Q & A : What Side Deals Will Mean to NAFTA

The agreement late Thursday on crucial side deals for the North American Free Trade Agreement offers new hope for supporters of the pact, which would create the world’s largest free-trade zone.

Here is a look at the significance of the side deals and where NAFTA goes from here:

*

Q: What is the importance of the agreements announced Friday?

A: The agreements are considered a crucial step toward winning congressional approval of NAFTA, which would create the world’s largest unfettered market, among Canada, the United States and Mexico. Over a 15-year period, NAFTA would eliminate most existing tariffs, taxes, quotas and licensing requirements on the movement of goods and services.

NAFTA supporters say the treaty would boost the economies of all three nations. Opponents worry it would cost U.S. jobs, undermine environmental quality and jeopardize consumer safety.

*

Q: What are the terms of the latest agreements and how do they relate to the overall accord?

A: The side deals, negotiated in response to concerns by critics about the main treaty, are intended to ensure enforcement of environmental and labor laws and to make public the process of consultation, evaluation and dispute settlements involving such standards.

They are also designed to make sure that companies do not move from one country to another to take advantage of lax enforcement of such laws.

The deals outline procedures to fine and punish countries if their industries do not abide by their own labor and environmental standards.

The agreements would create commissions to evaluate and settle labor and environmental disputes and also set up a procedure by which individuals or groups could complain if laws were not being enforced by a government agency.

If one country believed another was not enforcing its laws, it would first take the dispute to a council of the three nations.

If the council was unable to resolve a dispute involving the manufacture of goods traded between the two countries, it would appoint a panel of experts.

If the panel agreed a violation had occurred, the two countries would have 60 days to reach a solution. If they could not reach a solution, the panel would propose one. If the panel’s solution was not implemented, the panel could impose a fine.

In the case of Canada, if the fine was not paid, the council’s parent organization could demand payment in Canadian courts. With cases involving the United States and Mexico, the complaining country could suspend the NAFTA benefits of the other nation until the fine was paid or the panel’s solution was implemented.

*

Q: Why were the side agreements negotiated?

A: President Clinton promised in campaign speeches last year to address concerns by labor and environmental activists that NAFTA would result in a loss of U.S. jobs and degradation of environmental and worker health and safety standards. Negotiations on the side agreements were opened in March.

*

Q: Is this the final hurdle to passage of NAFTA?

A: No. The treaty is still subject to approval by lawmakers in all three countries.

Passage is virtually assured in Mexico and seems likely in Canada as long as the Conservative Party remains in power. But Canadian elections later this year could drive the Tories from office.

Meanwhile, NAFTA faces stiff opposition in the U.S. Congress, especially among representatives from districts with strong unions. Opponents of the side deals, including labor and environmental groups, say the deals do not go far enough, and they are likely to lobby against the treaty.

The side agreements don’t change other obstacles facing the treaty.

A recession and disputes over beer and forestry products arising from the 3-year-old U.S.-Canada Free Trade Agreement have made the Canadians wary about ties with their southern neighbors.

In addition, a U.S. District Court judge ruled last month that NAFTA cannot be implemented until a thorough study of its environmental impact is completed. The Clinton Administration has appealed that decision, which could block the agreement for months or years as the report is written.

If lawmakers in all three countries approve NAFTA, it will take effect Jan. 1, 1994.

MAIN STORY: A1