This Chapter addresses the issue of regional development in the context of free trade. In order to contribute to a discussion of the southern border of US in the NAFTA context, this chapter will examine the under-developed or "southern" regions of the European Union (EU) and the policies that are being instituted there in order to achieve greater symmetry within the European region as a whole. Though there are fundamental differences between the EU and NAFTA (See Writer, Chapter 5), similar dilemmas face both regions. In particular, in both zones there exist problems with cross-border disparities such as infrastructure development, migration, unemployment, and environmental degradation. If either the NAFTA or EU trade zone is to continually develop and prosper in the increasingly global economy, these issues must be addressed. In the case of the EU, institutionalization of trans-boundary cooperation at the local and regional levels has proven essential in addressing social, economic, and environmental problems that affect everyday life in these underdeveloped regions. By discussing these European experiences, this chapter draws out some critical institutional lessons for NAFTA.

"In contrast to the neo-liberal policy approach of NAFTA, European integration has from the outset been accompanied by the attempt to take the social dimension of the single market into consideration." A Single European Area created by the EU in 1987, produced a Single European Market and reinforced the Community's supranational institutions. These institutions set new objectives for common policies across a wide range of fields including social and regional policy, environmental policy, as well as research and development, among others. To achieve these goals, the EU Commission developed a policy for the abolition of barriers. In addition to the removal of checks on persons and goods at national borders, the policy calls for the harmonization of standards and technical rules, harmonization of consumption taxes, a Europe-wide invitation to tender for public orders above a certain financial level, the extension of the freedom of movement ruling to persons not in gainful employment and facilitation of intra-Community mobility, and the same terms for services offered within the Community. Because of the economic asymmetries existing between the various members of the EU, inevitable problems began to arise.

Like the North American members of the NAFTA, the European Union is divided into the "north," with a per head GDP above the EU average, and the "south" with a below average per head GDP. Like Mexico, EU states such as Portugal, Spain, Ireland, and future EU members Poland and the Czech Republic, all have per head GDPs far lower than the bloc's average. The consequences of this vary from labor migration to wealthier neighbor states to environmental degradation - both of which carry with them trans-border implications. Though not much has been done to attempt to solve these problems in the NAFTA "southern region," the EU has been creating and implementing policies and funds that promote economic development and cross-border cooperation on both local and regional levels. Because the asymmetries are so similar, the EU policies can provide useful lessons for NAFTA.

The first part of this chapter focuses on the economic asymmetries dividing the European "north" and "south." As in Mexico, a lack of infrastructure in Portugal and Spain hinders development. In particular, there is a lack of quality road and highway networks inside the borders as well as links that join international routes. But through local and regional cooperation, and EU funding, roads are being built and linked throughout Portugal and Spain. Of particular interest are Euroregions 1 (Junta de Andalucia) and 2 (Xunta de Galicia). Because this problem closely parallels the problem of insufficient infrastructure in the San Diego/Tijuana and Texas/Northeastern Mexico cross-border regions, a similar cooperation network could be established to better coordinate the construction and expansion of road networks and border crossings.

The second part of the chapter will focus on the social aspects of asymmetries by examining the situation in Ireland. As in Mexico, high unemployment and migration are preventing Ireland's economy from achieving its full capacity. This predicament has led the Irish government to experiment with local development initiatives. At the core of this strategy are urban and rural partnerships located in disadvantaged areas. The idea is that through regional partnerships, education and vocational training, migration can be limited and entrepreneurial activities can stimulate local economies. Of particular interest is the regional cooperation in the border region of Ireland and northern Ireland (Euroregion 3 on Map). Following the Irish example, trans-border regional cooperation between the US and Mexico can discourage potential immigrants by improving the Mexican standard of living.

The third and final section of this chapter focuses on the environment in border regions. Pollution is a problem in economically underdeveloped states such as Mexico, especially in the bustling border regions. This is also the case in Europe and the border region between Germany, Poland, and the Czech Republic. The region of Dreilandereck (Euroregion Neisse, 4 on Map) is one of the regions most endangered by air pollutants in Europe. In order to develop a regional strategy to manage this problem, the three states are currently working together and exchanging environmental data that can provide some future solutions. Within the NAFTA "southern" region, measures based on the EU's experience could be instituted to regulate pollution standards, as well as provide solutions to existing problems.

EUROREGIONS: GLOBALIZATION AND GLOCALIZATION

The mid-1970s marked a major turning point in Europe and the rest of the industrial world. As argued by Gabriel Grant (Introduction Chapter, this volume), the Fordist "golden age" of unprecedented and fast economic growth ended as increased competition resulted in the decline of profits and purchasing power. The resultant supply and demand side crises forced the industrial powers to pursue new modes of production and management. The result has been Post-Fordism, an increasingly neo-liberal capitalist system characterized by a shift toward globalization.

Globalization has generated self-enforcing trends toward increased economic interdependence, reduced national autonomy and increased economic integration. As a result, free trade zones such as the EU or NAFTA have been created to reduce the obstacles faced by transnational trade. As the traditional nation states' power has weakened, the economically dynamic border regions have gained autonomy and importance. Termed "glocalization," this trend is leading to a growth of transnational networks and overlapping jurisdictions. Because these regions are characterized by a higher than average internal level of economic integration, they have often been the sight of cross-border regional alliances and cooperative efforts.

Because economic cooperation in Europe began almost immediately after the end of World War II, the border regions of the EU are more developed today than their NAFTA counterparts. The European Community recognized the relevance of cross-border regions as early as 1971 and founded the Association of European Border Regions (AEBR) at Anholt Castle in the long existing Dutch-German EUREGIO. EUREGIO, along with nine border regions, formed the first network of European Border regions concentrated along the strip of the river Rhine. The primary motives for joining together were: "the exchange of experience, and the joint representation of common interests." From the very beginning, the AEBR was conscious of the fact that a network for and with the border regions can only be effective if it is able to gradually integrate all the European border areas. Today, the AEBR has 56 members, representing nearly 90 border regions all over Europe. The membership continues to grow, particularly in Southern, but also in Central and Eastern Europe.

During the 1970s and 1980s, the network of border-regions became increasingly interdependent. The AEBR had accumulated a comprehensive wealth of experience and knowledge. This wealth of experience provided useful contributions for the design of Article 10 of the European Regional Development Fund (ERDF) described in the next section of this chapter. The AEBR had soon developed into a service point for its members and an advisory partner for other border regions and European institutions. The Association realized that despite varied geography, varying starting points in terms of national administrative structures and competencies, and varying economic and social problems, border regions everywhere faced the same fundamental concerns and problems. This made it all the more necessary for border regions to exchange their experiences, to share their problems and their efforts to provide solutions. Today, annual events address specific themes of concern to the border regions, such as transport infrastructure, ecology, cultural cooperation, technology and innovation, tourism and leisure.

The European example of cross-border regional cooperation demonstrates the importance of the institutionalization of emerging regions. Because they are so similar to their European counterparts, the NAFTA cross-border regions described in this Task Force would undoubtedly benefit from an association modeled after the AEBR. As technological advances in communication continue to de-emphasize national borders, networking will become increasingly effective. Through regional cooperation, common cross-border problems can addressed, and solutions can be proposed and discussed in an institutional forum.

EU COHESION INSTRUMENTS: THE STRUCTURAL FUNDS

In contrast to the economic approach behind the NAFTA, the European Community made a political and diplomatic commitment to the elimination of regional disparities and the harmonization of the living conditions of its citizens in the Treaty of Rome. More recently, the Maastricht identified "the promotion of social and economic cohesion as vital to the full development and enduring success of the Community." This restated EU policies that dated back to the 1970s and was designed to counter the risk that increased competition could cause further damage to the already disadvantaged areas, thereby discrediting the entire market.

After the first twenty years of EU regional policies, the disparities between the poorest and the richest regions had hardly narrowed. "Per capita income in the ten poorest and richest regions was still less than a third that of the ten richest, and the unemployment gap between the 25 lowest and highest ranking regions was more than five to one." Although the income differentials in the EU were (and are) lower than in North America (NAFTA), average net earnings ranged from $13,000 in Portugal, to $50,000 in Luxembourg, a ratio of 1:4. And while 30 percent of Andalusians were without jobs, the unemployment rate in Luxembourg was a mere 2 percent. Policies had to become more drastic to produce results.

As a result of a 1989 amendment to the Single European Act, the EU has been able to take more effective measures to solve the structural problems of the weaker regions and their disadvantaged inhabitants. The European Commission describes disadvantages in the following way: inadequate or neglected infrastructure, weak or outdated industrial structures, decline of towns and de-population, and high unemployment. Theoretically, most of the US/Mexico cross-border regions would apply.

The opening of frontiers in 1993 posed a further problem for the most disadvantaged regions. There was a risk that the single market would be most beneficial to those regions best suited to attract capital and human resources. Because of this, the objective of economic and social cohesion was introduced by the Single European Act as the essential complement to the single market. It took practical shape in the thorough reform of the Community Structural Funds (European Regional Development Fund, European Social Fund, European Agricultural Guidance, and Guarantee Fund) and marked a substantial increase in the funds available effective from January 1, 1989. While the level of EU regional aid was relatively modest for the 1989-93 period, the overall budget for the 1994-98 has more than doubled and is Ecu 156 billion (Ecu 1= $1.30).

The European Union's overall policy operates mainly through five structural funds. The European Regional Development Fund (ERDF) was set up in 1975 under pressure from the UK and Ireland to assist underdeveloped areas as well as those in industrial decline. Its main application is the co-financing (alongside member governments) of infrastructure development such as communication, roads and industrial estates. The ERDF contributes up to 40 percent of the cost. Also covered are industrial investments which either create new jobs or maintain existing ones, with the fund contributing up to 20 percent of the cost. The ERDF is also intended to encourage small and medium sized enterprises, the development of frontier areas, and environmental measures associated with regional development.

The European Social Fund focuses mainly on funding recruitment and job creation schemes, especially for young people. Created by article 123 of the Treaty of Rome, this fund also supports the mobility of Europe's unemployed. The initial aim of the original six EC signatories (the Benelux countries, France, Italy, and Germany) was to create a special solution to the problems felt in the Mezzogiorno, an underdeveloped region in southern Italy. However, persistent and steadily increasing unemployment led to an enormous increase in the demands made on the Social Fund. In 1987 alone, the fund managed Ecu 14 billion - approximately 6 percent of the total EC budget.

The Cohesion Fund was established by article 130d of the Maastricht treaty to work alongside the existing Structural Funds. The Fund ". . .was intended to assist preparations for economic and monetary union in the four countries whose per capita GDP was less than 90 percent of the Community average in 1992 (Greece, Portugal, Ireland and Spain) by supporting projects concerned with the environment and trans-European transport networks anywhere in those countries." The initial sum allocated to the Cohesion Fund is Ecu 15.5 billion to cover the period 1993-99.

Although the funds were established at different times for different purposes, the Commission tries to coordinate them into a coherent framework. In theory, they must provide support over and above the public expenditure which would otherwise have been incurred by the member states, but their contribution is limited to 50 percent of project cost. However, this limit has recently been relaxed, especially for the poorer member states in which the Cohesion Fund's level of aid is 80-85 percent.

Most programs are run by the member governments, although the Commission does administer a number of "Community Initiatives" targeted at specific problems. Among these is a special initiative for border regions known as the INTERREG. "The central aims of INTERREG are to promote trans-frontier cooperation in economic development and to prepare the border regions to make the most of the opportunities and challenges of increasing European integration." INTERREG is unique among Community programs as its budget is allocated not by individual member states, but by border regions. This has helped to establish and strengthen cross-border partnerships between national, regional, and local authorities. Because its funding comes from border regions, this kind of framework can be modified and instituted within the NAFTA framework to aid the development of the southern border regions of the US and Mexico.

The reasons why certain regions are disadvantaged can be traced a long way back. Most of them require structural alterations. Though some of the regions are adversely affected by their geographic location, they all share, to some degree, certain difficulties. These include: inadequate basic infrastructure (transport, telecommunications, energy, water, environmental protection); a poorly qualified and uncompetitive labor force, a low level of research and development; and local financial markets which do not respond well to the needs of small firms for credit. All such problems make the regions less likely to succeed in the single market and hinder the building of more prosperous free trade zones. In its search for a solution, the EU has defined economic and social priorities using six development objectives based on well-defined criteria. Those benefiting from measures to promote development are:

1) Regions whose development is lagging behind (Objective 1). Included here are regions where per capita GDP is less than 75 percent of the Community average, or other special reasons for inclusion under this Objective. The emphasis is on "catching up" through direct investment, infrastructure development, various services to small firms, research and development, investment in infrastructure for education and health, vocational training, as well as various rural development measures.

2) Areas in industrial decline (Objective 2). These are mainly areas where rates of unemployment and industrial employment are higher than the Community average, and where industrial jobs are in structural decline. Measures are centered on raising employment and the restoration of industrial sites.

3) Throughout the Community, the long-term unemployed, young people in search of jobs, and those threatened with exclusion from the labor market (Objective 3). The emphasis is on access to employment and training (particularly training equivalent to education), as well as improvement of the structures of training and employment.

4) Throughout the Community, workers whose employment situation is threatened by changes in industry and production systems (Objective 4). Measures focus on the adaptation of workers to changes in industry and systems of production through measures that prevent unemployment (vocational training, anticipating trends in the labor market and requirements for skills).

5) Throughout the Community, farmers, fishermen and those involved in processing and marketing products from those sectors who are facing changes in the structures of production (Objective 5a). The focus of this Objective is adaptation of structures in the sectors of agriculture and fisheries in line with the reform of the Common Agricultural Policy.

6) Vulnerable rural areas with low levels of socio-economic development which also meet two of the following three criteria: a high proportion of employment in agriculture, a low level of agricultural incomes, and a low population density or high degree of migration (Objective 5b). The measures are primarily intended to promote alternative activities such as the development of human resources and advanced training in rural areas.

7) Areas of extremely low population density (Objective 6), i.e. those with fewer than eight people per square kilometer. The main aim of the measures is to encourage people to stay in these remote areas by broadening employment opportunities, development of human resources through training, and support to help these areas adapt to changes in the agricultural sector.

Slowly, the gap between the European "north" and "south" is shrinking. Though the EU is obviously more advanced in the development of its free trade zones, their progress can offer valuable lessons for the NAFTA. It is becoming painfully evident that the economic asymmetry between Mexico and the US is creating a number of critical problems. The EU experiment has proven that the systematic reduction of the economic asymmetries is beneficial to both the "north" and the "south." Though systematic funding for Mexico is rather unlikely at this stage of the NAFTA, cooperation and support for institutions like the NADBank can continue to support developmental projects south of the border.

ECONOMIC INFRASTRUCTURE: ROADWORK IN SPAIN AND PORTUGAL

The congestion in Europe is increasing, becoming more widespread on roads in particular. As early as May 1986, in a report submitted to the Council of Ministers, the European Conference of Ministers of Transport (ECMT) drew attention to the existence of bottlenecks at a number of locations in the road infrastructure. The continent, as such, is insufficiently integrated in terms of transportation networks. More specifically, there are problems of accessibility for peripheral regions in Spain and Portugal. A similar situation exists between the United States and Mexico, where the lack of infrastructure is preventing the NAFTA from achieving its overall goals.

Recognizing this lack of infrastructure as a major obstacle in reducing the asymmetries between the "south" and "north," Spain and Portugal have began a systematic construction and improvement of their roads. "To help meet the challenges of the Single Market, Spain and Portugal decided to build a network of toll-free motor-ways - a huge program requiring an unprecedented level if investment, achieved thanks to a contribution from the European Regional Development Fund." Change in infrastructure is a fundamental factor of integration in the Spanish-Portuguese border region. On a regional scale, the two neighboring states have been cooperating and collaborating in completing missing road links. In the Xunta de Galicia and Junta de Andalucia Euroregions, cross-border cooperation has resulted in the successful connecting of national roads to the international highway networks.

As stated in the European Charter of Border and Cross-Border Regions, traffic links are now increasingly of international importance. This makes them among the most important instruments of regional development policy in cross-border regions. International connections must link these peripheral regions with regional centers. Only the specific connection and utilization of large infrastructure removes border related "bottle-necks," and makes border regions into bridges between nation states, while contributing to the internal development of these areas. Projects relating to traffic infrastructure can only be successfully realized with equal participation of the border and cross border regions concerned. In addition, the cooperation between authorities below the federal level, and various sections of the population on both sides of the border promotes peace, freedom, safety and the safeguard of human rights, as well as the protection of ethnic and national minorities.

Cross-border cooperation takes place at various levels: from governmental commissions, regional development commissions, cross-border Euroregions, or between municipalities. They work with or without contractual foundation. The cross-border structures can be national, regional and local. This kind of cooperation is evident in the two Euroregions joining Spain and Portugal. Anxious about finding themselves marginalized with regard to the Central Region, the regions have been working together to complete missing road networks. This has had the effect of strengthening the links between the two states and ensuring that traffic moving towards the center of Europe is concentrated on the same axis.

In Portugal, the transport network is severely under-equipped to handle current demand, but a major investment plan for upgrading infrastructure, with generous European Union funding, promises to alleviate the bottlenecks. Between 1994 and 2000, some Ecu 23 billion will be invested in infrastructure projects, with about one-third funded under the EU sponsored structural program (Objective 1). The largest allocation will be to the national road system, which will receive some Ecu 4.2 billion to the year 2000, while motor-ways will get another Ecu 2.4 billion. The main emphasis remains on improving the links between the north and south of Portugal, as well as the links with Spain. The main highway to central Spain will be completed in 1998. As activity has grown, so has cooperation among construction firms. The major Portuguese construction companies have been joined by a number of foreign competitors, especially from Spain, who have responded by introducing new technologies and raising the quality of construction.

In 1986, Spain's state road network, along with Portugal and Greece, had one of the lowest road network densities in Europe per square kilometer. This was critical as the Spanish economy was expanding and the network could not adequately handle the anticipated growth in traffic. The completion of the Single Market, as well as the 1992 Expo in Seville and the Barcelona Olympics, dictated that the Ministry of Public Works launch a program to develop the motor-way network. The result was a total of 3,500 kilometers built between 1984 and 1993. Today, most of the country's major cities and border-crossings are interlinked.

The road project in Spain was designed to improve the accessibility of certain regions with poor transport links and resulted in the creation of 45,000 temporary jobs. In addition to the state plan, the autonomous communities and the provinces also undertook to modernize local roads in the context of regional plans which were co-funded by the European Regional Development Fund (Ecu 427 million). The areas which are still deficient in road infrastructure are the north-west (Xunta de Galicia) and parts of Extremadura (Junta de Extremadura), close to the border with Portugal. In these two regions, work is now under way and will soon be completed with the help of grants provided by the Cohesion Fund.

As Erika Kussmann and Heidi Hall have argued (Chapters 9 and 7, this volume), the border infrastructure between Mexico and the US is currently insufficient to handle the cross-border traffic created by NAFTA. Because of the Maquiladora plants along the border, the majority of the US trade with Mexico passes through the Texas border, while the Tijuana/San Diego corridor is recognized as the busiest gateway in the nation to carry commerce. Like the Euroregions between Spain and Portugal, the Texas/Mexico border is interdependent in nature. They share a common culture and economy (though somewhat less in the Tijuana/San Diego region). Like in the EU, their common culture can facilitate cross-border cooperation and coordination when the international bridges and road networks are expanded. The main difference being that all of the funding will have to come from their respective governments instead of being partially subsidized as a supra-national fund.

SOCIETY: LOCAL PARTNERSHIPS AND SOCIAL INNOVATION IN IRELAND

Unlike in the NAFTA free trade area, the movement of persons within the European Union is encouraged under the Single European Area policies. But the elimination of barriers that assured free trade also have had some adverse consequences. Some European companies have chosen to invest in less developed regions of the Community where wages are lower and labor organization organizations are more manageable. Citizens of the EU feared this kind of "social dumping" created by the industrial flight to the "south." The primary concern was that workers in the more prosperous "north," with higher labor standards will be forced to accept lower standards and consequently downgrade employment conditions. Through the Single European Act in 1987, the European Community responded to such concerns by harmonizing national labor standards under the ordinance of Community law. "The Treaty established several measures to harmonize labor regulatory norms and, for the first time, committed the Community to integrating European workplace safety and health standards."

Nevertheless, as in Mexico, the problem of unemployment is still prevalent in the "southern" states of the EU. The regional differences in the unemployment rates are substantial. While some 12 "northern" regions are experiencing rates of less than 3 percent, in 19 "southern" regions the rate exceeds 15 percent. Ireland is one of the states in which the current unemployment rate exceeds 15 percent. This kind of unemployment delays development and hinders the reduction of socio-economic asymmetries. In addition, high unemployment often encourages migration. Movement out of "southern" areas like Ireland deprives the regions of young, potential entrepreneurs. Furthermore, services to both individuals and producers risk becoming unsustainable in these increasingly remote and sparsely populated areas.

Increasing problems of long-term unemployment and social exclusion have led the Irish government to experiment with local development initiatives. "Ireland is engaged in an innovative experiment to reduce the incidence and mitigate the effects of unemployment while further encouraging the development of an open, competitive economy." At the core of this experiment are 38 Area-Based Partnerships in urban and rural communities created by the government of Ireland and the European Regional Development Fund beginning in 1991. The task of these partnerships is to reconsider the problems of unemployment and under-employment and devise effective responses to them.

In five years of operation, these partnerships have deployed innovative techniques for retaining and placing the long-term unemployed, as well as for building potentially self-sustaining firms that provide both training and jobs for those out of work. In rural areas, the partnerships have found new ways to rebuild communities depleted by migration and increase employment opportunities for under-employed groups. Transcending current political boundaries, some of these partnerships have even created cross-border alliances with their neighbors in northern Ireland.

One of the successful programs being instituted by the partnerships is called Plato. Built on a model developed in Belgium, Plato is a business training network. Local owners and managers are encouraged to learn from one another and from the advice of local large enterprises, who act as facilitators of small working groups. "The objectives of the program are to establish a broadly based business-to-business support structure which provides for owners/managers to develop their management skills and create opportunities for commercial development through local and international networking." These activities both depend on and encourage inter-firm cooperation.

The Plato model is portable because it is a general method for transferring knowledge. The particular institutions for transferring knowledge will vary according to the environment and the appropriate expertise. As part of a cross-border initiative with Newry and Mourne Enterprise Agency in northern Ireland and the Louth County Enterprise Board, the Dundalk Partnership is adopting the Plato partnership model. The project groups will be comprised of new entrepreneurs mentored by managers of existing small businesses within an enterprise center that the partnership is establishing.

Dundalk is a border town. Before the troubles and the onset of industrial restructuring, the town had a fairly strong manufacturing base. Over the past decade, the quality of life of many residents has deteriorated. The decline of both Irish and British manufacturing throughout the 1980s, combined with the unattractive location along a closed border, led to a substantial reduction in manufacturing jobs in the town, and thus to large scale unemployment. Currently, the city is classed as one of the most deprived areas in Ireland. At 24.8 percent, the level of unemployment is twice as high as the national average. Over 45 percent of the unemployed are older than 34 and there has been an increase in the number of long-term unemployed within that age group. Ireland's Industrial Development Agency has succeeded in attracting some inward investment to the area. This has helped stabilize the rate of short-term unemployment during the past two years. By mobilizing the expertise of Dundalk and Newry managers and bankers with knowledge of the broader regional community, the partnerships have established solid foundations for cross-border finance ventures, as well as technology and information transfers.

The aim of the Dundalk Employment Partnership has been the improvement of the employability of the long-term unemployed and those on the margins of or even outside of the labor market. The program and others like it revolve increasingly around developing enterprises that employ the long-term unemployed, as well as encouraging the long-term unemployed to start their own businesses. Essentially, the partnerships in the programs aim to work to change the social perception of the long-term unemployed; from being seen as a questionable segment of society to a legitimate component of an economic process.

Thought they may not transfer directly, the lessons from the EU can be applied to the contemporary labor and migration dilemma in the NAFTA. Hall argues in Chapter 7 that economic asymmetry is a paramount issue. On reason why economic asymmetry is dangerous for societies is that the greater the wage gap between two countries, the bigger is the incentive to migrate. Another pressing issue is the low-skilled labor migration from the Texas border cities as a result of the demand created by rapidly multiplying maquiladora plants. In Chapter 9, Kussmann addresses the concerns about the rights and working conditions of Mexican workers, as well as the uncertain futures of American workers. Perhaps the answer to this NAFTA dilemma can be found in the EU. By harmonizing labor regulatory norms as well as workplace safety and health standards, the EU has for the most part eliminated the problems of "social dumping." Furthermore, partnerships like the Plato business network can work to supply the increasing high-skilled labor demand in the border cities of Texas.

THE ENVIRONMENT: STUDYING THE ECOLOGY OF EUROREGION NEISSE

In both the NAFTA and EU free trade areas, environmental protection and socio-economic development have been seen as mutually clashing objectives. The governing bodies of the European Union were quick to recognize the need to reconcile the two, especially in the cross-border regions. Environmental problems do not respect national boundaries. "As early as 1972, the Community began to measure the scale of the environmental challenge and its own responsibilities in that field, and launched an initial action program in response." However, the measures advocated were essentially of a corrective nature, focusing mainly on toxic waste disposal and the protection of public health.

In a search for a more favorable environmental policy two urgent necessities emerged. The first was a need for better information. The CORINE program was established for this purpose in 1985 and has since been handed over to the European Environmental Agency (established in 1990). The other need was prevention. The Single European Act of 1987 considered environmental issues in the context of reducing regional disparities in terms of development and living standards within the Community. The Treaty of the European Union, ratified in 1993, marked a turning point. "The treaty stipulates that European environmental standards must be taken into account in other Community policies. It further puts forward the principle of sustainable growth respecting the environment."

On a more regional scale (and in congruence with the Maastricht Treaty), the European Charter of Border and Cross-Border Regions calls for the improvement in cross-border environmental protection and nature conservation. Since air and water pollution does not respect political borders, effective environmental protection is needed. Furthermore, it needs to be specifically integrated into regional cross-border development models. Currently, cross-border problems with air pollution, waste reduction and treatment, recycling, and noise abatement are being addressed in the various Euroregions. Of particular interest here is the Euroregion Neisse on the borders of Germany, Poland, and the Czech Republic (though not members of the European Union, both Poland and the Czech Republic have formal recognition as associate EU members and plan on being full members by the year 2000). Economically, Poland and the Czech Republic closely resemble the "southern" states of the Community in both GDP per head and unemployment. Politically, in anticipation of future membership, these former states of the Soviet Bloc are adjusting their social, economic and environmental policies and standards to match those of the European Union. As argued by Roe and Botello (Chapters 8 and 10, this volume), this kind of environmental cooperation is lacking in the border regions of US and Mexico. Plagued by the rapidly degenerating environmental situation, NAFTA can benefit by applying a cooperation framework instituted by the Euroregions.

On the eastern side of the EU border, the Euroregion Neisse is the most organized and institutionally advanced. Because of this, in 1992 it was accepted into The Association of European Border Regions and has received Ecu 3 million for the expansion of the cross-border infrastructure (three new border crossings) as well as for research of its environmental problem. The region of the Dreilandereck (where the three countries meet) is formed by the areas of East Saxony, North Bohemia and Lower Silesia, and belongs to those regions which are most endangered by air pollutants in Europe. "This situation is due to one-sided lignite-based energetics (coal fuel), fume purification plants below the up-to-date technical level, and to an geography characterized by a low mountain range with complicated meteorological conditions." The air pollutant concentration resulting from high emissions in the region, as well as from surrounding industrial areas, has disastrous effects on environmental health and the economic attractiveness of the region. It is a situation similar (air pollution) as one previously described by Botello in the Tex-Mex region (Chapter 10), and thus can benefit theoretically from the model described below.

Reflective of the environmental degradation in the area, the extensive forests in this Euroregion Neisse, show a high degree of damage. According to specialists' estimations, nearly the entire forest is damaged to a medium or high extent. The whole area of the Iser and Zittau mountains consists of extensive drinking water catchment areas which are of extraordinary importance beyond the region. The quality of the spring water is affected in a very negative way by increasing acidity and the light content of nitrate. In addition, the health of the region's inhabitants is strongly impaired by high pollutant concentrations. Despite the former political conditions that made complete investigations impossible, evidence now exists that points to a considerable increase of treatments in the fields of respiratory medicine.

During the preparation of the 1991 Dreilandereck conference for developing cooperation between the cross-border regions, a test was initiated to gather and exchange information on the environment. An environmental database based on a geographic information system has been designed for the fields of air, water, soil, nature and radiation protection. The universities of Zittau (Poland) and Liberec (Czech Republic) were already involved in the "Data Communication Unit Dreilandereck: Germany-Poland-Czech Republic." As part of the project, servers were built up for the database and for the geographic information system ARC/INFO. The database contains information and correlation between geographical and environmental data. It contains standards and required state information (especially legal instructions), as well as data about the particular state and includes descriptions of the country's environmental technology standards. This makes it possible to get insights into the inter-relations between the emission causes, the emissions, their causes, and their effects - also taking into account meteorological and other impacts. Methods of the system analysis are used to investigate these complex inter-relations. Furthermore, the stored environmental data serves for cross-border development scenarios and prognoses based on models.

In the future, the project will be extended to water and soil protection by taking into account the experiences gained in the field of air protection. Besides this, bio-monitoring will be provided for the area in question. This bio-monitoring will provide insight into the effects of environmental damages on the region's ecology and the health of the inhabitants. Furthermore, the resources created by the project will be used to solve other border-crossing problems in this region and thus promote ecologically-sound economic development of the bordering districts.

Though NAFTA has induced cooperation between many existing organizations that deal with the environment, ecological problems are still a paramount issue. As outlined by Roe and Botello, the US/Mexico border regions' lack of a standard is creating abuses of the environment. The lesson from the EU is that sustainable growth that respects the environment can only take place when an environmental standard is legislated. In addition, regional cooperation is crucial when attempting to analyze environmental problems and create solutions, even between states that are not bound by a free-trade agreement.

CONCLUSION

In light of the European experience, it becomes clear that institutions have become crucial and necessary actors in the evolution of free trade agreements. They are particularly important in attempts to elevate the socio-economic level of poor, peripheral states to that of their wealthy neighbors. Blind faith in the self-correcting powers of a single market will only exacerbate the existing problems.

A newly published report on the impact of various EU cohesion policies shows that on the national level there has been considerable progress in closing the gap between the richer and poorer member states in recent years. The report will be debated by regional policy ministers next March, as they consider how best to proceed beyond the expiration in 1999 of the current arrangements for the structural and cohesion funds.

What has become clear is that local initiatives and institutions, especially those in border and cross-border regions, are continuing to play an increasingly significant role in the reduction of regional asymmetries. Through cooperation, these various initiatives are setting the standard for a new trend in cross-border regionalism that is developing as a response to an increasingly global economy. In addition to reducing various asymmetries, this regional collaboration is promoting mutual cultural understanding: an important factor if cooperation is to endure.

The most important lesson from the EU is that of institutionalization (See Writer, Chapter 5). NAFTA can look to the more evolved EU, and based on their experiences create a policy that would be of most relevance and benefit. As interdependency and glocalization continue to strengthen the bonds between cross-border regions, it will become crucial that the NAFTA regions organize and create an association like the Association of European Border Regions. Organization will improve efficiency and promote networking, and, if needed, create a strong lobby. Instead of being alienated, the regions can look to each other for assistance and support. The more successful they are, the more successful their free-trade zone will be.