SPECIAL REPORT

Recommendations for Sustainable Hazardous Waste Management in Mexico and the U.S.

prepared by the

Committee for Responsible Hazardous Waste Management in North America (HAZNA) Committee

  Legal Center for Inter-American           National Law Center for        
Trade and Commerce                Inter-American Free Trade       
Centro JURICI                            NLCIFT                 

TABLE OF CONTENTS

I. Information About the HAZNA Committee............................................................................ 2

II. List of HAZNA Members...................................................................................................... 4

III. Executive Summary.............................................................................................................. 6

IV. Recommendations for Sustainable Hazardous Waste Management in Mexico and the U.S.... 9

Group I: Hazardous Waste Transportation and Customs Procedures in Mexico, the

U.S. and the Border Region............................................................................................ 9

Group II: Governmental Enforcement and Civil Liability.............................................. 13

Group III: Permitting and Financing of Hazardous Waste Treatment, Storage and

Disposal Facilities (TSDFs) in Mexico........................................................................... 18

Group IV: The Effects of the North American Free Trade Agreement (NAFTA) on

Hazardous Waste Management...................................................................................... 24

Group V: Maquiladora Work Group............................................................................. 31

I.

INFORMATION ABOUT THE HAZNA COMMITTEE

THE WHY, WHO, WHAT AND HOW OF THE HAZNA COMMITTEE.

WHY?

Pollution does not respect borders. The countries of the North American Free Trade Agreement (NAFTA) have unified the means of production in an effort to reach higher levels of efficiency and compete on a global scale. However, the NAFTA does not contemplate a regional approach to deal with one of the principal secondary effects of this new economic integration: industrial hazardous waste. Therefore, the HAZNA Committee has been formed to provide a vehicle for the formation of waste minimization/management practices and policies.

WHO ARE THE MEMBERS?

Government, academic, private sector and non-governmental organization (NGO) leaders from both Mexico and the United States with extensive experience in waste minimization and management issues (see attached list of members).

WHO ARE THE SPONSORS?

The National Law Center for Inter-American Free Trade (NLCIFT) is a non-profit research and educational institution directed by Dr. Boris Kozolchyk and located in Tucson, Arizona. The purpose of the NLCIFT is to facilitate sustainable development, as well as trade and investment, in the western hemisphere.

The Legal Center for Inter-American Trade and Commerce (Centro JURICI) is a non-profit research and educational institution affiliated with the Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) in Monterrey, Mexico. JURICI is dedicated to resolving contemporary issues of North American free trade.

WHAT IS THE PURPOSE OF THE HAZNA COMMITTEE?

The principal function of the HAZNA Committee is to help governments and the private sector develop viable waste minimization and management policies which will contribute to sustainable development in North America.

HOW DOES THE HAZNA COMMITTEE WORK?

The HAZNA Committee applies a detailed step-by-step methodology, developed by the sponsors, which facilitates the development of viable waste management policies. The methodology is founded on the principles of public participation and respect for national sovereignty.

For more information or copies of the comprehensive study entitled "Disparities Between Law and Practice in the Management of Hazardous Waste in the U.S. and Mexico" contact:

David W. Eaton, Esq. Amy Mignella, Esq.

HAZNA Project Director National Law Center for Inter-American Free Trade

Legal Center for Inter-American Trade and Commerce Environmental Projects Director

ITESM, E. Garza Sada 2501 Sur. C.P. 64849 111 S. Church Avenue, Suite 200,

Monterrey, N.L., Mexico. Tucson, AZ 85701-1602

Phone: (8) 328-4294 Phone: (520) 622-1200

Fax: (8) 328-4298 Fax: (520) 622-0957

e-mail: deaton@campus.mty.itesm.mx e-mail: amynafta@ccit.arizona.edu

II.

LIST OF HAZNA MEMBERS

José Agosttini            U.S. Customs:  Nogales, Arizona port-of-entry    

Ing. Miguel Angel         Asociación Mexicana de Instituciones de Seguros  
Arriaga                                                                    

Carlos Bejar              San Diego County Public Health Department        

Q.F.B. Norma Beltrán      Residuos Industriales Multiquím                  

John Bernardo             Pima County Department of Environmental          
                          Quality:  Tucson, Arizona                        

Walter Bouchard           CH2M Hill                                        

Dr. Alberto Bustani       Centro de Calidad Ambiental, Instituto           
                          Tecnológico y de Estudios Superiores de          
                          Monterrey                                        

Dip. Oscar Cantón Zetina  Comisión de Ecología y Medio Ambiente,           
                          Cámara de Diputados, H. Congreso de la Unión     

Bruce Carey               Arizona Toxics                                   

Lic. Luis Carranza        Procuraduría Federal de Protección al Ambiente,  
García G.                 Nuevo León                                       

Richard H. Carter         Carter Affiliates, Inc. Resources for the        
                          Environment                                      

Marc Coles-Ritchie        Border Ecology Project                           

Dr. Juan Antonio Cuéllar  Instituto para la Protección Ambiental           

Roger Cutler              U.S. Customs:  Nogales, Arizona port-of-entry    

Patrick Del Duca, Esq.    University of California at Los Angeles School   
                          of Law                                           

Gary Doyle, Esq.          National Law Center for Inter-American Free      
                          Trade                                            

David W. Eaton, Esq.      HAZNA Coordinator                                

Dave Emmett               Chemical Transportation, Inc.                    

Susan Ferguson            Texas Natural Resource Conservation Commission   

Randy Fitzgerald          U.S. Environmental Protection Agency, Region VI  

Craig Ford                Servicios Ambientales Ford                       

Mike Foster               Arizona Department of Environmental Quality      

David A. Gantz, Esq.      University of Arizona College of Law             

Lic. Felipe García        National Law Center for Inter-American Free      
                          Trade                                            

Lic. Enrique González     Grupo IMSA                                       

Lic. José Francisco       Red Transportadora Nacional de Carga             
González                                                                   

Valerie Gray              U.S.-Mexico Chamber of Commerce                  

Lic. Javier Guerra Durán  Química Omega                                    

Katrin Hahn               Zurich Compañía de Seguros                       

Heidi Hall                U.S. Environmental Protection Agency, Region IX  

Roger Hartzog             Western States Project                           

Guillermo Jirón           Industrial Technology & Environmental            
                          Consultants                                      

Dick Kamp                 Border Ecology Project                           

Sakina Keshavece          St. Mary's University School of Law              

Grant Kesler, Esq.        Metalclad Corporation                            

C. Foster Knight, Esq.    Foster Knight and Associates                     

Dr. Boris Kozolchyk,      National Law Center for Inter-American Free      
Esq.                      Trade                                            

James Langell             Centro Legal Campesino                           

Pam LePen                 California Department of Toxic Substances        
                          Control                                          

Maura Mack                Environmental Health Education Project, Arizona  
                          Department of Health Services                    

Michael McCullough, Esq.  National Law Center for Inter-American Free      
                          Trade                                            

Amy T. Mignella, Esq.     National Law Center for Inter-American Free      
                          Trade, Environmental Projects Director           

Lic. Pedro Miranda        Centro de Investigaciones Jurídicas (Monterrey,  
Martínez                  México)                                          

Lic. Marta Miranda        Centro de Investigaciones Jurídicas (Monterrey,  
Martínez                  México)                                          

Q.I. Cecilia Moreno       Sanyo Corporation, México                        
Manjarrez                                                                  

Lic. Gerardo Olea         Weyerhauser                                      

Dr. Sol Resnick           Water Resources Research Center, University of   
                          Arizona                                          

Lic. Rubén Aníbal Rivera  Centro Jurídico para el Comercio Interamericano  

Lic. Federico Ruanova     Baker & McKenzie, Tijuana                        

Raúl Sánchez, Esq.        St. Mary's University School of Law              

Josh Sarnoff, Esq.        University of Arizona College of Law             

Lic. Guillermo Septién    Zinc Nacional                                    

Jack Smith                Chemical Transportation, Inc.                    

Ing. Salvador Vargas      Brockman & Schuh Insurance Brokers, México       
Sanders                                                                    

Ing. Luis Wolf            Instituto Nacional de Ecología                   

Tad Woods                 Arizona Journal of International and             
                          Comparative Law                                  

III.

EXECUTIVE SUMMARY

Introduction

Recent accounts of the disease, illnesses and deaths linked to hazardous waste mismanagement have brought this environmental concern to the forefront. With the implementation of the North American Free Trade Agreement (NAFTA), effective hazardous waste management will become increasingly important as the United States, Mexico and Canada accelerate their rates of industrial production. The need to find solutions is particularly acute for the U.S. and Mexico, whose trade activities have jointly produced an intolerable situation.

The National Law Center for Inter-American Free Trade (NLCIFT) in Tucson, Arizona, and the Centro Jurídico para el Comercio Interamericano (JURICI) at the Instituto Tecnológico y de Estudios Superiores de Monterrey (ITESM) in Monterrey, Nuevo León, have responded to this need by researching law and practice in North American hazardous waste management. In addition, JURICI has founded the North American Committee for Responsible Hazardous Waste Management (HAZNA), a panel of U.S. and Mexican experts in hazardous waste issues. The result of JURICI's research and HAZNA's contributions is "Recommendations for Sustainable Hazardous Waste Management in Mexico and the U.S.," a report endorsed by HAZNA members as a means to ensure safe, efficient management of wastes in the U.S., Mexico and the border region. The following is a section-by-section summary of the Recommendations Document.

Jurisdictional Complexity

Jurisdiction along the U.S./Mexico border is a maze of complexity. Both sides have binational, federal, state, and local entities that share responsibilities for environmental regulation. These complexities create barriers to development and implementation of effective environmental policies that would ultimately lead to better environmental protection. Improved communication between counterparts will result in environmental policies that reflect the needs of particular border communities. Resource needs of agencies will be reduced as more efficient practices are implemented and reactive, protectionist legislation will be discouraged.

Changes in the "In-Bond" Manufacturing Program nder the NAFTA

Mexican domestic law and the bilateral La Paz Agreement require that all wastes generated from raw materials temporarily imported into Mexico "in-bond" (the bond is used instead of import taxes) must be returned to the country of origin of the raw material. NAFTA will eliminate the obligation to place a bond on raw materials used in maquilas. If there is no bond, the maquila may not be obligated to return the wastes to the U.S.

It is therefore important for both nations to consider the impacts of the changes the NAFTA will bring to the maquiladora industry. At a minimum, confusion will exist with respect to "maquila" waste disposal and it is likely that established bilateral hazardous waste flows will change dramatically.

Benefits of Harmonized or Compatible Hazardous Waste Laws

In addition to divergent waste management protocols that stem from the maquila program, the U.S. and Mexico also have distinct regulatory systems for hazardous waste management. Although each country is allowed to establish its own rules, this bifurcated approach creates confusion and incentives for waste mismanagement. Waste classification schemes, for example, are much more complex in the U.S. than in Mexico. These differences create confusion at customs ports where material classifications may be required before waste or raw materials are allowed to proceed. Harmonized or compatible waste management laws would provide a more efficient framework to help resolve many of these inconsistencies.

Specific Regulatory and Jurisdictional Barriers to an Effective Regional Approach to Hazardous Waste Management Include:

Overly broad legal mandates, e.g. Mexican state and local land use permits currently grant only general authority to TSDF facilities, leaving questions regarding what activities are permitted.

Substantive differences between liability regimens and associated legal institutions in the U.S. and Mexico encourage illegal waste disposal.

Disparities in permitting and waste tracking systems between the two countries.

Inadequate monitoring, inspection and regulation of the hazardous waste transportation industry.

Infrequent use of insurance for the transportation of hazardous waste in Mexico.

Opposition to TSDFs Is Widespread Along Both Sides of the Border and Stems from Several Factors:

A history of subjective enforcement by Mexican regulators, creating bias and fraud within the industrial community.

The lack of information made available in Mexico regarding hazardous waste facility permitting, operating activities, and the legal avenues and insurance options available to protect the environment.

Lack of a transparent permitting process which provides citizens' groups access to the process and creates a favorable climate for investment in TSDFs.

Additional Factors that Discourage Sound Management Practices:

Government agencies and citizens' groups involved in the TSDF permitting process may intervene at a late stage after investors have spent considerable time and money obtaining approval from other authorities.

Lack of financial resources for competent, ethical and highly-trained governmental supervision.

Early participation in the permitting process by citizens' groups is not encouraged.

Lack of appellate mechanisms in the Mexican permitting process.

Lack of overall transparency in the permitting process discourages foreign investment.

Inadequate laboratory capacity and availability to characterize wastes.

Lack of information made available to the public.

IV.

RECOMMENDATIONS FOR SUSTAINABLE HAZARDOUS WASTE MANAGEMENT IN MEXICO AND THE U.S.

The HAZNA Committee held its second plenary session April 10-12, 1996 in Tucson, Arizona. The discussions led to the development of this "Recommendations Document." Working in subgroups, members developed a detailed series of "recommendations" designed to solve contemporary hazardous waste problems in Mexico, the U.S. and the border region. The committee also outlined advantages, disadvantages and obstacles to the implementation of each recommendation. The committee recognizes that the proper forum to work out the specific details of a regional waste management relationship is bilateral negotiations between properly appointed governmental officials. Nevertheless, it is hoped that the wealth of knowledge and experience of the HAZNA Committee will be seriously considered by governmental Policy makers as they work towards the implementation of an effective hazardous waste management regime for North America.

GROUP I: HAZARDOUS WASTE TRANSPORTATION AND CUSTOMS PROCEDURES IN MEXICO, THE U.S. AND THE BORDER REGION.

ISSUE I.

MONITORING, INSPECTION AND REGULATION OF THE HAZARDOUS WASTE TRANSPORTATION INDUSTRY IS INADEQUATE.

Enforcement of and compliance with hazardous waste laws and regulations are inadequate. Further, current inharmonious waste classification mechanisms in the U.S. and Mexico inhibit cross-border management of wastes.

RECOMMENDATION:

1.- Both countries should develop compatible programs for training in areas such as driver qualifications and emergency preparedness. Most importantly, binational governmental training and cooperation programs should be increased, specifically in the areas of waste classification and identification.

ADVANTAGES:

• There will be fewer accidents, which in turn promotes productivity by encouraging more efficient service and by reducing government fines and civil judgments.

• Increased bilateral cooperation will enhance governmental response to cross-border waste problems.

DISADVANTAGES AND OBSTACLES:

• Lack of coordination among legitimate training centers can lead to inconsistency in programs, diminish the credibility of any "certified" training program, and undermine confidence in training in general. Minimum standards for "certified" training programs should be developed

• Hazardous waste management training programs are expensive. As a result, many companies cannot afford to provide such training.

• Bilateral cooperation is hindered by language barriers, limited resources, different national priorities, divergent levels of training and, at times, distrust.

RECOMMENDATION:

2.- Insurance companies in Mexico should promote risk management training for transportation and waste management companies as a means of limiting liability exposures. This will only be a success if Mexican law is strengthened with respect to liability for accidents and improper waste disposal practices.

ADVANTAGES:

• Reduction in the probability of accidents.

• Policyholders in the hazardous waste industry will benefit because risk management will result in fewer accidents.

• Victim indemnification will be more common.

DISADVANTAGES AND OBSTACLES:

• Industry members who cannot afford to comply with insurance standards may be forced into bankruptcy or to operate outside of the law.

• Mexican insurance companies lack the specialized knowledge to effectively implement risk management policies.

• Private industry may be reluctant to absorb the high costs of environmental insurance, and government may be unwilling to impose these costs on them.

ISSUE II.

DISPARITIES IN PERMITTING AND WASTE TRACKING SYSTEMS.

Each country has its own method of soliciting and cataloging information regarding transportation of hazardous waste. This makes it difficult for authorities to monitor cross-border hazardous waste activities. Furthermore, differences in documents require companies to duplicate paperwork in international shipments, and current waste tracking mechanisms do not provide regulators and Policy makers with accurate and timely information.

RECOMMENDATION:

1.- The U.S. and Mexico should create a single document which requests all information relevant to hazardous waste management, or at a minimum, they should reduce the number of documents required and make them compatible with one another. In order to avoid "downward harmonization" each country must remain free to require additional information from their own nationals.

ADVANTAGE:

• By making procedures easier, faster and less expensive, bureaucracy is reduced. Compliance increases with transparent, inexpensive procedures which are not overly time-consuming. Policy makers will have more accurate information and enforcement efforts will benefit from more reliable tracking systems.

DISADVANTAGES AND OBSTACLES:

• The harmonization process may cause some important data to be sacrificed or lead to downward harmonization of environmental laws.

• The initial phases of document consolidation efforts are expensive.

• Not all agencies may be willing to cooperate in harmonization efforts.

• Industry may resist any conversion to a new system of documentation.

ISSUE III.

INSUFFICIENT USE OF INSURANCE FOR THE TRANSPORTATION OF HAZARDOUS WASTE.

In Mexico, insurance in the environmental field is not used to its full potential. When insurance coverage is fully utilized, it provides resources for environmental cleanup when accidents occur. Also, insurance companies which must bear the financial burden of paying for environmental cleanup will demand that responsible risk management procedures be followed or they will charge higher premiums.

RECOMMENDATION:

1.- Insurance requirements for hazardous waste transportation should be clearly stated, universally applied and vigorously enforced. These requirements should take into consideration the dangers posed by these activities as well as current financial strains placed on industry. Adequate proof of insurance mechanisms should be developed.

ADVANTAGES:

• Either case will serve to internalize remediation costs and encourage responsible behavior by the transportation industry.

• More efficient use of insurance mechanisms can lead to the remediation of damage that otherwise would not be covered, and will foster responsible waste management practices.

• Government costs are reduced because the public sector will not be obligated to pay for cleanup costs.

• In the long run, remediation costs absorbed by the insurance industry will lead them to insist on the use of waste minimization technologies.

DISADVANTAGES AND OBSTACLES:

• Resistance to change in the governmental and private sectors.

• Lack of enforcement by governmental regulators discourages the purchase of insurance. Companies may prefer to accept the risk of hazardous waste accidents rather than pay premiums.

GROUP II: GOVERNMENTAL ENFORCEMENT AND CIVIL LIABILITY.

ISSUE I.

SUBSTANTIVE DIFFERENCES BETWEEN LIABILITY REGIMENS AND ASSOCIATED LEGAL INSTITUTIONS IN THE U.S. AND MEXICO ENCOURAGE ILLEGAL WASTE DISPOSAL.

Higher exposures to liability in the U.S., combined with Mexico's comparatively low liability costs and lax enforcement, encourage some in private industry to illegally export their wastes to Mexico to avoid high disposal costs and liability exposures in the U.S.

RECOMMENDATION:

1.- Legislation should provide for greater recoveries by plaintiffs harmed by hazardous waste accidents, and adequate resources necessary to deter illegal hazardous waste activities should be dedicated.

ISSUE II.

INSUFFICIENT GOVERNMENTAL ENFORCEMENT AND FLEDGLING RISK MANAGEMENT PLANS HINDER THE CREATION OF TREATMENT, STORAGE, AND DISPOSAL FACILITIES (TSDFS) IN MEXICO.

If there are low levels of enforcement or risk management mechanisms are not used, companies have no incentives to pay for proper disposal. Therefore, there are no market forces which lead to the development of a TSDF infrastructure. Without TSDFs, companies have no legal options to dispose of their wastes.

RECOMMENDATION:

1.- The insurance industry should develop and offer policies in Mexico for hazardous waste generators, transporters and TSDFs. In addition, governmental enforcement must improve. This may require more training, higher salaries and a "no tolerance" policy towards corruption. This recommendation will only be successful if it is accompanied with stricter legal liability for irresponsible waste management and for past contamination.

ADVANTAGE:

• This will encourage risk management practices and greater safety. Insurance companies will want to reduce their risks, and will accordingly monitor the activities of policyholders. Increased enforcement will force companies to operate within legal guidelines.

DISADVANTAGES AND OBSTACLES:

• Companies will not purchase insurance unless they are convinced it is in their financial interest to do so, or unless the law requires it and there are adequate mechanisms to verify that companies are complying with their obligations to buy insurance.

• Companies which want to purchase insurance may be unable to afford policies.

• The public sector may not have the resources to increase training and salaries.

ISSUE III.

BINATIONAL HAZARDOUS WASTE LAW.

There are substantive differences in the respective hazardous waste laws of the U.S. and Mexico. In some areas, such as waste classification, these differences can impede efficient management of hazardous wastes and create opportunities for fraud.

RECOMMENDATION:

1.- The U.S. and Mexican governments should harmonize or create compatible waste classification schemes. Together they should appoint a binational committee to develop a uniform or compatible model of waste classification for both governments. Also, U.S. and Mexican authorities should harmonize their respective hazardous waste manifests. They should implement joint training for customs officials, transporters, generators and TSDF facilities in the use of the harmonized manifest. Lastly, environmental officials in the U.S. and Mexico should publish a glossary of hazardous waste terminology common to both countries, and establish a helpline to respond to questions and concerns.

• Dissent: A few members opined that, while the goal of a clearer bilateral regulatory scheme is laudable, the U.S. should not be forced to lower its waste classification regulations in the interest of cross-border harmonization.

ISSUE IV.

EDUCATION AND INFORMATION DISSEMINATION.

Insufficient information is provided to the public. All parties involved in hazardous waste management in North America must conduct an on-going, dialogue. Currently, all stakeholders do not have access to information which will help them understand the perspectives of other individuals involved in hazardous waste management.

RECOMMENDATIONS:

1.- The U.S. Environmental Protection Agency (EPA) should expand the use of the HAZTRAKS waste tracking system and make information gathered by the system available on both sides of the border.

2.- Mexican environmental officials should collect and disseminate information on the quantities of hazardous wastes in each TSDF facility, and make it available to all who request it. The business plans required under the U.S. Superfund Amendments and Reauthorization Act (SARA) could serve as a model.

3.- Government authorities should make available to the public a handbook describing citizen environmental rights and containing contacts in governmental agencies.

4.- Enforcement officials should undergo more advanced training programs detailing hazardous waste issues. The business community should also take short courses in hazardous waste compliance and technical assistance. A portion of these classes should be dedicated to understanding the different perspectives involved in waste management.

5.- Government officials should promote cross-border visits with their counterparts to offer and receive feedback on their practices. They should also collaborate with industry associations to promote an effective exchange of information.

ISSUE V.

LABORATORY CAPACITY AND AVAILABILITY.

If companies are to comply with hazardous waste laws, and if government officials are to effectively monitor compliance efforts, it is important that industry and citizens have access to certified laboratories which perform waste classification and other environmental services.

RECOMMENDATION:

1.- Government should give financial incentives to expand the use of and access to certified laboratories. This would include facilitating the laboratory certification process. The public should be guaranteed access to laboratory information under specifically delineated guidelines which take into consideration the legitimate interests of the community to be well-informed and industry's need to protect confidential information.

ISSUE VI.

LACK OF FINANCIAL RESOURCES FOR COMPETENT, ETHICAL AND HIGHLY-TRAINED GOVERNMENTAL SUPERVISION.

Salaries for hazardous waste enforcement officials are low. This causes low morale, discourages other qualified individuals from entering the field, and gives officials greater incentives to accept bribes. The Mexican government should consider using industry fees such as permitting fees, waste generation fees and waste disposal fees to increase regulatory officials' salaries.

ISSUE VII.

NORMATIVE GAPS.

Mexico's current hazardous waste legislation is overly broad in some respects, and too narrow in others. Compliance is difficult because many companies do not know what is expected of them. Overly broad legal mandates lend themselves to subjective interpretations by government regulators.

RECOMMENDATIONS:

1.- Researchers should augment existing studies regarding normative gaps in Mexican and U.S. regulations to reflect upcoming changes in Mexican legislation.

2.- Legislators should review and revise the legal mandates given to federal, state and local environmental agencies; and fill in the legislative gaps by making appropriate provisions for jurisdiction for hazardous waste issues, and by establishing clear guidelines for civil liability for irresponsible environmental practices. Also, liability regimes should be strengthened.

ISSUE VIII.

LACK OF INFORMATION AVAILABLE TO THE PUBLIC ABOUT INSURANCE AND LEGAL AVENUES AVAILABLE TO PROTECT THE ENVIRONMENT.

RECOMMENDATIONS:

1.- The private sector should create an Environmental Law Institute in Mexico, which would foster sustainable environmental policies through the use of criminal and civil liability mechanisms while also promoting the use of insurance.

2.- The Mexican Association of Insurance Institutions (Asociación Mexicana de Instituciones de Seguros - AMIS) and Mexico's Secretariat for the Environment, Natural Resources and Fisheries (Secretaría de Medio Ambiente, Recursos Naturales y Pesca - SEMARNAP) should work together and create a mandatory insurance plan for all companies involved in the generation, recycling, transportation and disposal of hazardous wastes.

3.- Insurance companies and government officials should create incentives to buy insurance by explaining the legal requirements to do so and corresponding cost savings. The government should verify that those individuals and groups which handle hazardous wastes do in fact purchase insurance. Lastly, aggressive public education campaigns should be launched by both governments.

• Note: Difficulties with "pollution exclusion" provisions in insurance policies have plagued U.S. companies which mistakenly believed they had insurance for contamination. The result is protracted litigation. Therefore, it must be recognized that there are drawbacks to an overdependence on insurance to solve contemporary hazardous waste problems.

GROUP III: PERMITTING AND FINANCING OF HAZARDOUS WASTE TREATMENT, STORAGE AND DISPOSAL FACILITIES (TSDF'S) IN MEXICO.

ISSUE I.

POLITICAL OPPOSITION TO TSDFS.

Unfounded political opposition to TSDFs may hinder the development of and direct foreign investment in the environmental infrastructure.

RECOMMENDATION:

1.- Officials must generate trust and understanding in the permitting process by making it transparent and accessible to all concerned parties. It is recognized that not all permit applications to open a TSDF will be approved and that the purpose of a more transparent system is not to assuage the opposition, but to guarantee the rights of all parties concerned.

ADVANTAGE:

• By making the process open, parties can engage in constructive, meaningful dialogue, instead of relying on political rhetoric to communicate their positions.

DISADVANTAGE AND OBSTACLE:

• Increased participation could lead to delays in permitting. For example, small extremist groups could frustrate the will of the majority by stalling the process indefinitely.

ISSUE II.

CURRENTLY, MEXICAN STATE AND LOCAL LAND USE PERMITS ARE TOO BROAD AND GRANT ONLY GENERAL AUTHORITY TO TSDF FACILITIES.

TSDF investors have no explicit assurances from state and local authorities that they may continue operations once they have been granted a permit, and communities have no guarantees that the TSDF's operations will be restricted or limited in any meaningful way. This creates distrust, confusion and an unattractive climate for investment.

RECOMMENDATION:

1.- Land use permits should state in reasonable detail the specific activities which have been approved. In addition, applicants and the public should be able to challenge the approval or denial of land use permits via transparent appellate procedures.

ADVANTAGE:

• Clearer state and local commitment to approved projects will result in greater certainty for investment. Additional assurance that only proper criteria will be applied to approval determinations helps to protect the interests of the public. Most importantly, the public will be guaranteed a role in the permitting process.

DISADVANTAGE AND OBSTACLE:

• Additional paperwork and bureaucracy will require more expertise in reviewing and evaluating applications. Furthermore, policy makers will resist any reduction of their discretionary powers.

ISSUE III.

GOVERNMENT AGENCIES AND CITIZENS' GROUPS INVOLVED IN THE TSDF PERMITTING PROCESS MAY INTERVENE LATE IN THE PROCESS AFTER INVESTORS HAVE SPENT CONSIDERABLE TIME AND MONEY OBTAINING APPROVAL FROM OTHER AUTHORITIES.

RECOMMENDATIONS:

1.- Appropriate time frames for governmental and public participation in the permitting process should be established. An agency could only overcome established time-frames by demonstrating a legitimate safety concern.

2.- Through a contested hearing process, citizens should be granted time and access to information before they indicate their approval or disapproval of the proposed facility. After the delineated time-frames have expired, governmental and public participation in the permitting process should only be allowed by demonstrating a legitimate reason for not having complied with established time frames.

ADVANTAGE:

• Streamlines the permitting process by providing support from all relevant government agencies at the same time while promoting transparency, public participation and a favorable investment climate.

DISADVANTAGE AND OBSTACLE:

• Involves more agencies and requires more time. Agencies may be unwilling to cooperate with one another. Agencies with legitimate concerns may be closed out of the process.

ISSUE IV.

MEXICAN PUBLIC OFFICIALS WITH KNOWLEDGE OF A TSDF'S SAFETY MAY BE HESITANT TO COMMUNICATE DIRECTLY WITH THE PUBLIC TO OFFER ASSURANCES.

RECOMMENDATION:

1- Pertinent Mexican governmental agencies and other respected institutions should conduct analyses and provide studies and testimony to the public to demonstrate that some proposed facilities are safe. Governmental procedures should be transparent and open in order to develop confidence in their analyses of TSDF facilities. It is recognized that not all proposed facilities are safe and should not be approved. Public participation in the permitting process should be facilitated and encouraged to help ensure public safety.

ADVANTAGE:

• Increases the likelihood of local and state support and develops greater certainty for investors.

DISADVANTAGE AND OBSTACLE:

• Possible unwillingness of government agencies to actively support investments in hazardous waste infrastructure by foreigners.

ISSUE V.

DOCUMENTS RELATED TO THE PERMITTING PROCESS ARE GENERALLY NOT AVAILABLE TO THE PUBLIC.

RECOMMENDATION:

1.- All documents related to the permitting process should immediately be made available for public review and copying. The public should be made aware of the availability of these documents and they should be available in the town or city nearest the proposed site.

ADVANTAGE:

• Greater credibility in the permitting process.

DISADVANTAGES AND OBSTACLES:

• Greater bureaucracy and more work for Secetaría de Medio Ambiente, Recursos Naturales y Pesca (SEMARNAP). Requires modification of Mexican legislation.

• Lack of resources to develop an effective system for making these documents available to the public, including resources for filing, copying, and cataloging.

• Possible resistance by companies unwilling to make information public.

ISSUE VI.

THERE IS A LACK OF APPELLATE MECHANISMS IN THE PERMITTING PROCESS.

RECOMMENDATION:

1.- Environmental authorities should develop transparent review procedures for applicants and for the interested public to challenge the grant or denial of permits, or the specific conditions of permits.

ADVANTAGE:

• Greater integrity and less discretion in the permitting process. Opportunities to correct erroneous applications of the law.

DISADVANTAGES AND OBSTACLES:

• Greater delay and confrontation in the permitting process, which can create uncertainty for investors.

• Resistance by decision-makers to the reduction of their discretion, and opposition by permit applicants to greater public participation in the decision-making process.

ISSUE VII.

THERE IS A LACK OF INFORMATION MADE AVAILABLE TO THE PUBLIC REGARDING HAZARDOUS WASTE PERMITTING OR OPERATING ACTIVITIES.

RECOMMENDATION:

1.- Authorities should make information available through voluntary audits, disclosure of information requirements, certification procedures under international standards such as ISO 14001, mandatory audits, inspections at specified intervals, and mandatory reporting programs.

ADVANTAGE:

• Increased public and investor confidence.

DISADVANTAGES AND OBSTACLES:

• Expense of additional administrative and legal procedures.

• Loss of confidentiality.

• Resistance from industry and government officials to the disclosure of confidential information.

ISSUE VIII.

THE LACK OF TRANSPARENCY DISCOURAGES FOREIGN INVESTMENT.

RECOMMENDATION:

1.- The Mexican government must establish a market with transparent rules and processes. Foreign investors must be assured that their investments will be protected from the politics of local communities, from the arbitrary discretion of policy makers, and from legal provisions which limit the protections given to foreign investors. Investors must know what their rights are, and must know the extent of government authority to regulate their investments.

ADVANTAGE:

• The above suggestions for issues I through VII should improve the investment climate and lead to increased financing for TSDFs. They do so by making permitting and siting decisions transparent, which encourages investors by assuring them of stability and consistency in the process while guaranteeing that the public has access to the process.

DISADVANTAGES AND OBSTACLES:

• Government officials want to have the autonomy to regulate and limit investments.

• Communities want discretion to exclude foreign investors.

GROUP IV: THE EFFECTS OF THE NORTH AMERICAN FREE TRADE AGREEMENT (NAFTA) ON HAZARDOUS WASTE MANAGEMENT

ISSUE I.

JURISDICTIONAL COMPLEXITY.

Jurisdictional issues in the environmental field are complex, which create problems for the development and implementation of effective environmental policies. These problems are especially challenging in the U.S.-Mexico border region.

RECOMMENDATION:

1.- Governmental agencies charged with regulating hazardous waste transporters and permitting TSDFs should improve coordination among themselves through the use of intergovernmental databases and the Internet as well as through non-electronic means such as face-to-face meetings.

ADVANTAGES:

• Improved communication will facilitate the development of relationships between governmental regulators and community leaders. In turn, environmental policies will better reflect the particular needs of the community.

• Specifically, communication among governmental agencies will have several positive consequences. Gaps in governmental jurisdiction and overlapping jurisdiction will be exposed. In addition, the allocation of resources for regulatory agencies will be streamlined. Finally, communication will discourage reactive and protectionist legislation.

DISADVANTAGES AND OBSTACLES:

• There is resistance to change, and there are logistical coordination problems between governmental agencies. For example, the existing communication systems are incompatible, and the current computer infrastructure is inadequate.

• Other challenges that will have to be overcome include: language barriers, different legal systems, divergent agency policies on sharing information, and varied governmental and agency missions.

RECOMMENDATION:

2.- Regulatory authorities should establish clear definitions for key terms used to regulate the management of hazardous waste in the U.S., Mexico, and individual states, and incorporate them into key documents used for the management of hazardous wastes.

ADVANTAGES:

• Simplified procedures and lower costs for transportation, recycling, and reuse.

• Easier and more accurate identification of waste.

• Remediation of the disparities and loopholes in existing laws and regulations.

• Clarity and transparency will help foster a favorable investment climate, as well as illustrating what governmental regulators expect of waste management companies.

DISADVANTAGES AND OBSTACLES:

• Harmonization of definitions is time-consuming and resource-intensive.

• There is ambiguity involved in determining who is responsible for handling waste and who would have final approval over regulatory changes.

ISSUE II.

THERE ARE SEVERAL REGULATORY AND JURISDICTIONAL BARRIERS TO AN EFFECTIVE REGIONAL APPROACH TO HAZARDOUS WASTE MANAGEMENT.

The primary barriers result from the differences in U.S. and Mexican regulatory standards, which inhibit an effective, coordinated approach to waste management in the border region. Examples include: waste classification schemes; tariff classification differences; incompatible document requirements and procedures; different levels of inspector training; and differences in criminal sanctions for deliberate, illegal dumping of wastes.

RECOMMENDATION:

1.- U.S. and Mexican authorities should harmonize or make compatible waste classification schemes.

• Dissent: One member of the Committee dissented due to fears of downward harmonization.

ADVANTAGES:

• Clearer definitions for private industry and governmental regulators, as well as improved waste tracking mechanisms. The latter can be accomplished through a simplified database system for governmental reporting and waste tracking.

• Simpler customs inspections, waste identification and taxation processes.

• Reduction of paperwork and bureaucracy will facilitate management of hazardous wastes, lower costs, and improve the response of emergency personnel.

DISADVANTAGES AND OBSTACLES:

• The cost of activating programs may be prohibitive.

• Harmonization of definitions is a time-intensive task, and public officials have other priorities which may make it difficult to carry out this project.

• Ambiguity with respect to who has the responsibility for implementing harmonization, and differing political and regulatory processes for making these changes.

• Sovereignty issues and isolationist tendencies in governments may pose an obstacle to harmonization efforts: namely, a concern that countries can change each other's laws.

• There may also exist a concern over "downward harmonization" while achieving the goals of uniform standards.

RECOMMENDATIONS:

3.- Assure that creation of TSDF infrastructure does not institutionalize existing disposal practices by creating low-cost (but legal) disposal options which hinder waste minimization programs.

4.- Promote waste minimization, pollution prevention and recycling through economic incentives (e.g. lower tariffs on alternative fuels and technology, pilot projects, and tax incentives).

ADVANTAGES:

• The volume of waste will be reduced and "green" manufacturing promoted. This also encourages the reuse of resources, and encourages the formation of an adequate TSDF infrastructure. It further reduces the need and pressure for environmental infrastructure.

• Efficiency and productivity of industry processes will be increased. It will reduce risks to workers, communities, and the environment

DISADVANTAGES AND OBSTACLES:

• Industry resistance and adjustment of government agencies.

• Initial costs, bureaucracy and a lack of technical expertise.

• Re-engineering requirements (new processes, different raw materials and research and development) may pose a problem to companies seeking to reduce the quantity of waste generated.

• Budgetary constraints may not permit the Mexican government to implement a wide range of economic incentives.

RECOMMENDATION:

5.- Integrate U.S. and Mexican waste tracking and transportation documents into a single harmonized document or, at a minimum, develop compatible waste tracking documents.

ADVANTAGES:

• Improved quality of data on wastes generated and their movements.

• Increased awareness and easier movement of waste through customs.

• Illegal dumping will be hindered and compliance will improve through deterrence.

DISADVANTAGES AND OBSTACLES:

• Some difficulties include: bureaucratic and administrative procedures, differences in language, and resistance to change.

• Providing for technical requirements in data systems and obtaining sufficient resources and funding may prove to be a difficult task.

• Customs agents, brokers and transportation officials will also need computer training.

RECOMMENDATION:

6.- Analyze current waste flows to properly allocate resources for adequate training and development of facilities, depending on the most common types of wastes. In addition, a process open to the public to conduct a "needs assessment" for hazardous waste infrastructure and technology in Mexico should be undertaken. Needs assessment could also take a regional approach e.g. taking into consideration U.S. TSDF capacity and transportation costs.

ADVANTAGES:

• Encourages the use of new waste tracking technology and promotes the exchange of information. Facilitated documentary procedures will speed up processing time by customs officials and reduce the risk of accidents, spills and releases of hazardous waste during border crossings. The development of uniform emergency response procedures will become more feasible.

• An evaluation of the flow of hazardous waste will also reduce costs in several ways. First, it will reduce personnel and resources required for implementation by allocating resources more effectively. It will also improve transborder management and tracking of shipments, therefore reducing fraud.

DISADVANTAGES AND OBSTACLES:

• Bureaucratic and community resistance to change, "Not in My Backyard (NIMBY).

• It is difficult to apportion risk in an "environmentally just" manner if one area becomes a dumping ground for a disproportionate amount of hazardous wastes.

RECOMMENDATION:

7.- Streamline the permitting process to encourage the establishment of recycling facilities.

• Dissent: One member will only endorse this point if the burning of hazardous waste in cement kilns or industrial boilers is excluded from the definition of "recycling."

ADVANTAGE:

• Reduced cost for permitting process. Increased development of recycling industry without compromising environmental requirements. Improved government and industry credibility. It will also encourage investment by reducing waiting time to begin operations (and recouping of investment) and increasing predictability. Overall, it will promote environmentally sound and sustainable economic development.

ISSUE III.

INSUFFICIENT TSDF INFRASTRUCTURE IN MEXICO.

RECOMMENDATION:

1.- Set up financing mechanisms to encourage investment in TSDF facilities in Mexico based on the results of planned vulnerability atlases, and promote eco-parks near industrial areas. This recommendation does not assume that waste minimization cannot occur before considerable disposal capacity becomes available.

ADVANTAGE:

• Provides for regulated disposal of wastes until waste minimization programs can be instituted.

DISADVANTAGES AND OBSTACLES:

• Public opposition to TSDF facilities can be a most formidable obstacle to direct investment.

• Opposition can also be encouraged by the fact that the development of TSDF facilities discourages waste minimization programs. Often, public opposition can be aroused by misinformation and political grandstanding. Also, the viability and safety of a project can be illustrated by complicated scientific studies which are beyond the comprehension of the average citizen. The result in the selection of a site for a TSDF is a battle of experts in which the opposing parties produce contradicting scientific studies.

• Despite the fact that there is an appropriate climate for investment, oftentimes there is a lack of appropriate locations in high waste production areas, such as Veracruz.

• In some instances, investors face serious obstacles when trying to operate TSDFs. For example, economic instability represents a deterrent to investment. Other problems have their roots in the normal forces of the market place, such as competitive pressure from existing facilities or the production of an insufficient volume of wastes to be profitable.

• Lastly, competing needs for limited investment capital may hinder the development of TSDFs in Mexico.

RECOMMENDATION:

2.- Develop waste management training networks for industry and regulators.

ADVANTAGE:

• This will help develop standardized training modules and encourage the establishment of academic programs. In turn, cooperation and communication among government agencies and the public will be promoted.

DISADVANTAGE AND OBSTACLE:

• Lack of agreement on training protocols and criteria.

• Lack of standardized training programs.

GROUP V: MAQUILADORA WORK GROUP

ISSUE I.

CHANGES IN THE "IN-BOND" MANUFACTURING PROGRAM UNDER THE NAFTA.

Mexican domestic law and the bilateral La Paz Agreement require that all wastes generated from raw materials temporarily imported into Mexico "in-bond" must be returned to the country of origin of the raw materials. Effectively, one places a bond instead of paying import taxes on raw materials used in the maquila industry. As the NAFTA eliminates the obligation to pay duties and tariffs on imports, there will be no need to place a bond on raw materials used in maquilas. In conclusion, if there is no bond, the maquila may not be obligated to return the wastes to the U.S.

It is therefore important for both nations to consider what changes the NAFTA will bring to the maquiladora industry. At a minimum, confusion will exist with respect to the requirements to return "maquila" waste to the country of origin of the raw materials. The concept of a maquiladora operating as an "manufacturing island" within Mexico will change under the NAFTA. These changes will be evident in the year 2001 when maquila goods will be considered to be produced in North America as opposed to being produced in a U.S. manufacturing "island" within Mexican territory. Established hazardous waste flows may change dramatically in the absence of requirements to post a bond on the raw materials used in maquila production.

RECOMMENDATIONS:

1.- Therefore, legal dispositions which control the cross-border movement of wastes must be amended to reflect pending changes to the in-bond system. This will provide greater levels of certainty and allow waste generators to plan and implement responsible waste management programs.

2.- Bilateral work groups established under the auspices of the La Paz Agreement should recommend that the governments clarify what will happen to established waste flows between the maquila industry and U.S. TSDFs. In short, the in-bonding regimen will be altered by NAFTA and the established bilateral waste relationship must be revisited by the governments to avoid future political and environmental problems.

ADVANTAGE:

• More clarity and greater compliance. If people know the rules and what is expected of them they are more likely to comply. In addition, clarity will allow companies to more appropriately plan their activities and allocate costs.

DISADVANTAGE AND OBSTACLE:

• Different national priorities and levels of industrialization may inhibit harmonized action plans. These are important problems in the bilateral relationship which will make the task of galvanizing political will very difficult.

ISSUE II.

NIMBY IN THE U.S. MAY INHIBIT WASTE SHIPMENTS FROM MAQUILADORAS.

NIMBY may drive individual U.S. states to attempt to keep maquila wastes from being disposed of in their territory. In the U.S., states cannot prohibit waste shipments from other states; however, if a state perceives that it is a "dumping ground" for wastes generated in other countries it may seek to keep out foreign wastes. The result could be an effort to stop waste shipments from maquiladoras after the in-bond requirements are phased-out. These protectionist tendencies may be prohibited in states under the foreign commerce clause of the U.S. Constitution. That is, states are prevented from discriminating against foreign waste. Nevertheless, serious political tensions could result. Preventing waste shipments from maquilas may be a non-issue as a regulatory matter, but the problem comes from a private entity's refusal to accept wastes based on lack of confidence that the waste meets U.S. land ban provisions or is improperly characterized. Without the option to send wastes to TSDFs in the U.S., many maquilas may dispose of their wastes illegally in Mexico.

• Dissent: Opposition was registered to the use of the term "NIMBY" in problem II and III as such terms convey "emotional opposition" and reflect potential bias. The dissent concluded by stating that most citizen opposition is legitimate and based in fact.

RECOMMENDATIONS:

1.- Binational work groups established under the auspices of the La Paz Agreement, NGOs and the private sector should advise U.S. policy makers to assure that there remains sufficient capacity in the U.S. for maquila wastes, and that local governments do not establish protectionist barriers. Governments must anticipate that the transformation of the maquila industry may create political problems and must act proactively to prevent future strains on the bilateral relationship.

2.- Mexican and U.S. officials must establish policies and treaty provisions which clarify the flow of wastes after the maquila regimen is eliminated. Also, governmental lawyers should review domestic and treaty provisions in order to clarify individual states' rights to refuse a waste shipment from maquilas.

ADVANTAGE:

• Legal certainty allows for business planning. Shipping wastes to U.S. facilities will help prevent illegal dumping in the border region. Also, confronting the problem now should reduce future political and environmental problems.

DISADVANTAGE AND OBSTACLE:

• Permitting waste shipments to the U.S. may frustrate the development of hazardous waste TSDF facilities and the use of waste minimization technologies in Mexico. Galvanizing political will in the face of other needs and priorities may be a formidable barrier.

ISSUE III.

NIMBY IN MEXICO.

The transformation of the maquiladora industry under the NAFTA will increase the demand for TSDF infrastructure in northern Mexico. By the year 2001, maquilas will be able to sell all of their production in Mexico. As a result, Mexican consumers will enjoy the use of products made in maquilas. A society which benefits from a product should also share in the disposal costs of wastes generated in the product's manufacture. The major impediment to maquila waste disposal in northern Mexico is the lack of TSDF infrastructure. Despite the need for such facilities, there may be strong public opposition to the construction of TSDFs in Mexican communities.

RECOMMENDATIONS:

1.- Work groups established under the La Paz Agreement should advise Mexican and U.S. officials to establish both long-term and short-term policies which eliminate unreasonable legal and community barriers to TSDF construction in Mexico by creating a transparent permitting process. For example, in the long term, education may help communicate the need for waste minimization and responsible waste management as an integral part of a growing economy. In the short term, changes in current Mexican federal regulations and transparent permitting procedures may encourage the development of alternatives to disposal and foster a favorable investment climate.

2.- Additionally, the Mexican government should issue standards which specify the process that one must follow in order to recycle or treat wastes on-site. On-site reduction can drastically reduce the amount of waste which must be sent for final disposal. The current permitting processes for on-site disposal is very subjective and does not encourage on-site treatment nor the use of alternative methods of disposal.

ADVANTAGE:

• In the future, Mexican TSDFs will be under tremendous pressure to adequately dispose of maquila wastes. Unfortunately, there is insufficient TSDF capacity in Mexico to handle current and future demand. Transparent and clear permitting procedures will help keep the community informed and an active participant, as well as facilitate the development of TSDFs in Mexico. This, in turn, will help alleviate the NIMBY response.

DISADVANTAGE AND OBSTACLE:

• Creation of TSDF facilities may serve as a disincentive to the implementation of waste minimization projects in Mexico. It may be difficult to galvanize the political will to oppose the NIMBY syndrome.

RECOMMENDATION:

3.- Greater participation of U.S. and Mexican border states in the formation of transportation and import/export procedures. Also, state officials should play a greater role in the granting of operating permits and export documents. In order to provide efficient cross-border and interstate movement of wastes, a commission should be appointed to monitor the differences between state policies and attempt to make waste policies compatible.

ADVANTAGE:

• State officials are closer to the problems and can help formulate policies which appropriately address environmental and business needs. As a result of local participation, more reliable waste tracking mechanisms will be developed; providing better information for policy makers.

DISADVANTAGE AND OBSTACLE:

• State autonomy in the area of waste management may create a proliferation of inharmonious standards. This could make cross-border movement of wastes extremely difficult. States such as California, with relatively higher environmental standards, may not support harmonization efforts for fear of downward harmonization.

ISSUE IV.

INCOMPATIBLE WASTE CLASSIFICATION SCHEMES.

Large quantities of maquila wastes cross international and state borders. Different waste classification schemes in Mexico, the U.S. and various states make cross-border movement very difficult.

RECOMMENDATIONS:

1.- Environmental authorities should harmonize classification schemes with the Organization of Economic Cooperation and Development (OECD) waste characterization programs in an effort to make North American schemes compatible with international standards.

2.- A binational technical work group should be appointed to evaluate differences in waste classifications schemes and establish protocols which allow generators to easily comply with requirements of each country. The work group should regularly review hazardous waste characterization schemes in both countries and issue reports on the disparities between listings in each country. In the event that there are disparities between classification schemes, the waste classification schemes for the place of final disposal should control.

• Dissent: One member dissented out of concern for "downward harmonization."

ADVANTAGE:

• More clarity. Operating costs for maquilas and for waste brokers would be lowered. Companies have greater incentives to operate according to the law when costs are lower. The work group would also facilitate better communications between countries and a better understanding of waste flows and early identification of issues.

DISADVANTAGE AND OBSTACLE:

• Technical difficulties of harmonizing state standards. Different nature of the regulated communities will create differences in the classification schemes that are designed in each country or state. Bureaucratic ownership of classification mechanisms and reluctance to modify them may be a barrier. More pressing bilateral issues may take precedence.

ISSUE V.

LACK OF MARKET INCENTIVES FOR THE ESTABLISHMENT OF A RESPONSIBLE ENVIRONMENTAL SERVICES INDUSTRY TO SATISFY THE WASTE MANAGEMENT NEEDS OF THE MAQUILAS.

For example, in Tijuana and Ciudad Juárez, waste transporters and transfer stations who purchase insurance, buy specialty equipment and properly maintain their vehicles have a comparative disadvantage against companies which do not incur such costs. As a result, they offer their services at higher prices. Cost is the single most important factor considered when a maquila sends its wastes to the U.S. Due to low levels of governmental enforcement and the importance of offering reasonably priced services, companies have no incentives to purchase expensive equipment or insurance. As a result, companies have no incentives to absorb the costs associated with operating according to the law.

RECOMMENDATION:

1.- Increase governmental enforcement of existing standards for insurance, vehicle conditions and conditions of temporary storage facilities. Develop transparent licensing procedures for the establishment of companies which offer environmental services and expand the use of insurance "risk management" procedures.

ADVANTAGE:

• Development of a environmentally responsible services industry for the maquilas. Therefore, wastes will be properly handled and insurance will be used with greater frequency. Consistent and objective enforcement of standards creates a level playing field for all companies.