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11/15/93

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NAFTA first trade agreement to address environmental issues

STANFORD -- Despite complaints from some environmentalists, the North American Free Trade Agreement marks a watershed for the environment in international economic negotiations, William K. Reilly, the former head of the U.S. Environmental Protection Agency, said at Stanford Friday, Nov. 12.

Reilly's comments on NAFTA's long-term environmental ramifications were made during a two-day meeting of about two dozen world political, academic and business leaders who make up the international advisory council of Stanford's Institute for International Studies. Reilly is a visiting professor this year at the Stanford institute.

From a historical perspective, Reilly said, "NAFTA is a dream treaty for the environment," because it is the first trade agreement to address environmental as well as economic issues. If Congress passes it, he said, he expected the agreement to be a model for future world trade agreements. "We are asking more of our economic and trade relationships than we have ever asked before."

Eventually, he said, the world may need permanent institutions to handle ongoing negotiations about the environment, the way it has now for trade.

The trade agreement is the first to call for "upward harmonizing" of the environmental laws of the two parties, Reilly said. Mexico's environmental protection laws must be raised gradually to the levels that exist already in the United States, and the Mexican government has promised to borrow large sums from the international community to clean up its environment.

The agreement also calls for scientific research as a basis for raising environmental concerns, Reilly said, which will prevent protectionists from using the environment as an excuse for banning foreign products.

"Environmentalists have to acknowledge it's not in their interest to see their principles abused" by protectionists in this country or abroad, he said.

NAFTA also would subject Mexican products to potential trade bans if they are not processed in accordance with such American laws as the one banning the killing of dolphins in the harvesting of tuna. Business people do not like this, he said, but they need to understand that the environment is a worldwide political issue that shows no signs of disappearing.

"You don't want to get on the wrong side of the dolphins," he said he routinely tells business people, "because they'll beat you every time."

Despite his support for environmental provisions in NAFTA, Reilly said he opposed trying to do the same things in the Uruguay round of GATT - the General Agreement on Tariffs and Trade - the international trade negotiations that are in their sixth year. "We've been negotiating for six years. It's too late for that."

Eventually, he said, "I think we'll have to reconsider our [international] institutions and consider something parallel to the GATT for the environment. We don't now have structures for regular, ongoing conversation."

Stanford's Institute for International Studies includes economic and environmental components. Among other things, researchers are trying to develop market-based incentive structures, such as tradable pollution permits, to better protect the environment than the more common command-and-control regulations on pollution, said Donald Kennedy, a biologist and former president of the university.

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