The Mexican Action Network on Free Trade

Réseau Mexicain d'Action Sur le Libre - Échange

NAFTA and the Mexican Environment

Many promises were made by the Mexican, U.S. and Canadian governments during the NAFTA debate. Among these were assurances that the Agreement, along with the increased trade and investment that it would engender, would lead to improvements in environmental conditions in Mexico. The reality has been otherwise.

Increased trade and investment have exacerbated the environmental problems in Mexico that have accumulated over the years.

The impact of increasing trade and investment, coupled with the environmental policies of the Mexican government, have increased environmental degradation in this country. Environmental laws have been subordinated to commercial and financial interests, meaning that, in some cases, the law is not enforced. This new environmental degradation only adds to the existing problems.

For example, in response to citizen complaints about the recurrent and highly hazardous pollution produced by Stephan Chemical's pesticide plant in Matamorros, the Mexican Environment Protection Federal Attorney's Office declared the plant and the surrounding area a "high risk" zone. Without considering any alternatives, it then ordered the displacement of the population of thirteen towns and five communal lands in the area in order to permit the company to continue operations.

Much of the increase in environmental contamination is accounted for by a few large firms that dominate the local economy. Approximately 80% of the total value of the Mexican export industry is controlled by two percent of the total number of companies in the country, most of which are transnational corporations. Many of these (particularly those in the electronics, textile and chemical sectors) are classified by the U.S. Environmental Protection Agency as industries utilizing highly toxic and dangerous processes. Even official statistics, however, show that only 10% of the seven million tons of toxic waste these industries generate is properly treated.

Before NAFTA's inception, the U.S. government acknowledged that more than US$20 billion would have to be invested along the Mexican-U.S. border to improve the critical environmental conditions in the region. No significant amount, however, has been invested to date, and alarming conditions continue to exist in the northern border region. The binational Toxic and Hazardous Waste Monitoring System -- known as Haztraks -- has not even been implemented, in part because it is estimated that fewer than 30% of the region's industries comply with applicable regulations.

NAFTA's environmental tools are too weak.

NAFTA's environmental instruments, which include the North American Development Bank (NADBank) and the Border Environmental Cooperation Commission (BECC) are so weak and so far from the realities of the border communities that, after three years of existence, they have not been able to build any environmental infrastructure. The Clinton Administration used the creation of these institutions to present NAFTA as the "greenest trade agreement ever signed." As of January 1997, the NADBank had approved loans totalling just US$7.4 million.

At the same time, the increase in the number of foreign companies that are relocating production to Mexico to take advantage of lower environmental and labor costs has led to an aggravation and extension of environmental degradation. As long as weaknesses in the enforcement of environmental laws are not overcome, the potential benefits of international assistance from agencies like the BECC and NADBank will not be realized.

Environmental concerns are not integrated in the text of NAFTA.

Although Article 1114 of NAFTA establishes that it is "inappropriate" for governments to diminish their environmental standards to attract investment or boost trade, and the North American Agreement on Environmental Cooperation (NAAEC, NAFTA's side agreement on the environment) establishes mechanisms for citizens' complaints, they have had little impact. The effectiveness of the Environmental Commission established under the NAAEC has been quite limited due to its lack of a strong legal foundation. In practice, complaints raised by citizens' organizations serve mainly as mechanisms of political pressure in the country in which the demands are raised, rather than as effective means for resolving the problems through the NAAEC. In Mexico, there are at least two examples: the case of increased migrant-bird mortality in Presa Silva in Guanajuato; and the case of the construction of a new pier over a coral reef in Cozumel. In both cases, the decision as to whether or not to accept the complaints rests with the relevant governmental ministers, who judge the cases more on their political than legal merits.

The NAAEC has not been utilized to alleviate environmental problems in Mexico or to prevent their worsening. The lack of real integration of environmental, trade and economic policies has led to the depletion of environmental, social and human resources. Moreover, NAFTA allows the Mexican government to continue to set investment policies that do not require domestic or foreign investors to internalize these costs. Therefore, the country continues to subsidize economic, environmental and social inefficiency, thus postponing sustainable development. These policies have resulted in an alarming deterioration in indicators of living conditions in border communities. Infectious diseases propagate due to a lack of safe drinking water, and some children have been born with anencephaly (without brains), most likely due to the presence of toxic chemicals in the environment.

Environmental legislation and enforcement have worsened.

Although the enactment of certain environmental legislation has been achieved under the recent reform of the General Ecological and Environmental Protection Law (LEEGPA), there is a tendency to weaken its enforcement through the creation of sectoral legislation that undermines the levels of protection established in the new environmental code. Also, the issuance of discretional presidential decrees, as well as severe budget restrictions, limits the ability of the appropriate agencies to enforce the law.

The limited budgets for environmental infrastructure and enforcement constitute serious constraints. In 1996, the Ministry for the Environment (Secretaria del Medio Ambiente, Recursos Naturales y Pesca) had a budget of just US$999 million (down from $1.289 billion in 1985). In comparison, US$29.864 billion was paid in 1996 to service Mexico's foreign debt. Thus, the Ministry's annual budget represented in 1996 just 3.5% of the amount paid to service the debt.


*Trade and investment policies must be made compatible with social and environmental concerns so that sustainable development can be attained. NAFTA must be renegotiated to integrate environmental protection and funding sources into the text of the Agreement.

*Along with an overall policy designed to promote economic, environmental and social efficiency, instruments for a more balanced form of integration must be created. These would include funds for the construction and reconstruction of environmental infrastructure, as well as for institutional and community capacity building and for the transfer of clean technology.

*Trinational institutions must be created that, while respecting each country's sovereignty and promoting international cooperation, guarantee the implementation of integrated policies and commitments. Likewise, transparent trinational mechanisms that include the participation of citizens' organizations must be created, so that the latter can exercise their legitimate rights.

*At a national level, with or without the renegotiation of NAFTA, at least two changes are necessary: constitutional reforms must be made that guarantee citizens the right to a clean and balanced environment, which means that the LEEGEPA must be reinforced and respected by all means; and the current economic and investment policies must be transformed so that they serve as tools for the country's true development.

For more information, contact Alejandro Villamar at RMALC.

This factsheet is excerpted from Espejismo y realidad: el TLCAN tres años después, Análisis y propuesta desde la sociedad civil, by the Mexican Action Network on Free Trade (RMALC). The full report is available for US$10 from RMALC, tel/fax (525) 355-1177, email

Translated by The Development GAP

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