Suppose That The North American Free Trade Agreement

The second Clinton compromise was the North American Agreement for Environmental Cooperation (NAAEC). For environmental groups too, the NAAEC was not late: rather, it was conceived as a forum for cooperation and dialogue. It did not provide for any means of resolving disputes and trade sanctions that could be used as an instrument to promote regional environmental progress. Second, NAFTA removed many tariffs on imports and exports between the three countries. NAFTA created specific rules to regulate trade in agricultural products, automobiles and clothing. Third, NAFTA has granted rights to foreign companies through what is known as investor-state dispute settlement or ISDS. Suppose the Mexican government nationalizes a GM or Ford car plant in Mexico City or implements an environmental or labor law that only applies to U.S. facilities in Mexico and not to their Mexican competitors. Under ISDS, U.S. companies could sue the Mexican government…