Environmental Regulations and Corporate Strategy: A NAFTA Perspective

By Alan Rugman; John Kirton et al. | Go to book overview

Economic Cooperation and Development (OECD), while conducting useful work in dispute prevention and convergence, is largely a forum for research and discussion, rather than for international negotiation and lawmaking. Asia-Pacific Economic Cooperation (APEC), despite its deadline for free trade across the Asia-Pacific region by 2010/2020, has produced few results thus far in the area of trade and the environment, despite the fact that all three NAFTA members are APEC members. Its rotating secretariat and emphasis on consultative cooperation rather than binding legal commitments make it a poor contender for an extensive legal structure ( Rugman and Soloway 1997). The nascent FTAA has similarly produced few results to date ( Kirton 1998). Only the Canada-Chilean trade agreement has adopted the NAFTA model to some extent and implied that a CEC-type institution will be established in the near future.

Most observers put NAFTA in the middle of this spectrum, while placing it towards the lightly institutionalized end ( Steinberg 1997; Vogel 1995). However, a careful review of NAFTA's actual performance, based on the first five years of its operation, suggest that NAFTA has been a much more effective regime than these early comparative analyses suggest. This is especially true if one looks beyond the actual cases that have been taken before actual dispute settlement panels but examines more broadly incidences of dispute management, regional capacity building, and regulatory convergence.

This record thus indicates that international institutions, even lightly developed ones such as NAFTA, do make a difference. The NAFTA regime has been successful in dispute avoidance, transparency creation, and capacity building through the work of its 50 intergovernmental committees, subcommittees, and working groups which deal with issues between the parties as they arise. They have helped, for example, to render accessible Mexico's sometimes opaque and sometimes non-existent system of sanitary and phytosanitary standards. In some cases, such as the transportation of dangerous goods and pesticides, the committees have achieved regulatory convergence. Moreover, this is not a case where there is a hegemonic imposition of the United States' will over that of its weaker NAFTA partners. Nor is it a case of powerful trade interests dictating local environmental preferences. Rather it is a case of mutual adjustment between three countries and the trade-environment communities in ways that both open markets and raise environmental standards to meet the challenges of the next millennium.

Nor have the NAFTA institutions operated as another governmental incubator of green and greedy coalitions to pursue protectionist strategies. Rather they have fostered business and ENGO coalitions such that their energies have been redirected in ways that are both trade liberalizing and environmentally friendly. In doing so, they have opened the institutional arena to business to pursue a broader range of new and more complex environmentally oriented export and investment strategies.


Introduction

The coming into force of the NAFTA and its side agreements on I January 1994 produced major legal and institutional changes in the traditional

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