North American Free Trade Agreement

In 1947, in the aftermath of World War II, 23 nations signed the General Agreement on Tariffs and Trade (GATT). Over time the number of signatory nations grew and by 1986, the year of GATT's eighth round of trade negotiations (known as the “Uruguay” round), there were 75, including Mexico, which joined that year.

In 1989, at a time when market-based, low-tariff trade of goods and services between countries was being touted as a driver of investment and economic growth, the United States and Canada negotiated the U.S.-Canada Free Trade Agreement (CFTA). Soon after, Mexico, then governed by newly-elected, neoliberal president Carlos Salinas de Gortari, [Page 1261]signaled a strong interest in enlarging the U.S.-Canada agreement.

After four years of tripartite negotiations, the expanded North American Free Trade Agreement (NAFTA) became law on January 1, 1994. NAFTA thus established the world's largest free trade area—comprising the United States, Mexico, and Canada—populated by some 440 million people and producing about U.S. $12 trillion worth of goods and services.

As a commercial treaty, NATFA's goals were to remove tariffs and nontariff barriers; enhance fair competition; promote investment; protect intellectual-property rights; institute practical procedures for resolving disputes; and facilitate trilateral, regional, and multilateral cooperation.

But while the agreement itself was intended as an economic instrument, NAFTA's legacy may rest in its innovation in another domain: environmental protection. Prior to U.S. congressional approval, U.S. environmental groups, most of which initially resisted the accord, argued for institutional safeguards for the continent's environment and especially the fragile, water-scarce U.S.-Mexico border region. To placate this influential sector of civil society, the signatories agreed to soften the potential environmental impacts of the expected growth in trade and economic activity by chartering three new environmental institutions: the trinational Commission for Environmental Cooperation (CEC), created through a side agreement amending NAFTA; and two binational institutions, the Border Environment Cooperation Commission (BECC) and the North American Development Bank (NADBank), negotiated between the United States and Mexico. This “greening” of a trade treaty was a novel idea in 1993 and it remains the most prominent instance of such a procedure.

The new triad of CEC, BECC, and NADBank was meant to fill significant lacunae in protecting the North American environment. In this, they joined a host of existing international institutions (treaties, organizations, and cooperative agreements) already addressing certain aspects of environmental protection. Most prominent among these are: the International Boundary Commission (IBC), created in 1889 and changed to the International Boundary and Water Commission (IBWC) in 1944, to resolve boundary issues between the United States and Mexico; the International Joint Commission (IJC), an analogous organization established in 1909 to deal with U.S.-Canadian water-related issues; the Colorado River Compact of 1922, which allocates use of that river and forms the basis of what has become known as the “Law of the River”; the 1944 United States–Mexico Water Treaty, governing the Colorado, Rio Grande, and Tijuana Rivers; the 1983 La Paz Agreement (or “Reagan–de la Madrid Accord”), the first comprehensive environmental treaty between the United States and Mexico; the Border XXI Program (1996–2000), a binational cooperative workplan designed to implement the terms of the La Paz Agreement; and Border 2012 (from 2003), the successor to Border XXI.

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