Institutional capacity to constrain suboptimal welfare outcomes from trade-restricting environmental, health and safety regulation under NAFTA

There has been a dramatic shift in the focus of trade policy concerns from the barriers that lie at the border to the barriers which exist within the border. NAFTA has been largely successful in reducing both the levels of tariffs within North America and the scale of other border measures such as quotas. This has revealed a new and more subtle category of measures which restrict trade---the numerous commonplace regulations which governments enact to protect the health and safety of their citizens and the environment in which they live. This effort to protect citizens from the hazards of everyday life has become a virtual minefield for trade policy makers, as such differences can often be manipulated or exploited to protect domestic industry from international competition.; This thesis evaluates the capacity of the NAFTA rules and institutions to correct the suboptimal welfare outcomes that result from trade-restricting environmental regulation. It does so firstly by reviewing twenty-five North American trade disputes and irritants in order identify the nature of and extent to which trade-restricting environmental, health and safety regulation results in sub-optimal global and domestic welfare outcomes. Second, it evaluates whether NAFTA's institutional structure has been effective in alleviating or correcting the sub-optimal domestic and global welfare outcomes arising from such disputes. This is done with a view to identifying specific deficiencies in the institutional regime and prescribing more effective institutional arrangements to deal with these problems.; The central argument of this thesis is that NAFTA has not been effective in alleviating sub-optimal welfare outcomes and that there are, in fact, serious shortcomings in the current institutional structure of NAFTA. This thesis explores the institutional changes that are required in order to facilitate optimal outcomes. Given that there is little NAFTA jurisprudence, it reviews the jurisprudence of the World Trade Organization. It finds that the substantive rules and jurisprudence which separate bona fide regulation from protectionist regulation have been relatively effective. Yet in order to give effect to the trade and investment liberalization commitments found in NAFTA, this thesis argues for an expanded right of access for private parties in the dispute settlement provisions. This thesis also argues for a more concerted effort on the part of the NAFTA governments to pursue, where possible, harmonization and mutual recognition strategies as a means to avoid disputes.