NAFTA's Trade-Environment Institutions: Regional Impact, Hemispheric Potential _*

John Kirton

Center for International Studies, USC

Abstract

The strength of the regionalism embodied in NAFTA and its implications for countries outside the North American region can be assessed by examining the operation, over their first four years, of the trade and environment institutions created to give effect to the innovative NAFTA trade-environment regime. Those NAFTA created or inspired trade institutions with environmental responsibilities and relevance have succeeded during this time in constraining U.S. regulatory protectionism and engendering balanced, non-hegemonic regulatory convergence, in areas where U.S. ecological vulnerability is high and where U.S. export interests seek to protect their high and growing trade surplus in the regional market. In addition, the Commission for Environmental Cooperation created by NAFTA's environmental side agreement, in its cooperative, enforcement and trade environment functions, has, due to its organizational capacity, often operated with some autonomy to improve the North American environment in ways that do not impose the preferences of a dominant U.S. on a far weaker Mexico. Given the autonomous effect of the NAFTA institutions in improving regional performance, especially when reinforced by U.S. ecological vulnerabilities and successful export interests, there are grounds for anticipating a broadening of NAFTA's trade-environment regime into the larger hemisphere.

La fuerza del regionalismo, como parte integral de NAFTA, y lo que esto implica para aquellos fuera de la región, puede ser analizado mediante el estudio de las operaciones, durante los últimos cuatro años, de las instituciones de comercio internacional y medio ámbiente creadas para llevar acabo el innovador regimen de comercio internacional y medio ámbiente de NAFTA. Aquellas instituciones con responsabilidades y relevancia en el area del medio ámbiente han logrado contener las regulaciones proteccionistas provinientes de los EEUU, construyendo un balance, y "non-hegemonic" harmonizacion, especialmente en aquellas areas en las cuales los EEUU sufre gran intervulnerabilidad écologica y los intereses de exportadores buscan proteger mercados regionales. La Comision de Co-operacion en el Medio Ambiente, creada por el tratado de medio ámbiente que acompaña a NAFTA, en sus funciones de co-operacion, de enforzar, y de comercio internacional en el medio ámbiente, debido a su capacidad como organizacion, ha funcionado con cierta autonomia, y en formas que no imponen principalmente las preferencias de EEUU como país dominante. Gracias a esta autonomia de las instituciones de NAFTA en sus funciones regionales, hay muchas razones por las cuales podemos ver en el futuro, un ampliamiento del régimen de comercio internacional y medio ámbiente de NAFTA a una mas grande area del hemisferio.

1. Introduction

The coming into force of the North American Free Trade Agreement (NAFTA) and its side agreements on January 1, 1994 produced major legal and institutional changes in the traditional economic and environmental relationship among the United States, Mexico and Canada. The core NAFTA text and accompanying North American Agreement on Environmental Cooperation (NAEEC) gave North America and the world an innovative trade-environment regime that accorded environmental principles a more equal and integrated place than ever before. It transformed three, at times distant, bilateral relationships, with virtually no regular stand-alone, three-way intergovernmental connections, into an intense, multifaceted, trilateral relationship spawning an emergent regional community. Moreover, it brought regional international organization to North America, as the informal, binational, diplomatic processes of old were supplemented by bodies - for the environment, labour, and (prospectively) trade - with single secretariats, budgets, headquarters and governing charters. Taken together, these changes heralded a fundamental transformation in the dominant regime for regional North American governance.

Yet whether these NAFTA-created novelties in legal principles, rules, and institutions represent a genuine case of regime change in practice, and one that will broaden to embrace other countries in the western hemisphere, depends critically how effective this new NAFTA trade-environment regime, and in particular the institutions which implement it, have been in their first four years of operation. Some scholarly observers and NAFTA's many critics argue that NAFTA's new environmental institution, the Commission for Environmental Cooperation (CEC) has done little to fulfill what they see as its core purpose of ensuring the effective enforcement of national environmental regulations (Mumme and Duncan 1996, Public Citizen 1995). Such conclusions are consistent with analyses of the intense, often special Canada-US relationship which have pointed to the limited effectiveness historically of bilateral institutions in what should be an "easy" domain for liberal-institutionalist processes to unfold (Swanson 1978, Spencer, Kirton and Nossal 1982). They are also compatible with those examining multilateral "institutions for the earth"; who conclude that very little environmental change has come as a result of this activity (Haas, Keohane, and Levy 1993, Haas, Keohane, and Levy 1996).

Yet other assessments are more favourable to the basic precepts of liberal-institutionalist theory. Some see the capacity and early record of the Commission of Environmental Cooperation as pointing to an institution with considerable potential (Munton and Kirton 1994; Johnson and Beaulieu 1994, Abbott 1996, Audley, 1997). Still others view the NAFTA institutions more broadly as engendering effective environmental cooperation among the parties in several instances, and promising to constrain national and subfederal environmental regulations that serve as barriers to trade (Kirton and Fernandez de Castro 1997, Kirton 1997a, Weintraub 1997, Rugman, Kirton and Soloway 1997b). Providing general support to this perspective are those instances in the multilateral realm where the rules of environmental regimes have made a distinct difference on national government behaviour (Mitchell 1994).

This paper joins the debate to argue that during its first four years in operation, NAFTA's trade-environment regime has effectively encouraged communication, capacity building and compliance, constrained national regulatory protectionism, engendered a trade-facilitating, high level regional convergence of national environmental regulations, and served as an incubator and a foundation for regional co-operation in broader international fora, including the prospective expansion of NAFTA into the hemisphere. The impact of vastly superior U.S. power and leadership remains evident, as action has been most advanced in areas where US ecological vulnerabilities and US export interests in the region are most acute. Yet the autonomous, equalizing force of the regime and the underlying common trade interests and ecological intervulnerability of the three countries is evident in the broadly balanced and principle-supporting pattern of interaction and outcomes in several areas. The NAFTA trade-environment regime and institutions thus serves as a sound foundation for constructing broader free trade agreements in the hemisphere. ₁

2. NAFTA as a Trade-Environment Regime

The NAFTA trade and environment agreements and institutions constitute a robust, if nascent, regional regime - a set of "explicit or implicit principles, norms, rules and decision making procedures around which actors expectations converge in a given area of international politics" (Krasner 1983). They are usefully conceived of more broadly as institutions which embrace regimes, bureaucratic organizations, and informal conventions, and thus consist of "persistent and connected sets of rules and practices that prescribe behavioural roles, constrain activity, and shape expectations" (Haas, Keohane and Levy 1993:4-5). Regimes and institutions are employed here, in conventional fashion, as intervening variables which mitigate the impact of differences in member countries' and policy communities' capabilities and interests to constrain the otherwise self-interested unilateral behaviour of their dominant members (Keohane 1977, Keohane 1984).

Regime theory has been criticized for paying insufficient attention to how powerful countries, notably the United States, disproportionally shape and benefit from the apparent public good which a regime represents (Strange 1996). This criticism is of particular force when regime theory is applied to the "hard" case of North America, where profound disparity in capability abounds. In conventional cross-national terms, the United States, in overall economic weight is ten times larger than Canada and almost twenty times larger than Mexico. Equally important, in transgovernmental and transnational terms, on a region-wide basis, at the national and subnational levels, a historically separate, long established and powerful trade policy community confronts a more recent, less capable environmental community (Young 1994:25-6). The NAFTA trade-environment regime's effectiveness thus depends on its ability to offset this profound disparity in order to engender balanced trilateral and trade-environment cooperation and capacity building, to constrain the propensity of the powerful United States and its national and subfederal governments to adopt environmental regulations with protectionist effect, to promote regional regulatory convergence through mutual adjustment, and to engender regional cooperation in multilateral forums. Of particular interest is the potential for the regime through its "enforcement" mechanisms and regional regulatory convergence to constrain the ability of U.S. industries and environmental groups to form coalitions of the "green and greedy" that seek and secure such national regulations in their protectionist self-interest (Vogel 1995, Oye and Maxwell 1994, Vogel and Rugman, 1997).

Analytically, the autonomous impact of the NAFTA trade-environment regime can be assessed by examining both behavioural processes and substantive outcomes, against the initial preferences and underlying interests of both the three member countries and the region-wide trade and environment communities. The behavioural dimension examines the three countries' actions, through the institutions, to fulfill the regime's non-discretionary and permissive mandates through trilateral interaction and openness, equal inititation of proposals, and full flexibility and equality on the coalitions that form and prevail. The substantive dimension explores how institutional outcomes equally reflect the initial preferences or underlying interests of the three countries, give equal weight to the claims of trade and the environment, and most broadly, reflect the core principles of sustainable development as articulated in the principles, norms and rules of the NAFTA and NAAEC. The regime is considered effective to the extent that trilateral, and trade-environment, interaction and equality, rather than US and trade actors/interests prevail, and to the extent that differences among the three countries are superseded by those between region-wide trade and environment communities. It is ultimately important to differentiate between the interests of the US as a country and the environmental interests of the North American region.

3. NAFTA's Trade Institutions in Operation

A review of NAFTA's principles, norms and rules reveals that they did bring a major change in the prevailing trade-environment framework, by expanding the force of environmental protection while maintaining trade openness at the regional level (Munton and Kirton 1994, Housman 1994, cf. Audley 1997). However the NAFTA regime's decision making procedures, as operationalized in the institutions that interpret, implement and extend the rules, have given less emphasis to this embedded normative structure. Even so, among NAFTA's 50 trade institutions, the dozen with direct environmental responsibility have in several cases fostered a regular, balanced, trilateral communication, confidence and capacity building, high level regulatory convergence, and regional co-operation in multilateral forums that tempers the autonomous actions of U.S. and trade actors, including their ability to impose environmental regulations with protectionist impact.

From an environmental perspective, NAFTA marked a sharp departure from the Canada-U.S. Free Trade Agreement (which had minimal environmental provisions), from earlier Canada-U.S. agreements for environmental co-operation (which only tangentially addressed economic affairs) and from the prevailing trade-environment regime in the GATT and WTO (Rugman and Kirton with Soloway, 1998). The core NAFTA trade text began, in its preamble, by specifying that the purpose of the trade agreement was, inter alia, to proactively "promote sustainable development," and to "strengthen the development and enforcement of environmental laws and regulations", as well as undertaking "economic activities in a manner consistent with environmental protection and conservation." (Canada 1992). NAFTA also specified that its trade and economic provisions would not override members' obligations to the world's major multilateral environmental agreements - covering trade in endangered species, ozone depleting substances, and hazardous waste movement.

This deference to the concerns of the global ecology over the continental economy was reinforced by NAFTA's detailed commitments. Most notably Chapter Seven, on sanitary and phytosanitary standards, enabled each NAFTA country to set the level of environmental protection it considered appropriate. Chapter Nine conferred a similar right for standards measures generally. In both cases, however, these rights were disciplined by the requirement for more transparent and justifiable risk assessment procedures to avoid the use of trade-restricting environmental standards. Chapter Eleven's Article 1114 prohibited a country from lowering environmental standards or their enforcement in order to increase or maintain investment in its territory, and mandated intergovernmental discussions in the event of noncompliance.

Equally importantly, the core NAFTA text gave many of the specific trilateral institutions it created mandatory powers to interpret, implement and extend specific responsibilities for environmental action. In some instances, notably dangerous goods transportation and automotive emissions, it identified a precise timetable and target for action. It also offered permissive mandates for some of these institutions to act on specified environmental subjects should they so wish. More generally, the mandates of other bodies, such as agriculture, dealt with issues of such clear environmental relevance that they too, with the Agreement's preambular authority, could operate in environmentally enhancing ways, if they so desired.

A review of the performance of NAFTA's environmentally-relevant institutions over their first three years of operation shows several patterns (Kirton and Fernandez de Castro, 1997). Firstly, after a slow start, there has been since 1996 a sharp takeoff in the activities of these bodies, with virtually all now having established their procedures, structures, priorities and work plans. Regular, intense, trilateral interaction is now a reality. Secondly, there has been a notable institutional proliferation. The 26 bodies created by NAFTA have now doubled in number and new trilateral bodies with an environmental relevance have emerged within and outside the NAFTA structure across a broad array of issue areas. Thirdly, there has been a trend toward balanced and open trilateral co-operation, as Mexico has become a fuller partner in the problem-solving spirit that has (amidst the inevitable differences of interest and hard bargaining) long characterized the Canada-U.S. relationship. Fourthly, there has been a wide variation in performance, with some bodies, such as those for the Transportation of Dangerous Goods and for Pesticides, having rapidly generated a real high-level convergence of standards through mutual adjustment, while others, notably the Automotive Standards Council and Subcommittee on Land Transportation, have been slow to act. Finally, at the ministerial level and elsewhere, NAFTA's trade institutions and the Commission for Environmental Co-operation have done little to interact to produce an integrated, balanced and thus stable trade-environment regime.

More specifically, NAFTA institutional activity has had four effects on capacity-building, communication, regulatory convergence and broader regional cooperation: i) it is encouraging and assisting Mexico to introduce environmental regulations where none existed before; ii) it is leading to an understanding of legitimate geographic and environmentally-based differences in standards (for example, Mexico testing for automotive emissions at a higher altitudes than does the United States); iii) it is identifying areas where Mexico has higher and different standards than the United States, and incorporating an array of such features from all three countries into a common approach; iv) it is aimed at developing common North American positions in broader international forums, both to shape the broader regime to meet specific North American interests (and thus benefit North American firms) or to ensure broad multilateral harmonization as a value in its own right.

NAFTA's "enforcement" or dispute settlement mechanisms have also operated in ways that have constrained national environmental regulations with protectionist effect, without inhibiting the emergence of high-level regional standards. Throughout the ongoing NAFTA debate, environmental and other critics of the Agreement had raised concerns about how effectively the new textual commitments to the environment would be implemented through a NAFTA dispute settlement process that was based almost entirely on trade expertise, with limited provisions for the incorporation of environmental sensitivity, science, and non-governmental groups (Orbuch and Singer 1995). Yet in the limited experience thus far, NAFTA's three major dispute settlement mechanisms (in Chapters 19 on antidumping, subsidies and countervail, Chapter 20 on general disputes and Chapter 11 on investment disputes) have had a neutral or slightly constraining effect on national level regulations with protectionist impact.

With two exceptions, these mechanisms have not been mobilized during their first four years against national environmental regulations, as virtually no cases with a clearly environmental character have been brought before these NAFTA mechanisms. It is still too soon to definitively determine, even based on CUFTA precedents, whether the presence of the NAFTA mechanism is having a deterrent effect on the passage or use of environmental regulations with protectionist impact. Yet the paucity of such cases suggests that North American industry is unable to identify any clear protectionist impact of national or subfederal environmental regulation.

The two exceptional cases have both arisen under NAFTA's novel investment mechanism. The first case, MMT, involved a U.S. firm complaining under Chapter 11 about Canadian regulatory action using trade restrictions for environmental purposes by banning the importation and interprovincial trade of the environmentally-harmful gas additive MMT (Rugman and Soloway 1997, Soloway 1997). It is not yet clear how NAFTA's Chapter Eleven process will treat the case. In the interim, even though independent court action in the United States has temporarily made the use of MMT legal in the United States, about 80 percent of the U.S. industry is voluntarily refusing to use the MMT additive, pending a final legal determination. The second case about to enter a Chapter 11 process involves a U.S. owned firm (Metalclad) operating in the hazardous waste business in Mexico, complaining that a Mexican state government is refusing to allow its new site to open, on the grounds it does not meet environmental and building regulations. In the two cases thus far, it is US multinationals in the oil and environmental services industries respectively using the NAFTA mechanism to ensure access to the Canadian and Mexican market. Yet while American and trade/investment interest are thus far dominant, the environmental regulation could ultimately prevail in the Canadian case, and real environmental values rather than traditional regulatory protectionism in the Mexican one.

The breadth of subjects covered by the 50 NAFTA institutions and the activities with which they deal (many of which are in subfederal jurisdiction) suggest that the NAFTA institutions will have an ever stronger constraining effect in the future on state-level environmental regulatory protectionism, and produce greater region-wide regulatory convergence. The existing trend is toward convergence at higher levels of environmental regulation. Only in the case of pesticides are there concerns that the NAFTA process is causing the higher (in this case Canadian) national standards to be lessened.

This high level harmonization is not primarily a hegemonic regionalization of U.S. regulations and preferences. The emergent trilateralism often does converge on state-of-the-art U.S. environmental regulations. But this process is not primarily one of the United States using NAFTA to impose its standards on its partners, particularly in ways that benefit U.S.-based firms. Rather, much activity takes the form of a dialogue aimed at understanding better the very different regulations and regulatory-standards-setting, testing/assessment and enforcement/compliance systems within each of the three countries. The NAFTA process at a minimum lowers transaction costs, notably the information and confidence barriers, that otherwise inhibit access to all three markets. At a maximum it engenders a convergent movement upward through mutual adjustment.

Because NAFTA's environmental regime emphasized the effective enforcement of national regulations, it has thus far delivered less international regulatory convergence, in the myriad forms this process assumes, than the European Union, where international harmonization formed the focus of the regime (Esty and Geradin 1997). Yet the NAFTA environmental regime and institutions have created a clear bias towards regional convergence. This is best conceived of as a dynamic process unfolding in discrete, if partially overlapping, stages: i) communication among actors to lower transactions costs and thus enhance market access and environmental learning; ii) capacity building to develop modern regulatory systems in partner countries; and iii) convergence of regulations toward a common system and state. The NAFTA regime in its first three years has produced through this process considerable convergence in environmental regulations, despite the three countries disparity in overall capabilities and initial diversity in economic and regulatory development.

Across the six institutions where NAFTA's work on environmentally-related regulations is concentrated, however, there has been a wide variation in the degree of convergence sought and secured, the level of environmental standards aimed at and achieved, and the trilateral rather than bilateral or unilateral character of the bargaining and outcome. The Working Group on the Transportation of Dangerous Goods (LTSSV) and the Technical Working Group on Pesticides (TWGP) stand as successful cases of rapid, strong, high and balanced convergence based on a broadly multilateral rather than U.S. national standard. In sharp contrast, much less of the convergence specified as a goal in NAFTA has occurred in the Working Group on Vehicle Standards (LTSS I) and the Automotive Standards Council (ASC) where U.S. and trade/industry preferences have largely prevailed. The Committee on Sanitary and Phytosanitary Standards (CSPS), and the Committee on Agricultural Trade (CAT) have a mixed record, with the latter moving to address regional interests in broader multinational forums.

This variation across the six cases reflects the impact of the six factors. The first, causing extensive, balanced, high-level regulatory convergence, is the visible, concentrated and obvious transborder character of the environmental harm and resulting ecological vulnerability of the United States. An accident involving the transportation of dangerous goods is likely to attract publicity, and damage political and corporate reputations and resources, in contrast to less visible, long-term, diffusely impacting automotive emissions or pollution prevention measures. Moreover sprayed pesticides flowing by air or water from Mexico into the United States are more likely to galvanize political pressure and action from geographically concentrated constituencies than are the more subtle issues dealt with by the CSPS. The direct ecological vulnerability of the United States to threats emanating from partner jurisdictions, especially Mexico, creates an effective chemical "intervulnerability" and a powerful incentive for action (Doran 1985). This is a process of "dynamic intervulnerability" as NAFTA's trade provisions increase transportation and truck travel in particular through the United States and with it the threat of chemical spills from trucks (more than rail cars or sea tankers) on US soil. A full 80% of US-Mexican and 60% of US-Canadian freight is carried by trucks, with 40% of all US exports to Mexico flowing through Texas highways and roadways, and moves to create more Canada-Mexico road corridors are underway (Fry 1997). In the particular case of pesticides, U.S. ecological vulnerability to Mexico (and the domestic political need of President Clinton for an additional Congressional vote to secure NAFTA's passage) placed pesticides prominently on the agenda of the NAFTA institutions. Even then, the three national governments (and the institutions themselves) retained wide latitude in determining how the issue would be processed and resolved. Here the U.S. administration used the NAFTA institutions to deflect local (in this case Texan) demands for punitive national action.

A second cause of high level regulatory convergence is the presence of a "nested regime" in the broader international system that fosters a nonhegemonic framework for regional action (Aggarwal 1981). Work on the transportation of dangerous goods, where harmonization has proceeded fastest and furthest, is explicitly grounded in, and guided by, the established regime of the broader United Nations Economic Commission for Europe. The successful case of pesticides has the similarly multilateral OECD as its nest. Automotive emissions activity lacks a similarly strong multilateral nest. In the partially successful agricultural cases, the three North American countries look abroad primarily to advance regional interests in the formation of the still nascent and non-Eurocentric regimes forming in the FTAA, APEC, and the WTO.

A third cause is the insulation of the NAFTA institutions from direct, undiluted corporate influence. LTSSV on dangerous goods transportation contains only national government officials, while the TWGP incorporates a broad array of stakeholders, including both industry and ENGOs. In contrast, the ASC relies on an national industry advisory committee in Canada, the Automotive Advisory Council, to serve as its working .

A fourth, but less salient, factor is the functional need to harmonize standards to reap NAFTA's trade gains. Thus transportation operations have seen rapid action as trade requires road transportation which enhances the probability of chemical spills. In contrast, in automotive emissions, the trade barriers and incentives are less apparent. Yet the cognate area of trucking standards, where Texas refused to open the border to Mexican trucks by the NAFTA-specified deadline, and where Mexico granted Canada early and privileged access to the Mexican market, shows that industry-rewarding functionalism or "engrenage" is by itself not enough. It also reveals politically motivated preferential action by NAFTA's two lesser powers to offset the gains otherwise available to the much larger U.S .

A fifth factor is the cost to powerful industries of the high level harmonized standards. Dangerous goods work has proceeded rapidly on creating a regional emergency response guide for small packages. But progress has been slow for large containers, halogenated organic chlorides (where the chemical producing industry is seeking to shift the cost to the railroads by requiring super-strong tanker cars), and hazardous waste shipment (where the Canadian government was seeking to protect the commercial prospects of an Alberta disposal plant). In contrast, in the case of pesticides, action is spurred by the prospect that a single standard and test covering the entire region would facilitate trade by lowering costs (in money and time) to government and industry as well as lead to improved environmental protection.

A sixth factor is the support of MNEs most likely to be able to afford and benefit from a single, ultimately global system, and their relative influence over dispersed transportation interests and subfederal governments with a poor record of harmonizing on their own. In the case of dangerous goods transportation, officials in large national governments and large MNEs have a joint interest in preventing provincialism, with the transaction costs its autonomous regulatory activity brings. Particularly in Canada, NAFTA is seen to provide an institutional instrument to engender an interprovincial uniformity that could not be secured in the pre-NAFTA years.

However there are limits to MNE-driven "multilateralism" as an explanation. The case of automotive emissions reveals the reluctance of a large, concentrated, U.S.-owned industry (despite its high degree of North American integration and transnational character) to subject itself to a trilateral dialogue dominated by government officials from departments other than the industry and commerce sector where it traditionally has received a sympathetic hearing. Behind these national bureaucratic factors lie others - notably the difficulty the automotive industry has experienced in coming to an accommodation with the oil industry, and the automotive industry's continuing preference, despite occasional disappointments, for voluntary standardization at less than government-envisaged levels (Kirton 1997b) .

The absence of regional convergence in the "failed" cases is, on the whole, not driven by U.S. coalitions of environmentalists and firms insisting on unilateral autonomy and thus national environmental regulatory protectionism. Such coalitions might be expected to form to resist regional regimes which constrain their freedom to secure the national or subfederal-level regulations they desire to protect the home market for local firms (De Sombre 1995, Vogel 1995, Vogel and Rugman 1997). Yet, with the exception of pesticides, environmentalists are notable by their absence across the spectrum of NAFTA economic institutional activity. They are also absent from behind-the-border bargaining in the cases of environmental regulatory convergence failure.

Nor have there yet emerged regional coalitions seeking to use the NAFTA institutions to gain environmental rules for the North American region at the expense of outside firms seeking to export into, or operate in the region, or in support of North American firms wishing to develop the critical regional mass to penetrate markets outside. Their general absence is apparent in the early preferences of members of the North American Trilateral Standardization Forum, the private-sector driven trilateral body that liaises with the government-only Committee on Standards-Related Measures (CSRM) and meets with the CSRM immediately before CSRM meetings. The Forum's Mexican members, representing an economy with 85 percent of its trade concentrated on the U.S. market on average, have some tendency to prefer distinctive regional standards, as do smaller, domestically-oriented U.S. firms with few export interests. Yet Mexican members have displayed an initial affinity for co-operating with Canada, and a distrust of solutions embracing the United States. Canadian members come from an economy where 38% of GDP comes from goods and services exports, where 81% of merchandise exports go to the US and where Canadian factories produce more for the export than the domestic market (Fry 1997). But for reasons of diversification and a multilateralist ideology, they have displayed a general preference not for US based regional standards but for a single multilateral regime of "one standard, one test, one mark." The U.S. members, coming from a country that sends only one-third of its exports to Canada and Mexico, rationally prefer multilaterally-compatible regional standardization. This rational multilateral preference is reinforced by Mexico's reluctance to accord U.S. firms privileged access to their markets.

Taken together, then, there are several grounds for concluding that NAFTA's economic institutions, without U.S. hegemony or "coalitions of the green and greedy" behind them, are leading to a balanced, trade-facilitating, high level convergence of environmental regulations. This occurs most strongly in cases where the environmental damage is direct and visible and the resulting ecological vulnerability of the United States high, where there is a multilateral nest, and where the institutions are insulated from industry influence and the costs to industry low. The ecological vulnerability that offsets superior US and trade community capability, multilateral institutions and ideology and the insulation of state actors from singular industry influence through the NAFTA institutions generates balanced regional regulatory convergence.

Yet there remains evidence of predominant U.S. power and interest exercising its impact at a second, more structural level. The NAFTA institutions have succeeded in producing successful, rapid, high level convergence of environmental regulations in areas (dangerous goods transportation and pesticides) where the chemical industry is most involved. They have failed to do so where the interests of the automotive industry at stake. (The agriculture bodies stand as mixed cases). Consistent with this pattern is a model of "secure the regional export market" for competitive of U.S. business interests rather than one which emphasizes the protectionist influence of competitive US firms or the transaction-cost need of US-based multinationals with regionally integrated production systems to secure a single regional standard.

As Table A indicates, high level regulatory convergence through NAFTA's institutions arises where the NAFTA market has expanded most for the home-based exports of the U.S. industry most affected from 1990 to 1994 (Row Two). Canadian and Mexican interests matter much less. As Table B shows, success comes most in sectors in which the relevant U.S. industry has, more specifically, an export surplus with a) its NAFTA partners, b) with both NAFTA partners (and hence an incentive to harmonize on a trilateral basis); c) where those surpluses are increasing from 1990 to 1994 (as NAFTA takes hold in anticipation and action), and d) where the regional surplus is a large portion of U.S. industry's global surplus. There is thus a fusion between the export interests of competitive U.S. industries in the NAFTA marketplace, and the high-level environmental regulatory convergence that will lower their transaction costs and ease their access to sustain their success.

Table A NAFTA's Share of US and Canadian Exports, 1994, 1990-1994
	Chemicals	Agriculture	Autos
1. NAFTA Share of US Exports 1994	26.6%	24.0%	34.2%
2. NAFTA Share of US Exports 1990- 1994	4.6%	4.5%	1.7%
3. NAFTA Share of Cdn Exports 1994	80.1%	55.4%	96%
4. NAFTA Share of Cdn Exports 1990- 1994	10%	14%	1.8%
5. NAFTA Share of Can- US Exports 1994	53.4%	39.7%	65%
6. NAFTA Share of Can-US Exports 1990- 1994	7.3%	9.3%	1.8%

Table B US Exports over Imports 1994 (™ 1990-1994) ($US millions)
	Chemicals (2)	Agriculture (2)	Autos (2)
Canada	2,413 (+954)	-375 (-286)	-1,879 (-3,448)
Mexico	3,283 (+1,682)	128 (+972)	-4, 323 (-2,621)
NAFTA	5,695 (+2,636)	-247 (+686)	-6, 202 (-6,069)
World	16,122	6,789	-82, 091
NAFTA as % World	35%	-3.6%	7.6%

4. NAAEC's CEC in Operation

The institutional effectiveness of the NAFTA trade-environment regime can also be seen in the operation of the institutions created under the auspices of the NAFTA environmental side agreement - those of the CEC. The CEC has a threefold institutional structure: a ministerial-level Council as the governing body; a single Secretariat; and a multistakeholder Joint Public Advisory Committee (JPAC) to advise the Council on any matter within the scope of the Agreement. There is also provision for a National Advisory Committee (NAC) and a Government Advisory Committee (GAC) within each of the three countries, and for standing committees, working groups or expert groups as the Council deems appropriate.

At the institutional apex stands the "Council", which is, at a minimum, an annual meeting of the cabinet-level or "equivalent representatives" of the three countries. Although the Council will normally operate by consensus, and thus equips each of the three countries with a veto, the Council moves from pure national control to supranational constraint in several areas. Only a two-third majority is required to instruct the Secretariat (under Article 14-15) to prepare a factual record on allegations of government non-compliance made by interested parties, to make the final factual record public or available to the JPAC, to make public Council recommendations to parties about the resolution of a dispute, and to convene an arbitral panel to consider an alleged persistent pattern of enforcement failure (Part 5). In addition, in areas where the Secretariat takes the initiative, no single country can veto appointments to the Secretariat proposed by the Executive Director, or prevent the Secretariat from preparing an Article 13 report "on any other environmental matter related to the co-operative functions of this Agreement."

The CEC's single Secretariat, located in Montreal with a branch office in Mexico City, is mandated to provide technical, administrative and operational support to the Council and to committees and groups established by the Council. There is an overall Executive Director, who in 1997 supervises a staff of 50 full time employees, and oversees a budget of US$9,942,000, contributed equally by the members (CEC 1997b:91). Members of the Secretariat are to be recruited on the basis of merit, not receive instructions from any external authority other than the Council, and issue a public report on the activities under the Agreement, including the state of the environment in the territories of the parties. The Secretariat also can, under Article 13, initiate investigations on any matter within its workplan or related to its co-operative function. It further, under Article 14-15, decides which complaints of government non-enforcement from societal actors it will recommend to the Council for action, in the form of the preparation of a factual record.

The CEC's third major component is an innovative, 15 member "Joint Public Advisory Committee," conceived as a single trinational body rather than three national sections meeting together. Its role is to ensure citizens of the three countries contribute strongly to the efficient execution of the CEC work and mandate. In addition, each member country is empowered by the NAAEC to create a National Advisory Committee (NAC) that advises their Commission member. The United States established its 14 member NAC in September 1995. Canada created its six member NAC in August 1996. Mexico followed a different model, assigning its NAC responsibilities to the six senior members of its five regional sustainable development councils that together comprise its National Consultative Committee for Sustainable Development. There is also a parallel structure of Government Advisory Committees within the U.S. and Canada (with Canada's body labeled the "Government Committee" as a consequence of its broader role).

The CEC soon created additional bodies, notably an intergovernmental committee of Alternative Representatives or "Alternates" to the ministers, at the Assistant Secretary-level, to manage the work of the CEC and its Secretariat. It is assisted by a lower-level General Standing Committee (GSC). There have also emerged several intergovernmental Working Groups to provide direction and assistance in specific programme or project areas. Finally, individual CEC project teams are instructed to work with intergovernmental bodies.

The CEC has a broad program, with an emphasis on environmental co-operation and trade-environment integration, rather than environmental enforcement. Its mission statement notes: "The CEC facilitates co-operation and public participation to foster conservation, protection and enhancement of the North American environment for the benefit of present and future generations, in the context of increasing economic, trade and social links between Canada, Mexico and the United States (CEC 1997b:101). To fulfill this mandate, the CEC currently maintains programs in eight broad areas. The first, in the domain of environmental co-operation, is Environmental Conservation, focused on the protection of habitats and species. The second, dealing with standards co-operation and convergence, is "Protecting Human Health and Environment," including risk reduction, climate change and energy efficiency, and environmental management. The third is Enforcement Co-operation and Law. The fourth, "Environment, Trade and Economy", includes projects on NAFTA's environmental effects and technology co-operation. The other four programs are Information and Public Outreach, Specific Obligations Under the NAAEC, Council Identified Priorities, and the North American Fund for Environmental Co-operation (NAFEC) .

The CEC's Council has proven to be active in giving political level direction, initiative and protection. It moved swiftly into operation, holding its first meeting in March 1994 in Washington, DC, its second in October, 1995 in Oaxaca, Mexico, its third in July 1996 in Toronto, its fourth in June 1997 in Pittsburgh and a fifth exceptional meeting at Secretariat headquarters in October 1997. This intensity has become greater than that of the environment ministers trade colleagues on NAFTA's Free Trade Commission (who missed their annual meeting in 1996). Only for their June 1997 meeting did a Canadian election and an imminent vote on environmental protection in the US Congress lead Canada's Minister of the Environment and the US EPA Administrator respectively to send substitutes.

By the time of its third ministerial Council meeting, held in Toronto on July 31-August 1, 1996, the Council began to take an aggressive approach on trade-environment issues. It placed the task of forging an equal, integrated trade-environment linkage in the interests of sustainable development at the forefront of the CEC's priorities. It also called for a meeting with NAFTA's trade ministers to discuss shared concerns (CEC 1996). The Council further recognized the expansive, extra-regional implications of its trade-environment work. Looking ahead to a Canada-Chile bilateral free trade agreement and subsequent Chilean accession to NAFTA, representatives from Chile participated as observers in the public meetings (but not the in-camera Council session). Some Council ministers underscored the importance of the CEC in ensuring North American solidarity in the councils of the world. All three ministers agreed on the need to contribute to the trade-environment debate in the World Trade Organization (WTO) in the leadup to its ministerial meeting in December 1996.

The Council also moved at Toronto into action on environmental compliance. It authorized, with public unanimity, an Article 14-15 factual investigation of the actions of the Mexican authorities in constructing a pier and supporting port infrastructure in Cozumel, allegedly without adequate environmental assessment. Such a decision was strongly resisted, at all levels, in Mexico, whose representatives argued that construction had taken place before the NAFTA and NAAEC took effect. There was an appearance that Mexico was being singled out, as requests by American NGO's for similar actions against the US government had previously been rejected. At its October 1997 meeting, the Council further decided to make the completed factual record public.

The Secretariat has been equally active, moving faster than the other NAFTA-related organizations to become operational. It was the first to select an Executive Director. The professional background of its three senior officials, in government service, legal practice and the management of a scientifically-oriented ENGO, reinforce the Secretariat's ability to acquire credibility among its many constituencies.

In addition to the Secretariat's power of initiative and scientific and legal expertise regarding the Article 13 and 14-15 processes (discussed further below), it has effectively employed several instruments of influence to exercise autonomy regarding its co-operative functions. One is the scientific credibility it has commanded and the broader support base and issue-specific epistemic community it is fostering through the many expert groups, study teams and consultations it has sponsored during its first four years. A second is its contribution to, and association with concrete progress on environmental priorities of governments and publics.

One of the most notable cases is the CEC Secretariat's role in creating regional action plans to reduce and perhaps eventually eliminate from North America harmful pesticides and chemicals, notably DDT, PCBs, chlorodane, and, prospectively, human-caused releases of mercury (CEC 1997d). Differences in substantive preferences were evident, as participants sponsored by the CEC Secretariat sought a full elimination of such chemicals while those from the governmental community sought a substantial reduction. The equalization of outcomes across the preferences of the three countries is seen in the sequence of chemicals included.. DDT, banned for the majority of uses in the US in 1970-73, and deregistered in Canada in 1985 for a 1990 elimination (after most uses were phased out by the mid-1970's), will have its use reduced in Mexico (where it is used to combat malaria) by 80% within five years, and eliminated for agriculture uses, as the Mexican regulations adjust toward the long-standing US and subsequent Canadian level. The pesticide chlorodane, phased out in the mid 1970's and banned in 1985 (save for termites) in Canada, and phased out in 1978 and banned in 1995 in the US, will have its use ended in Mexico in 1998 (where it was limited to termite control as of 1992). However, PCBs, which all three countries currently use, will have their use ended in all three countries by the year 2008, in a clear case of a process of mutual adjustment producing outcomes with equal impact. A phaseout of mercery would disproportionally harm US economic interests, as a major use of mercury is in coal-fired electricity generation, upon which the US heavily relies. Because the substitutes for DDT are more expensive than DDT, there is evidence of ecological values taking precedence over economic ones, although particular industries producing the substitutes will benefit.

Autonomous influence does flow from the Secretariat's development of a modern, common and harmonized statistical base for measuring the environmental performance of the three Parties. A Secretariat report comparing pollutant releases across North American industry, released in July 1997, attracted widespread media attention for its central finding that the US jurisdictions of Texas and Tennessee, and Canada's largest province, Ontario, had the worst environment record, based on 1994 data (CEC 1997c). Mexico, lacking the data required for its inclusion in the study, escaped critical attention.

The Secretariat does suffer from major constraints in funding and mandate. Although it has a budget much larger than its sister NAFTA institutions, the Commission for Labor Cooperation (CLC) in Dallas and the Secretariat of the FTC expected to be established in Mexico City in late 1997, its funding remains one-third smaller than the US $15 million initially envisaged (US 1994:25). Moreover the CEC has significantly expanded its activities, and had, by Council direction, to divert US$1,600,000 (in 1997) to fund a responsive North American Fund for Environmental Co-operation (NAFEC) established in 1995. Yet Mexico and Canada, beleaguered respectively by the 1994-5 economic crisis and the 1995 severe reductions to Environment Canada's budgets, have been unwilling to allow any increase, even on a differential national basis.

The autonomous impact of the Secretariat is also limited by the fact that it is formally assigned no policy advisory responsibilities. It was designed primarily as an international public utility to lower transaction costs among the parties for arranging meetings, preparing and translating documents, implementing Council decisions, and receiving complaints. It came with an inherent tension between its co-operative mandate (substantially dependent the goodwill of member governments ) and its enforcement functions (overseeing their activities). Yet the CEC was also deliberately created in the conception of some parties as a minimum structure which could expand as the need arose, in recognition of the fact that many of North America's environmental challenges were not stand-alone technical ecological issues but required broader policy change.

The prospects of the CEC becoming a legitimate centre of political activity and source of democratic participation throughout North America were heightened by the composition and activity of JPAC and the ensuing creation of the NAC's. JPAC's appointments included respected representation from business, as well as the ENGO, and aboriginal communities. By June 1997, it had met 14 times, four of which were in connection with the annual Council. JPAC provided advice to the Council seven times in 1995 and ten times in 1996, on a wide range of issues.

JPAC's members had an ambitious conception of the CEC's workprogram, and have been strongly supportive of its involvement in trade-environment issues. Moreover, in 1996 and 1997 a total of 805 individuals had attended JPAC consultations, with 240 coming from NGO's, 162 from industry, 219 from government, and 184 in their individual capacity (CEC 1997a:23). JPAC has thus broadened, in number of actors and multi-sectoral breadth, the base of CEC engagement and support.

The impact of the NAC's and GAC's is more ambiguous. It remains to be seen whether these bodies will provide deeper support for the CEC within each country, provide a further drain on limited CEC resources, or serve as vehicles of intergovernmental capture.

During the CEC's first four years, there has been a notable trend for national governments to become much more frequently engaged, in much more detail, in the Secretariat's operation, in the intervals between the annual ministerial meetings of the Council. The Alternates now meet monthly, in person or by conference call, with the pace of their meetings growing from two in 1994 and five in 1995 to 11 in 1996. The GSC meets twice as frequently (for example 21 times in 1995 and 24 times in 1996, not including participation at the project level) (CEC 1997a). Government Working Groups have emerged to deal with the conservation of North American birds, the sound management of chemicals, transboundary environmental impact assessment, environmental enforcement and compliance, wildlife enforcement, and, by late 1997, trade and environment. CEC Project Teams must also work with such bodies as the trilateral Committee for Wildlife and Ecosystem Conservation and Management, the Technical Working Group on Pesticides, and a team of experts drawn from governments on new approaches for improving environmental performance (CEC 1997b) .

This is a sharp contrast with the CEC's potential architecture as an autonomous Secretariat receiving instructions only annually from the ministerial-level Council. Yet this trend is not necessarily an intergovernmental "capture" or "micromanagement" of an otherwise autonomous Secretariat. Despite the practical burdens it places on limited Secretariat resources, such detailed governmental engagement can lead to greater understanding of, and support for Secretariat activities within national governments. Government resources can supplement those of the CEC to permit a more ambitious programme. Government officials can learn and adjust as well as instruct and direct. A healthy tension between governmental and Secretariat perspectives on the same issue can lead to policy improvement and innovation. More complex coalitions may emerge, with the Secretariat entering as a fourth actor to break deadlocks among the three governments. And because two of such intergovernmentalized processes include NGO's and business as part of the process, more complex coalitions and broader support may develop. At a minimum, the intensification of governmental interest in the Secretariat's detailed activities suggests the present and potential influence the body has acquired.

An important part of the expectations that surround the CEC, relate to its "enforcement" performance in casting a "roving spotlight" on environmental issues under Article 13, its responsiveness to NGO complaints about government non-enforcement of environmental regulations under Article 14 and 15, and its use of its Part 5 powers for governmentally-initiated allegations of persistent non-enforcement by other governments.

As of July 1997, two Secretariat Article 13 reports had been completed. The first, concerning the death of birds at the Silva Reservoir in Mexico, found no evidence that Mexico's poor environmental practices were responsible for the deaths. The second report, dealing with the long-range transport of air pollutants, equally embraced the practices of and impacts on all three NAFTA countries. A third report, initiated in autumn 1997 and still in process, concerns the protection of the San Pedro River Conservation Area located at the Arizona border with Mexico, a key riparian area for migratory birds used as a resting stop every winter. It thus includes all three countries, with a focus on the US.

The Article 14-15 process, which allows any NGO, business or other "interested party" to complain that a member government is failing to enforce its environmental laws, is also becoming more widely used and more trilaterally balanced in its application. In its first four years, the Secretariat received eleven such submissions, of which three dealt with the US, two with Mexico and six with Canada. In its first year, both cases came from the US, and were terminated by the Secretariat on the grounds that the CEC lacked the legal authority to proceed. Of the four cases filed in 1996, the Secretariat terminated the two dealing with Canada, converted the one dealing with the US into an Article 13 inquiry, and proceeded with the Mexican Cozumel case. Of the five cases (four Canadian and one Mexican) submitted in the first half of 1997, the CEC is proceeding with one, dealing with hydroelectric dams in British Columbia. Canada thus seems likely to join Mexico as the subject of Article 14-15 scrutiny. While the US appears to be the great beneficiary, having escaped CEC investigation thus far despite its active array of ENGO's, the Article 14-15 process remains critically dependent on the actual enforcement performance of governments within each country. Moreover the CEC is empowered to act only against the enforcement of existing environmental laws, not prevent national legislatures from changing those laws.

There has been no use of the Part 5 mechanism. For a United States which has long resisted international organizational constraints on its sovereign prerogatives, it was a significant political step to accept in NAAEC an agreement allowing a US government unsympathetic to environmental concerns (as during President Reagan's first term), to be outvoted, investigated and sanctioned by an international organization as a result of a Canadian-Mexican majority. Such a scenario is conceivable if such a majority were supported by significant ENGO's, publics and legislators in the United States. However, such a scenario, is unlikely. Instead, all three governments appear to have accepted an implicit mutual non-aggression pact, choosing not to launch enforcement investigations against one another for fear that their partners will retaliate by launching similarly embarrassing investigations against them. Indeed, any government that feels itself consistently outvoted or otherwise discriminated against retains the ability under Article 43 to curtail the operation of the CEC by reducing or withholding financial support. Thus, even the deterrent power of Chapter 5, with its paper power to impose trade sanctions to punish environmental non-enforcement, is not an important operational part of the CEC's repertoire.

Of particular importance in determining the effectiveness of the CEC is the intensity and influence with which it has addressed the broad, economic dimensions of its mandate and pursued its overall sustainable development objectives. Here a critical challenge is the relationship the CEC has developed with the NAFTA Free Trade Commission, both at the level of its ministerial Council, and with the fifty or so official level bodies created or inspired by the NAFTA agreement (Kirton and Fernandez de Castro 1997, Weintraub 1997) .

The CEC has made only modest progress on the difficult task of injecting environmental concerns into the consciousness and operations of the NAFTA trade community. The relationship between the CEC and NAFTA's economic institutions is just beginning to develop, with both bodies at the ministerial level recognizing the importance of their interconnected agendas, asking for a joint meeting, but proving unable thus far to mount such an event. At its first meeting in 1994 NAFTA's FTC reviewed its relationship with the CEC and agreed to try to meet in 1994 with its CEC ministerial counterpart to achieve the highest possible level of co-ordination. At its 1995 meeting, the trade ministers again discussed the relationship among the three NAFTA Commissions, and asked for a report from their ministerial counterparts in the CEC Council on how the environmental agreement and CEC workplan was operating in support of the NAFTA. At their 1996 meeting in Toronto, the CEC ministers reciprocated the invitation, asking for a joint meeting with their trade counterparts to review North America's experience in trade and environment policy integration. By the end of 1997, no such joint ministerial gathering had taken place.

At the official level, there has also been little early contact between the CEC and those involved in NAFTA's economic institutions. The CEC itself had moved from the start to implement in an ambitious fashion all of its trade-related responsibilities, placing the trade and environment link as an integral part of its organizational culture and priorities. Yet a trade-environment dialogue proved slow to emerge.

In part the early isolation of the two communities flowed from the preoccupation of each with developing its own institutions, priorities and work programs. In part it derived from the absence within the trade community of a single trinational Secretariat able to mount a dialogue at the Secretariat level with the CEC. It also stemmed from the absence within each national capital of a single NAFTA co-ordinative centre with an effective overview of the activities of all the Free Trade Commission and other trilateral institutions and able to mount a trade-environment dialogue at the national level.

In such a situation, it was possible for a lack of communication to breed not merely benign neglect but a lack of awareness of co-operative opportunities, and even an absence of trust. Yet even in those early years members of the trade community could identify several ways in which the CECs work was, or could be, of benefit. More generally, there was a considerable understanding of the way environmentally-enhancing co-operation could assist the trade and industry community by providing a single set of rules that made trade easier and less expensive, by producing a single testing system that reduced costs to all three federal governments, and by supporting distinctively North American interests in broader regional forums.

More recently, the trade-environment dialogue has been strengthened, as co-ordinative centres and consultative processes have developed within national capitals. Potentially contributing to this national-level dialogue, and raising it to the international level, was the emergence in the late spring of 1997 of a forum within which trade and environment officials from the three countries engaged with the experts in the CEC's study team on NAFTA's environmental effects. However, the emergence of a truly integrated and balanced trade-environment engagement depended critically on the relationship the CEC secretariat would forge with its FTC counterpart, and the responsibilities assigned to the latter, when the FTC established its single Secretariat in late 1997.

Yet there continue to be severe limits on the trilateral consensus that would allow more far reaching, mutually-reinforcing trade-environment work to emerge. A de facto U.S.-Canadian partnership within the CEC was evident at the Council meeting in Toronto, where their two ministers were visibly more enthusiastic and ambitious than Mexico's in their conception of the CEC's trade and environment work. Mexican caution continued to be apparent in the following year, over the CEC's project to develop a framework to monitor NAFTA's environmental effects (DePalma 1997, America's Trade 1997). However, because both Canada and Mexico send 80% of their exports to the US market, and share the same underlying interest in engendering a plurilateral, rules-based, strong and organized regime to deal with their much larger neighbour, in both the trade and environment arena and for their many intersections, it is likely to be only a matter of time before a stronger trilateral consensus emerges.

There are also some small signs that an institutional deepening of the NAAEC is underway. As an estimated 75% of the responsibility for environmental protection in Canada rests with provincial governments, it is important, both for the application of the CEC's enforcement powers and politically for the legitimacy its acquires, for Canadian provincial governments to accede to the agreement. Alberta did so at any early stage. Quebec, where the CEC headquarters is housed, did so in the summer of 1996. Manitoba has followed. Others, such as Nova Scotia, have been deterred by the practical cost of reviewing and revising their existing environmental laws. However Canada's remaining provinces, including dominant Ontario and British Columbia, show few signs of wishing to accede. More broadly, the CEC is not reported as being involved in any of the 103 linkages between Canadian provinces and U.S. states on environmental matters operating in 1995, nor in the 649 such linkages covering all issue areas in the same year (Munton and Kirton 1996, Kirton and Munton 1996) .

The growing strength of the CEC is also evident in the broadening of the institution. During the negotiations, Canada had crafted an accession clause that envisaged the NAFTA, NAAEC and CEC admitting additional members, not necessarily from the western hemisphere. The prospect of a rapid broadening decreased when the U.S. Republican Congress refused to give President Clinton the fast track authority necessary to negotiate Chilean accession. The stalemate continued after the 1996 presidential election as the Republican majority appeared reluctant to offer the authority for a parallel environmental and labour accord that the administration insisted was vital. Canada proceeded to negotiate its own, bilateral but NAFTA-compatible free trade agreement with Chile. In the first half of these negotiations, the Canadians were not insisting on environmental provisions comparable to those of the NAAEC. But the advent of a new trade minister in Canada resulted in such a demand being added and, with some modifications, accepted. Thus the bilateral Canada-Chilean agreement, announced in November 1996, represented the first real broadening of the NAAEC model.

On both trade-environment and more environmentally-specific subjects, much of the CEC's work has come to be conducted with a conscious focus on how it can influence broader international forums, either as a means of asserting distinctive North American regional interests within them, or leading to the construction of a more multilateral regime. Such ambitions are clearly evident in the CEC's desire to display leadership on the reduction and phase-out of chemicals of global concern, to have its North American Pollutant's Release Inventory serve as a model for other areas of the world, to encourage trade-economic-environmental compatibility between North America and other trading regimes, and to increase environmental technology exports to the Americas (CEC 1997b) .

The CEC has during its first four years in operation thus had several substantial impacts. It has brought trilateralism in an intense and permanent way to North American environmental governance. The regular annual ministerial-level meetings of the Council, the creation of dozens of intergovernmental Working Groups and experts groups, and numerous consultations through JPAC and otherwise have, along with the Secretariat and JPAC, created a dense, multilayered web of new trilateral activity embracing national politicians, civil servants, influential societal actors and individual citizens. In the realm of enforcement, the initiation and results of Article 13 and 14-15 investigations, and the absence of Part 5 intergovernmental enforcement actions and sanctions show that from the start, but with increasing force, the CEC has not been an instrument for the US to single out Mexico and benefit from a poorer partner forced to pay the price for American political preferences and economic interests. In the area of environmental co-operation, through the power of statistical comparison and publicity, the July 1997 NAPRI report and the public reaction it aroused suggests that it is the United States and Canada that are being singled out and constrained. Only in the core, increasingly high policy area of trade and environment linkages does US enthusiasm and Canadian commitment meet a Mexican caution, exacerbated by the severe economic crisis experienced in the latter country in 1995.

The CEC has also emerged as a respected, professional and effective organization, with its Secretariat making use of its limited resources to exercise autonomous influence to which occasionally reluctant or resistant national governments adjust. The professional staff in the Secretariat have succeeded in engaging a broad constituency of experts in the CEC's work, which, together with JPAC consultations, have increased the visibility and credibility of, and supporting constituency for the CEC's increasingly focused but still comprehensive work. Although there is a growing need for expanded funding, the CEC has maintained its budget levels in the face of severe reductions within national environmental agencies. In the realm of enforcement, the Lake Silva and Cozumel cases in particular, and the broader pattern of Article 13 and 14-15 activities indicate that the often hidden influence of procedural supranationalism, through the two-thirds majority voting provisions and powers of Secretariat initiation and legal screening, is proving effective. The Secretariat's use of autonomous scientific and statistical power was evident in the case of NAPRI. Although the absence of intergovernmental enforcement action points to a mutual non-aggression pact that has disappointed some, the limited time that has passed, the severe economic crisis in Mexico in 1995, and the very co-operative capacity building and deterrent powers of the CEC make it likely that any persistent pattern of non-enforcement by national governments has lessened since 1993. Finally, the intensification of intergovernmental engagement is evidence both of the Secretariat's growing usefulness and influence, and of its relevance as a forum for building a constituency, as well as its position as a body being captured and constrained.

The CEC has also acquired a more expansive relevance by fostering more integrated and balanced trade-environment decisionmaking, by seeking to broaden its influence to other jurisdictions, and by very slowly deepening the engagement of subfederal governments within North America in its activities. It has moved quickly, comprehensively and aggressively on its trade-environment responsibilities, reached a balanced standoff at the ministerial level with its FTC counterpart, and is beginning to engage intensively with the government trade community within national capitals and through a new CEC forum for trade and environment officials. The prospect of dialogue at the inter-Secretariat level has moved closer with plans moving forward for the creation of the FTC. The CEC has involved Chile in its activities, and consciously designed its activities to achieve results in broader multilateral fora. And it is slowly beginning to engage North American state and provincial governments, through the accession of some Canadian provincial governments to its Agreement.

Thus, during its first four years the CEC has begun to add to the inherited pattern of Canada-US environmental governance a trilateral rather than bilateral regime, a de facto limited supranational rather than merely intergovernmental process, and a single centre with a comprehensive mandate embracing trade and environmental concerns and a broadening and deepening relevance. Its moves in these directions, while still limited, acquire significance in the context of the formidable obstacles the nascent institution has faced. In the first instance, the CEC, and the broader NAFTA environmental regime was the immediate product less of any fundamental enduring commitment to environmental values on the part of all three governments in North America than of a temporary need of a Republican and then Democratic President to secure sufficient domestic support to ensure legislative passage of a historic free trade agreement. Slow growth rates and persistent employment insecurity, particularly in Canada, and a strong emphasis on fiscal reduction have meant a major decrease in environmental priorities and budgets since the peak of the Rio conference in June 1992.

Thus it is hardly surprising that there remains little of the widespread enthusiasm and optimism that surrounded the CEC's birth. The genuine innovations within the NAFTA-NAAEC-CEC architecture, in bringing trilateralism and regional international organization to North American and a more integrated and balanced trade-environment regime to the world have not been realized rapidly and robustly in practice as the moment of political creation has passed into routine operation focused on complex ecological challenges. Nor were the rhetorically appealing promises made by President Clinton and his American allies to ensure NAFTA's passage capable of being quickly fulfilled, especially amidst the Mexican economic crisis of 1995 and the severe reduction in environmental budgets of governments in the United States and Canada from 1994 onward. Yet against the century-long established pattern of Canada-US environmental governance, as well as historic US-Mexican wariness and Canadian-Mexican benign mutual neglect, there are clear grounds to identify a regime of emerging autonomous effectiveness.

5. Implications for Broader Hemispheric Extension

The prospect of extending NAFTA's trade-environment regime, with the CEC at its institutional core, from the newly unified North American region to the broader hemisphere, as part of the process of NAFTA-plus or hemispheric trade liberalization confronts several immediate challenges. Many within the North American community retain a preference for trade liberalization without accompanying environmental protection. Many potential partners outside raise concerns, familiar to Mexicans and Canadians, that they are not ready for a high set of "made-in-America" environmental regulations and enforcement practices that do not take account of their particular level of development or political systems and values. Most importantly, some environmentalists see the CEC as a disappointing or at best still-fragile institution that should be saved to develop and deliver its benefits in North America alone. They fear that CEC expansion will dilute already inadequate CEC resources, expand US dominance, weaken its regulatory structure and compliance mechanisms, increase transactions costs and inhibit institutional growth (Mumme and Duncan undated).

Yet the CEC's early record does equip it with several points of hemispheric appeal. For four years an effective CEC has co-existed with a NAFTA that has delivered considerable trade, investment and economic benefits to all three countries (Weintraub and Gilbreath 1996). For a Mexico seeking insulation from the severe economic crisis of 1995, a United States becoming a more open, globally competitive economy and seeking to offset ballooning trade deficits with Japan and China, and a Canada dependent on trade to lift it out of the low period of slow growth in the early 1990's, NAFTA-generated trade and investment has been an important asset. Moreover, NAFTA has not disproportionately created trade and transborder investment in sectors that are heavily polluting or are large consumers of natural resources. In the investment realm, it appears to be having, in fact, an environmentally benign effect (Cole and Ensign 1997).

The treatment of Mexico can suggest to its southern American partners that the CEC will not invoke trade or other monetary sanctions against their domestic environmental enforcement practices, fix its roving spotlight on poorer members of the community, or use its power of public information to highlight their inadequacies, but rather bring demonstrable environmental improvements, and more vibrant democratic practices. Concerns about the readiness of the new members to accept the NAAEC disciplines could be easily accommodated by allowing differing phase-in periods for countries at different levels of economic development, environmental stress, and regulatory refinement (as the Canada-Chilean agreement does). The NAAEC, in its Part Five provisions for trade sanctions or domestic judicial remedies, has already set a precedent for treating different members in different ways. An expansion would provide an opportunity to calibrate this differentiation more finely to the needs of the hemispheric ecology and sustainable development, by, for example, defining phase-in periods according to a the ecological footprint imposed by the structure of a prospective members economy (Runge et al 1997), its ecological interdependencies with other members, and its unique ecological value in the regional and global ecosystem.

There are thus several grounds for identifying the existing CEC as the foundation for a broader trade-related, environmental regime, appropriately adjusted to meet the needs of the hemisphere as a whole. In the broadest terms, the CEC, as the core of the NAFTA trade-environment regime still stands as the world's most advanced trade-environment regime. The FTAA commitment to free trade by 2005, adopted in December 1994, and the APEC commitment to free trade by 2010/2020, accepted in November 1994 both lacked any provisions for a parallel and integrated environmental co-operation accord or institution. None has developed in these forums since. Nor did the WTO, in its ministerial meeting in Singapore in December 1996, make much progress in strengthening the environmental processes of the multilateral trade regime.

Constructing a separate and parallel agreement or institution would lead to a patchwork of competing rules and organizations that would harm environmentalists and free traders alike. It would compete for already scarce ministerial time and money within the three NAFTA countries, delay progress as the new institution became operational and lead to potential unproductive organizational competition. It would also impose on smaller business a maze of different rules and processes that would inhibit their potential to export to other countries, including the export of environmentally-enhancing equipment, technologies and services.

Starting from scratch to build a separate and improved organization might mean an adequate body is never constructed. Countries new to such negotiations could attempt to search for superior solutions which do not, in practice, exist. Existing parties could be tempted to re-open old issues, only to discover that the reasons they were unable to secure their preference in the 1994 text still remain. This is particularly true if America's trade expansion and accompanying environmental negotiation takes place through an all-in negotiation among a large number of countries with widely varying levels of economic development and ecological sensitivity. The FTAA has already created a bias in this direction.

Its 2005 deadline, devoid of environmental protection, is rapidly approaching. Existing subregional free trade agreements in the hemisphere, with the exception of the new Canada-Chile bilateral trade agreement do not have, or show signs of acquiring, the environmental protections and capacity offered by the CEC. At the same time, there are already an extensive array of hemispheric wide environmental interdependencies that directly impact the US (Kirton and Richardson 1995).

There are thus several incentives to expand NAFTA's trade-environment regime with internal adjustments to take account of the specific needs of the larger hemisphere and the experience of the first four years. Together these adjustments represent more of a rebalancing than an expansion of the CEC's mandate and powers, and a strengthening of its capacity to meet its existing objectives over a much wider geographic domain.

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Notes:

*: Revised version of a paper presented at the University of Southern California's Center for International Studies on October 28, 1997. I am grateful to Christopher Stone and Robert Friedheim for their comments and to Alan Rugman and Julie Soloway for their contributions. This paper draws on research supported by the Social Sciences and Humanities Research Council of Canada and projects of the Commission for Environmental Cooperation on NAFTA's Institutions and NAFTA's Environmental Effects. Back.

Note 1: The judgments made in this study are based substantially on the results of two semi-structure interview programs. The first, conducted during the fall of 1995 and the spring of 1996, included 59 interviews, evenly balanced among the three countries, with 27 from government, 17 from business, 11 from NGOs and 3 from the academic community. Business respondents came from major industry associations and the automotive, chemicals, telecommunications, financial services, and natural resource sectors. The second, conducted from the summer of 1996 through the spring of 1997, embraced 88 individuals directly involved in the work of the NAFTA institutions. Of the 37 government officials interviewed in the initial phase, from the Assistant Secretary level downward and covering the major sector departments dealing with transport, agriculture and industry as well as finance and trade, 16 were from Canada, 15 from the United States, and 6 from Mexico. A draft was reviewed and modified on the basis of comments from a group of 51 individuals from government, business, academics and NGOs in the three countries, with the business reviewers covering economy-wide associations and the automotive, chemicals, metals and environmental technology industries. Back.