Strategic Environmental Assessment for the Canadian Free Trade Agreement (CFTA)

In accordance with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals (2010), a strategic environmental assessment (SEA) was conducted in support of the negotiation of the Canadian Free Trade Agreement (CFTA). It builds on the preliminary SEA scan conducted in December 2015 in support of the initial stages of internal trade negotiations, which concluded that more analysis was required to determine whether the Agreement on Internal Trade (AIT) renewal would likely result in important environmental effects. The new SEA indicated that the likely cumulative environmental effects of the CFTA would be low. The majority of stakeholders consulted as part of this assessment agreed with the SEA’s conclusions.

The SEA analysis was predominantly qualitative in nature. Since the existing AIT was used as the foundation for negotiations, the SEA examined potential environmental effects that may result from the differences between the existing AIT and the new CFTA. Given the parameters initially set for the negotiations, the SEA focused on assessing effects related to six priority negotiation areas as set out by the Parties (government procurement, goods, services, investment, regulatory cooperation, and technical barriers to trade), and measures related to environmental protection.

In summary, the new CFTA would likely lead to some increase in the production of goods, in the demand for services, in investment, and in the total value of Canadian public procurement covered by the CFTA. While the extent of procurement covered by the CFTA will be broader than under the AIT, the total value of Canadian government procurement should not be affected materially. However, the CFTA could potentially lead to a shift in suppliers from across Canada as domestic market access is expanded. For businesses, the new CFTA will allow for the most cost effective inputs to be used, and increase the competitive incentive for productivity improvements or investments in innovative processes or products. This in turn is likely to enhance the ability of businesses to compete in domestic and international markets. For consumers, it is also expected to lower costs and increase choice for goods and services. For workers, it is expected to make it easier for Canadians to take advantage of job opportunities across the country.

The CFTA preserves each government’s ability to protect and enhance its existing environmental standards. In the CFTA’s preamble, Parties also resolve to promote sustainable and environmentally sound development. Under the CFTA’s Environmental Protection Chapter, federal, provincial and territorial governments assert that environmental protection and trade can be mutually supportive, and that sustainable development should be part of an overall approach to trade. The Parties have also agreed that environmental protection includes climate change mitigation and adaptation measures, and ensuring the sustainability of natural resources, such as fish, forests, clean air, and water. Parties have committed to uphold high levels of environmental protection when encouraging trade, investment, or labour mobility in Canada. The CFTA also allows Parties to adopt measures that may be inconsistent with certain CFTA obligations provided that such measures are necessary to achieve a legitimate objective, and meet certain conditions, including that a measure not be applied in a manner that is discriminatory or would constitute a disguised restriction on trade. Legitimate objectives are defined as including, for example, those aimed at protecting human, animal, or plant life or health, or protecting the environment.

The CFTA may advance the following goals and targets of the 2016–2019 Federal Sustainable Development Strategy in the short and long term, directly and indirectly:

  • Effective action on climate change
    • Long-term goal: A low-carbon economy contributes to limiting global average temperature rise to well below two degrees Celsius and supports efforts to limit the increase to 1.5 degrees Celsius.
    • Medium-term target: By 2030, reduce Canada's total GHG emissions by 30%, relative to 2005 emission levels.
  • Clean growth
    • Long-term goal: A growing clean technology industry in Canada contributes to clean growth and the transition to a low-carbon economy.
    • Medium-term target: Implement Canada’s Mission Innovation commitment to double federal government investments in clean energy research, development and demonstration, by 2020, from 2015 levels.

These goals may be advanced through actions pursuant to the CFTA. For example, Parties’ agreement to facilitate the removal of barriers to trade and investment concerning goods and services of particular relevance for environmental protection and sustainable development could support effective action on climate change and clean growth by reducing barriers to accessing clean technologies.  This will likely further enhance the growth and development of the clean technology industry in Canada, encourage investments in the industry, and facilitate wider adoption of clean technologies in public and private sector operations.

Additionally, the CFTA commitment to ensure the sustainability of natural resources is likely to encourage a shift over the long term in patterns of production and consumption towards sustainability on the part of responsible business and consumers. Such changes may advance progress on the FSDS goals noted above, while fostering progress on others over the long term, such as ensuring sustainably managed lands and forests, healthy wildlife populations, pristine lakes and rivers, and clean drinking water.

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