Environment chapter and Environmental Cooperation Agreement summary
Canada is firmly committed to the principle that trade liberalization and environmental protection are mutually supportive. Promoting stable and transparent environmental regulatory frameworks and institutions, through trade agreements, provides Canadian investors with greater certainty on the environmental governance of our trading partners. Environmental provisions in free trade agreements (FTA), including the environment chapter in the Canada-United States-Mexico Agreement (CUSMA), also support Canadian businesses in remaining competitive by ensuring that trading partners do not gain an unfair trading advantage by not enforcing their environment laws.
When NAFTA came into effect in 1994, it was the first free trade agreement to link the environment and trade through a historic parallel agreement on environmental cooperation, the North American Agreement on Environmental Cooperation (NAAEC). The CUSMA strengthens and modernizes environmental provisions by integrating them into an ambitious, comprehensive and enforceable environment chapter. The environment chapter establishes a binding and enforceable dispute resolution process to address any questions regarding compliance. This includes recourse to the broader CUSMA dispute settlement mechanism if countries are not able to resolve the matter through consultation and cooperation.
The CUSMA also includes a parallel Environmental Cooperation Agreement (ECA). The ECA ensures that the unique institutions that have existed since 1994 under the NAAEC are retained and modernized, including the Commission for Environmental Cooperation and its Montreal-based Secretariat. Through the ECA, a modernized Commission will continue the legacy of effective trilateral environmental cooperation between Canada, Mexico, and the United States, including on global environmental issues of importance to Canada, such as climate change.
Technical summary of negotiated outcomes:
CUSMA Environment Chapter:
- Integrates ambitious environmental provisions into a dedicated chapter within the CUSMA rather than a separate parallel agreement, and fully subjects them to dispute settlement.
- Includes core obligations for parties to maintain high levels of environmental protection and robust environmental governance, including commitments to:
- enforce environmental laws;
- not derogate from these laws to encourage trade or investment;
- promote transparency, accountability and public participation; and
- ensure environmental impact assessment processes are in place for projects having potential adverse effects on the environment.
- Creates new commitments to address a range of global environmental challenges, including substantive obligations to:
- combat illegal wildlife trade; illegal logging; and illegal, unreported and unregulated (IUU) fishing;
- promote sustainable forestry and fisheries management, including a commitment to prohibit subsidies that negatively affect fish stocks;
- conserve species at risk; and
- take measures to protect the ozone layer and address marine pollution.
- Includes a new article that identifies seven multilateral environmental agreements (MEAs) and commits the three parties to implement their respective obligations under those MEAs.
- For Canada, this includes the Convention on International Trade in Endangered Species of Wild Fauna and Flora, the Montreal Protocol on Substances that Deplete the Ozone Layer, the Protocol of 1978 Relating to the International Convention for the Prevention of Pollution from Ships, the Convention on Wetlands of International Importance Especially as Waterfowl Habitat, and the Convention for the Establishment of an Inter-American Tropical Tuna Commission.
- Includes commitment from parties to work together to conserve biological diversity and combat invasive alien species, among others.
- Includes innovative fisheries commitments to prevent the use of explosives and poisons, and a binding commitment to prohibit the practice of shark finning—a first for Canada.
- Introduces articles on air quality and marine litter, a first for a trade agreement environment chapter.
- Sets out new commitments that aim to strengthen the relationship between trade and environment, including through the promotion of responsible business conduct and corporate social responsibility, trade and investment in environmental goods and services, and the use of voluntary measures to enhance environmental performance.
- Recognizes the important role of Indigenous peoples in the long-term conservation of the environment, sustainable fisheries and forestry management, and biodiversity conservation, and takes into account the constitutional rights of Canada’s Aboriginal peoples.
- Establishes a binding and enforceable dispute resolution process to address any questions regarding compliance, including recourse to the broader CUSMA dispute settlement mechanism if countries are not able to resolve the matter through consultation and cooperation.
- Confirms that a failure to comply with obligations in the chapter that affect trade or investment are presumed to be “in a manner affecting trade or investment between the parties” for the purposes of a dispute, unless the defending party can demonstrate otherwise.
- Integrates the public submissions on enforcement matters process established under the North American Agreement on Environmental Cooperation (NAAEC), which is a key mechanism for promoting transparency and public participation on the enforcement of environmental laws in North America.
Environment Cooperation Agreement:
- Retains and modernizes the unique institutions for trilateral environmental cooperation created under the NAAEC. This includes the continued operation of the Commission for Environmental Cooperation, composed of:
- a Council of Environment Ministers;
- a Secretariat; and
- a Joint Public Advisory Committee.
- Establishes a framework (a “Work Program”) for the Parties to develop cooperative activities on a broad range of areas related to:
- strengthening environmental governance;
- reducing pollution and supporting strong, low emissions, resilient economies;
- conserving and protecting biodiversity and habitats;
- supporting green growth and sustainable development; and
- promoting the sustainable management and use of natural resources.
- Ensures that the Secretariat will administer the submissions on enforcement matters process that has been incorporated and strengthened in the CUSMA Environment Chapter.
- Encourages public participation that is inclusive and diverse, as well as improved outreach and public participation, including with Indigenous peoples, in the development, implementation, and monitoring of cooperative activities.