7:28 AM Jul 1, 1993

US COURT RULING ON NAFTA COULD AFFECT URUGUAY ROUND TOO

Geneva 1 July (Chakravarthi Raghavan) -- The US federal court ruling requiring preparation and submission to Congress of an environmental impact statement on NAFTA along with the treaty seems likely to put one more delay not only on Nafta but even the Uruguay Round negotiations and agreement already on a tight schedule.

The US Mission bulletin Thursday, in reporting the ruling, said that by setting a precedent, "the court order could also present the administration with an additional obligation in negotiating other trade agreements, including the long-stalled Uruguay Round."

On Wednesday, a US federal judge, ordered the Clinton administration to prepare an environmental impact statement on the North American Free Trade Agreement (NAFTA) before submitting the treaty to Congress for approval.

The US Trade Representative, Mickey Cantor, promptly announced that the ruling would be appealed, while continuing the negotiations for NAFTA side-agreements.

But by all accounts the process (whether of appeal to the Federal Appeals Court and the Supreme Court, or preparing an EIS) would mean a delay of six month or more, though it can't kill the agreements.

While the administration, and Democratic Presidents would not differ very much from Republication, would fight to preserve its jurisdiction (over foreign policy and negotiating treaties), it would also use these as an additional point to gain more concessions from its partners in the Uruguay Round.

It is likely, for example, to use this to insist on putting environment and labour standards on the GATT-II or the new MTO agenda, aiming them against competition from the developing world, and for weakening the "rule-based system of the MTO" (the argument being used by developing countries to justify their yielding to many demands of the US and EC in the Round in accepting the institutional arrangement and the package) by putting some of the domestic legal decisions beyond challenge in the GATT dispute settlement process.

And as the GATT's Assistant Director-General reminded the ECOSOC (high level segment) on Wednesday, any extensive or substantive rewriting or changes in the Draft Final Act text would make it virtually impossible to conclude the Round by end-December, the deadline for the US fast-track authority (yet to be enacted by the US Congress).

The NAFTA case was taken to court by Sierra Club, Public Citizen and Friends of the Earth.

But a number of environment groups in the US, many thinly disguised protectionists, have been using the 'environment' issue to insist on the right of countries to keep out imports of products manufactured by "processes" less costly than the costlier processes used or mandated by a country for allegedly greater environment-friendliness. Some of these groups have been demanding that the Uruguay Round accords on agriculture, textiles etc should all be subject to this environment issue.

But there are also other groups concerned over such issues as patenting of life-forms, bio-safety and other issues, who have been raising the environment impact question.

The federal judge's ruling, while underlining that the NAFTA would have environmental effects on the US-Mexican border, has not used it to declare the agreement invalid, but merely insisted on the Congressional intention behind the National Environment Policy Act (NEPA), namely, Congress should have a separate report on the environment impact when it is being called upon to enact any measure or implementing legislation.

In issuing the order, the federal judge has said that "such an impact statement is essential for providing Congress and the public the information needed to assess the present and future environmental consequences of, as well as the alternatives to, the NAFTA when it is submitted to Congress for approval."

Robert Housman of the Center for International Environment Law in Washington, has been reported in the US mission bulletin as saying that the environment impact statement is simply a legal procedure that could delay, but could not by itself defeat NAFTA and that even if the statement showed NAFTA would be ruinous, "Congress would still have the power to approve it."

Housman added that the ruling made the Uruguay Round and any other proposed trade agreements affecting US federal, state and local law subject to the NEPA and that this would be positive both for trade and environment because it would give the public more stake in decision-making.

Kantor has disagreed with this arguing it would be against "public interest because it interferences with the President's ability to negotiate international agreements".