Final Environmental Assessment of the Canada-Panama Free Trade Agreement (FTA) Negotiations

Introduction

This report outlines the results of the Final Environmental Assessment (EA) of the Canada-Panama Free Trade Agreement (FTA). Canada-Panama FTA signed on May 14, 2010, is a high-quality comprehensive free trade agreement substantially covering market access for goods, services, investment, telecommunications, among other areas.  The Canada-Panama Agreement on the Environment and the Canada-Panama Labour Cooperation Agreement were also signed on May 14, 2010. The full texts of these agreements can be found here on the Canada-Panama FTA webpage.

The Environmental Assessment Process

FTA negotiations are subject to the 2001 Framework for Conducting Environmental Assessment of Trade Negotiations. This process focuses on the likely economic effects of trade and investment negotiations, as well as their likely environmental impacts in Canada. The process involves three phases – the Initial EA, Draft EA, and this, the Final EA. The middle phase, known as the Draft EA, is not undertaken if the FTA is not expected to result in significant environmental impacts in Canada. Given the findings of the Initial EA, a Draft EA was not required for the Canada-Panama FTA negotiations.

Findings of the Initial EA

The key findings of the Initial Environmental Assessment report include:

  • In the area of trade in goods, tariff elimination in the context of an FTA is expected to further bolster the presence of Canadian exporters in the Panamanian market, particularly in sectors for which Panama applies higher tariffs.
  • Minimal environmental impact is expected to result from increased imports from Panama as a result of tariff elimination in the context of an FTA, including as a result of increased CO2 emissions from transportation of goods from Panama to Canada.
  • Although the liberalization of services is expected to have an economic impact in Canada, the impact will be small relative to the aggregate Canadian economy.
  • The results of the Initial EA Phase indicate that significant changes to investment flows into Canada are not expected as a result of an FTA, with any possible environmental impacts being minimal.
  • The economic effects of the Canada-Panama FTA will be quite modest relative to Canada’s overall economic activity, and as a consequence the environmental impact is not expected to be significant. Therefore, the Initial Environmental Assessment of these negotiations did not anticipate significant environmental impacts on Canada.

Results of the Consultations Process

An Initial EA of the Canada-Panama FTA was completed in November 2008. The Government of Canada consulted with the Environmental Assessment Advisory Group (EAAG) and Federal/Provincial/Territorial Committee on Trade (C-Trade) following the completion of the Initial EA. In general, the groups did not register any concerns regarding the Canada-Panama FTA’s impact on the environment.

The Government of Canada opened the Initial EA for public comments from January 28 to February 28, 2009. No comments from the public were received.

Results of the Final EA

The purpose of the Final EA is to document the outcome of the negotiations in relation to the EA process, including any new issues raised through consultations. The results of the Final EA of the Canada-Panama FTA re-affirm the findings of the Initial EA: that the economic effects of the Canada-Panama FTA are expected to be modest relative to Canada’s overall economic activity, and as a consequence the environmental impact is not expected to be significant. Moreover, no new issues arose during the latter stages of negotiations with respect to potential environmental impacts in Canada. As a result no additional analysis was required.

Environment Provisions in the Canada-Panama FTA and the Canada-Panama Agreement on the Environment

The Canada-Panama FTA contains several trade-related environmental provisions and a principles-based Environment Chapter. There is also a separate, parallel Agreement on the Environment. Provisions in both of these agreements are consistent with those found in other Canadian FTAs and parallel agreements on the environment.

The parallel Agreement on the Environment itself sets out mutual environmental obligations that address, inter alia:

  • The establishment of high levels of environmental protection;
  • The commitment not to derogate from domestic environmental laws to encourage trade or investment;
  • Compliance with and the enforcement of environmental laws;
  • The assessment of environmental impacts on proposed projects.
  • The establishment a framework for the Parties to cooperate on environmental matters of shared interest.

Similar to Canada’s previous free trade agreements, the Canada-Panama FTA includes a statement in its Preamble, indicating both Parties’ commitment to undertake the deepening of bilateral trade relations in a manner that is consistent with environmental protection and conservation.

The Initial Provisions and General Definitions Chapter, Article 1.06 notes that in the event of an inconsistency between an obligation in the FTA and an obligation of a Party under the following environmental or conservation agreements, the multilateral environmental agreement would prevail.1 These multilateral environmental agreements include: 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.

In addition, general provisions with respect to the protection of human, animal or plant life or health, as well as the conservation of exhaustible natural resources are included in the Canada-Panama FTA. These safeguards, found in Chapter Twenty-Three of the FTA text, are based on those contained in GATT Article XX and GATS Article XIV.

Finally, Chapter 9 on Investment, Article 9.16 contains a clause on maintaining environmental standards, whereby the signatories recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. In the event that a Party offers such encouragement, the other Party may request consultations. This recognition is also reaffirmed in the parallel Agreement on the Environment. The Environment Chapter within the FTA includes environmental objectives and summarizes the obligations set out in the parallel Environment Agreement.

Comments on this report may be sent by email, mail or fax to:

Environmental Assessment of Trade Agreements  
Trade Agreements and NAFTA Secretariat
Global Affairs Canada
Lester B. Pearson Building
125 Sussex Drive, Ottawa, ON, K1A 0G2
Fax: (613) 992-9392
E-mail: EAconsultationsEE@international.gc.ca

Any comments received will be circulated to the lead negotiator and the Government of
Canada’s EA of Trade Steering committee in order to inform future EAs of trade negotiations and other related policy development and decision-making processes.

1 Provided that the measure taken is necessary to comply with that obligation, and not applied in a manner that would constitute, where the same conditions prevail, arbitrary or unjustifiable discrimination or a disguised restriction on international trade.