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Trade Law and Quality of Life—Dispute Resolution under the NAFTA Side Accords on Labor and the Environment

Published online by Cambridge University Press:  27 February 2017

Jack I. Garvey
Jack I. Garvey*
Affiliation:
University of San Francisco School of Law
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Extract

Law, like other forms of life, evolves in response to changing environments. When cosmic change alters environment, viability is tested. The North American Free Trade Agreement was born into a radically new social and political environment for the making of international trade agreements. Its viability has centered on a fundamental alteration in international trade law, appearing as the NAFTA Side Agreements on labor, health and environmental regulation; specifically, as the dispute resolution process of the Side Agreements.

Type
Current Developments
Information
American Journal of International Law , Volume 89 , Issue 2 , April 1995 , pp. 439 - 453
Copyright
Copyright © American Society of International Law 1995

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References

1 North American Free Trade Agreement, Dec. 8, 11, 14, 17, 1992, Can.-Mex.-U.S., reprinted in 32 ILM 289, 605 (1993) (parts 1 & 2) [hereinafter NAFTA].

2 For the North American Agreement on Environmental Cooperation and the North American Agreement on Labor Cooperation, Sept. 13, 1993, see 1 North American Free Trade Agreements: Treaty Materials, bklt. 9 [9 NAFTA T.M.], at 2, 36 (James R. Holbein & Donald J. Musch eds., 1994) [hereinafter Environment Accord and Labor Accord].

3 Jennifer Schultz, The GATT/WTO Committee on Trade and the Environment—Toioard Environmental Reform, supra p. 423.

4 1 North American Free Trade Agreements, supra note 2, at 607–08.

5 See Patti A. Goldman, Resolving the Trade and Environment Debate: In Search of a Neutral Forum and Neutral Principles, 49 Wash. & Lee L. Rev. 1279, 1283(1992).

6 Id.

7 id.

8 See Peter Behr, Clinton's conversion on NAFTA, Wash. Post, Sept. 19, 1993, at HI. See also Ronald W. Kleinman & Joel M. Shapiro, NAFTA's Proposed Tri-Lateral Commission on the Environment and Labor, 2 U.S.-Mex. L.J. 25, 25 (1994); Judith H. Bello& Alan F. Holmer, Annual Symposium: The North American Free Trade Agreement, 27 Int'l Law. 589, 592 (1993).

9 Michael J. O'Neill, The Roar of the Crowd (1993).

10 This includes the principal areas of investment disputes, NAFTA, supra note 1, Arts. 1115–38, 32 ILM at 642–44; financial services, id., Art. 1415, 32 ILM at 661; antidumping and countervailing duties, id., Arts. 1901–10, 32 ILM at 682–87; international commercial disputes between private parties, id., Art. 2022, 32 ILM at 698; referrals of matters from judicial and administrative proceedings, id., Art. 2020, 32 ILM at 698; the Advisory Committee regarding Agricultural Trade, id., Art. 707, 32 ILM at 369; and the Advisory Committee on Private Commercial Disputes as mechanisms to aid in the interpretation and administration of the Agreement, id., Art. 2022(4), 32 ILM at 698.

11 Obvious examples are regulations against the use of prison labor, the use of dangerous pesticides, and laws protecting endangered species.

12 General Agreement on Tariffs and Trade, Oct. 30, 1947, TIAS No. 1700, 55 UNTS 187, Art. XXXVI [hereinafter GATT].

13 For a discussion of this development, see A Survey of Global Environment: GATTery v. Greenery, Economist, May 30, 1992, at 12, 65.

14 GATT, Dispute Settlement Panel, United States—Restrictions on Imports of Tuna (Aug. 16, 1991), GATT Doc. DS21/R(1991), 30 ILM 1594, 1621 (1991).

15 30 ILM at 1620–21. For a full discussion, see Ted L. McDorman, The GATT Consistency of U.S. Fish Import Embargoes to Slop Driftnet Fishing and Save Whales, Dolphins and Turtles, 24 Geo. Wash. J. Int'l L. & Econ. 477 (1991). The author states his conclusion that this result was compelled because GATT cannot “accommodate the emergence of a fully developed international environmental and conservation regime” in that GATT is focused on trade and not the environment. Id. at 525.

16 The dominance of the trade objective is evident in the GATT Secretariat's analysis of the interplay of trade and the environment, see GATT Secretariat, Trade and the Environment (1992), and the Decision of the GATT Contracting Parties to Establish a Working Group on Environmental Measures and International Trade, GATT Doc. C/M/71 (1971), charged with consideration of trade restraints in international environmental agreements.

17 NAFTA, supra note 1, Art. 904(1), 32 ILM at 387.

18 Id., Art. 904(4)(a), 32 ILM at 387.

19 Id., Art. 905(2), 32 ILM at 387.

20 Id., Art. 905(3), 32 ILM at 387.

21 Environment Accord, supra note 2, Art. 28, 9 NAFTA T.M. at 20.

22 Labor Accord, supra note 2, Art. 27, 9 NAFTA T.M. at 48.

23 Environment Accord, Art. 45(1), 9 NAFTA T.M. at 25–26; Labor Accord, Art. 49(1), 9 NAFTA T.M. at 57.

24 Environment Accord, Art. 8(2), 9 NAFTA T.M. at 6.

25 Labor Accord, Art. 8(2), 9 NAFTA T.M. at 40.

26 Environment Accord, Art. 22(1), 9 NAFTA T.M. at 17.

27 Labor Accord, Art. 21(1), 9 NAFTA T.M. at 46.

28 Environment Accord, Art. 23(1), 9 NAFTA T.M. at 17.

29 Labor Accord, Art. 22(1), 9 NAFTA T.M. at 46.

30 Environment Accord, Art. 24, 9 NAFTA T.M. at 18.

31 Labor Accord, Art. 23(1), 9 NAFTA T.M. at 46–47.

32 Following the presentation of the report to the council, any party may request consultations with any party regarding whether there has been a persistent pattern of failure by that other party to effectively enforce such standards in respect of the general subject matter addressed in the report. Id., Art. 27(1), 9 NAFTA T.M. at 48.

33 Id., Art. 28, 9 NAFTA T.M. at 49.

34 Id., Art. 29, 9 NAFTA T.M. at 49–50.

35 Environment Accord, Art. 31(2), 9 NAFTA T.M. at 20–21; Labor Accord, Art. 36(2), 9 NAFTA T.M. at 52–53.

36 Environment Accord, Art. 33, 9 NAFTA T.M. at 21; Labor Accord, Art. 38, 9 NAFTA T.M. at 53.

37 Environment Accord, Art. 34, 9 NAFTA T.M. at 21–22; Labor Accord, Art. 39, 9 NAFTA T.M. at 53–55.

38 Environment Accord, Arts. 34, 36, 9 NAFTA T.M. at 21–22, 23–24; Labor Accord, Arts. 39, 41, 9 NAFTA T.M. at 53–55.

39 Environment Accord, Art. 42, 9 NAFTA T.M. at 25.

40 Id., Art. 45(1), 9 NAFTA T.M. at 25–26; Labor Accord, Art. 49(1), 9 NAFTA T.M. at 57.

41 Gary N. Edson (General Counsel, Office of the U.S. Trade Representative), Remarks before the Institute for International Economics, Washington, D.C. (July 27, 1992), available in LEXIS, Commerce and Trade Speeches or Conferences Library.

42 “‘[P]ersistent pattern’ means a sustained or recurring course of action or inaction beginning after the date of entry into force of this Agreement.” Environment Accord, supra note 2, Art. 45, 9 NAFTA T.M. at 25–26. “ ‘[P]ersistent pattern’ means a sustained or recurring pattern of practice.” Labor Accord, supra note 2, Art. 49, 9 NAFTA T.M. at 57–58.

43 Environment Accord, Art. 14, 9 NAFTA T.M. at 13.

44 Id., Art. 11, 9 NAFTA T.M. at 10–11; Labor Accord, Art. 12, 9 NAFTA T.M. at 42–43.

45 Environment Accord, Art. 33, 9 NAFTA T.M. at 21; Labor Accord, Art. 38, 9 NAFTA T.M. at 53.

46 Environment Accord, Art. 34(1)(a), (4), 9 NAFTA T.M. at 21–23; Labor Accord, Art. 39(1)(a), (4), 9 NAFTA T.M. at 53–55.

47 Environment Accord, Art. 34(4)(a)(ii), 9 NAFTA T.M. at 22; Labor Accord, Art. 39(4)(a)(ii), 9 NAFTA T.M. at 54.

48 Environment Accord, Art. 34(1)(b), (5), 9 NAFTA T.M. at 21–23; Labor Accord, Art. 39(1)(b), (5), 9 NAFTA T.M. at 53–55.

49 See 26 Int'l Law. 855, 855–69 (1992) for the final text of the report by the Joint ABA/CBA/BM Working Group on Dispute Settlement under NAFTA.

50 Labor Accord, supra note 2, Arts. 23(2), 24, 9 NAFTA T.M. at 46–48.

51 Canada's Deputy Attorney General remarked during the negotiation of the Canada-United States Agreement:

We have done pretty well [at resolving trade disputes] in the past, but there are two reasons that I would advance have kept us from doing better. The first is what I would call the level playing field reason. This reason recognizes that the negotiating strength of the two parties are not equal… .

… [M]echanisms to solve disputes are vital to Canada. The existence of such mechanisms are going to make or break the issue in Canada. Quite apart from the substantive disagreements, any agreement without a satisfactory dispute resolution mechanism will not be acceptable. We cannot have a system that will see differences resolved on the basis of raw power.

See T. Bradbrooke Smith, Comments on Dispute Resolution Under a North American Free Trade Agreement, 12 Can.-U.S. L.J. 337, 337 (1987); Robert Hage, Dispute Settlement under the Canada-United States Free Trade Agreement, 1990 Can. Y.B. Int'l L. 361; Ted L. McDorman, The Dispute Settlement Regime of the Free Trade Agreement, 2 Rev. Int'l Bus. L. 303, 305(1988); Alan M. Rugman, A Canadian Perspective on U.S. Administered Protection and the Free Trade Agreement, 40 Me. L. Rev. 305, 305 (1988); Ann Carlsen, Note, The Canada United States Free Trade Agreement: A Bilateral Approach to the Reduction of Trade Barriers, 12 Suffolk Transnat'l L.J. 299, 308, 315 (1989). If this is true for Canada with its economy at one-tenth the size of that of the United States, it is even more important for Mexico. See James F. Smith & Marilyn Whitney, The Dispute Settlement Mechanism of the NAFTA and Agriculture, 68 N.D. L. Rev. 567, 594 (1992).

52 Environment Accord, supra note 2, Art. 16(5), 9 NAFTA T.M. at 14–15.

53 Id., Art. 17, 9 NAFTA T.M. at 15.

54 Labor Accord, supra note 2, Art. 17, 9 NAFTA T.M. at 45.

55 Id., Art. 24, 9 NAFTA T.M. at 46–47.

56 See supra pp. 445–46.

57 NAFTA Article 2012(1)(b) apparently makes dispute proceedings confidential by providing that “the panel's hearings, deliberations and initial report, and all written submissions to and communications with the panel shall be confidential” in accordance with the Model Rules of Procedure established by the commission. See NAFTA, supra note 1, 32 ILM at 696. However, it is also provided that parties may stipulate otherwise and have open proceedings. Id., Art. 2012(2). In contrast, the Side Agreements omit such confidentiality requirements. Rather, the Side Agreements promote public awareness, by providing that “each party shall promote public awareness of its labor law, including by (a) ensuring that public information is available related to its labor law and enforcement and compliance procedures.” Labor Accord, supra note 2, Art. 7(a), 9 NAFTA T.M. at 40; see also id., Art. 16(2), 9 NAFTA T.M. at 44–45; Environment Accord, supra note 2, Art. 4, 9 NAFTA T.M. at 4.

58 Sabotage of America's Health, Food Safety and Environmental Laws, Wash. Post, Apr. 22, 1992, at A18. E.g., Jessica Mathews, Dolphins, Tuna and Free Trade: No Country Can Protect Its Own Smidgen of Air or Ocean, Wash. Post, Oct. 18, 1991, at A21.

59 While it has been said that under GATT the rules of secrecy are often honored in the breach, this occurs because the governments involved choose to seek some political advantage, not to secure vital public review. See John H. Jackson, World Trade Rules and Environmental Policies: Congruence or Conflict?, 49 Wash. & Lee L. Rev. 1227, 1252 (1992).

60 Earth Island Inst. v. Mosbacher, 746 F.Supp. 964 (N.D. Cal. 1990), aff'd, 929 F.2d 1449 (9th Cir. 1991).

61 Environment Accord, supra note 2, Art. 16, 9 NAFTA T.M. at 14; Labor Accord, supra note 2, Art. 24, 9 NAFTA T.M. at 47–48.

62 See text at notes 42–48 supra.

63 Environment Accord, supra note 2, Art. 14(1), 9 NAFTA T.M. at 13.

64 Id., Art. 14(2)(c), 9 NAFTA T.M. at 13.

65 Id., Art. 22, 9 NAFTA T.M. at 17.

66 Labor Accord, supra note 2, Art. 24(1)(e), 9 NAFTA T.M. at 47–48.

67 Characteristically, it is amorphously provided that the council shall promote “the exchange of information on criteria and methodologies used in establishing domestic environmental standards,” Environment Accord, Art. 10(3)(a), 9 NAFTA T.M. at 7–9, and promote “public access to information concerning the environment that is held by public authorities of each Party … and opportunity to participate in decisionmaking processes related to such public access.” Id., Art. 10(5)(a).

68 Id., Art. 30, 9 NAFTA T.M. at 20; Labor Accord, Art. 35, 9 NAFTA T.M. at 52.

69 Environment Accord, Art. 39(1), 9 NAFTA T.M. at 24–25.

70 Id., Art. 42, 9 NAFTA T.M. at 25.

71 GATT, Dispute Settlement Panel, supra note 14, paras. 6.2, 6.3, 30 ILM at 1622–23.

72 Environment Accord, supra note 2, Art. 3, 9 NAFTA T.M. at 4; Labor Accord, supra note 2, Art. 2, 9 NAFTA T.M. at 37–38.

73 Environment Accord, Art. 28, 9 NAFTA T.M. at 20; Labor Accord, Art. 27, 9 NAFTA T.M. at 48.

74 See Alan F. Holmer & Judith H. Bello, U.S. Trade Law and Policy Series No. 22: Trade and the Environment: A Snapshot from Tuna /Dolphins to the NAFTA and Beyond, 27 Int'l Law. 169, 176 (1993); see generally Aggressive Unilateralism: America's 301 Trade Policy and the World Trading System (Jagdish Bhagwati & Hugh T. Patrick eds., 1990).

75 By encouraging and supporting the highest levels of national regulation, the Side Agreements also impliedly reject what may be called the “trickle down” development argument. This is the argument that exclusive focus on free trade is justified in that over time this will increase a developing nation's wealth so that it can afford to protect the environment and the health of its citizens, and assure minimum standards of labor welfare. The argument has always been fallacious, given the reality that environmental and social harm is often irreversible.

76 Environment Accord, supra note 2, part 4, 9 NAFTA T.M. at 16.

77 [T]he post-cold-war era requires a strategic economic and trade policy, global in scope and built on our foundation as an economic and export superpower.

… .

… [I]t is my goal to develop a strategic network of free trade agreements with Latin America; with Poland, Hungary, and Czechoslovakia; and with countries across the Pacific.

Remarks by President Bush to the Detroit Economic Club (Sept. 10, 1992), 1992–93 Pub. Papers: 2 George Bush 1525, 1528.

78 Dudley Althaus, Gore Says NAFTA a Beginning: “Community of Democracies” Seen for Hemisphere, Hous. Chron., Dec. 2, 1993, at A1.

79 Stephen G. Hirsch, Free Trade Pact Rapped Over Dispute Resolution, RECORDER, Sept. 4, 1992, at 1, 1 (quoting Professor of Law Robert Hudec of University of Minnesota Law School, so characterizing the dispute resolution procedures of NAFTA).

80 For a discussion of the range of contemporary applications, and the thesis that international arbitration involving commercial relations has more generally moved in the opposite direction, see David D. Caron, The Nature of the Iran-United States Claims Tribunal and the Evolving Structure of International Dispute Resolution, 84 AJIL 104, 152–55 (1990). Professor Caron notes, however, the natural connection between interstate arbitration and politicization, stating, “[t]he trend away from classic interstate arbitration is desirable politically because it reduces the significance of the state as a world actor in areas where the sensitivities of the state need not be implicated.” Id. at 154-55. Accordingly, where we have an agreed arbitral process that is essentially interstate, the sensitivities of the state are and must be implicated.

81 Ronald G. Atkey, Dispute Resolution Mechanisms Under FTA and NAFTA: A Comparison, Int'l Law Practicum, NYSBA, Spring 1993, at 5, 5; Kristin L. Oelstrom, A Treaty for the Future: The Dispute Settlement Mechanism of the NAFTA, 25 Law & Pol'y Int'l Bus. 783 (1994).

82 NAFTA, supra note 1, Arts. 2005(6), 2007(2), 32 ILM at 694–95.