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Canada-Ukraine Free Trade Negotiations

Initial Environmental Assessment Report

February 2015

Report of the Canada-Ukraine Free Trade Negotiations

1. Executive Summary

1.1 Overview

In June 2010, Canada launched negotiations toward a Canada-Ukraine free trade agreement (CUFTA), along with parallel agreements on environment and labour cooperation. An FTA with Ukraine would help provide increased access for Canadian goods and services to the Ukrainian market, address non-tariff barriers, and facilitate bilateral economic relations. The pursuit of an FTA with Ukraine is part of the Government’s pro-trade plan as outlined in the 2013 Global Markets Action Plan

Canada and Ukraine enjoy positive bilateral relations with close, historic ties of friendship, forged through generations of Ukrainian migration to Canada. In December 1991, Canada became the first Western country to recognize Ukraine’s independence. This was followed by the establishment of diplomatic relations with Ukraine in January 1992. Canada is a strong supporter of a free and independent Ukraine, and remains engaged in assisting Ukrainians in achieving their goal of a democratic and prosperous society. The Department of Foreign Affairs, Trade and Development’s (DFATD) technical cooperation program in Ukraine aims to support sustainable development by increasing economic opportunities for Ukrainians in a strengthened democracy. Canada currently has a Foreign Investment Promotion and Protection Agreement (FIPA) with Ukraine that entered into force in 1995, a bilateral Convention for the Avoidance of Double Taxation (1996) and a bilateral Air Transport Agreement (1998).

The Government of Canada is committed to conducting environmental assessments of all of its trade negotiations. An environmental assessment of trade negotiations assists Canadian negotiators in integrating environmental considerations into the negotiating process, and in documenting how environmental factors are being considered in the negotiating process. Through the environmental assessment process, Canada seeks to ensure that proposed trade agreements contribute to the development of the Canadian economy in a sustainable manner.

Pursuant to the 2001 Framework for Conducting Environmental Assessments of Trade Negotiations (“the Framework”)^{Footnote 1} this report constitutes DFATD’s Initial Environmental Assessment of the CUFTA negotiations. According to the Framework, the primary purpose of an Initial Environmental Assessment is to identify the main environmental issues likely to arise as a result of a proposed agreement. This assessment focuses on potential economic and environmental impacts in Canada from a CUFTA by exploring the links between the environment and improved market access for goods, services, and investment. This assessment considers the effects of new trade and investment in Canada that may result directly from a CUFTA, along with potential impacts on the Canadian environment, and policies and programs that will affect or otherwise mitigate such impact. As such, this Initial Environmental Assessment does not seek to predict with certainty the specific outcomes of a CUFTA, such as changes in specific trade patterns or investments. Rather, the Initial EA estimates possible environmental impacts using informed judgment based on potential changes in economic activity brought about as a result of a CUFTA, once implemented.

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 so as to generate positive environmental impacts;
• to strengthen respective national environment management systems; and
• to use this strengthened capacity to combat transboundary pollutants and invasive species that directly affect Canada’s environment and economy and the health of Canadians.

In order to ensure that Canada’s environmental protection mechanisms are strengthened through free trade, Canada typically includes a range of trade-related environmental provisions in its FTAs.

1.2 Initial Environmental Assessment Findings

In the area of Trade in Goods, tariff elimination in the context of a CUFTA is expected to expand the presence of Canadian exporters in the Ukrainian market, particularly in sectors where Ukraine applies higher tariffs. However, Canadian merchandise exports to Ukraine represent a very small proportion of Canada’s overall global exports. This would continue to be the case even if considerable trade growth ensued as a result of a CUFTA. Thus, a CUFTA would have a modest economic impact in Canada and the significance of any environmental impact resulting from increased exports to Ukraine is similarly expected to be minimal, and easily accommodated within Canada’s existing environmental regime.

Given that a large majority of goods imported from Ukraine already enter Canada duty-free, and considering that a very small proportion of Canada’s overall merchandise imports originate from Ukraine, a CUFTA is expected to result in only modest additional imports. Accordingly, a modest environmental impact is expected from the increase in imports from Ukraine as a result of tariff elimination.

Likewise, it is unlikely that a CUFTA will result in a significant increase in Services trade between Canada and Ukraine. In the context of its accession to the World Trade Organization (WTO) in 2008, Ukraine made commitments under the General Agreement on Trade in Services (GATS), which substantially liberalized its services trade. The resulting impact of further services trade liberalization as a result of a CUFTA is therefore expected to be modest relative to the aggregate Canadian economy. Consequently, any increase in services trade is expected to have a limited impact on the environment in Canada.

In terms of Investment, official data regarding Ukraine’s foreign direct investment (FDI) in Canada are withheld to meet the confidentiality requirements of the Statistics Act. The Initial Environmental Assessment indicated that a CUFTA is not expected to result in significant changes to investment flows between the two Parties. In these circumstances, any environmental impacts as a result of an FTA are expected to be minimal in Canada, particularly given that Canada already has a FIPA with Ukraine that entered into force in 1995. An investment chapter in an FTA would build upon this Agreement, and would be based on Canada’s current FIPA model.

In conclusion, the economic effects of a CUFTA will likely be very modest relative to Canada’s overall economic activity. Importantly, Canada maintains a strong regulatory framework, with sophisticated federal, provincial and territorial environmental oversight regimes, which serves as a mitigating factor to any increase in production or consumption. Canada has also implemented numerous environmental monitoring programs (highlighted in Section 6) that track environmental indicators. These indicators will continue to be used to track sustainability when the CUFTA is implemented.

Any environmental impacts that may occur as a result of a CUFTA are expected to be minimal. In accordance with the Framework, the environmental assessment process will therefore proceed directly to the Final Environmental Assessment phase.

2. Initial Environmental Assessment

2.1 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 Framework for the Environmental Assessment of Trade Negotiations details this process, and was developed in response to the 1999 Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals.^{Footnote 2} The Cabinet Directive was later updated in 2010. Detailed guidance for applying the Framework is contained in the Handbook for the Environmental Assessment of Trade^{Footnote 3} (“the Handbook”). The guidelines for implementing the Cabinet Directive require government departments to describe, in appropriate detail, the scope and nature of environmental effects, both positive and negative, that could arise from implementing proposals, and how they could affect the Federal Sustainable Development Strategy’s^{Footnote 4} goals and targets.

The Framework provides a process and methodology for conducting the environmental assessment of a trade negotiation. It is intentionally flexible so that it can be applied on a case-by-case basis according to the nature of the agreement being negotiated. The objectives of the environmental assessment process of a trade negotiation, as outlined in the Framework are:

• to assist Canadian negotiators in integrating environmental considerations into the negotiating process by providing information on the environmental impacts of a proposed trade and/or investment agreement; and
• to document how environmental factors are being considered in the course of trade negotiations.

The Framework provides for three phases of assessment:

1. Initial Environmental Assessment: a scoping exercise to identify the main environmental issues likely to arise as a result of the proposed agreement.
2. Draft Environmental Assessment: if required, builds on the findings of the Initial Environmental Assessment and provides a detailed analysis of those issues.
3. Final Environmental Assessment: takes place at the conclusion of the negotiations to document the outcome of the negotiations in relation to the EA process, including any new issues raised through consultations.

After the conclusion of each phase, a public report is issued along with a request for comments. In the event that an Initial Environmental Assessment finds little likelihood of significant environmental impact occurring as a result of an agreement, a Draft Environmental Assessment is not required. In those cases, environmental considerations continue to be integrated into ongoing negotiations and a Final Environmental Assessment must still be completed.

After the conclusion of the Environmental Assessment process, follow-up and monitoring can be undertaken in order to review any mitigation or enhancement measures that would be recommended in the Final Environment Assessment. Monitoring and follow-up activities can be undertaken any time during the implementation of the concluded agreement in order to gauge the performance of its provisions from an environmental perspective.

2.2 Assessment Methodology

The Initial Environmental Assessment is a forecasting exercise that allows for the identification of potential environmental effects resulting from trade negotiations, as well as providing an opportunity to integrate environmental considerations while negotiations are ongoing.

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

1. Identification of the economic effect of the agreement to be negotiated. This stage identifies the trade liberalization activity of the agreement under negotiation. It examines what the potential agreement may include, 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 prioritize the issues to be assessed.
2. Identification of the likely environmental impacts of the economic effects. Once the economic effects of the proposed trade agreement have been estimated, the likely environmental impacts of such changes are approximated. Consideration is given to potential positive and negative impacts.^{Footnote 5}
3. 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.
4. Identification of enhancement/mitigation options to inform the negotiations. The Initial Environmental Assessment is intended to identify, in a preliminary fashion, the possible policy options or actions to mitigate potential negative impacts and/or to enhance potential positive impacts that may occur as a result of the proposed FTA.

The environmental assessment of a trade negotiation requires inter-departmental collaboration.^{Footnote 6} An inter-departmental committee is established to review the environmental assessment of each free trade negotiation and includes officials from government departments and agencies participating in the negotiations. This approach facilitates informed policy development and decision making throughout the negotiating process.

The environmental assessment process also includes consultations with the public, provincial and territorial governments and with the non-governmental Environmental Assessment Advisory Group (EAAG), composed of stakeholders, including representatives from the business sector, academia, and non-governmental organizations.

As required by the Framework, a Notice of Intent to conduct a Strategic Environmental Assessment of the CUFTA negotiations was published December 10, 2011. This notice invited interested individuals to submit their input for consideration in the drafting of the Initial Environmental Assessment by January 9, 2012. No public comments were received during or after the consultation phase.

The Government welcomes input and comments on all Initial Environmental Assessments. Suggestions for enhancement of mitigation measures regarding potential negative environmental impacts and augmentation of positive effects identified at this stage are also encouraged. Input can be sent to:

E-mail: EAconsultationsEE@international.gc.ca
Fax: 613-992-9392
Regular Mail: Environmental Assessment Consultations – Canada-Ukraine FTA
Trade Policy and Negotiations Division (TPE)
Foreign Affairs, Trade and Development Canada
Lester B. Pearson Building
Sussex Drive, Ottawa, ON, K1A 0G2

3. Ukraine’s Trade with the World

Ukraine had a population of 45.4 million in 2013. In the same year, gross domestic product (GDP) was $183.6 billion or $4,050 per capita. Real GDP growth is projected by the European Commission to fall by 6.5% in 2014 and rise by 1.0% in 2015. Ukraine became a member of the WTO in 2008, and is also a member of the Commonwealth of Independent States (CIS).

Ukraine has had a merchandise trade deficit since 2005, which totalled $14.1 billion in 2013 and $16.0 billion in 2012. In 2013, Ukraine’s global merchandise exports totalled $65.2 billion (down from $68.7 billion in 2012 and $67.7 billion in 2011) and global merchandise imports totalled $79.3 billion (down from $84.6 billion in 2012 and $81.7 billion in 2011). Ukraine’s principal global exports include: iron and steel; cereals; mineral ores; machinery; and animal/vegetable oils and fats. Principle global imports include: mineral fuels and oils; nuclear fuel cartridges; machinery and equipment; electrical and electronic machinery and equipment; vehicles; and plastics. The country’s primary trading partners are the European Union (EU) and Russia. In 2013, exports to the EU and Russia accounted for over half of Ukraine’s merchandise exports and for nearly two-thirds of imports. Russia has traditionally been a particularly important trading partner, e.g. Ukraine’s imports of Russian energy supplies accounted for over two-thirds of Ukraine’s imports in mineral fuels and oils in 2013. Ukraine’s geographic position makes it a key trade link between Russia and Europe.

From 2005 to 2013, Ukraine’s global exports of services grew by 11.7% annually (in U.S. dollar terms), while global services imports grew by 12.8% annually on the same basis. In 2013, Ukraine’s global services exports reached US$15.3 billion and global services imports reached US$7.8 billion. Ukraine’s services balance was positive in 2013, totalling $7.4 billion, with transportation services comprising 56.0% of exports, travel at 3.6% of exports, and all other commercial services comprising 40.4%. .

At the end of 2013, the stock of Foreign Direct Investment (FDI) from all countries in Ukraine was reported by the IMF at $30.3 billion, while Ukraine’s stock of FDI abroad was not provided.

4. Canada-Ukraine Bilateral Trade and Investment Relationship

In 2013, two-way merchandise trade between Canada and Ukraine was modest, totalling $322.5 million (up from $313.5 million in 2012), with Ukraine being the 55^th-most important destination for Canadian exports and 86^th-largest source of Canadian imports. In 2013, Canada reported a trade surplus with Ukraine, with exports of $209.9 million (up from $148.9 million in 2012) and imports of $112.6 million (down from $164.6 million in 2012).

The level of Canadian direct investment (CDI) in Ukraine is classified as confidential in order to meet the confidentiality requirement of the Statistics Act, while the stock of FDI from Ukraine in Canada is not publically available. Export Development Canada (EDC) has identified key industries of Canadian interest in Ukraine as being agriculture; mining and metals; oil and gas; telecommunications; and transportation services. No information is available with respect to the interests of Ukrainian investors in Canada.

5. Trade and the Environment

The Government of Canada is committed to ensuring that its trade negotiations carefully consider environmental sustainability so as to encourage mutually supportive trade and environmental objectives. The importance of mutually supportive trade and environmental outcomes is underscored by a strong inter-dependence among open markets, economic development and environmental protection. A strong rules-based trading system and efficiently regulated markets are key building blocks for economic growth and development. The reduction of trade barriers plays a key role in facilitating the exchange of environmentally friendly technologies, and the establishment of investment rules that help create conditions for facilitating the transfer of technology. In addition, the environmental provisions of trade agreements can include other commitments and obligations that help protect and conserve the environment.

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 so as to generate positive environmental impacts;
• to strengthen respective national environmental management systems; and
• to use this strengthened capacity to combat transboundary pollutants and invasive species that directly affect Canada’s environment and economy and the health of Canadians.

At the same time, an increase in global economic integration and investment may have an impact on Canada’s domestic Federal Sustainable Development Strategy (FSDS) goals and targets. The FSDS is the government’s overall sustainable development strategy.^{Footnote 7} The environmental assessment of this trade negotiation is consistent with the overarching objectives of the FSDS, such as integrating environmental considerations into economic decision-making.

The identification of likely and important environmental effects of a proposed trade agreement enables negotiators to consider whether existing mechanisms, such as federal, provincial and territorial regulatory frameworks and other aspects of environmental oversight regimes in Canada will be sufficient to mitigate any identified impact as a result of a proposed agreement, and to consider the possible need for additional mitigation. The objective is to ensure that the implementation of trade agreements minimizes potential negative environmental impacts while contributing to the economic well-being of Canadians.

In order to ensure that economic development is sustainable, Canada seeks to negotiate meaningful and ambitious commitments in its FTAs relating to high levels of environmental protection, the effective enforcement of existing environmental laws, enhancing public awareness of environmental policy, and non-derogation from environmental laws to encourage trade or investment. Canada also seeks to negotiate obligations related to monitoring compliance with and investigating suspected violations of environmental laws and regulations.

In the CUFTA, the Parties have agreed to negotiate provisions committing them to high levels of environmental protection and to maintaining environmental laws and regulations which accomplish their objectives, while simultaneously not acting as unjustified barriers to trade and investment. Two approaches, for incorporating environmental provisions into the CUFTA, both of which have been used by Canada in other FTAs, are being considered by the Parties. Regardless of which approach is taken, environment-related provisions within the FTA:

• recognize the need to implement the FTA in a manner consistent with environmental protection and conservation, and sustainable development;
• enable the effective enforcement of domestic environmental laws;
• set out the relationship between certain multilateral environment agreements and the FTA;
• provide domestic remedies for violations of environmental laws;
• encourage increased public awareness and transparency;
• ensure that environmental impact assessment procedures are maintained;
• recognize that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures; and
• allow the Parties to take certain necessary measures to protect human, animal and plant life or health which may be inconsistent with trade or investment obligations.

As with all FTAs, Canada intends to negotiate obligations with Ukraine which are consistent with Canada’s obligations under multilateral environmental agreements such as: the Convention on International Trade in Endangered Species of Wild Fauna and Flora; the Montreal Protocol on Substances that Deplete the Ozone Layer; the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and their Disposal; the Rotterdam Convention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and Pesticides in International Trade; and the Stockholm Convention on Persistent Organic Pollutants.^{Footnote 8}

The following Section of this Initial Environmental Assessment includes a summary of all areas of the negotiations and their potential environmental impact.

6. Initial Environmental Assessment Findings

6.1 Findings Related to Potential Provisions of a CUFTA

The areas examined in the Initial Environmental Assessment are based on a preliminary listing of the areas of negotiation and potential chapters in a CUFTA. Three areas of special interest are examined in detail: Trade in Goods, Trade in Services and Investment (see sections 6.2, 6.3 and 6.4). Other potential chapters or areas of negotiation are assessed and summarized in Section 6.1, below.

Preamble

Anticipated Outcome: The Preamble summarizes the overall intent of the Agreement and is expected to reference the Parties’ ongoing commitment to sustainable development, the effective enforcement of environmental laws and cooperation on environmental matters.

Possible Environmental Impacts: By underscoring the Parties’ commitments to environmental stewardship, these provisions could indirectly have a positive impact on the environment.

General Provisions and Definitions

Anticipated Outcome: This chapter includes the establishment of the free trade area; defines the FTAs relationship to other agreements, including Multilateral Environmental Agreements (MEAs), and the extent of obligations; and establishes definitions for the FTA.

Possible Environmental Impacts: Where FTA provisions refer to multilateral environmental and conservation agreements, they serve to underscore the Parties’ commitments to environmental stewardship. This chapter could lead to positive environmental impacts by listing MEAs that supersede the FTA’s provisions in instances where conflicting provisions exist.

Administration of the Agreement

Anticipated Outcome: This chapter provides a framework for the overall management of the FTA and establishes a mechanism for the Parties to address any differences outside of formal dispute settlement mechanism. This chapter also governs amendments to the MEA list found in the General Provisions and Definitions chapter.

Possible Environmental Impacts: This chapter could have positive environmental impacts by permitting certain MEAs, which provide internationally recognized standards for environmental protection and conservation, to supersede provisions of the FTA in instances where conflicting provisions exist. There are no foreseen environmental impacts as a result of this chapter.

Transparency

Anticipated Outcome: This chapter facilitates the administration and smooth operation of the Agreement by designating contact points in each Party to facilitate communication. It also reiterates the Parties’ commitment to transparency and due process regarding matters covered by the Agreement.

Possible Environmental Impacts: There are no foreseen environmental impacts as a result of this chapter.

Exceptions

Anticipated Outcome: This chapter sets out exceptions to the commitments taken by Parties to the FTA to ensure that they maintain their ability to adopt measures to protect human, animal or plant life, and measures relating to the conservation of exhaustible natural resources.

Possible Environmental Impacts: These provisions normally provide for a general exception allowing for the adoption and enforcement of measures to protect animal or plant life or health, and measures relating to the conservation of exhaustible natural resources. By recognizing and protecting the right of each Party to regulate to protect the environment, this chapter could have beneficial environmental impacts.

Rules of Origin

Anticipated Outcome: This chapter seeks to establish rules of origin that are clear, as simple as possible, and leave little room for administrative discretion. Rules of origin are intended to ensure that the benefits of a CUFTA flow only to goods qualifying as originating in the territory of either Canada or Ukraine.

Possible Environmental Impacts: Production and consumption changes resulting from product-specific rules of origin will be captured in the Trade in Goods section below (Section 6.2), along with their corresponding environmental impacts (any environmental impacts are expected to be minor or non-existent).

Customs Procedures

Anticipated Outcome: This chapter ensures that the rules of origin are administered in a fair and transparent manner by the customs administrations and to provide the trading community with the means by which to take advantage of the preferential tariff treatment afforded under the trade agreement.

Possible Environmental Impacts: There are no foreseen environmental impacts as a result of this chapter. It will not affect how Canadian environmental regulations are developed or implemented nor how environmental objectives are set.

Technical Barriers to Trade (TBT)

Anticipated Outcome: This chapter builds on commitments made under the WTO Technical Barriers to Trade Agreement (“TBT Agreement”);^{Footnote 9} promotes greater cooperation in the field of standards and technical regulations; facilitates the acceptance of conformity assessment procedures; and addresses horizontal transparency issues, including notifications and participation in consultation processes.

Possible Environmental Impacts: There are no foreseen environmental impacts as a result of this chapter. Provisions would build on the WTO TBT Agreement 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. These provisions will enhance market access but are not likely to have any measurable impact on the environment.

Sanitary and Phytosanitary Measures

Anticipated Outcome: This chapter seeks to reaffirm commitments made under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (“SPS Agreement”). In addition, the chapter will designate contact points for the purpose of communicating on SPS matters.

Possible Environmental Impacts: As provided in the WTO SPS Agreement, both Parties maintain the right to adopt SPS measures necessary for the protection of human, animal or plant life or health, provided that such measures are not inconsistent with the provisions of the Agreement. As the CUFTA SPS chapter establishes no new rights and obligations beyond what Canada has already agreed to under the existing WTO SPS Agreement, and since the intent of the Agreement is aimed at the protection of human, animal and plant life or health, no negative environmental impacts are expected as a result of this chapter.

Trade Facilitation

Anticipated Outcome: This chapter seeks to streamline customs processes and facilitate the movement of goods.

Possible Environmental Impacts: To the extent any environmental impacts could be foreseen as a result of this chapter, they would be positive impacts due to less paper, simpler procedures, and automation. This chapter will not affect how Canadian environmental regulations are developed or implemented, nor how environmental objectives are set.

Cross-Border Trade in Services

Anticipated Outcome: This chapter seeks to incorporate provisions that offer market access opportunities for Canadian and Ukrainian services providers.

Possible Environmental Impacts: There are no foreseen environmental impacts as a result of the negotiation of provisions in this area. The chapter will not affect how Canadian environmental regulations are developed or implemented, nor how environmental objectives are set. The potential environmental impact of increased trade in services between Canada and Ukraine is described in further detail in section 6.3.

Temporary Entry of Business Persons

Anticipated Outcome: This chapter seeks to facilitate the temporary movement of business persons in support of bilateral trade in goods, services and investment by waiving regulatory requirements such as labour market tests and numerical restrictions.

Possible Environmental Impacts: 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, nor how environmental policy objectives are set.

Investment

Anticipated Outcome: Investment provisions provide Canadian and Ukrainian investors with greater certainty and predictability, as well as enhanced confidence in the territory of the other party. An investment chapter in a CUFTA will build upon the existing FIPA with Ukraine and will include a non-derogation clause recognizing that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures, as well as a provision to encourage Parties to promote corporate social responsibility (CSR).

Possible Environmental Impacts: As outlined in the section on investment, it is not possible to predict the impact on investment in Canada directly attributable to an FTA with Ukraine, but any impact is expected to be minimal. All investments made in Canada will still be required to conform to existing Canadian regulatory frameworks. The potential environmental impacts of increased investment are described in further detail in Section 6.4.

Telecommunications

Anticipated Outcome: This chapter seeks 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 provide an open and competitive market for telecommunications services.

Possible Environmental Impacts: 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.

E-commerce

Anticipated Outcome: This chapter seeks to ensure a predictable environment for the conduct of electronic commerce.

Possible Environmental Impacts: Some positive environmental impacts could indirectly result from this chapter as it could facilitate cross-border communication technologies. This chapter will not affect how Canadian environmental regulations are developed or implemented, or how environmental policy objectives are set.

Financial Services

Anticipated Outcome: This chapter seeks to establish commitments for investors and investments in financial institutions that provide protections against discrimination and unfair treatment. The commitments also establish a streamlined investor-state dispute settlement mechanism that seeks to protect against expropriation without compensation and limits on transfers. A prudential exception allows financial authorities to enact measures designed to protect the safety and stability of the financial sector.

Possible Environmental Impacts: As financial services commitments contained in the investment chapter would be in line with Canada’s existing FTAs, and there are no cross-border financial services commitments, no environmental impacts are expected as a result of these commitments.

Monopolies and State Enterprises

Anticipated Outcome: This chapter seeks to ensure that the benefits of trade and investment liberalization between Canada and Ukraine are not undermined by anti-competitive business conduct, or through the designation or conduct of monopolies and state enterprises.

Possible Environmental Impacts: 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.

Competition Policy

Anticipated Outcome: This chapter seeks to ensure that the benefits of trade and investment liberalization between Canada and Ukraine are not undermined by anti-competitive business conduct.

Possible Environmental Impacts: Such provisions are unlikely to have a direct environmental effect.

Government Procurement

Anticipated Outcome: This chapter seeks to provide Canadian and Ukrainian suppliers of goods and services with open, transparent and non-discriminatory market access to Canada’s and Ukraine’s respective federal government procurement markets.

Possible Environmental Impacts: The environmental impacts as a result of this chapter are likely to be negligible. Ukraine’s potentially increased participation in the Canadian government procurement market will not affect the relatively stable demand for goods and services from the Canadian government. Furthermore, Canada’s green procurement practices, including the Policy on Green Procurement, which seeks to reduce the environmental impacts of government operations and promote environmental stewardship by integrating environmental performance considerations in the procurement process, will apply without regard to the origin of suppliers and service provides. This chapter will not affect how Canadian environmental regulations are developed or implemented or how environmental objectives are set.

Intellectual Property

Anticipated Outcome: Provisions on intellectual property seek to reaffirm commitments made under the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (“TRIPS Agreement”), as well as other international intellectual property agreements to which both countries are a party, and reaffirm the flexibilities in the TRIPS Agreement, including those relating to the protection of public health. The CUFTA is also expected to contain cooperation provisions in areas of mutual interest. Provisions are not expected to go beyond Canada’s current international intellectual property obligations under the TRIPS Agreement.

Possible Environmental Impacts: 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.

Environment

Anticipated Outcome: The principles and objectives that will be covered by this chapter include commitments to high levels of environmental protection; the effective enforcement of domestic environmental laws; non-derogation from domestic environmental laws to encourage trade or investment; public participation and engagement; and dispute resolution.

Possible Environmental Impacts: This chapter seeks to ensure that trade and environment conservation and protection are mutually supportive. These provisions will discourage Parties from lowering environmental standards in order to gain a trade or an investment advantage. Provisions will also seek to ensure that the Parties maintain the ability to set their own environmental priorities, to establish their own domestic levels of environmental protection, and to adopt or modify relevant environmental laws and policies.

Labour

Anticipated outcome: This chapter outlines principles and objectives that are elaborated in the Labour Cooperation Agreement (LCA). The LCA will contain binding obligations and robust provisions to maintain high labour standards, including mutual commitments to respect and promote internationally-recognized fundamental labour rights and principles, and regarding the effective enforcement of domestic labour laws.

Possible Environmental Impacts: No environmental impacts are expected as a result of this chapter.

6.2 Trade in Goods

Overview

This section includes: (1) an overview of bilateral trade flows and anticipated areas of export growth as a result of liberalization under a CUFTA; (2) identification of potential environmental impacts associated with a growth in trade in goods and an assessment of the significance of these impacts; and (3) identification of mitigation and enhancement measures to address potential environmental impacts.

Overall, the liberalization of trade in goods under an FTA is expected to bolster the Canada-Ukraine trade relationship, particularly in the sectors outlined below. However, the Canada-Ukraine trade relationship assumes a modest role in the context of Canada’s global trade in goods. This would continue to be the case even if considerable trade growth ensued as a result of an FTA. As a result, no meaningful or measurable environmental impacts for Canada are expected to result from increased imports from Ukraine as a result of CUFTA tariff elimination.

Anticipated Effects of a CUFTA in the area of Trade in Goods

The proposed CUFTA is expected to establish commercially significant new market access for goods, principally through tariff elimination. The largest trade gains are expected in sectors where Canadian merchandise exports currently face significant tariff barriers. The CUFTA is expected to bolster Canada exports to Ukraine, particularly with respect to fish and seafood, industrial products such as machinery and vehicles, as well as agricultural products. Nevertheless, the Canada-Ukraine trade relationship assumes a modest role in the context of Canada’s overall global trade flows. This would continue to be the case even if considerable trade growth resulted from an FTA.

Beyond tariff elimination, Canadian negotiators will also seek to include provisions that would facilitate increased cooperation with Ukraine to make trade more efficient, including through trade facilitating measures and customs procedures designed to provide certainty, transparency and effective origin verification procedures. Rules of origin that are transparent, predictable and consistent in application will be developed to ensure that the benefits negotiated under the Agreement accrue to its Parties.

Canadian Merchandise Exports to Ukraine

Canada’s merchandise exports to Ukraine increased from $81.9 million in 2005 to $229.7 million in 2008 before declining by over 50% in 2009 to $112.3 million. Canadian exports to Ukraine have since recovered to $209.9 million in 2013, making Ukraine Canada’s 55th-largest export destination that year. However, Canadian exports to Ukraine represented only 0.04% of total Canadian global exports in 2013. Therefore, even if Canadian exports to Ukraine were to undergo considerable growth in the years following the implementation of a CUFTA, this would have only a modest effect on Canada’s overall trade and production levels.

Canada’s non-agricultural exports to Ukraine totalled $174.8 million in 2013, and included mineral fuels and oils (mainly coal), fish and seafood, pharmaceuticals, meat and machinery. Canadian agricultural and agri-food exports to Ukraine totaled $35.2 million in 2013, and included meat, other animal products, animal fodder and oilseeds.

Canada will be seeking the elimination of tariffs on substantially all trade with Ukraine. In 2013, Ukraine had an overall applied most favoured nation (MFN) tariff rate of 5.8%, an average applied non-agricultural tariff of 5.0%, and an average applied agricultural tariff of 10.9%^{Footnote 10}.

Ukraine has relatively high tariffs in a number of areas of export interest to Canada, including (average applied tariff in brackets): pork (11.4%); beef (13.9%); animal feed and pet food (7.8%); processed foods (11%); grains (13.7%); oilseeds (8.3%); pulses (12.1%); fish and seafood products (2.7%); industrial machinery (2.3%); plastics (3.4%); consumer electronics (7.2%); instruments (3.4%); stones, ceramic and glass (6.9%); chemicals (3.3%); tires (7.9%); light vehicles (9.1%); and other vehicles (7.5%).

Tariff elimination in the context of an FTA is expected to further bolster the presence of Canadian exporters in the Ukrainian market. Canada’s exports to Ukraine assume a modest role in the context of Canada’s global exports of all of the products and sectors highlighted above. For example, Canada’s 2013 exports to Ukraine represented 0.08% of Canada’s global agricultural exports, 0.9% of Canada’s global fish and seafood, and 0.05% of Canada’s industrial machinery exports.

This suggests that even if an FTA led to considerable growth of Canadian exports to Ukraine, the increase would represent a very modest share of overall Canadian production and exports, and therefore have a very modest environmental impact in Canada.

Canadian Merchandise Imports from Ukraine

Under an FTA, Canada would also eliminate most tariffs imposed on goods imported from Ukraine, as per the negotiated outcome, which would tend to result in an increase of Canadian imports from Ukraine. Ukraine is a relatively small supplier of Canadian imports, representing the 87th-largest source of merchandise imports for Canada in 2013, and accounting for 0.02% of Canada’s global imports. Canada’s imports from Ukraine totalled $112.6 million in 2013, down from $164.6 million in 2012.

More than half of Canada’s 2013 imports from Ukraine were accounted for by mineral fuels and oils (mostly coal), fertilizers, and iron and steel products, which totalled $67.3 million and faced an average MFN tariff rate of under 1%. Other important imports from Ukraine included sports equipment, pigments and dyes, apparel, and agricultural (including confectionary goods, vodka, corn, beer, and live animals).

Ukraine benefits from relatively low Canadian tariffs as Canada’s overall average applied MFN rate is 3.7%. Furthermore, Ukraine currently benefits from Canada’s General Preferential Tariff, which provides developing countries with a tariff lower than the applied MFN rate for a broad range of goods. Given that over 80% of goods imported from Ukraine entered Canada duty-free in 2013 and considering the relatively small volume of Canada’s merchandise imports from Ukraine, a relatively modest increase in imports is expected to result from a CUFTA.

Potential Environmental Impacts and Significance

In light of the relatively small bilateral trade relationship between Canada and Ukraine, environmental impacts resulting from a CUFTA are expected to be very limited. It is expected that any environmental impacts would be related to increased Canadian production due to increased demand for Canadian exports as a result of lower tariff. In particular, due to their significant share of total Canadian exports to Ukraine and relatively high current Ukrainian tariff levels, Canada’s domestic fish and seafood and agricultural sectors are the areas where production could increase most as a result of a CUFTA. Nevertheless, as outlined below, minimal environmental impacts are anticipated from any potential increases in Canadian exports to Ukraine.

Fish and seafood products represent Canada’s second-largest non-agricultural export to Ukraine behind coal, totaling $39.5 million in 2013, and representing 18.8% of Canadian exports to Ukraine. An increase in fish and seafood product exports could, in principle, have environmental impacts, particularly regarding sustainable management of fish stocks. However, any such increases would be subject to Canada’s fish management systems at the federal, provincial and territorial levels of government. In 2013, exports to Ukraine accounted for less than 0.9% of Canada’s global exports of fish and seafood products. Even if considerable export growth in this sector ensued as a result of an FTA, it would be expected to constitute only a very small share of overall Canadian production and exports. Therefore, the environmental impacts resulting from any potential increases to trade in fish and seafood products are expected to be similarly minimal.

Environmental impacts in the agricultural sector occur largely as a result of changes in resource allocation decisions, such as cropping patterns. Current trade in agricultural commodities with Ukraine accounts for a very small proportion (0.08% in terms of value) of total agricultural exports from Canada in 2013. Any increase in agricultural commodity trade between Canada and Ukraine from the reduction or elimination of tariffs is unlikely to have a measurable impact on world prices, which serve as the basis for agricultural prices in Canada. As such, changes in resource allocations as a result of new prices are not expected. In these circumstances, any environmental impacts would be very small and there is little or no change expected in the overall environmental performance of the Canadian agricultural sector.

For other products of interest listed above that face relatively high Ukrainian tariffs (such as industrial machinery, plastics, consumer electronics, instruments, stones, ceramic and glass, chemicals, tires, light vehicles and other vehicles), increased exports as a result of an FTA could potentially have environmental impacts in Canada, such as air pollution, hazardous wastes, and greenhouse gas emissions resulting from production increases. However, Canada’s exports to Ukraine of these products are minimal with no single sector exports exceeding 0.3% of Canada’s global exports. This suggests that even if considerable export growth ensued as a result of an FTA, they would continue to constitute a small share of total Canadian exports and production, and any potential environmental impacts would be manageable under current environmental management practices. As such, any environmental impact resulting from export expansion in these sectors is expected to be minimal.

Regarding the environmental implications of increased imports from Ukraine as a result of an FTA, as noted above, any increases of imports would represent a small fraction of Canadian global imports and domestic sales. The environmental impacts resulting from increased imports in the context of a CUFTA are therefore expected to be minimal or non-existent.

Mitigation and Environmental Enhancement Measures

Agriculture: While minimal environmental impact is expected to result from increased agricultural exports to Ukraine because of a CUFTA, should there be any discernible 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. Environmentally sustainable agriculture is a key component of AAFC’s agricultural policy framework, Growing Forward 2 (GF2)^{Footnote 11}. Growing Forward's environmental initiative, with $3 billion in funding, focuses on innovation, competitiveness and market development to ensure Canadian producers and processors have the tools and resources they need to continue to innovate and capitalize on emerging market opportunities.

The Growing Forward framework agreement consists of three broad federal programs with $1 billion under GF2 aimed at generating market-based economic growth in the agricultural sector.

• AgriInnovation
• AgriCompetitiveness
• AgriMarketing

Through the Sustainable Science and Technology Advancement Initiative of the AgriInnovation program of GF2, AAFC continues to produce a suite of quantifiable agri-environmental performance indicators, including annual greenhouse gas emissions estimates from agricultural land, reported in Canada’s National Inventory Report to the United Nations Framework Convention on Climate Change.

Provincial and territorial governments also apply legislative and regulatory frameworks on the agricultural and agrifood industry with respect to the protection of the environment and the protection of soils and water in agricultural settings, especially with respect to subterranean water and the use of pesticides and fertilising residual matter.

Efforts related to the above initiatives and as series of other programs will help offset any negative environmental impact that may result from liberalized agricultural trade with Ukraine. 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.

Fish and Seafood: Any growth of fish and seafood exports to Ukraine 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 is 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 a CUFTA will have minimal environmental impact. Because there are effective environmental management systems and government measures in place, an increase in exports to Ukraine 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.

6.3 Trade in Services

Overview

Unfortunately, there is no data on services trade between Canada and Ukraine. This corroborates the view that Ukraine is in all likelihood a relatively small market for Canadian services exports.

A CUFTA would better position Canadian services suppliers vis-à-vis competitors in this market. However, given that Ukraine has very liberal WTO General Agreement on Trade in Services (GATS) commitments, further market access gains in terms of sectoral coverage would be quite limited. Nevertheless, an FTA would improve upon GATS commitments bringing about enhanced predictability for Canadian services suppliers. This would tend to facilitate growth in services trade between Canada and Ukraine.

Likely Economic Impact of a CUFTA

While studies have generally indicated 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).

CUFTA-related gains in this area are likely to be small relative to Canada’s overall services exports. For purposes of the Initial Environmental Assessment of a CUFTA, we have based our analysis on expected results of an agreement with Ukraine that would include a NAFTA-plus services chapter and separate chapters on telecommunications and temporary entry. Service sectors of particular interest to Canada in the Ukrainian market include professional services, other business, and transport services. Canada is seeking the removal of existing regulatory barriers in these and other sectors.

Likely Environmental Impacts of the Economic Changes

Due to the fact that services are becoming increasingly integrated in the production of complex goods, the environmental impacts that could result from increased trade in services would likely be indirect. Increased cooperation in the areas of labour mobility, regulatory cooperation and science and technology is also expected to contribute to increased activity in the services sector trade. The environmental effects of increased cross-border trade in services, however, is difficult to quantify or predict, as not all commercial transactions are recorded as they cross the border. For example, the movement of persons associated with services trade is captured in business travel statistics, but these records are not industry-specific and thus difficult to attribute to increases or decreases in specific service sectors. That said, most cross-border services benefiting from liberalization under the CUFTA would likely be in virtual areas (i.e. those without a physical component, such as professional advice), with less likelihood of negative environmental impacts.

In sectors such as environmental services and telecommunications services, positive environmental impacts can be anticipated as more environmentally sustainable goods, services and technologies are adopted. For example, in sectors such as telecommunications services and electronic commerce, positive environmental impacts can be anticipated through greater use of cross-border communications technologies (i.e. the internet/email, fax, teleconference, and videoconference) and by facilitating virtual transactions of goods and services.

This may also be the case in the areas of professional, scientific, and technological services, where Canada can expect increased opportunities for innovative and complementary partnerships and sharing of best practices among professional services firms, opportunities that will contribute to enhancing the productivity of this sector in Canada.

Significance of the Environmental Impacts

While a CUFTA with Ukraine is expected to provide improved two-way market access, it is unlikely that there will be a substantial related increase in trade in services. Canada is already quite open in most services sectors and no domestic regulatory changes are expected as a result of a CUFTA. Canada’s imports of services from Ukraine may increase as a result of an FTA with Ukraine, but the environmental effects of any possible increase are expected to be negligible.

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 trade agreements, Canada fully intends to maintain its right to regulate in the public interest in sectors such as social services (health, public education ) and culture, and its right to protect the Canadian environment.

Governments at different levels, as well as professional associations that have been delegated self-regulating authority have implemented and maintained regulations governing the provision of services. Generally, such regulations establish and maintain a legal framework to serve various public-policy purposes, including the protection of the environment.

Until the economic impact of current and enhanced services trade can be more accurately quantified, and similarly the evaluation of their environmental impact , it will be difficult to identify very specific mitigating options. With respect to specific service sectors, changes and improvements in procedures, equipment and technology lessen possible impacts, as do environmental legislation and industry awareness of environmental issues. For example, environmental services include services such as “refuse disposal services, sanitation and similar services, noise abatement services, nature and landscape protection services, other environmental protection services,” which are environmentally friendly.

6.4 Investment

Overview

As noted earlier, the level of Canadian direct investment in Ukraine is classified as confidential in order to meet the confidentiality requirements of the Statistics Act, while the stock of Ukrainian FDI in Canada is not publically available.

Canada currently has a FIPA with Ukraine that entered into force in 1995. An investment chapter in an FTA would build upon this Agreement, and Canada would seek to include enhanced provisions concerning the definition of investment, transparency, minimum standard of treatment, indirect expropriation, and improved provisions regarding investor-state dispute settlement.

Likely Economic Impact of the Canada-Ukraine Free Trade Agreement

With respect to the investment negotiations, Canada’s objective is to build on the existing FIPA in order to conclude a high-quality, comprehensive investment chapter within an FTA. These enhanced investment obligations in a CUFTA 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 factor for investors when deciding whether to invest in the territory of the other party, it will be but one of many factors.

Likely Environmental Impacts of the Economic Changes

The likelihood and significance of any environmental impacts stemming from a CUFTA would depend on the level of increase in investment, the sectors affected, and the measures in place to protect the environment in relation to those activities.

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. In addition, Canada already has a relatively open investment regime. Thus, large changes in investment patterns are not expected to result from the FTA, and by extension, it is expected that the environmental effects of economic activity related to the investment provisions in a CUFTA will be minimal.

Significance of Environmental Impacts

As noted above, large changes in investment patterns are not expected to result from the FTA. Therefore, it is expected that the environmental effects of a CUFTA will be minimal.

Enhancement and Mitigation Options

Foreign investors in Canada are bound by the same environmental regulations that govern the activities of domestic investors. Canada’s FIPA model includes a non-derogation clause, which recognizes that it is inappropriate to encourage investment by relaxing domestic health, safety or environmental measures. The FIPA model also includes a provision that encourages both Parties to promote CSR among companies operating within their territories. Through the CSR provision, the investment chapter would seek to promote broader developmental objectives, including social and environmental dimensions. 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.

7. Environmental Sustainability Indicators

Along with federal, provincial and territorial legislation protecting the environment, Canada tracks its performance on key environmental sustainability issues including: climate change and air quality; water quality and availability; and protected nature. The environmental indicators are based on objective and comprehensive information and convey environmental trends in a straightforward and transparent manner^{Footnote 12}.

The indicators provide valuable data and information for tracking Canada’s performance on key environmental sustainability issues. They ensure that international, national, regional, and local trends are readily accessible and transparently presented to all Canadians. These indicators will continue to be used to track sustainability when the CUFTA is implemented.

Examples of Environmental Sustainability Indicators are as follows:

Biodiversity

Conserving biodiversity and using biological resources in a sustainable manner are essential parts of Canada's effort to achieve sustainable development. The Canadian Biodiversity Strategy^{Footnote 13} reaffirms that governments in Canada must create the policy and research conditions that will lead to the conservation of biodiversity and the sustainable use of biological resources.^{Footnote 14} The Canadian Biodiversity Strategy provides a framework for action at all levels that will enhance the ability to ensure the productivity, diversity and integrity of natural systems and, as a result, the ability as a nation to develop sustainably.

Air Contaminants and Greenhouse Gases

Air pollution is a broad term applied to any chemical, physical, or biological agent that modifies the natural characteristics of the atmosphere. Examples include particulate matter and ground-level ozone. Air pollutants fall into four main categories: criteria air contaminants (e.g. SO₂, NO_x, volatile organic compounds), persistent organic pollutants (e.g. dioxins and furans), heavy metals (e.g. mercury) and toxics (e.g. benzene).

The Federal government, along with other levels of government, industry, non-government organizations, and individuals have taken action to reduce emissions of harmful air pollutants from human sources.

The Canadian Council of Ministers of the Environment (CCME) serves as a principal forum for parties to develop national strategies, norms, and guidelines that each environment ministry across the country can use, including for air pollution. The CCME’s Air Quality Management System (AQMS)^{Footnote 15} is a comprehensive approach for reducing air pollution in Canada. It is the product of close collaboration by the federal, provincial, and territorial governments and stakeholders.^{Footnote 16} The AQMS (implemented on October 11, 2012) includes Canadian ambient air quality standards, local air quality management by provinces in air zones, and base-level industrial emissions requirements for key sectors and equipment groups.

For greenhouse gases, the Federal government is taking a sector-by-sector approach to developing regulations. Recently proposed electricity regulations will reduce both greenhouse gas and air pollutant emissions from coal-fired electricity, and stringent vehicle regulations will improve fuel efficiency and reduce greenhouse gas emissions from light duty vehicles and trucks. Some provinces, such as British Columbia, Manitoba, Ontario and Quebec, all of which joined the Western Climate Initiative, have also implemented GHG-reduction mechanisms.^{Footnote 17}

Waste

The amount of solid waste generated in Canada includes wastes disposed in landfills and incinerators plus wastes diverted for recycling and reuse. The generation and management of solid waste raise important environmental, economic and social issues for Canadians.

In Canada, the responsibility for managing and reducing waste is shared among the federal, provincial, territorial and municipal governments. The CCME is engaged in developing tools and resources for environmentally sound waste management in Canada, promoting sustainable use of materials and resources to reduce negative environmental impacts, and encouraging waste minimization. For example, the CCME has endorsed principles for electronics product stewardship, developed guidelines for hazardous waste landfills, and is now developing a Canada-wide approach to optimizing packaging reductions^{Footnote 18}.

Chemicals

Chemical substances are everywhere around us – in the environment, our food, clothes, and even our bodies. Many of these chemical substances are used to improve the quality of our lives. Most of these chemical substances are not harmful to the environment or human health.

The Government of Canada manages chemical substances of concern to protect human health and the environment through the Chemicals Management Plan. Canada’s Chemicals Management Plan was launched in 2006, and is jointly managed by Environment Canada and Health Canada. Chemical substances of concern are assessed and measures are put in place to eliminate or minimise potential risks of those found to be toxic. Monitoring and surveillance activities under Canada’s Chemicals Management Plan are national in scope, and are therefore discussed further below.

National Monitoring and Tracking Programs

In addition to the risk management frameworks outlined in specific areas above, Canada has established several ongoing national monitoring programs for the environment. These include, but are not limited to:

• Monitoring and Surveillance Activities under Canada's Chemicals Management Plan – A key element of the Chemicals Management Plan is the monitoring and surveillance of levels of harmful chemicals in Canadians and their environment. Environmental and human biomonitoring and surveillance are essential to identify and track exposure to hazards in the environment and associated health implications.
• National Pollutant Release Inventory – The Inventory is Canada's legislated, publicly accessible inventory of pollutant releases (to air, water and land), disposals and transfers for recycling.
• Canadian Environmental Quality Guidelines^{Footnote 19} – The Guidelines have been established by the Canadian Council of Ministers of the Environment (CCME) to provide nationally endorsed science based goals for the quality of atmospheric, aquatic, and terrestrial ecosystems.
• Canadian Environmental Sustainability Indicators (CESI)^{Footnote 20}– This program provides data and information to track Canada’s performance on key environmental sustainability issues including climate change and air quality, water quality and availability, and protected nature. The environmental indicators are based on objective and comprehensive information and convey environmental trends in a straightforward and transparent manner. Indicators are added and updated throughout the year as new data become available.

8. Conclusion

A CUFTA would help provide improved access for Canadian goods and services to the Ukrainian market, help to address non-tariff barriers, and facilitate investment. The Agreement will ground the trade and investment relationship in new rules set out in a bilateral FTA, which will supplement existing rules pursuant to other treaties. While the Agreement will provide opportunities for both parties, the level of new economic activity resulting from the trade agreement is expected to be relatively modest.

Based on the findings of this Initial Environmental Assessment, the environmental impacts that are expected to arise from a CUFTA are expected to be minimal once fully implemented. There are already Canadian domestic regulations in place aimed to protect and conserve the environment, and negotiators have committed to negotiate provisions consistent with environmental protection and conservation within the FTA, thereby demonstrating the importance of these values to the parties. Provisions aimed to protect the environment will be negotiated in line with Canada’s other recent FTAs (i.e. Peru, Colombia, Jordan, Panama and Honduras). In addition to provisions related to environmental protection throughout the FTA, it is envisaged that a parallel Environment Agreement with Ukraine will contain commitments to high levels of environmental protection and effective enforcement of domestic environmental laws, including through cooperative activities.

Pursuant to the Framework, the next phase of the environmental assessment process will be to conduct a Final Environmental Assessment. The Final Environmental Assessment will include a discussion of any subsequent analysis and comments received in response to the Initial Environmental Assessment concerning the anticipated environmental impacts of the Agreement on Canada, along with information as to how the Initial Environmental Assessment was incorporated into the negotiations.

Following the conclusion of the environmental assessment, follow-up and monitoring could be undertaken, if warranted, to review any mitigation or enhancement measures identified. Monitoring and follow-up activities can be undertaken at any time during the implementation of a concluded trade agreement in order to gauge the performance of its provisions from an environmental perspective.