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Canada - Panama

Initial Environmental Assessment (EA) Report of the Canada-Panama Free Trade Agreement (FTA) Negotiations

Table of Contents

I. Executive Summary

II. Overview of the EA Process

A. Assement Methodology

III. Overview of the Trade and Investment Relationship Between Canada and the Panama

IV. Trade and the Environment

V. Initial Environmental Assessment Findings

• A. Trade in Goods
• B. Trade in Services
• C. Investment

VI. Conclusion

Annex 1: Environmental Legislation and Regulations

I.  Executive Summary

In line with Canada’s Global Commerce Strategy (GCS) and Canada’s deepened engagement in the Americas, in Spring of 2008 Canada agreed to a request from the Republic of Panama (Panama) to explore the possibility of a bilateral free trade agreement (FTA). Canada recognises that an FTA between Canada and Panama would create commercial opportunities and economic benefits across many sectors of the Canadian economy including service providers, investors and export of goods as well as contribute to Canada’s hemispheric vision of stronger economies committed to open markets. An FTA with Panama is expected to generate benefits for a range of Canadian stakeholders; however, the impact of an FTA in relation to the aggregate Canadian economy would be very modest. Any environmental impacts resulting from an FTA are expected to be of minimal significance and easily accommodated within Canada’s existing environmental regulatory regimes.

In keeping with the 2001 Framework for Conducting Environmental Assessments of Trade Negotiations, and the Government’s commitment to protect the Canadian environment, this report constitutes the Government’s initial environmental assessment (Initial EA) phase of the prospective FTA Environmental Assessment (EA). The purpose of this Initial EA is to provide information to both Canadian policy makers and negotiators which will improve their understanding of the relationship between trade, investment, economic growth and the environment, as well as the potential environmental effects in Canada that may reasonably be expected to arise from a Canada-Panama FTA.

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 become better able to implement effective environmental policies, legislation and new institutions for the protection of the environment than are lesser-developed countries. Open markets also help to foster the development of new, more environmentally friendly technologies. Likewise, it is broadly accepted that liberalized trade and investment help to create the conditions for technology transfer.

The 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 possible 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 standards are maintained and strengthened through liberalized trade, Canada will be negotiating a principal-based chapter on the environment within the FTA, along with a parallel agreement on the environment.

The Environmental Assessment:

Environmental Assessments (EA) were designed by the Government to protect our fragile environment while building a strong economy—which is a sustainable development challenge that Canadians face every day. The EA process responds to this challenge by helping to identify and address any negative impacts that an FTA may have on the Canadian environment. The EA documents the findings of the Initial EA for the Canada-Panama FTA negotiations, focusing on the reasonably foreseeable environmental impacts, if any, of trade-induced economic and regulatory changes in Canada. The EA applies the analytical methodology outlined in the Framework which outlines the process for conducting the EA, 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 the EA is both strategic and intended to inform policy decision making throughout the negotiating process. Therefore, the Initial EA serves as a “forecasting” exercise.

The EA Process:

Before being posted 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 are anticipated. 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.

Initial EA Findings:

In the area of Trade in Goods, tariff elimination in the context of an FTA is expected to further bolster the presence of Canadian exporters in the Panamanian market, particularly in sectors for which Panama applies higher tariffs (e.g., frozen french fries, beef, pork, pulse crops such as beans, forest products, fish and seafood, and other products). Nevertheless, the Canada-Panama 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, which would therefore have a modest economic impact in Canada. As such, the significance of any environmental impact resulting from increased exports to Panama is expected to be minimal and easily accommodated within Canada’s existing environmental regime.

Given that the large majority of goods imported from Panama already enter Canada duty-free, and considering the relatively small volume of Canada’s merchandise imports from Panama, minimal additional import competition for Canadian industries is expected to result from a Canada-Panama FTA. Likewise, minimal environmental impact is expected to result from increased imports from Panama as a result of tariff elimination in the context of an FTA, including as a result of increased CO₂ emissions from transportation of goods from Panama to Canada.

Although the liberalization of services is expected to have an economic impact in Canada, the impact will be small relative to the aggregate Canadian economy. It is unlikely that there will be a substantial increase in services trade as a result of these negotiations. Consequently, any increase is expected to have a limited impact on the environment.

In terms of investment, Panama remains a modest source of FDI for Canada, representing only 2% of the total stock of incoming FDI in 2007, making Panama the 38^th largest source of FDI for Canada. The results of the Initial EA Phase indicate that significant changes to investment flows into Canada are not expected as a result of an FTA, with any possible environmental impacts being minimal.

II. Overview of the 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 (the “Framework”) details this process. It was developed in response to the 1999 , 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 (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 a proposed trade and/or investment agreements. As such, trade negotiators and environmental experts are involved in the EA, which is being undertaken in tandem with the FTA 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 detailed phases of assessment, which correspond to progress being made during the FTA negotiation process. The phases are as follows:

1. Initial EA: a preliminary examination to identify possible key issues.
2. Draft EA: builds on the findings of the Initial EA Phase and requires detailed analysis.
3. 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 feedback.¹ In the event that the Initial EA finds little likelihood of significant environmental impact occurring as a result of the FTA, a Draft EA will not be required. In these cases, environmental considerations will continue to be integrated into ongoing discussions and a Final EA will be completed.

Post 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 Phase is being conducted before the negotiations are completed. A Notice of Intent to conduct a Strategic Environmental Assessment of the Canada-Panama FTA negotiations was announced on November 26, 2008. It must be underscored that this strategic assessment 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 phase 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, investment and environmental regulatory policy, while focusing on potential economic and environmental impacts in Canada which may result from an FTA with Panama. In other words, this assessment considers the 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. The purpose of this stage is to identify the trade liberalization activity of the agreement under negotiation. This stage 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 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 various criteria in determining significance, including frequency, duration, permanency, geographical scope and magnitude, level of risk, irreversibility of the impacts, and possible synergies among the impacts. This study uses the following scale in relation to the criteria outlined above to describe significance: none, minimal, moderate, high and extreme.
  
  
• Identification of enhancement/mitigation options to inform the negotiations. The Initial EA Report, 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 FTA.

In conducting EA of trade negotiations, the Government is committed to a process that involves interdepartmental coordination. As such, an interdepartmental committee is established to review the EA of each negotiation. This committee is led by the Chief Canadian Negotiator for the respective FTA and involves officials from government departments responsible for the sectors for which increases in production are anticipated, as well as Environment Canada. This approach facilitates informed policy development and decision making throughout the federal government. Before being posted online on the Department web site, the findings of an Initial EA are shared with the EA Committee.

The EA process also includes consultations with the public, the Provincial and Territorial governments and an Environmental Assessment Advisory Group (EAAG), composed of stakeholders, including representatives from the business sector, academia, non-governmental organizations. As a part of the preparations for the Initial EA, a Notice of Intent was 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. 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 have been 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

mail:

Consultations & Liaison Division (BSL)
Environmental Assessment Consultations – Canada-Panama 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 Panama

An FTA with Panama has the potential to further advance Canada's foreign policy objectives of renewed engagement in the Americas, and contribute to Canada’s hemispheric vision of stronger economies committed to open markets. An FTA would serve as a building block toward regional economic integration and improve Canada’s global competitiveness by better positioning Canadian business vis-à-vis competitors, particularly with those who benefit from preferential trading arrangements with Panama.

Panama is an established market for Canada and the bilateral trade and investment relationship has strong potential for long-term growth. In 2007, bilateral merchandise trade between Canada and Panama totalled $115 million, with Canadian exports accounting for $86.4 million and imports totalling $28.7 million. From 2005 to 2007, Canadian merchandise exports to Panama grew by 44%.

In 2007, Canada's top goods exports to Panama consisted of pharmaceutical products, machinery, electrical and electronic equipment, malt and barley, vegetables and meats. Imports from Panama included mineral fuels, fruits and nuts, fish and seafood, spices, coffees and teas, fats and oil products and wood products. The stock of Canadian direct investment in Panama reached $111 million at the end of 2006. Increased opportunities for Canadian investors in Panama over the next years are foreseeable. In particular, activities related to the expansion of the Panama Canal are expected to garner interest and provide opportunities for Canadian investors and service providers in the areas of infrastructure and construction. Several Canadian investors and service providers are currently present in the Panamanian market (e.g. banking and financial services, construction, mining). Canada currently has a Foreign Investment Promotion and Protection Agreement (FIPA) with Panama, signed in 1998, and a new air transport agreement which was announced on June 19, 2008.

The strength of Panama’s economy is evidenced by the fact that Panama’s real GDP growth rate in 2007 was 11.2%, the highest rate among all Latin American and Caribbean countries. The Panamanian economy is based primarily on a well-developed services sector, which accounts for approximately 81 percent of its GDP.

Panama occupies a unique place in the international trading system. As home to the Panama Canal, Panama plays a pivotal role in the flow of goods around the world. The Panama Canal is an important stimulus for this service-oriented economy. Canada is currently the 10th most important user of the Canal. The expansion of the Panama Canal is currently underway and is slated to be completed by 2014. The projected cost is US$5.3 billion. An expanded Canal will strengthen Panama’s role in the international trading system, and could create new opportunities for Canadian business. For further information on the economic impact of an FTA with Panama please see the .

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 environmental 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 resulting from an FTA directly affect Canada’s environment, economy and health, the Government will seek to work with its FTA 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 than are lesser-developed countries. Open markets also help to foster the development of new, more environmentally friendly technologies. Further, liberalized trade and investment help to create the conditions for technology transfer and increases in productivity efficiency.

In order to ensure that economic development is sustainable, Canada will seek to negotiate a principal-based chapter on the environment, meaningful environment related provisions in appropriate sections of the FTA (e.g., preamble, initial provisions, and investment) as well as a parallel Environment Agreement.

Incorporating Environmental Provisions into the Canada-Panama FTA

In the context of an FTA between Canada and Panama, Canada will seek to negotiate a principal-based chapter on the Environment and a parallel Environment Agreement, as well as incorporate meaningful environment related provisions into appropriate sections of the FTA (e.g., preamble, initial provisions, and investment). The Environment Agreement would include environmental obligations that address, among other things:

• 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 would also include a section on environmental cooperation aimed at strengthening the environmental management systems of Panama. 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.

The following table in Section V of this Initial EA contains a summary of where environmental provisions could appear in a future FTA.

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 Panama.

Table 1: Results of Initial EA Analysis

Issue area	Anticipated outcome	Potential environmental implications and provisions
Preamble	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	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 with the FTA.
Administration of the Agreement	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 trade agreement’s obligations.
Competition policy	This chapter will seek to ensure that the benefits of trade and investment liberalization between Canada and Panama 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.
Cross-Border Trade in Services	This chapter of the agreement will seek to incorporate provisions that offer market access opportunities and improve regulatory transparency in the services sector.	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.
Customs procedures	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. This chapter will not affect how Canadian environmental regulations are developed or implemented or how environmental objectives are set.
Dispute settlement	This chapter will seek to include state-to-state dispute resolution procedures with the PANAMA countries 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.
Emergency action	This chapter will seek to enable either Party to take emergency actions, as prescribed under the agreement, 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.
Exceptions	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.
Financial services	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.
Government procurement	This Chapter is expected to provide Canadian and Panamanian suppliers open, transparent and non-discriminatory market access to Canada and Panama's respective federal government markets.	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.
Intellectual property	Provisions on IP could seek to reaffirm commitments made under the World Trade Organization (WTO) Trade Related Aspects of Intellectual Property Rights (TRIPS) Agreement as well as other international agreements in respect to intellectual property, and reaffirm the flexibilities in TRIPS, including those relating to public health. Provisions may also consider other areas where Canada and Panama can find mutually agreed areas of interest.	Provisions are not expected to have a significant impact on production or consumption in any specific sector. The ability to regulate for environmental purposes will not change as a result of these provisions. Provisions are not expected to go beyond Canada’s current international intellectual property obligations at the WTO and World Intellectual Property Organization. IP protection could encourage investment and innovation in environmental technology, which may lead to the development of new products, technologies or processes that could have a positive environmental impact.
Investment	An FTA with investment provisions will provide investors with greater certainty and predictability. While the existence of investment provisions in the FTA should be a positive factor on decisions on whether to invest in the territory of the other Party, it will be but one of many. Large changes in investment patters are not expected to result from the FTA.	There are no foreseen environmental impacts on Canada 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 Monopolies and State Enterprises	This chapter will seek to ensure that the benefits of trade and investment liberalization between Canada and Panama are not undermined by anti-competitive business practices, or through the designation of monopolies and state enterprises.	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.
Rules of origin	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 product-specific rules of origin will be captured in the Trade in Goods section below, along with their corresponding environmental impacts.
Sanitary and phytosanitary measures (SPS)	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 countries maintain the right to take measures necessary for the protection of human, animal or plant life or health. All countries 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	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 countries to take measures necessary to ensure the protection of human health, animal or plant life, and the environment. Measures shall not be more trade-restrictive than necessary to fulfil such legitimate objectives.
Telecommunications	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, as well as providing 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.
Temporary entry	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.
Trade facilitation	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.
Transparency	This chapter will seek to facilitate the administration and smooth operation of the Agreement by designating contact points in each Party to facilitate communication. It will also reiterate 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.

A. Trade in Goods

Overview

In accordance with the Environmental Assessment Methodology, this section includes:

• An overview of bilateral trade flows and potential growth areas as a result of a Canada-Panama 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 an FTA in the area of Trade in Goods

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 relatively 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 Panama 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.

An FTA is expected to bolster the Canada-Panama trade relationship, particularly in the sectors outlined below. However, the Canada-Panama 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 Panama

Panama’s economy has experienced significant growth in recent years, averaging 5% annual growth over the 2000-2006 period. In conjunction with this economic expansion, Panama’s total global goods imports grew from $4.8 billion in 2002 to $7.2 billion in 2007 (Source: World Trade Atlas - Canada Edition). Consistent with this trend, Canada’s exports to Panama grew from $37 million in 2002 to $86 million in 2007, making Panama Canada’s 78^th largest export destination that year. Between 2002 and 2007, Canadian exports to Panama increased in every year, with the exception of 2005, when exports dipped before continuing to grow in 2006 and 2007. Despite recent growth of Canadian exports to this market, Canadian exports to Panama represented only 0.02% of total Canadian global exports that year. Even if Canadian exports to Panama were to undergo considerable increases in the years following the implementation of a Canada-Panama FTA, it would have only a modest effect on Canada’s overall trade and production levels.

Canada’s non-agricultural exports to Panama totalled $63 million in 2007 and included pharmaceuticals, machinery, motor vehicles, iron and steel products, paper products, aircraft and parts, plastics, wood (including plywood), and fish and seafood. Canadian agricultural and agri-food product exports to Panama amounted to $23 million and included milling, malt and starch (mostly malt), vegetables (pulses), meat, and preserved food (mostly frozen potato products).

Canada will be seeking the elimination of tariffs on substantially all trade with Panama. Panama has relatively high tariffs in a number of areas of export interest to Canada. Panama has an overall applied most favoured nation (MFN) tariff of rate of 7.3%, an average applied non-agricultural tariff of 6.4% and an average applied agricultural tariff of 13.6%. While Canada’s goods market access objectives will take into consideration the fact that Panama is a developing country, Canada will also seek improved market access commensurate with that achieved by the United States under the United States – Panama Trade Promotion Agreement (USPTPA) in order to allow Canadian exporters to compete in Panama on a level playing field with their key competitors.

Benefits to Canadian exporters from tariff elimination in Panama are expected to be especially strong in areas where Canadian exports face particularly high tariffs, including (average applied tariff in brackets): agricultural products such as frozen french fries (20%), beef (18%), pork (47%), and pulses (5%); fish and seafood (13%); forest products such as wood (6%) and paper (7%); and other products such as electrical machinery (5%), iron and steel products (5%), motor vehicles (15%), and construction equipment (10%).

Tariff elimination in the context of an FTA is expected to further bolster the presence of Canadian exporters in the Panamanian market. However, Canada’s exports to Panama assume a small role in the context of Canada’s overall global exports in all of the sectors highlighted above. In particular, Canada’s 2007 exports to Panama represented 0.07% of Canada’s global agricultural exports, 0.02% of Canada’s global forest product exports, 0.03% of Canada’s global fish and seafood exports, and 0.01% of Canada’s global exports of the products not included above. This would suggest that even if an FTA led to considerable growth of Canadian exports to Panama, these exports would still amount to a relatively small share of Canadian global exports and production and therefore have a modest economic impact in Canada.

Canadian Imports from Panama

Under an FTA, Canada would also eliminate tariffs imposed on goods imported from Panama, which may result in an increase of Canadian imports from this country. Panama is a relatively small supplier of Canadian imports. In 2007, Panama was the 102^nd largest source of imports, accounting for less than 0.01% of Canada’s global imports. Canada’s imports from Panama totalled $29 million in 2007, down from $35 million in 2006 and $45 million in 2005.

A large share of Canada’s 2007 imports from Panama were accounted for by mineral fuels and oils (aviation fuel), which totalled $18.8 million and entered Canada duty-free. Other important imports from Panama included fruit and nuts (mainly bananas, melons and papayas), fish and seafood, spices, coffee and tea, and fats and oils.

In 2007, 97% of imports from Panama entered Canada MFN duty-free, and the majority of the remaining imports were eligible for preferential GPT treatment. Given that the large majority of goods imported from Panama already enter Canada duty-free and considering the relatively small volume of Canada’s merchandise imports from Panama, minimal additional import competition for Canadian industries is expected to result from a Canada-Panama FTA.

Potential Environmental Impacts and Significance

In light of the small bilateral trade relationship between Canada and Panama in relation to Canada’s overall global trade flows, environmental impacts resulting from a Canada-Panama FTA are expected to have minimal significance. It is expected that any environmental impacts in Canada would be related to increased Canadian production due to greater demand in Panama 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 Panama and which face higher 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 the export sectors noted in the previous section.

• 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 summerfallow, use of marginal lands) and changes in livestock numbers. While the reduction or elimination of tariffs could increase Canadian agricultural export flows to Panama, the significance of any environmental impacts would be minimal given that Canada’s agricultural exports to the Panama represent a very small share (0.07%) of Canada’s global agricultural exports. 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 Panama for Canadian agricultural products is expected to have minimal environmental impact due to changes in livestock numbers and cropland products.
  
  
• Forest Products: In principle, increased production of forest products such as wood building materials, pulp, and paper due to enhanced demand for Canadian exports could have environmental impacts that underscore the importance of conservation and sustainable management of Canada’s forests. Ecosystem services provided by Canada’s forests include air filtration, biological control, carbon sequestration, regulation of climate and water, and soil formation and retention. However, as noted above, exports to Panama accounted for only 0.02% of Canada’s global forest product exports 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 impacts resulting from increased exports of forest products are expected to be minimal and easily accommodated by current provincial, territorial, and federal forest management programs and practices.
  
  
• Fish and Seafood: Increased exports of fish and seafood products could, in principle, have environmental impacts that underscore the importance of fisheries management that is consistent with principles of sustainable development that address issues such as sustainability of target fish stocks, as well as effects on other marine species and habitats. Any such export increases would be subject to Canada’s fisheries management structures at the federal, provincial and territorial levels of government, which adhere to these principles. Further, as noted above, exports to Panama accounted for less than 0.03% of Canada’s global exports of fish and seafood 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 overall Canadian exports and production. As such, the significance of any environmental impact resulting from increased exports of fish and seafood products to Panama is expected to be minimal.
  
  
• Other Products: In principle, increased exports of other products of interest not listed above (such as machinery, construction equipment, and iron and steel products), could also have environmental impacts in Canada, such air pollution, hazardous wastes, and greenhouse gas emissions resulting from production increases. However, as noted above, exports to Panama of all other products not listed in the above categories accounted for only 0.01% of Canada’s global exports of these products, illustrating that even if considerable export growth 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 these sectors is expected to be minimal.

It is also reasonable to expect that some of the increases in Canadian agricultural and non-agricultural exports to Panama 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 Panama as a result of an FTA, as noted above, any increases of imports would represent a very small fraction of Canadian global imports and domestic sales. Further, it is anticipated that any increases of imports from the Panama would come largely at the expense of other international suppliers, with limited impacts on Canadian production. Minimal environmental impact is expected to result from increased imports from Panama as a result of tariff elimination in the context of an FTA.

Mitigation and Environmental Enhancement Measures

Agriculture: While minimal environmental impact is expected to result from increased agricultural exports to Panama 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 Panama. In the event the environmental impacts as a result of the FTA are greater than expected, consideration will be given to expanding existing programs or creating new ones to deal with any negative effects.

• Forest Products: Although minimal environmental impacts are likewise expected to result from potential increases of forest product exports as a result of a Canada-Panama 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.² Any marginal increase in production of those products that might result from tariff elimination in the context of a Canada-Panama FTA could be easily accommodated within current forest management programs.

• Fish and Seafood: Any growth of fish and seafood exports to Panama 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.³

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 Panama 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.

Regarding agricultural products, forest products, fish and seafood, and other products that may be subject to increased exports and production due in part to tariff elimination under a Canada-Panama FTA, 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 geographic position and the dynamism of the Panamanian economy, where the Panama Canal is a key economic driving force, make it a potential market for Canadian exporters to expand their services in this competitive global market. The proposed FTA is expected to yield benefits for Canadian exporters of services by providing increased market access to the Panamanian market. However, as is the case for trade in goods, the Canada-Panama services trade relationship assumes a very small role in the context of Canada’s overall global services trade flows. This would likely continue to be the case if considerable trade growth was generated as a result from a bilateral FTA.

Panama is a relatively small market for Canadian services exports. For instance, in 2006, Canadian services exports to Panama were approximately $5.9 million, accounting for less than 0.001% of Canada’s global services exports. In general, Canadian services exports to Panama have shrunk during the period of 2003 to 2006 (The latest year for which data are available) by $13.4 million, from $19.2 million to $5.8 million, which translates to a 70% reduction. Were Canadian services exports to undergo significant increases following the implementation of a prospective trade deal, this increase would have only a modest effect on Canada’s overall service trade levels.

Panama is a relatively small supplier of services to Canada, representing a nominal share of total services imports into Canada. In 2006, for example, Canadian services imports from Panama accounted for less than 0.001% of Canada’s global services imports. From 2003 to 2006, Canadian services imports from Panama reduced by 0.75%, from $7.55 million to $7.46 million. Given that Canada is already quite an open market in most services sectors, minimal additional import competition is expected to result from a Canada-Panama FTA.

Figures pertaining to Canada-Panama Services Trade from 2003 to 2006 are as follows:

Exports and Imports
(CAD thousands)

	2003	2004	2005	2006
Exports	19,262	17,617	7,501	5,858
Imports	7,552	7,281	6,878	7,495

Source: StatisticsCanada

Likely Economic Impact of the Canada-Panama 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 billion while deeper liberalization that includes investment liberalization would lead to gains in the range of 14.9% of GDP or U.S. $84 billion.

The gains identified above are based on a multilateral approach. The gains to be made from the Canada-Panama FTA would therefore be smaller. For purposes of the EA of the Canada-Panama FTA, we have based our analysis on expected results of an agreement with Panama that includes a NAFTA plus services chapter and separate chapters on telecommunications, financial services, and temporary entry.

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 GHGs, 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. A summary analysis of possible environmental impacts in various services sectors is provided in Table 1, section V.

Significance of the Environmental Impacts

While an FTA with Panama is expected to provide increased market access opportunities 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 an FTA with Panama. There may be some increased services exports to Panama, but it is difficult to segregate the effects of the Canada-Panama trade negotiations from those resulting from Canada’s other trade negotiations or implementation of existing regional or bilateral trade agreements or from unilateral liberalization. Given the small bilateral services relationship between Canada and Panama in relation to global flows, any environmental impacts resulting from a Canada-Panama FTA are expected to have minimal significance.

It is also reasonable to expect that some of the increases in Canadian services exports to Panama made possible by the FTA may reduce services exports to other less profitable destinations, thus further mitigating any potential environmental impact anticipated from increased trade flows. Table 1 section V also provides a summary analysis of the significance of likely environmental impacts in various services sectors.

Enhancement and Mitigation Options

With a minimal expected increase in trade in services, we can expect minimal 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.

Depending on the sector, mitigation options include the use of fuel efficient vehicles, alternative fuels, paper conservation within the office, recycling of various materials, and corporate policies on “green procurement”, limiting access to ecologically-sensitive tourist areas, consumer education and 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 be undertaken to help ensure that our ability to regulate for the protection of the environment is not undermined or weakened.

C. Investment

Overview

Likely Economic Impact of the Canada-Panama FTA

In 2006, the stock of Canadian direct investment in Panama reached $111 million.⁴ Currently, major sectors of Canadian investment in Panama include financial services and the extractive sectors. Canadian companies have demonstrated an elevated interest in Panama as an investment destination. Activities relating to the Panama Canal expansion project are expected to further increase opportunities for Canadian investors, particularly in the areas of infrastructure and construction.

Investors from Panama have also recognized prospects that the Canadian market offers with the stock of Panamanian investment in Canada increasing 74% from $46 million in 2003 to $80 million in 2007.

With respect to the investment negotiations, Canada already has a Foreign Investment Promotion and Protection (FIPA) with Panama, which was signed in 1998. Canada’s objective is to build on that agreement, in order to conclude a high-quality, comprehensive investment chapter within an FTA. These enhanced investment obligations in Canada-Panama FTA are not likely to result in a significant increase of investment flows into Canada. While the inclusion of investment obligations in an FTA should be a positive and important factor in investors decisions on whether to invest in the territory of the other party, it will be but one of many factors. The main effect is likely to be greater protection for existing Canadian investment in Panama.

Likely Environmental Impacts of the Economic Changes

The likelihood and significance of the environmental impacts that could stem from the anticipated economic effects of the Canada – Panama FTA would depend on the degree of increase in investment, the sectors of the investment, and the measures in place to protect the environment in relation to those activities.

As noted above, Panama’s stock of investment in Canada is modest. Significant new flows of investment into Canada as a result of the FTA are not anticipated. Actual increases in investment flows will depend upon many factors, including the financial capacity of individual investors and their assessment of, inter alia, opportunity and risk. While the existence of investment provisions in the FTA should be a positive factor in decisions on whether to invest in the territory of the other Party, it will be but one of many. In addition, Canada already has a relatively open investment regime. Thus, large changes in investment patterns are not expected to result from the FTA. Therefore, it is concluded that the environmental effects of the Canada-Panama FTA will be minimal to non-existent.

Significance of Environmental Impacts

Investment from Panama represents only a very small proportion of both the total foreign investment in Canada, as well as the total investment coming from the region. In 2006, FDI from Panama amounted to less than 0.02% of total incoming FDI, and 0.61% of the total FDI from South and Central America. Given these figures, even a significant economic change in investment from Panama would be small in scale compared to the overall level of investment in Canada, and any environmental impact is expected to be minor, if not negligible. Furthermore, the FTA negotiations are not expected to substantially change the already open Canadian investment regime.

Enhancement and Mitigation Options

Foreign investors in Canada are bound by the same environmental regulations that govern the activities of domestic investors. As in all previous investment agreements, Canada fully intends to maintain its right to regulate in the public interest in sectors such as health, public education, social services and culture, and its right to protect the Canadian environment.

VI. Conclusion

Given the Government’s view that trade and environment 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. The Environmental Assessments (EA) is a means of addressing potential environmental impacts that may result from the negotiation of a trade agreement. This is accomplished by assisting decision makers in understanding environmental implications of trade policy, as well as by improving overall policy coherence at the national level.

In tandem with the FTA negotiations with Panama, a separate but parallel environmental agreement is being pursued. This agreement will 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, Canada’s FTAs with Chile, Costa Rica, and our recently signed FTAs with Peru and Colombia). It is envisaged that the environment agreement with Panama will contain commitments to high levels of environmental protection and effective enforcement of domestic environmental laws, including through cooperative activities.

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

Nevertheless, the economic effects streaming from an FTA with Panama will be modest relative to Canada’s overall economic activity. As a consequence, the environmental impact will be minimal. For goods, services and investment, any absolute increase in economic activity as a result of an FTA with Panama will be small in comparison with the overall size of the Canadian economy. In the area of goods and services, opportunities to mitigate any environmental impact already exist. Moreover, any new inward investment into Canada will face Canadian environmental regulations, and Canada will seek in the FTA the preservation of the right to regulate in the public interest. Finally, general exceptions applicable to the entire FTA are permitted in order to ensure that the Parties to the FTA maintain policy flexibility in areas that Parties recognize as legitimate, including environmental protection.

In these circumstances, according to the Framework, the Draft EA phase is not required and the Department will proceed directly to the Final EA once the FTA negotiations conclude. Further analysis will be carried out if information that warrants further consideration becomes available. In the event that negotiations with Panama take a path that may lead to unpredicted environmental effects which were not explored in this Initial EA, steps will be taken to ensure that the effects are examined before the FTA is implemented. 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, 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 Final EA report after the trade negotiations are completed, follow-up and monitoring could, if warranted, be undertaken in order to review any mitigation or enhancement measures recommended by the Final EA report. Monitoring and follow-up activities can be undertaken anytime during the implementation of a concluded trade agreement in order to gauge the performance of its provisions from an environmental perspective.

Appendix: Environmental Legislation and Regulations

Below is a non-exhaustive list of federal, provincial and territorial legislation⁵ 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)
• 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 Act⁶

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 Document - 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

• Guidelines for Canadian Drinking Water Quality 1978
• (PDF Document - 154 KB)

• (PDF Document - 222 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

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

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

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¹All reports are available on the DFAIT web site.

²Information on Canada’s Sustainable Forest Management regime, including the annual .

³Information available on the .

⁴Statistics on Canadian direct investment into Panama for 2007 are currently unavailable

⁵Electronic copies of the actual legislation can be obtained online at  and .

⁶This has replaced the Atomic Energy Control Act.