Trans-Pacific Partnership (TPP) Free Trade Negotiations

Initial Environmental Assessment

April 2014

Table of Contents

I. Executive Summary

The Asia-Pacific is one of the world’s fastest growing economic regions, with a growth rate of two to three times the global average. It is also a priority region for Canada, offering significant opportunities for our exporters and investors in a variety of sectors/areas.

The Trans-Pacific Partnership (TPP) is a free trade initiative among 12 countries, with the objective of supporting the creation and retention of jobs and promoting economic development in TPP countries. With the addition of Japan in July 2013, the TPP market represents more than 792 million people and has a combined GDP of $28.1 trillionFootnote1; equivalent to almost 40% of the world economy.

Canada joined the TPP free trade negotiations on October 8, 2012. For Canada, the TPP offers a significant opportunity to engage in Asia, while reinforcing our traditional trading relationships within the Americas. The TPP will help boost Canada’s global competitiveness and prosperity through increased diversification of trade and investment opportunities. Participation in the TPP is in line with Canada’s ambitious pro-trade plan, a key element of Canada’s Global Markets Action Plan.

Trade and the Environment

Public support for trade liberalization in Canada is closely linked with expectations that Canada will be able to protect its environment. Canada is committed to achieving mutually supportive trade and environmental goals with its trading partners. Canada’s broad environmental objectives in entering into trade negotiations are:

  • to preserve Canada’s ability to protect the environment;
  • to ensure mutually supportive relationships between trade agreements and multilateral environmental agreements;
  • to stimulate the efficient allocation of resources to generate positive environmental impacts; and,
  • to strengthen respective national environmental management systems.

Through the Environmental Assessment (EA) process, Canada hopes to ensure that proposed trade agreements contribute to the development of the Canadian economy in a sustainable manner. The purpose of an EA of trade negotiations is to assist Canadian negotiators to integrate environmental considerations into the negotiating process by providing information on the potential environmental impacts of the proposed trade agreement in Canada; and, to address public concerns by documenting how environmental factors are being considered in the course of negotiations.

The current Initial EA (IEA) considers the effects of any new trade and investment in Canada that may result from a TPP Agreement. The IEA does not predict the specific outcomes of a TPP Agreement, but instead, estimates any possible environmental impacts, using informed judgements of potential changes, resulting from increased economic activity. It should also be noted that the modelling is a “point in time” analysis, with results reflective of the reality at the time of analysis. Projected outcomes are subject to change in the context of developments in global trade policy.

Overview of Initial Environmental Assessment Findings

The current IEA is based on a qualitative analysis of all the areas and sectors being negotiated under the TPP agreement. Special attention is paid to three areas in particular (trade in goods, trade in services and investment), as these areas face a greater likelihood of environmental impacts as a result of a TPP agreement. For a quantitative analysis, based on the estimated economic impacts from the Computable General Equilibrium (CGE) model, please see Annex A.

With respect to goods, a TPP Agreement is expected to increase Canadian exports to TPP markets in a number of sectors. The resulting changes in output could generate environmental impacts both as a result of emissions and waste from the production of goods themselves, impacts on resource consumption, as well as from increased transportation activity. Environmental threats specific to agriculture, fishery, forestry and mining industries were noted; however potential environmental impacts are likely to be minor given established regulatory mechanisms and mitigation initiatives (see Section VII). However, further analysis is recommended to confirm these findings.

A TPP Agreement is expected to facilitate increased services trade between Canada and TPP member countries. Increased cooperation in the areas of labour mobility, regulatory cooperation and science and technology is expected to contribute to increased trade activity in the services sector. Most services benefiting from liberalization under TPP would likely be in virtual areas with less likelihood of negative environmental impacts. Additionally, reduced trade barriers may facilitate the exchange of environmentally friendly technologies and environmentally sustainable practices, countering any potential negative environmental impacts, such as increased energy usage and electronic waste (e-waste) caused by increased trade in services. For example, liberalization in the sector of engineering services could facilitate the availability and use of more environmentally friendly building techniques in the construction industry.

In terms of investment, Canada negotiates investment protection provisions that provide for governments’ right to set policy and regulate in the public interest. The TPP countries, as a group, are the largest destination for Canadian direct investment abroad (CDIA) and the main source of foreign direct investment (FDI) stocks in Canada. While investment provisions in the TPP will provide investors with greater certainty and predictability, it is difficult to predict the level and magnitude of foreign investment as a result of TPP. The environmental impact of investment is likely to be minor, as impacts would be mitigated by laws that bind foreign investors to the same environmental regulations that govern domestic investors.

In conclusion, based on available information, the overall environmental impact in Canada as a result of a TPP Agreement will likely be minor. A quantitative analysis of this impact is provided in Annex A.

Next Steps:

A Final Environmental Assessment will be prepared after TPP negotiations conclude. This Final EA will identify any notable divergence from the IEA and will highlight any subsequent analysis undertaken as a result of any changes in TPP negotiations. Follow-up and monitoring could, if warranted, be undertaken in order to review any mitigation or enhancement measures ultimately recommended in the Final Environmental Assessment report. Monitoring and follow-up activities can be undertaken anytime during the implementation of a concluded trade agreement in order to gauge the performance of its provisions from an environmental perspective.

II. Overview of the Environmental Assessment Process

The Government of Canada has committed to conducting Environmental Assessments of all trade negotiations using a process that requires interdepartmental collaboration and public consultations. The 2001 Framework for the Environmental Assessment of Trade NegotiationsFootnote2 (the “Framework”) details this process, and was developed in response to the Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals.Footnote3 Detailed guidance for applying the Framework is contained in the Handbook for the Environmental Assessment of Trade NegotiationsFootnote4 (the “Handbook”). The Framework provides a process and methodology for conducting the Environmental Assessment (EA) of a trade negotiation. It is intentionally flexible so that it can be applied on a case-by-case basis according to the nature of the agreement being negotiated. The objectives of the Environmental Assessment process of a trade negotiation, as outlined in the Framework are:

  • to assist Canadian negotiators to integrate environmental considerations into the negotiating process by providing information on the environmental impacts of the proposed trade agreement;
  • to address public concerns by documenting how environmental factors are being considered in the course of trade negotiations.

The Framework also provides for three phases of assessment:

  • (1) Initial Environmental Assessment: a preliminary examination to identify potential key issues and environmental effects resulting from a trade negotiation, as well as providing an opportunity to reflect on environmental considerations while negotiations are ongoing.
  • (2) Draft Environmental Assessment: if required, builds on the findings of the Initial Environmental Assessment and provides detailed analysis of those issues.
  • (3) Final Environmental Assessment: takes place after the conclusion of the negotiations.

At the conclusion of each phase of an Environmental Assessment, a public report is issued along with a request for comments.Footnote5 In the event that an Initial Environmental Assessment finds little likelihood of significant environmental impact occurring as a result of an Agreement, a Draft Environmental Assessment is not required. In those cases, environmental considerations continue to be integrated into ongoing discussions and a Final Environmental Assessment must still be completed.

Assessment Methodology

The Framework provides a four stage analytical methodology for conducting the Initial, Draft, and Final Environmental Assessments. Guidance on how to conduct each stage of the analysis is provided in the Handbook.

  • Identification of the economic effect of the Agreement to be negotiated. Identifies the trade liberalization activity of the Agreement under negotiation. It examines the areas the potential Agreement may include, the changes or new trade activity that could result, and the overall economic relevance to Canada.
  • Identification of likely environmental impact of such changes. Once the economic effects of the proposed trade Agreement have been estimated, the likely environmental impacts of such changes are approximated. Consideration is given to potential positive and negative impacts.Footnote6
  • Assessment of the significance of the identified likely environmental impacts. The identified likely environmental impacts are then assessed as to their significance. The Framework outlines various criteria in determining significance, to be used as appropriate, including frequency, duration, permanency, geographical scope and magnitude, level of risk, irreversibility of the impacts, and possible synergies among the impacts. This study uses the following scale in relation to the criteria outlined above to describe significance: none, minor, moderate, high and extreme.
  • Identification of enhancement/mitigation options to inform the negotiations. The IEA is intended to identify, in a preliminary fashion, the possible policy options or actions that might be required to mitigate potential negative impacts and/or to enhance potential positive impacts that may result from the proposed Agreement.

Scope of the Initial Environmental Assessment Process for the TPP Negotiations

The purpose of the IEA is to inform negotiators of the potential domestic economic and environmental impacts from a prospective TPP Agreement by exploring the “qualitative” links between market access, investment and environmental impacts in Canada. A “quantitative” analysis is provided in Annex A in response to feedback received during consultations on the draft IEA. The IEA also includes measures to mitigate environmental concerns raised by the public during consultations, including potential impacts on Canadian health and social wellbeing from the eventual implementation of a TPP Agreement.

The Consultations Process

An interdepartmental Environmental Assessment (EA) Committee was established by the Department of Foreign Affairs, Trade and Development Canada (DFATD) to review the EA of the TPP negotiations. This Committee comprises representatives of federal departments covering the areas negotiated under the TPP Agreement.

Prior to seeking public consultations, the findings of an IEA are shared with the EA Committee; Provinces and Territories; as well as the Environmental Assessment Advisory Group (EAAG), which consists of industry, non-governmental organizations and academics. This feedback and consultation process is followed at each assessment phase (i.e. Initial, Draft or Final EA), prior to releasing the document for public comment. The current IEA reflects comments received from the EA Committee, Provinces and Territories, and the EAAG, including the annexed quantitative analysis as recommended during these consultations.

III. Summary of Comments Received During Initial Consultation

As required by the Framework, a Notice of Intent to conduct a Strategic Environmental Assessment of the prospective TPP Agreement was published on December 1, 2012,Footnote7 inviting interested parties to submit their input for consideration. Provinces and Territories as well as the Environmental Assessment Advisory Group (EAAG) were also consulted.

Comments were received from organizations and individuals ranging from concerned private citizens to experts/academics and elected politicians. The comments received represent a wide range of subjects, including the following, in no particular order:

  • Imported TPP products should be subject to the same food security, biosecurity and risk-management standards as in Canada. Increased imports of agricultural goods and commodities may also elevate the risk of invasive and alien species (e.g. plant, insect or plant pathogen) entering the Canadian environment;
  • The TPP should ensure fair competition for Canadian agriculture producers;
  • With respect to the Investor-State Dispute Settlement (ISDS) mechanism, investor-state arbitration could enable corporations to challenge domestic environmental regulations and policies;
  • The Government should ensure effective management programs as it relates to several industries, such as fisheries (e.g., fishery subsidies, illegal fishing, shark conservation), wildlife (e.g., trade in wildlife), and forestry (e.g., sustainable logging);
  • The Government should regulate exploitation of oil sands development, and resource extraction/transportation; and
  • Comments noting and/or seeking consideration of:
    • the impact on Provincial/Territorial jurisdictions in regulating environmental protection;
    • The effects and impacts on climate change and de-forestation;
    • SME capacity to develop or access green technologies to increase efficiency of production processes;
    • The full life cycle (production, distribution and disposal) of goods and services;
    • Potential environmental impacts of liquefied natural gas, coal and bulk water exports; and
    • Canadian health and social wellbeing, including First Nations environmental concerns.

The Government welcomes input and comments on this Initial Environmental Assessment. The comments received will be used to inform the current and/or subsequent EA analysis as well as future EAs of trade work more broadly. Suggestions for enhancement of mitigation measures regarding potential negative environmental impacts and augmentation of positive effects identified at this stage are also encouraged. Input can be sent to:

E-mail: EAconsultationsEE@international.gc.ca
Mail: Environmental Assessment of the Trans-Pacific Partnership Free Trade Agreement Negotiations
Trade Agreements and NAFTA Secretariat (TAS)
Foreign Affairs, Trade and Development Canada, Lester B. Pearson Building
125 Sussex Drive, Ottawa, Ontario K1A 0G2

IV. Trade and Environment

The Government of Canada’s Environmental Objectives in Relation to Trade

The Government of Canada is committed to ensuring that its trade negotiations encourage mutually supportive trade and environmental objectives. The importance of this mutually supportive relationship between trade and environmental outcomes is underscored by the strong correlation between open markets, economic development and environmental protection. A strong, rules-based trading system and efficiently regulated markets are key building blocks for economic growth and development. The reduction of trade barriers may facilitate the exchange of environmentally friendly technologies, and the establishment of investment rules helps to create conditions for facilitating the transfer of technology.

The identification of likely and important environmental effects of any proposed trade agreement enables negotiators to consider whether existing mechanisms (e.g., existing laws and/or regulatory frameworks) are sufficient, or whether new efforts would be required to mitigate any identified environmental impacts. The Environmental Assessment (EA) looks to minimize negative environmental impacts, as a result of a trade agreement, while also contributing to the economic wellbeing of Canadians. For example, the current EA incorporates the overarching objectives of the Federal Sustainable Development Strategy (FSDS), which integrates environmental considerations into economic decision-making (see Section VII).

The Government of Canada’s Environmental Objectives in Relation to a TPP Agreement

Recognizing that increased economic activity can lead to both positive and negative environmental effects, Canada is negotiating provisions on environmental protection in a TPP agreement that will maintain high levels of environmental protection and ensure environmental laws and regulations are accomplishing their objectives while also not acting as barriers to trade.

In order to ensure that economic development is sustainable, Canada will seek to negotiate meaningful and ambitious environment provisions in the TPP Agreement that:

  • recognize the need to implement the FTA in a manner consistent with environmental protection and conservation and sustainable development;
  • recognize that the Parties have the right to regulate and establish their own domestic levels of environmental protection, while aiming for the highest levels of environmental protection;
  • commit the Parties to enforcing their own domestic environmental laws, and to not derogate from such laws to attract trade or investment;
  • allow the Parties to take certain necessary measures to protect human, animal and plant life or health which may be inconsistent with trade or investment obligations;
  • reaffirm the Parties’ commitment to multilateral environment agreements;
  • provide for certain procedural guarantees and the availability of remedies as part of good environmental governance;
  • promote greater accountability and public participation;
  • establish a framework for environmental cooperation;
  • highlight efforts underway on a number of matters relating to trade and environment, such as illegal logging; illegal, unreported and unregulated (IUU) fishing; biodiversity; climate change and trade in environmental goods and services; and,
  • establish an effective dispute resolution process.

V. Overview of Canada's Economic Relationship with Members of the TPP

Economy at a Glance

The Asia-Pacific region is of crucial importance for Canada. It is the fastest growing region in the world and a key driver of global economic growth. As the third largest economy among TPP member countries, Canada’s participation in the TPP negotiations is an opportunity to further advance Canada’s commercial interests in this dynamic region of the world.

The TPP countries (as a group) would be Canada’s largest trading partner, and as a whole the TPP would form one of the largest trade areas in the world. 2012 Intra-TPP trade among TPP member countries was equal to US$3.9 trillion. Total exports to the world from TPP countries were US$4.3 trillion, accounting for 26.2% of world exports. Total imports from the world by TPP countries were US$5.1 trillion or 28.9% of world imports (see tables in Annex B).

Merchandise Trade

In 2012, Canada’s exports to other TPP members were worth US$360.5 billion, accounting for 79% of Canada’s exports to the world, and imports from TPP countries were valued at US$287.8 billion, representing 62.3% of total Canadian imports from the world (see Annex B). Canada had a trade surplus of US$72.9 billion with TPP member countries, largely related to exports to the US. The other markets in the Asia-Pacific region, excluding the U.S., represent Canada’s new economic opportunities in the region, where over the past decade exports to these countries grew by 7.0% annually.

In 2012, about 65% of Canadian exports to TPP countries were manufactured products (US$235.3 billion) with oil & gas, agriculture, and forestry making up the majority of the remaining balance (see Annex B). In the same year, Canada’s largest imports from TPP countries included manufactured products (US$235.4 billion), agriculture products (US$21.2 billion) and oil and gas products (US$6 billion) (see Annex B).

Services Trade and Foreign Direct Investment

Bilateral services trade between Canada and TPP countries totalled C$107.9 billion in 2010, with Canada exporting C$47.4 billion and importing C$60.4 billion. Canada’s services trade (imports and exports) with TPP countries accounted for 59.8% of Canada’s total trade in services of which over half consisted of trade in commercial services.

The TPP countries, as a group, are the largest destination for Canadian direct investment abroad (CDIA) stock, worth C$352.7 billion in 2012, or 49.6% of Canada’s total CDIA.Footnote8 Similarly, TPP foreign direct investment (FDI) stock into Canada was worth C$350.4 billion in 2012, or 55.3% of total FDI into Canada.Footnote9

VI. Qualitative Analysis

This IEA focuses on a qualitative analysis, which involves the analysis of conditions and relationships, based on existing information (e.g. research, legislation, etc.), experience and judgment.

The qualitative analysis of potential environmental impacts is not intended to be an exhaustive examination of the economy or environmental issues. Instead, it is developed as a tool for TPP negotiators to inform them of potential environmental impacts as a result of the TPP Agreement.

The analysis is structured into three main parts:

  • 1) General Qualitative Overview – this section provides a summary of all the areas and sectors being negotiated and their potential environmental impact;
  • 2) Detailed Analysis of Key Issue Areas – this section focuses on the potential environmental impacts of the following sectors: Trade in Goods, Trade in Services and Investment;
  • 3) Limitations to the Analysis - outlines limitations and considerations specific to this analysis.

1. General Qualitative Overview

The following table provides information relating to the various sectors involved in a prospective TPP Agreement.

General Qualitative Overview
Issue-AreaAnticipated OutcomePossible Environmental Impact
CompetitionEnsure that anti-competitive business practices do not undermine the benefits of the Agreement.
  • This chapter should not affect Canadian environmental regulations or how environmental objectives are set.
  • There are no foreseen negative environmental impacts as a result of these commitments.
Competitiveness and Business FacilitationEnhance the domestic and regional competitiveness and the development of regional production and supply chains.
  • There are no foreseen negative environmental impacts as a result of these commitments.
Cooperation and Capacity BuildingEstablish flexible mechanisms to facilitate cooperation and capacity building.
  • There may be some positive indirect environmental impacts as a result of these commitments, including by potentially providing an avenue to strengthen environmental governance.
Cross-Border Trade in ServicesProvide for improved market access, transparency and predictability for Canadian and other TPP country service providers.
  • Any environmental impacts (e.g., increased energy use and electronic waste) caused by increased trade in services are expected to be mitigated by increases in environmentally sustainable practices in the services sector.
  • Further analysis is required to better assess the environmental effects of these commitments.
Financial ServicesPromote high quality, forward looking market access commitments and improve regulatory transparency in the financial services sector.
  • There are no foreseen negative environmental impacts as a result of these commitments.
Electronic CommerceEnsure a predictable environment for electronic commerce.
  • There are no foreseen negative environmental impacts as a result of these commitments.
TelecommunicationsEnsure that the terms and conditions for access to and use of public telecommunications transport networks and services do not impede the parties’ market access commitments, as well as providing an open and competitive market for telecommunications services.
  • There are no foreseen negative environmental impacts as a result of these commitments.
Temporary Entry of Business PersonsFacilitate the temporary movement of business persons by waiving regulatory requirements, such as labour market tests.
  • Such provisions are likely to have little or no environmental impact.
Customs, Administration and Trade FacilitationEstablish transparent, streamlined and predictable border procedures that allow goods to move between TPP member countries more easily.
  • Such provisions are likely to have little or no environmental impact.
DevelopmentIdentify the most appropriate tools to address differences in levels of development among the TPP countries.
  • These commitments help address specific needs of developing countries in meeting the standards of the TPP Agreement, including in the area of environment. Could have positive environmental impacts for TPP partners by potentially providing an avenue to strengthen environmental governance. There are no foreseen negative environmental impacts as a result of these commitments.
EnvironmentMaintain mutual support between trade and environmental conservation and protection. Issue-specific provisions may also highlight efforts underway on a number of key matters which have trade implications.      
  • These commitments will ensure that TPP Parties maintain their ability to set their own environmental priorities, to establish their own domestic levels of environmental protection and to adopt or modify relevant environmental laws and policies. There may be positive environmental impacts as a result of these commitments.
Government ProcurementProvide Canadian and other TPP country suppliers with more open, transparent and non-discriminatory market access to Canada and other TPP members’ respective government procurement markets.
  • Canada is committed to negotiating procurement obligations in the TPP that are substantially the same as those in its existing international agreements. Canada will seek to include provisions clarifying that TPP Parties may adopt requirements to conserve natural resources and protect the environment (as is provided for under other Agreements relating to procurement that Canada is a Party to). There may be positive environmental impacts as a result of these commitments.
Intellectual Property RightsProtect and enforce intellectual property rights and provide rights holders with greater certainty and predictability.
  • There are no foreseen negative environmental impacts as a result of these commitments.
InvestmentProvide investors with greater certainty and predictability.
  • Large changes in investment patterns are not expected to result from the TPP. This may be verified with further analysis. Further analysis is required to better assess the environmental effects of these commitments.
LabourEnforce national labour laws, reflecting internationally-recognized labour rights and principles.
  • There are no foreseen negative environmental impacts as a result of these commitments.
Legal and Institutional IssuesFacilitate the management, administration and operation of the Agreement.
  • This will seek to reinforce commitments of due process and transparency regarding matters covered by the Agreement, including those in the Environment Chapter. There are no foreseen negative environmental impacts as a result of these commitments.
Market Access for GoodsSeek tariff elimination on goods across TPP countries while including provisions to simplify and facilitate international trade procedures in a clear and predictable manner.
  • Any economic changes and potential environmental impacts resulting from increased trade (although expected to be minimal) can be assessed through further quantitative analysis. An increase in trade between TPP countries may have environmental impacts due to increased production and imports into Canada. These possible environmental effects are explored further in subsequent sections of the assessment.
Regulatory CoherenceEnhance transparency and good regulatory practices and governance.  
  • There are no foreseen negative environmental impacts as a result of these commitments.
Rules of OriginProvide for rules of origin that are clear and leave little room for administrative discretion. It also may provide the trading community with the means to take advantage of preferential tariff treatment afforded under a TPP Agreement.
  • Strengthening the administration of rules of origin can deliver commercial and environmental benefits by reducing costs and delays to traders, increasing transportation efficiencies, and promoting a paperless environment. It is not possible to fully predict the environmental effects; however potential environmental implications are explored further in the subsequent sections of this assessment.
Sanitary and Phytosanitary (SPS) MeasuresEnhance animal and plant health and food safety among the TPP countries. The SPS text will contain a series of new commitments on science, transparency, regionalization, cooperation, and equivalence.
  • Increased trade may result in the increased use of SPS measures to appropriately manage risk to the environment. There may be positive environmental impacts as a result of these commitments.
Small and Medium Sized Enterprises (SMEs)Enhance SMEs’ access to information on the TPP Agreement and to encourage SMEs to participate in commerce in the region.
  • There are no foreseen negative environmental impacts as a result of these commitments.
Technical Barriers to Trade (TBT)Expand on the WTO Technical Barriers to Trade Agreement (TBT Agreement) related to standards, technical regulations and conformity assessment procedures. 
  • There are no specific environmental implications expected as a result of these commitments.
Trade RemediesProtect domestic producers from temporary difficulties associated with trade liberalization under the TPP Agreement.
  • It is not possible to predict environmental effects as a result of these commitments.

2) Detailed Analysis of Key Issue Areas:

As a follow-up to the above table, there are three key issue areas of negotiation that have been identified as potentially having a greater likelihood of environmental impacts in Canada:

  • Trade in Goods
  • Trade in Services and
  • Investment

A qualitative analysis of these three areas focuses on the following: (i) anticipated effects of a TPP Agreement, (ii) potential environmental impacts and their significance, and (iii) opportunities for mitigation and enhancement.

See Annex A for a quantitative analysis of the environmental impact, expressed in environmental indicators of greenhouse gas emissions (GHG), energy use, and water use.

In addition to the mitigation measures noted in the following sub-sections, Section VII contains a more detailed overview of Environmental Sustainability Indicators, including strategies, regulations, guidelines, standards, and monitoring programs, by which Canada quantitatively tracks its performance on key environmental sustainability issues.

A. Trade in Goods

The proposed TPP Agreement will seek to improve market access for goods principally through tariff elimination and accumulation of origin. At present, Canada has free trade agreements (FTAs) with 4 of the other 11 countries who are currently part of the TPP (United States, Mexico, Chile, Peru), in addition to long-standing preferential trade agreements with Australia and New Zealand. Hence, some of the largest potential gains resulting from the TPP FTA, in terms of Canada’s goods exports, would come from the non-FTA partners, especially Japan (4.4% average applied tariff), Vietnam (9.8% average applied tariff) and Malaysia (6.5% average applied tariff). It is also anticipated that significant gains would likely come from improved access to the U.S. market as a result of the ability to accumulate materials from all TPP members to qualify for preferential market access under the TPP.

i) Anticipated Outcome: Likely Economic Impact on Canada of a TPP Free Trade Agreement

Globalization has made it increasingly difficult to determine the basis of a good’s origin since raw materials and parts used to make finished goods are drawn from multiple sources. In the context of a TPP Agreement, the rules of origin negotiated by the Parties are used to determine when goods have undergone sufficient production within the free trade area or territory established by that Agreement to qualify for preferential access under that Agreement. Rules of origin that are transparent, predictable and consistent in application will be developed to ensure that the benefits negotiated under the TPP Agreement accrue to its Parties.

As a result of tariff elimination, it is anticipated that most of the environmental impacts in Canada would be related to increased production, due to greater demand in TPP countries for Canadian exports. The impact on trade flows bilaterally would vary depending on the TPP partner, the volume of trade, type of goods, and whether a Trade Agreement is already in place. The following section highlights the type of goods currently traded between Canada and individual TPP-member countries, and subsequently identifies areas for possible increased trade.

United States: Canada and the United States have fully implemented their respective tariff liberalization commitments under NAFTA. In 2012, U.S. imports from Canada amounted to C$323.7 billion, with key imports comprising mineral fuels and oils, vehicles and parts, machinery and equipment and plastics. Canada’s merchandise imports from the U.S. for that same year were C$233.9 billion. Key imports include vehicles & parts, machinery and equipment, mineral fuels and oils, and plastics.

Mexico: Canada and Mexico have also fully implemented their respective tariff elimination commitments under NAFTA. Mexico’s merchandise imports from Canada in 2012 were C$9.9 billion. Mexico’s top imports from Canada include vehicles and parts, machinery and equipment, oil seeds, electrical and electronic equipment and iron and steel. Canada’s merchandise imports from Mexico in 2012 amounted to C$25.5 billion, with top imports comprised of vehicles and parts, electrical and electronic equipment, machinery and equipment, mineral fuels and oils, and furniture.

Chile: Canada and Chile implemented their FTA in 1997. Canada and Chile have fully implemented their respective tariff liberalization commitments under the FTA. Chilean imports from Canada in 2012 amounted to C$1.0 billion, with the top sectors being mineral fuels and oils, machinery and equipment, mineral ores, and vehicles and parts. Canada’s imports from Chile amounted to C$1.7 billion in 2012, with the key imports being precious stones and metals, fruit and nuts, copper, fish and seafood, and beverages.

Peru: Canada and Peru implemented their FTA in 2009. Peru’s imports from Canada in 2012 amounted to C$589.1 million, with the key imports being cereals, machinery and equipment, electrical and electronic equipment, vegetables, and paper and paperboard. Canada’s imports from Peru amounted to C$3.7 billion in 2012, with the top imports being precious stones and metals, mineral ores, fats and oils, coffee, and fruit and nuts.

Australia: Beyond Australia’s already low average tariff (the MFN applied tariff was 2.8% in 2011), Canada and Australia enjoy some preferential access to each other’s markets due to a long existing bilateral trade agreement. In 2012, Australia’s imports from Canada amounted to C$2.4 billion with the top exports being machinery and equipment, vehicles and parts, electrical and electronic equipment, pharmaceuticals, and sulphur. Only about 16.1% of all imports from Canada were subject to duties. Conversely, Canada’s imports from Australia amounted to C$2.1 billion in 2012 with the top imports from Australia being mineral ores, inorganic chemicals, beverages, machinery and equipment, and precious stones and metals.

New Zealand: In 2012, New Zealand’s imports from Canada amounted to C$439.1 million, with top imports being machinery and equipment, fertilizers, sulphur, and printed matter. Canada’s imports from New Zealand amounted to C$534.2 million in 2012. The top imports from New Zealand were for certain types of meat, beverages, and machinery and equipment. Much of the trade between Canada and New Zealand is already duty-free. Both countries have relatively open markets, with New Zealand having an average MFN applied tariff rate of 2.0% in 2011. In addition, a long-standing bilateral trade agreement provides some additional preferential market access between Canada and New Zealand beyond each country’s low average MFN tariffs.

Vietnam: Vietnam’s imports from Canada amounted to C$455.5 million in 2012, with key imports being fertilizers, oil seeds, machinery and equipment, fats and oils processing, cereals, and fish and seafood. Canada’s imports from Vietnam were C$1.6 billion in 2012. The main imports were apparel, furniture, footwear, and electrical and electronic equipment. With applied tariffs averaging 9.8%, Canada could gain significantly more market access for its exports, especially for sectors with high tariffs (such as fish and seafood).

Malaysia: Malaysia’s imports from Canada were C$931.0 million in 2012. Top imports from Canada included fertilizers, electrical and electronic equipment, machinery and equipment, aircraft, and cereals. Canada’s imports from Malaysia in 2012 were C$2.2 billion with the main imports being electrical and electronic equipment, machinery and equipment, scientific and precision instruments, fats and oils, and rubber. The average applied tariff for imports in Malaysia is 6.5% (2010), providing room for increased market access for Canadian exports.

Brunei: Brunei’s merchandise imports were relatively small in 2012 at C$12.3 million and comprising mainly of machinery and equipment. Similarly, Canada’s imports from Brunei were limited, totalling only C$6.7 million, and composed mainly of organic chemicals. Given the relatively low value of two-way trade, any impact on the environment that could result from lower tariffs would be anticipated to be minimal.

Singapore: Singapore’s merchandise imports from Canada in 2012 were valued at C$1.2 billion, with the key imports being machinery and equipment, electrical and electronic equipment, vehicles and parts, scientific and precision instruments, and aircraft. All products, with only a few exceptions, enter Singapore duty-free. Canada’s imports from Singapore were valued at C$1.4 billion, of which only 2% were dutiable. The top imports from Singapore in 2012 were electrical and electronic equipment, machinery and equipment, miscellaneous chemicals, mineral fuels and oils, and pharmaceuticals.

Japan: In 2012, Japan was Canada’s fifth largest trading partner and imported C$12.7 billion of merchandise from Canada. The top products imported from Canada were mineral fuels and oils, oil seeds, meat, mineral ores and wood. Canada also imported C$15.0 billion of merchandise from Japan with top imports including vehicles and parts as well as machinery and equipment.

ii) Potential Environmental Impacts of the Economic Changes and Significance of these Impacts

It is expected that most of the environmental impacts in Canada would be related to increased Canadian production due to greater demand in TPP countries for Canadian exports. Increases in trade flows, either bilaterally or as a result of cumulative impacts, could lead to an increase in: natural resource use; use of toxic chemicals/their transportation and release, and hazardous waste management; goods production/transportation/disposal and consumption leading to greater emissions and pressure on local landfill sites. It should be noted that consideration of increases in trade flows and trade diversion is implicit in the production-based quantitative analysis in Annex A.

Increased or intensified agricultural production would exacerbate the industry as a major contributor to increasing methane and nitrous oxide concentrations in the atmosphere. It could also lead to degradation of natural habitat, rangeland, soils, water quality and availability, and an increase in agricultural-related pollution from animal manure, fertilizers and agricultural chemicals.

In addition, there are other goods-related policy concerns and considerations, such as the potential over-exploitation of fish and seafood; risk of invasive alien species; potential increase in fishing of endangered species; sustainable logging; and environmental impacts of mining.

Measures to mitigate some of the above risks and the associated significance of these impacts are described below.

iii) Enhancement and Mitigation Options

While detailed sectoral analyses are beyond the scope of this Initial Environmental Assessment, a number of representative sectors have been selected for analysis. The findings support the position that measures in place, such as those in Section VII, ensure that environmental impacts as a result of increased trade in goods would be minimal.

Agriculture:

The overall levels of environmental risk for water, soil, air and biodiversity are not expected to change significantly as a result of the liberalization of agricultural trade between Canada and the TPP countries. Minimizing environmental impacts from increased agricultural production has been a long term objective for Agriculture and Agri-Food Canada (AAFC). The department, in collaboration with provincial and territorial partners, provides research and programming to assess environmental risks, plan effective mitigation, and increase adoption of Beneficial Management Practices – practices that sustainably increase productivity and reduce farmer input costs at farm and landscape levels.

In considering the potential threat posed by invasive alien species as a result of increased trade with TPP countries, it will be important for Canada to maintain vigilance in this area. There are several mitigation measures (e.g., Canada’s Invasive Alien Species Strategy) Footnote10 and programs currently in place, managed by several Government of Canada departments, as well as provincial governments, that would help address any increased risk of potential environmental impacts as a result of increased trade.

Given the above considerations, and the available information at this time, environmental impacts as a result of increased trade in agricultural goods are likely to be minor.

Fish and Seafood:

Any growth of fish and seafood exports to TPP countries, as a result of a TPP Agreement, will be subject to supply restraints. These supply restraints will ensure that fish and seafood products are harvested at sustainable levels. The potential increase in exports of fish and seafood products would be directed mostly at Japan, Vietnam and Malaysia given their higher tariffs on fish and seafood imports (up to 15% for Japan and Malaysia, and up to 34% for Vietnam). The Government of Canada is committed to the conservation and sustainable development of Canada’s oceans through a variety of programs under the umbrella of the national Sustainable Development Strategy.

Measures for Canada’s fish management systems have been put into place to ensure the sustainability of Canada’s fisheries and the environmental integrity of its aquaculture operations, so that any increased trade resulting from a TPP Agreement will have minimal environmental impacts. The Canadian Environmental Protection Act (CEPA) and the federal Fisheries Act are key pieces of legislation for managing aquatic resources in Canada and they ensure the conservation and protection of fish habitat in Canadian fisheries waters. In addition, the Species at Risk Act (SARA) provides legislation to protect endangered or threatened species, and to encourage the management of other species to prevent them from becoming at risk. Canada is also working with other countries and entities to lead regional fisheries management organizations (RFMOs) towards a sustainable, science-based management approach that will ensure the viability of fisheries for future generations. Footnote11

Given the environmental management systems and government measures in place, a potential increase in fish and seafood exports to TPP countries is not expected to have a significant impact on the sustainability of fish stocks, nor on Canada’s marine or freshwater environment.

Forest Products:

Canada’s forested, other wooded land and other land with tree cover extend over about half of the country’s total land surface—nearly 400 million hectares—from coast to coast. Taking care of the country’s forests and ensuring their ongoing health is a key priority of the Government of Canada. To that end, the Government of Canada works closely with the provinces and territories to ensure that the nation’s forest resources are managed sustainably and in a way that optimizes benefits for all.

Most of Canada’s forest land (90%) is owned and managed on behalf of Canadians by provincial and territorial governments (public land). Two percent of forest land is under federal jurisdiction and 2% is owned and managed by Aboriginal peoples. The remaining 6% of forest land is on private property. As a result, governments at three different levels have set legislation and regulations for the protection and management of forests. For example, Canada is committed to sustainable forest management (SFM), a process in which forest management practices evolve in response to scientific advances and public participation. Footnote12

Determining and regulating the amount of wood that can be harvested is central to sustainable forest management strategies. Provincial governments regulate harvest levels on provincial Crown lands by specifying an allowable annual cut (AAC), which is the annual level of harvest allowed on a particular area over a specified number of years. The AAC levels are based on the sustainable growth rate of the forest. The goal is to maintain biological diversity while considering economic and social factors.

The wood product and the pulp and paper manufacturing industries, which are also subject to environmental protection regulations and instruments, have been consistently complying with provincial and federal environmental requirements. Air pollutants from the forest products industry are regulated federally under the Canadian Environmental Protection Act, 1999, and by the provinces generally through permitting processes. A wide range of air emission control devices are commonly used in order to meet air quality standards. Water effluents are regulated federally through the Fisheries Act and through provincial and/or municipal regulation. All Canadian pulp and paper manufacturing facilities are using secondary treatment prior to releasing effluents into the environment. The use of chemical substances by the sector is also subject to Canada’s Chemical Management Plan.

The TPP will not result in an increase in timber harvests above the AAC levels set by governments, nor will it alter landscapes and natural habitats. Increases of the production of wood products or pulp and paper products would have limited environmental impacts due to the efficiency of the mitigation measures in place. As such, the liberalization of trade under the TPP Agreement is not expected to have a significant environmental impact on the forestry industry.

Mining:

The mining industry is primarily regulated at the provincial level. Provincial governments are responsible for the exploration, development and extraction of, mineral resources; and the construction, management, reclamation, and close-out of mine sites.

Government of Canada involvement in the regulation of mining operations is limited in nature. As well, most major mining projects in Canada are subject to a federally-legislated environmental assessment process, either through the Canadian Environmental Assessment Act, 2012, or under legislation in force in Nunavut, the Northwest Territories and the Yukon, in addition to provincial environmental assessment processes.

The Metals and Minerals Policy of the Government of Canada: Partnerships for Sustainable Development, integrates policies, programs and legislation that ensure the continued use of Canada’s natural resource endowment within a sustainable development framework. Furthermore, the federal government has developed activities and partnerships that demonstrate Canadian expertise in a wide range of issues-areas related to sustainable development. These include (but are not limited to) the safe use of minerals and metals, life-cycle assessment, and the mitigation of environmental impacts of mineral and metal development.

If increased export activity occurs as a result of a TPP Agreement, only minor environmental impacts are anticipated as federal, provincial and territorial laws and regulations would ensure that increased production would be carried out in an environmentally responsible and sustainable manner.Footnote13

B. Trade in Services

Services are a key component of global value chains as they help promote value-added activities in different markets. Restrictions on service activities are rarely located at the border, and instead, barriers often arise from the domestic regulation of services provision such as: barriers to commercial establishment, and the number/type of services that can be provided.

Services are important for the Canadian economy as this sector helps Canada’s transformation towards a knowledge-based economy with high-quality, high-paying jobs. Services represent a large and growing share of Canada's economy (70% of Canada’s real GDP in 2012), and Canada is looking to promote new opportunities for Canadian businesses in the high-growth markets of the Asia-Pacific region.

Canadian service providers are very active in this region, particularly in sectors such as financial services, professional services and environmental services. Based on 2010 statistics, Canada’s share of services trade with TPP Member countries (excluding Brunei and Peru, for which no data is available) amounted to C$47.4 billion in exports to TPP members and C$60.4 billion in imports from TPP members. This accounts for 59.9 % of Canada's total exports, and 59.8 % of Canada's total imports of services worldwide.

i) Anticipated Outcome: Likely Economic Impact on Canada of a TPP Free Trade Agreement

While studies have shown that there are positive benefits to services liberalizationFootnote14 , it remains difficult to assess the economic impacts of removing barriers to trade in services. A number of international organizations and think tanks are currently looking at ways in which global services trade could be better quantified, but the “virtual” nature of most services transactions poses a significant challenge. In addition, the definition of services trade reaches beyond cross-border flows to include three additional modes of supply: consumption abroad, commercial presence, and the movement of natural persons.

While a TPP Agreement is expected to provide increased market access, services transactions between Canada and TPP Members are already occurring under existing bilateral FTAs or via the WTO General Agreement on Trade in Services (GATS). Canada’s existing FTAs with four of the TPP members (Chile, Mexico, Peru and the United States) provide substantive obligations and commitments in the area of services trade, the volume of which the TPP is not expected to significantly increase. With the other seven TPP members (Australia, Brunei, Malaysia, New Zealand, Singapore, Vietnam and Japan), services trade has been based on commitments under the 1995 GATS. As such, there is potential scope to advance Canadian market access for services, beyond these respective GATS commitments.

ii) Potential Environmental Impacts of the Economic Changes and Significance of these Impacts

As Services are becoming increasingly integrated in the production of complex goods, the environmental impacts that could result from increased trade in services would likely be indirect. Increased cooperation in the areas of labour mobility, regulatory cooperation and science and technology is also expected to contribute to increased activity in the trade in services sector. The environmental effects of this increased trade, however, is difficult to quantify or predict, as not all commercial transactions are recorded as they cross the border. For example, the movement of persons associated with services trade is captured in business travel statistics, but these records are not industry-specific and thus difficult to attribute to increases or decreases in specific service sectors.

That said, most cross-border services benefiting from liberalization under the TPP would likely be in virtual areas (i.e., those without a physical component, such as professional advice), with less likelihood of negative environmental impacts.

Liberalization in services could indirectly serve to bring “green” products to the market faster and at a lower cost. In sectors such as environmental and telecommunications services, positive environmental impacts can be anticipated as more environmentally sustainable goods, services and technologies are adopted. For example, in sectors such as telecommunications services and electronic commerce, positive environmental impacts can be anticipated through greater use of cross-border communications technologies (i.e. the internet/email, fax, teleconference, and videoconference) and by facilitating virtual transactions for goods and services. Therefore, while environmental impacts – positive or negative – are not expected to be significant, any potential negative environmental impacts could be offset by mitigation options and opportunities for environmentally sustainable growth, including technological innovation and industry best practices.

Given the above considerations, and the available information at this time, environmental impacts as a result of increased trade in services are expected to be minor.

iii) Enhancement and Mitigation Options

Until the economic impact of current and enhanced services trade can be more accurately quantified, it will be difficult to identify specific mitigation options.

In general, services sectors tend to be heavily regulated, where governments at different levels, as well as professional associations (with delegated self-regulating authorities) have implemented and maintained regulations governing the provision of services. These regulations establish and maintain a legal framework to serve various public-policy purposes, including the protection of the environment.

In the tourism sector, environmental damage can be limited by controlling access to ecologically-sensitive sites and limiting the number of visitors in certain areas based on capacity to accommodate, without pollution, loss of wildlife habitat, or other damage. With respect to transport services, there is an extensive range of environmental guidelines, codes of practice and international standards in place to reduce environmental impacts. In the construction sector there is a wide range of environmental protection guidelines, tools, and techniques applicable to engineering works. These include facility design and site selection measures, energy conservation measures, and on-site measures to control soil erosion, manage wastes, and control pollutants.

Private sector mitigation options may include paper conservation within the office, greater use of cross-border trade facilitating means (i.e. the internet/email, fax, teleconference, and videoconference), recycling of various materials, and corporate policies on “sustainable procurement.”  While these activities are within the scope of the private sector, government policy can lead in the adoption of such practices, specifically through the greening of government procurement strategies.

C. Investment

With respect to investment negotiations, Canada has treaties in force with several TPP countries, namely Chile, Mexico, Peru and the United States, which include foreign investment obligations similar to those envisioned in the TPP. Therefore, the investment protections resulting from the TPP are not expected to influence investment flows between Canada and these members.

Canada has already commenced negotiations on investment protections with Singapore and Vietnam, but has never negotiated investment provisions with Australia, Brunei, Japan, Malaysia or New Zealand. Therefore, any potential change in investment flows would be between Canada and these seven TPP members. The extent of investment flows, however, would be difficult to assess at this stage.

i) Anticipated Outcome: Likely Economic Impact on Canada of a TPP Free Trade Agreement

While the inclusion of investment obligations in the TPP should be a positive and important factor in investors’ decisions on whether to invest in a TPP member country, it will be but one of many factors (e.g., commercial and economic interests, identifying markets for growth, etc.). In addition, increases in investment flows resulting from a TPP Agreement will also depend upon issues such as the financial capacity of individual investors and their subsequent assessment of opportunity and risk, etc.

As Canada has established investment obligations (through FIPAs or FTAs) with many of the TPP member countries, any likely economic impact will be from existing and future Canadian investments into and from Australia, Brunei, Japan, Malaysia, New Zealand, Singapore and Vietnam. 

ii) Potential Environmental Impacts of the Economic Changes and Significance of these Impacts

Canada has a relatively open investment regime, balanced by a number of environmental laws and regulations in place to protect Canada’s natural environment and the wellbeing of Canadians. Respecting these laws and regulations can help investors reduce financial risk from environmental impacts. “An increasing number of investors have begun to factor environmental, social and governance issues into their decision-making. Investors can measure the unaccounted costs of business activities by putting a price on natural resources that power business but rarely show up on corporate balance sheets." Footnote15

The likelihood and significance of environmental impacts from new investment flows would be dependent on several factors including: the degree and amount of investment, the sectors of the investment, the type of investment, and any federal, provincial and territorial measures in place to protect the environment in relation to those activities. 

Given the above considerations, and information available at this time, minimal environmental impacts are anticipated as a result of increased investment through the TPP. However, further analyses are recommended to confirm this assumption.

iii) Enhancement and Mitigation Options

Foreign investors in Canada are bound by the same environmental regulations that govern the activities of domestic investors. As in all previous investment agreements, Canada is seeking provisions in the TPP Agreement to fully maintain its right to regulate in the public interest in sectors such as health, public education, social services and culture, as well as its right to protect the Canadian environment.

Canada’s approach is to negotiate into the substantive articles of the investment chapter, the flexibility necessary to protect legitimate public policy objectives, including providing adequate guidance to arbitrators in the case of a challenge.

Any environmental impacts that could result from the TPP, although not expected to be significant, would be mitigated by this policy flexibility and by existing laws and regulations which govern domestic and foreign investors alike. 

3) Limitations to the Qualitative Analysis

This Environmental Assessment is a “scoping” exercise that facilitates the forecasting and identification of potential environmental effects resulting from a TPP Agreement. It is developed to provide negotiators with an overview of the potential environmental impacts of the TPP Agreement. Accordingly, there are certain limitations to the analysis, which should be considered, when interpreting the results of this report:

  • The purpose of this analysis is not to assess the environmental impact of economic growth, but rather, of the potential economic activity and trade policy changes resulting from Canada’s TPP negotiations.
  • This qualitative analysis focuses on potential environmental impacts on Canada as a whole, and does not consider other distributional impacts experienced at the provincial/territorial and/or regional level.
  • Similarly, the report does not address global-scale environmental impacts, such as increases in greenhouse gases in, or affecting, other countries.
  • As Canada’s free trade negotiations with TPP members are still in progress, changes necessitated by a TPP Agreement may not be known until after negotiations conclude and the agreement enters into force.
  • The IEA addresses only the main issues covered in each of the TPP negotiating areas, as well as issue areas predominantly raised by the public during initial consultations.

VII. Environmental Sustainability Indicators

Along with federal, provincial and territorial legislation related to protecting the environment, Canada tracks its performance on key environmental sustainability issues including climate change and air quality, water quality and availability, and protecting nature as outlined in the Federal Sustainable Development Strategy (FSDS). As well, the Federal Government also works on monitoring of environmental issues, such as waste management, in support of sustainability. Areas of focus include:

Biodiversity: Conserving biodiversity and using biological resources in a sustainable manner are essential parts of Canada's effort to achieve sustainable development. The Canadian Biodiversity Strategy reaffirms that governments in Canada must create the policy and research conditions that will lead to the conservation of biodiversity and the sustainable use of biological resources. The Canadian Biodiversity Strategy, along with the complementary Biodiversity Outcomes Framework, guide action at all levels that will enhance the ability to ensure the productivity, diversity and integrity of natural systems and, as a result, the ability as a nation to develop sustainably.

Air Contaminants: Air pollution is a broad term applied to any chemical, physical, or biological agent that modifies the natural characteristics of the atmosphere. Examples include particulate matter and ground-level ozone. Air pollutants fall into four main categories: criteria air contaminants (e.g. SO2, NOx, volatile organic compounds), persistent organic pollutants (e.g. dioxins and furans), heavy metals (e.g. mercury) and toxins (e.g. benzene).

The federal government, along with other levels of government, industry, non-government organizations, and individuals have taken action to reduce emissions of harmful air pollutants from human sources. 

The Canadian Council of Ministers of the Environment (CCME) serves as a principal forum for collaboration on environmental strategies, norms, and guidelines. The recently approved Air Quality Management System (AQMS) is a comprehensive approach to reducing air pollution in Canada. It is the product of close collaboration by the federal, provincial, and territorial governments and stakeholders. The AQMS includes new Canadian Ambient Air Quality Standards, local air quality management by provinces in air zones, coordination of regional and transboundary issues through air sheds, and industrial emissions requirements for key sectors and equipment groups. It is currently in the implementation stage. 

Greenhouse Gases: The federal government is taking a sector-by-sector regulatory approach to reducing industrial greenhouse gas (GHG) emissions. The Government is aligning efforts with the United States where appropriate, given the integrated nature of our economies. Regulations are already in place for the transportation and coal-fired electricity sectors.

In the transportation sector, light duty vehicle regulations for model years 2011-2016 came into force in October 2011, and draft regulations for model years 2017 and beyond were published in December 2012. The final regulations are scheduled to be released in 2014. Regulations have also been finalized to reduce GHG emissions from new on-road heavy-duty vehicles and engines for model years 2014-2018. 

In September 2012 the Government of Canada released final regulations to reduce emissions from the coal-fired electricity sector. These will impose stringent standards on new coal-fired generation units and on units that have reached the end of their economic life. They come into effect on July 1, 2015 and will encourage the phase-out of traditional coal-fired generation and transition towards lower- or non-emitting types of generation.

The Government of Canada continues to work with other levels of government, industry and stakeholders to develop GHG regulations for the oil and gas sector, and other major-emitting industries. The federal government is focused on a realistic approach to GHG regulations that will reduce emissions while continuing to create jobs and encouraging the growth of the Canadian economy.

Waste: The principal method of waste disposal in Canada is landfilling complemented by a few municipal and hazardous waste incinerators and waste-to-energy facilities. Most waste in Canada is disposed of in engineered landfills, many of which capture or flare landfill gases. Canadian recycling rate has been on the rise since 2000 supported by a growing number of voluntary and regulated extended-producer responsibility programs covering products such as electronics, tires, used oils, pharmaceuticals, paints, pesticide containers, packaging, batteries, beverage containers, automotive products, etc. The management of organic waste in large scale facilities, using composting and anaerobic digestion technologies, is a new area of focus to reach higher diversion rates from landfills.

In Canada, the responsibility for managing and reducing waste is shared among the federal, provincial, territorial and municipal governments. The federal government, in particular, administers controls on the transboundary movements of hazardous wastes and hazardous recyclable materials in accordance with the Basel Convention and relevant OECD decisions on wastes. It also establishes best practices and implements measures, as needed, to manage the potential release of toxic substances during their life-cycle, including from end-of-life products and waste management activities.

The Canadian Council of Ministers of the Environment (CCME) is a forum where provincial, territorial and federal environmental authorities work together to develop policies, guidance and tools to advance the environmentally sound management of wastes in Canada and encourage waste minimization. For example, under the CCME, members have adopted the Canada-wide Action Plan on Extended Producer Responsibility, the Sustainable Packaging Strategy and guidelines for hazardous waste landfills. Together they continue exploring opportunities for collaborative solutions related to waste management.

Chemicals: Chemical substances are widely used to improve the quality of our lives and their presence can be observed in the environment and in living organisms. Most of these chemical substances are not harmful to the environment or human health.

The Government of Canada manages chemical substances of concern to protect human health and the environment through the Chemicals Management Plan. Canada’s Chemicals Management Plan was launched in 2006, and is jointly managed by Environment Canada and Health Canada. Chemical substances of concern are assessed and measures are put in place to eliminate or minimise potential risks of those found to be toxic. Monitoring and surveillance activities under Canada’s Chemicals Management Plan are national in scope, and are therefore discussed further below. 

National Monitoring and Tracking Programs: In addition to the initiatives outlined in specific areas above, Canada has established several ongoing monitoring programs for the environment. Ongoing monitoring and tracking programs provide valuable data and information about Canada’s performance on key environmental sustainability issues. 

These include, but are not limited to:

  • Monitoring and Surveillance Activities under Canada's Chemicals Management Plan – A key element of the Chemicals Management Plan is the monitoring and surveillance of levels of harmful chemicals in Canadians and their environment. Environmental and human biomonitoring and surveillance are essential to identify and track exposure to hazards in the environment and associated health implications.
  • National Pollutant Release Inventory (NPRI) – The NPRI is Canada's legislated, publicly accessible inventory of pollutant releases (to air, water and land), disposals and transfers for recycling.
  • Canadian Environmental Quality Guidelines  – The Guidelines have been established by the CCME to provide nationally endorsed science based goals for the quality of atmospheric, aquatic, and terrestrial ecosystems.
  • Canadian Environmental Sustainability Indicators (CESI)Footnote16 – This program provides data and information to track Canada’s performance on key environmental sustainability issues including climate change and air quality, water quality and availability, and protected nature. The environmental indicators are based on objective and comprehensive information and convey environmental trends in a straightforward and transparent manner. Indicators are added and updated throughout the year as new data become available.

These initiatives provide valuable data and information for tracking Canada’s performance on key environmental sustainability issues. They ensure that international, national, regional, and local trends are readily accessible and transparently presented to all Canadians and will continue to be used to track sustainability when the TPP is implemented.

CESI Nature Indicators:
http://www.ec.gc.ca/indicateurs-indicators/default.asp?lang=En&n=DC4B459E-1

CESI Air Quality Indicators
http://www.ec.gc.ca/indicateurs-indicators/default.asp?lang=en&n=7DCC2250-1

CESI National Greenhouse Gas Emissions
http://www.ec.gc.ca/indicateurs-indicators/default.asp?lang=en&n=FBF8455E-1

CESI Water Indicators
http://www.ec.gc.ca/indicateurs-indicators/default.asp?lang=En&n=13307B2E-1

CESI Release of Toxic Substances to Water
http://www.ec.gc.ca/indicateurs-indicators/default.asp?lang=en&n=3C4C1124-1

CESI Emission of Toxic Substances to Air
http://www.ec.gc.ca/indicateurs-indicators/default.asp?lang=en&n=51E75EF0-1

VIII. Environmental Cooperation

Canada is actively engaged in environmental cooperation activities with countries of the Trans-Pacific Partnership (TPP) region. These activities include various environmental agreements (negotiated in parallel to free trade agreements already in force), or other bilateral initiatives and multilateral mechanisms to collaborate on and address a number of environmental issues. A non-exhaustive list of these agreements and/or cooperative initiatives (by region and country) is detailed in Annex C. 

Recognizing that environmental issues transcend geographic boundaries, the Government of Canada will continue to work with its free trade partners to help strengthen national environmental management systems through mutual cooperation.

In this regard, Canada and the TPP members are working towards including a specific cooperation framework in the agreement to strengthen their capacities to protect the environment and to promote sustainable development.

IX. Conclusion of the Initial Environmental Assessment

Canada’s overall approach to trade and environment is to encourage economic development while supporting sustainable development. The reduction of trade barriers plays a key role in facilitating the exchange of environmentally friendly technologies and the establishment of investment rules that help create conditions for technology transfer. The identification of likely and important environmental effects of a proposed trade agreement enables negotiators to consider whether existing mechanisms, such as federal, provincial and territorial regulatory frameworks and environmental assessments of new development projects are sufficient to mitigate any identified impact, and to examine the need for any additional mitigation measures.

This Initial Environmental Assessment is part of the process, designed to ensure that negotiations of trade agreements include appropriate consideration of environmental impacts. The IEA is designed to scope out the main environmental issues likely to arise as a result of negotiations. To that end, this report assessed environmental impacts through qualitative and quantitative analyses (see Annex A) to help negotiators and the Canadian public better understand potential economic and environmental impacts from an agreement.

The qualitative analysis provided a brief overview of potential impacts in all negotiating areas, with a more detailed discussion of three key areas (Trade in Goods, Trade in Services and Investment) where impacts may be more likely. This qualitative analysis noted Canada’s extensive environmental regulatory framework, which is expected to help mitigate potential impacts and seek to ensure that increased economic activity, resulting from the agreement, would not jeopardize its commitment to sustainable development.

Similarly, the quantitative analysis (in Annex A) found that implementation of the TPP would marginally increase Canada’s greenhouse gas emissions, energy use, and water use.

In conclusion, based on available information, the environmental impact as a result of a TPP Agreement will likely be minor.

X. Annex A: Quantitative Analysis

Overview of Quantitative Findings

This quantitative analysis is to assess the environmental impact in Canada resulting from increasing trade and economic cooperation between Canada and other TPP members. The assessment was carried out based on the estimated economic impacts from the Computable General Equilibrium (CGE) modelFootnote17 . Specifically, the estimated output changes from the CGE-based economic analysis are linked to Statistics Canada’s Canadian System of Environmental and Resources AccountsFootnote18 and Environment Canada’s National GHG InventoryFootnote19 to assess the potential environmental change in Canada resulting from increasing trade and economic cooperation between Canada and other TPP members.

The environmental impact of the TPP is expressed in three categories of environmental indicators: greenhouse gas (GHG) emissions, energy use and water use. The environmental impact arising from expanding trade and economic cooperation under the TPP is further decomposed into three components: the scale, composition and technique effects. The scale effect relates the expansion in economic activities to environmental outcomes, and the composition effect links structural changes to environmental results. The technique effect represents on-going progresses of environmental quality in Canada independent of the TPP, resulting from an adoption of new environmental technology and better enforcement of environmental regulation during the implementation period of the TPP.

The economic modelling results show that Canada’s GDP (net value added) is expected to increase by 0.36 percent, while total output (including both net value added and intermediate inputs) would rise by 0.28 percent as a result of increasing trade and economic cooperation under the TPP. This expansion of economic activities is expected to generate new demand for Canada’s natural capital, which would have an effect on the environment in Canada. It is important to understand the extent of such an environmental impact and to assess whether appropriate measures to mitigate such an impact should be considered.

Based on the estimated measures of scale, composition and technique effects, the implementation of the TPP would marginally increase Canada’s GHG emissions, energy use and water use. Overall, GHG emissions would increase by 1,994 kilo tonnes via the scale and composition effects or 0.28 percent of Canada’s annual greenhouse gas emissions of 704,426 kilo tonnes of CO2 equivalent in 2008Footnote20. Further, during the period of the implementation of the TPP, the formation of new capital, measures in adopting new environmental technology and enforcement of environmental regulations captured by the technique effect is expected to reduce GHG emissions by 376 kilo tonnes. Hence, the resultant net increase in GHG emissions would only be 1,618 kilo tonnes, or 0.23 percent of total GHG emissions in Canada.

Total energy consumption is expected to increase by 40,608 terajoules via the scale and composition effects, which represents 0.38 percent of Canada’s energy use of 10,612,484 terajoules in 2008. Total energy usage under the TPP will further decrease by 3,998 terajoules via the technique effect. Therefore, the net increase in energy usage would be 36,610 terajoules, or 0.34 percent of total energy usage.

Total water use is expected to increase by 167.0 million m3 via the scale and composition effects, which represent 0.43 percent of Canada’s total water use of 38.8 billion m3 in 2009. The technique effect for water use is not available due to a lack of projected data for future years.

Overall, the potential negative impact on Canada’s overall environment arising from the Canada’s entrance into the TPP is expected to be minor.

Table 1: Summary of Environmental Impact
BaselineScale EffectComposition EffectTotal TPP-Induced EffectTechnique EffectTotal Effect 2020Total Effect 2020 (%)
GHG Emissions(kilo tonnes)704,4262,028-341,994-3761,6180.23
Energy Use (terajoules)10,612,48430,08310,52540,608-3,99836,6100.34
Water Use(millions of m3)38,80010958.1167N/A1670.43

A. Framework for the Quantitative Assessment

The assessment is carried out by using the estimated economic impact from the CGE model and linking the modelling results to the environmental indicators from Statistics Canada’s Canadian System of Environment and Resources Accounts and Environment Canada’s National GHG Inventory to assess the potential environmental changes under the TPP in Canada.

A1.The CGE model

The CGE model used for this analysis is the Global Trade Analysis Project (GTAP) Model developed by Purdue University. It is a static, multi-region, multi-sector, global trade model. The model is used to quantify the potential economic gains in trade between Canada and other TPP members under the TPP by comparing the economic performance in Canada and other TPP members before and after the implementation of the TPP. The model isolates the effect of trade policy change by netting out all other economic factors that also affect the economy such as macroeconomic fluctuations and exchange rate shifts. The database used for simulation is based on the Global Trade Analysis Project (GTAP) database version 8, which is benchmarked to 2007.

The modelling develops a baseline scenario and a liberalization scenario for which GDP, trade flows, and output changes are evaluated.

Baseline scenario – Outlines the likely economic circumstance in the absence of Canada entering the TPP.

Liberalization scenario– Assumes full elimination of protection in goods trade for all industrial and agricultural sectors including all tariffs and tariff-rate quotas among all TPP members without prejudice to negotiating outcomes. Use of a full liberalization scenario for goods affords analysis of maximal impacts. A services liberalization scenario is also employed without prejudice to final outcomes with the objective of enabling an assessment of potential impacts.

A2.The Environmental Indicators

The environmental indicators used for the analysis include GHG emissions, energy use and water use. The analysis examines the impact of liberalized trade and expanded economic cooperation between Canada and other TPP members under the TPP on these environmental indicators within Canada based on the direct intensity coefficients for GHG emission and energy use and water use obtained from Statistics Canada and Environment Canada. With respect to GHG emissions, the analysis considers both the 2008 level and direct intensity of 3 main GHGs: carbon dioxide (CO2), methane (CH4) and nitrous oxide (N<sub>2</sub>O). The measured level of emissions is in kilo tonnes of carbon dioxide equivalent (kt CO2 eq.) and the intensity is measured in kilo tonnes of carbon dioxide equivalent per million dollars of production output (kt CO2 eq./$1,000,000). The emissions sources consist of 10 different fuel types: coal, natural gas (excl. liquefied), motor gasoline, aviation fuel, diesel oil, light fuel oil, heavy fuel oil, liquid petroleum gases (incl. natural gas), electric power and coke.

Concerning energy use, the analysis is based on both the 2008 level and direct intensity of energy use associated with the production of a group of products including coal, natural gas (excl. liquefied), motor gasoline, aviation fuel, diesel oil, light fuel oil, heavy fuel oil, liquid petroleum gases (incl. natural gas), electric power, and coke. Energy has been measured in terajoules (TJ), and the intensity is measured in terajoules per million dollars of production output (TJ/$1,000,000).

In terms of water use, the basis is the volume of water use, measured in thousands of cubic metres. Water use intensity is measured in cubic metres per dollar of production output dated in 2007, which is the latest information currently available at the sector level.

A3.Evaluation Methods

Three separate mechanisms are used to assess how a change in trade policy can affect the level of pollution and the rate of depletion of natural resources: scale, composition and technique effects.

The scale effect occurs if there is an expansion of economic activity and if the nature of that expansion remains unchanged, the total level of air contamination, water, and energy use must increase.

A composition effect captures the change in emission and depletion resulting from the shift in the industrial structure of the economy as a result of trade policy change. When trade is liberalized, countries expand economic activities to a greater extent in the sectors in which they enjoy comparative advantages and specialization. The net effect of the structural adjustment on the levels of pollution, water use, and energy use depends on whether pollution-intensive, water-intensive and energy-intensive activities expand or contract. Thus, the composition effect on the environment resulting from trade policy change is ambiguous and can only be assessed empirically. 

Finally, a technique effect is measured because production output may not be produced by exactly the same methods subsequent to trade liberalization as it was prior to liberalization. In order to be fully assessed, the environmental impact of the TPP needs to be examined not only on the basis of the environmental technologies and regulations in existence, but also on the basis of the technological evolution that will have occurred during the implementation of the agreement. For example, emissions per unit of production output can decrease for the following reasons:

Higher energy prices induce an adoption of energy efficiency and conservation measures;

New capital formation during the period of the implementation of the TPP agreement would result in a lower emission level than the existing capital stock as new capital is typically cleaner and more efficient than existing capital stock;

Increased trade will also facilitate the transfer of modern and clean technologies among trading partners, which will reduce the cost of such technologies and increase their availability. This would help to reduce harmful emissions and improve energy and water conservation; and

The development of more stringent pollution standards and greater enforcement of existing anti-pollution laws and regulations may also lead to better environmental outcomes.

It should be noted, however, with respect to the above, that the model employed for this analysis does not consider endogenous technological progress, and that based on the benchmark year, results are adjusted to reflect the business-as-usual changes in intensities over the period to 2020.

Overall, the net impact of the TPP on the environment in Canada is determined by the three competing mechanisms with each having its own unique value: the scale effect (negative impact), the composition effect (ambiguous impact), and the technique effect (positive impact). The scale and technique effects tend to work in opposite directions, while the composition effect depends on whether emission-intensive sectors expand and shrink. The overall impact of trade will depend on the magnitude or strength of each of these three effects.

A4.Limitations on Economic and Environmental Modelling

The modelling results should be considered in the context of both the advantages and limitations of the model. Several cautionary notes are provided concerning the interpretation of the reported environmental impacts.

Quantitative assessment of the environmental impact of the TPP is undertaken based on the estimated economic impact. Consequently, the environmental assessment conducted in this report inherits some limitations of economic modelling.

First, while the economic modelling analysis is a useful estimation tool, all economic models, by definition, represent a simplification of reality and rely on numerous assumptions. Therefore, the results presented should be viewed as complementing the qualitative analysis of benefits from Canada’s entrance into the TPP.

Second, the economic assessment is best understood as estimates of potential economic impact of the TPP, not as forecasts of the actual results. It isolates the trade policy impact by netting out all other macroeconomic influences such as economic growth and exchange rate fluctuations.

Third, economic modelling assumes full elimination of tariff barriers for all industrial and agricultural products, without prejudice to final outcomes. This scenario affords analysis based on the maximum impacts of the agreement.

Fourth, the economic model captures only the expansion of trade in products already traded in the bilateral relationship, and cannot predict the creation of trade in new product areas, which is particularly important as the objective of the deal is to reduce barriers to trade among the partner countries.

Fifth, the economic model used only allows for analysis of gains from liberalization in goods and services trade, and does not include gains from liberalization and enhanced economic cooperation in other areas (investment being a key example due to the data limitation).

Sixth, it should be noted that the modelling is a “point in time” analysis, with results reflective of the current reality. Projected outcomes are subject to change in the context of developments in global trade policy. 

With respect to the environmental modelling, there are some cautionary notes concerning the interpretation of estimation results. 

First, the report provides an assessment of the environmental impact resulting from increasing economic activities under the TPP, but it fails to capture direct emissions in Canadian households resulting from changes in the consumption pattern as a result of Canada entering the TPP because the economic modelling reports the changes in the production pattern only. 

Second, this study separates economic modelling from environmental modelling. The shortfall of this approach is that it fails to take into account the change in emission intensity (emission per unit of output) that could result from Canada entering the TPP. The pre- and post-TPP emission intensity may not be the same. The removal of barriers could affect firms’ choices of production inputs (domestic vs. foreign or less fuel efficient vs. more fuel-efficient), resulting in different emission intensity.

Third, the technique effect reported in this study represents the on-going progress of environmental quality in Canada independent of the TPP. This technique effect is different from the feedback effect (sometimes also called “the technical effect” in the environmental assessment literature) in the sense that the improvement in income as a result of the TPP could translate into greater demand for environmental quality, leading to lower emission intensity. However, there is no compelling reason to believe that such a ”technical effect” (or feedback effect) would be significant given the limited income gains under the TPP relative to the size of the Canadian economy.

Fourth, the results of the environmental modelling reflect the impacts based on the three indicators used in the analysis, and might not capture the breadth of environmental issues that could occur as a result of the TPP, including positive environmental impacts that could accrue from successful conclusion of a TPP agreement.

B. Simulation Results

B1.GDP impacts

The economic modelling results suggest that Canada’s GDP gains from joining the TPP would amount to US$6.5 billion (2012 prices), or a 0.36 percent increase in GDP.  

B2.Trade impacts

Two-way bilateral trade of goods and services between Canada and other TPP members is expected to expand by US$7.8 billion (2012 prices), or 1.17 percent; of which US$6.1 billion comes from an increase in merchandise trade and US$1.7 billion comes from an increase in services trade.

Canada’s total exports to other TPP countries are expected to grow by 0.93 percent or US$3.3 billion from the pre-agreement level of US$358.8 billion; while imports from other TPP countries would grow by 1.44 percent or US$4.5 billion from the pre-TPP level of US$309.8 billion.

B3.Output Impact

The prospective shift in the trade pattern under the TPP would give rise to a reallocation of resources across sectors according to each country’s comparative advantages and specialization. It is those changes in output at the sector level that will serve as a basis for the TPP’s environmental impact assessment presented below.

Using the 2008 output data from Statistics Canada, the analysis applied the percent changes in output reported to obtain the post-liberalization output for each sector of the Canadian economy. Overall, total Canadian production or output is projected to increase by 0.28 percent or US$8.5 billion in 2008 prices.

C. Results of the Environmental Assessment

C1. Greenhouse Gas (GHG) Emissions

To determine the GHG emissions that result from the TPP, the actual 2008 direct intensity of carbon dioxide (CO2) equivalent was applied to the changes in Canadian output between the pre- and post-TPP periods for the goods and services sectors. The final outcome of emissions in Canada as a result of the TPP would be a mixed result of changes in the industrial composition (the composition effect) and an expansion of economic activities (the scale effect).

Here, the scale effect is calculated by comparing the differences in GHG emissions between pre- and post-TPP periods holding the structure of the Canadian economy at the pre-TPP level. The estimated results show that the expansion of economic activities in Canada under the TPP leads to a net increase in CO2-equivalent emissions by 2,028 kilo tonnes via the scale effect.

The composition effect is calculated by comparing the differences in GHG emissions between the pre- and post-TPP periods holding the level of economic activities at the pre-TPP level. The net composition effect of the TPP is negative, which means that the TPP would bring about a favourable structural change, resulting in a reduction in GHG emissions in Canada by 34 kilo tonnes. This reduces the total GHG emissions from 2,028 kilo tonnes (based on the scale effect calculation) to 1,994 kilo tonnes. Compared to Canada’s annual GHG emissions of 704,426 kilo tonnes of CO2 equivalent in 2008, the increase in emissions under the TPP represents only 0.28 percent of total GHG emissions in Canada. Therefore, the potential negative impact arising from the TPP on Canada’s overall environment would be minor. 

Finally, it is important to consider the technique effect that represents a general upward trend of environmental quality in Canada, which is independent of the TPP. This is a result due to an adoption of better environmental technology and better enforcement of environmental regulation and increase in trade in environmentally-friendly products and technologies over the implementation period of the TPP. As a consequence of these changes, the emission intensity measured by the amount of pollution generated per unit of output would decrease. Failure to take into account this technique effect would overstate the environmental impact of the TPP.

This study uses the projected GHG intensity provided by Environment Canada from 2008 to 2020, based on 2010 data, to determine how the technique effect could mitigate the potential negative impact of the TPP on the environment in Canada.Footnote21 The projected emission intensities in 2008-2020 are from Environment Canada's Energy-Economy-Environment Model for Canada (E3MC).Footnote22 By applying the projected emission intensity to the estimated output changes under the TPP, it can be seen that the technique effect has a positive impact on the environment in Canada by reducing GHG emissions by 376 kilo tonnes.

Overall, the TPP is expected to increase Canada’s overall GHG emissions due to the scale effect. The overall GHG effect of the TPP could be decomposed as follows: a scale effect of 0.28 percent, a composition effect of -0.005 percent and a technique effect of -0.05 percent, resulting in a net increase in emissions of 0.23 percent (or 1,618 kilo tonnes).

C2. Energy Use

The total energy use in Canada as a result of the implementation of the TPP would increase by 30,083 terajoules via the scale effect. As trade between Canada and other TPP members becomes freer, the Canadian production pattern shifts, which, in turn, could have an effect on the energy use in Canada (the composition effect). The estimation results show that the shift in Canada’s production would increase the energy use by 10,525 terajoules, which would raise the total energy use from 30,083 terajoules to 40,608 terajoules. This net increase in energy usage represents 0.38 percent of Canada’s total energy usage of 10,612,484 terajoules in 2008. Therefore, the potential negative impact arising from the implementation of the TPP on Canada’s total energy usage would be minor.

This study used the data provided by Environment Canada from 2008 and 2020Footnote23 to determine the technique effect that would accrue from the expanded economic activities under the TPP. The projected energy usage for 2020 is based on estimated intensity for energy usage from Environment Canada's Energy–Economy–Environment Model for Canada. The estimation shows that technological improvements in energy conservation would bring a marginal decrease in energy usage of 3,998 terajoules.

Overall, the three effects, considered separately, bring about the following impacts on energy use in Canada: a scale effect of 0.28 percent, a composition effect of 0.10 percent and a technique effect of -0.04 percent. The total effect of the TPP on Canadian energy use is relatively small, accounting for 0.34 percent of total energy use (36,610 terajoules).

C3.Water Use

For the water use, the key data sources come from Statistics Canada’s ‘Water use in Canada, by sector’ that provide measures of water use required for per unit of economic output. Here, water use refers to the water use for agricultural, industrial and municipal purposes including irrigation in agriculture, rain in agriculture and forestry and hydroelectric power generation.

The increasing economic activity resulting from the TPP would raise Canada’s total annual water use by 167 million m3 of water. This increase represents a 0.43 percent of Canada’s annual water use of 38.8 billion m3. The total water use for the Canadian economy would increase by 108.9 million m3 via the scale effect and 58.1 million m3 via the composition effect as a result of the TPP.

The technique effect for water use could not be calculated due to the absence of projected data. The water use for the whole economy is thus characterized by a scale effect of 0.28 percent and a composition effect of 0.15 percent for a total overall increase of 0.43 percent (167.0 million m3).

Conclusion

According to quantitative analysis of available data, as measured by GHG emissions, energy use, and water use, the overall environmental impact on Canada from entry into the TPP is expected to be minor.  

XI. Annex B: Trade Figures Across TPP Member Countries

Table 1: GDP, Population, and Bilateral Trade with World
CountryGDPNote 1 (Billions US$)PopulationNote 2 (Millions)Exports to WorldNote 3 (Millions US$)Imports from WorldNote 3 (Millions US$)

Notes

Note 1

1. Source: IMF World Economic Outlook Database, 2011

Note 1

Note 2

2. Source: World Bank Developmental Indicators, 2011

Note 2

Note 3

3. Source: Global Trade Atlas, 2012.

Note 3

United States15,075.7311.61,545,708.52,275,319.8
Japan5,897.0127.8798,447.2885,838.1
Canada1,781.134.5454,690.9462,351.6
Australia1,490.522.3256,754.9250,706.7
Mexico1,158.3119.4370,890.1370,746.2
Malaysia287.928.8227,617.0196,813.7
Singapore265.65.2408,621.2379,935.4
Chile251.017.376,791.270,566.0
Peru178.529.645,498.242,546.1
New Zealand161.84.437,309.636,340.5
Vietnam (2010)122.787.872,236.784,838.6
Brunei (2006)16.40.47,636.11,676.2
TPP-12 Total26,686.6789.14,302,201.65,057,678.8
World70,220.66,965.916,603,271.615,742,662.1
Share of TPP (%)38.011.325.932.1
Table 2: TPP Member’s Bilateral Trade, Millions US$ 2012
CountryExports to Other TPP CountriesNote 1Imports from Other TPP CountriesNote 1

Notes

Note 1

1. Trade flows include trade with Japan.  Source: Global Trade Atlas

Note 1

United States689,063.1843,190.3
Japan236,225.7227,700.1
Canada360,480.3287,786.9
Australia84,595.291,192.2
Mexico307,351.8223,123.2
Malaysia95,332.474,427.2
Singapore123,990.1113,740.0
Chile23,554.024,126.4
Peru14,731.613,669.7
New Zealand16,681.816,195.0
Vietnam (2010)30,457.122,915.7
Brunei (2006)4,243.31,076.7
Total TPP-121,986,706.41,939,143.5
Table 3: Canada’s Trade with TPP-12 by Industry, Millions US$ 2012
IndustryCanada Exports to TPP-12Canada Imports from TPP-12
Agriculture28,346.221,243.6
Timber & Forestry7,726.02,179.3
Fishing & Seafood1,316.6503.6
Mining5,270.44,446.8
Oil & Gas82,483.65,998.8
Manufacturing235,337.5253,414.8
Total360,480.3287,786.9

Notes

Source: Global Trade Atlas. Physical resources are included in mining (coal, raw minerals) and oil & gas, and manufactured resource products under manufacturing. Manufactured products from the resource sector include such items as paper products, leather bags, chemical/rubber/plastic products, iron/steel products, etc. Categories are based on the HS06 level from the GTAP modelling software used at DFATD.

XII. Annex C: Environmental Cooperation Initiatives with TPP Countries

The following is a non-exhaustive list of regional and bilateral agreements and initiatives, including international cooperation at various levels of government.

Southeast Asia and Oceania

In Vietnam, DFATD has a support program to respond to Climate Change in Vietnam.Footnote24

In cooperation with Australia, and headquartered at Dalhousie University, the Ocean Tracking NetworkFootnote25 is the world's most comprehensive study of marine life and ocean conditions. The project, monitored by the Science and Technology Division of the Department of Foreign Affairs, Trade and Development (DFATD), has engaged marine scientists working in all of the world's oceans. The Ocean Tracking Network was launched in several areas around Australia in 2012. Additional Pacific Ocean sites will be implemented in the future.

In cooperation with the National Industrial Chemicals Notification and Assessment Scheme of the Department of Health and Ageing of Australia, Health Canada and Environment Canada are working together to enhance technical cooperation and share Information on industrial chemicals. The key objectives are to gain efficiency in new and existing industrial chemicals reviews, enhance knowledge of risk assessment and risk management practices, share operational experience to strengthen regulatory capacities and harmonisation where appropriate with the aim of protecting human health and the environment. 

The 12th Canada-Japan Joint Committee on Science and Technology (JST), in accordance with the Canada-Japan S&T Agreement and coordinated by DFATD on the Canadian side, expanded research cooperation in January 2013 to include arctic research, advanced energy and environment technologies, as well as initiatives in the mining and natural resources sector. In 2013, Canada hosted a bilateral mining and natural resources workshop, and Japan hosted a sustainable energy workshop ahead of the 3rd call for proposals under the NSERC-JST MOU (Natural Sciences and Engineering Research Council-Joint Committee on Science and Technology Memorandum of Understanding).

In February 2012, following the NSERC-JST MOU on renewable energy, a bilateral Canada-Japan workshop on clean energy research took place in Vancouver. The workshop brought together top energy researchers from across Canada and Japan and focused on bioenergy, hydrogen and fuel cells, as well as photovoltaics, solar cells, and net-zero energy buildings.

Latin America

In Peru, DFATD is improving environmental management of mining and energy activities; ensuring sustainable and efficient management of Peru's energy resources; preventing conflicts over the use of natural resources; and enhancing the development impact of extractive industries.Footnote26

Under the Canada-Peru Environment Agreement, recent or ongoing cooperation has included activities related to environmental enforcement, migratory birds conservation, pollutant release and transfer registries, contaminated sites management, development of government-supported climate mitigation actions in the housing sector, development and implementation of long term strategies for replacing traditional cook stoves with cleaner and efficient units, and support for the development of criteria and guidelines and capacity improvement to facilitate integration of climate change adaptation criteria into public investment projects in Peru. This Agreement is coordinated by Environment Canada on the Canadian side.

Under the Canada-Chile Agreement on Environmental Cooperation, recent or ongoing cooperation has included activities related to environmental enforcement, environmental effects monitoring and regulation in the pulp and paper sector, invasive species, migratory birds conservation, contaminated sites management, national parks leadership, ecological restoration of protected areas to enhance resilience to climate change effects in Chile, climate change mitigation in Chile’s waste sector, and assessing the climate mitigation impact of soil conservation practices. Environment Canada is the lead department on the Canadian side for this bilateral Agreement.

In 2012, the Government of Québec and the Government of Chile signed a complementary protocol to the 2002 Québec-Chile cooperation agreement, enabling the pooling and development of know-how and technology in order to meet common objectives pertaining to the environment, sustainable development and the fight against climate change. Canada-Chile Cooperation in Mining: With respect to mining, Canada has a history of cooperation with Chile under the 2008 MOU for Sustainable Development in Mining. This MOU was intended to help reduce the environmental footprint of mining through the study and exchange of best practices in the areas of corporate social responsibility, natural resource governance, sustainable mining, and community engagement. NRCan (Natural Resources Canada) is the lead on the Canada-Chile MOU on Sustainable Mining.

Canada-Chile Cooperation in Environmental Health: Since 2003, Health Canada is providing technical support to the National Environmental Commission of Chile to build capacity in measuring health effects of air pollution and adopting effective air pollution mitigation strategies. Activities included the development of assessment methods, trend analysis of major health risks of air pollution; measurement of the effectiveness of air pollution mitigation strategies including cost-benefit analysis; development of air quality monitoring indicators and its implementation etc. Health Canada also collaborates with the Universidad de Chile in examining differential toxicity of particulate matter and the distribution of risk across populations.

Canada and Chile signed a Memorandum of Understanding (MOU) for Cooperation in Science, Technology and Innovation in June 2008. It is championed by Canada’s Department of Foreign Affairs, Trade and Development and Chile’s Ministry of Foreign Affairs. The MOU is intended to expand and deepen cooperation in science, technology, and innovation through joint projects; the exchange of institutional experience and researchers; and research and development cooperation. In 2011, a Joint Implementation Committee was established to provide strategic direction for the implementation of the MOU. The committee met for the first time in Ottawa in October 2011. The 2nd meeting of the Joint Implementation Committee was held in Santiago on March 18-19, 2013. During this meeting, the committee agreed to make an effort to: improve mutual understanding of existing funding mechanisms and identify complementarities; enhance the visibility of the bilateral S&T relationship; and to advance and expand collaboration in existing as well as new priority areas. The following themes for focus were agreed upon: (i) Public Health, including cancer and aging (ii) Sustainable Economic Development, including aquaculture, biofuels, and mining; and (iii) Higher Education and Young Researcher mobility.

Canada and Chile also collaborate on a number of bilateral science and technology activities on the margins of the S&T MOU. This cooperation involves public and private stakeholders and includes several areas such as: astrophysics and astronomy; the effects of climate change on glaciers; rural community water conservation and institutional adaptation to climate change; the sequencing of the Atlantic salmon genome; the early detection of lung cancer; and, the production of second generation biofuels from forest products.

United States

In the area of Ocean Science, Ocean Networks Canada (ONC) is a world-leading organization supporting ocean discovery and technological innovation. Based at the University of Victoria in British Columbia, ONC operates an ocean observatory as a national research platform focused on energy, marine conservation, marine hazards and ocean health. ONC is collaborating with the University of Washington in the United States to develop a linked system to share data along the Pacific Northwest coast of North America.Footnote27

As part of the Joint Action Plan for the Regulatory Cooperation Council,Footnote28 Health Canada continues to work with counterparts at the US Occupational Safety and Health Administration to align implementation of common classifications and labelling requirements for workplace hazardous chemicals. Through coordinated implementation of the Globally Harmonized System of Classification and Labelling of Chemicals (GHS) with the US, Canada will enhance the protection of worker health and safety, facilitate international trade and reduce costs to businesses and consumers. Health Canada and the US OSHA recently signed a Memorandum of Understanding, which allows OSHA and Health Canada to collaborate on implementing the GHS in their respective jurisdictions, as well as any future developments of the GHS. Other areas of environmental collaboration under the RCC include air quality, regulatory oversight of nanotechnology and nanomaterials, among other initiatives involving Environment Canada and other federal departments.Footnote29

In the area of standard development, Health Canada is working with the American National Standards Institute (ANSI) – Acoustical Society of America (ASA) including Technical Committee S12 on Noise, and the Technical Committee N13.39 on Design of Internal Dosimetry Programs. Technical committee on noise addresses standards, specifications and terminology in the field of acoustical noise pertaining to methods of measurement, evaluation, and control – including biological safety, tolerance, comfort, and physical acoustics – as related to environmental and occupational noise. Technical committee on internal dosimetry provides general policies and the framework for the design and implementation of an acceptable internal dosimetry component of a radiation protection program. As member of these Committees, Health Canada staff review and comment on standards upon request. 

AAFC and the US Department of Agriculture have a long history of bilateral cooperation on agri-environmental issues including: evaluation of the impacts of beneficial management practices; water quality and drainage; use of earth observation in agricultural monitoring and improved soil information; and, agroforestry. This cooperation occurs informally and also under more formal frameworks such as the Memorandum of Understanding (MOU) signed in 2012 between the AAFC and USDA on Cooperation Regarding Temperate Agroforestry Systems in Agricultural Landscapes. For example, this MOU provides for collaborative activities including advancing agroforestry science and tools for climate change mitigation and adaptation in temperate North America.

The Canadian Technology Accelerator (CTA) initiative is led and implemented internationally by DFATD to provide Canadian companies with access to entrepreneurial resources and contacts that can help them grow and compete internationally. The CTAs make available free office space to Canadian technology companies seeking to establish linkages within the leading technology clusters across the United States. There are now seven physical CTAs in key clusters in the US, as well as one virtual CTA to address the specific needs of Cleantech companies. CTAs help Canadian companies grow faster and thrive by providing support in the areas of business model development, networking, intelligence collection, identifying sources of financing, and client acquisition.  

The Government of Québec has signed a number of environmental cooperation agreements with US state governments, related to water and lake management (New York, Vermont), and with California, on Harmonizing and Integrating Cap-and-Trade Programs for Reducing Greenhouse Gas Emissions (2013).

North American Initiatives

Under the North American Agreement on Environmental Cooperation between Canada, the United States and Mexico, the Commission for Environmental Cooperation (CEC) set an ambitious cooperation agenda for 2011-2012 that focused on three key environmental priorities including Healthy Communities and Ecosystems, Climate Change – Low-Carbon Economy and Greening the Economy in North America. Projects developed under these priority areas include activities related to the management of chemicals, enhancing environmental law enforcement, engaging communities in marine conservation, green construction, carbon storage and emissions inventories among others. A full summary of these projects is available on the CEC website.Footnote30

Canada, Mexico and the United States have also been cooperating in monitoring drought conditions across the continent for over 10 years. The North American Drought Monitor (NADM) is one component of a Memorandum of Understanding between the United Stated National Oceanic and Atmospheric Administration (NOAA) and Environment Canada (EC) on Collaboration on Weather, Climate and Other Earth Systems for the Enhancement of Health, Safety and Economic Prosperity. AAFC has the lead for Canada on drought monitoring, and the NADM has been recognized as a model for collaboration and performance within this North American partnership. In 2012, Canada, Mexico and the United States developed the North American Climate Services Partnership (NACSP), a trilateral effort to facilitate the exchange of information, technology and management practices related to the development of climate information and the delivery of integrated climate services for North America. Environment Canada is the departmental lead on this initiative and AAFC continues to lead on the drought monitoring aspect.

Under the Canada-Mexico Partnership, cooperation of the Environment sub-group has involved ongoing policy dialogue and focused collaborative efforts on results-oriented activities on mutual climate change priorities, in particular capacity building and clean technology projects in cooperation with the private sector. Recent projects have dealt with landfill gas and waste management, low-carbon housing, mitigation of emissions from the oil and gas sector, and greenhouse gas emissions inventory reporting.

XIII. Annex D: Acronyms and Abbreviations

AAC – allowable annual cut

AAFC – Agriculture and Agri-Food Canada

CDIA – Canadian Direct Investment Abroad

EA – Environmental Assessment

EAAG – Environmental Assessment Advisory Group

EC – Environment Canada

FDI – Foreign Direct Investment

FIPA – Foreign Investment Promotion and Protection Agreement

FTA – Free Trade Agreement

GATS – General Agreement on Trade in Services

GDP – Gross Domestic Product

GTAP – Global Trade Analysis Project

IP – Intellectual Property

IT – Information Technology

JST – Joint Committee on Science and Technology

MFN – Most Favoured Nation

MOU – Memorandum of Understanding

NAFTA – North American Free Trade Agreement

NSERC – Natural Sciences and Engineering Research Council

ONC – Ocean Networks Canada

P/T – Provincial/Territorial

SMEs – Small and Medium Sized Enterprises

SPS – WTO Agreement on the Application of Sanitary and Phytosanitary Measures

S&T – Science and Technology

TPP – Trans-Pacific Partnership

WTO – World Trade Organization

Footnotes

Footnote 1

Updated March 2014. Other GDP and trade figures in this report reflect data used at the time of analysis, and will be updated for the Final Environmental Assessment where appropriate.

Return to footnote 1 referrer

Footnote 2

Framework for the Environmental Assessment of Trade Negotiations, 2011:

http://www.international.gc.ca/trade-agreements-accords-commerciaux/env/framework-cadre.aspx

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Footnote 3

Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals, 2010: http://www.ceaa.gc.ca/default.asp?lang=En&n=B3186435-1

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Footnote 4

Handbook for Conducting Environmental Assessments of Trade Negotiations, 2008: http://www.international.gc.ca/trade-agreements-accords-commerciaux/env/handbook-guide.aspx?lang=eng

Return to first footnote 4 referrer

Footnote 5

Recent consultation activity related to EAs of trade negotiations is available on the DFATD website: http://www.international.gc.ca/trade-agreements-accords-commerciaux/consultations/ea-ee.aspx?lang=eng

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Footnote 6

For the purpose of this environmental assessment, “environment” refers to the components of the earth, which includes: land, water, and air (all layers of the atmosphere); all organic and inorganic matter; living organisms; and, the interacting natural systems that include components of the foregoing.

Return to first footnote 6 referrer

Footnote 7

Notice of Intent to Conduct a Strategic Environmental Assessment of the Trans-Pacific Partnership Negotiations: http://gazette.gc.ca/rp-pr/p1/2012/2012-12-01/html/notice-avis-eng.html#d103

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Footnote 8

CDIA data for 2012 does not include Brunei due to the confidentiality of the information.

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Footnote 9

FDI data for 2012 does not include Brunei, Mexico, Peru, or Vietnam due to the confidentiality of the information.

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Footnote 10

The following document provides further information on Canada’s invasive alien species strategy:  http://www.ec.gc.ca/eee-ias/98DB3ACF-94FE-4573-AE0F-95133A03C5E9/Final_IAS_Strategic_Plan_smaller_e.pdf.

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Footnote 11

Malaysia, Vietnam, Singapore and Brunei are not members of the RFMOs in which Canada is a member.  Malaysia is a member of Indian Ocean Tuna Commission (IOTC), but Canada is not. Singapore has committed to implement the Catch Documentation Scheme (CDS) in The Commission on the Conservation of Antarctic Marine Living Resources (CCAMLR), and so has Canada (but not yet ratified). Source: Department of Fisheries and Oceans (http://www.dfo-mpo.gc.ca/international/dip-rfmo-eng.htm)

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Footnote 12

Source: http://www.nrcan.gc.ca/forests/canada/13161

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Footnote 13

Source: http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/eu-ue/initialEA-ceta-aecg-EEinitiale.aspx?lang=eng&view=d#Exec

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Footnote 14

See, for example: Petri, P.A., Plummer, M.G., and Zhai, F. “The Trans-Pacific Partnership and Asia-Pacific Integration: A Qualitative Assessment”. East-West Center Working Papers, Economics Series, No. 119 (2011). http://www.eastwestcenter.org/publications/trans-pacific-partnership-and-asia-pacific-integration-quantitative-assessment

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Footnote 15

Report by PRI Association and UNEP Finance Initiative, Universal Ownership Why environmental externalities matter to institutional investors, October 2010: http://www.unpri.org/viewer/?file=files/6728_ES_report_environmental_externalities.pdf

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Footnote 16

http://ec.gc.ca/indicateurs-indicators/default.asp?lang=En

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Footnote 17

Economic modelling for the TPP economic impact analysis was carried out by the Office of the Chief Economist at Foreign Affairs, International Trade and Development Canada.

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Footnote 18

Canadian System of Environmental and Resources Accounts: http://ww.statcan.gc.ca/imdb-bmdi/5115-eng.htm

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Footnote 19

Canada’s GHG Inventory: http://www.ec.gc.ca/ges-ghg/default.asp?lang=En&n=83A34A7A-1

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Footnote 20

2008 is the latest data available from Statistics Canada for GHG emissions and Energy Use. 2007 is the latest data available from Statistics Canada for Water Usage.

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Footnote 21

The scope of emission measurements from Environment Canada is broader than that by Statistics Canada. Environment Canada’s emission indicators include 6 GHGs: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), sulphur hexafluoride (SF6), perfluorocarbons (PFCs), and hydrofluorocarbons (HFC), while Statistics Canada GHG indicator include only the first three. Further, emission intensity reported by Statistics Canada is higher than that reported by Environment Canada. This is due to the fact that transportation-related emissions in each sector are included in the specific individual industrial sectors, while Environment Canada’s data groups them all in the transportation sector.

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Footnote 22

Environment Canada’s Greenhouse Gas Emissions Forecasting: http://www.ec.gc.ca/default.asp?lang=En&n=3B8552D4-1&xml=3B8552D4-3B91-4EE0-863B-C5D72EB83F42&offset=4&toc=show

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Footnote 23

Represents forecast based on historical data

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Footnote 24

http://www.acdi-cida.gc.ca/acdi-cida/acdi-cida.nsf/eng/NAD-99144921-Q3W

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Footnote 25

www.oceantrackingnetwork.org

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Footnote 26

http://www.acdi-cida.gc.ca/CIDAWEB/cpo.nsf/vLUWebProjEn/B01709D7F1049E0385257AED003B1640?OpenDocument
http://www.acdi-cida.gc.ca/CIDAWEB/cpo.nsf/vLUWebProjEn/4AD724164EABC4AD852579D20035A853?OpenDocument
http://www.acdi-cida.gc.ca/CIDAWEB/cpo.nsf/vLUWebProjEn/6FF7BF05846B04D18525794C00375167?OpenDocument
http://www.acdi-cida.gc.ca/CIDAWEB/cpo.nsf/vLUWebProjEn/1E9EAB690559068A852576EE003721DC?OpenDocument

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Footnote 27

More information: http://www.interactiveoceans.washington.edu/story/Ocean+Observing+in+the+NE+Pacific.

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Footnote 28

http://www.actionplan.gc.ca/en/page/rcc-ccr/2012-progress-report-leaders

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Footnote 29

http://www.actionplan.gc.ca/en/page/rcc-ccr/2012-progress-report-leaders#Environment

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Footnote 30

http://www.cec.org/Page.asp?PageID=751&SiteNodeID=1008&BL_ExpandID=155

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