| |
Summary: Bill H.R. 382 does not raise any issues of NAFTA consistency. Under
international trade case law, only legislation that mandates an illegal act
under trade rules, or seriously threatens such an act, can give rise to a claim
of violation. Bill HR 382 mandates nothing, but merely authorizes the states to
take certain actions that they would otherwise not be able to take because of
the law of the Commerce Clause of the US Constitution. It would not interpreted
by the US courts as even authorizing, let alone mandating, acts that violated US
international trade obligations.
Further, there is an issue as to whether transboundary movement of garbage is
even covered by NAFTA provisions on trade in goods, because the garbage is
moving across the border for environmental reasons, and not as an exported
product competing in US consumer markets. Although certain kinds of
environmental cooperation are mentioned in the NAFTA environmental
side-agreement, burden-sharing among NAFTA member states in dealing with the
environmental challenge of solid waste is not among them. NAFTA provisions on
trade in services are not applicable for similar reasons: no service delivered
to US consumers by Canadian or Mexican service providers appears to be affected
by this bill itself. Of course, one could imagine hypothetical scenarios where a
state decided to restrict imports of garbage in a way that affects such Canadian
interests, for example, prohibiting garbage not hauled by Canadian carriers; yet
this bill does not authorize such discriminatory treatment. In the case of NAFTA
investor protection rules, standing to bring an investor-state claim would
depend on the existence of a Canadian business entity that qualifies as an
"investor" or "investment" in the United States and is
affected by this bill. I am unaware at this time of any such entity, but if such
an entity did turn out to exist I would be pleased to offer my view of whether
such a NAFTA claim could be meritorious.
Bill H.R. 382: NAFTA Implications
I. NAFTA Provisions on Trade in Goods
Let me express at the outset my doubts as to whether these provisions are
even applicable to the export and import of garbage; is garbage a traded good,
within the meaning of NAFTA? It is not entering the United States as a good
offered for sale to consumers on the market; rather it is being sent abroad for
environmental reasons. The NAFTA itself is not an agreement that requires
sharing of environmental burdens between NAFTA members; indeed, the level of
cooperation contained in the NAFTA environmental side agreement falls far below
a legal requirement of such burden-sharing. The NAFTA is fundamentally a
commercial agreement, which requires among other things, equality of competitive
opportunities for goods and services being traded across the borders of NAFTA
member states; i.e. being produced in one NAFTA member state, and sold to
consumers in another. In other words, NAFTA disciplines commercial
protectionism, the protection of one's own consumer markets against goods and
services from other NAFTA members. Leaving aside the issue of recyclables, there
is no consumer market at all for the garbage in question; it would be laughable
in fact to describe it as competing with US garbage for US consumers.
But even if garbage were considered to be a traded good within the meaning of
NAFTA, it would make no difference in the case of Bill H.R. 382. This is because
the NAFTA defines the basic obligations concerning free movement of goods
(Import and Export Restrictions and National Treatment) in accordance with the
GATT and the WTO Agreements. GATT and WTO case law is clear: only legislation
that mandates a violation of a trade agreement may be challenged as illegal.
There may be borderline cases, where the legislation leaves some window of
discretion for decisionmakers, but could still be found to constitute a possible
violation; there has been one such borderline case in the history of the GATT
and WTO, the Section 301 case, and in that instance the panel, while
entertaining the possibility of a violation, ultimately ended up finding no
violation. HR. 382 is on the opposite end of the spectrum from such borderline
cases. H.R. 382 mandates nothing; it merely authorizes the states to take
certain actions that, without Congressional approval, they would be unable to
take because of the constitutional constraint of the Commerce Clause. It is even
questionable whether H.R. 382 authorizes the states to take actions in violation
of NAFTA, much less mandating such violations; while I am not an expert on the
foreign relations law of the United States, my understanding is that the US
courts will generally interpret a statute in a manner that is consistent with US
international legal obligations, unless there is clear wording in the statute to
the contrary. I suppose that, to reassure the US trading partners, in this case
Canada, wording might be added to the Bill to state explicitly that Congress is
authorizing only those state actions that are consistent with the international
trade obligations of the United States. But as I have just said, for purposes of
the US courts interpreting it that way or of legal consistency with NAFTA, such
wording is not necessary.
II. NAFTA Trade in Services Obligations
These obligations apply only to measures "relating to cross-border trade
in services by service providers of another Party". In the present case,
Canadian service providers are not offering any service for sale in the US;
rather it is the reverse-US landfill operators are providing a service to
Canada. Therefore the NAFTA Trade in Services obligations are inapplicable to
the United States in this situation.
Even if they were applicable, the general point stated above concerning the
non-mandatory nature of the proposed legislation would likely foreclose any
issue of a NAFTA violation.
III. NAFTA Trade and Investment Obligations
These obligations apply where a business entity of another NAFTA party
operates as an "investor" or "investment" in the United
States. I am not aware of any Canadian entity that meets the NAFTA definition of
an "investor" or "investment" in the United States and that
could be affected by this legislation in such a way as to have a valid
investor-state claim. Only if such an entity already existed, would one have a
NAFTA investor-state issue; and then one would have to examine the effects of
the legislation on that entity, and whether those effects run afoul of the NAFTA
provisions on investor protection, such as the expropriation provisions. As was
already emphasized in one NAFTA investor-state case that dealt with trade in
hazardous substances, the S.D. Myers case, the Basel Protocol on Transboundary
Movement of Hazardous Wastes would trump the NAFTA to the extent of any
inconsistency. However, there is no need to consider the details of that, as
long as there is no Canadian business entity that qualifies as an
"investor" or "investment" within the meaning of NAFTA,
since there is no one with standing to bring an investor-state claim in the
first place.
IV. Conclusion
I wish to emphasize that the above remarks apply on to Bill H.R. 382 itself.
They do not address hypothetical scenarios where subsequent action by the states
restricting imports of garbage might give rise to a NAFTA claim. There are
certainly some hypothetical scenarios where that could happen: for instance, if
a state prohibited imports of garbage unless the hauler was of US nationality,
then there could be an issue of National Treatment with respect to trade in
services. It might be argued that Canadian haulers were being discriminated
against in such a situation.
But clearly, no scenarios of that kind flow from Bill H.R. 382 itself.
|
|
