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Initial Environmental Assessment of the Canada-U.K. Bilateral Trade Agreement Negotiations

Table of contents

Executive summary

Since 2001, the Government of Canada has conducted environmental assessments of its international trade negotiations, in line with the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals. This approach has allowed for the identification of potential environmental impacts of a trade agreement and the identification of ways to mitigate possible negative impacts, either through the course of negotiations or through domestic measures. The purpose of these assessments is to fully integrate environmental considerations into the negotiating process, contribute to informed decision-making, and improve overall policy coherence.

Canada and the U.K. have enjoyed preferential access to each other's market since the provisional application of the Canada – European Union Comprehensive Economic and Trade Agreement (CETA) began on September 21, 2017. As a result of the U.K. decision to leave the European Union (EU), and as a matter of international law, the U.K. ceased to be a party to CETA on January 1, 2021. However, the Canada-United Kingdom Trade Continuity Agreement (TCA) entered into force on April 1, 2021 and is a transitional agreement that substantively replicates CETA, providing Canadians with stable preferential access to the U.K. market. Under the terms of the agreement, Canada and the United Kingdom have committed to begin new negotiations towards a comprehensive bilateral FTA within a year of its entry into force (by April 1, 2022), and to seek to complete negotiations within 3 years (by April 1, 2024).

Negotiation of a new bilateral FTA is expected to allow Canada and the U.K. to both preserve and improve on the TCA market access outcomes for both goods and services, and secure outcomes tailored to the bilateral trade relationship. Given the comprehensive nature of the TCA market access outcome, a comprehensive bilateral FTA is not expected to generate economic effects that can be quantitatively modelled. Instead, it is expected to ensure continuity for traders and improve outcomes, including on issues related to inclusive trade, environment and labour.

This report presents the Initial Environmental Assessment (IEA) of bilateral trade agreement negotiations between Canada and the U.K. Its purpose is to identify potential impacts on the environment in Canada and the U.K. and beyond that may result from an FTA, assess the significance of these impacts, and identify possible enhancement or mitigation options that may be addressed in the negotiations.

Based on the results of a broad review of environmental links, this IEA concludes that the negotiation of a new bilateral free trade agreement with the U.K. is not likely to produce significant positive or negative environmental effects given that any economic gains are likely to be incremental. The majority of outcomes Canada may seek include updated rules to address existing bilateral irritants and inclusive trade provisions. Notably, Canada will seek to negotiate a trade and environment chapter that will bring bilateral obligations with the U.K. in line with Canada's most recent and ambitious provisions in this area.

Further, an overview of the Government of Canada's and the U.K. government's existing environmental legislative framework, including statutes, regulations, policies, and actions for the prevention and management of environmental risks, suggests that Canada is well positioned to mitigate any potential environmental impacts of an agreement, including through future improvements in the environmental performance of both Canada's and U.K.'s economic sectors. The FTA also offers the opportunity to enhance positive impacts or mitigate negative effects from trade liberalization. In particular, the chapter-by-chapter review points to several areas for environmental collaboration and risk mitigation in the context of the FTA. In addition to more ambitious trade and environment chapter provisions, this could also include expanded market access for environmentally-friendly services, increased institutional cooperation between Canada and U.K., and provisions related to Investment and Government Procurement.

The Government of Canada is committed to advancing an inclusive approach to trade through a potential agreement, in recognition that trade policies must respond and contribute meaningfully to overall domestic economic, social and environmental policy priorities.

This report should be read in conjunction with the Summary of the initial Gender-Based Analysis Plus (GBA+) that presents the potential differentiated effects and opportunities of an agreement on diverse groups of women and men in Canada, with SMEs and Indigenous peoples as priority considerations.

1. Background and study objectives

On March 29, 2017, the United Kingdom of Great Britain and Northern Ireland (U.K.) invoked Article 50 of the Treaty of Lisbon and notified the European Council of its intention to withdraw from the European Union (EU). On January 31, 2020, the U.K. ceased to be a Member State of the EU and entered into a transition period as per the terms of the EU-U.K. Withdrawal Agreement treaty. During the transition period, which kept the U.K. temporarily in the EU Single Market, Canada was able to agree with the EU and the U.K. that trade preferences of the Canada – European Union Comprehensive Economic and Trade Agreement (CETA) could continue to apply to the U.K.  When the transition period ended on December 31, 2020, the U.K. departed the EU Single Market, Customs Union and free trade area, as well as all EU international agreements, including the CETA.

While the U.K. continued to be a Member State of the EU, it was not able to enter into new international trade negotiations; however, it could seek to replicate the terms of existing EU FTAs, like CETA. To avoid a gap in trade preferences for Canadian stakeholders, Canada undertook negotiations to substantively replicate the CETA outcome on a bilateral basis with the U.K. On December 9, 2020, Canada and the U.K. signed the Canada- U.K. Trade Continuity Agreement (TCA). The TCA, which entered into force on April 1, 2021, provides stability and predictability for businesses and workers in both countries following the U.K.'s withdrawal from the EU. Under the terms of the TCA, the Parties have committed to enter into subsequent negotiations within one year of the TCA's entry into force and to work towards concluding a comprehensive trade agreement tailored to the bilateral relationship within three years.  

1.1 Economic relationship between Canada and the U.K.

Canada and the U.K. have historically enjoyed mutually advantageous commercial relations. With a total population of 67 million people and a gross domestic product (GDP) of $2.7 trillion (£1.95 trillion) in 2020, the U.K. was Canada's third-largest destination for merchandise exports worldwide as a single country and a key source of foreign direct investment (FDI) and science and technology partnerships. The U.K. is Canada's most important commercial partner in Europe and our fifth largest globally. Two-way merchandise trade in 2020 reached $30.7 billion. That said, a large share of trade between Canada and the U.K. is in precious metals such as gold. If gold is removed from total trade, bilateral trade between the two countries remains significant, at $14.7 billion, close to the $14.8 billion in trade between Canada and South Korea. With respect to trade in services, Canada exported an average of $7.0 billion in services to the U.K. from 2017 to 2019. Over the same period, the U.K. exported $8.0 billion in services to Canada.

The U.K. is an important source of foreign direct investment (FDI) for Canada, ranking fourth after the United States, the Netherlands and Luxembourg. In 2019, FDI stock from the U.K. was valued at $62.3 billion. There are more than 950 U.K. affiliates that have a presence in Canada and that contribute to our economy. The U.K. is Canada's second most important destination for investment abroad. More than 1100 U.K. firms are owned or controlled by Canadian interests. Canadian stock of FDI in the U.K. was valued at $107.0 billion in 2019. That makes the U.K. Canada's second largest destination for Canadian direct investment abroad. Canadian public sector pension funds have over $51 billion invested in U.K. infrastructure and real estate.

Canada and the U.K. also have strong partnerships in science, technology and innovation, with thriving networks of researchers, universities and R&D-intensive companies. To strengthen these links further, Canada and the U.K. signed a Memorandum of Understanding (MoU) on Science, Technology, and Innovation in 2017. This agreement has helped accelerate collaboration and commercialization in areas such as agri-tech, advanced manufacturing, smart-grids, artificial intelligence, quantum technologies and polar research.

1.2 Objectives of the proposed Free Trade Agreement

FTAs are binding treaties between countries that open markets for businesses by eliminating or reducing a variety of tariff and non-tariff barriers; establish the terms of market access in areas such as services, investment and government procurement; and set out rules for fair and transparent treatment. A Canada-U.K. bilateral trade agreement will aim to:

The proposed bilateral trade agreement aims to address areas beyond the traditional focus of, for example, liberalization of trade in goods and services, investment and government procurement, to also include provisions such as those related to sustainable development, trade and gender, and trade and Indigenous peoples. For a detailed description of the objectives of each proposed bilateral trade agreement chapter, please refer to Annex A.

1.3 Framework for Environmental Assessment of Trade Negotiations

In 2001, pursuant to the Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals, the Framework for the Environment Assessment (EA) of Trade Agreements (the "Framework"), was developed by Global Affairs Canada to evaluate the environmental impacts of Canada's trade policy initiatives.

In 2021, the Framework was renewed to take into account progress on methodologies in conducting EAs and provide updated guidance to trade negotiators to support the continued application of the Directive to future trade negotiations. Based on the principles of flexibility, timeliness, transparency and accountability, evidence-based, and continuous improvement, the objectives of the new Framework are to: 

To ensure that the new Framework is consistent with Canada's inclusive approach to trade which seeks to ensure that Canada's trade policies more effectively support Canada's economic, social and environmental priorities, and also is consistent with and advances Canada's Federal Sustainable Development Strategy (FSDS), the EA analysis has three complementary components: 

  1. Quantitative and qualitative assessments
    • Quantitative assessment based on the GTAP-e economic model which allows for the comparison of the baseline scenario to the post-liberalization scenario after the agreement's implementation. 
    • Qualitative assessment and case studies to assess aspects such as impacts outside of Canada or in specific sectors in cases where quantitative data is limited.
  2. Review of trade agreement provisions 
  3. Review of existing environmental legislation, policies, and actions in Canada 
    • The trade agreement is reviewed in the context of domestic laws, policies and actions to prevent and manage environmental risks in Canada as well as to identify opportunities for additional domestic policy responses. 

The EA of trade negotiations benefits from the active support and advice from the following five critical actors: (1) federal departments and agencies, (2) provincial and territorial governments, (3) Indigenous peoples, (4) the Environmental Assessment Advisory Group (EAAG), and (5) the general public. 

The Framework follows 4 phases of assessment:

  1. Initial EA analysis and reporting: the EA process is initiated upon the launch of exploratory discussions and focuses on: (1) activating communication channels with all players of the analysis and (2) establishing the methodological approach and scope of the analysis.
  2. Integration of environmental considerations: Consolidation of Phase 1 analysis through in-depth quantitative and qualitative measures and integration of environmental considerations into the preparation of Canadian positions. Informal consultations with environmental experts across the government are ongoing throughout negotiations. 
  3. Final EA analysis and reporting: Final EA on the final agreement. 
  4. Monitoring and ex-post reporting: Implementation phase with follow-up and monitoring which may include ex-post environmental studies, ongoing reporting on cooperation activities, and continuous improvement of the EA process through regular consultations and strategic reviews. 

2. Stakeholder consultations

In conducting environmental assessments for trade agreements, Global Affairs Canada consults with other government departments and agencies, including Environment and Climate Change Canada (ECCC), the Impact Assessment Agency (IAA) and a number of federal government departments and agencies involvedFootnote 1 in the negotiation under review. This approach facilitates informed policy development and decision-making throughout the negotiations.

The IEA also includes consultations with the public, provincial and territorial governments, Indigenous peoples' representatives, and with the non-governmental Environmental Assessment Advisory Group (EAAG).  The EAAG is made up of 18 persons drawn from the business sector, academia and non-governmental organizations, and provides advice in their own expert capacity on the EA undertaken by GAC. At the conclusion of each assessment phase (i.e. Initial and Final), EAs are shared with provincial and territorial representatives and the EAAG for feedback before being released for public comment.

This section presents the comments and input that were received from the public, provincial and territorial governments, Indigenous representatives and the EAAG as part of the preliminary assessment of a Canada-U.K. bilateral trade agreement negotiation.

2.1 Public consultations

A Notice of Intent to conduct impact assessments, including an initial environmental assessment, on a possible Canada-U.K. bilateral trade agreement was published on March 13, 2021. This Notice invited interested individuals to submit their input for consideration in the drafting of the IEA. A range of stakeholders cited environment and climate change considerations, including non-governmental organizations, academics, labour organizations and individuals. In the event of a bilateral trade agreement with the U.K., a number of stakeholders stressed that such an agreement should incorporate enforceable environment commitments, including binding commitments to combat climate change and implement international climate obligations. Some stakeholders noted that a trade agreement between Canada and the U.K. provides an opportunity to influence the emerging international trade and environment agenda, pointing to examples such as carbon border adjustments, public procurement tools, and regulatory cooperation. A number of stakeholders encouraged the government to pursue trade rules that support and facilitate the trade in renewable and clean energy technologies and environmental services. Lastly, stakeholders cautioned that Canada should ensure that no rules in a trade agreement could be used against ambitious climate and environmental policies, including through investor rights provisions.

2.2 Other consultations and engagement

2.2.2 Provinces and territories

Consultations with provinces and territories form an integral part of the environmental assessments of trade negotiations. As such, the draft of this IEA was shared with provincial and territorial governments, four of which provided comments covering a number of topics, including invasive species, carbon leakage, forest management, as well as coverage of provincial and territorial actions and regulatory frameworks. These comments were documented and considered in the final version of this document.

2.2.3 Indigenous peoples

Indigenous groups were actively engaged in the drafting of this initial environmental assessment, notably through the GAC-led Indigenous Working Group on trade policy (IWG). The IWG comprises National Indigenous Organizations, modern treaty partners, Indigenous industry associations, academics, legal and policy experts, and others.

2.2.4 Environmental Assessment Advisory Group

Members of the EAAG were engaged in the drafting of this document. Given the variety of expertise and approaches represented on the EAAG, the comments received from the group were instrumental in shaping this document. In particular, EAAG members' feedback pointed to the need to broaden the scope of the IEA process for future engagements, to refine sections on mining waste management as well as marine resources and to refine analysis of multiple sectoral impacts.

3. Preliminary Environmental Impact Assessment

The purpose of the IEA is to identify potential environment impacts in Canada, the U.K. and beyond that may result from a bilateral trade agreement between Canada and the U.K., and to assess the significance of these impacts.

Negotiation of a new bilateral FTA is expected to allow Canada and the U.K. to preserve and improve on the TCA market access outcomes for both goods and services and secure an agreement tailored to the specific bilateral trade relationship. Given the comprehensive nature of the TCA market access outcome, a comprehensive bilateral FTA is not expected to generate new economic changes.  Attendant environmental effects cannot therefore be quantitatively modelled, but are not expected to be substantial.

3.1 Effects of the TCA and a CA-UK FTA on GDP and Trade

The current TCA provides Canadian exporters with preferential access to the U.K. market, including the elimination of 98% of tariffs on Canadian exports to the U.K. (carried over from CETA), and the elimination of an additional 1% of tariffs on Canadian exports to the U.K. by January 1, 2024, when the TCA is fully implemented. This will bring the total elimination of tariffs on Canadian exports to 99%.

Negotiating a custom bilateral FTA with the U.K. would allow Canada to seek to address stakeholder concerns that were not adequately addressed in the continuity agreement and establish a more predictable business environment, while protecting Canadian interests.

FTA negotiations would also provide Canada with the opportunity to seek modern rules for digital trade, improve on TCA outcomes in the areas of environment and labour, and include provisions to promote responsible business conduct and the participation of women, small and medium-sized enterprises (SMEs) and Indigenous peoples in trade.

3.2 Preliminary Environmental Assessment of a bilateral FTA with the U.K.

The negotiation of an FTA with the U.K. provides an opportunity to increase the Agreement's benefits for Canadians. However, increases in production levels are expected to be limited considering existing preferential access, instead negotiations are expected to focus on improving outcomes to better reflect the bilateral trade relationship.

In the context of this initial environmental assessment, the Government of Canada therefore projects that minimal environmental impacts will result from the implementation of a future Canada-U.K. FTA. It is, nevertheless, appropriate to explore potential environmental consequences of a new FTA with the U.K.  by examining the environmental effects of the current agreement.

3.2.2. TCA Environmental Impact Assessment

As a transitional replication of CETA, the TCA's environmental effects on Canada-U.K. trade should be considered identical to those under CETA.  Given its status as a replication, an exemption to the Cabinet Directive on Environmental Assessment of Policies, Plans and Program Proposals was applied to the Agreement.

CETA's potential environmental impacts have been assessed twice through that Agreement's Initial Environmental Assessment (EA) and Final EA. In February 2012, Canada published an Initial Strategic Environmental Assessment of CETA's potential impacts, which concluded that significant environmental impacts in Canada would be unlikely due to Canada's extensive environmental regulatory framework and commitment to sustainable development, as well as the potential for furthering environmental cooperation with the EU under CETA. In May 2017, Canada published a Final Environmental Assessment CETA, which concluded that the Agreement was expected to have only minor environmental impacts in Canada. These conclusions are supported by a quantitative analysis which concluded that the net impact of increased bilateral trade with EU Member States (including the U.K.) on Canada's environment would be characterized by only minor increases in greenhouse gas emissions, energy and water use. The continued application of the CETA outcome to the Canada-U.K. trade relationship, including with possible incremental changes, are not expected to affect this previous assessment. 

Lastly, although the environmental effects of CETA have been extensively studied, it should be noted that at the time of the TCA's negotiation, Canadian and U.K. officials sought, but were ultimately unable, to separate CETA's environmental data for the U.K. from data for the remaining EU members.

3.2.1 TCA Environment and sustainable development chapters

The Canada-U.K. TCA, as in CETA, has a Trade and Environment chapter and a Trade and Sustainable Development chapter. Working together, both chapters seek to ensure that both Canada and the U.K. pursue high social and environmental objectives while realizing the benefit of liberalized trade. As in CETA, these chapters contain commitments to effectively enforce domestic environmental laws and encourage cooperation to address global environmental issues such as climate change, multilateral environmental agreements, environmental goods and services, and biological diversity. The chapters also reflect our shared values in recognizing that economic, social and environmental objectives are mutually supportive and reinforcing.

A bilateral FTA negotiation would present Canada with an opportunity to build on the TCA's environment and sustainable development chapters towards a possible comprehensive and enforceable environment chapter, in line with recent agreements such as CUSMA and the CPTPP. Canada may also seek to include enhanced provisions to address climate change.

3.3 Preliminary qualitative assessments

The potential environmental impacts of a Canada-U.K. FTA extend beyond those captured above. This section is intended to provide qualitative analysis of the possible environmental implications of increased trade between Canada and the U.K. by examining areas of possible environmental concern and benefit such as GHG emissions, air pollution, deforestation, biodiversity loss, water quantity and quality, marine litter and plastic waste, and management of harmful chemicals.

3.3.1 Climate change

An increase in international trade as a result of ongoing trade ties with the U.K. along with a trade agreement tailored to the bilateral trade relationship may be associated with incremental growth in production of goods and services and an increase in investment that are associated with or contribute directly to changes (both increases or decreases) of greenhouse gas (GHG) emissions. An increase of trade and investment could also contribute to higher activity in the transportation sector as a whole, particularly in the international shipping industry, which accounts for a significant amount of global GHG emissions and produces significant amounts of black carbon, a short-lived climate pollutant that contributes to warming, particularly near the Arctic.

a. Canada

Over the past five years, an intensive national effort has been made to put in place the measures needed to put Canada on a path to significantly reduce emissions in a way that ensures all sectors and parts of the country can participate and thrive in the increasingly low-carbon economy. This effort has been guided by the 2016 Pan‑Canadian Framework on Clean Growth and Climate Change, Canada's first‑ever national climate plan. With the rapidly accelerating climate crisis, and in light of the scale of the clean growth opportunity, however, the Government committed to meet and exceed its previous 2030 goal, and delivered on that commitment in December of 2020 through Canada's strengthened climate plan — A Healthy Environment and A Healthy Economy. Canada's Nationally Determined Contribution, submitted in July 2021, confirmed Canada's new and ambitious 2030 GHG target of 40-45% below 2005 levels, and Canada's commitment to achieve net-zero emissions by 2050.

Canada is an active participant in discussions on GHG emissions reductions at the International Maritime Organization (IMO), and supports the implementation of the initial IMO strategy on reduction of greenhouse gas emissions from ships. 

A Canada-U.K. bilateral trade agreement could create an increase in carbon emissions from sectors such as transportation, manufacturing, mineral products and other extractives (i.e., oil, gold and silver). Increased sales will provide increased revenue, which could facilitate the adoption of new technologies and processes to reduce GHGs.

Since traded goods would need to be transported between Canada and the U.K. via shipping and/or aviation, an increase in trade in goods would cause increased emissions, including of climate-warming agents such as carbon dioxide and black carbon.

b. U.K.

The U.K. has seen extensive public and parliamentary interest in acting on climate change and sustainable energy. Its GHG emissions have trended downward since 1990 and it is on track to meets its Paris Agreement reduction target of 68% below 1990 levels by 2030. The U.K. government's 25 Year Environment Plan and its Clean Growth Strategy contain ambitious proposals on housing, business, power, transport, the natural environment and green finance. The U.K.'s 2008 Climate Change Act makes long-term emissions reductions targets legally binding. In 2019, the U.K. passed legislation making net-zero by 2050 a legally binding target.

An increase of trade in goods and services between the U.K. and Canada due to a comprehensive bilateral FTA could lead to an increase in GHG emissions as well as emissions of black carbon. While the U.K. has a number of emissions reduction policies already in place to mitigate such an effect, increased international aviation and shipping in particular, are under the purview of the International Maritime Organization and the International Civil Aviation Organization, respectively, and neither have taken significant action to address emissions.

3.3.2 Biodiversity and wildlife loss

Both Canada and the U.K. rely on their biodiversity to maintain the ecosystem goods and services (EG&S) on which their economies rely. There are many factors that contribute to biodiversity loss in both Canada and the U.K., including habitat degradation and fragmentation, land use changes, overexploitation, illegal fishing, illegal wildlife trade, pollution, climate change, invasive alien species, forest and land fires, and underwater noise.

a. Canada

Although Canada has implemented a number of laws and policies to mitigate the loss of biodiversity at the various levels of government, populations of at-risk wildlife continue to decrease. This loss of biodiversity in Canada is driven by the cascading effects of habitat loss and degradation, climate change, pollution, underwater vessel noise, invasive species, and overexploitation. As a result, Canada continues to monitor the harvesting and trade of fish and seafood to maintain biodiversity and sustainable harvest levels, prevent the overexploitation of resources and recognize the issues of Indigenous peoples' access to traditional natural resources.   

The unsustainable trade of wildlife is also a contributing factor to biodiversity loss. Canada is a founding party to the United Nations Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES) and the United Nations Convention on Biological Diversity (CBD), which are a treaties protecting wild plants or animals.

Marine biodiversity could be impacted by a Canada-U.K. bilateral trade agreement; however, fisheries management measures are implemented to ensure potential impacts on marine biodiversity are averted. In 2019, Canada exported a total of CA$7.4B in fisheries products, mostly shellfish, globally and CA$100.7M specifically to the U.K. market. Even with increased policy implementation, the proportion of healthy Canadian fish stocks have gone from 45% in to 30% from 2016 to 2019.

Canada is member of multiple regional fisheries management organizations (RFMOs) and cooperates with other countries, including the U.K., to conserve and sustainably manage common fisheries resources, especially straddling and high migratory fish stocks. This existing cooperative management through RFMOs can mitigate the impacts of a Canada- U.K. bilateral trade agreement by setting science-based limits on harvest amounts and methods, independent of demand created by trade opportunities. Canada is working with the U.K. to push for stronger conservation measures for sharks in RFMOs such as the International Commission for the Conservation of Atlantic Tunas (ICCAT).

In August 2019, Canada surpassed its 2020 target by establishing marine protected areas (MPA) and other effective area-based conservation measures (OECMs). Currently, 13.81% of Canada's marine area is protected. Canada is pursuing 25% marine area protection by 2025, working toward 30% by 2030 to ensure the health and sustainability of the marine environment and its resources.

Increased international trade will also result in an increase in underwater noise from the vessels that are integral to the trading of goods. Since 2017, Canada has taken a leadership role at the United Nations International Maritime Organization (IMO) to promote action on underwater vessel noise to protect marine ecosystems and promote the development of international underwater noise standards for vessel design and maintenance. In June 2021, a new work output proposal, submitted by Canada, Australia and the U.S., on underwater vessel noise was approved by the IMO signalling the ongoing importance of this issue and the need for ongoing international collaboration.

b. U.K.

Biodiversity policy is a devolved responsibility in the U.K.: England, Scotland, Wales and Northern Ireland have each developed, or are developing, their own biodiversity or environment strategies.

The extent and condition of the U.K.'s land-based ecosystems, including forests, remain affected by past changes in land use, and by pollution, invasive non-native species and climate change. While long-term declines in the number and distribution of certain species have slowed in some cases, continued action is needed to tackle ongoing declines across many groups.

While the U.K. is also party to CITES and the UN CBD, increased bilateral trade with Canada could also affect marine biodiversity and marine wildlife. The U.K. exported £2B in fisheries globally, with $CA25M to the Canadian market. Fish stocks could be at risk if an increase in fisheries trade is accomplished by overfishing resulting from a Canada- U.K. bilateral trade agreement. Such a risk is unlikely and would likely be mitigated by sustainable fisheries management measures.

The In 2019, according to the U.K. Marine Strategy Programme of Measures, there were 355 Marine Protected Areas (MPAs) in U.K. waters, totalling over half of all MPAs within the Northeast Atlantic network and covering 25% of the U.K.'s domestic waters.

The U.K. has been supportive of efforts at the IMO, and to furthering international policy and research efforts, to understand the impacts of underwater vessel noise on marine biodiversity. 

3.3.3 Air pollution

An increase in international trade between Canada and the U.K. is likely to result in increased emissions of air pollutants along transportation routes between both countries, and also within both countries, from major transportation routes. Such activities would increase domestic air pollution and likely have transboundary air pollution impacts as this pollution is transported to neighbouring countries by prevailing winds.  Anthropogenic sources of cross-border pollution include emissions from transportation, energy production and heavy industry. Such emissions also contribute to the formation of smog. Cross-border pollution has become increasingly common as the world's factories and cluster in manufacturing and resource-intensive regions, including both in Canada and the U.K.

a. Canada

Air pollution associated with certain industries, as well as pollution from increased shipping, rail and land transportation, could be exacerbated by an increase in international trade resulting from a Canada- U.K. bilateral trade agreement. In Canada, addressing air pollution is a shared responsibility among federal, provincial, and territorial governments. The federal government collaborates with provincial and territorial governments to implement Canada's Air Quality Management System (AQMS), which includes Canadian Ambient Air Quality Standards (CAAQS), industrial emissions requirements, provincial air zones and interprovincial air sheds, as well as reporting to Canadians. The federal government puts in place the CAAQS, developed in collaboration with provinces and territories. CAAQS are intended to drive outdoor air quality improvements across the country. In addition, the federal government has put in place a number of regulatory and non-regulatory measures to address air pollutant emissions from industrial sources, as well as from transportation sources and consumer and commercial products.

Many air pollutants travel long distances and across national boundaries. In addition to the impacts of domestic activities and emissions, Canadian air quality is impacted by air pollution that originates from outside its borders. Therefore, Canada plays an active role in several international and bilateral fora to ensure that Canadians have clean air and a healthier environment. This includes working under the Convention on Long-range Transboundary Air Pollution (LRTAP) to reduce emissions of sulphur dioxide (SO2) and nitrogen oxides (NOx), which lead to acid rain; emissions of NOx and volatile organic compounds (VOCs) which contribute to ground-level ozone, a key component of smog/haze; and emissions of particulate matter (PM), which negatively affects human health. Canada is actively working multilaterally with partners under the Arctic Council, the Climate and Clean Air Coalition, and the Global Methane Initiative to mitigate emissions of short-lived climate pollutants, including black carbon and methane. Canada also works bilaterally with the U.S. under the Canada-U.S. Air Quality Agreement, to reduce emissions that cause acid rain and ground-level ozone.

b. U.K.

The U.K. National Air Quality Strategy was implemented in 2007 and devolved responsibility in air pollution reduction to England, Scotland, Wales and Northern Ireland while the Department of Environment, Food, and Rural Affairs (DEFRA) coordinates at the national level.

Since then, the Clean Air Strategy of 2019 has implemented new objectives for reduction of sulphur dioxide (SO2), nitrogen oxides (NOx) and particulate matter (PM). The U.K. has committed to end the sales of petrol and diesel cars and vans by 2040. Other goals have been set to reduce levels of smog, acid rain and others by legislating on farming, industry and residential emissions.

The U.K. is an active and constructive partner under the Long-Range Transboundary Air Pollution Convention.

3.3.4 Water quantity and quality

International trade and the expansion of industry can have negative effects on water quantity and water quality. Key drivers in the decrease of water quantity include climate change, infrastructure development, agricultural land use, and water demand for commercial use. Additionally, toxic industrial waste can contaminate fresh water sources when released intentionally or accidentally.

a. Canada

Canadians have a multi-jurisdictional governance approach to water quality policy. The federal, provincial and territorial governments share responsibilities in watershed management, water efficiency and digital integration and system optimization of the water sector.

Canada is home to a fifth of the world's freshwater resources, and Canadians rank water as the country's most important resource. However, its fresh water sources are not evenly distributed and can be subject to adverse changes in water quantity. There are regional water quantity and water quality issues. About 60% of fresh water in Canada flows to the north, away from the majority of the population. Because northern communities – both Indigenous and non-Indigenous – are often downstream, they are particularly affected by water issues.

Flooding and drought can lead to negative economic impacts such as crop failure and damage to infrastructure (i.e., roads, bridges, and buildings). Additionally, low water levels can impact Canadian seaways (i.e., Great Lakes-St. Lawrence system), which are integral to Canada's participation in international trade.

The Government of Canada is creating a new Canada Water Agency to keep Canada's water safe, clean, and well-managed. Throughout 2020 and early 2021, the Government of Canada began initial discussions and engagement to inform the development of a Canada Water Agency. No date has been determined for the creation of the Agency.

b. U.K.

Water quality policy is a devolved responsibility in the U.K. England, Scotland, Wales and Northern Ireland have each developed, or are developing, their own water quality strategies.

The government has seen important progress in recent years. The U.K. now has consistently high levels of clean bathing waters, serious pollution incidents are steadily declining and rivers that were biologically dead are reviving. Over 99.8% of drinking water samples meet national standards in the U.K.

3.3.5 Marine litter and plastic waste

Global plastic production has been increasing over the past several decades at a rate faster than that of any other material. The improper management of plastic waste has led to the contamination of shorelines, surface waters, sediment, soil, groundwater, and harm to biota.

a. Canada

Canada has one of the largest coastlines in the world and is a significant consumer of plastic. In Canada, total sales of plastic were estimated at $35 billion in 2017, with approximately 4,667kt introduced to the Canadian market in 2016.Footnote 2 Plastics are used in a variety of industrial sectors, and demand for plastic products continues to grow.

Every year Canadians throw away 3 million tonnes of plastic waste, and only 9% of this waste is recycled, meaning that the vast majority of plastics end up in landfills and 1% finds its way into our natural environment. To address this issue, Canada has a comprehensive approach towards its vision of zero plastic waste by 2030. It is aiming to fulfill its Ocean Plastics Charter commitments, and is working with all the Canadian provinces and territories to implement the Canada-wide Strategy and Action Plan (Phase 1 and 2) on Zero Plastic Waste. It is supporting actions to address waste and pollution along the entire plastics lifecycle. The Government of Canada has committed to banning select single-use plastic items and to introducing recycled content requirements for plastic products. Lastly, in 2019, Canada exported CA$80M in plastics to the U.K., much of it already duty-free.

Since 2018, Canada has been a signatory of the Global Ghost Gear Initiative (GGGI) as part of our commitment to prevent, reduce and mitigate the impacts of marine litter, including abandoned, lost, and discarded fishing gear (ALDFG or "ghost gear"). ALDFG represents 46-70 per cent of marine macro-plastic litter in the world by weight, and is a key threat to fish stocks, aquatic ecosystems, and wildlife.

Canada works with the U.K. in a number of fora to tackle plastic waste and pollution, including the G7, G20, Commonwealth Blue Charter and Commonwealth Clean Ocean Alliance, United Nations Cleanseas Campaign, the Global Plastic Action Partnership, and the Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastic Trade at the WTO.

b. U.K.

In the U.K. it is estimated that five million tonnes of plastic is used every year, nearly half of which is packaging.

The U.K. exports a total of US$14.7B in packaging plastics globally, with US$134M specifically to Canada in 2019.

Like Canada, the U.K. addresses marine litter and plastic waste through UN SDG 14 (Conserve and sustainably use the oceans, seas and marine resources for sustainable development) and is part of the United Nations Convention on the Law of the Sea.

The U.K. has banned plastic microbeads and certain single use plastics (plastic drinking straws, cotton buds and stirrers), extended their plastic bag charge, introduced a tax on plastic packaging with less than 30% recycled content and is improving their waste systems via a Resources and Waste Strategy. The Strategy outlines actions along the product lifecycle to encourage producer responsibility, reduce demand for single use plastics and make it easier for people to recycle. The U.K. invested up to GBP 13 million (2018-2021) to support Commonwealth countries to improve waste management and reduce marine litter.

Canada and the U.K. are founding members and sit on the governing council of the Global Plastic Action Partnership.

The British Plastics Federation (BPF), an industry led initiative, released a reportFootnote 3 that commits to reduce plastics entering the ocean. BPF, including brands and retailers, have committed to achieve zero plastic packaging to landfills by 2030 and established a marine litter platform to highlight U.K. and global solutions.

The U.K. is a member of the GGGI, and is looking into taking active measures to capture ghost gear.

3.3.6 Mining waste management

An increase in mine development and the production of Canada's minerals and metals due to growing demand and improved commodity prices from a Canada- U.K. bilateral trade agreement could have negative impacts on the environment, and the communities impacted by mining activities, as presented in UN SDG 12 (Ensure sustainable consumption and production patterns). Significant progress in mine waste management strategies has been made in the last 25 years.  However, there remain significant concerns about the long-term stability of human-made impoundments and the negative perception of using natural bodies of water for disposing of mine waste. New methods to safely and effectively manage and reclaim mine waste are needed to stabilize tailings and limit metal mobilization.

a. Canada

The right market conditions, consistent or increased demand for raw materials from partners, as well as gains associated with a Canada – U.K. bilateral trade agreement could contribute to an expansion of existing mining operations, restarting of production at mine sites that are currently out-of-operation, or opening of new mines. In Canada, an increase in mining waste could create negative environmental and social effects including increases in the use of land and water bodies for mining and the management of mine tailings and waste rock, increases in greenhouse gas (GHG) emissions and potentially, localized changes in wildlife habitat and in water quality and quantity.

In 2020, Canada exported more than $11.5B worth of mineral commodities to the U.K., the most important trade sector between the two countries. However, much of this trade is already duty-free, so a future agreement would have only a marginal impact.

In Canada, all mining projects are subject to regulatory review. Mining regulations across the country include federal, provincial, and territorial environmental and regulatory processes to ensure that all mining projects are scrutinized by the appropriate authority and in the best interest of Canadians.

b. U.K.

The U.K. is a net importer of mineral products, importing more than $100B worth of pearls, precious stones and metals globally, with $11.5B of these products coming from Canada. A large share of trade between the Canada and the U.K. is in precious metals such as gold and silver.  

If a bilateral trade agreement were to increase the amount of precious metals imported from Canada, the impacts of mining in Canada have the potential to be exacerbated, but would not significantly impact the U.K. domestically.

3.3.7 Managing harmful chemicals

Increased production and use of hazardous chemicals globally, combined with increasingly global and complex supply chains for products, represent sources of pollution and exposure to harmful chemicals – from environmental transport through air, water, migratory species, and imported products. While Canada and the U.K. both have robust chemicals management legislation and programs in place, both countries receive imports of harmful chemicals in products from third-countries that may have weaker chemicals management regimes, that in turn could be traded between the two countries.    

a. Canada

Chemicals management is a longstanding core function of the federal government. In Canada, chemicals are managed under the Canadian Environmental Protection Act, 1999, and other federal statutes such as the Fisheries Act, the Pest Control Products Act (PCPA), the Food and Drugs Act (FDA), the Hazardous Products Act (HPA), and the Canada Consumer Product Safety Act (CCPSA).

Canada has a robust Chemicals Management Plan (launched in 2006) to assess and manage risks from harmful chemicals. Thousands of substances have been assessed to identify environmental or health risks, with action taken by Canada on over 500 toxic chemicals. More than 200 risk management measures have been implemented since 2006, and a total of over 400 risk management actions taken including those pre-CMP, such as regulations, pollution prevention plans and voluntary measures. 

Despite strong domestic actions, Canada remains a recipient of harmful chemicals from international sources and imported products.

b. U.K.

The U.K. has strong, comprehensive legislation covering the manufacture, supply, storage, transport, packaging, labelling, use and disposal of chemicals and other substances that could harm people and the environment.

Following the U.K.'s withdrawal from the EU, the EU REACH Regulation has been brought into U.K. law under the European Union (Withdrawal) Act 2018. The EU REACH Regulation has been replicated in the U.K. with the necessary changes to make it operable in a domestic context. As of January 1, 2021, companies that operate within the Great Britain market will need to comply with U.K. REACH. Under the Northern Ireland Protocol, the EU REACH Regulation continues to apply to Northern Ireland.

Like Canada, the U.K. is a recipient of harmful chemicals from international sources and imported products.

3.4 Conclusion of the Preliminary Environmental Assessment

As a scoping exercise, this IEA focused on identifying the potential non-quantified effects of a new bilateral FTA on the environment in Canada, the U.K., and globally. This review does not identify any significant positive or negative impacts on the environment from such an agreement. Given existing preferential market access under the TCA, and the minimal environmental effects associated with that agreement, any incremental increase in trade that results from bilateral negotiations is expected to have minimal environmental effects. The analysis does identify opportunities to improve existing environment provisions to bring them in line with Canada's newest and most ambitious provisions on trade and environment. 

The qualitative review of other environmental links, which aimed to broaden the analysis of potential risks related to a bilateral trade agreement with the U.K., did not identify any significant positive or negative impacts on the Canadian environment from such an agreement.  It did, however, highlight limited risks related to climate change, biodiversity and wildlife loss, air pollution, water quantity and quality, marine litter and plastic waste, mining waste management and managing harmful chemicals. Although beyond the scope of this report, the analysis also noted the possibility of positive and negative environmental impacts in the U.K.

Considering these limited risks, the next sections review the existing environmental legislative framework at the federal level in Canada (Chapter 4), as well as the enhancement and mitigation options that could be considered more specifically in the context of a Canada-U.K. bilateral trade agreement (Chapter 5).

4. Chapter-by-chapter review of enhancement and mitigation options

A Canada-U.K. bilateral trade agreement could also help to enhance positive impacts and/or mitigate environmental risks, as described in the following section. As the final analytical stage of the initial environmental impact assessment, this section identifies areas for environmental enhancement and risk mitigation that may be addressed in a potential Canada-U.K. bilateral trade agreement. This preliminary analysis aims to respond to the risks identified in section 3, as well as broader environmental considerations, in trade policy terms, with a view to inform negotiations. For more information on the purpose of each of the chapters mentioned below, please see Annex A.

For the purposes of this report, the assessment has been broken down into five groups of related chapters/provisions with potential environmental impacts:

Chapters not included in the above groupings are those that are not expected to significantly enhance or mitigate environmental impacts of the agreement.

4.1 Environment

Canada seeks to advance an ambitious and comprehensive Environment chapter in its trade agreement negotiations. This includes obligations to ensure that high levels of environmental protection are maintained as trade and investment are liberalized, as well as commitments to address a range of global environmental issues. Canada also includes environment-related provisions in other areas of its FTAs as appropriate, including in the preamble, as well as in the broader initial provisions and general exceptions articles.

In the context of the Canada-U.K. bilateral trade agreement, there are opportunities to use this chapter to improve environmental governance, and continue cooperation between Parties and address environmental challenges, not only in the risk areas identified in Section 3 of this report but also more broadly.

In particular, Canada will seek to use the opportunity of a bilateral trade agreement with the U.K. to advance four key objectives:

  1. Strengthen environmental governance by pursuing core obligations to maintain high levels of environmental protection, including commitments to effectively enforce environmental laws, to not derogate from those laws to encourage trade or investment, and to promote transparency, accountability and public participation. Commitments by Parties to maintain high levels of environmental protection and improve their respective laws and policies may help mitigate the minor increases expected in GHG emissions, water and energy usages identified in this report.
  2. Support efforts to address a range of global environmental challenges in areas that affect Canada's environment, economy and health. In addition to potentially helping address specific risk areas identified in Section 3 related to climate change, biodiversity and wildlife loss, air pollution, water quantity and quality, marine litter and plastic waste,  and managing harmful chemicals, environment provisions in a bilateral trade agreement with the U.K. could provide an opportunity to enhance efforts related to areas such as resource efficient and circular economy, marine litter and plastic waste, and conservation of biodiversity. An agreement could also include a binding commitment on climate change, which would support Canada's broader climate change objectives and align with the 2019-2022 Federal Sustainable Development Strategy (FSDS) goal to promote substantive climate change provisions in Canada's FTAs. Further, Parties could use the bilateral trade agreement to reaffirm their respective commitments to the multilateral environment agreements they have signed Overall, these provisions would support each Party's respective national, bilateral and international commitments to strengthen environmental protection and would help advance solutions to address global environmental challenges. Parties could also use this agreement to seek provisions to reaffirm or support their commitments under the Paris Agreement and the Glasgow Climate Pact.
  3. Promote mutually supportive trade and environment objectives through commitments to promote best practices of corporate social responsibility and responsible business conduct, measures to enhance environmental performance, and trade and investment in environmental goods and services. In particular, these provisions could encourage the promotion of trade in environmental goods and services, including those relevant to the risk areas identified in this report, and to broader climate change mitigation and adaptation goals. This could also contribute to sustainable growth and the creation of jobs, and would align with the 2019-2022 FSDS goal to grow Canada's clean technology industry and exports.
  4. Support sustainable management of natural resources by pursuing provisions related to a resource-efficient and circular economy, and sustainable fisheries, and agriculture.  Given the importance of natural resources and their significant role in the national economy of Parties, these provisions would reinforce the importance of sustainable resource management. These provisions may also help mitigate negative impacts, notably in relation to the agricultural practices highlighted earlier, as well as the generation of waste, overfishing of limited fish stocks, or illegal, unreported and unregulated (IUU) fishing.

In addition to the above objectives, the Environment chapter provides an opportunity to subject the environment obligations to the dispute settlement mechanism of a Canada-U.K. bilateral trade agreement, and strengthen existing cooperation activities between Canada and the U.K. on broader environmental issues by establishing a more streamlined framework for cooperation on matters of mutual interest, in line with Canada's approach in other FTAs.

Existing environmental cooperation activities between Canada and the U.K. cover a range of areas. Both countries signed the Canada-U.K. Partnership on Clean Growth and Climate ChangeFootnote 4 in September 2017. The Partnership aims to advance clean innovation as well as clean and renewable energy by promoting cooperation between parties in areas of mutual interest including, clean growth, carbon pricing and the Powering Past Coal AllianceFootnote 5. The Partnership also promotes the participation of both public and private sector bodies in Canada and the U.K. The agreement commits both Canada and the U.K. to advancing climate action and meeting shared international goals while working together towards a low carbon economy.

The current Canada-U.K. TCA has a designated Trade and Environment chapter carried over from CETA. The objectives of the Trade and Environment Chapter ensure that both Canada and the U.K. pursue high levels of environmental protection while realizing the benefit of liberalized trade. As in CETA, the Chapter contains commitments for Parties to effectively enforce domestic environmental laws, and cooperate to address global environmental issues such as climate change, multilateral environmental agreements, environmental goods and services, and biological diversity. Both Canada and the U.K. are members to a number of fora to tackle plastic waste and pollution, including the G7, G20, Commonwealth Blue CharterFootnote 6 and Commonwealth Clean Ocean AllianceFootnote 7, United Nations Clean Seas Campaign, and the Global Plastic Action PartnershipFootnote 8 . Multilateral environmental cooperation between Canada, the U.K. and other countries facilitates collaboration and cooperation between the two nations on shared climate mitigation and adaptation efforts to achieve the goals of the Paris Agreement, while working towards a low carbon economy.  

A potential bilateral trade agreement provides an opportunity to build upon these environmental cooperation activities and explore new cooperation avenues with the U.K.

4.2 Goods and services

Provisions on goods and services include the following chapters: National Treatment and Market Access (NTMA); Rules of Origin and Origin Procedures; Customs and Trade Facilitation; Sanitary and Phytosanitary Measures; Cross-Border Trade in Services; Temporary Entry; Electronic Commerce; Intellectual Property; and Biotechnology. The purpose of these chapters is to help Canadian traders, services providers and investors gain market access where possible and to maintain harmonized regulatory systems between Canada and the U.K. Please refer to Annex A for more details.

An bilateral trade agreement with the U.K. provides an opportunity to enhance positive impacts and/or mitigate impacts of increased trade in goods and services as follows:

More generally, chapters in this grouping could help improve trade processes and mechanisms through more predictable and transparent procedures as well as specific provisions to facilitate online trade in goods and services. This applies in particular to the Customs and Trade Facilitation and the Rules of Origin and Origin Procedures chapters, which could streamline customs processes and facilitate the movement of goods more efficiently. This would deliver commercial and environmental benefits by reducing costs and delays to traders, while minimizing the environmental impacts relating to the movement of goods through transportation efficiencies, promoting a paperless environment, and other mitigating factors.

4.3 Investment

 The purpose of an investment chapter under an bilateral trade agreement with the U.K. would be to help Canadian investors gain market access, protect them and their investments from discrimination and arbitrary treatment, and ensure that the regulatory systems in the U.K. are predictable. The investment chapter does not impose any changes to the Canadian regulatory framework, which applies to all foreign investors as it applies to Canadian investors, including the Impact Assessment Act and provincial environmental assessment regulatory regimes. As such, although the trade agreement may result in increased investments, these investments would need to meet the same standards of environmental protections as investments of domestic origin. The investment chapter could also contain a number of additional provisions to further address the risks noted in this study in relation to large-scale projects, and include:

4.4 Government procurement

Canada's Government Procurement (GP) objectives in trade negotiations are to ensure that Canadian suppliers are treated in a non-discriminatory manner when they bid on procurement contracts in a foreign market and that procurements are conducted in a fair, open and transparent manner.

While advancing the above objectives, Canada would seek to use the opportunity of negotiations with the U.K. to secure commitments to allow Parties to apply technical specifications to promote the conservation of natural resources or the protection of the environment in its GP activitiesFootnote 9 . The inclusion of such provisions would contribute to enhancing positive impacts of an agreement by supporting the Government's Greening Government Strategy, particularly its Policy on Green ProcurementFootnote 10 and advancing the 2019-2022 FSDS's goal to green government, which includes short-term milestones to:

Overall, commitments in the GP chapter would likely have an indirect but positive impact on the environment through the reinforcement of green GP practices and the expected associated increase in governmental spending on environmentally-friendly goods and services. GP commitments also reinforce Canada's efforts to incentivize the adoption of clean technologies, which can create economic opportunities and improve environmental outcomes.

4.5 Trade and Indigenous Peoples

As part of its inclusive approach to trade, Canada is advancing Trade and Indigenous Peoples provisions that seek to acknowledge the importance of enhancing the ability of Indigenous peoples and Indigenous businesses to benefit from the opportunities created by a bilateral trade agreement with the U.K. This also includes provisions with linkages to the environment:

Overall, Trade and Indigenous Peoples' provisions would likely have an indirect, positive impact on the environment through cooperation activities between the Parties. These activities would highlight the importance the environment has on Indigenous peoples' economic and cultural well-being and the role that Indigenous businesses play internationally in innovative and environmentally sustainable economic development.

5. Existing environmental legislation, policies and actions

Expected impacts identified by the environmental analysis should be considered in the context of Canada's existing statutes, regulations, policies and actions that help prevent and manage environmental risks in Canada. The environmental legislative framework focuses on minimizing threats to Canadians and their environment from pollution; equipping Canadians to make informed decisions on weather, water and climate conditions; and conserving and restoring Canada's natural environment. This robust environmental framework positions Canada well to mitigate potential environmental effects from a Canada-U.K. bilateral trade agreement. A potential bilateral trade agreement would also be informed by multiple United Nations Sustainable Development Goals (SDGs) such as SDG 6 (Ensure availability and sustainable management of water and sanitation for all), SDG 14 (Conserve and sustainably use the oceans, seas and marine resources for sustainable development) and SDG 12 (Ensure sustainable consumption and production patterns).

This section provides an overview of the Government of Canada's environmental legislative framework, both at the broad and sector-specific levels. While this overview focuses on the statutes, regulations, policies and actions implemented by the federal government, it is understood that provincial and territorial governments also have important roles and responsibilities in the prevention and management of environmental risks, including numerous environmental statutes and regulations. As a result of these roles, there is extensive cooperation taking place between federal, provincial and territorial governments in these areas.

5.1 Canada's Environmental Sustainability Strategy and Framework

Under our constitution, the management of environmental issues is an area of shared jurisdiction among federal and provincial governments. The federal government collaborates with provinces, territories, Indigenous peoples and others to protect species and spaces, to develop and administer environmental standards, guidelines, regulations and risk management instruments to reduce releases and monitor levels of contaminants in air, water and soil, and promote and enforce compliance with environmental laws and regulations.

Monitoring and reporting on changes in the environment on a regular basis is essential for assessing the impact of risks and the effectiveness of measures to prevent or minimize those risks, and is an important component of the scientific work supporting the implementation of Canada's environmental framework. The environmental standards set by these instruments will remain in place irrespective of changes in economic activity or international trade, including as a result of a Canada-U.K. bilateral trade agreement.

5.2 Key pieces of federal environmental legislation in Canada

The main federal statutes dealing with the protection of the environment are as follows:

  1. Canadian Environmental Protection Act (CEPA)
    • Aims at preventing pollution and protecting the environment and human health.
    • Prevents and manages risks posed by toxic and other harmful substances. It also manages environmental and human health impacts of products of biotechnology, disposals at sea, vehicle, engine and equipment emissions, fuels, hazardous wastes, environmental emergencies and other sources of pollution.
  2. Greenhouse Gas Pollution Pricing Act (GGPPA)
  3. Canadian Net-Zero Emissions Accountability Act
    • Enshrines Canada's objective to achieve net-zero GHG emissions by 2050 and provides transparency and accountability in Canada's efforts to achieve this objective by:
      • Requiring the Minister of ECC to prepare, table and publish a GHG reduction target, emissions reduction plan, progress report and assessment report for each milestone year leading to 2050 (2030, 2035, 2040, 2045); and
      • Establishing the Net-Zero Advisory Body as a statutory body to provide advice to the Minister on ways to achieve net-zero emissions by 2050.
  4. Federal Sustainable Development Act
  5. Fisheries Act
    • Addresses the protection of fish and fish habitats in both oceans and inland waterways.
    • Prohibits the deposit of harmful substances into water frequented by fish, unless authorized through regulation.
  6. Canada Water Act
  7. Transportation of Dangerous Goods Act
    • Promotes public safety in the transportation of dangerous goods.
  8. Migratory Birds Convention Act, 1994
    • Protects migratory birds, their nests and eggs anywhere they are found in Canada, including ocean waters.
    • Prohibits the deposit of substances harmful to migratory birds in waters or areas frequented by them, unless authorized by other federal legislation or by the Minister for scientific purposes.
    • Prohibits the purchase, sale, or possession of any migratory bird, including parts, nests or eggs, unless authorized by regulation. 
  9. Nuclear Safety and Control Act
  10. Canada Shipping Act
    • Deals principally with controlling the discharge of pollutants from shipping vessels.
  11. Species at Risk Act (SARA)
    • Designed to meet one of Canada's key commitments under the Convention on Biological Diversity (CBD).
    • Its purposes are preventing wildlife species in Canada from becoming extirpated (no longer exist in the wild in Canada) or extinct, providing for the recovery of wildlife species that are extirpated, endangered, or threatened as a result of human activity, and managing species of special concern to prevent them from becoming endangered or threatened.
    • Encourages the various governments in Canada to cooperate to protect wildlife species.
    • Consultation and cooperation with Indigenous peoples are essential to the successful implementation of SARA.
  12. Wild Animal and Plant Protection and Regulation of International and Interprovincial Trade Act (WAPPRIITA)
    • Implements the Convention on International Trade in Endangered Species (CITES) by regulating trade in wild animals and plants.
    • Prohibits the import, export and interprovincial transportation of designated species unless the specimens are accompanied by the appropriate documents (licences and permits).
  13. Impact Assessment Act (IAA)
    • The Act and its regulations establish the legislative basis for federal impact assessment.
    • The impact assessment is a planning and decision-making tool used to assess positive and negative environmental, economic, health and social effects of proposed projects as well as impacts to Indigenous groups and rights of Indigenous peoples.

5.3 Canada's Federal Sustainable Development Strategy and The Pan-Canadian Framework on Clean Growth and Climate Change

The 2019–2022 Federal Sustainable Development Strategy (FSDS)Footnote 11 highlights the Government of Canada's environmental sustainability priorities, establishes goals supported by medium-term targets, and identifies short-term milestones and actions to achieve them. It is Canada's fourth whole-of-government strategy that brings the Government of Canada's sustainability activities together in one place.  It outlines what the Government is doing across 42 federal departments and agencies to promote clean growth, ensure healthy ecosystems, and build safe, secure and sustainable communities between 2019 and 2022. The FSDS also remains closely linked with government priorities, reflecting key initiatives such as efforts to implement the UN 2030 Agenda; Canada's climate plans; the Oceans Protection Plan; and work undertaken to address plastic waste and promote zero-emission vehicles. Indicators to track progress against the goals and targets in the FSDS are drawn largely from the Canadian Environmental Sustainability Indicators program, including progress on GHG emissions for Canada. The FSDS also tracks progress on the federal government's Mission Innovation pledge to double investments in clean energy, research, development and demonstration from 2015 levels of $387 million to $775 million by 2020, as well as reducing GHG emissions from government operations.

Among the 13 goals set out by the 2019-2022 FSDS, the following are of particular interest in the context of environmental impacts projected as a result of a Canada-U.K. bilateral trade agreement:

The 2016 Pan-Canadian Framework on Clean Growth and Climate Change (PCF)Footnote 12 is Canada's first-ever national climate plan that was developed with provinces and territories, and in consultation with Indigenous peoples. In December of 2020, the Government of Canada introduced A Healthy Environment and a Healthy EconomyFootnote 13 as Canada's strengthened climate plan. It builds on the efforts that are currently underway through the PCF to cut more pollution, to create more good jobs, and to support a healthier economy and environment. It includes 64 strengthened and new measures, through five pillars: make the place we live and gather more affordable by cutting energy waste; make clean, affordable transportation and power available in every community; continue to ensure pollution isn't free and households get more money back; build Canada's clean industrial advantage; and, embrace the power of nature to support healthier families and more resilient communities.

Among the key areas defined in these plans, those of specific relevance in the context of expected impacts from a Canada-U.K. bilateral trade agreement include plans to:

5.4 Sector-specific laws, policies and action

Canada also leverages bilateral and multilateral engagement in key international fora to support wider global efforts to address climate change and manage environmental risks.  For example, the Canadian Net-Zero Emissions Accountability Act enshrines the 2030 GHG emissions target as being Canada's Nationally Determined Contribution (NDC) under the Paris Agreement. Canada submitted a new NDC in July 2021, committing to reduce GHG emissions by 40-45% below 2005 levels by 2030. Canada also provides climate finance to support developing countries' transition to low-carbon, climate-resilient economies. Canada is delivering $2.65B in climate financing to developing countries, between 2015-16 to 2020-21 and announced in June 2021 a doubling of its international climate finance commitment, to $5.3 billion over the next five years (2021-22 to 2025-26).  

Specific policies and regulations are also of relevance given the environmental risks identified in the initial environmental assessment of a possible Canada-U.K. bilateral trade agreement. At the sector level, these may help control the limited risks related to the manufacturing, transportation, and mining and extractives sectors, as identified in section 3.3.

5.5 Conclusion

The Government of Canada's existing environmental legislative framework is well positioned to mitigate any environmental effects from a Canada-U.K. bilateral trade agreement. As new statutes, regulations, policies and actions are developed and implemented in the future, improvements in the environmental performance of Canadian economic sectors may further help mitigate environmental impacts of an agreement going forward.

6. Conclusion and next steps

With a total population of 67 million people and a gross domestic product (GDP) of $2.7 trillion (£1.95 trillion) in 2020, a bilateral FTA with the U.K. offers Canada an opportunity to maintain and improve trade with an important market. Overall, Canada's free trade agenda helps Canadians compete and succeed in global markets, which in turn helps to strengthen the Canadian economy.

The negotiation of a bilateral FTA with the U.K. also offers an opportunity to deepen the Canada-U.K. bilateral relationship by strengthening provisions in the FTA to better reflect Canada's commitment to inclusive trade. This Initial Environmental Assessment (IEA) of a possible FTA between Canada and the U.K. aimed to identify potential impacts on the Canadian and U.K. environment that may result from the new and modernized chapters, assess the significance of these impacts, and identify possible enhancement or mitigation options that may be addressed in the negotiations. Overall, the initial environmental assessment found that a Canada-U.K. FTA is unlikely to result in significant negative environmental impacts. This is particularly the case given that Canada and the U.K. already benefit from comprehensive preferential market access under the TCA (and, previously, the CETA).

Furthermore, an overview of the Government of Canada's existing environmental legislative framework, including statues, regulations, policies, and actions for the prevention and management of environmental risks, suggests that Canada is well positioned to mitigate any potential environmental impacts of an agreement, including through improvements in the environmental performance of Canadian economic sectors going forward.

In addition, the chapter-by-chapter review points to several areas for environmental collaboration and risk mitigation in the context of the modernized FTA, including through provisions in the environment chapter, expanded market access for environmentally-friendly services, and mechanisms to increase cooperation between Canada and U.K. in key areas.

The next phase of the EA process will be to conduct a Final EA. This Final EA will take into account the final negotiated outcomes to assess the scope and nature of environmental effects that could arise from the proposed CUKFTA. The Final EA will be published following the conclusion of negotiations.

Until then, the Government of Canada welcomes input and comments on this IEA. Any comments received will be used to inform subsequent EA analysis of the FTA with the U.K., as well as EAs of other trade negotiations more broadly. Suggestions for enhancement of mitigation measures regarding potential negative environmental impacts and augmentation of positive effects identified at this stage are also encouraged.

Comments and inputs can be sent until October 5, 2022 to:

E-mail: consultations@international.gc.ca

Mail: Environmental Assessment of the Canada-U.K. Bilateral Trade Negotiations
Trade Agreements Secretariat (TCT)
Global Affairs Canada
125 Sussex Drive, Ottawa (Ontario), K1A 0G2

Annex

Annex A - Overview of Canada-UK FTA chapters' objectives

Market Access for Goods – The goal of National Treatment and Market Access (NTMA) obligations is to achieve increase and improved market access for exports of Canadian goods to FTA partner countries, by liberalization trade and creating a stable and predictable trading environment, to the net benefit of the economy. The NTMA chapter establishes clear and predictable rules for trade in goods, such as the general prohibition of most import and export restrictions. The chapter also incorporates the national treatment obligation from the General Agreement on Tariffs and Trade, requiring parties to treat imported products no less favourably than like domestic products. Tariff elimination annexes and schedules set out each party's commitments regarding the elimination of tariffs.

Rules of Origin and Procedures related to Origin

Customs and Trade Facilitation – Customs and Trade Facilitation provisions seek to facilitate the movement of legitimate trade in goods across FTA Partner borders by establishing obligations that seek to simplify, standardize, and modernize trade-related customs procedures. With the World Trade Organization (WTO) Agreement on Trade Facilitation as the baseline, the chapter addresses various stages of the customs process and establishes commitments that will lead to greater predictability, consistency and transparency in customs matters.

Sanitary and Phytosanitary Measures – The goal of Sanitary and Phytosanitary Measures is to maintain each party's right to take measures necessary to protect against risks to food safety, animal or plant life or health, while ensuring that such measures are science-based, transparent and do not create unnecessary and unjustifiable sanitary and phytosanitary trade restrictions.

Technical Barriers to Trade – Technical Barriers to Trade (TBT) provisions  build on the existing World Trade Organization (WTO) Technical Barriers to Trade Agreement's provisions in the areas including transparency, international standards, technical regulations, conformity assessment and a mechanism to address TBT issues. A TBT is a non-tariff barrier to trade - such as a technical regulation, standard or conformity assessment procedure - that sets out specific technical or other requirements for products to be exported to a certain country.

Investment – Investment provisions protect investors from discriminatory or arbitrary treatment in their host country.

Cross-border Trade in Services – Cross-Border Trade in Services provisions set out the rules regarding the treatment of service suppliers in partner countries.

Domestic Regulation – Domestic Regulation provisions ensure that licensing and qualification requirements and procedures are transparent, objective, fair and timely.

Maritime Transport Services – Marine Transport Services provisions replicate CETA provisions that government measures affecting the International Marine Transport Services sector are subject to the provisions of the agreement's Investment and Cross-Border Trade in Services (CBTS) chapters, including obligations not to maintain discriminatory measures with respect to accessing and using ports, and the use of infrastructure and services of ports.

Financial Services – Financial Services provisions set out the rules for the treatment of financial institutions, their investors, and cross-border trade in financial services, while preserving flexibility to protect the integrity and stability of the financial system.

Temporary Entry for Business Persons – Temporary Entry supports economic growth and development through the facilitation of temporary labour mobility for certain highly-skilled categories of business persons by eliminating many common barriers encountered at the border, including economic needs tests and/or quotas.

Telecommunications – Telecommunications provisions enhance regulatory certainty for telecommunications service suppliers.

Digital Trade (E-Commerce) – Electronic Commerce provisions help facilitate the use of e-commerce by consumers and businesses, in recognition of the growing digitalization of trade and its impact on the economy.

Intellectual Property – The inclusion of provisions related to intellectual property (IP) in a trade agreement aims to establish standards for the protection and enforcement of IP rights to which each Party's national laws must conform.

Government Procurement – Government Procurement (GP) provisions help to ensure that suppliers of goods, services and construction services are treated in an open, transparent and non-discriminatory manner when competing for GP opportunities in FTA partner markets.

State-owned Enterprises – State-Owned Enterprises provisions seek to ensure that private firms can fairly compete with enterprises owned or controlled by a government. Such provisions ensure that state-owned enterprises act in accordance with commercial considerations, except when performing a public mandate.

Competition Policy – Competition Policy provisions aim to promote open and competitive markets. It also aims to make sure that the benefits of freer trade are not offset by anti-competitive business activities or misleading or deceptive commercial activities.

Labour – Labour provisions commit parties to adopt and maintain in their domestic labour laws internationally recognized labour rights and principles. These provisions also require that the parties effectively enforce such labour laws.

Environment – Environment provisions ensure that parties effectively enforce their environmental laws and do not lower environmental standards to encourage trade or investment. It also includes commitments that support efforts to address a range of global environmental challenges, including related to climate change, air quality, water quantity and quality, conservation of biological diversity, illegal wildlife trade, sustainable fisheries, agriculture and forest management, marine litter and plastics waste and invasive alien species.

Science, Technology and Innovation –  Provisions on Science, Technology and Innovation facilitate cooperation, trade, and investment in activities related to commercial science, technology and innovation.  

Regulatory Cooperation and Good Regulatory Practices – Provisions on Regulatory Cooperation and Good Regulatory Practices promote enhanced transparency and good regulatory practices, with a view to improving governance and predictability while taking into account the legitimate policy objectives of each country.

Trade Remedies – The purpose of the Trade Remedies chapter is to reaffirm WTO rights and obligations for anti-dumping, countervailing and global safeguard measures under the relevant WTO Agreements.

Transparency and Anti-Corruption – Transparency and anti-corruption provisions facilitate a transparent and predictable environment for trade and investment.

Responsible Business Conduct – Responsible Business Conduct (RBC) provisions encourage uptake and implementation of RBC elements in business practices that are informed by, and complementary to, existing global RBC standards such as the Organization for Economic Cooperation and Development Guidelines for Multinational Enterprises and the United Nations Guiding Principles on Business and Human Rights.

Trade and Gender – The main objective of Trade and Gender provisions is to advance women's economic empowerment, gender equality and participation in trade. It facilitates cooperation activities and information sharing in order to remove barriers to participation.

Trade and Indigenous Peoples – Provisions on Trade and Indigenous Peoples seek to enhance the ability of Indigenous peoples and businesses to benefit from the opportunities created by and a free trade agreement through cooperation activities and information sharing in order to remove barriers to participation.

Micro, Small and Medium-sized Enterprises – Micro, Small and Medium-sized Enterprises provisions support the growth and development of these enterprises by enhancing their ability to participate in and benefit from the opportunities created by a free trade agreement. They do so by facilitating cooperation activities and information sharing in order to remove barriers to participation.

Institutional Chapters

  1. Preamble – A preamble is not a chapter, but an introduction to the purpose of the free trade agreement. The preamble reflects the intentions of the parties and the scope of the FTA.
  2. Initial Provisions and General Definitions – Initial Provisions and General Definitions chapter explains how the FTA respects WTO commitments and how it links with existing agreements.  They also include definitions of terms used in more than one chapter.
  3. Administration – Administrative Provisions establish the structure of the bodies that will be charged with the governance and the implementation of the FTA.
  4. Exceptions and General Provisions – Exceptions and General Provisions include exceptions, such as for essential security, cultural industries and taxation, that would apply across the entire agreement.
  5. Dispute Settlement – Dispute Settlement provisions describe transparent, effective and efficient dispute settlement mechanisms to resolve disputes between FTA partners over the interpretation of the agreement or whether a measure of a Party is inconsistent with the agreement.
  6. Final Provisions – Final provisions relate to entry into force or accession to the agreement (i.e. elements linked to the Vienna Convention). 

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