American trade deal clears hurdles: Environmental and labour standards agreed - Mexican shares soar on news

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The Independent Online
NEGOTIATORS for the United States, Canada and Mexico yesterday overcame the final sticking points preventing approval of the North American Free Trade Agreement, concluding the 'side agreements' that will set common environmental and labour standards in the three countries.

The accord, which would create the world's largest free trade zone, has still to be ratified by the US Congress, and President Bill Clinton had insisted that he would not put it to a vote unless such measures were added to the original treaty negotiated by his predecessor, George Bush.

The pact and side agreements, which faced opposition in all three countries, will now be submitted to the US Congress when it returns next month from a summer recess, Mickey Kantor, the US trade representative, said.

While Canada has been worried about its effects on its sovereignty, opposition in the US is focused on the potential loss of jobs.

'This agreement finally has real teeth' which enable authorities to enforce common standards across the continent, Mr Kantor said. 'Nafta brings us a step closer to President Clinton's goal of creating a high-wage, high-growth economy.'

After almost collpasing several times in the past three months, negotiations reached an apparent impasse this week over Canada's refusal to accept trade sanctions as a punishment for violations of the side agreements. A compromise, reached late on Thursday, exempts Canada from any sanctions, resorting instead to the Canadian courts for enforcement of the agreements.

The side agreements provide for fines for repeated violations of up to dollars 20m, which are to be paid into special continental environmental and labour funds.

The settlement, announced simultaneously in the three countries' capitals, sent share prices in Mexico soaring, climbing almost 4 per cent within minutes of the release.

Mexican companies, whose fortunes hinge on easier access to the North American market, have suffered volatile swings since the election of Mr Clinton, whose commitment to the treaty has been hedged by promises to limit its impact on jobs and the environment.