Canada-Israel Free Trade Agreement Modernization Negotiations

Initial Environmental Assessment Report

February 2015

Report of the Canada-Israel Free Trade Agreement Modernization Negotiations

1. Executive Summary

1.1 Overview

The Canada-Israel Free Trade Agreement (CIFTA) has been in force since January 1997. The CIFTA eliminated all tariffs on industrial products, and on some agricultural and fish and seafood products. Amendments to the CIFTA were brought into force on November 1, 2003, to implement further tariff concessions on some agricultural and fish and seafood products. Since CIFTA came into force, Canada-Israel bilateral merchandise trade has more than doubled, from $507.3 million in 1996 to $1.439 billion in 2013. 

On January 21, 2014, Prime Minister Stephen Harper and Benjamin Netanyahu, Prime Minister of the State of Israel, announced the launch of negotiations to expand and modernize the CIFTA agreement. A modernized CIFTA would be consistent with Canada’s Global Markets Action Plan, open new market opportunities for Canadian business, and deepen our commercial relationship with Israel. The first two rounds of negotiations took place in February and May 2014. Negotiations are ongoing.

The Government of Canada is committed to conducting environmental assessments of all prospective free trade agreements (FTAs). Such environmental assessments assist Canadian negotiators in integrating environmental considerations into the negotiating process, and otherwise documents how environmental factors can help inform the negotiations. Through the environmental assessment and negotiating process, Canada seeks to ensure that proposed trade agreements contribute to the development of the Canadian economy in a sustainable manner.

Pursuant to the 2001 Framework for Conducting Environmental Assessments of Trade Negotiations (the “Framework”) ^{Footnote 1}, this report constitutes Foreign Affairs, Trade and Development Canada’s (DFATD’s) Initial Environmental Assessment of the CIFTA modernization negotiations. According to the Framework, the primary purpose of an Initial Environmental Assessment is to identify the main environmental issues likely to arise in Canada as a result of the proposed agreement.  This assessment focuses on potential economic and environmental impacts in Canada from a modernized CIFTA by exploring the links between market access, investment and environment in Canada.  In other words, this assessment considers the effects of incremental trade that may result directly from a CIFTA modernization. As such, this Initial Environmental Assessment does not seek to predict the specific outcomes of a CIFTA modernization agreement. The Initial Environmental Assessment estimates possible environmental impacts using informed judgment, based on prospective changes in economic activity resulting from a modernized CIFTA, once implemented.

Canada’s broad environmental objectives in negotiating trade agreements are to:

• preserve Canada’s ability to protect the environment;
• ensure mutually supportive relationships between trade agreements and multilateral environmental agreements;
• strengthen respective national environment management systems; and
• use this strengthened capacity to combat transboundary pollutants and the invasive species that may directly affect Canada’s environment and economy, and the health of Canadians.

In order to ensure that Canada’s environmental protection mechanisms are strengthened through free trade, Canada currently includes trade-related environmental provisions in its FTAs. As the 1997 CIFTA does not include such provisions, they are now being considered as part of the current modernization process.

1.2 Initial Environmental Assessment Findings

Environmental Assessment findings normally include goods, services, investment, and government procurement. However, as the current negotiations to expand and modernize the CIFTA agreement do not include services, investment, or government procurement provisions, the Initial Environmental Assessment excludes these areas.

In the area of Trade in Goods, Canadian and Israeli tariffs have already been fully eliminated for industrial goods. In 2013, industrial goods accounted for about 87% (or $330.4 million) of the total value of Canadian exports to Israel and about 95% (or $1 billion) of Canadian imports from Israel. Tariff elimination or reduction in the context of a modernized FTA will be limited to agriculture and fish/seafood.

Canadian exports to Israel represent only (0.08%) in 2013 of Canada’s overall global exports, and this figure is unlikely to change perceptibly as a result of a modernized CIFTA. Accordingly, the significance of any environmental impact resulting from increased Canadian exports to Israel is expected to be relatively limited and could easily be accommodated by Canada’s existing environmental regime.

Meanwhile, given that the large majority of goods imported from Israel already enter Canada duty-free, and considering that only (0.22%) in 2013 of Canada’s overall merchandise imports originate from Israel, even considerable growth in imports from Israel could be accommodated within Canada’s existing environmental regime. As such, little or no environmental impact is expected from any increase in imports from Israel as a result of additional tariff concessions by Canada under a modernized CIFTA.

In sum, the economic effects of a modernized CIFTA are expected to be modest relative to Canada’s overall economic activity. Moreover, Canada maintains a strong regulatory framework with robust federal, provincial and territorial environmental oversight regimes, which serves as a mitigating factor to any increase in production or consumption. Canada has also implemented numerous environmental monitoring programs (highlighted in section 7) that track environmental indicators. These indicators will continue to be used to track any environmental impacts when a modernized CIFTA is implemented.

Because any environmental impacts that may occur as a result of a modernized CIFTA are expected to be minor, pursuant to the Framework, a Draft EA will not be undertaken. However, the Department will continue to invite comments from stakeholders and the public, and a Final EA will be released after negotiations conclude.

2. Overview of the Environmental Assessment Process

The Government of Canada is committed to conducting environmental assessments (EAs) for all trade negotiations using a process that requires interdepartmental coordination and public consultations. The 2001 Framework for the Environmental Assessment of Trade Negotiations details this process, and was developed in response to the Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals^{Footnote 2}. Detailed guidance for applying the Framework is contained in the Handbook for the Environmental Assessment of Trade Negotiations^{Footnote 3} (the Handbook). The guidelines for implementing the Cabinet Directive require departments to describe, in appropriate detail, the scope and nature of environmental effects that could arise from implementing proposals. The implementation of this process can contribute to achieving Canada's sustainable development objectives.

The Framework provides a process and methodology for conducting the environmental assessment of a trade negotiation. It is intentionally flexible so that it can be applied on a case-by-case basis and reflect the nature of the agreement being negotiated. The objectives of the environmental assessment process in connection with an FTA negotiation, as outlined in the Framework, are to:

• assist Canadian negotiators in integrating environmental considerations into the FTA negotiating process by providing information on the prospective environmental impacts; and
• document how environmental factors are being considered in the course of trade negotiations.

The Framework provides for three phases of assessment:

• 1. Initial Environmental Assessment: a preliminary examination to identify possible key issues.
• 2. Draft Environmental Assessment: if required, builds on the findings of the Initial Environmental Assessment and provides a more detailed analysis of the relevant issues.
• 3. Final Environmental Assessment: takes place upon the conclusion of FTA negotiations.

After the conclusion of each phase, a public report is issued along with a request for comments.  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.

After the conclusion of the Environmental Assessment process, follow-up and monitoring can be undertaken, if warranted, in order to review any mitigation or enhancement measures recommended in the Final Environment Assessment. Monitoring and follow-up activities can be undertaken at any time during the implementation of the concluded agreement in order to gauge its provisions from an environmental perspective.

2.1 Scope of the Environmental Assessment Process

Given that Environmental Assessments are intended to assist and inform the Canadian negotiating team during negotiations, this assessment focuses on new provisions being considered as part of the modernization initiative, rather than considering elements that are already in force since January 1997. As such, all incremental changes to the existing agreement (whether they are modifications or additional provisions) are assessed to identify and evaluate their potential impact on Canada`s environment and to consider any concerns raised by stakeholders and the public.

As the 1997 CIFTA was negotiated prior to the adoption of the Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals, no environmental assessment was conducted at the time.

2.2 Assessment Methodology

The Initial Environmental Assessment is an analytical exercise to identify potential environmental effects resulting from trade negotiations, and to facilitate reflection on environmental considerations while negotiations are ongoing. It focuses on potential economic and environmental impacts in Canada from an FTA and explores the links between market access (and other areas per the scope of the negotiations) and environmental impacts in Canada. In the case of the CIFTA, the assessment considers the environmental impacts of incremental commercial activity in Canada that may result directly from a modernized CIFTA, once implemented.

The Framework provides a four-stage analytical methodology. The Handbook provides guidance on how to conduct each stage of the analysis.

• Identification of the economic effect of the agreement to be negotiated. This stage identifies the trade liberalization activity of the agreement under negotiation. It examines what the potential agreement may include, the changes or new commercial activity that could result, and the overall economic relevance to Canada. This helps determine the scope of analysis for the environmental assessment and to prioritize the issues to be assessed.
• Identification of the likely environmental impact of such changes. Once the economic effects of the proposed FTA have been estimated, the likely environmental impacts of such changes are approximated. Consideration is given to potential positive and negative impacts^{Footnote 4}.
• 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, 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, minimal, moderate, high and extreme.
• Identification of enhancement/mitigation options to inform the negotiations. The Initial Environmental Assessmentis intended to identify, in a preliminary fashion, the possible policy options or actions to mitigate potential negative impacts and/or to enhance potential positive impacts that may occur as a result of the proposed FTA.

The environmental assessment of an FTA benefits from interdepartmental collaboration^{Footnote 5}. An interdepartmental committee is established to review the environmental assessment of each FTA and includes officials from, inter alia, those government departments and agencies participating in the negotiations. This approach facilitates informed policy development and decision making throughout the negotiating process.

The environmental assessment process also includes consultations with the public, provincial and territorial governments, and with the Environmental Assessment Advisory Group (EAAG). The EAAG is comprised of Canadian stakeholders, including representatives from the business sector, academia, and non-governmental organizations.

There are some limitations to a qualitative assessment. As indicated above, this Initial Environmental Assessment is an analytical exercise to determine whether significant environmental impacts are likely to occur as the result of a modernized CIFTA. The qualitative assessment of potential environmental impacts is not an exhaustive examination of all sectors of the economy or environmental issues, but does provide an overview of the potential environmental impacts of the trade agreement. As a result, a number of considerations are relevant with respect to interpretation of the reported impacts:

• The actual economic and environmental effects of trade negotiations with Israel will depend on how various economic actors, producers, and consumers react to the new trade policy environment once a modernized CIFTA is implemented.
• This analysis focuses on overall impacts for Canada, rather than impacts on a province, territory or region.
• The CIFTA modernization negotiations are ongoing, and the specific outcomes will not be known until negotiations conclude.

As required by the Framework, a Notice of Intent to conduct an Environmental Assessment of the CIFTA modernization negotiations was published in the Canada Gazette on April 26, 2014. This notice invited submissions from interested individuals, stakeholders, and groups for consideration in the drafting of the Initial Environmental Assessment. A total of five comments were received during the initial consultation phase. The comments focused on the main environmental content of the 1997 CIFTA which centered on Exceptions to Article 4.1 and Article 10.1. It was suggested that these two measures be maintained to provide adequate environmental safeguards. Lastly, concerns were raised about potential trade barriers in government procurement for the environmental sector.

The Government welcomes input and comments on all Initial Environmental Assessments, along with suggestions for enhancement of mitigation measures regarding potential negative environmental impacts and augmentation of positive effects. Input can be sent to:

E-mail: EAconsultationsEE@international.gc.ca
Fax: 613-992-9392
Mail: Environmental Assessment Consultations – Canada-Israel FTA Modernization Negotiations
Trade Policy and Negotiations Division (TPE)
Foreign Affairs, Trade and Development Canada
Lester B. Pearson Building, Sussex Drive, Ottawa, ON, K1A 0G2

3.  Israel’s Trade with the World

Israel is a stable democracy with a population of 8 million and a GDP of US$300 billion in 2013. Real GDP is projected to expand by an average of 4.7% from 2014-18 as Israel's export-dependent economy benefits from a sustained recovery in its main markets, the U.S. and the EU, as well as rising offshore gas production.^{Footnote 6} Israel has a highly developed market economy. Its major industries produce high-technology products, metal products, electronic and biomedical equipment, chemicals, processed foods and other agricultural products. Israel is one of the world's hubs for diamond cutting and polishing.

In 2013, Israel’s top merchandise exports were precious metals and stones, electric machinery and equipment, pharmaceutical products, chemical products, and machinery and mechanical appliances. Its main export market was the U.S., followed by Hong Kong, the United Kingdom, Belgium, and China. Israel’s top imports include mineral fuels and oil, precious metals and stones, electric machinery and equipment, machinery and mechanical appliances, and automobiles and trucks. Its top partners for imports were the U.S., China, Germany, and Belgium.^{Footnote 7}

4. Canada-Israel Bilateral Trade and Investment Relationship

Canada and Israel have strong, multidimensional bilateral relations, marked by close political, economic, social and cultural ties. Israel one of the only Middle East economies with a full range of business possibilities, including: exports, investment, science and technology, and innovation. Substantial opportunities for Canadian companies exist in knowledge sectors, such as aerospace, defense and security, sustainable technologies, information and communications technology, life sciences, energy, transportation and advanced materials.

Israel was Canada's 45th-largest merchandise trade partner in 2013, with two-way merchandise trade between Canada and Israel totalling $1.44 billion.^{Footnote 8} Total merchandise exports from Canada to Israel in 2013 totaled $380 million. Top merchandise exports to Israel were machinery and mechanical appliances, paper/paperboard, precious metals and stones, aircraft and spacecraft, and sulphur. Canada’s top merchandise imports (valued at $1.059 billion in 2013) were pharmaceutical products, electrical machinery and equipment, precious metals and stones, machinery and mechanical appliances, and medical and surgical instruments.  Israeli foreign direct investment into Canada was estimated at approximately $1.2 billion in 2010.

Israel has a relatively open investment environment. Foreign investors generally benefit from treatment equivalent to that accorded to nationals, though foreign investment is restricted in some sectors (e.g. defense) and requires government approval in other sectors (e.g. banking and insurance). Israel has an A1 credit rating (Moody’s 2013) and Export Development Canada offers a full range of products and services (insurance, financing and bonding) in Israel.

5. Trade and the Environment

Canada’s approach to trade and environment is to encourage economic development while supporting environmental sustainability. Canada typically seeks to include firm commitments in its FTAs that foster good environmental governance and reinforce the concept that trade and environment policies can and must be mutually supportive. 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 create conditions for facilitating the transfer of technology.

At the same time, an increase in global economic integration and investment may have an impact on Canada achieving its Federal Sustainable Development Strategy (FSDS)’s goals and targets^{Footnote 9}.  The environmental assessment of the CIFTA modernization negotiations is consistent with FSDS’s purpose of rendering environmental decision-making more transparent and accountable; specifically, integrating environmental concerns with economic and social considerations in government decision-making.

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 trade development projects, are sufficient to mitigate any identified potential impact as a result of the proposed agreement, and to examine the need for additional mitigation, if any. The objective of the assessment is to ensure that the implementation of FTAs minimizes potential negative environmental impacts, while at the same time contributes to the economic wellbeing of Canadians.

In order to ensure that economic development is sustainable, Canada seeks to negotiate meaningful and ambitious commitments relating to high levels of environmental protection, the effective enforcement of existing environmental laws, enhancing public awareness of environmental policy, and non-derogation from environmental laws to encourage trade or investment. Canada also seeks to negotiate obligations related to monitoring compliance with and investigating suspected violations of environmental laws and regulations.

Canada intends to negotiate obligations with Israel that are consistent with Canada’s obligations under multilateral environmental agreements such as the Convention on International Trade in Endangered Species of Wild Fauna and Flora; the Montreal Protocol on Substances that Deplete the Ozone Layer; the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal; the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade; and, the Stockholm Convention on Persistent Organic Pollutants.

6. Initial Environmental Assessment Findings

6.1 Findings Related to Potential Provisions of a modernized Canada-Israel FTA

The areas examined in the Initial Environmental Assessment are based on a preliminary understanding of the areas of negotiation and potential chapters in a modernized Canada-Israel FTA. Most potential chapters, whether they are being modernized or added, are assessed and summarized in Section 6.1, below. The area of Trade in Goods is assessed in Section 6.2.

Preamble

Anticipated Outcome: The Preamble normally summarizes the overall intent of the Agreement and references the Parties’ ongoing commitment to sustainable development, the effective enforcement of environmental laws and cooperation on environmental matters.

Possible Environmental Impacts:  By underscoring the Parties’ commitments to environmental stewardship, these provisions have indirect positive effects.

Initial Provisions and General Definitions

Anticipated Outcome: This chapter is expected to include the establishment of the free trade area; define the FTA’s relation to other agreements and extent of obligations; and definitions. This chapter contains provisions that allow certain Multilateral Environmental Agreements (MEAs) to supersede the trade agreement’s obligations in the event that conflicting provisions exist between and MEA and the FTA.

Possible Environmental Impacts: Where FTA provisions refer to multilateral environmental and conservation agreements, they serve to underscore the Parties’ commitments to environmental stewardship. This chapter could lead to positive environmental impacts by permitting certain MEAs, which include internationally recognized standards for environmental protection and conservation, to supersede FTA provisions in instances where conflicting provisions exist. 

Administration of the Agreement

Anticipated Outcome: The Administration of the Agreement chapter provides a framework for the overall management of the FTA and establishes a mechanism for the resolution of disputes outside of the formal dispute settlement mechanism.

Possible Environmental Impacts:  There are no foreseen environmental impacts as a result of the modernization of this chapter.

Exceptions

Anticipated Outcome: This chapter sets out exceptions to the commitments of the FTA to ensure that the FTA Parties maintain their ability to adopt measures to protect human, animal or plant life, and measures relating to the conservation of exhaustible natural resources.

Possible Environmental Impacts:  Such provisions provide for a general exception allowing for the adoption and enforcement of measures to protect animal or plant life or health, and measures relating to the conservation of exhaustible natural resources. By recognizing and protecting the right of each Party to regulate to protect the environment, this chapter has beneficial environmental impacts.

E-commerce

Anticipated Outcome: This chapter will seek to ensure a predictable environment for the conduct of electronic commerce.

Possible Environmental Impacts: Some minor positive environmental impacts could indirectly result from this chapter as it would facilitate greater use of cross-border communications technologies. This chapter will not affect how Canadian environmental regulations are developed or implemented or how environmental policy objectives are set.

Intellectual Property

Anticipated Outcome: This chapter may include intellectual property (IP) provisions that are cooperative in nature, and do not extend beyond the minimum levels provided for under the WTO Agreement on Trade-related Aspects of Intellectual Property Rights, to which Canada already adheres.

Possible Environmental Impacts:  There are no environmental impacts foreseen as a result of this chapter. The IP provisions are unlikely to directly translate into increased production or trade.

Rules of Origin

Anticipated Outcome:  This chapter ensures that the benefits of the FTA are accorded only to goods qualifying as originating in the territory of either or both Parties.

Possible Environmental Impacts:  Production and consumption changes resulting from modernization of product-specific rules of origin will be captured in the Trade in Goods section (6.2), along with any associated environmental impacts.

Sanitary and Phytosanitary Measures

Anticipated Outcome: This chapter is expected to affirm the rights and obligations of the Parties under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement); and to designate competent authorities for the purpose of communicating on SPS matters, facilitating improved understanding between Parties related to the implementation of the WTO SPS Agreement, and promoting cooperation between Parties on SPS issues under discussion in multilateral fora.

Possible Environmental Impacts: As provided in the WTO SPS Agreement, both Parties maintain the right to adopt SPS measures necessary for the protection of human, animal or plant life or health, provided that such measures are not inconsistent with the provisions of the Agreement.

As the CIFTA SPS chapter establishes no new rights and obligations beyond what Canada has already agreed to under the existing WTO SPS Agreement, and since the intent of that Agreement is aimed at the protection of human, animal and plant life or health, no negative environmental impacts are expected as a result of this chapter.

Technical Barriers to Trade (TBT)

Anticipated Outcome: The TBT chapter is expected to build upon and advance TBT disciplines in areas such as transparency, standards, technical regulations and conformity assessment.

Possible Environmental Impacts: There are no foreseen environmental impacts as a result of the modernization of this chapter. These provisions will enhance market access, but are not likely to have any measurable impact on the environment.

Trade Facilitation

Anticipated Outcome: The objective of this chapter is to reduce transaction costs through the modernization, simplification, automation and standardization of trade procedures.

Possible Environmental Impacts: To the extent any environmental impacts could be foreseen as a result of this chapter, they would be positive impacts due to less paper, simpler procedures, and automation.

Transparency 

Anticipated Outcome: This chapter seeks to facilitate the administration and smooth operation of the Agreement by designating contact points in each Party to facilitate communication. It also reiterates the Parties’ commitment to transparency and due process regarding matters covered by the Agreement.

Possible Environmental Impacts: There are no foreseen environmental impacts as a result of the modernization of this chapter.

Environment  

Anticipated Outcome: This chapter is expected to include commitments for high levels of environmental protection; the effective enforcement of domestic environmental laws; non-derogation from domestic environmental laws to encourage trade or investment; accountability, transparency, and civil society engagement; and appropriate consultative and review processes as a means to resolve outstanding issues.

Possible Environmental Impacts: This chapter seeks to ensure that trade and environment conservation and protection are mutually supportive. These provisions strongly discourage Parties from lowering environmental standards in order to gain a trade or an investment advantage. Provisions will seek to ensure that 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.

Labour

Anticipated outcome: This chapter is expected to include enforceable provisions to maintain high labour standards, including mutual commitments to respect and promote internationally recognized fundamental labour rights and principles, and to effectively enforce domestic labour laws. This chapter will also seek to ensure that each Party does not waive or derogate from its labour law to encourage trade or investment.

Possible Environmental Impacts: There are no foreseen environmental impacts as a result of this chapter. This chapter will not affect how Canadian environmental regulations are developed or implemented or how environmental objectives are set.

6.2 Trade in Goods

Overview

This section includes: (1) an overview of bilateral trade flows and potential growth areas as a result of the modernization of the 1997 CIFTA; (2) identification of potential environmental impacts associated with this trade growth and an assessment of the significance of these impacts; and (3) identification of mitigation and enhancement measures that could address potential environmental impacts.

Overall, considering that tariffs on bilateral trade in industrial goods are already fully liberalized and supported by relatively liberal rules of origin, a modernized CIFTA is expected to bolster the Canada-Israel trade relationship only in the areas of agriculture and fish/seafood. Although some modest trade growth may result from a modernized CIFTA, the Canada-Israel trade relationship represents only a very small proportion (0.15%) of Canada’s overall global trade flows. As such, no significant or measurable environmental impacts for Canada are expected to result from the increased trade flows with Israel that would be achieved through additional tariff elimination or reduction, or the adoption of less restrictive rules of origin, in the context of a modernized CIFTA.

Anticipated Effects of a Free Trade Agreement in the area of Trade in Goods

In 2013, Canada’s agricultural exports to Israel totalled $48.7 million. Top agricultural exports include wheat, corn, and lentils. Canada’s imports of agricultural products from Israel totalled $53.6 million in 2013, with mandarins, cane syrups, and dates as top imports.

In 2013, Canada’s fish/seafood exports totalled almost $1 million, with fish fats and oils, scallops, mussels, and lobsters as top exports. Canada’s imports of fish and seafood from Israel totalled $2.3 million in 2013, with fish fats and oils, ornamental fish, and salmon as top imports.

Details concerning Canadian originating agricultural and fish/seafood goods benefitting from preferential access to Israel under the current CIFTA are accessible at : CIFTA

A modernized FTA with Israel could bolster bilateral trade for agricultural and fish/seafood products not currently subject to tariff concessions under the existing CIFTA. Current dutiable Canadian agricultural exports that could benefit from a modernized FTA include chickpeas, canary seed, canola oil, frozen potato products, processed fruits and vegetables, other processed foods, and animal feeds.

Potential Environmental Impacts and Significance

Agriculture: The Canadian agriculture and agri-food system (AAFS) is a complex and integrated supply chain which includes input and service suppliers, primary producers, food and beverage processors, food retailers and wholesalers, and foodservice providers.  Environmental impacts associated with agriculture in Canada are varied, and involve components of land and water availability, air and water quality, and a management regime of fertilizers and pesticides.  The Government of Canada continues to make considerable efforts to understand the impact of agriculture on the environment, to seek ways to reduce negative impacts, and to promote the sustainable use of natural resources. For example, Agriculture and Agri-Food Canada (AAFC) contributes to sustainability of the agriculture, agri-food and agri-based products sector through science and associated activities, designed to enhance agri-ecosystem productivity, health, and biodiversity.   AAFC activities extend across the value chain for food from farmers to processors, domestic and global markets, and consumers. AAFC invests in innovative research and development into new crop varieties, beneficial management practices and technologies that support sustainable agricultural production. Emerging economic opportunities, such as clean energy and consumer and market demand for environmental product attributes, are also supported. AAFC efforts help address agri-environmental challenges such as water quality and water use, developing resilience to a changing climate, and maintaining ecosystem health.

Fish/Seafood: Growth in production and exports as a result of a modernized CIFTA could lead to modest incremental pressure on the aquatic environment. 

Wild fisheries operations may affect ocean and freshwater ecosystems, while aquaculture may cause environmental changes in areas where it takes place. Increasing Canada’s exports of fish and seafood products to Israel could impact on a number of components in the ecosystem, including the target fish stock; the fish species caught incidentally; the food sources for other species (i.e. forage species); the fish habitat; and the sensitive or unique bottom habitats and ecosystems, such as seamounts, hot thermal vents, corals and sponges.

Increased exports to Israel of aquaculture products could also have impacts through increased volumes of aquaculture waste (e.g. nutrient and organic matter); increased use of chemicals (e.g. pesticides, drugs, antifoulants); and increasing chances of interactions between farmed and wild species (with the potential for disease transfer, genetic, and ecological effects).

Overall, management and regulation consistent with principles of sustainable development are necessary to mitigate potential environmental impacts that may be foreseen with increased exports to Israel of fish and seafood products.  Fishing, aquaculture, and related processing activities are regulated in Canada to ensure that resources are harvested at a sustainable level, including through the use of quotas or input controls for capture fisheries, and proper siting, management, and regulation for aquaculture. Measures such as these, which may be used to mitigate potential negative impacts, are further discussed below. Given the above considerations, environmental impacts as a result of increased trade in goods with Israel are expected to be minor.

Positive impacts as a result of a modernized CIFTA are also possible through increased collaboration on specific issues.  For example, illegal, unreported and unregulated (IUU) fishing is a major contributor to declining fish stocks and marine habitat destruction.  Globally, IUU fishing takes many forms both within nationally controlled waters and on the high seas. While it is not known with certainty how much IUU fishing is taking place, it is estimated that it accounts for approximately 30 per cent of all fishing activity worldwide.

Mitigation and Environmental Enhancement Measures

Agriculture: The Canadian agricultural industry operates under an elaborate system of risk assessments, financial incentives, federal, provincial and municipal legislation and other initiatives that reduce the environmental risks of increasing agricultural production. Agricultural businesses are continually seeking ways to improve productivity, open new markets and manage risks to their operations. An increasingly important component to these farm business requirements is having access to scientific knowledge that helps the industry keep pace with pressure to merge sustainability considerations into production practices, and demonstrate results to their customers and end users. AAFC is an important contributor to agricultural research and development in Canada, especially in areas where other players do not have a strong motivation to invest.

AAFC, in collaboration with provincial and territorial partners, provides research and programming under the Growing Forward 2 policy framework, to support environmentally sustainable agriculture and environmental farm plans, and increase the adoption of Beneficial Management Practices – practices that sustainably increase productivity and reduce farmer input costs and landscape-level impacts.  Growing Forward 2’s Agri-Innovation Program, with up to $698 million in funding over five years, focuses on research and development that enhances economic growth, productivity, competitiveness, adaptability and sustainability of the Canadian agriculture, agri-food and agri-based products sector and assists in capturing new opportunities for the sector in domestic and international markets. The Program includes the Research Accelerating Innovation stream that consolidates several agri-environmental science initiatives. This stream addresses emerging science-based requirements by generating and providing access to scientific knowledge that helps the industry reduce risks to production, keep pace with sustainability considerations, and improve productivity.

Fish/Seafood: Any growth of fish and seafood exports to Israel as a result of an FTA will be subject to supply restraints that ensure that fish and seafood products are harvested at a sustainable level. 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.

Canada’s fish management systems and federal, provincial and territorial government measures 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 an FTA will have minimal environmental impact. Therefore, because there are effective environmental management systems and government measures in place, an increase in exports to Israel due to an FTA is neither expected to result in a significant negative or positive impact on the sustainability of fish stocks, nor on Canada’s marine or freshwater environment.

Selected Provincial/Territorial Initiatives: British Columbia’s Environmental Management Act uses environmental management tools to protect human health and the quality of water, land and air. In Manitoba, the Pesticide Regulation under the Environment Act regulates the application and storage of pesticides in the province. This regulation promotes the safe and appropriate use of pesticides in Manitoba’s environment. The Pesticide Regulation can be found at the following link: Pesticide Regulation.

7. 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).  The federal government also closely monitors environmental issues, such as waste management, in the interest of sustainability. 

Areas of focus include:

(a) 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.^{Footnote 10} 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.

(b) 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 Air Quality Management System (AQMS), which was recently approved by the governments, with the exception of the Government of Quebec,^{Footnote 11} 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. 

(c) Greenhouse Gases

The federal government is taking a sector-by-sector regulatory approach to reducing industrial GHG emissions. In addition to the federal sector-by-sector regulatory approach provinces and territories have developed policies and programs reflecting a diversity of approaches to monitoring reporting and reducing greenhouse gas emissions (GHGs) to reach provincial GHG emission reduction targets. The provinces, territories and the federal government work together to ensure our approaches to GHG reductions are complimentary. The federal 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. Some provinces, such as British Columbia, Manitoba, Ontario and Quebec, all of which joined the Western Climate Initiative, have also implemented GHG-reduction mechanisms.^{Footnote 12}

In the transportation sector, final regulations establishing progressively more stringent GHG emission standards for light duty vehicles of the 2011-16 model years were published in October 2010. Draft regulations to establish even more stringent GHG standards for light duty vehicle of the 2017 and later model years were published in December 2012. The final regulations are scheduled to be published later in 2014. Regulations have also been finalized to reduce GHG emissions from new on-road heavy-duty vehicles and engines for model years 2014 and beyond.

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.

(d) 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 with leachate collection systems, many of which capture, flare and/or utilise the landfill gas. Canada’s 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. There have also been increasing efforts in the area of food waste reduction. The management of organic waste (e.g. food waste, leaf and yard 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 on the Control of Transboundary Movements of Hazardous Wastes and their Disposal and relevant OECD decisions in this area.  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 CCME, as indicated earlier, 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.

(e) 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.

The Government of Canada has in place a number of laws and a regulatory framework which protect human health and the environment from the risks of harmful chemicals.  The primary legal authority for assessing and managing harmful chemical substances is the Canadian Environmental Protection Act 1999. Other legislation which may be used includes the Canadian Consumer Product Safety Act, the Food and Drugs Act, and the Pest Control Products Act. The Government of Canada’s Chemicals Management Plan (CMP), enables decision-making processes and coordination under the “best placed act” initiative, to ensure that the most appropriate authorities and suite of legislative, regulatory and other tools available under these various acts are used to protect human health and the environment from hazardous chemicals.  The CMP, launched in 2006, is jointly managed by Environment Canada and Health Canada in order to:

• take action on new and existing chemicals;
• integrate chemical management activities across the government; and
• provide predictability for business and expand public trust through transparent work plans.

For further information on Canada’s Chemicals Management Plan, please refer to: Canada’s Chemicals Management Plan

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:

• Canadian Environmental Sustainability Indicators (CESI)^{Footnote 13} – 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.

  • CESI Nature Indicators
  • CESI Air and Climate Indicators
  • CESI Water Indicators
• 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. These guidelines were established by the CCME to provide nationally endorsed science based goals for the quality of atmospheric, aquatic, and terrestrial ecosystems.

Other Environmental Monitoring in Canada

The FSDS is the Government of Canada’s overall sustainable development strategy. The environmental assessment of this trade negotiation takes into account FSDS goals and targets.

The FSDS provides Canadians with a whole-of-government picture of federal goals, targets, and specific actions (implementation strategies) to achieve environmental sustainability, organized under four themes: Addressing Climate Change and Air Quality; Maintaining Water Quality and Availability; Protecting Nature and Canadians; and Shrinking the Environmental Footprint – Beginning with Government. The strategy’s objective, as defined by the Federal Sustainable Development Act, is to make environmental decision making more transparent and accountable to Parliament.

For more information on the FSDS, please refer to the following website (FSDS).

The CIFTA will not have any effect on Canada’s ability to develop and implement environmental policies and regulations. Canada will safeguard its ability to maintain and expand the current framework of policies, regulations and legislation for the protection and conservation of the environment.

8. Conclusion

Canada’s bilateral merchandise trade flows with Israel are modest. In addition, Canadian and Israeli tariffs are already fully eliminated for industrial goods, so new bilateral market access opportunities for Canadian business will effectively be limited to the areas of agriculture and fish/seafood.

Canadian exports to Israel represent only a very small proportion of Canada’s overall global merchandise exports. This would continue to be the case, even if considerable growth in Canadian exports to Israel ensued as a result of a modernized CIFTA. Thus, the significance of any environmental impact resulting from increased exports to Israel is expected to be very limited, and is expected to be easily accommodated within Canada’s existing environmental regime.

Provisions in other areas, such as technical barriers to trade, sanitary and phytosanitary measures, institutional arrangements, environment, labour, trade facilitation, rules of origin, intellectual property and E-commerce are not expected to have a significant, or direct impact on economic activity in Canada. The inclusion of such chapters in the FTA is therefore unlikely to have any negative environmental impacts in Canada, and may have direct or indirect positive environmental impacts.

Undertaking EAs is an effective way to address and avoid potential problems, and to protect the environment by improving overall policy coherence at the national level and by assisting decision-makers in understanding environmental implications of trade policy. This Initial EA concludes that a modernized CIFTA is likely to have little or no impact on Canada’s environment; and that any environmental impact resulting from a related increase in commercial activity could easily be accommodated by Canada’s existing environmental regime.