This summer, the House and Senate want to finish the Central American Free Trade Agreement, a top priority for President Bush. But the trade pact has a tough road ahead, with significant opposition from Democrats, labor unions, and environmental groups. Could CAFTA undermine U.S. environmental laws? Will it raise the standards of living in developing nations? What lessons have been learned from more than a decade of experience under the North American Free Trade Agreement? David Waskow, international program director at Friends of the Earth, describes the outlook for free trade legislation this year.
Brian Stempeck: Hello and welcome to OnPoint. I'm Brian Stempeck. Joining me right now is David Waskow, international program director at Friends of the Earth. David thanks for being here.
David Waskow: Thank you.
Brian Stempeck: Typically when people think about the debate over free trade they think about labor unions, they think about industries losing jobs overseas. They don't really think about environmental groups. Give us a sense as Congress right now is considering CAFTA, the Central American Free Trade Agreement, why is Friends of the Earth and are other environmental groups getting involved in this debate?
David Waskow: Well we do see this as a critical environmental issue and let me begin by saying that unlike NAFTA a decade ago when there was a split within the environmental community over what to do with that agreement, there is unified opposition in the environmental community to CAFTA today. In groups like the National Wildlife Federation, that supported NAFTA 10 years ago, are opposing CAFTA today. They've seen the impacts. They've seen what happened under NAFTA and they don't think we should go that course again with an agreement like CAFTA. There also is strong opposition from Central America. Dozens of environmental groups from the region have weighed in saying that they think this agreement is going to be harmful to their environment and to their society.
Brian Stempeck: Now is the opposition to these agreements, is it an anti-globalization effort? I mean that's how some people see this, as lumping environmental groups and with the TWO protesters and things like that. But are there specific things that you need to see in these trade agreements that would allow you to support them?
David Waskow: Well we think that trade can actually be quite beneficial both to the United States and to developing countries. The question is what kind of trade agreements are negotiated and we think everything hangs on that question. We have two central concerns about CAFTA. The first is that the environmental provisions in the agreement don't get the job done. The increased trade and investment that we're going to see from this agreement will have serious ramifications for the environment and let me just say, Central America is a very special place environmentally. It's less than 1 percent of the land mass in the world, but it has more than 8 percent of all the species living on the planet. It's a region that, as anyone who's been there knows, is very rich in biodiversity and has wonderful places. It's also a place that's under very serious threat environmentally, 70 percent of its forests have been deforested in the last decade. There is severe air and water pollution in a number of cities and so the threats are very serious. With increased trade and investment those issues are going to become more serious, more problematic, more severe and we think that a trade agreement like this, therefore, needs to address those concerns. It doesn't. The environmental rules actually have many gaps and loopholes and we don't think that it does what needs to be done. In addition to that, not only does the agreement fail to raise standards in the way that it needs to do, it actually has the potential to undercut environmental protections in Central America and also actually in the United States, as I can get to in a moment. We're particularly concerned about the investor rights rules in this agreement. These are rules that essentially give wide rights to multinational companies to challenge environmental laws and regulations.
Brian Stempeck: Right.
David Waskow: And essentially what it does is allow them to say that their business interests have been impaired, their profits have been impaired because of an environmental regulation and they should be compensated by the government.
Brian Stempeck: Now this is something we've seen under NAFTA. There's two cases going on right now that involve the United States under NAFTA. I think you have a Canadian company suing California over banning MTBE, a gasoline additive that causes water pollution. The company is suing for about $1 billion in damages saying that California unfairly infringed on its investments in that state. What's going on with that case? I mean what kind of ramifications does that have for NAFTA and CAFTA and other trade deals moving forward?
David Waskow: Right. Well we've seen a number of cases under these investor rights rules and essentially the companies go directly to an international tribunal and demand their cash compensation. We've seen 40 of these cases under NAFTA, not all them environmental, but already Mexico and Canada have lost cases involving environmental protections. The United States is facing almost 2 billion total in cases involving environmental and public health and safety issues. The one you mentioned involving California's toxic gasoline additive ban, a billion dollar challenge. The United States government has already spent $3 million defending us against what we think -- our country against a challenge to what we think is a legitimate environmental protection.
Brian Stempeck: Right.
David Waskow: Mining protections have been challenged, hazardous waste treatment protections and so forth, so we see this as really a dagger aimed at the heart of environmental protection in our country.
Brian Stempeck: How much of a concern is it really though? I mean when you talk to the U.S. Trade Representatives, they'll say, they point to the fact that in 10 years of NAFTA the United States has never lost a case. You mentioned there's 40 cases, there's $2 billion worth of damage suits against the United States, but if we haven't lost in 10 years what's to think that we're going to lose in the future? Why the concern about this?
David Waskow: Well in the environmental cases they actually haven't been, the outcomes have not yet been determined, so we haven't won either when it comes to the environmental cases. Mexico and Canada are 0-and-2 and actually there's another case that was settled where Canada had to pay out $13 million because of a ban it put on a toxic gasoline additive. So, so far, the record is pretty bad actually and looking forward, even if the U.S. were to win a case like the one involving MTBE, we have spent more than $3 million defending ourselves on it. And I think those kind outlays are not ones that we want to see going forward and if you're a small Central American country think about what the impact of a challenge like that would be. Three million dollars is a very sizable chunk of any of those government's environmental agency budgets and I think an environmental agency or even a Congress there is going to be very wary about putting new environmental laws in place if they know that there are multinational companies from the U.S. looking over their shoulders ready to challenge them.
Brian Stempeck: There's been some concern that some of the states who are involved with this might be lobbying against CAFTA because they don't like these investment protections. They're a little bit afraid that more of these countries are going to start suing them, California especially. There was a recent Business Week article where they talked about a lot of these states starting to pull their support. What do you see as the likely path forward in Congress right now for CAFTA and will these investment protections and other aspects ultimately kill the bill?
David Waskow: Well I think there are a number key swing votes in play in Congress, members of Congress who are very concerned about these questions, who think daily about environmental issues and when these issues are put front and center for them I think it does become a serious concern. There are additionally, as you know, concerns about impacts on local governments and state governments. If a local government or a state government puts in place an environmental law or protection all of the sudden a foreign government can go to an international tribunal, completely bypass any domestic legal proceedings, and challenge what they've done. Now the local government doesn't have to pay out if the U.S. loses a case. The federal government has to pay out, but nonetheless, we've already seen with California Governor Schwarzenegger vetoing a bill that would have required recycling of rubber to use in highways because he was concerned about a possible NAFTA challenge.
Brian Stempeck: There are some members of Congress who have come out and they're trying to strengthen the environmental protections within CAFTA. Senator Baucus of Montana is one of them. Has he done enough, have they done enough to try to change these bills? I mean the markups are going on this week. We're expecting it to probably go to the House and Senate floor sometime this summer. Do you think there's going to be a chance to change these environmental protections and can enough be done to satisfy the concerns of the environmental community?
David Waskow: Well Senator Baucus has raised some important issues and he essentially engaged in a process with the United States Trade Representative Office around -- including a citizen's submission process, in CAFTA. That allows citizens, individual citizens and organizations, to raise concerns about a country not effectively enforcing its laws.
Brian Stempeck: Like the public comment period in the United States, something similar to that?
David Waskow: Exactly. Unfortunately, we've seen with NAFTA that although this is helpful to have as an additional check in these agreements, we've seen with NAFTA that it doesn't go far enough and it's not strong enough. It doesn't have teeth at the end of the day. The citizen's submission process ends up with a report, a factual record about what has happened. That contrasts very strongly, I think very starkly, with what happens under these investor rights provisions that I just described, where a company can actually get money at the end of the day. So you've got a book on the one hand and a check on the other hand. I think the imbalance between the investor rights rules that challenge environmental laws and the citizens of submission process, that's meant to be there to protect them, is quite severe.
Brian Stempeck: You recently went around Capitol Hill, your group and some other environmental groups, with Father Cortez, who is a major environmental award winner from Honduras who represents subsistence farmers and other groups. What were his concerns and I guess, what members of Congress did you meet with and how is this debate against CAFTA going forward with some of these members from Central American countries coming in?
David Waskow: Well, we met with a wide range of swing members of Congress on this issue from both Republican and Democratic sides. The father raised some really important issues about impacts that were going to be felt locally, in Central America. He talked about mining companies that have come into his country, Honduras and also to Guatemala and some of the other countries, and are using very toxic methods to go about mining gold and other minerals and are also destroying the forests in many ways. He talked about agriculture and what will happen if highly subsidized agricultural products from the United States are dumped into Central America pushing small farmers off their land and we've seen with NAFTA that has very serious environmental consequences. In Mexico, in southern Mexico, when farmers have been pushed off their land or impoverished they've gone and deforested large areas of forest in order to supplement or replace their income and so although this agricultural dumping issue is usually seen as a social question and economic question, it's also a key environmental question.
Brian Stempeck: In USTR's defense, when you ask them about some of these environmental protections, what they'll say is a lot of these countries don't have strong environmental laws. If you look at Honduras and other Central American countries they don't have a lot in place and they say with these trade agreements we can get the U.S. EPA, U.S. AID, U.S. institutes to go in there and help them develop better environmental laws and help them enforce those. How do you respond to that? I mean isn't this a good path forward for some of these countries, beyond just the question of raising their standard of living?
David Waskow: If the agreement actually did two things simultaneously. One would be to require that countries raise their standards, their environmental standards, and also if it provided significant amounts of money to help get them there. It doesn't do either of those at this point and you need both of those, you need both a bit of a prod and you need something that can actually assist them to get where they need to go. USTR itself has said that Honduras and Guatemala don't have even basic environmental laws in place that they ought to. There's nothing in the agreement that requires that to change and so far, at most, about $10 million has been pledged to help Central American countries deal with environmental problems. Broken down by the six countries that are involved in this agreement, that's 1.3 million or so --
Brian Stempeck: Right.
David Waskow: Or maybe a little more, but one and a half million, it just doesn't get the job done. They have very severe problems as I said earlier.
Brian Stempeck: But USTR also says, they say with some of the products they're already dealing with some of the trade agreements we've seen recently in Morocco and Chile. They've basically had trade agreements where they're going in and getting these projects done and there is more money going to these countries. I mean couldn't the path forward, if there is more money, be a positive for these Central American countries?
David Waskow: Well let me talk about Chile and Singapore first for a second and NAFTA. We've seen with all three of these agreements that the environmental rules have actually not worked to get standards where they need to go. With NAFTA the citizen's submission process has led to just a handful of factual records. They have not generally said anything about whether a country's effectively enforcing its laws. When they have said something about that, where Mexico didn't enforce its water pollution laws, the U.S. government didn't step in to press the Mexican government to change at all. With Chile the government has allowed the continued illegal deforestation of alerce trees, one of the very special species in Chile. In Singapore the U.S. government has stood by while illegal trade in illegal forest products and also illegal wildlife has continued unabated. So we haven't seen the kind of forward progress on these kinds of questions where environmental laws just aren't getting enforced or getting put in place that we would've liked under these previous agreements. So with CAFTA as well, we're highly skeptical.
Brian Stempeck: You mentioned before that most, if not all, environmental groups do oppose CAFTA right now, but there have been a number of kind of high profile groups that have not gotten involved, World Wildlife Fund, Nature Conservancy and some others. There've been some recent stories about this and these are groups that are very active in South and Central America and so far haven't done much to get involved. They've been pretty silent on the issue. Is that a disappointment to you?
David Waskow: Well, I think many of these groups, and there are just a few in fact I think that one can point to, these groups are not ones that have had trade policy programs in place, or haven't recently had them in place. So for them it was just a matter of not being ready to wade into a policy arena in which they didn't have a lot of expertise, even if they saw some real concerns about this agreement. So I'm not concerned. There are 10 groups, 10 major groups that have weighed in with Congress across the spectrum of the environmental community. Just last week the League of Conservation Voters indicated its opposition to CAFTA and of course LCV, the League of Conservation Voters, in fact scored trade agreements several years ago when fast-track trade promotion authority was before Congress. So I think their input is going to be very important.
Brian Stempeck: Last question for you David. This summer, as CAFTA's moving forward on the Hill and the White House gets behind it, do you think it'll pass and what do you see as the road forward in Congress this summer?
David Waskow: I think it's very hard to tell. It's going to be a very close vote. I think everyone recognizes that. There's some critical questions twisting in the wind right now, sugar market access to the United States is one of those. The votes of environmentally concerned members, both Democrats and moderate Republicans, are going to be key to the outcome. So I think we'll have to wait and see as far as the outcome goes. As far as our work goes, we continue to raise the issues that I've talked about and I think we're beginning to see much more traction in terms of people paying attention to what the environmental concerns are and what the environmental consequences for Central America and the United States might be.
Brian Stempeck: All right. We're out of time. David thanks for being here.
David Waskow: Thank you.
Brian Stempeck: But I do think our guest today that was David Waskow of Friends of the Earth. I'm Brian Stempeck. This is OnPoint. Thanks for watching.
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