Final Environmental Assessment of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership

October 26, 2018
Prepared by the Government of Canada

I. Introduction

On March 8, 2018, Canada and 10 other countries signed the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) in Santiago, Chile. The CPTPP is an international treaty that incorporates, by reference, most of the provisions from the Trans-Pacific Partnership (TPP), which was concluded in late 2016 by these same countries as well as the U.S.

The CPTPP is a comprehensive agreement covering market access for goods, services, investment and government procurement, which are generally the categories that have the highest environmental impacts. The agreement contains rules across a wide spectrum of areas such as intellectual property (IP), e-commerce, and technical barriers to trade (TBT).

Once the CPTPP enters into force, it will create a trading bloc representing 495 million people and 13.5 percent of global GDP. A study by Global Affairs Canada’s (GAC) Office of the Chief Economist projects long-term economic gains for Canada totalling $4.2 billion a year by 2040, driven by increases in exports in goods and services through preferential access to new free trade agreement (FTA) partners such as Japan, Australia, Malaysia, and Vietnam. The CPTPP stands to benefit a broad range of sectors across the Canadian economy, including agriculture, fish and seafood, forestry, metals and minerals, energy products, financial services, and various industrial products.

Canada is committed to achieving a mutually reinforcing relationship between trade and the environment. To this end, the CPTPP is a landmark initiative that seeks to ensure our country’s prosperity in a progressive and responsible manner. For example, for the first time in any Canadian FTA, the provisions outlined in the Environment Chapter are subject to the Agreement’s dispute mechanism.

There exists a strong correlation between open markets, economic development, and enhanced environmental protection. Liberalized trade and efficiently regulated markets lead to economic growth and development. Open markets also help to foster the development and adoption of new environmentally friendly technologies, while liberalized trade and investment help to facilitate the conditions for technology transfer.

Canada’s broad environmental objectives in negotiating trade agreements are: 1) to preserve Canada’s ability to protect the environment through maintaining our right to regulate in the best interest of Canadians; 2) to promote mutually supportive trade and environment objectives; 3) to improve the efficient allocation of resources with the aim of generating positive environmental impacts; and 4) to support efforts to address international environmental challenges that affect Canada’s environment, economy, and health.

II. The Environmental Assessment (EA) process

The Government of Canada has committed to conducting Environmental Assessments of all trade negotiations through a process that requires interdepartmental collaboration and public consultations. This process focuses on the likely economic effects of trade negotiations, as well as their likely environmental impacts in Canada.

The 2001 Framework for the Environmental Assessment of Trade Negotiations, (the “Framework”) details this process, and was developed in response to the Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals. Detailed guidance for applying the Framework is contained in the Handbook for the Environmental Assessment of Trade Negotiations (the “Handbook”).

The Framework provides a process and methodology for conducting the Environmental Assessment (EA) of a trade negotiation. It is intentionally flexible so that it can be applied on a case-by-case basis according to the nature of the Agreement.

The Framework provides for three phases of assessment:

• (1) Initial Environmental Assessment: a preliminary examination to identify potential key issues and environmental effects resulting from a trade negotiation, as well as to provide an opportunity to reflect on environmental considerations while negotiations are ongoing.
• (2) Draft Environmental Assessment: if required, builds on the findings of the Initial Environmental Assessment and provides detailed analysis of those issues.
• (3) Final Environmental Assessment: published after the conclusion of the negotiations, it documents the outcome of negotiations and identifies any notable divergence from the previous EA.

At the conclusion of each phase of an Environmental Assessment, a public report is issued, along with a request for comments. In the event that an Initial Environmental Assessment finds little likelihood of significant environmental impact occurring as a result of an agreement, a Draft Environmental Assessment is not required.

In the case of the CPTPP, a Draft Environmental Assessment was not carried out as the Initial Environmental Assessment completed for the TPP Agreement (the provisions of which were incorporated into the CPTPP), anticipated only minor environment impacts on Canada. Since the absence of the U.S. from the negotiations was not anticipated to alter the scope or potential outcome of the CPTPP as compared to the TPP, it was determined that the Draft Environmental Assessment for TPP was equally applicable to CPTPP negotiations. Accordingly, environmental considerations were integrated into the approach that Canada took in negotiating the CPTPP. The Final Environmental Assessment was completed on October 26, 2018, before the ratification of the CPTPP. Findings from the Final Environmental Assessment will be used to inform Environmental Assessments of other future FTAs.

Assessment methodology

The Framework provides a four-stage analytical methodology for conducting the Initial, Draft, and Final Environmental Assessments. Guidance on how to conduct each stage of the analysis is outlined in the Handbook.

1. Identification of the economic effect of the Agreement to be negotiated – This stage identifies the trade liberalization activity of the agreement under negotiation. It examines the potential areas the agreement may include, the changes or new trade activity that could result from these areas, and the overall economic relevance to Canada.
2. Identification of likely environmental impact of such changes – Once the economic effects of the proposed trade agreement have been assessed, the likely environmental impacts of such changes are approximated. Consideration is given to potential positive and negative impacts.
3. Assessment of the significance of the identified likely environmental impacts – The identified likely environmental impacts are then assessed for their significance. The Framework outlines various criteria in determining significance, to be used as appropriate, including frequency, duration, permanency, geographical scope and magnitude, level of risk, irreversibility of the impacts, and possible synergies among the impacts. This study uses the following scale in relation to the criteria outlined above to describe significance: none, minor, moderate, high and extreme.
4. Identification of enhancement/mitigation options to inform the negotiations –The Initial Environmental Assessment is intended to identify, in a preliminary fashion, the possible policy options or actions that might be required to mitigate the potential negative impacts and/or to enhance the potential positive impacts that may result from the proposed agreement.

Scope of the Environmental Assessment process for the CPTPP

The primary purpose of the Initial Environmental Assessment was to identify the main environmental issues that were deemed likely to arise as a result of a proposed agreement. It considered the effects of new trade and investment in Canada that may result directly from an FTA with TPP countries, as well as potential impacts on the Canadian environment. As such, the Initial Environmental Assessment estimated possible environmental impacts using informed judgment based on any potential changes in economic activity brought about as a result of the agreement, once implemented.

Subsequent to the Notice of Intent to Conduct a Strategic Environmental Assessment of the Prospective TPP Agreement published on December 1, 2012, the TPP Initial Environmental Assessment was drafted following consultations with the interdepartmental Environmental Assessment Committee, which consists of representatives across the Government of Canada.

III. Conclusions of the Initial Environmental Assessment

The Initial Environmental Assessment encompassed both qualitative and quantitative analyses to inform negotiators and the Canadian public of the potential economic and environmental impacts of the Agreement in Canada. The overall findings of the initial Environmental Assessment were that Canadian environmental impacts as a result of the TPP Agreement (now CPTPP) would likely be minor in nature.

In early December 2013, the draft Initial Environmental Assessment was sent for consultation and review to an external Environmental Assessment Advisory Group (EAAG), as well as Provinces and Territories. Comments were generally positive, but recommended further quantitative analysis. In response, a quantitative analysis was produced by GAC’s Office of the Chief Economist, which also concluded that the environmental impacts of the TPP on Canada would be minor.

For further information, please find the Initial Environmental Assessment report here. 

IV. Results of the consultations process

The CPTPP EA process involved consultations with the Canadian public, provincial and territorial governments, as well as the non-governmental Environmental Assessment Advisory Group.

Provincial and territorial governments

The final environmental assessment of the CPTPP included consultations with provincial and territorial governments. Comments received were documented, and considered in the final report.

Consultations with the external advisory group

Consultations on the final EA were also undertaken with the non-governmental Environmental Assessment Advisory Group (EAAG). The EAAG comprises experts drawn from academia, non-governmental organizations, and the business sector who provide advice in their individual capacity on the EA reports and process. Comments received were documented, and considered in the final report.

V. Updated quantitative analysis of environmental impacts

Framework for the quantitative assessment

The following assessment was carried out based on the estimated economic impact from the Global Affairs Canada’s Computable General Equilibrium (CGE) model. The estimated output changes from the economic model are linked to the data from Statistics Canada’s Canadian System of Environment and Resources Accounts and Environment and Climate Change Canada’s National GHG Inventory to track the environmental changes in Canada resulting from expanding trade and economic cooperation under the Agreement.

The environmental indicators^{Footnote 1}

The environmental indicators used for the analysis include greenhouse gas (GHG) emissions, fossil fuel energy use and water use. With respect to GHG emissions, the analysis considers both the 2015 level and direct intensity of 3 main GHGs: carbon dioxide (CO2), methane (CH4) and nitrous oxide (N2O). The measured level of emissions is in kilo tonnes of carbon dioxide equivalent^{Footnote 2} (kt CO2 eq.) and the intensity is measured in kilo tonnes of carbon dioxide equivalent per million dollars of production output (kt CO2 eq./$1,000,000). The emission sources consist of 16 different fuel types: coal, natural gas, motor gasoline, diesel, aviation fuel, light fuel oil (including kerosene), heavy fuel oil, refinery fuel gas, coke oven gas, liquefied petroleum gases (including natural gas liquids), electricity, coke, steam, wood, and spent pulping liquor.

Concerning energy use, the analysis is based on both the 2015 level and direct intensity of energy use associated with the use and production of coal, natural gas, motor gasoline, diesel, aviation fuel, light fuel oil (including kerosene), heavy fuel oil, refinery fuel gas, coke oven gas, liquefied petroleum gases (including natural gas liquids), electricity, coke, steam, wood, and spent pulping liquor. Energy is measured in terajoules (TJ), and the intensity is measured in TJ per million dollars of production output (TJ/$1,000,000).

On water use, the base information is the volume of water use in 2013, and is based on selected sector information only (due to the limited availability of data). Water use is measured in thousands of cubic metres. Water use intensity is measured in cubic metres per dollar of production output with the latest data available only in 2013.

Evaluation methods

Three separate mechanisms are utilized to assess how changes in trade policy could affect the level of emissions and uses of energy and water in the economy: scale, composition and technique effects.

The scale effect measures the impact of an expansion of economic activity as a result of the Agreement on total emissions as well as water and energy usage, assuming that the nature of that activity remains unchanged.

The composition effect captures the changes in emissions and depletion of resources resulting from shifts in the structure of the economy due to trade policy changes. When trade is liberalized, sectors with comparative advantages expand, while activities in the sectors with comparative disadvantages shrink, in the absence of any policy action undertaken at the Federal or Provincial/Territorial level. The net effect of structural change on the levels of emissions and water and energy use depends on whether emission-intensive, water-intensive, and energy-intensive activities expand or contract. Thus, the composition effect on the environment in Canada resulting from trade policy changes is ambiguous and can only be assessed empirically.

Finally, the technique effect is measured because production output may not be produced by exactly the same methods subsequent to trade liberalization as it was prior to liberalization. In order to be fully assessed, the environmental impact of the CPTPP needs to be examined not only on the basis of the environmental technologies and regulations in existence, but also on the basis of technological progress that will have occurred during the implementation of the Agreement. For example, emissions per unit of production output can decrease for the following reasons:

• higher energy prices induce an adoption of energy efficiency and conservation measures;
• new capital formation during the FTA’s implementation period would result in a lower emissions level than the existing capital stock as new capital is typically cleaner and more efficient than existing capital stock;
• increased trade will also facilitate the transfer of modern and clean technologies among trading partners, which will reduce the cost of such technologies and increase their availability. This would help to reduce harmful emissions and improve energy and water conservation; and
• the development of more stringent pollution standards and greater enforcement of existing anti-pollution laws and regulations may also lead to better environmental outcomes.

Overall, the net impact of the CPTPP on the environment in Canada is determined by the three competing mechanisms with each having its own unique value: the scale effect (negative impact), the composition effect (ambiguous impact), and the technique effect (positive impact). The scale and technique effects tend to work in opposite directions, while the composition effect depends on whether emission-intensive or less emission-intensive sectors expand. The overall impact of trade will depend on the magnitude of each of these three effects.

Limitations of economic and environmental modelling

The modelling results should be considered in the context of both the advantages and limitations of the model. Several cautionary notes are provided concerning the interpretation of the reported environmental impacts.

Quantitative assessment of the environmental impact of this FTA is undertaken based on the estimated economic impact. Consequently, the environmental assessment conducted in this analysis inherits the same limitations as the economic modelling.

First, while the economic modelling analysis is a useful estimation tool, all economic models, by definition, represent a simplification of reality and rely on numerous assumptions. Therefore, the results presented should be viewed as complementing the qualitative analysis that is presented in section VI.

Second, the economic assessment presented in this analysisis best understood as an estimate of the potential economic impacts of this FTA, not as forecasts of the actual results. It isolates the trade policy impact by netting out all other macroeconomic influences such as economic growth and exchange rate fluctuations, as well as other policy changes at the Federal or Provincial/Territorial level. For more information on the economic assessment, please review the Economic impact of Canada’s participation in the Comprehensive and Progressive Agreement for Trans-Pacific Partnership.^{Footnote 3}

Third, the economic model utilized in this analysiscaptures only the expansion of trade in products already traded in the bilateral relationship, and cannot predict the creation of trade in new product areas.

With respect to the environmental modelling, there are some cautionary notes concerning the interpretation of the estimated results.

First, the analysis provides an assessment of an environmental impact resulting from increasing economic activities due to the implementation of the CPTPP, but it fails to capture direct emissions in Canadian households resulting from changes in consumption patterns as the analysis models the changes in production patterns only.

Second, this study separates economic modelling from environmental modelling. The shortfall of this approach is that it fails to take into account the change in emissions intensity (emissions per unit of output) that could result from the implementation of the Agreement. The pre- and post-FTA emissions intensity may not be the same. The removal of barriers could affect firms’ choices of production inputs (domestic vs. foreign or less fuel efficient vs. more fuel-efficient), resulting in a different emissions intensity.

Third, the technique effect reported in this study represents the on-going progress of environmental quality in Canada independent of this Agreement. This technique effect is different from the feedback effect (although it is sometimes also called “the technique effect” in environmental assessment literature) in the sense that the improvement in income as a result of the FTA could translate into greater demand for environmental quality, leading to a lower emissions intensity. However, there is no compelling reason to believe that such a feedback effect would be significant given the limited income gains under the Agreement relative to the size of the Canadian economy.

Fourth, the results of the environmental modelling reflect impacts based on the three indicators used in the analysis, and does not capture the breadth of environmental issues that could occur as a result of the implementation of the CPTPP.

A. The overall economic impact

The eleven countries that are party to the CPTPP form one of the largest trading areas in the world, accounting for nearly 13.5 percent of global Gross Domestic Product (GDP) in 2017. CPTPP countries, as a group, represent Canada’s third largest trading partner.^{Footnote 4} Bilateral trade between Canada and other CPTPP countries, including both goods and services, amounted to $105 billion in 2016, accounting for 8.1 percent of Canada’s total trade. Two of Canada’s top five trading partners, Mexico and Japan, are located within the CPTPP region. Bilateral foreign direct investment between Canada and CPTPP countries amounted $122.2 billion in 2016.

Canada already has free trade agreements (FTAs) with three CPTPP countries, namely Mexico, Chile and Peru. The CPTPP will establish new preferential access to seven additional Asia-Pacific countries—Australia, Brunei Darussalam, Japan, Malaysia, New Zealand, Singapore, and Vietnam. In 2016, Canada’s bilateral trade with these seven partners totalled $71.3 billion. This is collectively greater than Canada’s current trade with its third largest trading partner—Mexico. The bulk of Canada’s trade with these countries is accounted for by trade with Japan—the world’s third largest economy.

The economic impact assessment is conducted by using a computable general equilibrium (CGE) model of global trade based on the final negotiated CPTPP, which was signed in Santiago, Chile, on March 8, 2018.This model follows the structure of the Global Trade Analysis Project (GTAP) model developed and supported by Purdue University.^{Footnote 5}

To assess the economic impact of an Agreement, the economic analysis compares the economic performance of all members under a baseline scenario (prior to implementation of the Agreement) and a post-liberalization scenario (following implementation of the Agreement). The net effect of the Agreement can thus be quantified as the difference between the baseline and post-liberalization scenario expressed in terms of changes in GDP, exports, and imports.^{Footnote 6}

A1. Gross domestic product impacts

The economic modelling analysis concludes that the final negotiated outcomes of the CPTPP would boost Canada’s GDP gains by $4.2 billion in the year 2040, or a 0.126 percent net increase from the baseline (in the absence of CPTPP) in 2040.

Canada’s gains come from two sources: expanded trade due to the elimination and reduction of both domestic and foreign protections for specified products, and productivity enhancement arising from increased market predictability and savings in trade costs in services.

A2. Trade impacts

As a result of the implementation of the CPTPP, Canada’s exports to member countries would increase by $2.7 billion or 4.2 percent yearly, by 2040. Canada’s major export gains under the CPTPP come from preferential market access to new FTA partner countries. Canada’s exports to these new FTA partner countries are expected to expand by $3.2 billion with the largest gains coming from Japan, Australia, Vietnam and Malaysia. At the sector level, Canada is expected to increase its exports to CPTPP partner countries in sectors such as beef, pork, vegetable oils, wood products, motor vehicles and parts, machinery and equipment, and services, while increases in imports would be dominated by apparel, leather products, chemical products and machinery and equipment.

A3. Output impact

The prospective shift in trade patterns under the CPTPP would give rise to a reallocation of resources across sectors in the economy according to each country’s comparative advantages and specialization. It is those changes in output at the sector level that will serve as the basis for the environmental impact assessment presented below. Overall, as a result of the implementation of the CPTPP, the production of goods and services in Canada would increase by $5.8 billion or 0.149 percent annually, by 2040 (See Annex Table 1).

B. Overview of the quantitative findings of the environmental assessment

The quantitative environmental assessment was undertaken based on the estimated economic impacts from the CGE modelling. Specifically, the estimated output changes from the CGE-based economic analysis are linked to Statistics Canada’s Canadian System of Environmental and Resources Accounts^{Footnote 7} and Environment and Climate Change Canada’s National GHG Inventory^{Footnote 8} which provide the data necessary to track the environmental change in Canada resulting from increasing trade and economic activities under the CPTPP.

The environmental assessment of CPTPP concludes that its implementation would have a minor impact and marginally increase Canada’s GHG emissions, energy and water usage. Overall, GHG emissions would increase by 865 kt via the scale and composition effects based on the environmental technologies utilized in Canada in 2015. Compared to Canada’s annual GHG emissions of 755,062 kt of CO2 equivalent in 2015,^{Footnote 9} the increase in emissions represents 0.012 percent of total GHGs in Canada in that year. Further, during the implementation period of the Agreement, progress in adopting new environmental technologies and better enforcement of environmental regulations captured by the technique effect is expected to reduce GHG emissions by 111 kt. As a result, the net increase in GHG emissions would only be 754 kt, or 0.099 percent of GHG emissions in Canada in 2015.

Total energy consumption is expected to increase by 10,372 TJ via the scale and composition effects, which represents 0.089 percent of Canada’s energy use of 11,687,613 TJ in 2015.^{Footnote 10} Total energy usage under the CPTPP would be further reduced by 682 TJ via the technique effect. Thus, the net increase in energy usage under this Agreement would be 9,691 TJ, or 0.083 percent of total energy usage.

The water use estimation is based on selected sector information only (due to the limited availability of data). The estimation shows that water use is expected to increase by 42.66 million m3 via the scale and composition effects, which represents 0.113 percent of Canada’s total water use of 37,892.0 million m3 in 2013.^{Footnote 11} The technique effect for water use is not available due to a lack of projected data for future years.

Overall, the analysis finds that the net impact of increased trade and production activities under the CPTPP on Canada’s environment would be characterized by modest increases in GHG emissions, energy and water usage. Further, these increases are significantly smaller than the corresponding increase in production output, indicating a shift toward a more favourable Canadian industrial composition in terms of emissions and energy and water usage under this Agreement. In summary, there is little likelihood of any significant environmental impacts on Canada as a result of the CPTPP.

C. Results of the environmental assessment

This section reports on the results of the environmental assessment based on the estimated output changes obtained from the economic modelling and the intensity coefficients for GHG emissions, energy use, and water use in Canada.

C1. Greenhouse gas (GHG) emissions

To determine the change of GHG emissions in Canada as a result of the implementation of the CPTPP, the 2015 direct intensity of CO2 equivalent is applied to the changes in Canadian output between pre- and post-CPTPP in 24 sectors. Annex Table 2 shows that the expansion of economic activities in Canada under the FTA leads to a net increase in CO2-equivalent emissions by 1,034 kt via the scale effect. Variation in GHG emissions at the sector level reflects the changes in economic activities under the Agreement and the degree of emission intensity for each sector. The sectors most affected via the scale effect are services, energy (oil including petroleum, gas, and coal), primary agriculture as well as forestry (wood products, paper product and publishing) which together represent 91.4 percent of the total increase in emissions via the scale effect.

The composition effect is calculated by comparing the differences in GHG emissions between pre- and post-CPTPP, while holding the level of economic activity at the pre-CPTPP level. The net composition effect of the Agreement is negative. By holding the level of general economic activities at the pre-CPTPP level, the sectors expected to have increases in emissions include primary agriculture and processed food: Energy, chemical products and minerals and metals are expected to have marginal decreases in emissions. This would reduce GHG emissions in Canada by 168 kt, and reduces the total GHG emissions from 1,034 kt based on the scale effect calculation to 866 kt.

Finally, it is important to consider the technique effect that represents ongoing progress in environmental quality in Canada resulting from the adoption of better environmental technologies, better enforcement of environmental regulations, and increased in trade in environmentally-friendly products and technologies over the implementation period of the Agreement, an effect that is independent of the CPTPP. It is expected that emissions intensity measured by the amount of pollution generated per unit of output would decrease as a result of the technique effect. Failure to take into account the technique effect would overstate the environmental impact of the FTA.

This analysis uses the projected GHG intensity provided by Environment and Climate Change Canada from 2015 to 2025 to determine how the technique effect could mitigate the potential negative impact of the FTA on the environment in Canada.^{Footnote 12} The projected emission intensities in 2015-2025 come from Environment and Climate Change Canada's Energy-Economy-Environment Model (E3MC).^{Footnote 13} By applying the projected emission intensity to the estimated output changes under the Agreement, GHG emissions would be reduced by 111 kt. The most significant improvements come from the sectors of services (-55 kt) and primary agriculture (-42 kt).

The total GHG emissions as a result of the Agreement can be disaggregated as follows: a scale effect of 0.149 percent, a composition effect of -0.024 percent and a technique effect of -0.016 percent, resulting in a net increase in emissions of 0.109 percent (or 754 kt) based on Canada’s level of emissions intensity in 2015. Compared to Canada’s annual GHG emissions of 755,062 kt of CO2 equivalent in 2015, the increase in emissions under the CPTPP represents only 0.099 percent of total GHG emissions in Canada. Therefore, the potential negative impact arising from the implementation of the FTA on Canada’s overall GHG emissions is expected to be minor.

C2. Energy use

In terms of energy use, the energy sector has the highest TJ use per million dollars of production, followed by metals and minerals and forestry products. The increase in economic activity resulting from the CPTPP would increase Canada’s total energy usage as demonstrated in Annex Table 3.

The total energy usage in Canada as a result of the implementation of the CPTPP would increase by 15,460 TJ via the scale effect. Energy, forestry, industrial manufacturing and services together represent 77.0 percent of the total increase in energy use via the scale effect.

As trade between Canada and CPTPP partner countries is liberalized under the Agreement, Canadian production patterns shift, which, in turn, would have an effect on energy use in Canada (the composition effect). By holding the level of general economic activities at the pre-FTA level, the energy, forestry and services sectors are expected to reduce energy usage via the composition effect. The sector that is expected to increase energy use is industrial manufacturing. Overall, the structural shift under the FTA is favourable for energy conservation in Canada, resulting in a reduction of energy use by 5,088 TJ. This reduces the total energy use from 13,485 TJ to 10,373 TJ. The net increase in energy usage under the CPTPP represents only 0.10 percent of Canada’s total energy usage of 11,687,613 TJ in 2015.

This analysis also uses the projected energy intensity coefficients provided by Environment and Climate Change Canada from 2015 and 2025^{Footnote 14} to determine the technique effect. The estimation shows that technological improvements in energy conservation would give rise to a decrease in energy usage by 682 TJ. Most energy savings come from services (-388 TJ), primary agriculture (-163 TJ), and when breaking down the metals and minerals category, mineral products (-171 TJ), while metals would be the sector that is expected to increase energy use by 199 TJ.

Overall, energy use as a result of the implementation of the CPTPP could be disaggregated as follows: a scale effect of 0.149 percent, a composition effect of -0.049 percent and a technique effect of -0.006 percent. The total effect on Canadian energy use is relatively small, accounting for only 0.083 percent of total energy use in 2015.

C3. Water use

For water use, the key data sources come from Statistics Canada’s ‘Water use in Canada, by sector’, which provides measures of water usage required for per unit of economic output. Here, water use refers to the water usage for agricultural, industrial and municipal purposes including irrigation in agriculture, rain in agriculture, forestry and hydroelectric power generation.

The total water use of the Canadian economy would increase by 69.1 million m3 via the scale effect as a result of the CPTPP. The sectors that are projected to have the most significant increases in water usage are services and forestry, which together represent more than 84 percent of the total increases in water use via the scale effect.

Further, the shift in the economic structure in Canada as a result of the CPTPP would result in lower levels of water usage. Primary agriculture and processed foods are expected to have net increase in water uses, while water usage in other sectors decline in relative terms, resulting in a net decrease in water usage of 26.4 million m3.

The technique effect for water use could not be calculated due to the unavailability of projected intensity coefficients for water uses. Water use for the whole economy is thus characterized by a scale effect of 0.149 percent and a composition effect of -0.057 percent for a total overall increase of 0.092 percent (42.7 million m3). This increase represents 0.113 percent of Canada’s annual water usage of 37,892 million m3.

VI. Updated qualitative analysis of the environmental impacts

Overview of qualitative findings

A thorough understanding of the environmental impact of the CPTPP for Canada also requires a qualitative analysis of the Agreement with a focus on four key issue areas – trade in goods, trade in services, government procurement, and investment which represent the core areas of liberalization of trade. The analysis also includes a description of the robust environmental provisions contained in the CPTPP which serve to mitigate potentially negative impacts resulting from liberalization in other areas.  

The CPTPP preserves Canada’s ability to adopt and apply its own laws and regulations that regulate economic activity in the public interest in order to achieve legitimate public policy objectives in areas such as public health, social services, public education, safety, culture, and the environment. Accordingly, the CPTPP’s implementation will not impact Canada’s ability to maintain its robust environmental management framework.

The CPTPP represents Canada’s most ambitious environment chapter in an FTA to date, with provisions requiring Parties to maintain high levels of environmental protection, effectively enforce environmental laws, and not waive or derogate from such laws to promote trade or investment; ensure transparency and public participation; and establish a framework for cooperation in areas of mutual interest. In addition, the CPTPP is the first FTA for Canada that includes an Environment Chapter subject to an enforceable state-to-state dispute settlement mechanism and has become an integral element of Canada’s approach going forward. An enforceable environment chapter reflects the Government’s commitment to negotiate agreements, which aim to ensure that trade liberalization, and the protection and conservation of the environment are mutually reinforced.

For the purpose of this Environmental Assessment, “environment” refers to the components of the Earth, including land, water, air, all layers of the atmosphere, all organic and inorganic matter and living organisms and the interacting natural systems that include components of the foregoing. This section is intended to highlight the anticipated incremental environmental impacts in Canada as a result of CPTPP.

Limitations of the qualitative assessment

This Final Environmental Assessment is an exercise which attempts to determine whether significant environmental impacts are likely to occur as the result of CPTPP. The qualitative assessment of potential environmental impacts is not an exhaustive examination of sectors of the economy or environmental issues. Instead, it is intended to provide an overview of the potential impacts of the Agreement. As a result, several cautionary notes are required concerning the interpretation of the reported environmental impacts.

• The purpose of this assessment is not to assess the environmental impact of economic growth, but rather of the economic activity and trade policy changes potentially resulting as a direct result of the CPTPP. There are many macro- and microeconomic forces at play that influence the pattern and flow of trade. The actual economic effects of the CPTPP will also depend on how various economic actors, producers, and consumers react to the new trade policy environment.
• This analysis focuses on the overall impacts for Canada. It does not focus on the impacts of the Agreement for partner countries, nor does it exhibit impacts by province, territory and/or region. Although the net impacts might be positive, certain regions may be affected differently.
• Measures taken to protect the environment may cause other unintended effects on society that have not been considered in this assessment due to their complexity. For example, changed behaviour may offset part of the environmental gain, a phenomenon that has variously been labelled the “take-back” or “rebound” effect (e.g. gains from energy efficiency can be subsequently negated by increases in energy use).

A. Trade in goods

This section analyzes in greater detail the economic opportunities, potential environmental impacts, and mitigation/enhancement options available in five sectors that are expected to see increased exports under the CPTPP: mining and energy products; forestry and wood products; industrial manufactured products; processed food; and agricultural goods. These product areas were chosen based upon the results of the quantitative assessment.

The environmental impact of increasing growth in exports in these sectors is expected to be modest. It is anticipated that the increases in production would occur under Canada’s regulatory framework with well-established federal, provincial, and territorial environmental oversight regimes that would address any potential ensuing negative environmental impacts. In particular, legal frameworks requiring environmental impact assessments of new developments will help to mitigate impacts of projects in several sectors. Additionally, cooperation between Canada and CPTPP countries on regulatory issues could lead to improved implementation and oversight of environmental measures.

A1. Anticipated economic and environmental effects

Energy products and minerals and metals

Opportunities: Between 2015 and 2017, the CPTPP as a region represented Canada’s third largest energy products export market (after the United States and the European Union), accounting for 1.9 percent of Canada’s exports in this sector for an average of $1.6 billion annually.

The value of Canada’s top energy product exports to key CPTPP markets of interest during this period included petroleum and coal products to: Japan ($1.3 billion), and Vietnam ($53.4 million).

While the vast majority of energy products already enter these markets duty-free, applied tariffs averaging 1.5 percent in Japan, and 6.9 percent in Vietnam will be eliminated within 10 years upon entry into force of the Agreement.

Also, between 2015 and 2017, the CPTPP as a region represented Canada’s third largest minerals and metals export market (after the United States and European Union), accounting for 5.1 percent of Canada’s exports in this sector for an average of $3.8 billion annually.

The value of Canada’s exports in this sector to key CPTPP markets of interest during this period averaged $2.1 billion to Japan, $37.6 million to Malaysia, and $22.6 million to Vietnam.

Canadian exports of minerals and metals currently face tariffs in these markets of up to 8.4 percent in Japan, 60 percent in Malaysia, and 60 percent in Vietnam. Overall, tariffs currently applied in this sector average 0.8 per cent, 9.4 per cent and 8.8 percent in these markets, respectively. The vast majority of these tariffs will be eliminated upon the entry into force of the Agreement with all products becoming duty-free within 10 years (with the exception of a small number of excluded salt tariff lines in Vietnam).

Potential Environmental Impacts: Resource extraction (e.g., mining, including bitumen) often remove surface features (e.g., grasslands, forests) and can result in soil erosion. Resource extraction, including mining, is the second leading cause of deforestation (37 percent), which is also an important factor in soil erosion. Soil erosion is a cause of sedimentation, which could have profound impacts on aquatic ecosystems, not just in the immediate area. This can also impact fish passages, harming migratory fish species.

Aquatic ecosystems can also be negatively impacted by accumulations of heavy metals and metal leaching, which contribute to increased acidity in water systems. Tailings ponds - common in mining projects, particularly in bitumen extraction - can have concentrated amounts of toxins, which can over time leach into surrounding ecosystems and waterways. Water pollution also impacts surrounding soil organisms and vegetation, contributing to negative impacts on terrestrial ecosystems. Mining can have other negative impacts on biodiversity. Noise pollution and other anthropogenic effects can disturb terrestrial and avian wildlife. Deforestation caused by mining projects can have negative impacts on biodiversity. The removal of surface features can also impact biodiversity, including disrupting migratory species.

Mining produces air emissions that can have negative impacts on ecosystems and animals. This includes dust containing heavy metal particles and chemicals, which can be released into the environment through a vector throughout the lifecycle of a mining project. Areas downwind from projects can experience accumulations of toxins and heavy metals, exacerbating the impact on terrestrial ecosystems.

Refining metals (e.g., steel) can contribute to increased energy needs, including for transportation, which would increase GHG emissions. Increased exports of mining and mining products may also require the construction of electrical transmission lines and roads, expanded port facilities, and marine shipping, including in the Arctic.

Extracting bitumen from oil sands is a water- and energy-intensive process, which can negatively impact water systems and dependent ecosystems, and increase air emissions. Pipelines for the transport of oil and gas resources can also impact surface features and impact migrant species. While pipelines can leak, causing environmental hazards (e.g., leaching into groundwater), they are considered to be environmentally safer than other methods of transportation (e.g., rail).

Mitigation/Enhancement: In Canada, the Government recognizes that strong environmental policies are needed to develop the country’s natural resources and to transport them to international markets. The mining industry has committed to practices and standards to ensure the safe and sustainable development of Canada’s mineral resources. Serious environmental incidents at operating mines are rare. The construction, operation, closure, and reclamation of mines are subject to strict provincial and territorial regulatory requirements, along with federal requirements, related to fish and fish habitat protection, wildlife and wildlife habitat protection, uranium mines and the control of metal mine effluents.

The different provincial, territorial, and federal regulatory processes ensure that potential impacts on the environment of investments in mining and oil and gas projects are mitigated. Changes and improvements in procedures, equipment, and technology, as well as environmental legislation and industry awareness of environmental issues, lessen possible negative impacts. Some examples of current practices in procedures and technology include:

• provinces and territories have an environmental assessment regulatory process for mining, oil and gas projects, in addition to regulations to protect air and water quality, as well as reduce greenhouse gas emissions;
• at the federal level, the Canadian Environmental Assessment Act (CEAA), sets the conditions for which a project would require a federal Environmental Assessment;
• taking special precautions during the drilling of critical gas wells;
• using equipment such as vapour recovery to reduce environmental impacts;
• using directional and horizontal well drilling which reduces the number of roads, power lines, and pipelines needed for a site;
• recycling the water used in the drilling and processing of oil sands and mineral processing;
• using low-impact seismic technologies in environmentally sensitive terrain to reduce GHG emissions from energy use during exploration;
• using best practices to reduce benzene emissions and the impact on the air quality in the toll refining services industry;
• providing services on oil and gas fields to reduce the quantity of odours, extract elemental sulphur (and thus reduce emissions of sulphur dioxide), while using the recovered vapour on a commercial basis;
• implementing ore sorting, segregation and advanced mineral processing practices to minimize the volume of mining waste requiring management;
• using a holistic approach to mineral resource development such as environmental ore deposit models;
• implementing prediction techniques to minimize acid generation from mining waste;
• promoting environmental effects monitoring as an assessment and decision-making tool to protect aquatic ecosystems;
• implementing energy saving measures into mineral resource development operations;
• implementing green mining technologies and practices; and,
• commercialization of new technologies to reduce or eliminate greenhouse gas emissions from the traditional smelting process.

Additionally, mine development proposals and oil and gas pipelines with the potential for significant adverse environmental effects in Canada are subject to rigorous environmental impact assessment processes, which inform decisions on project approval, project design, regulatory processes, and environmental impact management. For projects within the ten provinces, most mine proposals are reviewed by coordinated federal and provincial environment assessment processes. For projects within the territories, all mine proposals are subject to environmental and socio-economic impact review or environmental assessments conducted by co-management boards under federal legislation.^{Footnote 15}

There are many other examples of responses to environmental risks. For instance, the Canadian oil and gas industry is aware that it shares land and water (in the case of offshore exploration) with many stakeholders (e.g. forestry, fishing, recreational users and Indigenous communities) and therefore invests heavily in programs and technology that help to reduce its environmental footprint. Many national associations have signed memorandums of understanding with Natural Resources Canada regarding climate change. Moreover, government-led initiatives that seek to promote the sustainable development of resources, as well as laws that bind foreign investments to the same environmental regulations that govern domestic investors, will mitigate potential environmental impacts.

Federal and provincial initiatives to increase public confidence in environmental assessment processes, to develop more protective standards for mine effluents control and tailings storage facilities, and to set limits on GHG emissions, will help ensure that any expansion of mineral development and production activities will proceed with the necessary project planning and impact mitigation measures to minimize environmental impacts.

Should there be an increase in export activity in mining or energy sectors as a result of the CPTPP, this would not have a significant negative effect on Canada’s environment as the federal, provincial, and territorial regulatory systems are sufficient to ensure that new and expanded mine development and mineral production will be carried out in an environmentally responsible manner.

Forest and value added wood products (including paper and printed material)

Opportunities: Between 2015 and 2017, the CPTPP as a region represented Canada’s third largest forest and value added wood products export market (after the United States and China), accounting for 5 percent of Canada’s exports in this sector for an average of $2.1 billion annually.

The annual value of Canada’s forest and value added wood product exports to key CPTPP markets of interest during this period averaged $1.5 billion to Japan, $18.4 million to Malaysia, and $31.6 million to Vietnam.

Canadian exports of forest and value-added wood products currently face high tariffs in these markets, including tariffs of up to 17 percent in Japan, 40 percent in Malaysia, and 31 percent in Vietnam. Overall, tariffs currently applied in this sector average 2.4 per cent, 2.8 percent, and 11.2 percent in these markets, respectively. The vast majority of these tariffs will be eliminated immediately upon entry into force of the Agreement, with the longest phase-out being 15 years for a small number of forest and value-added wood products in the case of Japan.

Potential Environmental Impacts: Paper and pulp manufacturing use high volumes of water. Effluents from pulp and paper mills that use bleaching techniques may release toxins into water systems, which can accumulate, and have a negative impact on aquatic ecosystems – including harming fish and invertebrate species. Paper and pulp production increases CO2 emissions into the atmosphere. Additionally, air emissions from pulp and paper mills can also have toxins, which can negatively impact the health of humans and other animals– especially avian wildlife.

Although the forest industry contributes to deforestation, primarily through the creation of forest roads, this is not a leading factor in deforestation in Canada: Forest roads are often deactivated and rehabilitated into productive sites. Rather, the leading cause of the permanent loss of forest, or deforestation, is clear cutting trees for agricultural lands, which remains limited. Between 1990 and 2016, Canada lost 1.3 million hectares of forest, which is equal to less than half of 1 percent of Canada’s total forest area. Moreover, forest regeneration is required on all provincial and territorial Crown lands – which account for the vast majority (90 percent) of forest land where harvesting occurs. Given Canada’s extensive forests and the requirements laid out by the Government, increased exports of lumber are not expected to have a significant environmental impact. Similarly, increased exports in forest products (including lumber, wood products, etc.) are not expected to have a significant environmental impact, even though forest harvesting can disrupt ecosystems, primarily through the construction of forest roads, which can affect water and wildlife, including migratory species. 

The continuation of Canada’s approach to sustainable forest management is an important factor in ensuring that increased exports in forest products do not have a significant environmental impact. Forests are important for watershed systems and are not only a part of a broader healthy aquatic ecosystem, but are key to water security in Canada as approximately two-thirds of Canadians get their water from river systems, lakes, and reservoirs – sources that largely originate in forested areas. Deforestation and unsustainable forest harvesting can have serious environmental consequences. Forests are also important to biodiversity in Canada. They are key terrestrial ecosystems since approximately two-thirds of Canada’s plants, animals, and micro-organisms live in forests. Moreover, forests are essential carbon sinks – taking CO2 emissions out of the atmosphere and acting as carbon storage. There is a possibility that an increase in forest products trade through the CPTPP could have a net positive impact on the environment as wood is considered one of the best choices for building materials from an environmental standpoint, particularly when used as a substitute for non-renewable and energy-intensive building materials. It is widely recognized now that where wood products are directed to long-term uses, the increased use of wood can also delay the emission of GHGs. Life-cycle analyses of wood as a building material have shown that, overall, wood uses the least amount of energy, and generates the least amount of GHGs and air and water pollution when compared to other building materials. Bioproducts and bioenergy produced from renewable wood fibre also provide greener alternatives to other non-renewable materials and energy sources.

Mitigation/Enhancement: In Canada, deforestation has declined since 1990, dropping from 64,000 hectares per year in 1990 to roughly 37,000 hectares per year in 2016. Canada’s sustainable forest management regime ensures that our forests remain healthy and continue to provide a steady stream of benefits for Canadians. With strong laws, oversight and management, timber harvesting in Canada is sustainable. Forest management planning is one of the primary tools used to ensure that Canada’s publicly owned forests remain socially, economically and environmentally sustainable. To ensure forest sustainability over the long-term, provincial and territorial governments, which are responsible for managing 90% of Canada’s forests, regulate harvest levels through forest management plans. This is done by specifying an allowable annual cut (AAC): the annual level of harvest allowed on a particular area of Crown land over a set number of years.

In 2015, 780,000 hectares of forest were harvested, a 9 percent increase in forest harvesting since 2014, which accounts for less than 0.5 percent of Canada’s overall 347 million hectares of forest — well below the sustainable threshold and significantly smaller than the areas damaged by insects and burned by wildfires each year. Forestry laws are backed by comprehensive compliance and enforcement regimes that strictly monitor forest harvesting activities. In addition, all Crown lands that are harvested for commercial timber must be regenerated in accordance with provincial and territorial standards and regulations. Moreover, approaches that accelerate the growth of planted seedlings exist, which speeds up the regeneration of the forest, increasing the speed and volume of carbon sequestration.

Given the practices and laws in place in Canada, it is unlikely that the CPTPP will result in a negative environmental impact for Canada’s forestry sector, notwithstanding the expected increase in Canadian exports to CPTPP markets.

Industrial manufacturing

Opportunities: Between 2015 and 2017, the CPTPP as a region represented Canada’s third largest export market for industrial manufactured goods (after the United States and European Union), accounting for 4 percent of Canada’s exports in this sector for an average of $6.7 billion annually.

The annual value of Canada’s exports in this sector to key CPTPP markets during this period averaged $922.9 million to Japan, $202.8 million to Malaysia, and $112.9 million to Vietnam. Top exports included: machinery and equipment, transport equipment, and electronic equipment to Japan (averaging $448.3 million, $276.6 million, and $119.3 million, respectively); machinery and equipment, transport equipment, and electronic equipment to Malaysia (averaging $99.3 million, $54.2 million, and $39.9 million, respectively) and machinery and equipment, motor vehicles and their parts, and electronic equipment to Vietnam (averaging $57.1 million, $18.9 million, and $14.8 million, respectively).

Canadian exports in this sector currently face high tariffs in these markets, including tariffs of up to 16 percent in Japan, 50 percent in Malaysia, and 100 percent in Vietnam. Overall, tariffs currently applied in this sector average 0.5 percent, 7.8 percent and 10.4 percent in these markets, respectively. The majority of these tariffs will be eliminated immediately upon entry into force of the Agreement with all products becoming duty-free within 15 years after the entry into force of the Agreement.

Potential Environmental Impacts: Increased demand stemming from trade liberalization would likely result in greater Canadian exports to the CPTPP countries, which would likely increase manufacturing output in Canada. This increase in manufacturing production will likely result in higher environmental impacts. Greater production of goods like electronic machinery, motor vehicles, machinery and equipment would increase the demand for inputs, including key raw materials such as metals, chemicals and oil (for plastics), leading to higher water and energy usage. Increased demand for industrial goods can lead to increased waste and emissions (including CO2) from increased.

Mitigation/Enhancement: The regulatory framework governing environmental impacts from industrial manufacturing includes the Canadian Environmental Protection Act, 1999 (CEPA) and its regulations. A key aspect of CEPA is the prevention and management of risks posed by toxic and other harmful substances, including those that result from industrial manufacturing. Under CEPA, manufacturing facilities may also be required to disclose their emissions of selected pollutants through various programs such as the National Pollutant Release Inventory (NPRI) and Environment and Climate Change Canada’s Greenhouse Gas Emissions Reporting Program. Pollutant emissions to water resulting from industrial manufacturing are also subject to the Fisheries Act, which prohibits not only the deposit of deleterious substances in water frequented by fish, but also activities that result in serious harm to fish that are part of a commercial, recreational, or Aboriginal fishery, unless authorized. Provinces and territories also have comprehensive legislative and regulatory frameworks for pollutant emissions and wastewater effluents.

An increase in industrial manufacturing of electronic equipment typically leads to an increase in electronic waste (e-waste). In 2004, the Canadian Council of Ministers of the Environment (CCME), a council composed of environment ministers from the federal, provincial, and territorial governments, adopted 12 principles for the proper management of e-waste, which provincial and territorial governments can take into account when developing their own regulatory measures. The principles focus on life cycle management, which places the responsibility for e-waste primarily with the producers, with the costs to be borne by producers and users. The list of products to be included in any regulatory regime encompasses not only what is considered to be IT-related equipment, but also a full range of household devices.

Management of e-waste is generally regulated by the provinces and territories. E-waste that is considered hazardous must be managed according to applicable provincial and territorial hazardous waste regulations. Municipalities may also be involved in the management or disposal of e-waste generated by households. Several provinces are implementing e-waste management programs. These programs focus on collection, disposal, recycling, take-back, recovery, reprocessing, and treatment.

Processed foods

Opportunities: Between 2015 and 2017, the CPTPP as a region represented Canada’s third largest processed foods export market, accounting for 4.5 percent of Canada’s exports in this sector, worth an average of $830.1 million, annually.

The annual value of Canada’s exports in this sector to key CPTPP markets of interest during this period averaged $387.7 million to Japan, $17.2 million to Malaysia, and $118.0 million to Vietnam.

Canadian exports of processed foods to these markets currently face high tariffs, including tariffs of up to 61.9 percent in Japan, 20 percent in Malaysia and 40 percent in Vietnam. Overall, tariffs currently applied in this sector average 12.2 percent, 1.8 percent and 21.0 percent in these markets, respectively. Phase-out periods for duties in these markets vary widely. All duties will be eliminated immediately upon entry into force by Malaysia, while only 32.3 percent of tariffs and 37.6 percent of tariffs will be eliminated immediately by Japan and Vietnam, respectively. The longest phase-outs for Japan and Vietnam for remaining tariffs are 20 and 10 years, respectively, for a limited number of products.

Potential Environmental Impacts: Increased demand for processed food puts increased pressure on Canada’s food producers, with potential for negative impacts on Canada’s environment. The processed food industry requires significant amounts of energy for several purposes, including heating and cooling buildings, processing and providing treated water, refrigeration, and transporting raw materials and products. Increased demand for processed food also means overall increases in transportation, resulting in increased GHG emissions.

Increased productivity in the agri-processing industry could lead to increases in packaging, which could result in potentially negative environmental effects. Specifically, an increase in plastics use (both inputs required for manufacturing as well as waste production) could result in negative effects.

Agri-processing, like any industry, contributes to solid waste streams that are managed by landfills and incinerators. Increased production could also result in an increase in effluents, which are regulated and treated at the municipal or provincial/territorial level. The food processing industry in Canada is subject to water licensing requirements under the jurisdiction of provincial and territorial governments. Water quality is regulated federally and provincially.

Mitigation/Enhancement: While the CPTPP is expected to increase demand on Canada’s food processing industry, it is not expected to have significant negative environmental impacts as this industry in Canada is subject to robust environmental regulations, and mitigation measures are available and expected to offset the potential environment impacts resulting from increased demand.

In Canada, there are national standards for wastewater treatment. The Wastewater Systems Effluent Regulations established under the Fisheries Act include mandatory minimum effluent quality standards that can be achieved through secondary wastewater treatment. However, most wastewater systems are owned and operated by municipalities. In the country, all levels of government share the responsibility for managing the collection, treatment and release of wastewater effluents. Similar to industrial manufacturing, the food processing industry may also be required to disclose their emissions of selected pollutants.

Agriculture and Agri-Food Canada (AAFC) supports the agri-processing sector in adopting sustainability measures, such as increasing input efficiencies, which could offset some of the minor adverse impacts associated with increased production. For example, sustainability gains could be made if agri-product exports displace production made with non-renewable resources, or energy/water use could decrease due to investment in energy-efficient equipment.

Canada has also signed memorandums of understanding with some CPTPP members that seek to achieve efficiencies of resources in new and existing industrial chemical reviews; gain increased knowledge of each other’s risk assessment and management approaches and practices; facilitate exchange of operational experience to strengthen regulatory capacities on mutual interest matters; and lead to greater harmonization where appropriate with the aim of protecting human health and the environment.

Primary agriculture (excluding processed foods)

Opportunities: Between 2015 and 2017, the CPTPP as a region represented Canada’s second largest primary agricultural products export market (after the United States), accounting for 16 percent of Canada’s exports in this sector for an average of $6.6 billion, annually.

The value of Canada’s exports in this sector to key CPTPP markets during this period averaged $3.6 billion to Japan, $197 million to Malaysia, and $255.6 million to Vietnam. Top exports included: oilseeds, meat products, and wheat to Japan (averaging $1.5 billion, $1.3 billion, and $564.4 million, respectively); oilseeds, wheat, and vegetable oils and fats to Malaysia (averaging $82.6 million, $50.3 million, and $46.5 million, respectively) and wheat, oilseeds and animal products to Vietnam (averaging $123.7 million, $67.6 million, and $31.9 million, respectively).

Canadian exports currently face high tariffs in the primary agriculture sector for Japan and Vietnam, with tariffs averaging 6.7 percent and 15.4 percent, respectively for these destinations. Immediately upon the entry into force of the Agreement, Japan will eliminate 34.5 percent of tariffs in this sector, while Vietnam will eliminate 26.7 percent of tariffs. The majority of remaining tariffs in Japan will be eliminated within 15 years, with a small number to be eliminated over 20 years. Certain products are excluded by Japan from tariff elimination. The remaining tariff lines in Vietnam will be eliminated within 12 years, with a longer phase-out of 20 years for tobacco products and exclusions for certain poultry and sugar products. The vast majority of Canadian exports in this sector currently enter Malaysia duty-free with more tariff lines receiving duty-free treatment immediately upon entry into force of CPTPP.

The improved market access opportunities under the CPTPP cover a broad range of primary agricultural products, such as beef, pork, grains and oilseeds, fruits and vegetables. Realizing the full gains of improved market access in this sector however is contingent also on addressing non-tariff barriers to trade, including sanitary and phytosanitary measures and biotechnology issues which also form part of the CPTPP.

Potential Environmental Impacts: Any increase in demand on agricultural supply is likely to increase pressure on agricultural land and natural resources (e.g., land and water use for agricultural production). At the same time, the environment may cause changes to agriculture (e.g., a drought), and the sector must be able to respond and adapt to environmental impacts, such as climate change, on agricultural production.

Agricultural production can have significant environmental impacts, contributing to soil degradation, water degradation, decreased biodiversity, and GHGs. The extent of the impact of agricultural production is very much dependent on the management practices that are implemented by farmers, as well as the extent of land-use change (e.g., the conversion of forests or wetlands to agricultural lands) for agricultural purposes. In this regard, if current trends continue, the gains in agricultural industries are unlikely to have a significant environmental impact in Canada.

Land-use change for agriculture can have a significant environmental impact. In Canada, approximately 7.2 percent of the total land base is agricultural lands. Agricultural production has become more efficient in the last thirty years, allowing more production to take place on less land. There is, however, a limit to this efficiency. Increased demand for agricultural products could increase the demand for agricultural land. Land-use change can have significant, negative environmental impacts. For example, agriculture continues to be the number one cause of deforestation in Canada, accounting for over 12,300 hectares of forest lost in 2015.

Sustainable approaches to land-use change (e.g., landscape approaches) can diminish the negative environmental impacts of land-use change for agricultural purposes as agro-ecosystems, like natural ecosystems, are dynamic and in constant flux. Unsustainable agricultural practices can have serious consequences for soil quality. In Canada, soil quality has increased and soil erosion has decreased since 1981, in large part because farmers have changed tillage practices and decreased the use of summer fallow. The increase in quality of soil has resulted in Canadian agricultural lands becoming a net sink, with soil now sequestering GHGs.

Though widely considered to be a more sustainable approach for managing soil, low-tillage and no-tillage practices can have some negative consequences. Changes to tillage practices have increased the need for nutrients (including nitrogen and phosphorus) as fertilizer and manure, and the increased use of pesticides.

This has increased concentrations of certain minerals, like nitrate, which has had a negative environmental impact on water, such as eutrophication. Soil nitrogen is most readily available in the form of water-soluble nitrates, which are at risk of leaching into ground water and, where fields are tile-drained, into drainage water, which can then be directed into ditches, streams and rivers. This can negatively impact aquatic ecosystems.

The intensification of livestock production has compounded water quality issues, primarily from the run-off associated with increased animal waste. Increased livestock production can also result in increased methane emissions.

Recognizing the environmental impacts resulting from increased agricultural production, Canada actively maintains mitigation measures to minimize their effect. Consequently, overall, levels of environmental risk for water, soil, air, and biodiversity are not expected to change significantly as a result of the liberalization of agricultural trade between Canada and CPTPP countries. As long as sustainable practices are incorporated into agricultural activities, and Canada continues to recognize and promote the broad environmental objectives set out in the introduction of this assessment, environmental effects should be minimal or effectively mitigated through established programs and frameworks.

Given the above considerations, no significant negative environmental effects are expected as a result of increased trade in agriculture and agri-food goods with CPTPP countries.

Mitigation/Enhancement: The Government of Canada continues to make considerable efforts to understand and mitigate the negative impacts of agriculture on the environment, to seek ways to reduce negative impacts, and to promote the sustainable use of natural resources. For example, AAFC, through Agricultural Policy Frameworks Agreements with provinces and territories, provides funding to support the implementation of on-farm actions in the form of beneficial management practices (BMPs), which can mitigate negative agricultural environmental impacts and result in improved water quality, biodiversity, and climate change adaptation.

Environmentally sustainable agriculture is a key component of Canada’s current overarching Agricultural Policy Framework initiatives of the federal, provincial and territorial governments. Collaborative action related to environmental sustainability and climate change adaptation and mitigation improves the sector’s ability to manage risks, enhances productivity, and contributes to economic growth. It also builds public confidence in the environmental performance of the sector.

Specifically, environment and sustainable development programs under the Agricultural Policy Framework provide assistance for provincial and territorial activities aimed at supporting the Canadian agriculture, agri-food and agri-based sector and its businesses to assess and respond to priority environmental risks and manage the natural resource base sustainably.

AAFC is collaborating with provincial and territorial partners on preparing the next iteration of programming under the Canadian Agricultural Partnership (CAP) which began in 2018, which will provide a greater emphasis on climate change mitigation and adaptation, environmental sustainability and science. This is expected to further enhance the agriculture sector’s environmental performance. For example, programming available under the upcoming CAP could accelerate the agriculture sector’s ability to reduce the most significant GHG emission sources, primarily from crop production and methane.

AAFC invests in sustainable agriculture by supporting direct on-farm action, in particular environmental risk assessment and the implementation of beneficial management practices, and by undertaking innovative research and development activities that contribute to the sustainable growth of the sector.

Research and development activities include increasing resource and input use efficiency (water, land, nutrients, etc.), developing new crop varieties, enhancing crop yields, and developing beneficial management practices and technologies. These investments help decouple growth in production from a corresponding increase in risk to agricultural resources and the surrounding environment. AAFC also works in close collaboration with Natural Resources Canada and Environment and Climate Change Canada in making investments that make our resource sectors world leaders in the use and development of clean and sustainable technology processes.

AAFC-specific programming also plays a significant role in ensuring business continuity through the Business Risk Management (BRM) suite of programs. These programs can enhance the sector’s resilience to environment-based risks, such as pests, drought, or flooding, and to its increasing competition for limited natural resources (e.g., water) from other sectors. For example producers participating in “AgriInvest” may be able make more strategic decisions based on the long-term outlook rather than short term cash flow needs. This would allow producers more scope to diversify their crops and use farming practices such as crop rotation, that have beneficial impacts on soil quality and the environment. Innovation initiatives that AAFC is directly involved with include: support for the sector’s ability to capture emerging economic opportunities such as clean energy; collaboration with conservation organizations that provide financial compensation for voluntary on-farm activities; and assisting the sector in maintaining access to and opening new markets in response to growing demands by buyers for sustainable product attributes.

Since jurisdiction over agriculture and natural resources in Canada is shared between the federal, provincial and territorial governments, programs and policies are based on partnerships between both levels of government. By considering the wide variety of environmental and socio-economic conditions across Canada, farm-level programs are uniquely tailored and delivered by provincial and territorial agencies. In addition, provinces and territories also regulate the management of the use and sale of pesticides for agricultural purposes.

B. Trade in services

Services are a key component of global value chains as they help promote value-added activities. Restrictions on service activities are rarely located at the border; rather, barriers often arise from the domestic regulation of services provision such as: restrictions/limitations to commercial establishment, and the number/type of services that can be provided.

Services are important for the Canadian economy as this sector helps Canada’s transformation towards a knowledge-based economy with high-quality, and high-paying jobs. Services represent a large and growing share of Canada's economy (70 percent of Canada’s real GDP in 2016), and Canada is looking to promote new opportunities for Canadian businesses in the high-growth markets of the Asia-Pacific region.

Canadian service providers are active in the CPTPP region, particularly in sectors such as transportation, professional, and financial services. Based on 2016 statistics, Canada’s share of services trade with CPTPP Parties (excluding Brunei and Peru, for which no data is available) amounted to $6.1 billion in exports to CPTPP Parties and $8.8 billion in imports from CPTPP Parties. This accounts for 5.6 percent of Canada's total exports and 6.6 percent of Canada's total imports of services worldwide.

Services are covered by five chapters in the CPTPP: Cross-Border Trade in Services (Chapter 10); Financial Services (Chapter 11); Temporary Entry for Business Persons (Chapter 12); Telecommunications (Chapter 13); and, Electronic Commerce (Chapter 14). New commitments on the trade of services made by CPTPP Partners aim at the elimination of restrictions at the border and beyond the border, and at improving access for the supply of professional (e.g. engineering, architectural), computer-related, research and development, energy and mining-related, construction, distribution (e.g., wholesale and retail), educational, environmental, financial, travel-related (e.g., accommodation and food-related), and transportation services, amongst others.  

B1. Anticipated economic effects

While studies have shown that there are positive benefits to services liberalization,^{Footnote 16} it remains difficult to assess the economic impacts of removing barriers to trade in services. A number of international organizations and think tanks are currently looking at ways in which global services trade could be better quantified, but the “virtual” nature of most services transactions poses a significant challenge. In addition, the definition of services trade reaches beyond cross-border flows to include three additional modes of supply through which services may be provided amongst CPTPP Parties: consumption abroad, commercial presence, and the movement of natural persons.

Services transactions between Canada and CPTPP Parties are already occurring under existing bilateral FTAs or via the WTO General Agreement on Trade in Services (GATS). Canada’s existing FTAs with three of the CPTPP Parties (Chile, Mexico, and Peru) provide substantive obligations and commitments in the area of services trade, the volume of which the CPTPP is not expected to significantly increase. With the other seven CPTPP Parties (Australia, Brunei, Malaysia, New Zealand, Singapore, Vietnam and Japan), current services trade is based on each Party’s current commitments under the 1995 GATS. As such, improved Canadian market access for services sectors under the CPTPP is expected to enhance productivity in services supply from increased certainty and savings in trade costs.

B2. Potential environmental impacts

While recent studies are improving our understanding of the environmental impacts of trade in goods, there is currently no conventional model that would allow for the specific calculation of environmental impacts of trade in services. The environmental effects of increased trade are difficult to quantify, as not all commercial transactions are recorded as they cross the border. For example, the movement of persons associated with services trade is captured in business travel statistics, but these records are not industry-specific and thus difficult to attribute to increases or decreases in specific service sectors. It is nonetheless recognized that services that involve the movement of persons will have a different environmental footprint than services that do not.

As services become increasingly integrated in the production of complex goods, the environmental impacts that could result from increased trade in services would likely be indirect. Increased cooperation in the areas of labour mobility, regulatory cooperation and science and technology is also expected to contribute to increased activity in the trade in services sector. That being said, most cross-border services benefiting from liberalization under the CPTPP would likely be those without a physical component, such as professional consultancy. These types of services would be less likely to have negative environmental impacts.

In this regard, services liberalization under the CPTPP may alternatively have a positive environmental impact for Canada. Liberalization in services could indirectly serve to bring “green” products to the market faster and at a lower cost. Moreover, in sectors such as environmental and telecommunications services, positive environmental impacts can be anticipated as more environmentally sustainable goods, services and technologies are adopted. For example, positive environmental impacts can be anticipated through greater use of cross-border communications technologies (i.e., the Internet/email, teleconference, and videoconference) and by facilitating digital transactions for goods and services, which would reduce the amount of printed paper.

B3. Significance of potential environmental impacts

Increased activity in services sectors may increase GHG emissions via the scale effect (e.g., through transportation services); however, by applying the projected intensity to the estimated output changes under the CPTPP, these emissions may be partially reduced through technological progress and sectoral adjustments. Moreover, although the services sectors consume energy in the forms of electricity, and natural gas, for heating/air conditioning, lighting, cooking and building installations purposes, the structural shift and technique effect under the CPTPP is favourable for overall long-term energy conservation in Canada. Services sectors may also see some increases in water use and solid waste output (e.g., food scrap and containers as a result of potential tourism and in person service providers); however, about half of the water use’s increase is expected to be offset by the structural changes resulting from the CPTPP. 

Given the above considerations, and available information at this time, the overall environmental impacts as a result of increased trade in services under the CPTPP are expected to be minimal. Potential negative environmental impacts may be offset by mitigation options and opportunities for environmentally sustainable growth, including technological innovation and industry best practices.

B4. Mitigation / Enhancement

In general, services sectors tend to be heavily regulated by governments at different levels and professional associations (with delegated self-regulating authorities) which implement and maintain regulations governing the provision of services. These regulations establish and maintain a legal framework to serve various public-policy purposes, including the protection of the environment.

In the tourism sector for example, environmental damage can be limited by controlling access to ecologically-sensitive sites and limiting the number of visitors in certain areas based on their capacity to accommodate, level of pollution, loss of wildlife habitat, or other deterioration. With respect to transportation services, there is an extensive range of environmental guidelines, codes of practice and international standards in place to reduce environmental impacts. In the construction sector, there is a wide range of environmental protection guidelines, tools, and techniques applicable to engineering works. These include facility design and site selection measures, energy conservation measures, and on-site measures to control soil erosion, manage wastes, and control pollutants. For instance, the Super E® strategic initiative is a new housing standard which utilizes state of the art construction techniques that promote energy conservation, environmentally responsible construction, and healthy housing. Canada is also monitoring compliance with the 1987 Montreal Protocol on Substances that Deplete the Ozone Layer and its subsequent amendments in order to regulate emissions of Chlorofluorocarbons used in refrigeration and cooling systems notably used in the food-related services industries.

Private sector mitigation options may include paper conservation within the office, greater use of cross-border trade facilitating means (i.e., the Internet/email, teleconference, and videoconference), recycling of various materials, and corporate policies on “sustainable procurement”. While these activities are within the scope of the private sector, government policy can lead in the adoption of such practices, specifically through the greening of government procurement strategies.

C. Government procurement

Government purchases of goods and services account for significant levels of total economic activity in CPTPP countries and offer significant potential opportunities for Canadian suppliers. The government procurement commitments in the CPTPP are complementary to the market access commitments made in other chapters (e.g. goods, services and investment). In essence, they expand the market access gains for Canada secured elsewhere in the CPTPP.

The CPTPP Government Procurement Chapter is comprised of two sections: the procedural rules and the market access schedules of each Party. The procedural rules establish the manner in which GP is conducted and are governed by four core obligations:

• national treatment: governments must treat goods, services and suppliers of the other Parties no less favourably than domestic goods, services and suppliers;
• transparency: governments have clear rules and procedures;
• impartiality: all participants in a procurement process are treated equally; and,
• accountability: suppliers have the ability to challenge an alleged breach of the rules through domestic review procedures.

The market access schedules identify the government procurement opportunities for which the rules apply. The CPTPP provides new, updated or expanded market access for Canadian suppliers to existing trading partners – including Chile and Peru – and new government procurement opportunities in Australia, Brunei, Malaysia and Vietnam. This means that under the CPTPP, Canadian suppliers will have guaranteed and secure access to opportunities to supply their goods and services to the governments of CPTPP countries, as well as to a wide range of state owned entities.

C1. Anticipated economic effects

Government procurement markets represent a significant proportion of national incomes. According to the Treasury Board Secretariat (TBS) of Canada, the estimated average annual value of contracts awarded by federal government departments and agencies from 2006 to 2016 was $17 billion. While procurement figures at the sub-central level and by other federal entities (Crown corporations) are unavailable, the Organization for Economic Co-operation and Development (OECD) estimates that Canada’s total government procurement market in 2015 amounted to 13.4 percent of GDP (approximately $250 billion). The OECD further notes that sub-central government procurement in Canada accounted for 88 percent of total procurement spending in 2015.

C2. Potential environmental impacts

Overall, liberalization of government procurement under the CPTPP is not expected to significantly impact the environment. Canada already has extensive international commitments in relation to government procurement with a significant number of CPTPP countries, either through bilateral FTAs or the World Trade Organization Agreement on Government Procurement (GPA).

Although increases in the transportation of goods may negatively impact the environment, these impacts may be offset by a slight positive impact associated with the procurement of efficient technologies that are procured by governments benefiting from increased competition and wider options. Furthermore, government procurement tends to follow strict guidelines and policies with respect to environmental stewardship, and these policies will remain in place with or without CPTPP. For example, the CPTPP includes provisions clarifying that procuring entities in CPTPP countries may apply technical specifications to conserve natural resources and protect the environment.

C3. Mitigation / Enhancement

Environmental impacts as a result of increased government procurement under the Agreement are expected to be mitigated by the use of green procurement practices in CPTPP countries. In dealing with government procurement, the Canadian federal government and the provinces and territories are committed to take into account the need to restore, maintain, and enhance the environment. Canada will retain its ability to develop and implement green procurement policies, and Canada and CPTPP countries may benefit from further cooperation in areas such as sustainable procurement. In this respect, the low-carbon government goal of the 2016-2019 Federal Sustainable Development Strategy (FSDS) will help to ensure that federal government procurement meets environmental standards.

The federal government’s purchasing activities impact the national economy and can influence both the price and the availability of goods and services in the marketplace. Through the increased promotion of environmental sustainability, and by integrating the application of environmental performance considerations in its procurement process, the federal government is in a position to influence the demand for environmentally preferable goods and services.

In this manner, the federal government’s Policy on Green Procurement seeks to reduce the environmental impacts of government operations and promote environmental stewardship by integrating environmental considerations through the procurement process, from planning to final disposal. The policy also supports the federal government in targeting specific environmental outcomes where procurement can effectively be used to mitigate the environmental impacts.

D. Investment^{Footnote 17}

Investment is critical to the Canadian economy. With more than $820 billion in foreign direct investment (FDI) invested in Canada in 2017, foreign investment into Canada accounts for 1 in 8 jobs and 26 per cent of employment in our manufacturing sector. It enables the creation of new economic opportunities beyond what Canadian capital could generate on its own. Across Canadian industries – including energy, mining, advanced manufacturing, cleantech, biotechnology, and many others – foreign investment results in innovative new jobs, access to new technologies and skills, and greater connectivity to global supply chains.

The CPTPP Investment Chapter requires the Parties to treat each other’s investors and their investments no less favorably than they treat any other investor in their territory; protects investors from government actions that are abusive, manifestly arbitrary, or in breach of due process; includes protections from expropriation without prompt and adequate compensation; and ensures investors are able to transfer capital into and out of the host country. It provides access to an independent international investor-state dispute settlement (ISDS) mechanism to ensure disputes are resolved in a fair and impartial manner.

The chapter fully preserves Canada’s ability to review certain foreign investments under the Investment Canada Act, and includes reservations for existing and future non-conforming measures. It also upholds the right of governments to legislate and regulate to achieve legitimate public policy objectives, such as those relating to public health, safety, and the environment.

Canada has significant two-way investment flows with CPTPP partners. In 2017, the stock of Canadian FDI in CPTPP countries stood at more than $83 billion; inward FDI to Canada from CPTPP countries stood at nearly $45 billion.

D1. Anticipated economic effects

Quantifying the economic impact of investment liberalization in the context of CPTPP raises two data issues:

• quantifying the scope of current barriers to foreign direct investment embodied in national economic regulatory frameworks; and,
• determining the extent to which such barriers can be reduced through further liberalization.

Canada also expects the CPTPP to contribute to enhanced inbound investment from capital exporting countries, such as Japan, Australia and Singapore, which have traditionally invested in Canada’s manufacturing sector (e.g., autos), natural resources (e.g., mining, oil and gas), ICT, and financial services. Canada expects to see the biggest economic gains from investment into Canada from Japan, Australia, New Zealand, Malaysia, Vietnam, Singapore, and Brunei Darussalam as Canada does not have existing foreign investment protection agreements with these countries.

D2. Potential environmental impacts

The likelihood and significance of the environmental impacts that could stem from the Agreement depends on the degree of increase in investment, the sectors of the investment, and the measures in place to protect the environment (e.g., Government laws, regulations, and processes).

Investment plays an important role in the establishment of global value chains which facilitate the modern global economy. As such, international commerce very frequently involves extensive intra-firm trade in goods and service within multinational corporations. This is combined with international sourcing of components and services and the international movement of business executives and technical experts as well as capital. The kinds of environmental impacts that could arise from this increasingly integrated global economy are similar to those outlined in Section VI. A – Trade in Goods, as investment is likely to occur in the same industries that will see increased exports, specifically mining, oil and gas, and advanced manufacturing.

D3. Mitigation / Enhancement

The CPTPP’s Investment Chapter maintains Canada’s right to regulate to achieve legitimate public policy objectives in sectors such as health, public education, social services, and culture, as well as its right to protect the Canadian environment. In the event that the Agreement results in increased investment in Canada, potential environmental impacts will be mitigated by existing laws and regulations which govern domestic and foreign investments alike.

Although Canada’s already largely open investment regime means that increased inward investment directly attributable to CPTPP is expected to be limited, it is useful to discuss how environmental impacts resulting from potential increased investment could be mitigated, specifically in the most environmentally intensive sectors of mining and oil and gas.

The different provincial, territorial, and federal regulatory processes ensure that potential impacts on the environment of investments in mining and oil and gas projects are mitigated. As well, changes and improvements in procedures, equipment, and technology, as well as environmental legislation and industry awareness of environmental issues, lessen possible negative impacts. The specific mitigation measures to address environmental impacts that could arise from this increasingly integrated global economy are similar to those outlined in Section VI. A – Trade in Goods, as investment is likely to occur in the same industries that will see increased exports, specifically mining, oil and gas, and advanced manufacturing.

In conclusion, the qualitative analysis of this Final Environmental Assessment indicates that the Investment Chapter is unlikely to lead to significant environmental impacts in Canada.

D4. Environmental provisions in CPTPP

Consistent with Canada’s usual approach towards free trade agreements, the CPTPP includes environment provisions that reinforce the principle of mutual supportiveness of trade and environment objectives.

Key provisions relating to the environment are found in the Environment Chapter in the CPTPP which represents Canada’s most comprehensive and ambitious chapter on the environment to date. The CPTPP includes commitments to foster high levels of environmental protection and good environmental governance in the context of trade liberalization. To this end, the Chapter includes commitments for Parties to: pursue high levels of environmental protection; effectively enforce their environmental laws; not derogate from those laws to encourage trade or investment; ensure that domestic remedies are available to address violations of environmental laws; and, promote public awareness and information on their respective environmental laws.

The Environment Chapter also reaffirms each Party’s commitments to the Multilateral Environment Agreements (MEAs) that they have signed. Furthermore, it includes commitments to advance the mutual supportiveness of trade and environment policies in areas such as the promotion of corporate social responsibility practices, trade and investment in environmental goods and services and, through voluntary mechanisms to enhance environmental performance, as a complement to domestic regulatory measures.

The Chapter also includes commitments in key global environmental issues such as combatting illegal wildlife trade and illegal, unreported and unregulated fishing; protecting the marine environment and the ozone layer; and collaborating to address climate change and combat invasive alien species. It also includes new obligations to deter overfishing by prohibiting certain fish subsidies and to implement the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). It also establishes a framework for cooperation between the Parties on trade-related environmental issues of shared interest.

The CPTPP represents a significant evolution in how Canada traditionally approaches enforcing environmental obligations in FTAs. The Environment Chapter allows for recourse through the FTA’s state-to-state dispute settlement mechanism allowing for consultations, followed by review and recommendations from an independent Panel of Experts as necessary. Separately, a public accountability mechanism contained in Chapter 28 allows for members of the public to also make submissions related to the Chapter to any Party.

The Environment Chapter is complemented by commitments in the Joint Declaration on Fostering Progressive and Inclusive Trade, which reaffirms the intention of those CPTPP Parties who sign it to work together in the transition to a low emissions and resilient economy in order to mitigate effects of climate change. It also underscores the signatories’ respective commitments for an ambitious and effective implementation of the Paris Agreement.

The CPTPP also includes General Exceptions provisions that allow Parties to take certain measures, including environmental measures, necessary to protect human, animal and plant life or health that may be inconsistent with trade or investment obligations in the CPTPP, so long as such measures are not discriminatory or a disguised restriction on trade.

E. Conclusion of the qualitative analysis

In this analysis, the Government provided a detailed analysis of four key issue areas where a greater likelihood of economic impact is anticipated and for which more rigorous analysis of the potential environmental impact of the CPTPP has been undertaken: trade in goods, trade in services, government procurement, and investment. Within these areas, anticipated economic effects as a result of CPTPP were considered, and the potential environmental impacts and their significance were further explored. Policy frameworks, regulations, and other options for mitigation of potentially negative impacts and enhancement of positive impacts were discussed, and these were considered in anticipating overall environmental impacts of the Agreement.

Undertaking Environmental Assessments is an effective way to acknowledge potential environmental problems, which can lead to an improvement in overall policy coherence on environmental matters at the national level, and assist decision-makers in understanding the environmental implications of trade policy.

Canada has a range of policies and programs in place to mitigate negative environmental impacts and enhance positive ones. The CPTPP does not compromise the environmental protection measures that Canada has implemented, and Canada still has the ability to put in place additional environmental policies and programs. Moreover, CPTPP does not exempt foreign service-providers and foreign investors from Canadian laws and regulations.

From a more global perspective, any increased demand for Canada’s industries may have positive implications on the global environment. For example, Canadian steel is recognized as the “greenest” of its kind globally which carries through to downstream products made with Canadian steel inputs, including machinery and automobiles and auto parts. Likewise, aluminium produced in Canada produces approximately two tonnes of carbon per one tonne of aluminium compared to a global average of six tonnes of carbon. Members of the Chemistry Industry Association of Canada commit themselves to the Association’s Responsible Care® initiative under which they use processes that conserve resources, take preventative action to protect the environment and work to ensure the stewardship and security of Canadian chemical products, services and raw materials throughout their life-cycles. Thus an expansion of the use of Canadian manufactured products abroad may serve to reduce the negative global environmental impacts resulting from more damaging manufacturing processes in other CPTPP countries.

Together, Canada’s industries and existing mitigation and enhancement techniques make Canada an environmentally friendly place to do business. The environmental modelling performed in this assessment could underestimate the positive impact Canada can have on the global environment. 

This Environmental Assessment concludes that CPTPP is expected to have only minor environmental impacts in Canada, in large part because Canada has a robust and responsive environmental regulatory regime, reflecting its commitment to achieving a mutually reinforcing relationship between trade and the environment.

Appendix A: Economic and environmental analysis tables^{Footnote 18}