Reassessing the ‘Green’ in NAFTA

Abstract

The North American Free Trade Agreement (NAFTA) was the first trade agreement to explicitly link trade policy with environmental protection goals to ensure that liberalized trade did not result in increased environmental degradation. The environmental policies developed for NAFTA were predominantly concerned with addressing hypothetical concerns such as industry flight, pollution havens, downward harmonization, and conflicts between environmental laws and trade regime rules. These policies have endured and served as the template for subsequent US trade agreements. Twenty-five years on, however, research has shown that the actual effects of trade liberalization on the environment are not as drastic or far-reaching as originally thought. Thus, the inclusion of extensive environmental policies within trade agreements in general, and NAFTA in particular, may no longer be justified. Rather, there is a need to update the policy framework for NAFTA to focus on building the institutional capacity of its trading partners where it is most needed in conjunction with the inclusion of a small set of core environmental policies focused on a conflict of rules.