Nafta’s Dangerous Side Agreements

By Llewellyn H. Rockwell, Jr.

The Clinton administration, which can’t always get what it wants from Congress, is now trying to smuggle its agenda into law as “free trade.” We can know that because of the environmental and labor supplemental agreements to the North American Free Trade Agreement.

Negotiated by U.S. Trade Representative Mickey Kantor, the side agreements are designed to please regulators, union bosses, and environmentalists. In doing so they prevent future legislators and presidents from enacting free-market reforms.

Within the first few sentences of the environmental agreement, for example, we are told that “sustainable development” will be our policy. As those who follow eco-speak know, this is code for shutting down capitalism.

That’s why the agreement establishes a supranational “Commission for Environmental Cooperation,” including a “Central Secretariat,” to enforce its rules and regulations over the heads of Congress and state legislatures. To do so, the Commission will have its own budget, court, propaganda office, and bureaucratic army.

Its mission: zealous enforcement of all environmental regulations, including those related to “pollution prevention techniques and strategies,” “environmental scientific research and technology development,” “conservation and protection for wild flora and fauna and their habitats, and specially protected natural areas,” “protection of endangered and threatened species,” and even “eco-labeling.”

The Commission can even veto American economic projects if they have “significant adverse transboundary effects,” i.e., bother foreign governments.

The agreement also obligates the U.S. to “report on the state of the environment,” “further environmental scientific research and technological development” and “assess, as appropriate, environmental impacts.”

It mandates that the U.S. “effectively enforce its environmental law” through “on-site inspections,” “environmental audits,” “licenses, permits or authorizations,” “search, seizure or detention” of alleged violators, with punishments including “fines, imprisonment, injunctions, the closure of facilities, and the cost of containing or cleaning up pollution.”

And if we don’t, for example, jail enough businessmen, millions in penalties will be imposed on American taxpayers.

If Congress passes Nafta, all this will go into effect on January 1, 1994. After that, free-market groups can toss out (oops, recycle) their proposed reforms of statist eco-laws, as can Republican legislators. And farmers, hunters, and developers can forget about changing the endangered species act, which covers a host of bugs and weeds. The environmentalists will have a permanent green rope around the neck of the American economy.

Right now land-rights groups can appeal to legislators to change the law. After Nafta, they won’t have a prayer, unless they have a friend on the Commission for Environmental Cooperation. Now we can see why our northern neighbor refused to be fully bound by this side agreement. But why should the U.S. sign something that is too much for eco-socialist Canada?

The Clinton administration also tacked a Labour Accord onto Nafta. According to the text, its objective is “to promote compliance with and effective enforcement” of “labour law.”

This includes collective bargaining, strikes, minimum wages and overtime pay, anti-discrimination law, and even “equal pay for men and women.” The left has been pushing “comparable worth” for a decade. What better way to enact this egalitarian nonsense than to bypass state and federal legislatures and make it continent-wide?

To oversee all of this, the Labour Accord establishes a “Labour Commission” with a “Ministerial Council,” an “International Coordinating Secretariat,” and a “National Administrative Office.” And like the environmental agreement, it sets in concrete some of the worst aspects of the U.S. regulatory state.

Our government is ordered to “promote compliance and provide for effective enforcement” of our “domestic tabour law” through “on-site inspections,” “mandatory reporting and record keeping,” and “mediation, conciliation or arbitration.” And unions are granted advantage over management in disputes over “health and safety,” “employment standards,” and “industrial relations and migrant workers.”

The accord transfers responsibility for labor policy from Americans to the Ministerial Council of Nafta, which is charged with unifying standards on “occupational health and safety,” “child tabour,” “human resource development,” “work benefits,” “social programs for workers and their families,” “labour-management relations and collective bargaining procedures.” It will also promote “legislation relating to the formation and operations of unions, collective bargaining and the resolution of labour disputes.”

Kantor calls these “basic labor rights,” but somehow Jefferson forgot to mention them. Such “rights” are currently driving up the costs of labor and therefore increasing unemployment. Through “child labor” laws, for example, the Department of Labor takes authority away from parents, prevents America’s youth from gaining work experience, and maintains tyrannical control over even the smallest details of work schedules. The minimum wage keeps marginal workers permanently unemployed. Health and safety rules freeze the production side of the economy by erecting impenetrable barriers to entry. All these should be repealed, not entrenched and exported.

If there were any doubts, Kantor explained to the Wall Street Journal (8-17-93) that “the supplemental agreements will help ensure that the enforcement of domestic environmental laws and workplace standards and requirements will be strengthened” and “that no nation will lower labor or environmental standards, only raise them.”

Yet the side agreements are only elaborations on the crucial section 906 of the agreement’s main text. The “Parties,” it says, must “make compatible their respective standards-related measures” but “without reducing the level” of regulation. Countries “shall … work jointly to enhance the level of safety and of protection of human, animal and plant life and health, the environment and consumers.”

In leaving nothing outside the Nafta commission’s purview, this one section gives the whole game away. Vague international secretariats are to be empowered to increase the level of coercive control on the entire economy, including people, pigs, and pimento. What the anti-Roosevelt Old Right called “economic regimentation” is being sold as “upward harmonization.”

Free trade has a very different message. It says that if American consumers want to buy something from abroad, they should be allowed to. And American businessmen should be allowed to sell their wares abroad. Tariffs and import quotas? Tear them all down. And tear down the litany of foreign aid, guaranteed loans, and political manipulation that harms consumers at home and abroad. Nafta, on the other hand, should go the way of Clinton’s “stimulus” package, and on the same grounds.

Former Bush speech writer Tony Snow wrongly calls the free trade argument against Nafta the “Adam Smith Objection.” In section 430 of The Wealth of Nations, Smith made a tragic concession to the mercantilism that animates Nafta’s most dangerous provisions. When “some tax is imposed at home,” Smith wrote, it “seems reasonable that an equal tax should be imposed” on imports of the same good from abroad.

Rather than a tax on imports, a consistent free trader would have recommended repealing domestic taxes that cause the problem in the first place. It’s safe to say, however, that when Smith recommended tax/tariff parity, he never imagined governments, especially not the new American one, would ever seize 40% of the national income.

Some make protectionist arguments against Nafta, but they need not be our concern. They distract from the essential point that Nafta is not free trade but trade managed so as to solidify government and special-interest control over the economy. The public’s suspicion that this is another D.C. trick is exactly right, even if the public’s objections are not as developed as those offered by a trained economist.

The widespread hatred of Nafta would not have surprised Ludwig von Mises. When law is impartially applied, such as contract law that allows free trade with anybody, anywhere, people understand the rationale. But when governments conspire to create a trade bloc, as Mises wrote in The Free and Prosperous Commonwealth, the public is invariably and rightly suspicious of preferential treatment.

Neither would F.A. Hayek have been surprised that Nafta is being sold as free trade. As he wrote, under statism, even language itself becomes corrupted and politicized. These days, it takes the Devil’s dictionary to understand Washington-speak. There’s only one thing we can count on: the intention and effect of laws are generally the exact opposite of their advance billing. And there’s no better example than Nafta.