October 2001
Our organizations support trade agreements that encourage environmental progress and guard against direct attacks by trade rules on environmental laws. HR 3005, the Thomas fast track bill, falls far short on both counts — in a number of cases making n improvements upon the Crane fast track bill, and in others regressing from provisions in the Jordan Free Trade Agreement and the NAFTA environmental side agreement.
Even the bill’s one vague negotiating objective concerning the environment is inadequate. The bill asks negotiators “to seek to protect and preserve the environment;” but it does not provide adequate safeguards to ensure that trade agreements meet this environmental objective. Analysis of the bill raises the following problems:
Problem #1: Thomas allows investor suits to challenge domestic environmental laws.
The Thomas bill fails to protect public interest regulations from foreign investor suits claiming expropriation, potentially allowing foreign investors greater rights than they would enjoy under U.S. law. Thus, the bill fails to address the serious challenges posed to public interest protections by investment provisions such as those in NAFTA Chapter 11.
- Vague expropriation standard: The standard for expropriation is the same overly vague and broad standard used in the Crane fast track bill and the 1997 Archer fast track bill (“consistent with United States legal principles and practices”). It does nothing to limit expropriation to the longstanding U.S. legal standard that takings do not occur just from a diminution in value or loss of business profits.
- Threat to public interest laws: Thomas provides absolutely no protection for environmental, health and safety, and other public interest laws and regulations from suits before international tribunals concerning alleged investor expropriation.
- Redundant frivolous claims mechanism: The bill proposes a mechanism to weed out frivolous claims, but such a mechanism already exists in the international tribunal system and has not been able to prevent major challenges to environmental and other public interest laws. Vague transparency provisions: Thomas proposes development of procedures to increase transparency in investment disputes, but it does not specify public access to hearings and documents or the ability to bring amicus briefs, and does not ensure creation of any kind of appeals process.
- Diplomatic check missing: Thomas does not provide a diplomatic check on private investor suits against countries, including against the United States.
- Lack of “minimum treatment” limitation: The bill does not limit the open-ended and unclear “minimum treatment” standard that has been used under NAFTA to attack public interest laws.
Problem #2: Environmental provisions in the Thomas bill have major gaps.
The environmental negotiating objective seems designed to undermine the environmental regimes of other countries rather than to reinforce and build sound regulatory structures to ensure environmentally sustainable trade and investment. Moreover, most core environmental concepts are missing from the bill:
- Barrier to lower environmental standards missing: The bill does not include a provision to prevent countries from lowering, waiving or derogating from their environmental standards to promote a trade advantage – something that is a key provision in the Jordan Free Trade Agreement and the NAFTA environmental side agreement.
- Environmental law improvement missing: The bill does not require any improvement in environmental laws. The language encouraging negotiators to seek parity for environmental provisions is weaker than for other objectives.
- Limits on environmentally harmful and trade-distorting subsidies missing: While the bill addresses the elimination of policies that threaten sustainable development, it does not require the elimination of environmentally harmful and trade-distorting subsidies or environmentally perverse economic incentives.
- Multi-lateral environmental agreements not protected: The bill refers merely to “consideration” of Multilateral Environmental Agreements (MEAs), but does not provide protection for MEAs in cases of conflict
with trade rules. - Environmental enforcement limited: The bill’s provisions concerning enforcement of environmental laws by trading partners are severely limited by a requirement that the violation be a “sustained and recurring course of action or inaction” and that it affect trade. The requirement that environmental enforcement affect trade already was rejected in the NAFTA negotiations.
Problem #3 The Thomas bill sets up a barrier to agricultural, consumer, and environmental regulation.
In the sections on regulatory practices and agriculture, the bill includes a series of provisions that may harm domestic public interest regulation in general, and agricultural conservation programs and consumer information regulation in particular:
- Harmful regulatory tests: The Thomas bill urges use of controversial cost-benefit analysis and risk assessment, tools that have often been used to attack environmental measures. The bill also requires use of “sound science” in the development of domestic regulations, without defining that term. Trade agreements use this type of language to set an almost impossibly high bar for environmental regulations and to transfer the burden to the consumer and regulator to prove that the science underlying a questioned regulation is beyond dispute. This directly contradicts the widely recognized “precautionary principle.”
- Farm programs limited: The Thomas bill would allow programs that support rural communities, but only when these programs, including conservation programs, do not “distort trade.”
- Barriers to consumer information: The bill sets up consumer labeling as an “unjustified trade restriction,” especially regarding genetically modified food products – opening up many consumer information regulations to possible challenges.
Problem #4: Thomas fails to include mandatory negotiating objectives
to ensure environmental priorities are met.
U.S. trade negotiators are unlikely to implement environmental objectives unless they are mandatory. Mandatory environmental objectives must be backed up by a clear and effective mechanism to ensure that fast track procedures do not apply if those objectives are not fully met.
Problem #5 Thomas does not provide sufficient public oversight and accountability.
The Thomas bill provides for general consultation with Congress but does not provide clear Congressional procedures to ensure that negotiating objectives are met:
- No Congressional certification: There is no Congressional certification or vote prior to signing of an agreement – at a time when the provisions in an agreement could still be modified. Even the Congressional Oversight Group has no certification or approval authority to ensure that negotiating objectives are met.
- Committee approval of resolutions: Any fast track disapproval resolutions have to first be approved by Ways and Means and Finance committees before they can reach the floor – unlike Jackson-Vanik resolutions.
- Public access to information weak: Among the public access to information provisions, the bill does not include access to information during negotiations of a trade agreement, including release of a negotiating text.