CIESIN Thematic Guides

North American Free Trade Agreement

In September 1992, Canada, Mexico, and the United States signed the North American Free Trade Agreement (NAFTA). NAFTA's main objectives, according to the official three-nation summary of the agreement, are to "eliminate barriers to trade, promote conditions of fair competition, increase investment opportunities, provide adequate protection for intellectual property rights, establish effective procedures for the implementation and application of the Agreement and for the resolution of disputes and to further trilateral, regional and multilateral cooperation."

NAFTA is a pioneering agreement from the view of trade and environmental policy, because it directly addresses environmental laws and standards, and includes an Environmental Side Accord. Environmental issues are addressed in NAFTA's preamble, in article 104 of its objectives, and in its chapters on investment, agriculture and sanitary and phytosanitary measures, and dispute settlement. NAFTA's explicit inclusion of environmental issues in dispute settlement jurisdiction is one of the more significant (and controversial) links between trade and environmental policy in the agreement.

The Environmental Side Accord establishes an environmental cooperation commission, in addition to asserting each country's right to set its own environmental standards and encouraging the signatories to improve and enforce their standards and laws. Among the commission's duties are to mediate disputes over any "persistent pattern of failure to effectively enforce an environmental law relating to a situation involving the production of goods or services traded between the Parties," according to the summary of the environmental side agreement

A discussion of environmental issues in relation to NAFTA is presented in the environment chapter of the U.S. Congressional Budget Office study "A Budgetary and Economic Analysis of the North American Free Trade Agreement" (1993). The Canadian government (1992) also produced an environmental analysis of NAFTA. Kelly (1993) compares negotiating positions and the final agreement text of the Environmental Side Accord in "NAFTA's Environmental Side Agreement."

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