WASHINGTON, D.C. Aug. 27, 2018 – Today, various outlets are reporting that negotiators from the United States and Mexico announced they reached a preliminary agreement on a new North American Free Trade Agreement (NAFTA) that excludes Canada. Both Mexico and Canada have said that they will not finalize a bilateral deal with the U.S. but rather all three countries will need to agree to a trilateral agreement.
In response, Sierra Club Executive Director Michael Brune released the following statement:
“Workers, environmentalists, and communities across all three NAFTA nations have demanded a trade agreement that protects jobs, clean water and air, climate, and their rights, not this toxic proposal that was brokered haphazardly and secretly to try and help Trump score political points. Corporate polluters have had unparalleled access to the negotiations while the public continues to be shut out. All we know from these backroom talks is that Trump plans to replace a failed trade deal with one that weakens environmental standards and continues to allow corporations to outsource jobs and pollution to Mexico, harming communities on both sides of the border. If this deal moves forward as is, it will exacerbate — not relieve — NAFTA’s decades of damage to North America’s communities.”
See here for a recent joint statement from leading U.S. environmental groups on what must be included in any NAFTA replacement deal.
Key findings from our report NAFTA 2.0: For People or Polluters?
NAFTA’s Existing Obstacles to Climate Progress
NAFTA allows corporations to evade climate policies by offshoring their production, pollution, and jobs to countries with weaker climate standards. Policymakers across North America regularly cite this climate pollution loophole as a reason not to enact stronger climate policies, for fear that doing so would spell job loss and a mere exporting of emissions.
NAFTA’s “proportionality” rule locks in tar sands oil extraction and fracking in Canada, while giving investors a permanent green light to finance new tar sands oil pipelines to the U.S. If Canada tries to meet its climate goals but remains bound by this NAFTA rule, the country will produce nearly 1,500 metric megatons more climate pollution by 2050 than if it ditched the rule. This cumulative NAFTA climate pollution penalty is twice Canada’s current annual emissions and more than 12 times greater than its 2050 climate pollution target.
NAFTA has facilitated a fivefold increase in U.S. gas exports to Mexico by requiring those exports to be automatically approved. This has fueled increased fracking in the U.S., expansion of cross-border gas pipelines, and a crowding out of solar and wind power in Mexico. Only 1 percent of Mexico’s electricity comes from solar and wind while half now comes from gas, which has contributed more than any other fuel type to Mexico’s increased climate pollution.
NAFTA could prolong the climate damage from the Trump administration’s regulatory rollbacks if NAFTA’s private legal system for corporate polluters remains intact. If “investor-state dispute settlement” (ISDS) remains in NAFTA, it could delay or weaken the re-establishment of U.S. climate policies after the Trump administration leaves.
New Climate Threats in NAFTA 2.0?
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NAFTA negotiators have explicitly stated that they intend for NAFTA 2.0 to lock in the recent deregulation of oil and gas in Mexico, which has encouraged increased offshore drilling, fracking, and other fossil fuel extraction. A future Mexican government may want to restrict such activities to reduce climate, air, and water pollution. However, NAFTA 2.0 could bar such changes with a “standstill” rule that requires the current oil and gas deregulation to persist indefinitely, even as the climate crisis worsens and demands for climate action crescendo.
NAFTA 2.0 includes expansive rules concerning “regulatory cooperation” that could require Canada, the U.S., and Mexico to use burdensome and industry-dominated procedures for forming new regulations, which could delay, weaken, or halt new climate policies. These rules also could be used to pressure Canada and Mexico to adopt climate standards weakened by the Trump administration, making it harder to resume climate progress in the post-Trump era.
A Climate-Friendly NAFTA Replacement
To allow governments to take climate action without fearing the offshoring of jobs and pollution, NAFTA’s replacement must require each country to enforce robust climate, labor, and human rights protections, in line with the Paris accord and other international agreements. In contrast, the Trump administration is proposing weak environmental standards for NAFTA 2.0, without even mentioning climate change.
To prevent climate and other public interest policies from being challenged in trade tribunals, NAFTA’s replacement must include a broad “carve-out” that shields such policies from challenge, while eliminating ISDS and other overreaching rules. The Trump administration has proposed an opt-out for ISDS, but negotiators have given no indication that they plan to curtail other overreaching rules or exempt climate and other public interest policies from those rules.
To support a just transition to a clean energy economy, NAFTA’s replacement must allow governments to swiftly phase out fossil fuel exports. The deal must eliminate NAFTA’s proportionality rule and the rule that requires automatic U.S. approval of gas exports.