Environmental Assessment of Trade

Frequently Asked Questions (FAQ)

General Questions

Why conduct an EA of trade and investment negotiations?

  • EAs assist Canadian negotiators in the integration of environmental considerations in the negotiating process by providing information on the environmental impacts of the proposed trade agreement.
  • EAs of trade negotiations help the Government to pursue mutually supportive trade and environmental policies by identifying potential negative and positive environmental impacts on the Canadian environment when the negotiations are concluded.
  • EAs of trade negotiations are a tool to respond to public concerns about the environmental impacts of trade. Communications and consultation are integral to our EA of trade activities.
  • EAs of trade negotiations are also in keeping with the Government of Canada’s commitment to sustainable development as they examine economic and environmental implications of the negotiations in a concurrent fashion.

What guides the environmental assessment of trade and investment negotiations?

  • Environmental assessments of trade and investment negotiations are guided by the 2001 Framework for Conducting Environmental Assessments of Trade Negotiations.
  • A detailed handbook was developed to provide more pragmatic guidance for those that are conducting EAs of trade and investment negotiations. This is updated as we learn more about this challenging and relatively new area of work.
  • These documents are available on DFATD’s Environmental Assessment web page.

What are the objectives of the Government of Canada’s Framework for Conducting Environmental Assessments of Trade Negotiations?

  • The 2001 Framework for Conducting Environmental Assessments of Trade Negotiations has two objectives.
  • First, it helps trade negotiators integrate environmental considerations into the negotiating process by calling for the identification of potential positive and negative environmental impacts of trade and investment negotiations.
  • Second, it provides a means to address public concerns about the environmental effects of the trade and investment negotiations by documenting how the environment is considered during negotiations.
  • Overall, the EA contributes to ensuring greater coherence between trade and environment policies.

Who conducts the Government of Canada’s EAs of trade and investment negotiations?

  • An interdepartmental steering committee oversees all EAs of bilateral, regional, and multilateral trade negotiations and investment negotiations. Foreign Affairs, Trade and Development Canada holds the Secretariat for this purpose.
  • A separate interdepartmental committee is established for the EA of each negotiation.
  • These EA committees are led by the department or division leading the negotiations. They are chaired by the Chief Negotiator and they include trade negotiators for each of the negotiating issues being examined. They also include mandatory representation from Environment Canada, the Canadian Environmental Assessment Agency, and Foreign Affairs, Trade and Development Canada. All other government departments and agencies are welcome to participate.
  • In house assessment of trade negotiations is in keeping with the principle of self-assessment. However, the analysis undertaken by government officials is reinforced through consultations with provinces and territories, EA experts and the general public.

What are the key steps in the EA process?

  • The 2001 Framework for Conducting EAs of Trade Negotiations provides for three increasing detailed phases of assessment: the Initial, Draft, and Final EA. These correspond to progress within the negotiations. A report is issued at the conclusion of each phase.
  • During each phase of an assessment, a consistent four step methodology is applied, which requires the identification of the potential economic effects in Canada of the negotiations. The likely environmental impacts of these effects are identified and assessed for their significance. Finally, measures that would help mitigate negative environmental impacts and enhance positive impacts are identified.
  • Consultations are a key element of each phase of assessment. Provinces and territories, and experts from academia, NGOs, and industry are asked for feedback on draft versions of EA reports.
  • Upon conclusion of these consultations, EA reports are finalized and released on Foreign Affairs, Trade and Development Canada’s “Trade Negotiations and Agreements” web site. Members of the public are invited to provide comments. These comments inform the next phase of the analysis and future EA of trade work as pertinent.

What negotiations are assessed?

  • The Framework is applied to negotiations for bilateral, regional, and multilateral trade negotiations, as well as negotiations for Foreign Investment Protection Agreements (FIPAs).
  • The Framework was developed with the intention that it be both flexible and generic in order that it could be applied to liberalizing negotiations while using a consistent methodology.
  • The Framework is not applied to negotiations to solve trade disputes or to previously signed agreements. However, policies considered by the Minister of International Trade are subject to the processes in place within DFATD to implement the 2010 Cabinet Directive on Environmental Assessment of Plans, Programs, and Policies.

How are EAs of trade and investment negotiations different from environmental impact assessments?

  • EAs of trade or investment negotiations are strategic environmental assessments - not environmental impact assessments. A strategic environmental assessment focuses on the environmental implications of a policy before it is implemented. Conversely, an environmental impact assessment examines the potential environmental impact of a project.
  • Project level EA is generally seen as less complex because the key variables are more easily identified and more tangible than during strategic environmental assessments.

How many EAs of trade and investment negotiations have been completed?

  • As of January 2014, we have completed Final EAs for the following trade and investment negotiations: Canada-Honduras FTA negotiations, Canada-Colombia and Canada-Peru FTA Negotiations, Canada-Jordan FTA Negotiations, Canada-Panama FTA Negotiations, Government Procurement Chapter to be added to the Canada-Chile Free Trade Agreement (FTA), Canada-Bahrain Foreign Investment Promotion and Protection Agreement (FIPA), Canada-China FIPA, Canada-Jordan FIPA, Canada-Kuwait FIPA, Canada-Madagascar FIPA and the Canada-Peru FIPA.
  • As of January 2014, we have completed Initial EAs for the following trade and investment negotiations: Canada-European Union Comprehensive Economic and Trade Agreement (CETA) Negotiations, Canada-Dominican Republic FTA Negotiations, Canada-CARICOM FTA Negotiations, Canada-Singapore FTA Negotiations, Canada-Korea FTA Negotiations, World Trade Organization (WTO), Negotiations to Expand Product Coverage under the WTO Information Technology Agreement, Free Trade Area of the Americas (FTAA), Canada-Central America Four (CA4) FTA Negotiations, Canada-Andean Community FTA Negotiations, Canada-India Foreign Investment Promotion and Protection Agreement (FIPA) and Canada-Tunisia FIPA
  • Initial EAs are underway for the Canada-India Comprehensive Economic Partnership Agreement (CEPA) Negotiations, Trans-Pacific Partnership (TPP) Negotiations, Canada-Japan Economic Partnership Agreement (CJEPA) Negotiations, Canada-Ukraine FTA Negotiations, Canada-Morocco FTA Negotiations, Trade in Services Agreement and the Modernization of the Canada Costa-Rica FTA.

Methodology

What methodology is used for assessing the environmental impacts of trade and investment negotiations?

  • Canada uses an ex ante methodology, which means that the assessment takes place as the negotiations take place and before the agreement is concluded. This approach is in keeping with the principle that strategic environmental assessment should inform decision making.
  • The EA Framework allows for three increasing detailed phases of assessment: the Initial, Draft, and Final EA. These correspond to progress within the negotiations.
  • During each phase of assessment a consistent four step methodology is applied, which requires the identification of the potential economic effects in Canada of the negotiations. The likely environmental impacts of these effects are identified and assessed for their significance. Finally, policy options are identified that could enhance potential positive environmental impacts and to mitigate potential negative environmental impacts of the negotiations.
  • Five different types of effects are considered during an EAs of trade negotiations. This includes scale effects (i.e., the change in overall amount of production and consumption), structural effects (i.e., shifts in production and consumption toward different sectors in the economy), product effects (i.e., changes in the types of products that are produced or consumed), technology effects (i.e., changes in potential technologies used as a result of the negotiation), and regulatory effects (e.g., impacts on current and future policy development and implementation).
  • Analysis is based on quantitative information when it is available. Otherwise, the analysis remains largely qualitative.

What are the key challenges for assessing the environmental impacts of trade and investment agreements?

  • Impact assessment of trade is still a relatively new field, and we continually work to improve our practice.
  • Finding data to estimate the economic and environmental analysis of a potential outcome of a negotiation continues to be a challenge. Quantitative data and models are used where possible, however we continue to rely largely on qualitative information.
  • Timing is a challenge. We use a three-phase approach that advances based on progress in the negotiations. It can be difficult to determine the best time to conduct each phase of assessment, especially when negotiations move slowly or progress occurs at differing speeds in the various negotiating areas.
  • It is difficult to identify incremental economic effects solely attributable to a specific trade or investment negotiations, from those resulting from existing trade agreements, from economic growth or from other circumstances.
  • Trade negotiations are expanding into issue areas beyond market access liberalization, such as regulatory cooperation and trade facilitations. Methodologies to assess the environmental impacts of these negotiations are in their infancy.

Why not have an independent body conduct the environmental assessment of trade and investment negotiations?

  • The Guidelines for implementing the Government of Canada’s Cabinet Directive on the EA of Policy, Plan and Program Proposals, highlight the principle of self-assessment. Self-assessment allows those participating in the trade and investment negotiations and developing trade policy to be personally involved in the assessment process. This facilitates informed policy development and decision making. Self-assessment also avoids constraints on the analysis that would result if an external party did not have access to sensitive information.

Does the Government of Canada coordinate its EA of trade process with the countries which it is negotiating trade and investment agreements?

  • Work undertaken in the Government Canada on impact assessment of trade is shared with the countries with which we negotiate trade and investment agreements. This can occur informally or formally. For example, impact assessment of trade is an element of the sustainable development discussions in the negotiations for the Canada-EU Trade and Investment Enhancement Agreement.
  • However, the 2001 Framework for Conducting EAs of Trade Negotiations directs the EA Committee to focus on the environmental impacts of the negotiations on the Canadian environment. Countries with which we are negotiating are encouraged to undertake their own EAs based on their preferred methodology.
  • Foreign Affairs, Trade and Development Canada also shares information on the application of the Framework in various international forums. For example, updates on our EA of trade work are provided via the WTO Committee on Trade and Environment and during discussions on impact assessment of trade related policies in the International Association for Impact Assessment.

Scope

What is the scope of the various EAs of trade and investment negotiations?

  • The scope of the EAs for trade and investment negotiations is guided by the 2001 Framework for Conducting Environmental Assessments of Trade Negotiations.
  • The EAs aim to identify and assess the likely and significant environmental impacts on the Canadian environment. Transboundary, regional and global environmental impacts will be considered when they have a direct impact on the Canadian environment.
  • EAs cover issues for which there is a negotiating mandate. This will vary from one negotiation to another.
  • The Framework focuses the scope of analysis to environmental impacts in Canada. The environmental analysis is focused where the negotiations are expected to have an economic effect. This is determined based on the expected changes in the scale and structure of economic activity and the products and technology that are traded. The legal and policy effects of the agreement are also assessed for their environmental implications.

On what basis is the expected outcome of a negotiation determined for the purposes of the EA?

  • The analysis during an EA of a trade or investment negotiation is based on a scenario, which is developed by the interdepartmental EA committee in charge of the specific negotiation.
  • Some scenarios, such as those pertaining to agriculture and non-agricultural market access negotiations, are quantitative and assume different percentages of liberalization. Others, such as those relating to issues such as services, rules and trade facilitation, are qualitative.
  • The principal function of these scenarios is to provide a benchmark. They are strictly a tool for conducting the analysis.

Why doesn’t the Government of Canada approach to EA of trade and investment negotiations assess environmental impacts outside of Canada?

  • While many environmental issues should be examined within the greater global context, sovereignty issues, limited data and resources, and practicality limit the focus of the environmental assessment to domestic impacts.
  • Transboundary, regional and global environmental impacts are assessed when they directly impact the Canadian environment. This approach is in accordance with the 2001 Framework for Conducting EAs of Trade Negotiations.

Why doesn’t the Government of Canada approach to EA of trade and investment negotiations assess social impacts of negotiations?

  • EAS are being conducted in accordance with the 2001 Framework for Conducting EAs of Trade Negotiations, which is designed to identify and assess environmental impacts linked to the trade negotiations.
  • However, the analysis carried out to determine the environmental impacts of a negotiation carries with it an implicit connection to consideration of social benefits: a healthy environment benefits the well-being of its inhabitants.

Are other countries conducting environmental assessments of trade negotiations?

  • Canada is not alone in conducting environmental assessments of trade negotiations. Other countries, including the US and the EU assess trade negotiations according to their own methodologies. However, Canada is one of the few countries conducting environmental assessments of negotiations for investment agreements.
  • Multilateral organizations such as UNEP and NGOs also undertake work to assess the potential impacts of trade negotiations.
  • International collaboration and capacity building have been recognized as essential for continued success in the area EA of trade. Canada shares information on its EA of trade work with its negotiating parties, and actively participates in discussions in international forums such as the WTO, the North American Commission for Environmental Cooperation, APEC, and the International Association for Impact Assessment.

How does the approach used within the Canadian government compare with the approach others use to assess the impacts of trade negotiations?

  • Our approach has similarities and differences with other methodologies. An overview of three other methodologies is provided here: the Unites States, European Union, and the North American Commission for Environmental Cooperation.
  • United States
    • The US conducts ex ante environmental reviews (ERs) of trade agreements, in accordance with Executive Order 13141 and associated guidelines. The Order is applicable to comprehensive multilateral trade rounds, bilateral or plurilateral free trade agreements, and major new trade liberalization agreements in natural resource sectors.
    • The Office of the United States Trade Representative and the Council on Environmental Quality oversee implementation of the Order in consultation with interested agencies on the Trade Policy Staff committee, the US Environmental Protection Agency and US Agency for International Development.
    • The ER process is initiated with a notice in the Federal Register. The scope of the review is determined with consideration to the objectives of the proposed trade agreement, a realistic range of alternatives for accomplishing the objectives of the trade agreements, and reasonably foreseeable environmental impacts.
    • Analysis during the ER is focused on the implications for environmental laws and regulations, economically driven environmental impacts, and ways to address the identified environmental impacts. The Guidelines provide special considerations for the scoping of global transboundary impacts that include the scope and magnitude of reasonably foreseeable global and transboundary impacts, implications for US interests, the availability of relevant data, and diplomatic considerations.
    • An interim ER document is normally issued for public comment during the negotiations. A final ER document is issued publicly after the conclusion of the agreement.
    • Details on environmental reviews of trade agreements in the US.
  • European Union
    • The European Union conducts ex ante sustainability impact assessments (SIAs).
    • The SIA methodology calls for the consideration of economic, environmental, and social impacts of trade negotiations, and considers the potential impacts of the negotiations in partner countries.
    • The SIA methodology has four main stages that are applied as the negotiations proceed. Analysis is carried out by parties external to the government. First, a screening is undertaken to determine which proposed trade measures can be excluded from further analysis because they are not expected to have significant impacts. The next stage is scoping to establish the coverage of each SIA. Each of the measures identified in the screening are considered with respect to likelihood and significance of potential positive and negative on sustainable development. Ideally, this is carried out through a preliminary SIA. Subsequently, detailed SIAs are carried out for each individual trade measure. Finally, the SIA methodology calls for a full synthesis of impacts assessed and an analysis of mitigation and enhancement opportunities to suggest measures that may enhance the overall impact on sustainable development of the proposal.
    • For each report, the European Commission prepares a paper, based on the analysis, that defines points of agreement and respond on disagreements and considers what further analysis should be undertaken and what policy action should be implemented including capacity-building and trade-related assistance initiatives, international regulation, use of trade and regional policy instruments within the EU. There are procedures in place for consultation and dialogue with stakeholders from both within the EU and from other countries.
    • Details on sustainability impact assessments of trade negotiations in the EU.
  • North American Commission for Environmental Cooperation (NACEC)
    • The North American Agreement on Environmental Cooperation (NAAEC) [Article10(6)(d)], directs the Commission for Environmental Cooperation (CEC), to consider on an ongoing basis the environmental effects of the North American Free Trade Agreement (NAFTA).
    • The Analytic Framework for Assessing the Environmental Effects of the North American Free Trade Agreement (NAFTA) provides an ex poste methodology for assessing the effects of NAFTA rule changes, trade flows, investment flows, and institutions on the four major media of the ambient environment. Independent organizations and individuals with funding from the CEC carry out analysis and the findings are reported at public symposiums.
    • Details on the NACEC methodology and the research presented at NACEC symposia on assessing the environmental impacts of trade.

Does the Government of Canada assess trade and investment policies unrelated to a specific negotiation?

  • The 2010 Cabinet Directive on Environmental Assessment of Plans, Programs, and Policies requires that a strategic environmental assessment be conducted when a proposal is submitted to an individual Minister or Cabinet for approval that may result in important environmental effects (either positive or negative).
  • In keeping with this requirement, Foreign Affairs, Trade and Development Canada has a process in place to conduct preliminary environmental scans of proposals considered by the Minister of International Trade via Memorandum to Cabinet. This process identifies how environmental considerations could be integrated into the proposal to enhance potential positive environmental impacts, and mitigate potential negative environmental impacts. It also determines the need for a detailed environmental analysis.

Are trade and investment disputes subject to an environmental assessment?

  • The Framework for Conducting EAs of Trade Negotiations was not designed to apply to trade dispute negotiations. However, this does not preclude the integration of environmental considerations into the policy development and decision-making related to a trade dispute. This outcome is facilitated by the processes in place within Foreign Affairs, Trade and Development Canada to apply the 2010 Cabinet Directive on Environmental Assessment of Plans, Programs, and Policies to Memoranda to Cabinet that are considered by the Minister of International Trade.

Transparency and Consultations

Who is consulted during an EA of a trade negotiation?

  • When a trade or investment negotiation is announced, a notice of intent is issued publicly in the Canada Gazette and/or on DFATD’s “Trade Negotiations and Agreements” web site. This notice invites interested parties to submit their views on Canadian environmental matters related to the proposed negotiation.
  • An interdepartmental committee is established to conduct the analysis. Preliminary findings are then shared with the provincial and territorial governments, and an EA Advisory Group that consists of individuals from academia, industry, NGOs, and multilateral organizations.
  • Further to these consultations, the EA report is finalized and released publicly with a call for comments. Comments received from the public are shared with the interdepartmental EA Committee, negotiators, and inform subsequent EA analysis as well as future EA of trade work more broadly.

How can the public get involved?

  • At the beginning of each EA of a trade or investment negotiation, a notice of intent is issued that invites interested parties interested parties to submit their views on the likely and significant environmental impacts of the negotiation on Canada.
  • An EA report is issued at the conclusion of each phase of the EA for a negotiation and the public is invited to submit comments. These comments inform subsequent EA analysis as well as future EA of trade work more broadly.
  • All EA reports for trade and investment negotiations are available on Foreign Affairs, Trade and Development Canada “Trade Negotiations and Agreement”’ web site. This site also provides updates on the negotiations and provides avenues for interested parties to comment on negotiations. Consultations with stakeholders are an important aspect in the development of Canadian negotiating position.

How are public comments used?

  • Comments received from the public pursuant to an EA of trade and investment negotiations are circulated to an interdepartmental EA Committee and trade negotiators. These comments inform future work on EA of trade.
  • An overview of public comments received, as well as an explanation of how they informed the analysis, may be included in subsequent EA reports. However, they will not be attributed to specific individuals or organizations.
  • Personal information is protected by the Privacy Act. Third party commercial information may be subject to requests under the Access to Information Act. However, no information will be released without prior consent.

Outcomes

How does an EA of trade inform the Canadian negotiating activities?

  • The Chief Negotiator chairs the interdepartmental EA Committee established for a negotiation and reviews all reports. Negotiators for specific issue areas examined in the EA are directly involved in the EA of trade and investment negotiations, and the consultations therein. As such, those involved in the negotiations are aware of the EA findings and the potential environmental impacts of different outcomes in the negotiations.
  • The key findings from an EA are included in the documents provided to Ministers and Cabinet requesting a negotiating mandate, or reporting on the status of ongoing negotiations.
  • Overall, EAs can help refine Canada’s negotiating positions and identify measures to mitigate anticipated negative environmental impacts.

How are last minute changes in negotiations assessed for their environmental implications?

  • The 2001 Framework for Conducting EAs of Trade Negotiations calls for three phases of increasingly detailed analysis, which proceed based on progress within the negotiations.
  • An Initial EA occurs early on in the negotiations, and a more detailed Draft EA occurs at an advanced stage of the negotiations when the Initial EA identifies the need for further detailed analysis. The Framework allows for further analysis if changes occur in latter stages of the negotiations, and calls for a Final EA based on the conclusion of the negotiations.
  • Final EA Reports identify any notable divergence from the Draft EA and subsequent analysis undertaken due to last minute changes in negotiations.
  • EAs generally provide analysis of the potential environmental impacts that would result from different scenarios that could result from the negotiations. Further, negotiators are made aware of key trade and environment relationships associated with different negotiating areas.

How have the assessments affected negotiations?

  • An important way that EAs have affected negotiations is by sensitizing trade negotiators to overall relationships between trade and environment, and how trade negotiations could impact the Canadian environment and promote the mutual supportiveness of both trade and environmental objectives.
  • To date, there have not been any cases where a significant change in Canada’s negotiating position would change the anticipated environmental impacts of the negotiations. However, environmental concerns are taken into account when developing Canadian negotiating positions in all trade and investment negotiations.
  • If an EA indicated that the negotiations could have serious negative environmental impacts in Canada, the Government would consider the existing and potential options to mitigate the environmental impacts, and then, if necessary, re-evaluate its positions and participation in the negotiations.

Are the findings from an environmental assessment binding?

  • The Framework is informed by the 2010 Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals, which does not impose binding responsibilities on the recommendations flowing from a strategic environmental assessment.
  • The Guidelines for Implementing the Cabinet Directive highlight the principle of flexibility. Departments and agencies have discretion in determining how strategic environmental assessments are undertaken and are encouraged to adapt and refine tools and methodologies appropriate to their circumstance.

How is the environment considered after an agreement is concluded?

  • The mechanisms that are used to consider the environmental impacts of a specific trade or investment agreement will vary based on the agreement and the anticipated environmental effects.
  • Within the WTO, trade-related environmental issues are discussed in various committees, including the Committee on Trade and Environment.
  • Environmental cooperation agreement agreements have been established in tandem to our free trade agreements with our NAFTA partners, Chile, and Costa-Rica.
  • Policies and programs are implemented by various government departments to facilitate environmental protection and management in Canada, including with respect to the impacts of trade.