bush administration holds up as free trade's success story.

According to INEGI's figures, environmental problems have worsened since
trade liberalization began in Mexico. The institute estimates that municipal
solid waste has increased 85 percent; air pollution by 71 percent; and soil
erosion by 62 percent since 1988, when Mexico began its transition
toward economic integration. These trends have occurred faster than (and
despite) the rising incomes that were supposed to offset environmental
contamination.

During the same period, real economic growth has been slower than
promised, but positive, rising 38 percent (only 17 percent in per-capita
terms).

The INEGI studies estimate the financial costs of this environmental
degradation at 10 percent of gross domestic product from 1988 to 1999,
an average of $36 billion of damage each year. The destruction
overwhelms the value of economic growth, which has been just 2.5
percent annually over the same period, or $14 billion a year.

In sum, the economic costs of environmental degradation are far
outstripping the benefits of trade-led growth in Mexico.

The reason for this is all too clear. Because the proper mechanisms were
not put in place to help Mexico manage its economic growth in an
environmentally sustainable manner, free trade took its toll. This is
unfortunate because, in the years leading up to the signing of the North
American Free Trade Agreement, Mexico had begun to show environmental
improvements.

Indeed, spending on environmental protection doubled and Mexico started
a much-needed industrial environmental-inspection program. However,
shortly after NAFTA was signed and fiscal and financial woes set in,
attention to the environment nose-dived.

According to INEGI, since 1994 real spending on environmental protection
declined by the equivalent of $200 million, or 45 percent.

The environmental "side" institutions created by NAFTA set some
important precedents, but were not equipped to come to the rescue. At
most, Mexico receives only a third of the $9 million annual budget of the
North American Commission for Environmental Cooperation. NACEC has
been effective in carrying out its limited mandate, but its $3 million budget
is dwarfed by Mexico's budget shortfalls and buried by the $36 billion price
tag of environmental degradation.

The Free Trade Area of the Americas that the Bush administration seeks
with the proposed fast-track authority includes the controversial
NAFTA-like investment provisions that let private foreign investors sue
nations in the hemisphere for domestic environmental regulations that are
deemed "tantamount to expropriation."

Again, Mexico serves as an example for what looms ahead for the
Americas under the FTAA. Under NAFTA's investment rules, the Mexican
government was forced to pay the U.S.-based Metalclad corporation $16.7
million because local elected authorities refused to let the company build a
toxic-waste dump in an environmentally sensitive location.

Sen. John Kerry, D.-Mass., is sponsoring an amendment that will address
some of these concerns. Senate environmental leaders often leave their
environmental hats at the door when it comes to trade policy.

No self-proclaimed environmentalist should support a trade bill that fails to
place the environment at the heart of trade agreements, create
mechanisms for the U.S.and its trading partners to steer trade-led
economic growth in a sustainable manner, and restrict foreign investors'
ability to sue trading partners over environmental regulations.

Such senators as Lincoln Chafee, R.-R.I., James Jeffords, I-Vt., Joseph
Leiberman, D.-Conn. and Paul Wellstone, D.-Minn., should support Kerry
and lead a charge to bring a greener fast-track bill to the Senate floor.

The National Conference of State Legislators has now backed the Kerry
amendment. If these legislators on the ground who will bear the cost of
such actions support the amendment, those who stay in Washington
should listen and follow suit.

Kevin Gallagher is a research associate at Tufts University's Global
Development and Environment Institute, in Medford, Mass.