¶¶ÒùÊÓƵ

CANADA – Dominican Republic

Initial Environmental Assessment Report

I. Executive Summary

Negotiations towards a free trade agreement (FTA) between Canada and the Dominican Republic (DR) were launched on June 7, 2007. An FTA with the DR could deliver commercial benefits across many sectors of the Canadian economy, including a range of agriculture and agri-food products (e.g. frozen french fries, pulses, meats), natural resources and information and communication technology. However, the effect of an FTA in relation to the aggregated Canadian economy will be very modest, and therefore, the impact on the environment as a result of the proposed FTA is expected to be minimal.

In keeping with the 2001 Framework for Conducting Environmental Assessments of Trade Negotiations, the government is conducting an initial environmental assessment (Initial EA) of the prospective FTA, to assist Canadian policy makers in addressing potential environmental issues arising from the negotiations that may affect Canada. Improved understanding of the relationship between trade, foreign direct investment (FDI), economic growth and the environment can assist in the formulation of government policy to reduce potential conflicts between commercial and environmental objectives.

There is a strong correlation between open markets, economic development and enhanced environmental protection. Liberalized rules-based trade and efficiently regulated markets are key building blocks for economic growth and development. In turn, public support for measures to protect the environment generally increases as incomes rise, and developed countries are better able to implement effective environmental policies than are lesser-developed countries. Open markets also help to foster the development of new, more environmentally friendly technologies, and liberalized trade and investment help to create the conditions for technology transfer.

This Initial EA was conducted as part of Canada’s commitment to achieving a mutually supportive relationship between trade and the environment. The intent is to assist Canadian negotiators to integrate environmental considerations into the negotiating process by providing information on the potential environmental impacts on Canada of the proposed trade agreements, and to address any public concerns by documenting how environmental factors are being considered in the course of trade negotiations.

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

• to preserve Canada’s ability to protect the environment;
• to ensure mutually supportive relationships between trade agreements and multilateral environmental agreements;
• to stimulate the efficient allocation of resources to generate positive environmental impacts;
• to strengthen the environmental management capacities of Canada’s trading partners; and
• to use this strengthened capacity to combat trans-boundary pollutants and invasive species that directly affect Canada’s environment, economy and health.

In order to ensure that Canada’s environmental quality is strengthened through liberalized trade, Canada will be negotiating with the Dominican Republic environmental obligations in the FTA itself along with a parallel agreement on the environment.

This EA documents the findings of the Initial EA phase of the Canada-DR FTA negotiations, focusing on the potential incremental environmental impacts, if any, of trade-induced economic and regulatory changes in Canada. It applies the analytical methodology outlined in the Framework that outlines the process for conducting EAs, and acts as a screening process to identify the main environmental issues, if any, that may be expected to arise as a result of this trade initiative. As such, it must be underscored that this is environmental assessment is a strategic analysis and is intended to inform policy making throughout the negotiating process. The Initial EA is, therefore, more of a “forecasting” or “anticipatory” exercise.

Before being posted online on the Foreign Affairs and International Trade Canada (the “Department”) web site, the findings of an Initial EA are shared with an interdepartmental EA Committee,comprised of representatives of federal departments covering the sectors for which increases in production areanticipated, as well as Environment Canada. This approach facilitates informed policy development and decision-making throughout the federal government.The findings are also shared with the provinces and territories, as well as the Environmental Assessment Advisory Group, an advisory group made up of industry, non-governmental organizations and academics.

Regarding trade in goods, an FTA between Canada and the Dominican Republic has the potential to expand opportunities for Canadian companies in the Dominican Republic’s growing market. Tariff reduction in the context of an FTA with the DR is expected to generate commercial benefits in a variety of sectors, including iron and steel, non-ferrous metals, pulp and paper, construction equipment, fish and seafood, as well as agriculture and agri-food products such as pulses, beef, pork, and frozen french fries.

Nevertheless, given the relatively low levels of trade between Canada and the DR in relation to Canada’s overall global trade flows, even considerable increases in exports to the Dominican Republic are reasonably anticipated to have a modest impact in relation to overall Canadian trade and production levels. Therefore, any environmental impacts resulting from Canadian export and production increases are expected to be of minimal significance and easily accommodated within Canada’s existing environmental regulatory regimes. Tariff reduction may also result in increased Canadian imports from the DR, notably in the apparel sector, although these would continue to constitute a very small share of Canada’s global imports in this sector. Few, if any, environmental impacts are expected to derive from increases of imports from the Dominican Republic as a result of an FTA.

It is also unlikely that any future FTA will lead to a substantial increase in trade in services and as a result, the impact on the Canadian environment is not expected to be significant. Similarly, the environmental effects of a Canada-Dominican Republic FTA due to an increase in investments are expected to be minimal to non-existent.

II. Overall Environmental Assessment Process

The Government of Canada is committed to conducting environmental assessments (EAs) for all trade and investment negotiations using a process that requires interdepartmental coordination and public consultations. The 2001 Framework for the Environmental Assessment of Trade Negotiations¹ (the “Framework”) details this process. It was developed in response to the 1999 Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals², which requires that all initiatives considered by Ministers or Cabinet must be environmentally assessed to indentify significant environmental effects, either positive or negative, and incorporate environmental considerations in decision-making. Detailed guidance for applying the Framework is contained in the Handbook for the Environmental Assessment of Trade³ (the “Handbook”).

The Framework provides a process and methodology for conducting an EA of a trade negotiation. It is intentionally flexible so that it can be applied to different types of negotiations (e.g., multilateral, bilateral, regional), while ensuring a systematic and consistent approach to meet two key objectives.

• The first objective is to assist Canadian negotiators to integrate environmental considerations into the negotiating process by providing information on the environmental impacts of the proposed trade and/or investment agreements. As such, trade negotiators and environmental experts are involved in the EA and work proceeds in tandem to the negotiations.
• The second objective is to address public concerns by documenting how the environment is considered during negotiations. As such, the Framework contains a strong commitment to communications and consultations throughout the EA process.

The Framework provides for three increasingly detailed phases of assessment: the Initial, Draft, and Final EA. These phases correspond to progress within the negotiations. The Initial EA is a preliminary examination to identify possible key issues. The Draft EA builds on the findings of the Initial EA and requires detailed analysis. The Final EA takes place at the conclusion of the negotiations. At the conclusion of each phase, a public report is issued with a request for feedback⁴. A Draft EA is not required if the Initial EA finds little likelihood of significant environmental impacts as a result of the negotiations. In such circumstances, environmental considerations will continue to be integrated into ongoing FTA discussions and a Final EA will be completed.

Following the conclusion of the EA process, follow-up and monitoring can be undertaken in order to review any mitigation or enhancement measures recommended in the Final EA. Monitoring and follow-up activities can be undertaken anytime during the implementation of the concluded agreement in order to gauge the performance of its provisions from an environmental perspective.   

A. Assessment Methodology

Pursuant to the Framework, this Initial EA is being conducted in an ex ante fashion (before the negotiations are completed). A Notice of Intent to conduct a Strategic Environmental Assessment of the Canada-DR FTA negotiations was announced on October 13, 2007. To date, no comments have been submitted to the government. It must be underscored that this is a strategic assessment and is intended to inform the decision-making process as the proposed FTA is being negotiated. Consequently, there is a fair degree of uncertainty associated with identifying likely economic and environmental impacts. The Initial EA is, therefore, more of a 'forecasting' or 'anticipatory' exercise. Nevertheless, the analysis allows for the early clarification of national goals and priorities with respect to trade and environmental interests, as well as for any mitigation and enhancement options that can be taken into account while the trade negotiations are underway and after they are completed.

Consistent with the methodology prescribed in the Framework, this assessment explores the link between trade rules and investment and environmental regulatory policy, while focusing on the incremental economic and potential environmental impacts in Canada of the prospective Canada-DR FTA. In other words, this assessment considers the environmental effects of new trade and investment that may result directly from the proposed FTA. Trans-boundary, regional and global environmental impacts are considered insofar as they have a direct impact on the Canadian environment.

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

• Identification of the economic effect of the Agreement to be negotiated
  This stage identifies the trade liberalization activity of the agreement under negotiation. It examines what the potential agreement would entail, the changes or new trade activity that could result, and the overall economic relevance to Canada. This helps determine the scope of analysis required for the environmental assessment and to prioritise the issues to be assessed.
  
  
• Identification of likely environmental impact of such changes
  Once the economic effects of the proposed trade agreement have been identified and characterised, the likely environmental impacts of such changes are identified. Consideration is given to potential positive and negative impacts. For the purpose of this EA, “environment” refers to the components of the Earth, which includes: land, water, and air (all layers of the atmosphere); all organic and inorganic matter; living organisms; and the interacting natural systems that include components of the foregoing. The Framework calls for analysis of the most likely impacts on the Canadian environment. The Handbook demonstrates that there are two main factors that contribute to likelihood: exposure and probability.
  
  
• Assessment of the significance of the identified likely environmental impacts
  The identified likely environmental impacts are then assessed as to their significance. The Framework outlines a number of criteria in determining significance, including frequency, duration, permanency, geographical scope and magnitude, level of risk, irreversibility of the impacts, and possible synergies among the impacts. This study uses the following scale in relation to the criteria outlined above to describe significance: none, minimal, moderate, high and extreme.
  
  
• Identification of enhancement/mitigation options to inform the negotiations
  In the Initial EA, this step is intended to identify, in a preliminary fashion, the possible policy options or actions to mitigate potential negative impacts and/or to enhance potential positive impacts that may occur as a result of the proposed free trade agreement.

In conducting EAs of trade negotiations, the Government of Canada is committed to a process that involves interdepartmental coordination. An interdepartmental committee is established to undertake the EA of each negotiation, which is led by the Chief Negotiator and involves officials from various government departments. Before being posted online on the Department web site, the findings of this Initial EA will be shared with this interdepartmental EA Committee, which includes representation by the federal departments in the sectors in which increases in production are anticipated, as well as Environment Canada. This approach facilitates informed policy development and decision making throughout the federal government.

The EA process also includes consultations with the Provincial and Territorial Governments, as well as stakeholders, which include representatives from business, academia, non-governmental organizations and the public. In the preparations for the Initial EA, a Notice of Intent is issued inviting the public to provide their thoughts on the potential impacts of the proposed agreement on the Canadian environment. At the conclusion of each phase, EA reports are shared with provinces and territories and environmental experts and then issued publicly with a request for feedback.

The Government of Canada welcomes comments on this Initial EA Report. Feedback on the analysis of the economic relevance of new negotiations and the initial assessment of the likelihood and significance of resultant environmental impacts is welcome. Comments on opportunities to mitigate any negative environmental impacts, and to enhance any positive effects as may already be identified at this stage, are also welcome. Comments on this document can be sent to:

E-mail: consultations@international.gc.ca or
Fax: (613) 944-7981 or

Mail:

Consultations & Liaison Division (CSL)
Environmental Assessment Consultations– Canada-DR FTA negotiations
Foreign Affairs and International Trade Canada
Lester B. Pearson Building
125 Sussex Drive
Ottawa, ON K1A 0G2

III. Overview of the Trade and Investment Relationship Between Canada and the Dominican Republic

In response to today’s rapidly evolving global trading environment, the Government of Canada is committed to an aggressive bilateral trade negotiations agenda, which is supported by Budget 2007 and the Government’s economic plan, Advantage Canada. Consistent with the Global Commerce Strategy, the strategic international commerce framework in support of Advantage Canada, the Dominican Republic was identified as among the next trade partners with which Canada should pursue a trade agreement. A Canada-DR FTA would also be in-line with the Government’s commitment to Canadian re-engagement in the Americas.

The DR represents an established and growing market for Canadian exporters and investors. An FTA with the DR would improve the bilateral trade and economic ties between the DR and Canada, and further advance Canada's foreign policy objectives in the region. It would also better position Canadian business vis-à-vis competitors in this market. As stated in Advantage Canada, it is in Canada's national interest to be open to free trade opportunities and help Canadian business compete in global markets.

Canada’s goods exports to the Dominican Republic more than doubled from $85 million in 2003 to $198 million in 2007⁵. Between 2003 and 2007, Canadian exports to the DR increased in every year between 2003 and 2007, with annual export growth rates ranging from 12–44%. The Dominican Republic was Canada’s 60^th largest export market in 2007, representing 0.04% of total Canadian global goods exports that year.

A bilateral FTA with the DR could deliver commercial benefits across many sectors of the Canadian economy, including a range of agriculture and agri-food products such as frozen french fries, pulses, and meats, as well as non-agricultural sectors like iron, steel, non-ferrous metals, construction equipment, pulp and paper, and fish and seafood. On many agricultural products of Canadian export interest, the Dominican Republic applies significant tariffs, such as beef (20–40%), pork (25–40%), frozen french fries (20%), and pulses (20–89%), suggesting potential gains to Canadian producers as a result of an FTA. The DR also applies tariffs of 8–20% on many top non-agricultural export interests, suggesting further commercial benefits as a result of an FTA.

An FTA with the DR would also mean more security and predictability for Canadian investment in the DR and enhanced market access for Canadian service providers in areas such as financial, professional (engineering), environmental and mining, energy and construction services.

Pursuing a comprehensive FTA, therefore, is a logical step for further solidifying Canada’s trade relationship with the Dominican Republic. This initiative also reflects Canada’s ongoing commitment to support the economic development of the region and Canadian business in the Americas. Moreover, FTA negotiations provide a platform for dialogue and cooperation on such issues as labour and the environment and establish mechanisms that can facilitate future dialogue on a broad spectrum of issues.

IV. Trade and the Environment

Public support for trade liberalization in Canada is linked to the expectation that the environment will be protected. Canada is committed to achieving mutually supportive trade and environment goals with its trading partners. Canada’s broad environmental objective when negotiating trade agreements is to preserve Canada’s ability to protect the environment. Where global and trans-boundary impacts due to increased economic activity directly affect Canada’s environment, economy and health, Canada will seek to work with trade partners to strengthen their national environmental management systems.

Open markets, economic development and environmental protection are strongly correlated. Liberalized rules-based trade and efficiently regulated markets are key building blocks for economic growth and development. In turn, public support for measures to protect the environment generally increases as incomes rise, and wealthier countries are better equipped to implement effective environmental laws and policies. Open markets also help to foster the development of new, more environmentally friendly technologies, and liberalized trade and investment help to create the conditions for technology transfer.

In order to ensure that economic development is sustainable, Canada will negotiate with the DR meaningful environment related provisions in appropriate sections of the FTA (e.g., preamble and objectives, investment, environment chapters) as well as a parallel agreement on environmental cooperation. In the context of increased economic activity due to trade liberalization, it is important to ensure that Canada and its trade partners maintain high levels of environmental protection and do not lower their standards or enforcement to attract trade or investment.

Incorporating Environmental Provisions into the Canada-DR FTA.

In the context of the FTA between Canada and the DR, Canada will seek to negotiate a parallel Environment Agreement, which will include environmental obligations that address, inter alia:

• establishment of high levels of environmental protection;
• the commitment not to derogate from domestic environmental laws to encourage trade or investment;
• compliance with and the enforcement of environmental laws; and
• promotion of accountability, transparency and public participation on environmental matters.

The Environment Agreement will also include a section on environmental cooperation aimed at strengthening the environmental management systems of the Dominican Republic. Recognizing the need to reinforce sustainable development on all fronts, Canada will endeavour to leverage its expertise on key issues of interests to both Parties.

V. Initial Environmental Assessment Findings

In addition to the sections pertaining to goods, services, and investment, the following chart provides information relating to other chapters in an eventual FTA with the Dominican Republic.

Results of Initial EA Analysis

Preamble: Anticipated outcome Potential environmental implications and provisions

The Preamble will summarize the overall spirit of the Agreement.
The Preamble is expected to reference the Parties’ ongoing commitment to sustainable development and cooperation on environmental matters.

Initial Provisions: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to include the following elements: establishment of the free trade area; relation to other agreements; relation to environmental and conservation agreements; and extent of obligations.
Provisions in this chapter will identify a number of environmental agreements and provide that each of these environmental agreements prevail in the event of inconsistency.

Rules of origin: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to provide rules of origin that are clear, as simple as possible, and leave little room for administrative discretion.
The rules are intended to be sufficiently stringent to ensure that the benefits of the FTA flow only to goods qualifying as originating in the territory of either or all countries.
Production and consumption changes resulting from rules of origin will be captured in the Trade in Goods section below, along with their corresponding environmental impacts

Customs procedures: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to administer and enforce the rules of origin in a fair and transparent manner.
There are no foreseen environmental impacts as a result of this chapter.

Trade facilitation: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to streamline customs processes and facilitate the movement of goods more efficiently.
There are no foreseen environmental impacts as a result of this chapter.
This chapter will not affect how Canadian environmental regulations are developed or implemented or how environmental objectives are set.

Sanitary and phytosanitary measures (SPS): Anticipated outcome Potential environmental implications and provisions

This chapter will seek to: reaffirm commitments made under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement); and the continued use of the WTO dispute settlement procedures for any formal disputes regarding SPS measures. In addition, it will seek to establish a bilateral SPS mechanism to provide direction on identification, management, and resolution of SPS issues to avoid disputes.
As provided in the WTO Sanitary and Phytosanitary Measures Agreement, all WTO members maintain the right to take measures necessary for the protection of human, animal or plant life or health. All WTO members are required to ensure that any SPS measures are applied only to the extent necessary to protect human, animal or plant life or health, and are based on scientific principles.

Technical Barriers to Trade (TBT): Anticipated outcome Potential environmental implications and provisions

This chapter will seek to affirm commitments made under the WTO Technical Barriers to Trade Agreement (TBT Agreement); promote greater cooperation in the field of standards, technical regulations and conformity assessment procedures; and address horizontal transparency issues, including notifications and participation in consultation processes.
The chapter will reaffirm WTO TBT rights and obligations, including the right of all WTO members to take measures necessary to ensure the protection of human health, animal and plant life, and the environment. Measures shall not be more trade-restrictive than necessary to fulfil such legitimate objectives.

Emergency action: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to enable either Party to take transitional, tariff-based emergency actions in the event of certain circumstances (e.g. imports have increased in such quantities as a result of tariff phase-out, that they constitute a substantial cause of serious injury or threat to Canadian, or other Party, producers).
No significant changes to production or consumption are expected as a result of this chapter.
There are no foreseen environmental impacts as a result of this chapter.
This chapter will not affect how Canadian environmental regulations are developed or implemented or how environmental objectives are set.

Telecommunications: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to ensure that the terms and conditions for access to and use of public telecommunications transport networks and services do not impede the parties’ market access commitments under the FTA, and to an open and competitive market for telecommunications services.
There are no foreseen environmental impacts as a result of this chapter.
This chapter will not affect how Canadian environmental regulations are developed or implemented or how environmental objectives are set.

Financial services: Anticipated outcome Potential environmental implications and provisions

This chapter of the agreement is expected to promote high quality, forward looking market access commitments and improve regulatory transparency in the financial services sector.
There are no foreseen environmental impacts as a result of this chapter.

Temporary entry: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to facilitate the temporary movement of business persons in support of bilateral trade in goods, services and investment, by negotiating more liberal access by waiving regulatory requirements for labour market tests, etc.
There are no foreseen environmental impacts as a result of this chapter.
This chapter will not affect how Canadian environmental regulations are developed or implemented or how environmental objectives are set.

Competition policy: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to ensure that the benefits of trade and investment liberalization between Canada and Dominican Republic are not undermined by anti-competitive business practices.
Provisions should include basic commitments to adopt, maintain and enforce respective competition laws; to be consistent with the principles of non-discrimination, transparency and procedural fairness; to recognize the importance of cooperation and coordination among the competition authorities; and to exclude dispute settlement (state-to-state and investor-state) from the provisions on competition policy.
This chapter will not affect how Canadian environmental regulations are developed or implemented or how environmental objectives are set.
There are no foreseen environmental impacts as a result of this chapter.

Monopolies and state enterprises: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to incorporate provisionsthat permit the designation of monopolies and stateenterprises but place disciplines on a party with respect to such entities.These include disciplines to ensure that a party does notcircumvent obligations under the agreement. Pursuant to the proposed chapter, monopolies or state enterprises must provide non-discriminatory treatment to investors of the other party, act in accordance with commercial considerations, and not act in an anti-competitive manner outside of their monopoly designation.
There are no foreseen environmental impacts as a result of this chapter.
Canada will safeguard its ability to delegate governmental authority to monopolies and state enterprises.

Government procurement: Anticipated outcome Potential environmental implications and provisions

This chapter of the agreement is expected to contain government procurement commitments, as well as extended transparency commitments, for federal government departments and agencies, and some federal Crown Corporations.
Canada will safeguard its ability to maintain and expand the current framework of policies, regulations, and legislation for the protection of the environment in a manner consistent with its domestic and international obligations.
There are no foreseen environmental impacts as a result of this chapter.
This chapter will not affect how Canadian environmental regulations are developed or implemented or how environmental objectives are set.

Electronic Commerce: Anticipated outcome Potential environmental implications and provisions

Provisions on e-commerce will seek to include rules guaranteeing a predictable environment for the conduct of electronic commerce, while preserving the government’s flexibility to pursue cultural and other social objectives, including the environment.
The amount of e-commerce conducted between the parties is not expected to increase substantially as a direct result of the FTA.
The only environmental impacts from these discussions would be indirect. If the expected cooperation activities increase the amount of e-services there could be positive and/or negative environmental impacts. Positive environmental impacts could include reduced demand for transportation. Negative environmental impacts could result from increased waste and energy usage. These impacts could be partially mitigated via effective environmental management practices.

Transparency: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to facilitate the administration and smooth operation of the Agreement by designating contact points in each Party to facilitate communication and reiterating the Parties’ commitment to transparency and due process regarding matters covered by the Agreement.
There are no foreseen environmental impacts as a result of this chapter.

Dispute settlement: Anticipated outcome Potential environmental implications and provisions

This chapter will seek to include state-to-state dispute resolution procedures with the Dominican Republic based on the dispute settlement provisions of the NAFTA, but simplified and improved where possible.
There are no foreseen environmental impacts as a result of this chapter.

Exceptions: Anticipated outcome Potential environmental implications and provisions

The Exceptions Chapter will seek to set out agreed upon exceptions to the obligations contained in the FTA. These exceptions are permitted in order to ensure that the Parties to the FTA maintain policy flexibility in areas that the Parties recognize as legitimate such as environmental protection. Canada generally seeks to include the following exceptions: General Exceptions; National Security; Taxation; Disclosure of Information; Cultural Exemption; and WTO Waivers (including those related to the environment).
This chapter will contain provisions to ensure that Parties maintain their ability to adopt measures to protect human, animal or plant life, and measures relating to the conservation of exhaustible natural resources.

Administration of the Agreement: Anticipated outcome Potential environmental implications and provisions

This Chapter will seek to provide a framework for the overall management of the FTA and establish a mechanism for the effective resolution of disputes outside the formal dispute settlement mechanism. In so doing, the chapter establishes the Free Trade Commission, each Party’s obligation to appoint a Free Trade Coordinator, in addition to delineating the various committees, sub-committees and working groups created under the Agreement.
This chapter will contain provisions permitting the Parties to modify the list of Multilateral Environmental Agreements that supersede the FTAs obligations.

A. Trade in Goods

In accordance with the Environmental Assessment Methodology, as outlined in Section II (A) of this Initial EA, this section includes:

• An overview of bilateral trade flows and expected growth areas as a result of a Canada-Dominican Republic FTA;
• Identification of potential environmental impacts associated with this trade growth and an assessment of the significance of these impacts; and
• Identification of mitigation and enhancement measures that could address potential environmental impacts.

Anticipated Effects of FTA Trade in Goods Provisions

The proposed FTA is expected to establish commercially significant provisions related to market access in goods, principally through bilateral elimination of tariffs. The largest trade gains resulting from the FTA are expected in sectors with high recent bilateral trade volumes that face significant tariff barriers. Canadian negotiators will also seek to include provisions that would facilitate increased cooperation with the government of the Dominican Republic to make trade more efficient, including through trade facilitating measures and customs procedures designed to provide certainty, transparency and effective verification. Rules of origin that are transparent, predictable and consistent in application will be developed to ensure that the benefits negotiated under the trade agreement accrue to its Parties.

The Canada-Dominican Republic bilateral trade relationship has grown in recent years even in the absence of an FTA. An FTA is expected to further bolster this commercial relationship, particularly in the sectors outlined below. However, the Canada-Dominican Republic trade relationship assumes a very small role in the context of Canada’s overall global trade flows. This would continue to be the case even if considerable trade growth ensued as a result of an FTA.

Canadian Exports to the Dominican Republic

The Dominican Republic’s economy has experienced significant growth in recent years, from GDP of US$19 billion in 2000 to US$38 billion in 2006. During this period of economic expansion, the Dominican Republic’s total global goods imports more than doubled from US$7.6 billion to US$12.0 billion per year⁶. Consistent with this trend, Canada’s exports to the Dominican Republic more than doubled from $85 million7⁷ in 2003 to $198 million in 2007, making the DR Canada’s 60^th largest export destination in that year. Between 2003 and 2007, Canadian exports to the Dominican Republic increased in every year between 2003 and 2007, with annual export growth rates ranging from 12 – 44%. Despite recent growth of Canadian exports to this market, Canadian exports to the Dominican Republic represented only 0.04% of total Canadian global goods exports that year. Even if Canadian exports to the Dominican Republic were to expand ten-fold in the years following the implementation of a Canada-Dominican Republic FTA, Canada’s exports to this market would represent less than 0.5% of Canada’s 2007 global goods exports, suggesting that export growth resulting from an FTA with the Dominican Republic would have only a modest effect on Canada’s overall trade and production levels.

The table below lists Canada’s top 10 exports to the Dominican Republic in 2007 by product sectors. Exports from these groups accounted for over 82% of Canada’s total exports to the Dominican Republic in that year. Although commercial gains are expected to accrue to many Canadian export sectors as a result of an FTA, those sectors with the highest recent exports to the Dominican Republic and that face high tariffs are expected to see the largest absolute commercial gains as a result of tariff elimination. Exports to the Dominican Republic did not account for over 0.35% of Canadian global exports in any of these top ten export sectors in 2007.

Canadian Exports to the Dominican Republic By Sector ($CAD Millions)

Sector	2003	2004	2005	2006	2007	% 2007 Total CDN Exports to DR	% 2007 CDN Global Exports	2007 Avg DRTariff
Iron and steel	1.0	6.3	1.5	14.0	45.9	23.15%	0.31%	8.8%
Agriculture	24.0	21.9	23.7	18.8	26.4	13.34%	0.08%	13.1% [Note 1]
Non-Ferrous Metals	0.2	2.6	5.9	10.2	18.8	9.50%	0.22%	4.5%
Construction Equipment	0.8	1.2	8.1	2.9	15.5	7.82%	0.28%	3.4%
Pulp and paper	21.5	15.5	23.4	10.2	12.2	6.15%	0.06%	6.6%
Fertilizers	1.2	3.8	6.4	6.3	11.3	5.72%	0.25%	0.6%
Fish & Seafood	12.2	14.4	19.4	13.8	11.2	5.66%	0.28%	15.5%
Textiles	1.6	1.9	2.0	2.9	8.9	4.50%	0.34%	4.9%
Petroleum Fuels	0.0	0.1	0.3	22.3	6.4	3.24%	0.01%	5.2%
Industrial Machinery	2.0	5.5	3.9	4.9	6.2	3.15%	0.05%	2.7%
Sub-Total	64.5	73.1	94.8	106.4	162.9	82.23%
Others	20.8	28.2	50.5	57.0	35.2	17.77%
Total CDN Exports to DR	85.3	101.3	145.3	163.4	198.1	100.00%	0.04%

Sources: World Trade Atlas (Statistics Canada Data); 2007 Dominican Republic Customs Tariff

Note 1: Ad Valorem Equivalent simple average MFN rate, WTO 2007 calculation.

Canadian non-agricultural exports to the Dominican Republic totalled $172 million in 2007. The Dominican Republic applies, on average, a Most Favoured Nation (MFN) tariff of 8.5% on non-agricultural products and many goods from key Canadian non-agricultural export sectors face tariffs of up to 20%. An FTA would eliminate tariffs on all non-agricultural goods within a specified number of years and could therefore be expected to facilitate further growth in Canadian non-agricultural exports to this market.

Canada’s top non-agricultural sector exporting to the Dominican Republic in 2007 was iron and steel products (in many forms, including primary materials, scrap, as well as intermediate and end-use products composed mainly of iron and steel), which totalled $46 million, up from $14 million in 2006 and $1.5 million in 2005. This sector accounted for 27% of non-agricultural exports or 23% of total Canadian exports to the Dominican Republic in 2007. The Dominican Republic’s average applied MFN tariff on iron and steel products is 8.8%, with tariffs of 8–20% applied on many products of Canadian export interest, suggesting that tariff elimination in the context of a Canada-Dominican Republic FTA could result in commercially significant gains to Canadian exporters in this sector. However, Canada’s 2007 iron and steel exports to the Dominican Republic represented only 0.3% of Canada’s $14.7 billion global iron and steel exports. This would suggest that even very strong growth of iron and steel exports resulting from an FTA would have a relatively small effect on Canada’s overall export and production levels in this sector.

Non-ferrous metals represented Canada’s second largest non-agricultural sector exporting to the Dominican Republic in 2007, with exports totalling $18.8 million, representing 9.5% of Canada’s total exports to the DR that year. The Dominican Republic’s average tariff applied on imports of non-ferrous metals is 4.5%, suggesting that this sector could also see some expanded commercial opportunities as a result of a Canada-Dominican Republic FTA, although potentially on a smaller scale than other top export sector facing higher tariffs. Any increase of non-ferrous metal exports to the Dominican Republic following an FTA would have a modest effect on Canadian production and global export levels in this sector, as exports to the Dominican Republic represented only 0.2% of Canadian global exports in this sector in 2007.

Construction equipment was Canada’s third largest non-agricultural sector exported to the Dominican Republic in 2007, with exports totalling $15.5 million (7.8% of total Canadian exports to the Dominican Republic). Exports from this sector face a 3.4% average tariff in the Dominican Republic, suggesting some potential benefits, although also on a smaller scale than other top export groups facing higher tariffs in the Dominican Republic. Any increase of construction equipment exports to the Dominican Republic following an FTA would have a modest effect on Canadian production and global export levels in this sector, as exports to the Dominican Republic represented less than 0.3% of Canadian global exports in this sector in 2007.

Pulp and paper, with exports totalling $12.2 million, was Canada’s fourth largest non-agricultural sector exporting to the Dominican Republic in 2007. The Dominican Republic applies a 6.6% average tariff on pulp and paper imports, with tariffs of 8–20% on numerous products of Canadian export interest, suggesting that tariff elimination in the context of a Canada-Dominican Republic FTA could result in commercially significant gains to Canadian exporters in this sector. However, while an important sector in the context of the bilateral trade relationship, Canada’s 2007 pulp and paper exports to the Dominican Republic represented only 0.06% of Canada’s $19.7 billion global exports in this sector. This would suggest that even very strong growth of pulp and paper exports resulting from an FTA would have a relatively small effect on Canada’s overall export and production levels in this sector.

Fertilizers, with exports of $11.3 million, were Canada’s fifth largest non-agricultural sector exporting to the Dominican Republic in 2007. Due to the relatively low average Dominican Republic tariff of 0.6% applied on imports from this sector, potential gains as a result of an FTA are likely to be limited.

Fish and seafood products, with Canadian exports to the Dominican Republic totalling $11.2 million in 2007, accounted for 5.7% of Canada’s exports to this market that year. Canadian fish and seafood producers could see significant commercial gains as a result of the elimination of the Dominican Republic’s 15.5% average tariff applied on imports in this sector. However, as Canada’s 2007 exports to the Dominican Republic represented less than 0.3% of Canada’s global fish and seafood exports, even a strong increase of exports to the DR would have a modest effect on overall Canadian trade and production levels.

Canada exported $26.4 million of agricultural and agri-food products to the Dominican Republic in 2007 (13% of Canada’s total exports to the DR), led by pulses, which totalled $8.4 million (4.2% of Canada’s total exports to the DR). An FTA would reduce Dominican Republic tariffs for many agricultural products of export interest, including: beef (20–40%), pork (25–40%), frozen french fries (20%), and pulses (20–89%). While the reduction or elimination of tariffs could significantly increase Canadian agricultural export flows to Dominican Republic, overall economic effects on Canada’s agriculture sector would be modest given that Canada’s agricultural exports to the Dominican Republic in 2007 represented 0.08% of Canada’s $31.8 billion of global agricultural exports that year. Even if agricultural export growth as a result of an FTA is considerable, total Canadian exports to Dominican Republic in this sector would still amount to a very small share of Canadian global exports and production.

Canadian Imports from the Dominican Republic

Under an FTA, Canada would also eliminate tariffs imposed on goods imported from the Dominican Republic, which may result in an increase of Canadian imports. The Dominican Republic is a recipient of Canada’s General Preferential Tariff (GPT), which provides preferential tariff rates for certain goods of qualifying developing countries. Canada imported $109 million worth of goods from the Dominican Republic in 2007, nearly even with the $108 million total in 2003. The Dominican Republic was Canada’s 76^th largest source of imports in 2007, and accounted for only 0.03% of Canada’s total global imports that year.

The table below lists Canada’s top ten imports from the Dominican Republic in 2007 by product sectors. Imports from these groups accounted for 96% of Canada’s total imports from the Dominican Republic that year. Canada’s top sectors of imports from the DR in 2007 were led by medical devices ($30.5 million), electronics ($21.1 million), and information technology products ($18.6 million), which combined accounted for 62% of Canada’s total imports from the DR that year. Canada’s average tariffs applied on imports from these sectors are relatively low (all less than 1%). Therefore, these sectors are not expected to see notable gains as a result of tariff elimination under an FTA.

Canadian Imports from the Dominican Republic By Sector ($CAD Millions)

Sector	2003	2004	2005	2006	2007	% 2007 Total CDN Imports from DR	% 2007 CDN Global Imports	2007 Avg CDN GPT Tariff
Medical Devices	16.0	20.0	17.7	17.4	30.5	26.88%	0.50%	0.7%
Electronics (non-IT)	24.9	26.4	25.1	23.6	21.1	18.62%	0.31%	0.9%
Information Technology	14.5	15.8	19.0	20.2	18.6	16.43%	0.05%	0.1%
Apparel	20.3	22.6	25.4	22.4	16.2	14.30%	0.22%	16.3%
Agriculture	23.9	29.4	20.1	16.1	14.2	12.55%	0.06%	17.3% [Note 2]
Plastics	0.7	1.7	2.0	3.1	2.9	2.55%	0.02%	1.8%
Textiles	3.7	1.7	0.9	2.1	1.8	1.59%	0.04%	5.4%
Jewellery	0.7	0.5	0.5	0.7	1.4	1.19%	0.11%	2.5%
Footwear	1.5	1.1	0.9	0.9	1.3	1.17%	0.07%	11.7%
Stones, Ceramics, Glass	1.8	1.3	1.6	2.1	1.2	1.06%	0.03%	1.3%
Sub-Total	108.0	120.5	113.3	108.7	109.2	96.33%
Others	6.5	7.7	6.7	5.4	4.2	3.67%
Total CDN Imports from DR	114.5	128.2	120.0	114.1	113.4	100.00%	0.03%

Sources: World Trade Atlas (Statistics Canada Data); 2008 Canada Customs Tariff

Note 2: Ad Valorem Equivalent simple average MFN rate, WTO 2007 calculation.

Apparel was the fourth largest sector of Canadian imports from the Dominican Republic in 2007, with $16.2 million of imports, down from $20.3 million in 2003 (imports peaked at $25.4 million in 2005). Canada applies tariffs of 17–18% on apparel imports, significantly higher than tariffs applied on any of Canada’s other top non-agricultural imports from the Dominican Republic. Due to the relatively high tariff rates applied on apparel imports, it is expected that this sector will be the predominant beneficiary of Canadian tariff elimination in the context of an FTA. However, as apparel imports from the Dominican Republic represented only 0.2% of Canada’s global apparel imports in 2007, it is expected that increased imports in this sector resulting from an FTA would have minimal effects on overall Canadian imports and production levels.

Further, apparel imports from the Dominican Republic have declined in recent years, while imports from China and several other major international suppliers have grown considerably (Canada’s apparel imports from China grew from $1.7 billion in 2003 to $3.9 billion in 2007). As such, it is expected that the elimination of Canadian apparel tariffs under an FTA may allow the Dominican Republic to maintain its share in the Canadian apparel market vis-à-vis other international suppliers or to displace imports from other international suppliers, further mitigating any effects on Canadian production in this sector.

Canadian agriculture and agri-food imports from the DR totalled $14 million, led by eggplants, fresh vegetables and fruits, coconut and cocoa beans. Although Canada’s average tariff applied on agriculture and agri-food products is 17.3%, the current MFN rate is zero for these top agricultural imports from the Dominican Republic. Canada’s average trade-weighted tariff on agricultural imports from the Dominican Republic is only 0.07%, suggesting that an FTA may result in only limited increases of agriculture imports from the Dominican Republic.

Potential Environmental Impacts and Significance

In light of the small bilateral trade relationship between Canada and the Dominican Republic in relation to Canada’s overall global trade flows, environmental impacts resulting from a Canada-Dominican Republic FTA are expected to have minimal significance. It is expected that any environmental impacts would be related to increased Canadian production due to greater demand in the Dominican Republic for Canadian exports as a result of tariff elimination. As noted in the previous section, Canadian commercial sectors expected to see the largest absolute gains are those sectors with the highest recent exports to the Dominican Republic and that face high tariff barriers to this market. As a result, this section will evaluate potential environmental impacts, as well as their significance, of possible production increases in those sectors with over $10 million of exports to the Dominican Republic in 2007 and that also face average tariffs greater than 5%. These sectors include iron and steel, agriculture, pulp and paper, and fish and seafood.

• Iron and Steel: In principle, increased exports and production of iron and steel products could have environmental impacts, including air pollution, hazardous wastes, and Greenhouse Gas emissions. However, as noted above, exports to the Dominican Republic accounted for only 0.3% of Canada’s $14.7 billion in total global exports of iron and steel products in 2007, illustrating that even if considerable export growth in this sector ensued as a result of an FTA, they would still constitute a very small share of total Canadian exports and production and would be manageable under current environmental management practices. As such, the significance of any environmental impact resulting from export expansion in the iron and steel sector is expected to be minimal.
• Agriculture: Regarding agricultural export growth and potential environmental impacts, the most significant changes in agricultural production are changes that affect land use (e.g. cropland under summer fallow, use of marginal lands) and changes in livestock numbers. While the reduction or elimination of tariffs could increase Canadian agricultural export flows to the Dominican Republic, the significance of any environmental impacts would be minimal given that Canada’s $26 million of agricultural exports to the Dominican Republic in 2007 represented a very small share (0.08%) of Canada’s $31.8 billion of global agricultural exports that year. Even given very significant export growth, exports in this sector would still amount to a very small share of Canadian global exports and production. Further, Canada’s agricultural production is of relatively low intensity and, thus, any increase in domestic production in response to higher market demand in Dominican Republic for Canadian agricultural products would be expected to have minimal environmental impact.
• Pulp and Paper: In principle, increased exports and production of pulp and paper could have environmental impacts, particularly regarding the sustainability of Canadian forests. However, as noted above, exports to the Dominican Republic accounted for only 0.06% of Canada’s $19.7 billion total global exports of pulp and paper in 2007, illustrating that even if considerable export growth in this sector ensued as a result of an FTA, they would still constitute a very small share of Canadian exports and production. As such, the significance of any environmental impact resulting increased exports of pulp and paper are expected to be minimal and easily accommodated by current forest management programs.
• Fish and Seafood: Increases of exports of fish and seafood could, in principle, have environmental impacts, particularly regarding sustainable management of fish stocks. However, any such increases would be subject to supply constraints through Canada’s fish management systems at the federal, provincial and territorial levels of government. Further, as noted above, exports to the Dominican Republic accounted for less than 0.3% of Canada’s $4.0 billion in total global exports of fish and seafood in 2007, illustrating that even if considerable export growth in this sector ensued as a result of an FTA, they would still constitute a very small share of Canadian exports and production. As such, the significance of any environmental impact resulting from export expansion of fish and seafood is expected to be minimal.

It is also reasonable to expect that some of the increases in Canadian agricultural and non-agricultural exports to the Dominican Republic made possible by tariff elimination may reduce exports to other less profitable destinations, thus further mitigating any potential environmental impact anticipated from increased trade flows.

Regarding the environmental implications of increased imports from the Dominican Republic as a result of an FTA, as noted above, any increases of imports are expected to be concentrated in apparel products, and would represent a very small fraction of Canadian global apparel imports and domestic production in this sector. Further, it is anticipated that any increases of apparel imports from the Dominican Republic would come largely at the expense of other international suppliers, with limited impacts on Canadian production. No environmental impact is expected to result from increased apparel imports from the Dominican Republic, and virtually no environmental impact is expected to result from increased imports from Dominican Republic in all sectors combined.

Mitigation and Environmental Enhancement Measures

• Iron and Steel: Minimal environmental impact is expected to result from increases of iron and steel exports to the Dominican Republic as a result of an FTA. Any environmental impacts will be accommodated by provincial and federal government regulations concerning air and water pollution and solid waste disposal. The iron and steel industry is also subject to the Government of Canada’s Turning the Corner action plan to reduce greenhouse gases and air pollution.
• Agriculture: While minimal environmental impact is likewise expected to result from increased agricultural exports to Dominican Republic as a result of an FTA, should there be any discernable environmental impacts, Agriculture and Agri-Food Canada (AAFC) has a number of programs in place intended to improve the environmental performance of the agriculture and agri-food sector. In conjunction with the provincial and territorial governments, AAFC, through the Agricultural Policy Framework (APF) 2002-2009, assists producers in accelerating the adoption of improved environmental practices.

AAFC funds various initiatives intended to improve the environmental performance of the agri-food sector, including:

• Environmental Farm Planning (EFP): Farmers with EFPs are eligible to apply for financial and technical assistance to implement beneficial management practices through the National Farm Stewardship Program and Greencover Canada.
• Greencover Canada: Landowners can access a package of funding and technical assistance to help improve grassland-management practices, protect water quality, reduce greenhouse-gas emissions, and enhance biodiversity and wildlife habitat.
• National Agri-Environmental Standards Initiative: Producers will benefit from performance standards establishing the degree of desired environmental quality of air, water and soil in agricultural areas.
• The National Agri-Environmental Health Analysis and Reporting Program provides objective, science-based indicators to inform decision-makers in agriculture and help improve policies and programs aimed at addressing environmental issues faced by producers.
• National Farm Stewardship Program: Landowners can receive financial and technical assistance to implement on-farm beneficial management practices to address environmental risk identified in their Environmental Farm Plans.
• The National Land and Water Information Service is developing an Internet portal to provide land managers with information, data, tools and expertise to help them make sustainable land-use decisions.
• National Water Supply Expansion Program: Producers and agricultural communities can receive technical and financial assistance to help meet their everyday growing water needs.
• The Pesticide Risk Reduction Program develops and implements strategies, conducts research and develops alternative approaches to pest management.
• The Minor Use Program assists producers in accessing more environmentally friendly and efficient pest management technologies.
• Various ongoing programs built upon the work of the activities of the Prairie Farm Rehabilitation Administration (PFRA), delivered to ensure the sustainable use and conservation of agricultural soil and water resources, such as grassland management, irrigation, crop diversification and shelterbelt planning.
• In addition, provincial environmental legislation and initiatives normally have a direct impact on farming operations. They include a range of mechanisms designed to encourage or require environmentally sound farming practices:
• extension services or funding to carry out specific practices, develop infrastructure, or diversify operations to reduce the environmental impact of agricultural production;
• information documents on beneficial management practices;
• regulations on reducing agricultural pollution;
• policies encouraging the development of on-farm environment plans;
• regulations on the development and operation of new or expanded livestock operations; and
• legislation to regulate the discharge of pollutants.

Efforts related to the above and other programs will help offset any negative environmental impact that may result from liberalized agricultural trade with the Dominican Republic. In the event the environmental impacts as a result of the FTA turn out to be greater than expected, consideration will be given to expanding existing programs or creating new ones to deal with any negative effects.

• Pulp and Paper: Although minimal environmental impacts are expected to result from potential increases of pulp and paper exports as a result of a Canada-Dominican Republic FTA, it is important to underscore that Canadian governments at the federal, provincial and territorial levels have taken steps to ensure that forests are managed in accordance with sustainable development principles. Canada’s commercial forest resources are largely managed by the provinces through forest management tenure agreements that strictly regulate harvesting, silviculture and forestry practices. These policies provide for regulatory and audit mechanisms based on sustainable development principles to ensure that timber is not harvested at rates exceeding a forest’s capacity to regenerate. Any marginal increase in production of those products that might result from tariff elimination in the context of a Canada-Dominican Republic FTA could be easily accommodated within current forest management programs.
• Fish and Seafood: Any growth of fish and seafood exports to the Dominican Republic as a result of an FTA will be subject to supply restraints that ensure that fish and seafood products are harvested at a sustainable level. The Government of Canada, along with provincial and territorial governments, aboriginal organizations, coastal communities and other stakeholders and interested Canadians are committed to the conservation and sustainable development of Canada’s oceans through a variety of programs under the umbrella of the national Sustainable Development Strategy.

Canada’s fish management systems and federal, provincial and territorial governments’ measures have been put into place to ensure the sustainability of Canada’s fisheries and the environmental integrity of its aquaculture operations so that any increased trade resulting from an FTA will have minimal environmental impact. Therefore, because there are effective environmental management systems and government measures in place, an increase in exports to the Dominican Republic due to an FTA is not expected to result in a significant negative or positive impact on the sustainability of fish stocks, nor on Canada’s marine or freshwater environment.

A detailed list of federal, provincial and territorial legislation and regulations that may enhance positive environmental impacts or mitigate against negative environmental impacts of trade agreements is attached as Appendix 1 of this report.

B. Trade in Services

Overview

The services sector is the cornerstone of the DR’s economy, both in terms of value added and of employment. Growth rates since 1996 have been particularly high in communication and tourism-related services, such as transport and the hotel and restaurant industry. Since 1999, as a result of the DR’s privatization policy, the legal and institutional framework for services has been reformed, and the State has reduced its involvement to certain basic infrastructure services, notably maritime ports.

These services sectors, as well as others like construction, electricity and telecommunications have turned into expanding economic areas for Canadian service providers in the DR, in addition to financial and insurance services, as the local market diversifies. Canada is one of the DR’s main destinations for services exports trade, mainly consisting of tourism and travel-related services. In 2004, two-way trade in commercial services between Canada and the DR totalled approximately $70 million. Canada’s services exports to the DR represented about $24 million and imports represented approximately $46 million in 2004. Disaggregate data is not yet available for 2005 and beyond. (Note: Statistics Canada figures include commercial services only, and exclude travel, transportation, and government services. Unofficial statistics from the Canadian Tourism Commission reflect approximately $457 million spending by Canadians in the Dominican Republic in 2005.)

Bilateral interaction between Canada and the DR in the context of the WTO General Agreement on Trade in Services (GATS) negotiations has been limited. In general, the DR’s GATS commitments tend to bind the policy framework in place at the time of the Uruguay Round negotiations (1995), and do not reflect recent policy changes that improve conditions for foreign participation in services markets. Canada submitted a bilateral market access request to the DR in 2002, which included professional services (engineering and integrated engineering), research & development services, and financial services. However, Canada has not engaged substantially with the DR in the plurilateral request process, in that the DR is not a recipient of any plurilateral requests to which Canada is a co-sponsor. Canada is, however, a recipient of the plurilateral request on Mode 4, of which the DR is a demandeur. From a bilateral negotiation perspective, our main services market interests in DR are financial, engineering, environmental, energy, and research & development services; and to a lesser degree, mining, construction and telecommunications services – given that the scope of the DR’s GATS commitments in these sectors is very limited.

Notwithstanding potential difficulties, there is sufficient scope to advance Canadian interests bilaterally under a FTA with respect to market access and to rules development on a number of fronts. A North American Free Trade Agreement (NAFTA)-plus type approach would likely yield benefits beyond GATS to both parties. Canada is seeking to negotiate with the DR a comprehensive NAFTA plus chapter on services which will include expanded provisions on domestic regulation, transparency, and professional services/mutual recognition. In addition, there will be separate chapters on telecommunications, financial services, ecommerce and temporary entry. A negative list approach to the listing of non-conforming measures will provide both Parties with improved market access and regulatory transparency beyond our respective existing commitments under the GATS. In general, Canada and the DR share the same approach regarding the scope of cross-border trade in services.

On market access, Canada will not negotiate commitments on any services related to health, public education, social services or culture. In addition, Canada will ensure that its position at all stages of these negotiations will be fully consistent with our right to regulate and to introduce new regulations on the supply of services in order to meet national policy objectives, including environmental protection.

Likely Economic Impact of the Canada-Dominican Republic FTA

While studies have shown that there are substantial positive benefits to services liberalization, it remains difficult to assess with certainty the impacts of specific trade negotiations in specific services sectors. Services barriers take the form of domestic regulations – i.e. requirements for local partners, foreign ownership restrictions, citizenship, residency and licensing requirements, and opaque or non-transparent rules/regulations – and assessing the economic impacts of removing such barriers to services trade is difficult. In addition, the definition of services trade reaches beyond cross-border flows to include three additional modes of supply: consumption abroad (e.g. international tourism), commercial presence (e.g., a branch office operating in a country outside of country of ownership), and the movement of natural persons (e.g., engineers or architects working abroad).

Despite these difficulties, work is ongoing in this area. For example, several studies using CGE modeling suggest that there would be welfare gains to be made from services liberalization. For Canada, recent studies estimate that even a partial global reduction of services barriers in the WTO context could lead to gains in the range of 2.8% of GDP or U.S. $20 billion⁸ while deeper liberalization that includes investment liberalization would lead to gains in the range of 14.9% of GDP or U.S. $84 billion⁹.

The gains identified above are based on a multilateral approach. The gains to be made from the Canada-DR FTA would therefore be smaller. For purposes of the Initial EA of the Canada-DR FTA, we have based our analysis on expected results of an agreement with the DR that includes a NAFTA-plus services chapter and separate chapters on telecommunications, financial services, e-commerce and temporary entry. Dominican Republic service sectors of particular interest to Canada include financial, engineering, environmental, energy, and research & development services; and to a lesser degree, mining, construction and telecommunications services. Canada is seeking the removal of existing regulatory barriers in these and other sectors.

Likely Environmental Impacts of the Economic Changes

Generally, the kinds of environmental impacts that could result from the economic activities of increased trade in service sectors include effects on air and water pollution, land and biodiversity conservation, and effects on the atmosphere and climate. Environmental effects common to all service sectors include the consumption of energy for heating, lighting, and vehicle and equipment use which may result in air pollution and release of greenhouse gases, and the production of waste, including paper, refuse, sanitary waste, and chemical by-products from office equipment. In sectors such as environmental services and telecommunication services, positive environmental impacts are anticipated. In addition to examining such elements, given the nature of services trade, the analysis of the environmental effects must also consider the impacts of services trade liberalization in areas where the potential for negative impact may seem negligible but where over time the impact will prove more significant. Analysis of elements such as smokestack effects, direct and indirect effects, and upstream and down stream effects is necessary to capture the potential cumulative effects.

Significance of the Environmental Impacts

While an FTA with the DR is expected to provide increased market access into Canada, it is unlikely that there will be a substantial increase in trade in services as a result of these negotiations. Canada is already quite open in most services sectors and no domestic regulatory changes are expected as a result of an FTA with the Dominican Republic. There may be some increased services exports to the DR, but it is difficult to segregate the effects of the Canada-DR trade negotiations from those resulting from Canada’s other trade negotiations, or from the implementation of existing regional or bilateral trade agreements or from unilateral liberalization. Generally speaking, while the environmental impacts are not expected to be significant, we will need to consider indirect or cumulative impacts and the synergies between environmental goods and services which may increase the impact.

Enhancement and Mitigation Options

As noted above, while an FTA with the DR will improve market access and, to an extent, increase trade in services, we can expect little or moderate environmental impact. Further, any potential impacts can be partially balanced by mitigation options and opportunities for environmentally-sustainable growth, including technology innovation and industry best practices. It should also be noted that Canada will seek to have the WTO GATS general exceptions for environmental measures incorporated into the FTA, including clarifications that they encompass exceptions for environmental measures necessary to protect human, animal or plant life, or health.

Depending on the sector, mitigation options include the use of fuel efficient vehicles, alternative fuels, paper conservation within the office, recycling of various materials, corporate policies on “green procurement”, limiting access to ecologically-sensitive tourist areas, consumer education, and the promotion of sound environmental practices. In addition, increasingly, changes and improvements to environmental legislation and industry awareness of environmental issues are helping to offset potential negative impacts of services trade liberalization. A further review of environmental impacts will be required as the FTA negotiations advance and a clearer picture of potential WTO disciplines on domestic regulation is obtained. Consultations will continue to help ensure that our ability to regulate for the protection of the environment is not undermined or weakened.

C. Investment

Overview

The stock of Canadian direct investment abroad (CDIA) in the Dominican Republic has increased significantly since 2002, from 134 million in 2002 to more than $1.1 billion in 2007, an increase of over 750%. The DR is currently the 30th largest destination for CDIA in the world. Sectors of interest for Canadian investors include mining, tourism, textile industries, infrastructure and banking. Statistics on investment from the DR into Canada are not available.

Canadian investment in the DR currently enjoys a hospitable environment and is expected to increase, increase, particularly in the areas of mining, infrastructure and tourism. With the inclusion of investment provisions as part of a FTA, Canadian investments would be granted even more security and a predictable environment for existing investments.

While the existence of investment provisions as part of the FTA should be a positive factor in investor’s decisions on whether to invest in the territory of the other party, it will be but one of many factors considered in an investment decisions. Large changes in investment are not expected to result from these negotiations.

Likely Environmental Impacts in Canada and the Context for these Impacts

The likelihood of significant environmental impacts would depend on the degree of increase in investment, the sectors in which investment is made, and any measures in place to protect the environment in relation to those activities. Significant new flows of investment resulting from the FTA are not anticipated. Therefore, the environmental effects of the Canada-DR FTA resulting from investment are expected to be minimal to non-existent.

Identification of Enhancement/Mitigation Options

Foreign investors in Canada are bound by the same environmental protection regulations that govern the activities of domestic investors. Proposed projects resulting from inward investment would be subject to applicable environmental assessment legislation, including the Canadian Environmental Assessment Act and provincial environmental assessment regulations.

The investment chapter of the FTA with the DR is based on the government of Canada’s model Foreign Investment Protection Agreement (FIPA). The current FIPA model includes revisions that clarify the government’s right to regulate in the public interest. The model FIPA also includes a general exception that permits a Party to take measures necessary to protect human, animal or plant life or health, the environment and safety, or measures primarily aimed at the conservation of exhaustible natural resources, provided that such measures are not applied in an arbitrary or unjustifiable manner and are not disguised restrictions on trade or investment. We anticipate that the final agreement will not have a negative effect on Canada’s ability to develop and implement environmental policies and regulations.

VI. Conclusion

Given the government’s view that trade and environmental policies should be mutually supportive, it is Canada’s practice to pursue trade agreements in a manner consistent with, among other things, environmental protection and conservation. Undertaking environmental assessments is an effective way to address potential environmental impacts that may result from the negotiation of a trade agreement. The EA process is a mechanism through which the Canadian environment may be better protected in trade negotiations. It does this by assisting decision makers understand the environmental implications of trade policy and by improving overall policy coherence at the national level.

In tandem with the FTA negotiations with the DR, Canada will seek a separate but parallel environmental agreement. This agreement would be consistent with the focus on strengthening the domestic environmental management systems found in existing side agreements to which Canada is a party (including NAFTA, Chile and Costa Rica). It is envisaged that this agreement would contain commitments to high levels of environmental protection and effective enforcement of domestic environmental laws, including through cooperative activities.

The conclusion of a Canada-DR FTA will strengthen the existing commercial relationship enjoyed between the Parties. In addition, the anticipated new economic activity resulting from the trade agreement is expected to yield economic benefits to Canada through improved market access for Canadian goods, services and investment, as well as provisions that will ground the bilateral trade relationship in a coherent rules-based system, thereby making it more predictable and secure.

Nevertheless, these economic effects, while important, will be very modest relative to Canada’s overall economic activity, and as a consequence, the environmental impact will be minimal. For goods, services and investment the absolute increase in economic activity caused the increases in trade flows will be small in comparison with the overall size of the Canadian economy. Moreover, in the area of services, opportunities to mitigate any environmental impact will exist. In addition, any new inward investment into Canada will face Canadian environmental regulations, and Canada will seek the preservation of the right to regulate in the public interest. Finally, general exceptions across the entire FTA will be sought which exempt environmental measures from the FTA’s provisions.

In these circumstances, according to the Framework, the Draft EA phase is not required and the Department will proceed directly to the Final EA. Further analysis will be carried out if information becomes available that would warrant further consideration. Indeed, should the negotiations with the DR take a path that may lead to environmental effects not yet explored in this study, steps will be taken to ensure that they are assessed. In addition, the findings of the Initial EA, published herein, as well as any new public comments received, will continue to inform Canadian negotiators.

In accordance with the Framework for the Environmental Assessment of Trade Negotiations, the Final EA will be conducted based on the outcome of the negotiations, and the findings will be reported publicly. As such, it will include a discussion of any new analysis and comments received in response to the Initial EA regarding the anticipated environmental impacts of the agreement on Canada.

Finally, following the conclusion of the overall EA of the trade negotiations, follow-up and monitoring can be undertaken in order to review any mitigation or enhancement measures recommended during in the Final EA report. Monitoring and follow-up activities can be undertaken anytime during the implementation of the concluded trade agreement in order to gauge the performance of its provisions from an environmental perspective.

Appendix 1: Environmental Legislation and Regulations

Below is a non-exhaustive list of federal, provincial and territorial legislation¹⁰ and regulations that may enhance positive environmental impacts or mitigate against negative environmental impacts of trade agreements.

Laws of General Application

Federal

Canada Emission Reduction Incentives Agency Act

Canada National Parks Act

Canada Shipping Act

Canadian Environmental Assessment Act (CEAA)

Canadian Environmental Protection Act, 1999 (CEPA)

• Biological Test Method: Reference Method for Determining Acute Lethality of Effluents to Daphnia magna (EPS 1/RM/14)
• Biological Test Method: Reference Method for Determining Acute Lethality of Effluents to Rainbow Trout (EPS 1/RM/13)
• Biological Test Method: Test of Larval Growth and Survival Using Fathead Minnows (EPS 1/RM/22)
• Biological Test Method: Test of Reproduction and Survival Using the Cladoceran Ceriodaphnia dubia (EPS 1/RM/21)
• Code of Practice for the Reduction of Chlorofluorocarbon Emissions from Refrigeration and Air Conditioning Systems
• Domestic Substances List (SOR/94-311)
• Environmental Assessments of Priority Substances Under the Canadian Environmental Protection Act
• Environmental Code of Practice for Base Metals Smelters and Refineries (First Edition, March 2006)
• Environmental Code of Practice for Elimination of Fluorocarbon Emissions from Refrigeration and Air Conditioning Systems
• Environmental Code of Practice for Integrated Steel Mills (EPS 1/MM/7 - March 2001)
• Environmental Code of Practice for Non-Integrated Steel Mills (EPS 1/MM/8 - March 2001)
• Environmental Code of Practice for the Reduction of Solvent Emissions from Dry Cleaning Facilities (CCME-EPC/AITG-50E)
• Environmental Code of Practice for Vapour Recovery in Gasoline Distribution Networks (CCME-EPC/TRE-30E)
• Environmental Code of Practice on Halons (Code of Practice EPS 1/RA/3E)
• Federal Above-ground Storage Tank Technical Guidelines (P.C. 1996-1233)
• Federal Underground Storage Tank Technical Guidelines
• Guidance Document for Flow Measurement of Metal Mining Effluents (April 2001)
• Guidance Document for the Sampling and Analysis of Metal Mining Effluents (April 2001)
• (October 27, 2004)
• (February 2001)
• (REPEALED) (August 2001)
• (March 2001)
• (2003)
• (September 2003)
• List of Toxic Substances Authorities (SOR/94-162)
• National Emission Guidelines for Stationary Combustion Turbines (CCME-EPC/AITG-49E)
• National Pollutant Release Inventory and Municipal Wastewater Services (May 2003)
• Non-domestic Substances List (Canada Gazette, Part I)
• Notice with Respect to Reporting of Greenhouse Gases (GHGs) for 2005 (Canada Gazette Part I, March 12, 2005)
• Notice with Respect to Reporting of Greenhouse Gases (GHGs) for 2006 (Canada Gazette, Part I, July 15, 2006)
• Notice with Respect to Selected Substances Identified as Priority for Action (Canada Gazette Part I, March 4, 2006)
• Notice with Respect to Substances in the National Pollutant Release Inventory for 2005 (Canada Gazette, Part 1, February 19, 2005)
• Notice with respect to substances in the National Pollutant Release Inventory for 2006 (Canada Gazette Part I, February 25, 2006)
• Reporting For The Domestic Substances List
• Toxic Substances Management Policy : Persistence and Bioaccumulation Criteria
• Toxic Substances Management Policy : Report on Public Consultations

Canadian Food and Drugs Act

Canadian Nuclear Safety and Control Act¹¹

Department of the Environment Act

Emergencies Act

Energy Efficiency Act

Hazardous Materials Information Review Act

• Application for a Claim for Exemption

Hazardous Products Act

•  

National Round Table on the Environment and the Economy Act

Northwest Territories Water Act

Nuclear Fuel Waste Act

Pest Control Products Act

Railway Safety Act

Safe Containers Convention Act

Territorial Lands Act

• Territorial Land Use Regulations (C.R.C., c. 1524)

Transportation of Dangerous Goods Act

Yukon Environmental and Socio-Economic Assessment Act

Provincial/Territorial

Ontario Environmental Protection Act

• Regulation 222/07 Environmental Penalties

Environmental Assessment Act

• R.R.O. 1990, Reg. 334 General

Dangerous Goods Transportation Act

Environmental Bill of Rights, 1993

• O. Reg. 681/94 - Classification of Proposals for Instruments
• O. Reg. 73/94 - General

Quebec Environment Quality Act, Ministry of the Environment Act, Transport Act

Nova Scotia Environment Act, Environmental Assessment Regulations

New Brunswick Clean Environment Act, Environmental Impact Assessment Regulation, Transportation of Dangerous Goods Act

Manitoba Sustainable Development Act, Environment Act, Dangerous Goods Transportation and Handling and Transportation Act

British Columbia Environmental Management Act, Environmental Assessment Act, Transportation of Dangerous Goods Act

Prince Edward Island Environmental Protection Act

Alberta Environmental Protection and Enhancement Act, Environmental Assessment Regulation, Dangerous Goods Transportation and Handling Act

Saskatchewan Environmental Assessment Act, Environmental Management and Protection Act, Dangerous Goods Transportation Act,

Newfoundland and Environmental Protection Act,

Labrador Regulations, Dangerous Goods Transportation Act

Northwest Territories , (PDF^*, 232 KB) Environmental Rights Act, Transportation of Dangerous Goods Act

Yukon Environment Act, Environmental Assessment Act and Regulations, Dangerous Goods Transportation Act, Yukon Environmental and Socio-Economic Assessment Act, Yukon Act

Nunavut Transportation of Dangerous Goods Act

Laws impacting air

Federal

Motor Vehicle Fuel Consumption Standards

Provincial/Territorial

Ontario Environmental Protection Act

• Regulation 419/05 – Air Pollution – Local Air Quality
• Regulation 194/05 – Industry Emissions – Nitrogen Oxides and Sulfur Dioxide
• Regulation 127/01 – Air Contaminant Discharge Monitoring and Reporting
• Regulation 397/01 – Emissions Trading
• Regulation 496/07 – Cessation of Coal Use – Atikokan, Lambton, Nanticoke and Thunder Bay Generating Stations
• Regulation 535/05 – Ethanol in Gasoline
• R.R.O. 1990, Regulation 356, Ozone-depleting Substance Regulations

Nova Scotia Air Quality Regulations, Ozone Layer Protection Regulations

New Brunswick Clean Air Act, Air Quality Regulation, Ozone-depleting Substances Regulation

Manitoba Ozone-depleting Substances Act

British Columbia Ozone-depleting Substances and Other Halocarbons Regulation, BC ,

Prince Edward Island Transboundary Pollution (Reciprocal Access) Act

Alberta Clean Air Act, Ozone-depleting Substances Regulation

Saskatchewan Clean Air Act and Regulations, Ozone-depleting Substances Control Regulations

Newfoundland and Labrador ,

Laws impacting flora and fauna

Federal

Arctic Wildlife Act

Canada Wildlife Act

Migratory Birds Convention Act, 1994

Provincial/Territorial

Ontario Fish and Wildlife Conservation Act, Forestry Act

Crown Forest Sustainability Act, 1994

Pesticides Act

Endangered Species Act

Wilderness Areas Act

Quebec Wildlife Conservation and Development Act, Natural Heritage Conservation Act, Act Respecting Threatened or Vulnerable Species, Pesticides Act, Tree Protection Act

Nova Scotia Wildlife Habitat and Watercourses Protection Regulations, Endangered Species Act, Fisheries and Coastal Resources Act, Forests Act, Forest Sustainability Regulations

New Brunswick Endangered Species Act, Fish and Wildlife Act,

Manitoba Forest Act, Wildlife Act, Fisheries Act, , Endangered Species Act

British Columbia , Fisheries Act, , , Fish Protection Act

Prince Edward Island Wildlife Conservation Act, Fisheries Act

Saskatchewan Forest Resources Management Act, Wildlife Act, Wildlife Habitat Protection Act , Fisheries Act

Northwest Territories Wildlife Act

Yukon Wildlife Act, Migratory Birds Convention Act, Fisheries Act, Forest Protection Act

Laws impacting water and fisheries

Federal

Arctic Waters Pollution Prevention Act

Canada Marine Act

Canada National Marine Conservation Areas Act

•  (PDF^*, 290.11 KB)
•  (PDF^*, 153.67 KB)

•  (PDF^*, 221.77 KB)

• (R.S.C. 1985, c. I-20)

Lac Seul Conservation Act

Navigable Waters Protection Act

Provincial/Territorial

Nutrient Management Act, 2002

• O. Reg. - 267/03 General

Safe Drinking Water Act, 2002

• O. Reg. 128/04 - Certification of Drinking Water System Operations and Water Quality Analysts
• O. Reg. 242/05 - Compliance and Enforcement
• O. Reg. 172/03 - Definitions of "Deficiency" and "Municipal Drinking Water System"
• O. Reg. 171/03 - Definitions of Words and Expressions Used in the Act
• O. Reg. 170/03 - Drinking Water Systems
• O. Reg. 248/03 - Drinking Water Testing Services
• O. Reg. 453/07 - Financial Plans
• O. Reg. 188/07 - Licensing of Municipal Drinking Water Systems
• O. Reg. 252/05 - Non-Residential and Non-Municipal Seasonal Residential Systems that do not serve designated facilities
• O. Reg. 169/03 - Ontario Drinking Water Quality Standards
• O. Reg. 243/07 - Schools, Private Schools and Day Nurseries

Clean Water Act, 2006

• O. Reg. 286/07 - Miscellaneous
• O. Reg. 284/07 - Source Protection Areas and Regions
• O. Reg. 288/07 - Source Protection Committes
• O. Reg. 287/07 - Terms of Reference
• O. Reg. 285/07 - Time Limits

Lakes and Rivers Improvement Act

• O. Reg. 454/96 Construction

Sustainable Water and Sewage Systems Act, 2002

Pesticides Act

• R.R.O. 1990, Reg. 914 General

Quebec Watercourses Act, Water Resources Preservation Act

Nova Scotia Water Resources Protection Act, Wildlife Habitat and Watercourses Protection Regulations,

New Brunswick Clean Water Act, Water Quality Regulations, Watercourse Alteration Regulations

Manitoba Conservation Agreements Act, Water Protection Act,

British Columbia Water Act, Water Protection Act, Groundwater Protection Regulation

Prince Edward Island Water and Sewage Act

Alberta Water Act, Surface Water Quality Guidelines

Saskatchewan Water Regulations, Groundwater Conservation Act

Newfoundland and Labrador Water Resources Act

, Water Resources Agreements Act

Laws impacting land and non-renewable resources

Federal

Motor Vehicle Fuel Consumptions Standards (Not in Force)

Provincial/Territorial

Ontario Environmental Protection Act

• Regulations 101-104
• Regulation 153 – Record of Site Condition (Brownfields)
• Deep Well Disposal Regulation (Regulation 341)
• Regulation 347 – Waste Management – General
• Waste Management – PCBs Regulation (Regulation 362)

Waste Diversion Act, 2002

• O. Reg. 273/02 Blue Box Waste
• O. Reg. 542/06 Municipal Hazardous or Special Waste
• O. Reg. 33/08 Stewardship Ontario
• O. Reg. 85/03 Used Oil Material
• O. Reg. 84/03 Used Tires
• O. Reg. 393/04 Waste Electrical and Electronic Equipment

Waste Management Act, 2002

Planning Act

Greenbelt Act, 2005

• O. Reg. 59/05 Designation of Greenbelt Area

Nutrient Management Act, 2002

Oak Ridges Moraine Conservation Act, 2001

• O. Reg. 1/02 Designation of the Oak Ridges Moraine Area
• O. Reg. 141/02 Municipalities that are required to prepare and adopt official plan amendments under Subsection 9 (2) of the Act
• O. Reg. 140/02 Oak Ridges Moraine Conservation Plan

Places to Grow Act, 2005

• O. Reg. 416/05 Growth Plan Areas
• O. Reg. 311/06 Transitional Matters - Growth Plan for the Greater Golden Horseshoe, 2006

Aggregate Resources Act

• O. Reg. 244/97 General

Mining Act

• O. Reg. 6/96 Assessment Work
• O. Reg. 113/91 General
• O. Reg. 240/00 Mine Development and Closure under Part VII of the Act

Oil, Gas and Salt Resources Act

• O. Reg. 245/97 Exploration, Drilling and Production

Quebec Mining Act

Nova Scotia Asbestos Waste Management Regulations, PCB Management Regulations, Wilderness Areas Protection Act, Petroleum Management Regulations, Energy Resources Conservation Act

New Brunswick Topsoil Preservation Act, Petroleum Product Storage and Handling Regulation, Regional Solid Waste Commissions Regulation, Energy Conservation Act, Mining Act, Oil and Natural Gas Act

Manitoba Waste Reduction and Prevention Act, Manitoba ,

British Columbia Environment and Land Use Act, Contaminated Sites Regulation, Special Waste Regulation, Waste Discharge Regulation, Hazardous Waste Regulation, Forest Act, Forest and Range Practices Act

Prince Edward Island Oil and Natural Gas Act

Alberta Release Reporting Regulation, Release Regulation, Waste Control Regulation, Conservation and Reclamation Regulation, Coal Conservation Act, Energy Resources Conservation Act, Oil and Gas Conservation Act, Oil Sands Conservation Act, Pipeline Act

Saskatchewan Environmental Spill Control Regulations, Hazardous Substances & Waste Dangerous Goods Regulations, Mineral Industry Environmental Protection Regulations, Conservation and Development Act, Oil and Gas Conservation Act

Newfoundland and Labrador Well Drilling Regulations, , Waste Reduction and Recovery Act

Northwest Territories Forest Protection Act, Waste Reduction and Recovery Act

Yukon Oil and Gas Act, Yukon Surface Rights Board Act

Laws impacting trade

---

[1] More information on the 2001 Framework for Conducting Environmental Assessment of Trade Negotiations.

[2] More information on the 2004 .

[3] More information on the (PDF*, 516 KB).

[4] All reports are available on the DFAIT website.

[5] All figures in Canadian dollars, unless otherwise noted.

[6] Source: Country Report: Dominican Republic, Economic Intelligence Unit, May 2008

[7] Unless otherwise noticed, all figures are in Canadian dollars.

[8] (Chadra, 2000)

[9] (Deardorff and Stern, 2004).

[10] Electronic copies of the actual legislation can be obtained online at the Department of Justice (federal) and the Canadien Legal Information Institute (provincial/territorial).

[11] This has replaced the Atomic Energy Control Act

---

^* If you require a plug-in or a third-party software to view this file, please visit the .