140 



the absence of some mechanism to compel exemplary behavior, the U.S. oil and gas 

 industry will do little for Mexico's pollution problem. 



III. TRANSPORTATION EFFECTS IGNORED 



In November 1989, the European Commission published a study of the environ- 

 mental effects of the implementation of the Common Internal Market in 1992. While 

 the Europeans are undertaking a more ambitious project than the proposed com- 

 prehensive North American Trade Agreement, their preliminary analysis is a sober- 

 ing confirmation of the environmental dangers of trade agreements. 



The task force explored a wide range of effects, the most significant of which was 

 the increase in transportation that would result from greater trade. The task force 

 concluded that the Common Internal Market would increase interstate truck trans- 

 port in the EC between 30 and 50 percent. According to the task force, "the growth 

 impact of the Internal Market is likely to cause atmospheric emissions of S0 2 and 

 NO x to increase respectively by 8-9 percent and 12-14 percent by 2010." 



While geographic differences between North America and Europe mean that these 

 results cannot be translated directly, a dramatic expansion of truck traffic along the 

 U.S. -Mexican border seems inevitable. An EPA report, "Review of U.S. -Mexico Envi- 

 ronmental Issues," points to a quadrupling of truck traffic between the United 

 States and Mexico by the year 2000, even without NAFTA. With NAFTA the total 

 will go higher; the report suggests that up to 12 million trucks may be crossing the 

 border each way each year by the turn of the century — up from slightly under 2 mil- 

 lion in 1990. 7 The resulting pollution could be significant. 



With the inclusion of Canada, one can reasonably expect growing transport across 

 the United States to Canadian markets as well, although we do not have estimates 

 of this effect. 



The overall increase in transport would not only have effects on S0 2 and NO* 

 emissions, but would also increase emissions of C0 2 , the principal greenhouse gas. 



The task force goes on to conclude that in the European case: 



Without proper incentives, energy demand (and corresponding pollution) 

 appears to be positively correlated with additional economic growth. The 

 main policy lesson of the energy shortages of 1974 and 1979 may be that 

 a proper incentive, such as higher energy prices, is critically important in 

 breaking the link between economic growth and energy consumption. Only 

 if the scarcity of natural resources is properly reflected in the use of price 

 incentives and/or regulations, will economic growth associated with the 

 completion of the Internal Market lead to overall economic efficiency. 



We concur with the conclusion of the task force and note that the NAFTA com- 

 pletely lacks these sorts of compensatory measures. 



CONCLUSION 



In short, NAFTA holds the prospect for increased energy use, particularly fossil 

 fuel use, in the United States, Mexico and Canada, especially in the transportation 

 sector. Current exemptions from environmental laws and subsidies to the petro- 

 chemical industry will continue, while inducements to the alternative energy indus- 

 try may be vulnerable to challenge as nontariff barriers. As the case of Carbon II 

 illustrates, we will be powerless to stop transborder pollution from power-generating 

 facilities. Furthermore, these facilities may gain a competitive advantage in the 

 electricity market because they need not abide by as strict a set of pollution control 

 laws. 



? "Review of U.S.-Mexico Environmental Issues," February, 1992, pp. 177-178. 



