The previous chapters have stressed the importance of integrating environmental protection laws into free trade agreements, and the problems that result from lack of enforcement in the NAFTA institutions. This chapter examines the potentially positive outcomes of extending the NAFTA to Chile in the near future, rather than waiting for the problems of NAFTA to be solved. First, the chapter will look at the history of Chile and how trade liberalization, and subsequent economic growth, has had a negative impact on Chile's environment. It will be shown that, like so many other developing countries, environmental costs have been externalized in Chile in the name of trade liberalization. One section focuses on Chile's current situation. As of now, the country is reaping the economic benefits of many different trade agreements which do not attempt to address environmental concerns. (As Nicole Oliver's paper points out, at least NAFTA has the environmental protections in its framework.) Finally, the role of NGOs will be explored. Chile has a long history of public participation. It will be argued that this participation, if added to current efforts of those in the U.S., Canada and Mexico, will ultimately help to deepen the NAFTA agreement.
Extending NAFTA to Chile before it is improved upon may help to quicken, and make easier, the deepening process. Many share the view that the agreement should be strengthened before it is expanded. Chile's economic and environmental structures suggest another possible avenue. Rather than stopping the expansion movement until better policies are formed, broadening the NAFTA now presents an opportunity to improve existing environmental regulations and conditions in utilizing a country which is similar in biome and economic structure to that of Mexico. These cross-border regulations could be achieved in part by utilizing NGO recommendations and the publicity that would result in the expansion process. Chile's economic position and environmental conditions are compatible with present member-countries due to the pattern of economic development which has occurred during the past two decades. For these reasons, the Chilean case with respect to NAFTA should be given serious consideration.
One major reason for U.S. opposition to the expansion of the NAFTA is that opponents believe the document requires changes to make it a better environmental contract. The reasons behind this claim have been addressed in the previous chapters. Yet in the case of Chile a point commonly overlooked is the fact that the country already suffers from environmental degradation which is directly related to its trading practices. The country can be paralleled with the case of Mexico in this aspect, "While it makes economic sense to invite Chile into NAFTA, it is imperative to avoid repeating the mistakes made with Mexico." This is an understandable concern seeing as how our most immediate experience with the effects of trade upon the environment comes from NAFTA and what we have seen in Mexico; a country which has widely acknowledged environmental problems. It is however naive for people to pin the blame of environmental degradation solely on the NAFTA document. True, NAFTA is a contributing factor, but it is only a small part of the global free trade movement. Chile has adopted the neo liberal model quite apart from entering into free trade agreements with NAFTA members.
Chile's rapid economic growth began in the 1970's when General Pinochet and several "free market" economists from the University of Chicago adopted the neo-liberal model and set Chile on the path towards an open market economy. According to Danielle Rounds, the Chilean economy underwent "adjustment policies, privatization, economic opening, balanced budgets, and labor flexibility." Rounds further points out that during the Pinochet regime, "social spending per capita dropped by over a fifth, while trade policies became focused on export promotion." Policies instituted by the Pinochet government were designed to reduce taxes and other trade barriers so as to invite foreign investment. Sustained market-led economic growth and the replacement of the Pinochet regime in the early 1990s, opened the door for large scale trade and foreign investment in Chile.
Chile has been remarkably effective in opening its economy to global investment and establishing trade linkages throughout the world. Like so many other developing countries, the resulting economic growth has devastated its environment. Recognizing the world demand for natural resources, the Chilean governments, starting with Pinochet, established their niche in the global economy. The growth of the Chilean economy was directly a result of the exploitation of their resources. Exportation of resources like wood, wine and minerals now account for eighty-eight percent of Chile's economy, and approximately 300,000 acres of Chile's native forests are being harvested a year. Essentially, Chile has externalized its environmental costs as a comparative advantage. (See the previous chapter for a more detailed analysis of the implications of externalities)
The implementation of trade liberalization has led to the deterioration of the overall resource base in Chile. Indigenous peoples have had to deal with the issue of land loss due to larger agricultural companies claiming legal rights to purchase the land. The policies of the Pinochet government were geared towards the interests and even judicial advantages of international corporations. These large corporations were given the land ownership rights and subsidies for crops intended for exportation with little or no regard shown for the indigenous peoples. As a result, the campesinos (the local Chilean indigenous peoples) were nearly eliminated. In January of 1994, the zapatistas in Chiapas, Mexico held a massive revolt protesting an identical claim of land loss. The Chilean government currently in power has continued to cater to the large corporations. The opening of Chile has impacted its economy and environment because the government has promoted exploitation of its resources by multinational corporations.
As in many other developing countries, Chile has adopted practices aimed at increasing economic growth, which in turn have adversely affected the environment. Like Mexico, Chile has increased its use of pesticides in the past decade. The alarming fact is that one hundred and thirty of these are black listed by the United Nations because of their negative impacts on human health. Many of these banned pesticides are directly correlated with the development of cancer and or mutations. "In the Sixth Region of the country, for example, where 60% of the pesticides are used, studies carried out by the Hospital of Rancagua show an alarming increase in miscarriages and genetic malformations. This research has now attracted worldwide attention." Again, parallels can be drawn to Mexico in that the effects of pesticides can be seen in an area along the border between Mexico and Texas where increasing numbers of babies have been born with undeveloped brains. These births have been related directly to the use of toxins in Mexico which have been outlawed in the U.S. These are examples of the types of problems people are attempting to address by deepening NAFTA, problems that may be easier to solve with the increased attention and resources resulting from Chile's inclusion.
The downward spiral of social welfare is not simply a North American problem; it is undoubtedly a world problem. Deteriorating social welfare is seen in the widening economic gap between the rich and poor in countries world wide. In this regard, Chile is no different. For example, although unemployment has been dropping, in Chile, more and more people have low paying jobs. One million households, or four million Chileans out of a population of thirteen million, make less than US$200 a month. If one was to divide the population into ten different groups based on income level, the results are even more striking. The richest ten percent receive 40.8% of the GDP, while the poorest ten percent receive only 1.7%. Broken down, this suggests that 1,656,000 people in Chile earn less than US$37 a month. On a global level, similar statistics can be found. The United Nations Development Program "Human Development Report" for 1992 showed that 20% of the world's richest people earn 82.7% of the world's income, while the lowest 20% receive a mere 1.4% of the world's total income. The income gap between the rich and poor in Chile has been increasing since the adoption of trade liberalization policies. With or without the expansion of NAFTA, Chile will most likely continue to face the negative side effects of neoliberal policies.
With or without NAFTA, Chile will continue to immerse itself into the global economy. Along with bilateral agreements with both Mexico and Canada, Chile has become a member of the Asia-Pacific Economic Cooperation forum (APEC), and MERCOSUR, a coalition formed by countries of Latin America. The European Union has also made it known publicly that forming an agreement with MERCOSUR in the next few years is a priority. These countries are willing to make trade agreements with Chile without insisting upon stiff environmental regulations. If the U.S. holds back expansion of NAFTA until further reforms are made, then Chile may not be willing to sign on to a document with strict environmental regulations already in place. There would be little incentive for Chile to accept NAFTA with enforced environmental conditions attached when other agreements have no such stipulations.
According to Jose Joaquim Brunner, Secretary General to Chile's president and cabinet. "We don't need an accord with the United States anymore. Yes, we still want one, but we have made strides in other directions that have helped our economy and will continue to without a U.S. trade agreement." Brunner points out a key difference here. Obviously Chile would like to have a trade agreement with the U.S. There are incalculable benefits in being linked to the wealthiest nation in the world. However, unlike Mexico, future economic well-being is not dependent on such an agreement. In this age of multinational corporations, Chileans are able to purchase products from U.S. corporations through their linkages to other countries, yet recently imports to Chile from the U.S. have slowed from a 43% increase in 1995 to almost zero growth in 1997. This is because goods from other nations are proving more competitive. MNCs like Chrysler and IBM have recently begun to ship goods to Chile via their plants in Mexico and Canada, rather than their plants in St. Louis or Ontario. In cases like this, not expanding NAFTA to Chile could lead to a loss of jobs in the U.S. - one of the strongest current complaints about the NAFTA.
Chile's economy is continuing to expand because of trade agreements with other countries, but there is another reason why they may not want to be part of a "green" NAFTA. Populations in developing nations often resent too much outside influence resulting from previous colonial and Cold War power plays. "Strict environmental standards of the northern variety may be just another weapon in the armory of the powerful first world to stop the third from getting its exports on to the world markets." In the eyes of the Chilean government, the country has made remarkable progress in creating the sustained economic growth of recent years. In developing countries, it is not the rainforests that most are worried about; concerns about clothing and feeding children often must take precedence. The Chilean government will continue to do what is necessary to achieve these immediate, economic goals. It may be difficult for people in the U.S., Canada and perhaps even Mexico to understand this attitude, because the focus tends to be on the negative impacts of Chilean development - especially the depletion of their natural resources.
Many studies have been done showing that the Earth's resources are being used at a rate that is not sustainable. People in industrialized countries like the U.S. and Canada are inclined to simply tell countries such as Chile that they must change their habits for the sake of all human beings. Chileans, or citizens of an independent country, are often resentful of such "colonist" attitudes and insist on the ability to make autonomous decisions within their own political borders. Until issues like the environment are truly addressed on a global level, we must rely on individual governments and their agreements to prove responsible. Binding trade agreements which both give and take in the final economic and environmental calculus are perhaps the best way the First World can induce a country like Chile to adopt better environmental practices. The question now, is how can these binding trade agreements be made more responsible toward things like the environment? Often times, these changes must come from the efforts of citizens.
It is currently acknowledged American and Canadian NGOs had significant influence in the drafting of NAFTA. (See Nicole Oliver's paper for more discussion of NGO importance in international agreements) NGOs are a means of vocalizing issues that are often overlooked or ignored by governmental entities. NGOs, by their nature, seek publicity to gain the influence necessary to elicit change.
NGOs rely on publicity to make other people aware of the causes they are fighting for. Fernando and Heston argue that in developing countries NGOs "have been particularly successful in initiating a dialogue about, and creating awareness of, the various societal issues in the national and international arena." After creating this awareness, an NGO's goal is to use the publicity generated to affect policy outcomes. Extending the NAFTA would raise consciousness of the Chilean situation and generate awareness needed to help promote NGO concerns about the environment and other trade related problems. As a political resource, publicity helps NGOs raise their profile and connect with more established groups such as the Sierra Club.
Because the current NGO movement in Chile is active at this point in time, an effective, influential coalition could be formed if their efforts were combined with the resources and participation of NGOs based in other countries. Even though NGO activity is quite strong in Chile, bringing in international efforts would undoubtedly help their cause. "The extent to which the NGOs can be successful in influencing government policies depends on international opinion, the nature of the conflict, and a given country's relationship with the international community, rather than NGOs having a local constituency powerful enough to support their agendas." A Chilean newspaper poll conducted in 1996 stated that the environmental movement was rated as the number one force working towards positive change in the country, placing it higher than the Catholic Church. The largest environmental NGO in Chile is RENACE, the National Ecology Action Network. Founded in 1988, RENACE consists of 140 different organizations from every part of the country. RENACE's profile is high in Chile but its international potential to ally with other North American groups would be greatly increased if Chile were included in the NAFTA. This would add to the NGO impression upon Chilean environmental policy.
Chile and Mexico have followed similar paths resulting in rapid economic growth and increased environmental degradation. However, under the limelight of NAFTA, Mexico has been under pressure to attend to its environmental problems. Because of NAFTA's visibility, the pressure is not solely from Mexican groups, but also from U.S. and Canadian NGOs, corporations, unions and governmental leaders. An example of the way publicity from NAFTA has affected Mexico can be seen by examining public opinion about the maquiladora zone. As pointed out in Wendy P. Dodds and Virgil R. Mabalay's paper, the zone was established in the 1960s, long before NAFTA had come into play. However, until recently, the average person had probably never been exposed to the word maquiladora, much less was aware of conditions existing there. Clearly, the publicity attached to the creation of NAFTA has heightened awareness in regards to multinational corporations moving production to countries where they are able to take advantage of lax environmental regulations and cheap labor. While it is true that NAFTA has made it easier for companies to relocate to Mexico, the agreement has increased public awareness about the realities of neo liberalism and its impacts on the environment. If the NAFTA were to be expanded to Chile, it is likely that a similar level of publicity would be generated.
Collaboration of NGOs in Mexico and Chile with groups in Canada and the U.S. are beneficial to a transboundary environmental movement. This has already been seen between Mexico, Canada and the U.S. Since the creation of the NAFTA, many NGOs in all three countries have formed cross-border alliances. "The importance of U.S. NGOs in Mexican border communities is a reality that should not be overlooked. When U.S. NGOs have developed respectful, collaborative relationships with their Mexican counterparts, they have been a positive influence because they can be a channel for resources, information, and experience to Mexican NGOs. Environmental groups in Mexico and Chile, involved with and affected by the environmental shortcomings of trade agreements, would logically be able to offer first-hand insight in this area. Meanwhile, groups in the U.S. and Canada can share their resources and technology with these resource-rich nations. The result is a more effective environmental movement than any single NGO could create on its own.
The very purpose of NGOs is to work together. Through the expansion of NAFTA, NGOs would be given a political situation in which they could thrive. "NGOs have arisen as a response to attempts by social groups to secure social, economic and political equality; a sustainable environment; …and as a resistance against all forms of exploitation and domination. The expansion of the state and markets has led to further stimulation, not suppression, of NGO activities." Unfortunately, without motivating forces (such as expanding markets with a trade agreement), NGOs tend to independently identify with a specific issue they consider important. The NAFTA could provide a channel for NGOs to work together internationally, thus deepening the document's environmental regulations and overall effectiveness through this newly heightened awareness.
Many NGOs in all four countries, Mexico, Canada, the U.S. and Chile, have been speaking out for several years about the shortcomings of the NAFTA. Currently, environmental groups and NGOs in Chile have no reason to focus their efforts on bettering the trade agreement, because it is not directly affecting them. If the NAFTA were to be expanded, even before better environmental reforms are made, the NGOs already active in Chile, such as RENACE, would have little choice but to work with NGOs in the other NAFTA countries.
Chile is facing serious environmental degradation as a result of their current trading practices. The three nations of NAFTA are facing problems of the same nature. The citizens of Chile are attempting to fight the negative effects of trade on their own and the countries of NAFTA are trying to work together to enforce the protections already defined within the NAFTA document. Regardless of whether or not the NAFTA is extended to Chile, environmentally inclined citizens will continue waging battles against the strict neo-liberal model. This being true, it makes a certain degree of sense to form a bond which is both economically beneficial and eventually environmentally friendly, given that current efforts continue to work towards the same goals. Change to the NAFTA will inevitably occur, yet the motto of working together towards a common purpose undoubtedly applies.
The Chairman and CEO of North American Environmental Technologies, Steven J. Winston, made an excellent point while original talks of NAFTA were taking place: "In short, NAFTA will be leverage for the very sort of activity about which I am speaking (increased activity of NGOs across borders). If NAFTA does not come into being, however, trade and investment will not suddenly come to a halt; existing problems will remain. In any case, there will be work for us to do together."
As discussions revolve around the possible extension of NAFTA to Chile, the realities that Mr. Winston points out still hold true. Winston mentioned that NAFTA would be leverage, or a means, for this increased NGO activity to take place. Thus far he has been proven right; joint NGO efforts between the NAFTA countries have increased. Given the present solid public support for environmental NGOs in Chile, there is no reason to believe that this would not happen with Chile as well.
The question the U.S. is struggling with right now is whether or not NAFTA should be expanded before it is deepened. The answer, in Chile's case, depends on what risks appear to be greater. On the one hand, there are groups concerned about the further degradation of the Chilean environment, not to mention more loss of jobs for people in the U.S. These problems might very well occur; however, it is possible that the increased amount of public awareness and NGO activity that would be created in the expansion of NAFTA seems to be worth this risk. This opportunity to use expansion to Chile as a means to deepen the NAFTA through the linkage of pro-environmental NGOs and other groups across the Americas should not be overlooked.