Capitalizing on free trade

September 23, 1996

Dear Friend:

Back in 1989, Environment Probe campaigned to turn free trade to the environment’s advantage. Since then, the environmental impacts of free trade have been hotly debated. Critics have rightly pointed out that, in theory, governments may be hamstrung in imposing certain environmental standards. But other enterprising environmentalists have capitalized on free trade to reduce subsidies to—and raise standards in—our environmentally destructive resource sectors.

Ironically, environmentalists have found powerful allies in U.S. resource industries that object to the generous subsidies enjoyed by their Canadian counterparts. Subsidies, they argue, give Canadian resource companies an unfair advantage. Although U.S. corporate efforts to level the playing field spring strictly from financial interests, their actions bring substantial environmental benefits.

The U.S. lumber lobby, for example, has played a critical role in reducing government subsidies to forestry companies operating in British Columbia, Quebec, Ontario, and Alberta. Since the early 1980s, it has charged that the low “stumpage fees” (the tree-harvesting fees charged by provincial governments) make trees unreasonably cheap for Canadian companies, enabling them to undersell their U.S. competitors. The lumber lobby found an excellent forum for its complaints in the U.S.-Canada Trade Agreement and used trade actions to push up the disputed fees, especially in B.C. The result? Higher stumpage fees more accurately reflect the value of our trees, making logging more expensive. Export fees, also a result of U.S. pressures, will further increase the price of our trees. As the costs of logging and exporting increase, low-value logging becomes less feasible. And governments earn more from the logging that does occur. Our stumpage fees are still below those charged on the open market. But the dramatic increases of the last decade show that we’re moving in the right direction. Free trade is helping us get there.

We can also use free trade to eliminate subsidies that take the form of lax environmental standards. The U.S. Environmental Protection Agency, for example, has announced that it will be scrutinizing Ontario’s movement towards environmental deregulation: Its lawyers will examine the Mike Harris government’s recent report recommending reductions in the number of environmental regulations to determine if the proposed changes violate the North American Free Trade Agreement (NAFTA).

After a report released last year indicated that most of British Columbia’s forests are more laxly managed than are the public forests across the border in Washington State—B.C. standards allow for logging at a faster rate, bigger clearcuts, and inferior stream protection—environmentalists in the United States called for upwards harmonization of forestry standards under NAFTA. B.C.’s looser rules, they charged, gave the province’s lumber companies an unfair advantage. Their brief to NAFTA’s environmental commissioners alerted activists to the environmental promise of the harmonization of standards. With environmentalists across the continent joining hands on this issue, we can look forward to improved forestry practices north of the border.

Just this month, environmentalists in Alberta filed a complaint under NAFTA, charging the federal government with ignoring its own environmental laws. The government, they contend, has bypassed provisions of the Fisheries Act and the Canadian Environmental Assessment Act, facilitating approvals of damaging projects. They hope that their complaint will prompt a full NAFTA investigation and pressure the government into complying with its environmental protection legislation.

NAFTA is working to protect the southern environment as well. For the first time, officials in Mexico and the United States are cooperating to control pollution along their border, with the ultimate goal of enacting common standards. Texans who understand that the quality of the air they breathe depends on pollution controls in Mexico are among those looking to NAFTA for environmental gain. Progress is slow, but it is indeed progress.

I hope that you agree that events have confirmed the value in our approach to free trade. Much of what we advocated has come to pass. But past accomplishments will not finance our future operations. To continue our efforts to promote policies that are both economically and environmentally sustainable, we need your help. I urge you to support our ongoing work.

Sincerely,

Elizabeth Brubaker
Executive Director

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