Free Trade Area of the Americas - FTAA

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April 29, 2002

Original: English



Name (s) John Audley and Edward Sherwin
Organization (s) Carnegie Endowment for International Peace
Country United States

If the Free Trade Area of the Americas (FTAA) is to become a reality by 2005, negotiators will have to address a broad range of issues going beyond trade. At the initial Summit of the Americas in 1994, leaders of the 34 FTAA countries embraced a broad hemispheric agenda including not only economic integration but democracy promotion, poverty reduction, and environmental protection. Those last three items have been largely ignored, helping fuel a popular backlash in both wealthy and developing countries against policies that support globalization. Many people believe, rightly or not, that economic globalization does not serve broader social policy objectives, including protection of the environment and human health.

The FTAA negotiations create conditions that make it both possible and necessary for the countries of the Western Hemisphere to discuss the environment and devise collaborative solutions to transnational environmental problems. It is possible because absent the FTAA, there would be insufficient political will to reach a hemispheric environmental agreement. Accordingly, the FTAA and an environmental side agreement should be seen as two components of a much broader integration agenda like that agreed to at the Miami summit. There are serious environmental problems in the Americas - air pollution, deforestation, depletion of fish stocks, the return of long-dormant infectious diseases like cholera - that should be addressed. The FTAA creates a condition for governments to take responsibility for these challenges and negotiate proactive solutions.

Meanwhile, trade politics - particularly in the United States and Canada - make it necessary that the FTAA include a side agreement on the environment. Note the contentious fight over the North American Free Trade Agreement in the U.S. Congress in 1993, the rejection of fast-track trade negotiating authority later in the Clinton administration, and the current impasse over Trade Promotion Authority. In each case, the opposition to trade liberalization by some members was based on a strongly held belief that trade disciplines should not result in harm to the environment. The problem was solved during NAFTA by negotiating a largely successful side agreement on the environment. Supporters of Trade Promotion Authority have responded to the earlier fast track defeats by giving the environment parity with other negotiating objectives.

We understand the reluctance among many developing countries to link trade and the environment. Some see environmental protection as veiled protectionism and fear that failure to uphold U.S. levels of environmental protection will result in trade sanctions. Others recognize that their economies are not strong enough to internalize the costs of environmental degradation and fear that they will be less competitive if held to high environmental standards. We believe that it is possible to move beyond these commonly held beliefs and design solutions that harness environmental protection to the engines of economic growth, creating “win-win,” not “win-lose” situations. To that end, we propose that the 34 FTAA countries, as soon as possible, begin parallel negotiations on the environment linked to the successful conclusion of the FTAA. Negotiators should begin by addressing these four issues:

National Environmental Assessments: Assistance to developing countries to conduct national environmental assessments based on existing methodologies, such as those outlined by the United Nations Environment Program (UNEP) or the Organization for Economic Cooperation and Development (OECD). These will help countries identify environmental challenges related to trade liberalization, as well as those they face outside a trade context.

Hemispheric Environmental Information: Aggregation and dissemination of environmental information, particularly data that capture the implications for the environment and human health arising from hemispheric economic integration. This agenda item will allow countries to make environmental policy based on “sound science” and to quantify transnational environmental problems. The cooperative work plan of the North American Commission for Environmental Cooperation (CEC) serves as a good model.

Coordinated Technical Assistance and Capacity-Building Programs: Aid delivered at the request of developing countries to address their environmental infrastructure needs and help government officials write and enforce legislation pursuant to trade, environment and development objectives. Hemisphere-wide coordination of technical assistance and capacity building should also include coordinating bilateral, regional, international and private sector financial and technical support. Such coordination will help get funding where it is most needed and alleviate “donor fatigue.”

An Effective Role for Civil Society: Any environmental partnership for the Americas should not be limited strictly to governments, but rather should capitalize on the proven capabilities of the private sector and of non-governmental organizations to contribute to policy development and implementation, as well as technical assistance and capacity building. In addition, civil society should retain a formal role in the administration of the agreement. NAFTA’s parallel accords provide useful examples of formal administration roles for civil society, as well as a complaint system for by citizens against governments for non-compliance with domestic environmental laws.

This proposal for a parallel agreement does not include issues such as agriculture, investment, or dispute settlement that arise under the FTAA. We understand that trade negotiators will address these issues within the context of the trade agreement itself. The substance of this proposal runs parallel to trade negotiations and is a process that should be directed principally by ministries of environment and development.

In order to capitalize on the political goodwill generated by the FTAA and to mollify critics of trade liberalization, a parallel accord on the environment should be concluded simultaneously with the FTAA, in January 2005. With that date less than three years away, it is imperative that negotiations begin as soon as possible. To catalyze the process, we propose that government officials direct the three members of the Tripartite Committee - the Organization of American States, the Economic Commission for Latin America and the Caribbean, and the Inter-American Development Bank - to play the same administrative and advisory roles in the environment negotiations as they do in the trade negotiations. Member governments may also draw upon the expertise of other international organizations, such as the United Nations Environment Program, and of civil society groups, to conduct studies and inform their negotiating positions.

The FTAA creates a once-in-a-generation opportunity for the countries of the Western Hemisphere to take a bold step to improve their natural environments. At the same time, they may not realize the benefits of trade liberalization without addressing the other commitments made at the Summit of the Americas. We propose a course of action that will not only create stronger economies, but improve the environment and human health as well.

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