Canada-U.S. Trade and the Environment:

Regimes, Regulatory Refugees, Races, Restraints and Results

John Kirton[1]

Paper presented at the conference on “Rethinking the Line: The Canada-U.S. Border,” October 23-25, 2000, The Waterfront Centre Hotel, Vancouver, British Columbia, sponsored by the Policy Research Secretariat. The authors expresses his gratitude for the contribution of Alan Rugman[2] and Julie Soloway[3], who collaborated in the initial research on which this paper is substantially based. This paper forms part of the research being conducted under the SSHRC-funded Strategic Grant for a project on “Strengthening Canada’s Environmental Community Through International Regime Reform” (EnviReform), based at the Centre for International Studies, University of Toronto.

Version: November 5, 2000.
Throughout the long history of the bilateral Canada-U.S. relationship, both trade issues and environmental issues have recurrently been at the centre of controversy and conflict (Nye 1976). They have equally been at the centre of co-operative steps, including the construction of pioneering bilateral institutions such as the International Joint Commission and those created or catalyzed by the Free Trade Agreement (FTA) of 1998 (Spencer, Kirton and Nossal 1981). Moreover, many of these controversies in either sphere — for example, the Arctic Waters Pollution Prevention Act of 1970 and the FTA itself in 1988 — as well as the co-operative initiatives and institutions have inherently involved the tradeoffs and other linkages between trade and the environment (Munton and Kirton 1992).

Yet it was only in the 1990s, with the advent of trilateral co-operation, the North American Free Trade Agreement (NAFTA), the accompanying North American Agreement on Environmental Cooperation (NAAEC) and the first regional organization, the Commission for Environmental Co-operation (CEC), that trade and environment became formally fused in a single regime (Kirton 1998b, Kirton 1997, Munton and Kirton 1996). It may be truly paradoxical that the countries with the largest two-way trading relationship in the world and with vast borders that joined their massive ecological capabilities and vulnerabilities should have waited until the arrival of Mexico and the trilateralism it brought to forge their political trade-environment link. It may be even more paradoxical that these two world-leading G7 trade and environmental powers and pioneers of multilateral trade and environment institutions in the 1990s should not have crafted and used such multilateral institutions as important instruments to address the trade-environment relationships within their continental home. But with few exceptions, it is the trilateral NAFTA regime and its institutions and organization, rather than available bilateral or multilateral alternatives, that are defining how the struggle to relate trade and environmental considerations affect investment and regulatory races to the bottom, restrictions on national and subfederal regulatory autonomy, and the economic, environmental and social results in both Canada and the United States.

After seven years in operation, and three years in serious anticipation, this revolutionary NAFTA regime remains the subject of considerable controversy over what its impact has actually been. Those examining the NAFTA trade-environment regime in general terms, both from a realist perspective and from a liberal institutionalist perspective, have concluded that it is very limited in its degree of institutionalization and effectiveness relative to that of the European Union (Steinberg 1997), and that its rules and decision-making procedures are not supported by any genuine change in underlying norms or principles (Audley 1997). Indeed, some scholarly observers and NAFTA’s many critics argue that NAFTA’s new environmental institution, the CEC, has done little to fulfil what they see as its core purpose of ensuring the effective enforcement of national environmental regulations (Mumme and Duncan 1996, Public Citizen 1995, Economic Policy Institute 1997).

Yet other assessments are more favourable to the basic precepts of liberal-institutionalist theory. Some see the capacity and early record of the CEC as pointing to an institution with considerable potential (Munton and Kirton 1994; Johnson and Beaulieu 1994, Abbott 1996). Still others view the NAFTA institutions more broadly as engendering effective environmental cooperation among the parties in several instances, and promising to constrain national and subfederal environmental regulations that serve as barriers to trade (Rugman, Kirton and Soloway 1997, 1999, Rugman and Kirton 1999, 1998, Kirton and Rugman 1999, Kirton and Fernandez de Castro 1997, Kirton 1998b, 1997, Weintraub 1997).

More specifically in the critical area of the NAFTA regime’s regulatory impact within Canada, the United States and Mexico, critics of NAFTA continue to make the central claim, as they did in the initial NAFTA debate, that the free trade, foreign direct investment and intensified competition brought by NAFTA would lead to a race to the bottom in regulation and industrial relocation, to regulatory chill in the face of rising environmental problems, awareness and demands, to restraint on the ability of national and subfederal governments to regulate freely to supply the demanded environmental protection, and to a regime in which a strong trade community and a strong U.S. would benefit at the expense of a weaker environmental community and the Canadian and Mexican neighbours. Most recently, the critics have focused their attention on the way NAFTA’s Chapter 11 investment dispute settlement mechanism has rewarded U.S.-based multinational corporations (MNCs) at the expense of Canadian and Mexican environmental regulations, whereas the counterpart Article 14-15 citizen complaint process in the NAAEC, instituted to ensure governments enforce their existing environmental laws and regulations, has offered little balance (Mann and von Moltke 1999). In response, NAFTA’s defenders have highlighted the rising economic growth, environmental regulations and enforcement and environmental quality in most of the region, and the success that equally benefit all three countries and their citizens (Hufbauer et al. 2000).

What does the record actually reveal? To answer this question, this paper conducts a comprehensive exploration of how the advent of NAFTA and its institutions has altered the process and outcomes in the full universe of 84 cases of broadly defined “environmental regulatory protection” involving at least two of the three NAFTA member countries from 1980 to mid 1998.[4] Here it first defines the phenomenon of environmental regulatory protection and examines how emerging conditions of “complex institutional responsiveness” have affected the ability of U.S., Canadian and Mexican governments to take environmental or trade actions that impact on the prevailing patterns in the other domain. Second, it examines the process through which these cases are handled and the outcomes that result, exploring in particular how the balance of outcomes changes across issue areas, industry sectors, from the pre-NAFTA to post-NAFTA period, as the NAFTA institutions are involved, and the CEC, rather than NAFTA’s trade institutions, are employed. Third, it explores the overall record of the cases taken to the Chapter 11 and Article 14-15 dispute settlement mechanisms, as the record of these innovative provisions for direct societal actor access is in many ways at the heart of the current debate over NAFTA’s environmental regulatory effects debate. It concludes by considering the record of environmental regulatory protection in general and Chapter 11–Article 14-15 cases in particular in reference to recent analyses and finding about NAFTA’s environmental effects as they relate to domestic regulation in Canada and the United States.

This analysis reveals, in the first instance, that there has been a proliferation of cases of environmental regulatory protection in North America from the 1980s to the NAFTA era of the 1990s, suggesting that NAFTA-ensconced governments in the U.S., Canada and Mexico have by no means had a diminished appetite or ability to regulate for environmental protection in ways that restrict trade and that provoke intergovernmental action in response. In resolving such cases, the three North American governments have tended to find solutions that generate both higher and more convergent environmental regulations, and greater trade liberalization as well. Despite the overwhelming economic power of the United States in the NAFTA region, the outcomes of such cases move toward equality among the member countries and their trade and environment communities as the NAFTA era arrives, and as the NAFTA institutions and the CEC assume consequential roles. Despite the controversies over a few high-profile cases and the need for some reforms, both the Chapter 11 and Article 14-15 processes contribute cumulatively and steadily to such results. And these conclusions are consistent with recent analyses and evidence now emerging as Canada and the United States move beyond the era of domestic fiscal consolidation that dominated NAFTA’s first five years, and as Mexico recovers from the devastation of the economic crisis that began on December 20, 1994.

In short, relative to the previous regime and available alternatives, NAFTA has provided an incentive and an instrument for governments in Canada and the U.S. to regulate more aggressively and successfully in order to secure higher levels of environmental protection, through a more equal process of mutual adjustment yielding outcomes that more equally benefit each of the region’s three countries and both of its environment and trade communities. NAFTA has given the United States and its smaller regional partners both a reason to recognize and a regime to respond to the new trade opportunities and ecological vulnerabilities that the trilateral community bring, and to do so in ways that benefit all and both.

1. The Record of Environmental Regulatory Protection in North America

NAFTA’s trade and tightly related investment liberalizations were particularly important for smaller firms from smaller countries, such as Canada and Mexico, which depend on access to the larger U.S. market for much of their trade and, in Canada’s case, for much of its GNP. They were also important for a steadily internationalizing U.S., which has Canada and Mexico as its top-ranked trade partners and has over 30% of its trade with them (United States Trade Representative [USTR] 1997). Yet, in moving to seize these now opportunities in the NAFTA marketplace, such firms confronted emerging conditions of “complex institutional responsiveness,” which brought a new array of barriers to foreign market access and new vulnerabilities for internationally oriented firms and their governments. The conditions of complex institutional responsiveness consist of a three component complex of a new generation of environmental regulations at the national and subfederal level (Esty and Geradin 1997), a growing dependence on international sales and production in an era of internationally-integrated production, and the advent of international regimes, such as NAFTA, with powers of trade liberalization and environmental regulation (Rugman and Kirton 1999). These have produced a far more complex environment in which firms must operate.

This more complex environment was not resolved by firms demanding and their governments accepting the need for reduced or stagnant environmental regulations in order to seize the new NAFTA-wide market opportunities. Rather, it was resolved by an upsurge in both trade-investment and environmental regulation, with the NAFTA institutions called upon to help governments solve the conflicts and seize the co-operative opportunities that resulted. The degree and form of this trade-environment linkages, and the environmental regulation that lay behind it, can be seen by examining the cases of environmental regulatory protection that have arisen in North America since 1980.

Environmental regulatory protection is defined as government action, at the subfederal, national or international levels, that is directed at affecting trade liberalization or environmental protection, but that has clear, direct, substantial and recognized implications for activities and values in the other domain. It thus embraces activity aimed at environmental protection that affects trade, as with national regulations that impede (or enhance) market entry for foreign firms, or international action to create region-wide environmental regulations (at any level) that lower transactions costs and thus facilitate trade. Furthermore, it embraces activity aimed at trade liberalization that affects environmental protection and quality, in either positive or negative ways.

Such cases can be initiated by government action at the subfederal, national or international level. In the later case, it embraces initiatives taken by the secretariats of intergovernmental institutions themselves. Such government action may arise in response to firm behaviour or pressure, or at independent government initiative. Moreover, such cases can encompass the full spectrum, from those marked by high conflict to those embracing full co-operation. The research universe thus runs the range from reactive, conflictual cases, in which new environmental regulations create trade barriers, to proactive co-operative ones, where governments actively create region-wide environmental or trade rules in advance of any conflicts occurring. Finally, unlike the original Keohane-Nye conception, which was limited to conflict cases that reached the attention of the U.S. president, the current study includes cases from the high political to the low functional level (Nye 1976, Keohane and Nye 1977).

An application of these criteria yields a universe of 84 cases of intergovernmentally managed environmental regulatory protection involving at least two of the three North American national governments or their subfederal units from 1980 to mid 1998. An examination of these cases suggests several trends.

In the first instance, the new politically grounded conditions of complex institutional responsiveness have led to an upsurge in the frequency of environmental regulatory protection. Those hoping that NAFTA would issue in a new era of transborder commercial harmony devoid of environmental regulatory impediments have good reason to be disappointed with the record. As Table A indicates, there have been substantially more trade-environment issues involving at least two North American countries that have arisen in the five years since NAFTA took formal effect, than in the five years when the Canada-U.S. Free Trade Agreement (FTA) operated (1989–1993), and in the preceding five years when the three countries of North America could look only to the distant General Agreement on Tariffs and Trade (GATT) for international relief.

There has been a similar post-NAFTA expansion in the range of environmental regulatory protection, seen in the broad range of sectors that have been affected by it. Such issues abound in the automotive sector (at the heart of the North American manufacturing economy), in the environmentally rich natural resource sectors of agriculture, fisheries and forestry, in other manufacturing industries and service industries such as trucking and, paradoxically, in the new sector of environmental services. Indeed, no sector of a modern, internationally engaged economy is likely to escape the impact of environmental regulatory protectionism in its future operations.

This upsurge in environmental regulatory protection is taking place in the long opened U.S.-Canada relationship as well as in the newly NAFTA-opened U.S.-Mexico one. The cases have arisen not only, as the U.S. debate over NAFTA assumed, across the U.S.-Mexican border. They have arisen equally voraciously along the rhetorically “undefended” Canada-U.S. border as well. A home-base location in a highly developed, long internationally integrated country with high degrees of environmental consciousness and regulations is thus unlikely to allow firms to escape facing the impact of environmental regulatory protection from abroad. Indeed, there are good reasons for expecting that even in such relationships, characterized by high degrees of intra-industry trade, trade liberalization will lead individual firms to seek protection, including through different and higher environmental regulation ever more strongly (Gilligan 1997, Weintraub 1994). As trade liberalization agreements such as NAFTA eliminate border barriers, newly exposed shelter-seeking firms will seek alternative form of protection by demanding different, but usually higher forms of behind-the-border environmental regulation (in the face of low-cost competition from firms in less developed countries with lower costs of production). Firms on the other side of the newly exposed border may well respond in kind, leading to a protectionist environmental regulatory “race to the top.” This phenomenon of “administered protection,” well known to scholars of economics and management studies, offers an offsetting logic and dynamic as powerful as the “race to the bottom” hypotheses focused on by concerned environmentalists. It appears to be alive and abundant in the Canada-U.S. relationship of the NAFTA age.

This upsurge in the overall frequency, sectoral range and geographic spread of environmental regulatory protectionism could theoretically be generated by ever more aggressive export-oriented firms assaulting even more intensely long existing and even relaxed and remaining environmental regulation, a lust to win in an intensified competitive race. But a detailed examination of the 84 cases suggests it arises primarily from the first of the three particular conditions of “complex institutional responsiveness” — the rise of environmental regulations. This process has several components.

First, the spread of mass public environmental concern in the three NAFTA countries, partly NAFTA induced, has generated a growing demand for and thus a governmental supply of such regulations. Both subfederal and international governmental bodies have joined national governments in meeting this demand (Orbuch and Singer 1995). And the advent of NAFTA itself has changed environmental issues from being considered fully domestic to a matter of international concern.

Second, environmental regulatory protectionism has now become much more entrenched. As is evident in the cases of Herring-Salmon and Softwood Lumber, several of these issues go through multiple stages, with outcomes at a particular moment leading not to enduring solutions but only to temporary respites before an offspring of the dispute erupts to impede or close the border again. Moreover, such disputes, once centred in the traditional trade domain of antidumping and countervailing duties, have now spread laterally to involve general trade disputes, foreign direct investment disputes, and issues involving the domestic enforcement of federal and subfederal environmental regulations.

Third, the new tenacity of environmental regulatory protectionism has a deeper domestic base, grounded ultimately in “green and greedy coalitions,” than merely the protectionist seeking firms, employees, suppliers and surrounding communities of old. The rise of mass public environmental concern has enormously increased the number, resources and political influence of environmental non-governmental organizations (NGOs), not only in the United States, but also in Canada and now Mexico. The new generation of environmental regulations, with provisions for expanded public participation (as in the NAAEC’s Article 14-15 process at the international level), and the activism of subfederal governments, have increased the access and power wielded by such groups. It has thus also increased their opportunities to identify compatible or common industries with industries seeking protection, and to forge active alliances of “green and greedy” coalitions to secure such outcomes (De Sombre 1995). Governments seeking to keep their border open must now face the self-interested claims of a particular firm or industry promising jobs as well as the often nation-wide, highly attractive pleas of not-for-profit groups claiming to represent the public good.

Such “green and greedy” coalitions exist in abundance in North America. Indeed, in many cases such coalitions can be identified as a force that has held the trade-restricting environmental regulation in place. Moreover, such coalitions exist, operate and prevail not only in the United States. They have also arisen in Canada and Mexico as well. Also of note is the broad array of groups that have joined such coalitions. Industry groups and their environmental allies are now often joined by the subfederal governments where an industry is concentrated, consumer groups and, as in the Chapter 11 MMT case, religious groups as well. When, as in the MMT case, they are supported by subfederal governments, they have the full resources of government and constitutional law in federal systems behind them (Soloway 1999). The very diversity of groups and motives are what often make such coalitions, once formed, difficult to counter and dislodge, as are the new and high environmental regulations those coalitions press for and protect.

Fourth, environmental regulatory protectionism is now more complex in the content and character of the regulations that industry must face. Regulations address not merely the nature of their product, but also their after-sales services (as the cases of California Recycling and Ontario Beer show), their harvesting production processes (as with the Herring-Salmon, Lumber and Eco-labelling cases), and with the components of the materials used by consumers to operate their products (as with the MMT and other automotive fuel additive cases). Industry must now too be concerned about such issues. The scientific evidence required to challenge regulations is becoming more subtle and complex, as the MMT case indicates. And regulatory politics now confront major issues of co-ordination and burden sharing between powerful industries such as automobiles and petroleum in the case of automotive emissions, and between the chemicals and railroad industry in the case of halogenated organic chlorides.

Fifth, such complexity is a direct result of a further condition of complex institutional responsiveness — the new generation of environmental regulation. In particular, regulations now often express the environmentalists’ core values of full life-cycle environmentalism and, as in the MMT case, the precautionary principle. This has increased the backward and forward linkages that regulations embrace, and made the task of using sound science to challenge regulations more difficult. Moreover, the move to a “total systems” approach to environmental control, as in the automotive industry, raises major issues of inter-industry and economy-wide co-ordination.

Sixth, and finally, environmental regulatory protectionism in now more costly for the firms that face it. As the experience of Lactel in the case of UHT milk shows, the cost and time of process protectionism can impose major competitive costs — destroying a firm’s entire export market — even when its claims are ultimately accepted as legally valid by a foreign government. As the experience of British Columbia in the case of California newsprint recycling demonstrates, small regulatory changes can put major export markets at risk, even for some of the world’s major multinational enterprises (notably, MacMillan Bloedel). Such was also the case for Ethyl Corporation, which faced the complete termination of its ability to export to Canada as a result of one regulatory change.

While not all or even most of this new environmental regulatory protection and the aims of the coalition partners behind it is consciously protectionist in intent, it is often protectionist in impact. Regardless of the motives of its originators, it severely compromises the competitiveness of most firms having to operate under new business conditions.

Several conditions of complex institutional responsiveness have generated these increased costs. Most generally, trade and investment liberalization has made domestic firms and home-based exporters vulnerable to competitors from abroad and raised the protectionist impact of regulatory arbitrage (Leyshon 1992). As the automotive industry shows, the spread and speed of new technology, and the move to integrated production and the just-in-time inventory it allows, requires rapid, unimpeded and costless access to foreign markets (Kirton 1998a). The emergence of international business alliances, as in the automotive industry, reinforces the need for integrated international production. Meanwhile the move to global markets and competition means even large firms from large countries, such as the big three of the North American automobile industry, need a seamless regional home base on which to build the scale required to compete in world markets.

It is thus the cost of regulation itself, as well as — or rather than — the competitive pressures brought by trade and investment liberalization that will lead firms to seek strategic solutions. And among the alternative strategies, relocation or lobbying for reduced regulation is only one of many that are available, that have been employed and that have met with success (Rugman, Kirton and Soloway 1999).

2. Patterns and Sources of Regime-Governed Outcomes

It is an analytically and empirically challenging task to identify how firms and their governments actually respond to this dilemma of rising environmental regulatory protection, when and why they use the new international institutional instruments offered by NAFTA, and when and why these institutions are successfully employed to balanced benefit. The NAFTA regime has been in operation for only a short time. Many of the cases dealt with under it are still in progress. Some of the issues resolved immediately prior to NAFTA taking formal effect were done so in anticipation of and thus under the influence of the NAFTA, as a calculated consequence of how countries and firms would be better off by moving to particular solutions. Most importantly, in many of these cases several instruments worked together to produce an outcome, making it somewhat artificial to single out and score each in operation alone. Nonetheless, after a half decade of operation of the NAFTA regime itself, there is a sufficiently strong empirical foundation for confident judgments about the emerging patterns to be made.

To begin this analysis, it is necessary to score the outcome of those cases that have been resolved, under NAFTA’s influence or not. In keeping with the initial Keohane-Nye conception for scoring outcomes of Canada-U.S. disputes, and variants based on it, outcomes are scored as to whether these cases, once resolved, conform more to the initial preferences of each of three countries (Nye 1976, Leyton-Brown 1976, Norton 1998). However, in an extension of this method, they include the co-operative, positive-sum possibility of joint or mutual gains, in which outcomes reflect the initial preference of both or all parties (as distinct from the original Keohane-Nye “compromise” possibility of “tied” outcomes equidistant between the initial preferences of each). A further extension allows a scoring of cases according to whether the positions, interests and values of the transnational trade or environment communities were realized in the outcomes.

As Table A and B indicate, 50 of the 84 cases have come to an effective resolution where such outcomes can be scored. Ten have done so in the pre-NAFTA period, and 40 have done so in the post-NAFTA period or in the immediate leadup to and under the conscious anticipation of NAFTA.

One of the most striking findings is how the outcome of cases of environmental regulatory protectionism have benefited the United States, which wins 58% of the time. Of the 50 cases effectively resolved, the United States and its firms have won 29, Canada 8, and Mexico 7, while 8 have been resolved to the mutual benefit of two or three of the North American partners. Such a pattern would appear to be a further testament to the realist presupposition that in this bargaining domain as in so many others, the United States with its overwhelmingly superior power (based on having at least ten times as much economic capability as Canada and at least 20 times as much as Mexico) is bound to prevail.

However, this first-order conclusion needs immediate qualification. For the impact of complex institutional responsiveness is to equalize outcomes in a trade-liberalizing and environmentally enhancing manner.

First, the U.S. wins far less than its relative economic weight suggests it should. On a GNP basis, the United States commands about 85% of the overall economic capability within the North American region. This is far more than its 58% success rate actually delivered. (It remains for further research to develop a calculus of economic vulnerability and ecological capability and vulnerability, and assess the overall record of success against these referents.)

Second, in keeping with an issue-structure model, the degree of U.S. success varies widely across issue area, according to the relative size of the home-based firms that dominate each (Keohane and Nye, 1977). Thus, the United States enjoys complete success (prevailing in all nine cases) in the area of automotive emissions and fuels, an area dominated by the U.S.-owned Big Three (including Daimler-Chrysler) assemblers and U.S.-owned parts suppliers. It has a success rate of 75% in manufacturing recycling and 67% in fisheries conservation. But it has only 60% in agricultural inspection, where the Canadian and especially Mexican industries (based on home-based exporters) loom relatively large. Moreover, the United States has a success rate of only 33% in forestry conservation, an area where Canadian companies are particularly strong. It is worth noting that these natural resources sectors of fisheries and forestry (along with agriculture) are the ones where environmentalists are most concerned about the stress on ecosystems, and of trade and NAFTA’s environmental effects.

Third, in many of the cases, notably in the areas of automotive emissions, U.S. dominance arises because of its national environmental leadership — it is the first to recognize an environmental problem and take regulatory action. Canadian and Mexican compliance with these regulations is not a case of acquiescence after significant resistance but a case of these two partner countries coming to support the initial U.S. action to produce an environmentally superior result. While this process, often involving convergent national adjustment, involves the exercise of structural and other forms of power, it is best seen as a form of beneficent rather than coercive hegemony, based in part on the superior scientific resources of the United States. In some cases, it is a matter of NAFTA operating in a world where states do not have fixed preferences but acquire their interests through the process of NAFTA-inspired and -guided interaction. Propelling this process is the dominance of U.S.-owned transnational multinational enterprises (MNEs), and an empowered North American public demanding better environmental solutions. More recently, it has led to a process of environmental regulatory leapfrogging, especially in the automotive and related air-quality domains, where Canadian jurisdictions have moved to introduce new environmental regulations and standards that are more stringent by many measures than those of neighbouring U.S. states and the U.S. as a whole (Kirton 1998a, Kirton 1999).

Fourth, in the domain of trade-related environmental cases there is an almost perfect equality of outcome, and a complete absence of U.S. dominance. In contrast to the environmentally related trade issues, where the United States is successful in 64% (27 of 42) of the cases, in the domain of trade-related environmental cases it prevails in only 25%. In this latter realm, success is shared equally among the U.S. with 25%, Canada with 38%, Mexico with 25%, and all three with 25%. This sharp shift toward balanced outcomes can be attributed to two factors. The first is the superior ecological capability of Mexico and especially Canada, manifested in a vulnerability for the United States that has been expanded by NAFTA economic liberalizations. To contain this new vulnerability, the United States is forced to co-operate and accept balanced outcomes, as the cases of pesticides and environmental information suggest. The second is the presence in the trade-related environmental area of a strong international institution — the CEC — which, unlike those in the trade area, possesses an international organization with a single secretariat, substantial budget and staff, and considerable powers of autonomous investigation (Kirton 1997, Housman 1994).

The autonomous power of international institutions is further seen by examining the outcome of the cases according to their non-NAFTA or NAFTA-affected resolution. Here it is clear that the NAFTA era makes an equalizing difference. As Table C displays, in the ten resolved pre-NAFTA cases (with the U.S. directly involved in all), the United States prevailed in eight cases or 80% of the time. Canada, directly involved in ten, won in two, for a success rate of 20% overall and 20% in the issues of direct engagement. Mexico was not directly involved in any. This distribution is very close to the overall distribution of economic capability in the region, with Canada’s somewhat larger than predicted score (20% rather than 10%) traceable to the presence of the bilateral FTA. Mexico’s score reflects a still relatively autarkic Mexico, carefully choosing the issues on which it ventured to confront the United States. Equally striking, in this pre-NAFTA era none of the cases resulted in an equal outcome.

In sharp contrast, in the much larger set of 40 cases in the NAFTA era, the distributions are dramatically different. The rate of success for the United States alone, directly involved in all cases, has dropped from 80% to 50%. Canada’s has remained relatively constant, moving from 20% to 13% in all cases and 19% in the 26 cases in which it is directly involved (as a disputant or through the NAFTA trilateral institutions). Mexico’s has strongly increased to 18% over all cases and to 23% in the 30 issues in which it is directly involved. And outcomes that benefit both or all of the countries and their firms involved have risen from zero to 20%. Indeed, 57% or over half of the cases involving all three NAFTA countries are resolved according to the preferences of all three.

From these figures it is clear that the NAFTA era works for the United States. It still wins half (50%) of the issues in the region. It further shares in the additional 20% of joint gains, to produce an overall success rate of 70%. The NAFTA era also works for Canada, as its success rate holds at 19% in the issues in which it is directly involved, and it records an overall success rate of 39%. The greatest beneficiary of the NAFTA era, however, is the region’s weakest member — Mexico — whose success rate rises to an encouraging level of 38% overall. Over the dramatically expanded number of issues in which it is directly involved, relative to the pre-NAFTA period, it records a success rate of 23% against a still much stronger United States, with which it is now much more intensely involved. Above all, the NAFTA era works for the common North American community, as all three members benefit equally in 20% of the issues, and do so in 50% of those in which all three are directly involved. The world of three competitors struggling for relative gains is clearly giving way to a single integrated community in which all members equally participate and profit.

The importance of the NAFTA era can be further seen by examining the outcomes of those resolved cases in the post-NAFTA era which have been importantly dealt with through the NAFTA institutions, from either its trade or environmental domain. Here it is clear that the NAFTA institutions make an equalizing difference. As the data in Table D show, of the 40 resolved cases in the post-NAFTA era, the NAFTA institutions attracted almost half the traffic. Nineteen or 48% were resolved through the NAFTA institutions (even if other instruments of firm strategy ultimately proved decisive in securing particular outcomes). Of these 19 cases, the United States prevailed in 47%, Canada in 22%, Mexico in 21% and all three countries equally in 21%. These are still clearly the United States’ NAFTA’s institutions, as it is the sole beneficiary of their use to a greater degree than the other partner countries. Indeed, taking its individual and collective gains together, the United States wins through the NAFTA institutions 68% of the time. However, the autonomous impact of international institutions is evident in the greater equality of outcomes when issues are processed through the NAFTA bodies. Here Canada’s success rate rises from 19% to 32%, and Mexico’s from 18 to 21%. Most strikingly, when individual and common gains are taken together, the NAFTA institutions deliver a distribution of outcomes that is vastly more equal than power ratios among countries in North America: United States 68%, Canada 53%, Mexico 42%.

The remaining imbalance points both to the legacy of U.S. power and highly active environmental movement, but also to Canada’s particular historic skill at diplomacy through international institutions. However, the autonomous importance of international organization and the environmental intervulnerabilities that underlie it are again apparent. The NAFTA environmental institutions make a difference that does more than create an equal or common community. In the 11 cases where NAFTA’s trade institutions served as a nest for resolution, the outcomes were distributed United States 55%, Canada 18%, Mexico 9%, and all 18%. In the eight cases where NAFTA’s environmental institution — the CEC — served as the nest, the outcomes were Canada 38%, the United States 25% (including the joint win with Canada on Cozumel), Mexico 25%, and all 25%.

At the level of the firm, the importance of effective international institutions is again seen in the particular form in which the NAFTA bodies were fashioned. Of particular importance is the their open architecture, allowing firms to have direct access to, and involvement in, the work of these institutions. Firms are involved in the CEC through the Joint Public Advisory Committee (JPAC) and many of its working groups. This direct industry involvement was a critical element in producing the mutually beneficial outcomes through regulatory convergence in the Trilateral Working Group on Pesticides. Within the NAFTA trade institutions, industry involvement is less direct. The mechanism for industry involvement, through the joint meetings of the Committee on Standards Related Measures (CSRM) with trilateral industry bodies, is a facilitator of success.

3. Direct Societal Access under NAFTA Chapter 11 and NAAEC Article 14-15

Perhaps of greatest importance is the right provided by the NAFTA regime for firms and environmentally concerned organizations and individuals to initiate and pursue processes of dispute settlement over trade-related environmental, without having to face the barrier of first securing often unavailable or unenthusiastic home government support. Indeed, among the most innovative features of the NAFTA trade-environment regime, and a truly prescient pioneering step given the current crescendo of demands for improved civil society participation in global governance, were the two major mechanisms NAFTA constructed to allow societal actors, both multinational firms and NGOs and interested citizens, direct access to international dispute settlement procedures.[5] For firms that felt discriminated against by government environmental and other regulations in a foreign country, including regulatory action that was “tantamount to expropriation,” NAFTA’s Chapter 11 offered the ability to take their claim for compensation to one of two multilateral dispute settlement mechanisms. The NAAEC’s Article 14-15 citizen submission process, in a balancing provision, allowed NGOs and citizens to pursue claims that national and subfederal governments were not adequately enforcing their own environmental laws and regulations (Markell 2000). Each innovation was the subject of considerable criticism, hope and speculation about their impact at the time of their birth. Now, after almost seven years in operation, it is possible to identify empirically what the actual record, and its probable impact on regulatory behaviour, has been.

a. Chapter 11

During this time, there have been 14 known cases initiated under Chapter 11 (Hufbauer et al. 2000, Mann and von Moltke 1999, Soloway 1999, Wagner 1999).[6] There were one in 1995, four in 1996, none in 1997, six in 1998 (the peak year), two in 1999 and one in the first six months of 2000. This average of only two cases a year does not suggest that firms are rushing to use this new mechanism, to an extent that regulators would be deterred by its existence and availability from more stringent regulatory action. This is even more so when one considers the large and increasing numbers of firms involved in foreign direct investment (FDI), the number of North American governments able to regulate and the number of regulations that have been generated. At the same time, there are enough cases to suggest that there would be far more cases if firms felt compelled to challenge such regulations, as the first step of the “race to the bottom” hypothesis suggests.[7]

In a surprise to those who crafted Chapter 11 to counter classic cases of expropriation and FDI discrimination, eight of the 14 cases have involved challenges to environmental regulations as an explicit part of the petitioning firm’s claim. Often such claims have involved claims regarding the economic damage in projected sales or other aspects as a consequence of regulatory change, rather than more direct forms of expropriation of property located in a foreign jurisdiction. Yet it is important to note that these environmental cases have involved challenges to new and often far-reaching forms of government environmental regulation, suggesting that any NAFTA-induced chill has had a much less potent effect. Governments continue to raise the level and sophistication of environmental regulations whatever the cadence of Chapter 11 cases. It is true that the July 1998 out-of-court settlement by the Canadian government of the Ethyl MMT claim was followed by an outburst of environmentally related cases in quick suggestion, suggesting copycat behaviour by firms beginning to act in ways, and with a frequency, that is consistent with the race-to-the-bottom hypothesis. Yet this outburst was short-lived, and after the Methanex case filed in June 1999 no environmentally related cases have arisen.

As Chapter 11 was introduced primarily to protect U.S. investors in Mexico from the traditional forms of discriminatory treatment they had long suffered there, it was surprising that only a minority of the 14 cases involved U.S. firms petitioning against regulatory action by governments in Mexico.[8] U.S. firms did initiate 9 of the 14 cases, with Canadian firms responsible for four and Mexican firms nine (a pattern fully explained by the number and size of foreign direct-investing firms based in each of the three NAFTA countries). However, the Mexican government served at the defendant in only five of the cases, a level equalled by Canada with five and the U.S. with four (including most of those cases in the most recent period). On a pairwise basis, the five claims of U.S. firms against Mexico were closely followed by the four of the U.S. against Canada and the four of Canada against the United States (with a Mexican claim against Canada accounting for the remaining one).

This pattern shows that Chapter 11 has become predominantly an instrument for bilateral Canada-U.S. trade/investment-environmental diplomacy. Yet it is inconsistent with the fear that Chapter 11 provides an instrument for U.S. firms to use against relatively small and weak but environmentally inclined Canadian and Mexican governments. The fact that Canadian firms have used it against the U.S. government as often as the reverse, in a perfect balance, refutes this argument of nationally based discrimination. Nor does the classic race-to-the-bottom hypothesis explain why Canadian and U.S. firms would concentrate their investment, regulatory and legal attention on each other’s rich and highly regulated jurisdictions (including California) rather than on Mexico, where the sucking sound was supposed to lead them and where pollution havens presumed to exist.

Finally, in almost seven years, the Chapter 11 process has yielded two clear outcomes in addition to the Ethyl-MMT case, which was settled out of court before the NAFTA-generated panel could rule. In these two cases, both involving U.S. firms’ claims against Mexico, the Mexican regulators won the first (Desona) and the U.S. investors the second (Metalclad). Even if these two or three resolved cases are sufficient to generate widespread “chill” calculations on the part of firms and governments throughout the region, the perfect equality of the outcomes provides no basis for an assumption that a chill conclusion will result. Moreover, the fact that Metalclad received a far lower level of compensation that the firm sought (and one that covered directly physical property costs) and the fact that Canada settled in the Ethyl-MMT case only after its regulatory actions were declared illegal under domestic Canadian law suggest that the compounding Chapter 11 case law and precedents will dispense any fears that might lead to chill.

Even with this record, there remains a respectable case for an interpretative statement and for greater transparency in the Chapter 11 proceedings (Hufbauer et al. 2000, Mann and von Moltke 1999). However, the burden of the reform effort should be redirected as replacing the inherited multilateral nests for dispute settlement (International Centre for the Settlement of Investment Disputes [ICISID] and the United Nations Commission on International Trade Law [UNCITRAL]) with a new, all-NAFTA institution. Such a NAFTA creation would be more sensitive to the trade and ecological conditions and regulations within the region, to the NAFTA regime, and its moves to balance trade and environmental considerations within the NAFTA architecture.

b. Article 14-15

In one of many important and innovative provisions to offset the trend toward liberalization-induced chill, the NAFTA regime created a provision under NAAEC’s Article 14-15 for any interested party to initiate direct action against governments felt to be systematically not enforcing their own environmental regulations. With 28 cases in NAFTA’s first six and a half years, this mechanism has generated twice the volume of activity as Chapter 11, and more than three times as much if only Chapter 11’s environmental cases are included. In sharp contrast, the government-to-government Part 5 mechanism, designed to serve a similar purpose but that relied on the governments themselves to initiate such cases, had no cases during this time. With two Article 14-15 cases in 1995, three in 1996, eight in 1997 (including one refiled case), six in 1998, three in 1999 and six in the first six months of 2000, it has rapidly moved to a relatively high and sustained level of activity (despite the one time dip of 1999).

The cases initiated under Article 14-15 have featured very good overall balance in the spotlight it casts, with the U.S. attracting eight challenges, Canada nine and Mexico eleven. Indeed, given the widespread perceptions that Mexico lacked the will and ability to regulate and enforce, and the reality of restricted resources following the December 1994 economic crisis, it is remarkable that so much effort — 17 of the 28 cases — has been directed at ensuring that Canadian and U.S. enforcements remain at the relatively high level their legislation has long specified. At the same time, the imbalance is not sufficiently great to suggest that the region’s NGOs have been directing their Article 14-15 activity on the basis of an assumption that chilled U.S. and Canadian jurisdictions are the ones requiring priority remedial action. Nor does the particular nature of the cases, particularly as some of the most high-profile ones, relate to behaviour that predated the advent of NAFTA.

Moreover, the chill hypothesis cannot account for the particular temporal pattern of cases, with the initial emphasis on the U.S. and Canada as defendant, being soon replaced by a focus on Canada and Mexico (which received all eight complaints in 1997), and subsequently on the U.S. and Mexico. For the chill hypothesis would suggest a consistent pattern of the United States and Canada being litigated against by NGOs fearful that their firms would flee to (especially post-crisis) Mexico, and that their home governments would relax enforcement to keep them at home.

Article 14-15 operates, as intended, as an instrument for NGOs concerned with environmental quality and related social concerns. A full 22 of the 28 cases have been field by NGOs, with four by individuals. In 1999-2000, firms began to file actions, but the two they mounted were declined on the grounds that they were already the subject of action under NAFTA’s Chapter 11. Article 14-15 has thus remained a pure instrument for environmental protection, rather than being mobilized by firms and foreign investors to forward their ultimately commercial concerns. It is also accessible to individuals, who have used it in conjunction with an NGO.

Of the 28 cases brought to the CEC under Article 14-15, 13 have been terminated, withdrawn or diverted (to an Article 13 investigation), or deferred, leaving 15 to proceed through the review process. Of those 15, two have resulted in a factual record, the CEC’s Council of Ministers has declined the recommendation that a record by prepared in a further case, and the remainder are in various stages of review (including two where the preparation of a factual record has been recommended). Of the two that have been settled, the factual record upheld the submitters cases against Mexican government action (in the case of the Cozumel pier) and the Canadian government (over failure to enforce the Fisheries Act at hydro dams in British Columbia). In neither case was remedial action specified.

The production of only two factual records after six and a half years, the long and lengthening time it has taken to produce the two that have emerged, and the government’s willingness to veto production of a factual record all suggest that Article 14-15 is a less effective instrument to ensure environmental enforcement than had been intended. Yet these derogations do not arise as a result of regulatory chill. The chill hypothesis would predict that the U.S. and Canada would be the subject of such actions, rather than Canada and Mexico against which a factual record has been released. Moreover, in both of these cases, it was not the advent of NAFTA that caused the lack of enforcement that was highlighted. The Cozumel case featured tourism rather than trade in goods, and actions that predated the advent of NAFTA. Similarly, the Canadian case dealt with a pattern of enforcement behaviour that existed long before NAFTA took effect, and where any NAFTA competitiveness link was highly indirect (reduced costs for hydro that would benefit all firms and residents in British Columbia, and potentially, under deregulated electricity trade, U.S. and Mexican ones as well).

Although the Article 14-15 record suggests that regulatory refugee and chill behaviour is not at work, there remain good general and trade-related grounds for significantly improving the mechanism. At a minimum, as a basic matter of good governance, democratically elected governments and their citizens all have strong interest in ensuring that their existing laws and regulation and fully respected and enforced. Furthermore, the accumulating evidence suggests that both governments and their firms have a strong interest in moving rapidly to high environmental standards to reap the full competitive advantages offered by the NAFTA marketplace and to thrive as North Americans in the single global market that is rapidly emerging (Kirton 1999).

4. Conclusion

There is a legitimate concern that the competitive dynamics unleashed by NAFTA trade and investment liberalization in the 1990s, and perhaps the similarly deep liberalization to come under the World Trade Organization in the coming decade, will create regulatory refugees as firms seek pollution havens where environmental standards are lax, where regulatory chill exists as their home governments relax regulations and standards in order to retain them, and where international legal and institutional restraints on the freedom of national and subfederal governments to regulate as their local conditions and citizens demand. Yet the accumulating evidence uncovered by analyses conducted from several vantage points suggests that there is little support for such fears and much to indicate they are false.

At one end of the spectrum, patterns of foreign direct investment and firm location and expansion suggest decisively that there is no physical race to the bottom, and that the consequential case of firm relocation are not caused by differential environmental regulations and enforcement (Kirton 1998c, Cole and Ensign 1977). Similarly, the observed improvement in general conditions of environmental quality in the major ambient media throughout much of the region, in the face of strong economic growth, suggests that refugees, regulatory relaxation and chills and international restraints do not exist to any, meaningful extent (Hufbauer et al. 2000; Jones, Griggs and Fredricksen 2000). An examination of firm incentives, strategies, choices and experiences in the new era of complex institutional responsiveness suggests that from among the rich array of alternatives available to cope with rising environmental regulatory protection, environmentally enhancing solutions are preferred (Rugman, Kirton and Soloway 1999). It is hardly surprising that the general and sectoral case studies conducted as part of the development of the CEC’s analytic framework for assessing NAFTA’s environmental effects, and the 14 studies conducted most recently to apply the framework, found very little to support and much to refute the hypothesis of regulatory refugees, relaxation and restraint (Kirton et al. 1999).[9]

The more detailed analysis of the full set of cases of environmental regulatory protection in North America confirms these conclusions. Conditions of complex institutional responsiveness have generated a proliferating number of cases in North America in which actions in the trade and environmental protection spheres intersect with and influence each other. Given the profound imbalance in capability among the three countries of the region, the historical absence of trilateral interaction and the very recent advent of regional international organization, it does seems unlikely that the NAFTA trade-environment regime, despite its pioneering provisions, could exercise an autonomous impact in altering the pattern of outcomes from those predicted by power and interest, in which powerful U.S. multinational investors and free traders would have their way over the weaker Canadian and Mexican governments and environmental regulators throughout the region.

Yet an analysis of 84 cases of environmental regulatory protection from 1980 to mid-1998 demonstrates that this regional regime is effective in giving smaller countries and environmental values a more equal place. While more cases have arisen as the 1980s have given way to the 1990s, there has been a distinct move toward equality of outcomes, and joint gains, as the NAFTA era has progressed, as the NAFTA institutions have been employed and as NAFTA’s environmental organization, the CEC, has been used as the locus for action. Similarly, the record of NAFTA Chapter 11’s 14 cases and NAAEC’s Article 14-15 28 cases suggest a reasonable equality in process and outcomes among the three countries, in which trade and investment liberalization values are well balanced by environmental ones.

At a minimum, future research on the regulatory refuges, relaxation and restraint hypothesis will need to specify much more clearly and fairly which particular behaviours they predict, and generate reliable interview-based research with regulators and firms that can demonstrate that the hypothesize calculations and resulting causally related behaviours actually exist. At a maximum, perhaps the time has thus come to stop approaching the important task of modernizing the NAFTA architecture with a focus on solving this essentially non-existent problem, and start designing it to better serve the needs of both trade liberalizers and environmental protectors in the face of the fierce global competition and challenges that lie ahead.

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Table A: Cases of North American Environmental Regulatory Protection

Case	Regulatory initiator	Challenger (supporter)	Outcome closer to objectives of instrument	Internatonal institution
A. Environmentally Related Trade Issues (60)
Automotive Emissions (6)
SOx	U.S.	(Mexico)	U.S.
NOx	U.S.	(Mexico)	U.S.
Ozone	U.S.	(Canada, Mexico)	U.S.
Particulates	U.S.	(Canada, Mexico)	U.S.
OBD Systems	U.S.	(Canada, Mexico)	U.S.
INM	U.S.	(Canada)	U.S.
Automotive Fuels (4)
Lead*	U.S.	(Mexico)	U.S.
MMT	Canada	U.S. (Ethyl)	U.S. (Ethyl)	NAFTA 11
Sulphur	U.S.	(Canada)	U.S.
Benzene	U.S.	(Canada)	Ongoing
Agriculture Inspections (24)
Apples, 1989–98	Mexico	U.S.	Mexico	NAFTA 19
Avocados, 1914–97	U.S.	Mexico	Equal
Beef 1, 1991–98	U.S.	Canada	Ongoing	NAFTA SPS
Beef 2, 1994–97	Mexico	U.S.	Mexico	–
Blueberries, 1991–93	U.S.	Canada	U.S.	FTA
Christmas Trees 1, 94–98	Mexico	Canada	Ongoing	NAFTA SPS
Christmas Trees 2, 94–98	Mexico	U.S.	Ongoing	NAFTA SPS
Citrus Canker, 1991–97	Mexico	U.S.	U.S.	NAFTA SPS
Global Wheat Trade	All	All	Ongoing	NAFTA CAT
Mangoes, 1993–95	U.S.	Mexico	U.S.	NAFTA SPS
Pork, 1997	U.S.	Mexico	Mexico	NAFTA SPS
Potatoes, 1995–96	U.S.	Canada	Ongoing
Poultry 1	U.S.	Mexico	Ongoing
Poultry 2	Mexico	U.S.	Ongoing	–
Seed Potatoes	Mexico	Canada	–	NAFTA SPS
Sorghum. 1997–98	Mexico	U.S.	Ongoing	NAFTA SPS
Strawberries, 1996	U.S.	Mexico	U.S.	–
Stone Fruits, 1991–97	Mexico	U.S.	U.S.	NAFTA SPS
Supply Management	Canada	U.S.	Canada	NAFTA 20
Sweet Cherries, 1991–97	Mexico	U.S.	U.S.	NAFTA
Tomatoes, 1937–98	U.S.	Mexico	U.S.	NAFTA 19
UHT Milk, 1987–95	U.S.	Canada	U.S.	FTA 18
Wheat 1, 1995–98	Mexico	U.S.	U.S.	–
Wheat 2, 1995–97	U.S.	Mexico	Mexico	NAFTA SPS
Manufacturing Recycling (4)
Newsprint*, 19	U.S.	Canada	U.S.	–
Beer Cans 1, 1988*	Canada	U.S.+EU	U.S.	GATT
Beer Cans 2, 1992*	Canada	U.S.	U.S.	GATT
Beer Cans 3, 1992	Canada	U.S.	Equal	–
Fisheries Conservation (6)
Lobsters*, 1989–	U.S.	Canada	U.S.	FTA
Tuna*, 1979–82	U.S.	Canada	Canada	GATT
Herring-Salmon 1*, 1988	Canada	U.S.	U.S.	GATT
Herring-Salmon 2*, 1989	Canada	U.S.	U.S.	FTA
Pacific Salmon, 1998	Both	Canada	U.S.	–
Tuna-Dolphin, 1993	U.S.	Mexico	Mexico	GATT
Forestry Conservation (4)
Lumber 1*, 1986–	U.S.	Canada	U.S.
Lumber 2*, 1992	U.S.	Canada	Canada	FTA
Lumber 3, 1998	U.S.	Canada	Ongoing	–
B.C. Forestry, 1998	EU	Canada	Equal	–
Environmental Services (4)
PCB Exports*, 1995	Canada	U.S.	Equal
Metalclad	U.S.	Mexico	Ongoing	NAFTA 11
DeSona	U.S.	Mexico	Ongoing	NAFTA 11
USA Waste	U.S.	Mexico	Ongoing	NAFTA 11
Dangerous Goods Transportation (5)
Small Packages	All	(All)	Equal	CSRM
Large Containers	All	–	Ongoing	CSRM
HOC	All	–	Ongoing	NAFTA CSRM
Truck Spills (ERG)	All	(All)	Equal	CSRM
Rail Cars	All	–	Ongoing	NAFTA CSRM
Other (2)
Asbestos*	U.S.	Canada	U.S.	–
Trucking	U.S.	Mexico	Canada	NAFTA FTCC
B. Trade-Related Environmental Issues (25)
Pesticides (4)
PCBs	All	All	All	CEC TWGP
DDT	U.S. (Canada)	Mexico	U.S. (Canada)	CEC TWGP
Chlordane	Canada (U.S.)	Mexico	Canada (U.S.)	CEC TWGP
Mercury	All	All	Canada (Mexico)	CEC TWGP
Environmental Information (1)
NAPRI, 1997	CEC	All	Mexico	CEC
Environmental Science (3)
Silva Reservoir	CEC	Mexico	Mexico	CEC13
LRTAP	CEC	All	Equal	CEC13
San Pedro	CEC	U.S.-Mexico	Ongoing	CEC13
Environmental Enforcement (17)
Biodiversity, 1995	U.S.	U.S.	Terminated	CEC 14-15
Sierra club, 1995	U.S.	U.S.	Terminated	CEC 14-15
CPRN, 1996	Mexico	Mexico	Canada/U.S.	CEC 14-15
Tottrup, 1995	Canada	Canada	Terminated	CEC 14-15
Oldman River, 1996	Canada	Canada	Terminated	CEC 14-15
SW Biodiversity, 1996	U.S.	U.S.	Terminated	CEC 14-15
BC Fisheries, 1997	Canada	Canada	Proceeding	CEC 14-15
Rio, 1997	Canada	Canada	Proceeding	CEC 14-15
CQDE, 1997	Canada	Canada	Proceeding	CEC 14-15
CEDF, 1997	Canada	Canada	Terminated	CEC 14-15
Animal Alliance, 1997	Canada	Canada	Terminated	CEC 14-15
Oldman River, 1997	Canada	Canada	Proceeding	CEC 14-15
IDA, 1997	Mexico	Mexico	Proceeding	CEC 14-15
IDA, 1998	Mexico	Mexico	Proceeding	CEC 14-15
Martinez, 1998	Mexico	Mexico	Terminated	CEC 14-15
Planet Earth, 1998	Canada/U.S.	U.S.	Proceeding	CEC 14-15
Sierra Club, 1998	Canada	Canada	Proceeding	CEC 14-15

Note: * denotes non-NAFTA cases, defined as those effectively resolved prior to NAFTA and whose resolution was unaffected by calculations about the onset of NAFTA.

Table B: Outcomes of North American Regulatory Protectionism by Country and Issue (post-NAFTA)

Case	Cases	U.S.	Canada	Mexico	Equal/All
Trade Cases	42 (29)	27 (17)	4 (2)	5 (4)	6 (6)
Automotive emissions	6 (6)	6 (6)	–	–	–
Automotive fuels	3 (2)	3 (2)	–	–	–
Agriculture inspections	15 (14)	9 (8)	1 (1)	4 (4)	1 (1)
Manufacturing recycling	4 (1)	3 (–)	–	–	1 (1)
Fisheries conservation	6 (1)	4 (1)	1 (0)	1 (0)	–
Forestry conservation	3 (1)	1 (0)	1 (0)	–	1 (1)
Environmental services	1 (1)	–	–	–	1 (1)
Dangerous goods	2 (2)	–	–	–	2 (2)
Other	2 (1)	1 (0)	1 (1)	–	–
Environment cases	8 (8)	2 (2)	3 (3)	2 (3)	2 (3)
Pesticides	4 (4)	(1)	2 (2)	–	1 (1)
Environmental information	1 (1)	–	–	1 (1)	–
Environmental science	2 (2)	–	–	1 (1)	1 (1)
Environmental enforcement	1 (1)	1* (1)	1* (1)	–	–

* Both the U.S. and Canada scored as successful in the Cozumel case.

Table C: Outcomes of Resolved Cases of North American Environmental Regulatory Protection (pre- and post-NAFTA)

Winner	Overall	Pre-NAFTA		Post NAFTA
		All	Direct	All	Direct
U.S.	29 58%	10 77%	(13) 77%	19 51%	(37) 51%
Canada	7 14%	2 15%	(11) 18%	5 14%	(22) 23%
Mexico	7 14%	1 7%	(2) 50%	6 16%	(29) 21%
Both/Equal	8 16%	– –	– –	8 22%	(14) 57%

(Number of cases of direct involvement)

Table D: Resolved Cases of Post-NAFTA North American Environmental Regulatory Protection Dealt With through the NAFTA Institutions

Case	Regulatory initiator	Challenger (supporter)	Outcome closer to objectives of instrument	International institution
A. Environmentally Related Trade Issues
Automotive Fuels
MMT	Canada	U.S. (Ethyl)	U.S. (Ethyl)	NAFTA 11
Agriculture Inspections
Tomatoes, 1992–97	U.S.	Mexico	U.S.	NAFTA 19
Stone Fruits, 1997	Mexico	U.S.	U.S.	NAFTA SPS
Sweet Cherries	Mexico	U.S.	U.S.	NAFTA
Pork, 1997	U.S.	Mexico	Mexico	NAFTA SPS
Citrus Canker	Mexico	U.S.	U.S.	NAFTA SPS
Mangoes	U.S.	Mexico	U.S.	NAFTA SPS
Supply Management	Canada	U.S.	Canada	NAFTA 20
Dangerous Goods Transportation
Small Packages	All	(All)	Equal	CSRM
Truck Spills (ERG)	All	(All)	Equal	CSRM
Other
Trucking	U.S.	Mexico	Canada	NAFTAFTCC
B. Trade-Related Environmental Issues
Pesticides
PCBs	All	All	All	CEC TWGP
DDT	U.S. (Canada)	Mexico	U.S. (Canada)	CEC TWGP
Chlordane	Canada (U.S.)	Mexico	Canada (U.S.)	CEC TWGP
Mercury	All	All	Canada (Mexico)	CEC TWGP
Environmental Information
NAPRI, 1997	CEC	All	Mexico	CEC
Environmental Science
Silva Reservoir	CEC	Mexico	Mexico	CEC