May 10, 2019

Still standing: The New U.S.-Mexico-Canada Agreement and the fate of the Commission for Environmental Cooperation

Tracy Hester

Like a hardy survivor in a long-running disaster movie, the Commission for Environmental Cooperation (CEC) has outlasted the tortuous negotiation of the U.S.-Mexico-Canada trade agreement (USMCA) and, unexpectedly, emerged stronger than before. The USMCA’s environmental provisions, especially when viewed in concert with the new Environmental Cooperation Agreement (ECA) between the parties, now address long-running criticisms of the CEC’s operational processes and goals. The new language—if approved by Congress—offers the prospect of revitalized environmental cooperation between the three nations under a reenergized CEC.

NAFTA and the original CEC

First, some background. When the United States, Canada, and Mexico negotiated the North American Free Trade Agreement (NAFTA) to establish one of the world’s largest free trade zones, critics immediately raised concerns that the agreement would encourage corporations to relocate to jurisdictions with cheaper labor and laxer environmental regulations. To assure NAFTA’s passage before a skeptical Congress, the Clinton administration pursued two side agreements to NAFTA that focused on labor and environmental concerns. The North American Agreement on Environment Cooperation (NAAEC), the name given to the environmental side agreement, accompanied NAFTA into force on January 1, 1994.

Even through the haze of 25 years of history, NAAEC is an innovative and groundbreaking agreement. It committed all three nations to foster sustainable development and protect the environment within their territories. It also specifically committed them to enhancing compliance with environmental laws and promoting transparency in developing new environmental regulations and policies. NAAEC art. 1. It additionally established an independent international organization, the CEC, to help the parties coordinate their activities to address cross-border environmental impacts. The CEC in turn included three new international entities—the Council, which consists of the highest-level environmental officials of each nation and governs the CEC; the Secretariat, which independently administers the Council’s directives; and the Joint Public Advisory Committee, which consists of 15 citizens and advises the Council on matters within the scope of NAAEC. Id. at art. 8.2. These three bodies have helped spur environmental research and coordinate policy initiatives on a broad array of concerns, including transnational shipments of hazardous waste.

NAAEC also established a new citizen submission process to identify and highlight alleged failures to enforce national environmental laws or requirements. Under the new Submittal on Environmental Matters (SEM) process, residents of the NAFTA parties can allege that any of the NAFTA parties has failed to effectively enforce its own environmental laws. Notably, NAAEC allows private parties—including individuals and nongovernmental organizations (NGOs)—to raise these claims directly rather than through their own national governments. To invoke the process, the petitioner must make a submission to the Secretariat raising the allegation. The Secretariat in turn must assess whether the submission meets detailed criteria, both substantive and procedural, set out in NAAEC. These conditions include providing “sufficient information to allow the Secretariat to review the submission” and showing that the submission “appears to be aimed at promoting enforcement rather than at harassing industry.” NAAEC art. 14.1. Notably, the Secretariat must find that the submission involves one or more “environmental laws,” it alleges failures to “effectively enforce” those laws, and those failures are ongoing.

If the submission survives this gauntlet, the Secretariat can recommend the development of a factual record to investigate and corroborate the nation’s alleged failure to enforce. If the Council approves the Secretariat’s recommendation, the Secretariat can begin its investigation and development of the record; it cannot, however, provide a legal conclusion as to whether the nation has failed to enforce its environmental laws. The factual record, true to its name, simply sets out the actions and background surrounding the alleged nonenforcement. The premise of NAAEC’s environmental submittal process is that the simple light of public disclosure and transparency will drive the nation to address any enforcement shortfall. Last, after the Secretariat completes the factual record, the Council could then decide whether to make the final factual record publicly available by a majority vote (i.e., two-thirds vote). Id. at art. 14.2.

In practice, structural design flaws slowly hobbled the CEC’s effectiveness, particularly as to the SEM process. Some criticized the NAAEC during the initial negotiations, saying that it lacks any enforceable mechanism to compel one of the NAAEC parties to bring their environmental enforcement practices into line. That criticism persisted over the next two decades. This complaint, however, simply highlighted the political realities surrounding NAAEC’s approval. The three nations at that time clearly would not have accepted such an infringement into their national sovereignty as part of a corollary agreement accompanying a trade agreement.

NAAEC’s other shortfalls, particularly as concern its SEM process, grew over time. Some of the difficulties arose from inadequate funding commitments and shifting environmental priorities among the three nations. The SEM process suffered from several detrimental practices, including the Council’s willingness to narrow the scope of issues considered (“scoping”); aggressive claims by a responding nation that its pending legal or administrative proceeding, however limited, already addressed the underlying environmental violation; and the outright rejection by the Council, at its discretion, of the Secretariat’s determinations or recommendations. Despite attempts to modernize the SEM process and reform the Secretariat’s guidelines, the number of submittals has fallen steadily over the past decade, and at least one party took the extraordinary step of withdrawing its submittal because of its concerns over the Council’s scoping practices.

USMCA’s changes and challenges

Despite fears that NAAEC would fall by the wayside in the aftermath of the United States’ withdrawal from the Trans-Pacific Partnership (TPP) negotiations and renegotiation of NAFTA, the new USMCA surprisingly leaves the CEC and SEM process in better shape than before. First, USMCA puts some teeth into specific environmental obligations of the three parties by including detailed commitments on important subjects such as fisheries management, ozone protection, endangered species protection, and marine ship pollution. USMCA at arts. 24.9-.12, 24.15-.23. These provisions echo similar commitments sought in the TPP, but without the troubling retreat from NAAEC’s review process found in the proposed TPP agreement. The USMCA also commits the three nations to provide enough funding to empower the CEC to carry out its mandate. This step will hopefully alleviate the Council’s chronic and deteriorating resource shortfalls.

The SEM process also survived the USMCA negotiation process, and, in fact, it unexpectedly emerged with important improvements. Most notably, the USCMA incorporates many of the administrative reforms to the SEM process directly into the text of the side agreement. As a result, the three nations now have direct obligations to meet timeline requirements and satisfy transparency and disclosure obligations. USMCA at art. 24.27-.28 (SEM timeline requirements); art. 24.5 (transparency and disclosure).

Separately, like NAFTA, the USMCA also has its own side agreement: the ECA. The ECA confirms many of the USMCA’s commitments and provides important detailed direction on operations, funding, and priorities. For example, the ECA specifically directs the three nations to answer information requests needed to develop factual records (a perennial sore point under NAAEC), and it allows the CEC to accept and use funding from supplemental sources. This latter innovation could hopefully encourage the development of NGO support of the CEC from groups akin to the United Nations Association.

The USMCA, of course, must first be approved by Congress, and some of its other provisions raise independent environmental concerns. But considering the dim prospects for NAAEC’s survival during the TPP and USMCA negotiations, its unanticipated survival—and potential reinvigoration under the new ECA—offer hope for renewed credibility and effectiveness for this important, yet beleaguered, institution.

Tracy Hester

Tracy Hester is a lecturer at the University of Houston Law Center and co-director of its Center for Carbon Management in Energy.