Table Of Content

IMPACTS OF TRADE AGREEMENTS ON U.S. ENVI- RONMENTAL PROTECTION AND NATURAL RE- SOURCE CONSERVATION EFFORTS Y 4. M 53: 103-5 — Inpacts of Tnde ftgreenents on U.S ,AE THE SUBCOMMITTEE ON ENVIRONMENT AND NATURAL RESOURCES OF THE COMMITTEE ON MERCHANT MARINE AND FISHERIES HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION ON ENVIRONMENTAL IMPACTS OF A FREE TRADE AGREEMENT MARCH 10, 1993 K^Of^.,^^ Serial No. ^3:5 • Printed for the use of the Committee on MerehaBt Marine and Fisheries U.S. GOVERNMENT PRINTING OFFICE 68-232^ WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-0A0983-7 IMPACTS OF TRADE AGREEMENTS ON U.S. ENVI- RONMENTAL PROTECTION AND NATURAL RE- ^^^^^^^^ SOURCE CONSERVATION EFFORTS Y 4. M 53: 103-5 Ri^I"N'G^ Inpacts of Trade Agreenents od U.S -HE THE SUBCOMMITTEE ON ENVIRONMENT AND NATURAL RESOURCES OF THE COMMITTEE ON MEECHANT MARINE AND FISHERIES HOUSE OF REPRESENTATIVES ONE HUNDRED THIRD CONGRESS FIRST SESSION ON ENVIRONMENTAL IMPACTS OF A FREE TRADE AGREEMENT MARCH 10, 1993 Serial No. 103-5 ''^tuiik^,.. . AUG I 4 Printed for the use of the Committee on Merchant Marine and Fisheries U.S. GOVERNMENT PRINTING OFFICE 68-232!=i WASHINGTON : 1993 ForsalebytheU.S.GovernmentPrintingOffice SuperintendentofDocuments,CongressionalSalesOffice,Washington,DC 20402 ISBN 0-16-040983-7 COMMITTEE ON MERCHANT MARINE AND FISHERIES GERRY E. STUDDS, Massachusetts, Chairman WILLIAM J. HUGHES, New Jersey JACK FIELDS, Texas EARL HUTTO, Florida DON YOUNG, Alaska W.J. (BILLY) TAUZIN, Louisiana HERBERT H. BATEMAN, Virginia WILLIAM O. LIPINSKI, Illinois JIM SAXTON, New Jersey SOLOMON P. ORTIZ, Texas HOWARD COBLE, North Carolina THOMAS J. MANTON, New York CURT WELDON, Pennsylvania OWEN B. PICKETT, Virginia JAMES M. INHOFE, Oklahoma GEORGE J. HOCHBRUECKNER, New York ARTHUR RAVENEL, Jr., South Carolina FRANK PALLONE, Jr., New Jersey WAYNE T. GILCHREST, Maryland GREG LAUGHLIN, Texas RANDY "DUKE" CUNNINGHAM, California JOLENE UNSOELD, Washington JACK KINGSTON, Georgia GENE TAYLOR, Mississippi TILLIE K. FOWLER, Florida JACK REED, Rhode Island MICHAEL N. CASTLE, Delaware H. MARTIN LANCASTER, North Carolina PETER T. KING, New York THOMAS H. ANDREWS, Maine LINCOLN DIAZ-BALART, Florida ELIZABETH FURSE, Oregon RICHARD W. POMBO, California LYNN SCHENK, California GENE GREEN, Texas ALCEE L. HASTINGS, Florida DAN HAMBURG, California BLANCHE M. LAMBERT, Arkansas ANNA G. ESHOO, California THOMAS J. BARLOW, III, Kentucky BART STUPAK, Michigan MARIA CANTWELL, Washington PETER DEUTSCH, Florida GARY L. ACKERMAN, New York Jeffrey R. Pike, StaffDirector WiLUAM W. Stelle, ChiefCounsel Mary J. Fusco Kitsos, ChiefClerk Harry F. Burroughs, Minority StaffDirector Subcommittee on Environment and Natural Resources GERRY E. STUDDS, Massachusetts, Chairman GEORGE J. HOCHBRUECKNER, New York JIM SAXTON, New Jersey FRANK PALLONE, Jr., New Jersey DON YOUNG, Alaska GREG LAUGHLIN, Texas CURT WELDON, Pennsylvania JOLENE UNSOELD, Washington ARTHUR RAVENEL, Jr., South Carolina JACK REED, Rhode Island WAYNE T. GILCHREST, Maryland ELIZABETH FURSE, Oregon RANDY "DUKE" CUNNINGHAM, California DAN HAMBURG, California MICHAEL N. CASTLE, Delaware BLANCHE M. LAMBERT, Arkansas JACK FIELDS, Texas (ExOfficio) ANNA G. ESHOO, California EARL HUTTO, Florida W.J. (BILLY) TAUZIN, Louisiana SOLOMON P. ORTIZ, Texas Dan Ashe, Professional staff Gina DeFerrari, Professional staff Karen Steuer, Professional staff Laurel Bryant, Minorityprofessional staff <II) CONTENTS Page Hearingheld March 10, 1993 1 Statement of: Audley, John J., program director for trade and the environment, Sierra Club International Program 23 Prepared statement 63 Castle, Hon. Michael N., a U.S. Representative from Delaware 5 Dudley, Barbara, executive director, Greenpeace 29 Prepared statement 194 Fatemi, Khosrow, Dean, The Graduate School ofInternational Trade and Business Administration 33 Prepared statement -• 271 Fields, Hon. Jack, a U.S. Representative from Texas, and ranking minority member, Committee on Merchant Marine and Fisheries 3 Furse, Hon. Elizabeth, a U.S. Representative from Oregon 6 Hamburg, Hon. Dan, a U.S. Representative from California 7 Housman, Robert, and Paul Orbuch, Center for International Environ- mental Law 25 Prepared statement ••• 87 Nader, Ralph, Public citizen, and Lori Wallach, director. Public Citizen's Trade Program 27 Prepared statement 113 Ortiz, Hon. Solomon P., a U.S. Representative from Texas, and Chairman, Subcommittee on Oceanography, Gulf of Mexico, and the Outer Conti- nental Shelf 4 Saxton, Hon. H. James, a U.S. Representative from New Jersey, and ranking minority member. Subcommittee on Environment and Natural Resources 4 Snape, William J., Ill, associate counsel. Defenders ofWildlife 30 Prepared statement 208 Studds, Hon. Gerry E., a U.S. Representative from Massachusetts, and Chairman, Subcommittee on Environment and Natural Resources 1 Turner, John, director, U.S. Fish and Wildlife Service, Department ofthe Interior 10 Prepared statement 54 Yerxa, Ambassador Rufus, deputy U.S. trade representative. Office ofthe U.S. Trade Representative 8 Prepared statement 49 Additional material supplied: Center for International Environmental Law (CIEL): Overview of proposed NAFTA enforcement approaches •• 313 Greenpeace International: UNCED undermined, why free trade won't savethe planet •• 281 Humane Society of the United States and other organizations: NAFTA's effect on wildlife conservation and animal welfare legislation 301 Public Citizen: Annex I—Analysis of GATT sanitary and phytosanitary standards, and multilateral trade organizational provisions 143 Annex II—Analysis of NAFTA sanitary and phytosanitary provisions, technical standards provisions, and dispute resolution 168 Communicationssubmitted: Defenders of Wildlife et al.: Letter of March 4, 1993, to Hon. Mickey Kantor, U.S. trade representative 235 (III) IV Page — Communicationssubmitted Continued Subcommittee staff: Memo of March 3, 1993, to Members, Subcommittee on Environment and Natural Resources, on impact oftrade agreements on U.S. environmental protection and natural resource conservation efforts 41 IMPACTS OF TRADE AGREEMENTS ON U.S. EN- VIRONMENTAL PROTECTION AND NATURAL RESOURCE CONSERVATION EFFORTS WEDNESDAY, MARCH 10, 1993 House of Representatives, Subcommittee on Environ- ment AND Natural Resources, Committee on Mer- chant Marine and Fisheries, Washington, DC. The subcommittee met, pursuant to call, at 10:22 a.m., in room 1334, Longworth House Office Building, Hon. Gerry E. Studds [chairman ofthe subcommittee] presiding. Present: Representative Studds, Hochbrueckner, Pallone, Un- soeld. Reed, Furse, Hamburg, Lambert, Eshoo, Ortiz, Gilchrest, Castle. Stafif Present: Jeffrey Pike, Will Stelle, Sue Waldron, Gina De- Ferrari, Karen Steuer, Lesli Gray, Leigh Clayton, Joan Bondareff, Robert Wharton, Cyndi Wilkinson, Laurel Bryant, Jayneanne Rex, Tom Melius, Jill Brady, Harry Burroughs, Eunice Groark, Bill Wright. STATEMENT OF HON. GERRY STUDDS, A U.S. REPRESENTATIVE FROM MASSACHUSETTS Mr. Studds. The subcommittee will come to order. The Chair apologizes profusely to his colleagues and to the witnesses and to those here. Nothing short of a breakfast meeting at the White House would have kept me, and that is what it was, and I do apologize. And you should all feel comforted that the spotted owl contro- versy is well on its way to resolution. I particularly apologize to the witnesses who have been kept waiting. Let me say there are a lot of folks—here. If there is—anyone—particularly anyone who needs to write without a seat you are per- fectly welcome to come and fill in on this lower dais here. That will relieve some of the pressure there. You will not be accused ofbeing a member of Congress so please feel free to come on in. Don't be frightened. Most ofthese people up here are really quite nice. In 1984, when this committee passed an amendment to the Marine Mammal Protection Act establishing an embargo provision for dolphin-unsafe tuna, we had no idea that it would become the catalyst for an international debate on the impacts of free trade agreements on U.S. conservation and environmental protection efforts. It is largely because of the Marine Mammal Protection Act's embargo provisions that we are all here today. (1) We live in a world growing steadily smaller, where an action in one hemisphere has the potential to reverberate almost immediate- ly in another. The American economy is now a global one, and American jobs are created or destroyed by the relative success or failure of our export markets. At the same time, access to a healthy U.S. consumer market has the ability to make or break a foreign industry's future. The U.S. economy increasingly reflects the growing influence of international free trade principles, that, ideally, those who produce the most products at the cheapest prices are the winners. But the old saying of "caveat emptor" applies to free trade as well. The maquiladora area on the U.S.-Mexican border is a sober- ing example of trade principles gone awry, with American companies moving south to take advantage of cheap labor and lax enforcement of environmental regulations. There are also major sov- ereignty issues to be considered, given the circumstances of Mexi- co's challenge to our own Marine Mammal Protection Act. Finally, ofparamount concern to all of us should be the process ofdemocra- cy itself, and the fact that thus far trade negotiations and dispute settlements have taken place in secret, behind closed doors. Today's subject is quite possibly the most arcane and impenetra- ble of any that I can remember before this committee in a long time. Let me try a couple of examples to illustrate in a very real sense why we are here. Should the United States have the right to insist that automobiles sold in this country meet certain fuel effi- ciency standards or emission standards? The answer is yes. But might these standards be argued to constitute an illegal restraint on trade and violation of these trade agreements? The answer is also yes. Should the United States have the right to insist that agricultur- al products meet certain minimum public health standards, and that their production meets certain minimum environmental standards? The answer, ofcourse, is yes. But might these standards be challenged as an illegal restraint on trade on those products not meeting similar standards? That answer is also yes. Should we have the right to insist that our domestic markets not be used for causing the depletion of limited natural resources else- where, whether they be resources of the international commons or anywhere else? The answer clearly is yes. But might these restrictions be challenged as illegal under these trade agreements? The answer, again, is darn right. In short, when have the interests ofexpanding trade trumped all other social or environmental policies? It is a fact that both the General Agreement and the NAFTA purport to elevate trade objec- tives to precisely this status, and that, in my view, makes no sense at all. Those of us who have spent most of our legislative careers trying to protect the environment and natural resources may well have been asleep at the wheel for far too long, but as of this moment, we are no longer asleep. Something needs to give. One hundred and fifty years ago while giving a speech on import duties before the English House of Lords, Benjamin Disraeli warned that free trade, in and of itself, is not a principle but an expedient, a means to an end. In today's world, that end must not consist solely of enriching the stockholders of Fortune 500 companies as quickly as possible. We must also ensure that global free trade does not further stress this fragile planet and its limited resources. Until recently, considering the environmental impacts of a trade agreement was as alien to trade negotiators as protecting wetlands was to the late, unlamented Council on Competitiveness. Fortu- nately, that situation is changing. Trade negotiators are learning about sustainable yield and biodiversity. Environmentalists are talking about import surges and snap-back tariffs. In short, we are entering a brave new world oftrade negotiations, and we are entering it none too soon. Laws important to this committee are at stake: the Magnuson Fisheries Conservation and Management Act, the Marine Mammal Protection Act, the Fishermen's Protective Act, the Wild Bird Conservation Act, and the High Seas Driftnet Fisheries Enforcement Act all contain trade restrictions. The challenge before us today is to determine how best to mesh free trade with other domestic policy programs including environmental protection and wildlife conservation. A number of the laws passed by this committee have taken the same approach supported by conservation and consumer action groups, that the leverage of potential import sanctions encourages protection of natural resources both domestically and abroad. It is admittedly not the best approach in an ideal world. But this, as many people may have noticed, is not an ideal world. If it were, we would not have hundreds of species on the verge of extinction and hundreds more already gone. We would not be faced with pol- luted coastal environments and destroyed riversheds, and we would not need smokestack scrubbers or reforestation programs. The new Administration's announcement of its intention to begin NAFTA negotiations on an environmental side agreement to the makes this hearing timely and extremely important to this committee. It is the objective of this subcommittee to assist the Admin- istration in developing the terms of an agreement to accompany the NAFTA that will properly incorporate issues of environmental quality and natural resource conservation into that agreement and other trade initiatives. It is an enormous challenge that is long overdue. I look forward very much to today's testimony. Mr. Studds. Are there additional opening statements? The gen- tleman from Delaware. Mr. Castle. Thank you very much, Mr. Chairman, and good morning. I would like to make an opening statement. Before I do though, I would ask for unanimous consent that opening statements which I have here by the Honorable Jack Fields and the Honorable H. James Saxton be entered into the record. Mr. Studds. Without objection. [Statement of Mr. Fields follows:] StatementofHon. Jack Fields, a U.S. Representative from Texas, and Ranking Minority Member, Committee on Merchant Marine and Fisheries Mr. Chairman, I am pleased that the Subcommittee is holding a hearing today on the impact of trade agreements on environmental protection and natural resources conservation. I would like to welcome our distinguished witnesses, especially Dr. Khosrow Fatemi, Dean ofthe Graduate School ofInternational Trade and Business Adminis- tration at Laredo State University. Dr. Fatemi is familiar with the North American Free Trade Agreement and I am sure will provide us with some valuable insights into the impacts ofthe Agreement. As a Representative from Texas, the largest U.S. exporter to Mexico and sixth largest U.S. exporter to Canada, the NAFTA will have a considerable impact on my home State. In 1991 alone, Texas exported $19.7 billion worth of goods to Canada and Mexico, supporting 185,000 jobs. As a whole, the U.S. has seen its exports to Mexico almost double since 1988, from $20.6 billion to $40.6 billion in 1992. It is critical that, as side protocols are contemplated, we do not forget the economic benefits that are achievable. I understand and support the need to address environmental issues in trade agreements. I believe that NAFTA has done a goodjob looking at the environmental impacts of proposed economic development. Indeed, one of the goals in the NAFTA is to strengthen development and enforcement of environmental laws and regulations. NAFTA allows the U.S. to continue to prohibit goods that do not meet U.S. standards; allows parties (including States and Cities) to enact tougher standards; encourages strengthening and harmonizing environmental and health protection standards; and preserves the right to enforce international treaties protecting endangered species and lesseningthe use ofozone depletingchemicals. In spite ofwhat the NAFTA already addresses, there are many who feel additional environmental protections are needed, not only in the NAFTA, but also in Gener- al Agreement on Tariffs and Trade (GATT) negotiations. While I believe it is important that we review these concerns, we need to also recognize that progress is being made. In 1991, Mexico spent 18 times more on environmental concerns than in 1988. They are enforcing the strong environmental laws that they already have on the books. Whatever changes we make in trade agreements currently under consider- ation, it is important to recognize and encourage progress, not burden the process with disincentives to trade. I look forward to hearing the comments of our witnesses on the impacts of the NAFTA and GATT Agreements on the environment and their suggestions for im- provements. I appreciate the Chairman's interest in an issue that is so critical to the U.S., and to many ofmy constituents. Thankyou. [Statement ofMr. Saxton follows:] Statement of Hon. H. James Saxton, a U.S. Representative from New Jersey, AND Ranking Minority Member, Subcommittee on Environment and Natural Resources I want to thank the Chairman for taking initiative on this matter. As most ofus have known, and others are beginning to understand, the environment and the economy are not mutually exclusive. Rather, they are interdependent. Nowhere else will this interdependency become more evident than in the matter of global free trade. Like many of us here today, I am partic—ularly concerned with the matter of domestic soverei—gnty. Our domestic industries be they manufacturers ofgoods or har- vesters offish have been forced through the years to minimize their impact on the environment, take the lead in developing sound technologies, and adopt methods of conservation and sustainable stewardship. Such technologies will be critical compo- nents ofour export industries in the years ahead. However, as the domestic and international demand for expanding free trade in- creases, we must take care not to place our industries at a disadvantage. Protecting our domestic players while insisting on strong conservation measures and stewardship as a requirement for doing business is one of the most important tasks facing this country and the futureglobal markets. I look forward to working with the Chairman on this matter and welcome our witnesses here today. Thank you, Mr. Chairman. [Statement of Mr. Ortiz follows:] Statement of Hon. Solomon P. Ortiz, a U.S. Representative from Texas, and Chairman, Subcommittee on Oceanography, Gulf of Mexico, and the Outer ContinentalShelf I want to thank all you for coming today to appear before the Subcommittee to address the issue of how the negotiation of trade pacts with other nations may impact U.S. environmental protection and natural resourceconservation efforts.