The fifth round of NAFTA renegotiations is getting underway in Mexico City.
Unfortunately, American trade negotiators have proposed expanding NAFTA’s environmental reach. This is counterproductive and seems to be inconsistent with the Trump administration’s broader deregulatory agenda.
U.S. officials should not only reject an expansion of NAFTA’s environmental regulatory reach in this round, they should work to remove any focus on environmental regulation from the NAFTA process altogether.
By including an environmental side agreement, NAFTA set the precedent for attaching non-trade issues to trade deals. The result is that trade agreements since NAFTA have gone well beyond free trade and into broader regulation of economic activity.
The Trump administration should use this NAFTA renegotiation to reset the precedent by focusing the talks exclusively on expanding free trade.
The Office of the United States Trade Representative, though, listed as NAFTA renegotiation objectives to “bring the environment provisions into the core of the agreement rather than in a side agreement,” and to subject environmental provisions to the same dispute settlement process that exists for other enforceable obligations of NAFTA.
Further, the environment-related objectives go beyond merely incorporating the existing side agreement into the main text of NAFTA. They also include other measures that could lead to boxing the U.S. into a corner when it comes to trying to address the sweeping regulatory overreach that already exists in the U.S.
One of these objectives is to “establish strong and enforceable environment obligations.”
This NAFTA environmental expansion could not only make addressing environmental overreach more difficult, but it could also allow Canada and Mexico to have influence over U.S. environmental laws, specifically by giving them the means to challenge how the U.S. is addressing its own domestic environmental issues.
This apparent environmental push by U.S. trade negotiators is completely at odds with the excellent work the Trump administration has done to address environmental regulation overreach elsewhere.
It’s actually quite confusing: Why push for provisions in a trade deal that would make it harder to address regulatory overreach?
In a recent paper, The Heritage Foundation identified specific recommendations regarding NAFTA and the environmental side agreement:
- The Trump administration should limit NAFTA renegotiations to provisions directly related to North American trade and investment. All other extraneous measures should be addressed through other vehicles, if at all.
- If Canada and Mexico insist that NAFTA should include environmental provisions, those issues should be kept in the side agreement and not incorporated into the main agreement.
- Environmental measures should not expand the existing scope of NAFTA, especially in ways that could make environmental and regulatory reform more difficult.
- Continued efforts should be made to increase economic freedom by reducing trade barriers, subsidies, and other measures that limit the ability of people in Canada, Mexico, and the United States to better address their environmental challenges.
Leaving out the environmental side agreement and focusing on trade would actually be better for the environment. The best way to improve the environment is to promote economic growth, including through trade.
Data in The Heritage Foundation’s Index of Economic Freedom show that countries with low trade barriers score better on Yale University’s Environmental Performance Index, for instance.
Bringing unrelated issues such as the environment into trade agreements leads to the U.S. having to simultaneously negotiate environmental objectives that likely will require having to make trade-offs that are counter to reducing barriers to mutually beneficial trade.
Trade deals should be about free trade, not a pretext to push environmental agendas. NAFTA set the U.S. down the wrong path with the environmental side agreement. President Donald Trump can now guide the nation back in the right direction.
