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Labor & Environmental Implications of Free Trade Agreements: A New Paradigm?

The Wake Forest Law Review will hold its fall symposium Friday, Oct. 30, on the topic of “Labor and Environmental Protection in Free Trade Agreements: A New Paradigm?” Law Professor John Knox, who has helped organize the symposium, is an expert in the areas of international law of human rights, the environment and trade. For four years, he chaired a national advisory committee to the Environmental Protection Agency on the environmental organization created by the North American Free Trade Agreement (NAFTA), the North American Commission for Environmental Cooperation. His coauthored book, Greening NAFTA, is about NAFTA’s effort to further free trade and environmental protection in North America.

Q: Why are we talking about labor, environmental protection and free trade agreements now?

A: The election of President Obama and the new Congress offers an opportunity to take a fresh look at how to address labor and environmental concerns in the context of negotiating free trade agreements. For the last 15 years, the United States has followed the NAFTA approach to labor and environmental issues, which was developed under the Clinton administration. To a large degree, not much changed under the Bush administration, which included many of the NAFTA provisions in later free trade agreements. While that approach has its supporters, it has serious critics as well, and President Obama himself criticized it during his campaign. The symposium will address how well the participants think the NAFTA approach has worked, and what changes should be made as the United States goes forward.

Of course, it’s natural for people not to understand how NAFTA works in any detail – like other trade agreements, it’s very complicated! If you’re not an expert – and sometimes even if you are — it can be very difficult to understand how trade agreements work.

Q: You have mentioned that one of the most controversial issues in international trade has been its effect on labor rights and environmental protection? Why is it controversial?

A: Because many believe trade agreements work against labor and environmental protections. Lowering international economic barriers allows companies to move to countries with lower labor and environmental standards. One reason the textile industry has moved so many jobs to foreign countries that companies with high labor costs move overseas to find cheaper labor. Labor and environmental advocates also believe that trade agreements put pressure on countries to keep their standards low, in a kind of race to the bottom, both to attract more companies and to retain those that they already have. There is less empirical evidence that companies move in search of lower environmental standards than labor standards, but environmentalists are also concerned about other effects of trade agreements, including the environmental stresses caused by ramping up economic production without corresponding increases in environmental protection.

Q: Why do you think the NAFTA agreements remain so poorly understood?

A: One reason is that NAFTA is often treated as a symbol for free trade generally. Many people don’t realize it’s only one of a wide range of trade agreements the United States belongs to. NAFTA only affects the United States’ trade relations with Mexico and Canada, while the World Trade Organization affects far more trade on a world-wide basis. Treating NAFTA as a bogeyman really goes back to the 1992 election, when Ross Perot ran to try to defeat it. Of course, it’s natural for people not to understand how NAFTA works in any detail – like other trade agreements, it’s very complicated! If you’re not an expert – and sometimes even if you are — it can be very difficult to understand how trade agreements work.

Q: Do you think President Obama will revisit his campaign pledge to renegotiate NAFTA? And if he does, what new approach do you believe the U.S. should adopt when it comes to labor and environmental protections in trade agreements?

A: I think he will have to do something before the next election, because the people in Michigan and Ohio aren’t going to forget he promised them that he would do something. I don’t think there’s any chance that he will tell Mexico and Canada that we need to rewrite the agreement from scratch, but it’s likely that he’ll propose a new approach to labor and environmental protections, which could include new provisions or even agreements. What that new approach should be is what we are going to discuss on the symposium panels. Should we continue this model, and if we change it, how should we change it?