Trade-Environment Linkages in the Resolution of Transboundary Externalities

• Published in: World economy 1999-01, Vol.22 (1), p.25-39
• Main Authors: Hauer, Grant, Runge, C. Ford
• Format: Article
• Language: English
• Subjects: AGREEMENTS, CONTRACTS, TREATIES, CONCORDATS, INTERSTATE COMPACTS; Economic models; Environment; Environmental movements; Environmentalists; Game theory; GAME THEORY AND DECISION THEORY IN MODELS; International Trade; NAFTA; Negotiation; North American Free Trade Agreement; Pollution; Protectionism; Studies; Trade liberalization; United States
• ISSN: 0378-5920; 1467-9701
• DOI: 10.1111/1467-9701.00191

In 1992, then candidate Bill Clinton agreed to support NAFTA on the condition that an environmental side-agreement would be attached to the trade accord. Environmental groups argued that without such a side-agreement they would oppose NAFTA, increasing the likelihood, if not assuring, its defeat in Congress. An environmental measure, focusing in large part on transboundary issues along the US-Mexico border, was linked to the NAFTA agreement on trade. In 1997, during debates in the US over reauthorization of executive authority to negotiate trade agreements, environmental groups withheld their support. The environmental opposition resulted from a perceived failure in the Clinton administration explicitly to attach environmental side agreements to expanded NAFTA agreements with Chile and other Latin governments, slowing, if not stopping, progress toward a Free Trade Area for the Americas. In this case, a failure to link trade and environmental negotiations reduced the willingness of key environmental groups to authorize further trade negotiations leading to liberalization.