CASE NUMBER: 459 CASE MNEMONIC: Cleaner CASE NAME: U.S./Mexico Drycleaning Dispute
I. Identification
1. The Issue
Since the inception of the North American Free Trade Agreement (NAFTA) in 1994, many businesses and firms in the United States have relocated to Mexico. One industry in particular has taken advantage of the open market which has been created by NAFTA. This industry is the drycleaning and laundry industry. Numerous drycleaning firms, especially in California, have gone south because of Mexico's less stringent environmental laws. U.S. drycleaning cleaning firms have not complied with Mexican environmental laws. The laws are indeed effective in certain ways. The problem is that the laws are not strict and do not address the drycleaning industry. In the United States, the drycleaning industry has begun to comply with the measures and regulations of the Environmental Protection Agency(EPA), as well as the obligations put forth by the Montreal Protocol in 1989. The Protocol stipulates that the production and consumption of compounds that deplete the ozone in the atmosphere; chloroflorocarbons, (CFCs), halons, and methyl chloroform are to be phased out by 2000 (2005 for methyl chloroform). These are just a few of the chemicals used by the drycleaning industry. Due to loopholes in the Protocol and Mexico's desire for economic growth, there is very little regulation placed on U.S. and Mexican industries within Mexico. As a result, the ozone is being depleted further and people are getting sick at the expense of development and economic gain in Mexico.2. Description
History of Dry Cleaning
Drycleaning is the process by which soils and stains are removed from garments by the use of solvents other than water..hence the term "dry" cleaning. The solvents are in liquid form and the equipment used to "dryclean" clothing looks much like a large front loading washing machine. The process uses "mechanical action" to loosen and remove soils and stains while at the same time the dry solvents are being filtered and purified so that they can be used over and over again to clean clothing. Drycleaning solvents are not harmful to any fabric and drycleaning is the only safe method for cleaning many types of garments (1).
The process of drycleaning dates back to the 1800's when by accident a petroleum-type fluid was accidently spilled on a piece of fabric that was stained with a greasy stain. The stain quickly evaporated and left the area clean where the fluid had been spilled. The firm of "Jolly Belin" opened in Paris, France in the 1840's and is reported to be the first drycleaning firm in existence (2).
After the garments have been cleaned, they are individually pressed or "finished" on steam heated finishing equipment to return them to a crisp and wrinkle-free appearance.
While drycleaning has been continuously modernized and improved over the years, it is still one of the few service professions that requires a great deal of skill and hands-on experience. Fashion and fabrics are constanlty changing and it is up to the professional drycleaner and/or professional fabricare expert to constantly update his/her methods and processes to assure the customer the best care possible for all types of clothing and garments (3).
The EPA and Greenpeace have acknowledged that drycleaning is hazardous to the environment and to people. Potential hazardous wastes generated by drycleaning and laundry plants are primarily solvents which include: Perchloroethylene, known as perc, valclene, known as fluorocarbon 113, and petroleum solvents, such as Stooddard, quick-dry, low-odor and other solvents(4).
Drycleaning causes severe harm to the health of workers, the general public and the environment. Dry cleaners emit 12 more times more perc into the air than the combined total from all other American industries required to report emissions to the EPA. Of all the toxic contaminants in urban air, perc concentrations are the highest. The food from stores or residences near dry cleaners contain perc levels up to 800 times higher than normal. Finally, perc levels in groundwater supplies contaminated by dry cleaners are hundreds or thousands of times higher than federal standards (5).
| Waste Type | Cleaning Method Average Quantity of Hazardous Waste (pounds) EPA 1995 | ||
|---|---|---|---|
| PERC | Valclene | Petroleum Solvents | |
| Still Residues | 25 | 10 | 20 |
| Spent Cartridge Filters Standard (carbon core) Adsorptive (split) | 20 15 | 30 20 | |
| Cooked Powder Residue | 40 | NA | NA |
| Drained Filter Muck | NA | NA | |
This table highlights the percentage of chemicals used in drycleaning. These chemicals are extremely toxic to those who work for drycleaning firms, the general public and the environment. Those who work for drycleaning firms have a greater chance of getting cancer. The chemical "perc" has been linked to reproductive and central nervous system disorders. Women who come into contact with these chemicals on a daily basis are more likely to have children with physical and mental disorders.
The drycleaning industry is just one of the many industries throughout the world which contribute to the depletion of the ozone layer. Countries needed to come together and discuss ways to remedy this devastaion.
The Montreal Convention
One of the most significant international efforts to protect the environment is to protect the ozone layer by eliminating ozone-damaging substances. In 1985, countries all over the world attended the Vienna Convention. At this convention, participating countries defined their intent to protect the fragile ozone layer. Entered into force in 1988, the Vienna Convention received international support to protect the ozone layer. To define this support, the Montreal Convention was convened in Canada in 1987, by the Executive Director of the United Nations Environment Programme (UNEP) (6).
The Montreal Convention compiled a list of ozone-depleting substances (chlorfluorcarbons and halons) as well as documentation describing each substance's depletion potential. A time table was enacted for reducing the production and use of these chemicals. The result was the Montreal Protocol (7). The Protocol called for the elimination of all ozone-depleting chemicals by the year 2000. The Protocol entered into force on January 1, 1989 with amendments in 1990 (London) and 1992 (Copenhagen) that strengthened the agreement. The Protocol defines the following: (1) how to determine the national consumption of a controlled substance. (2) the timetable for eliminating consumption and production, based on 1986 levels of consumption. (3) special provisions for developing countries to minimize economic hardship as a result of the Protocol. An example of this is delaying the compliance dates by ten years for countries who produce less than .3 kilograms per capita of ozone depleting substances. (4) promotion of education and research and development in the areas of CFC reduction, recycling and replacement. (5) restrictions on the trade of CFC products or the exportation of similar technology with non-participating countries (8).
At the same time, the Protocol takes into consideration the special needs and situations of some of the participating countries: (1) participants whose consumption rate of CFCs was less than 25 kilotons (average amount) in 1986 may transfer to or receive from another participant excess CFCs, provided that their total combined production levelsare not exceeded. (2) Participant countries which had authorized construction of CFC facilities before January 1, 1987, could add that production to their 1986 consumption figures, with the agreement that the new total rates of CFC use did not exceed .5 kilograms per capita (9).
The Protocol is seen by some environmental organizations and policy makers as being "soft" on certain countries. Most chemical companies will phase out sales of CFCs in the industrialized world this year. But, CFCs will continue to be produced for export for another ten years.
Beginning in January of 1986, it became illegal, under the auspices of the Protocol, for developed nations to produce or import CFCs, except for "essential" and "livestock" purposes, and for export to the South.( Essential purposes in the sense of appliances that still require the use of CFCs, such as air conditioners and refrigerators. Some farms in the developed world may use certain solvents to grow crops and to keep pests away.) The use of these chemicals in the developed world is slowly being phased out under the auspices of the Protocol. Some believe this production loophole for the "south" was placed into the Protocol at the request of developing countries. These countries were concerned about the availability of CFCs after the North's phase out (10).
New Developments
Since the induction of the North American Free Trade Agreement (NAFTA), goods and services have been transported more easily between the United States and Mexico. The transportation of these goods and services have had a great effect on the environment and on trade relations between the two countries. See SANDIEGO Case and BORDER Case.
One of the main reasons why U.S.drycleaning firms have relocated to Mexico is from provisions derived from the Protocol itself. Developing countries, like Mexico, have a longer grace period to phase out the use of the harmful solvents used in drycleaning as well as other industries. Drycleaning solvents are, for the most part banned from being used and exported from the United States. However, the ban has not gone into effect in Mexico.
Another reason why drycleaning firms in the United States have gone to Mexico is because Mexican laws are less strict. This reasoning is not entirely true. Mexico does have tough environmental laws. The problem lies in the fact that the laws are not enforced where foreign firms are concerned.
During the last few years, a green movement has emerged in Mexico. The movement consists of politicians and citizens. The Green Movement and policy makers alike have dedicated themselves to proving that NAFTA and the liberalization of other economic barriers will not result in the degradation of the environment. An example of a green movement sponsored initiative is the ambitious program of "one day without a car". This program restricts residents of Mexico City from using their car one business day per week. This program is aimed at reducing polluting car emissions and its success can only be achieved by the participation of the community. So far, the program has been successful and the percentage of pollutants in the air is somewhat lower than before the program's inception (11).
The General Law of Ecological Equilibrium and Environmental Protection was published on January 28, 1988 and became effective on March 1, 1988. This law replaced the previous law on environmental matters. The Law states that any activity that is performed in Mexico, whether public or private, that may cause imbalances in the ecological system must be in accordance with the conditions, norms and regulations set by the Secretariat of Social Development (Sedesol). Those companies that do not voluntarily comply with environmental standards and regulatory requirements, are subjected to fines and shutdowns (12).
In order to combat pollution new technologies must be developed and used. However, these technologies are fairly new and expensive. Many developing countries like Mexico are unable to afford these technologies at the present time. This issue must be brough to the forefront before Mexico can be blamed for having "soft" environmental laws.
New substitutes for drycleaning have been designed in the United States. They are called Multi-process wet cleaning and Aqueous/Alkaline cleaning. In essence, multi-process wet cleaning uses soap and water to alleviate soiled clothing. This type of cleaning does not use perchloroethylene, (perc). However, it may use some solvents for some types of stains (13). Aqueous/Alkaline cleaning uses pure water, adds soaps and other types of detergents to remove stains from clothing (14).
The successful transition from cleaning with "perc" and other harmful chemicals to aqueous/multi-process wet cleaning requires the consideration of many factors. The transition to these safer drycleaning technologies usually requires the installation and purchase of new equipment. This involves capital investment and modifications. Such alternative cleaning methods usually have a higher cost than the older, well known methods which have been used up until the present. These are some of the obstacles faced by Mexico as it enters the 21st century.
The Mexican Government has designed laws and proposals which are beginning to address environment issues. However, the drycleaning industry and the emissions put forth from this industry have yet to be addressed. U.S. firms have relocated to Mexico for precisely this reason, as well as taking advantage of Mexico's cheap labor force and working conditions. The United States and Mexico have joined forces and cooperated in achieving a consensus on environmental matters in the past. One agreement was the La Paz Agreement signed on August 14, 1983. See LA PAZ Case. With the further insight derived from the Montreal Protocol as well as the rallying of environmental organizations in the United States and Mexico, hopefully a consensus can address this dispute as well as set forth regulations on the future of the drycleaning industry, and the effect it has on the environment.
3. Related Cases
Keyword Clusters (1) Forum: MEXICO (2) Bio-geography: DRY (3) Environmental Problem: POLLUTION SST Case CANCUN Case MONTREAL Case AVOCADO Case TOMATO Case COZUMENL Case TRUCK Case MAQUILA Case CARBON2 Case KENPEST Case CHILEAIR Case BASMEX Case LAPAZ Case4. Draft Author:
Kristen Picariello December 18, 1997II. Legal Clusters
5. Discourse and Status:
AGReement and INPROGThe Montreal Protocol and its precursor, The Vienna Convention for the Protection of the Ozone Layer, exhibit agreement among countries that collaborated action is needed to protect human health and the environment against the dangerous and harmful effects of ozone layer depletion. The agreements recognize that the main source of ozone layer depletion is the emission of CFCs, halons and other solvents, and that the internationally agreed measures are necessary to control those emmissions. The agreements also acknowledge that these solvents are an essential component of the economies of developed, and most importantly, developing countries. The products produced with these solvents are a vital aspect of the developing countries' trade markets (15).
Certain aspects of the Protocol are in progress. The phase out schedule for the industrialized countries is ten years ahead of that for developing countries. There is a concern that technology and associated factories withdrawn in industrial- ized countries are being marketed in developing countries where these technologies are still very much in use. It is for this reason that the drycleaning industry of California is heading south of the border.
In concluding the Montreal Protocol, governments had agreed that the protection of the ozone layer would require concerted efforts by all countries, industrialized, newly industrialized and developing. It was recognized though that the ability to take action was linked to technology and institutional capability, that countries' capacities were not equal, and that some Parties were in a special situation(16).
Countries require effective policy, technical, regulatory, monitoring and economic capacity to develop and manage their phase out programs. In many cases, this is lacking. Also, the structure of the industry in some countries is very different from that in the developed countries, with much of the industry being in the small and informal sector(17).
In the case of Mexico, regulation and environmental laws concerning the drycleaning industry have not been addressed. This may be due to the fact that the Mexican economy welcomes the capital and revenue that is accumulated as a result of U.S. firms relocating to Mexico under the provisions of NAFTA. See NAFTA Case.
6. Forum and Scope:
NAFTA and REGIONAlthough this dispute concerns the United States and Mexico, the Protocol is a multilateral agreement among all the countries which have ratified it. There are numerous border disputes concerning pollution and depletion of the ozone layer such as this one. (See MEDIT Case and LEB Case.) However, the United States and Mexico have signed an environmental agreement which addresses the dumping and tranport of hazardous waste. LAPAZ Case and BORDER Case.
7. Decision Breadth:
42 Active Particpants (countries) which have signed the Protocol. The United States and Mexico are among these participants.8. Legal Standing:
PROTOCOL/TREATYIII. Geographic Clusters
9. Geographic Locations
a. Geographic Domain: North America [NAMER]
b. Geographic Site: Western North America [WNAMER]
c. Geographic Impact: NAFTA, Entire Western Hemisphere
10. Sub-National Factors:
YESThe Environmental Protection Agency of the United States (EPA) in accordance with the United States Congress have imposed and passed strict environmental laws, such as the Clean Air Act of 1990. The Clean Air Act restricts the use of ozone destroying chemicals. Many of these chemicals are used in drycleaning. As a result, drycleaning firms in the United States have developed safer technologies which use water and soap and are not harmful to the environment.
In Mexico, the two most important pieces of legislation regulating the use of chemical substances and products are the General Health Law (Ley General de Salud) and the Regulation to the General Law in the Area of Sanitary Control of Activities, Establishments, Products and Services (Reglamento de la Ley General en Materia de Control Sanitario de Actividades, Establecimientos, Productos y Servicios). Both laws set forth guidelines on the definitions and uses of pesticides, fertlizers and toxic substances. The laws establish registering and licensing pesticides, fertilizers, and other toxins, and provide labeling procedures for chemical substances (18). However, neither law addressed the drycleaning industry.
11. Type of Habitat:
DRYIV. Trade Clusters
12. Type of Measure:
Regulatory Ban [REGBAN]13. Direct v. Indirect Impacts:
Indirect [IND]14. Relation of Trade Measure to Environmental Impact
a. Directly Related to Product: YES Drycleaner
b. Indirectly Related to Product: NO
c. Not Related to Product: NO
d. Related to Process: YES Ozone
15. Trade Product Identification:
Drycleaning16. Economic Data
The drycleaning industry is grouped under the manufacturing sector in the Mexican economy. In millions of U.S. dollars, the manufacturing industry's exports for 1996 was $1,405.5. For the first quarter of 1997, the number of exports in millions of U.S. dollars was $139.8 The manufacturing sector in Mexico generates much of the country's revenue(19).
Employment in this industry has stayed constant, at about 38.4 percent. (Based on 100 percent of the population) In January of 1996, the employment rate was 39.1 percent. By September, the pecentage decreased a bit and was at 38.5 percent. Beginning in 1997, the employment rate was at 38.4 percent. This past September, the rate dropped to 33.6 percent, indicating that less people in the service sectors were able to find jobs; the sector was not able to absorb this labor force(20).
As of 1995, there have been over 1,600 U.S. drycleaning firms which have relocated to Mexico. These firms employ about 510,000 workers. Most of the firms have relocated to the Mexican Cities of Tijuana and Ciudad Juarez. Growth in these cities has been around 13 percent (21)
17. Impact of Trade Restriction:
The drycleaning industry could add some unwanted costs to Mexico: health and environmental degradation to workers and the community at large. There is little Mexican enforcement of restricting the use of drycleaning chemicals and technologies.
The problem lies in the fact that Mexico has strict laws, but the laws are not enforced. It has been argued that these laws are ignored in order for Mexico to have economic growth and productivity. Productivity increases capital and revenue. Now with NAFTA in place, laws will be even more difficult to enforce. When there is free trade, there is more movement of firms and people across borders. See NAFTA Case.
Obviously, firms are not concerned with the health of workers. Relocation is an opportunity to make more money and take advantage of Mexico's docile labor force. Health issues not been addressed as issues of concern. Firms will be unable to ignore these issues for long, soon people will get sick and the labor force will be signigficantly reduced. Then firms will lose revenue. It is in the best interest of firms to take heed of the chemicals used in drycleaning which cause health problems.
18. Industry Sector:
Services [SOTH]19. Exporters and Importers:
USA and Mexico
V. Environment Clusters
20. Environmental Problem Type:
Ozone Loss [OZONE]21. Name, Type, and Diversity of Species
22. Resource Impact and Effect:
HIGH and REGULATORY23. Urgency and Lifetime:
LONG and 100s of Years24. Substitutes:
Bio-degradable [BIODG] products
VI. Other Factors
25. Culture:
NOWhile there is no culture impact per se, Mexican workers are subjected to harsh working conditions and low wages than they would have in the United States. This is especially true for women who work in industry. Women, who are mostly between the ages of 18 and 24, are subjected to exploitation and harassment by management (22). See MAQUILA Case. Others say that compensation, wage practices and working conditions are much better in the United States.
26. Trans-Boundary Issues:
YESThis is a border problem between the United States and Mexico. Firms in Mexico are less likely to comply with Mexican law because the environ- mental laws do not address the regulation of the drycleaning industry. The solvents used in drycleaning are not yet banned in Mexico because of the ten year phase out plan under the auspices of the Montreal Protocol. Since Mexico is defined as a developing country, it has a longer grace period to suspend the use of these chemicals. Mexico will be placed in a difficult position in the next few years. It must decide whether economic growth and a place in the global economy is the price to pay for ruining the fragile ecosystem and environment.
Also, if U.S. drycleaning firms relocate ten miles south to Tijuana, the air quality of Southern California is still very much affected by these harmful chemicals.
27. Rights:
YES"Perc" and other hazardous chemicals used in drycleaning have caused bladder and esphageal cancer and leukemia. "Perc" has also been linked to central nervous system and reproductive disorders; liver and kidney damage (23). The depletion of the ozone layer, through the use of chemicals by the drycleaning and other industries causes a permanent clouding of the eye, which is sensitive to the UVB exposure. Further depletion could increase cataracts in sun-exposed people by 3-4 percent. The skin is at risk as well; the increase in sun-exposed skin is linked to high rates of skin cancer (24).