Response to Notice for Consultations on Canada's Draft Environmental
Assessment Framework for Trade Negotiations
The Department of Foreign Affairs and International Trade (DFAIT) invited comments on their draft environmental assessment framework for trade negotiations in the Canada Gazette, September 9, 2000. In response, a group of graduate students from the Faculty of Environmental Design, Law, Economics and Engineering from the University of Calgary would like to submit comments and details on opportunities to improve the framework. Similar responses have been submitted for previous notices in the Gazette under the name Ekos 707. The project team for this submission includes: Dr. Dixon Thompson, Rachel McCormick, Jodi Tomchyshyn, Kanaka Sabapathy, Mischa Kowall, Lino Contini, Daniel Belanger, Srikanth Venugopal and Ryan Hayhurst. The aim is not just to identify new problems but also provide recommendations on how to strengthen the framework, and solutions to our concerns.
The framework requires a clearer purpose
This framework is only one step in a process to obtain an effective integration of environmental concerns into trade, it must be supported by a well-resourced (time, experts, financial) system that will monitor its usefulness and advise future policy formulation. Although this may be the intent of the Department, as is evident in the recent organizational changes that include environmental considerations with the same department as trade negotiations, it needs to be clearly stated how the framework fits into overall goals and objectives of the DFAIT.

Recommendation 1






 The environmental assessment framework must be part of an overall commitment to integrate and address the ongoing conflicts and take advantage of any mutual benefits that exist between international trade and environment. A documented commitment to the required resources would preclude failure due to a lack of resources (as currently experienced by the Commission for Environmental Cooperation). As well, a clearer indication is required on what influence the findings of the assessment will have on negotiations, and how the goals of trade and environmental protection will relate to one another when there is conflict.
Recommendation 2


 		 It should be clearly stated how the findings of the Environmental Impact Assessment (EIA) will inform and educate the negotiators. They need to have a thorough understanding of the issues, rather than a list of environmental considerations. This could be facilitated through support groups.


The framework requires clearly defined terms of reference
Improving clarity through defined terms of reference could further strengthen the framework. This increases the transparency and accountability of the process, and makes the process more active than passive. Many of the terms used in the document are subjective, have a range of meanings depending on the reader, and read as a theoretical rather than practical tool. Clearly defined terms of references are important in applying the assessment framework. Two examples are provided below.
Example 1 - Defining risk. What is a "high level" (p.9) of risk? Who decides what level of risk is acceptable and when? Is it a quantified or qualitative assessment of risk? If a high risk is established, is there a requirement for the government to act? What are the other levels of risk?

Recommendation 3




 The method of assessing risk (quantitative and / or qualitative) should b described. Models of cost benefit analysis are available that incorporate social and environmental costs into the equation, and would allow a verifiable and accountable method of quantifying risks. It is a fairly reasonable task to quantify environmental effects using, for example, clean up costs and opportunity costs that the destruction of our environment creates.
Recommendation 4




A hierarchy of risks should be defined, such as low, moderate, high, and extreme. The DFAIT should commit to a certain level of required action for each level of risk before the risks are assessed. For example, for an extreme risk the government is required to take mitigative actions to reduce the impact to a level of high or less, and monitor to ensure the impact does not reach an extreme level.


Example 2 - Defining actors and their roles. Which "negotiators" will this framework inform? Just trade? When will third parties seek the advise of a "special advisory team"?

Recommendation 5


 Given an interdepartmental group developed the framework, the results and learnings should be shared to effectively integrate economics and environment throughout the federal government.
Recommendation 6







A working group of academics, industry association representatives, and NGOs should be developed before, and consulted throughout the negotiations. This provides a more open and transparent process, as well as expertise in areas other than negotiating to build the best agreement possible. Measures may need to be taken to ensure confidentiality as needed during this process, but that does not mean third parties cannot be involved. This would be different than the proposed SAGITs, as it would be developed before hand, and therefore would illustrate a proactive stance and increased transparency and accountability within the process.


Defining the scope of the environmental impact assessment
An effective EIA requires a well-defined scope and boundary conditions to ensure all relevant impacts are identified. The proposed framework states the scope will be assessed on a case-by-case basis, defines environment as the biophysical systems of the earth, and limits the geographical bounds to a national assessment. In stage 1 it references both production and trade patterns for identifying effects of trade liberalization, scale and structural effects on economic activity, and the ability to regulate. In stage 2 it references increased extraction, transfer of technology, the consumption of ecologically damaging inputs, and any other environmental externalities as areas that must be assessed for the identification of likely environmental impacts. Given these statements, the following recommendations are made.

Recommendation 7




 The assessment should include all stages of the product's production from resource extraction, processing, manufacturing, transportation, and final disposal. Although the WTO rules do not yet allow discrimination based on production methods, this should not affect the Canadian assessment of environmental impacts. There are internationally accepted standards for carrying out a life cycle assessment.
Recommendation 8

















Recognizing the difficulty of carrying out a policy EIA, it understandable that for pragmatic reasons the geographical boundary of the assessment ends at our national borders. As the process evolves this assumption should be revisited for three main reasons: the transboundary and global nature of many environmental problems, the ability to use recognized life cycle assessment models, and moral considerations for the well-being of foreign producers' countries.

For the mean time, Canada must be cognoscente of the transboundary impacts of trade, and wherever possible incorporate this into trade negotiations. Canada should also, wherever possible, encourage capacity building of developing countries to help them reduce environmental impacts through education and transfer of technologies. We recognize there are different needs and priorities between developing and developed countries but maintain that environmental protection cannot come after economic development based on three arguments: it is easier to fight poverty and economic inequality in a clean environment, pollution and degradation are signs of economic inefficiency and will slow economic development, and clean up of pollution is more expensive than pollution prevention. Above this, within WTO rules failure to internalize environmental costs (i.e. include environmental costs in the price) could technically be argued as a subsidy


Use of Environmental Management tools to increase strength and credibility
In previous briefs to the Canadian government we have stressed the opportunity to use environmental management tools to decrease the environmental costs of trade, and increase the (economic and environmental) benefits. We have promoted the use of the ISO 14000 Environmental management series because it is well recognized in industry, was developed with the input of both developed and developing countries, and will provide a standard to be referenced in trade agreements. Other environmental management systems that could be used as a reference are the Ecosystem Management Auditing Scheme, Responsible Care, GEMI, and the Natural Step. This is supportive of the World Trade Organization (WTO) principle that wherever possible a country should use an international standard. In the environmental assessment framework offered for comment, the term "tools" is referenced (p. 6) for the process of conducting an environmental impact assessment, though none are listed. The following are examples of environmental management tools can be used to assess, mitigate and monitor environmental impacts of trade. It is critical that all three of these stages be incorporated into any environmental program to manage the environmental impacts of trade. They can help stop the race to the bottom and encourage the race to the top (with regards to environmental protection).

· Site assessment
· Environmental Auditing
· Life Cycle Assessment
· Environmental Impact Assessment
· Labeling
· Environmental Management Systems
· Purchasing Guidelines
· Performance indicators
· Economic instruments (triple bottom line accounting, green taxes)

Recommendation 9


 The framework should use standardized environmental management systems and tools to help conduct environmental assessments of trade agreements, implement the mitigation options, and monitor the impacts.


Alignment and increased coherence with federal policy development
There are two important references within the framework that require domestic policies to be adequate and effective so that environmental impacts from trade can be mitigated. First, it states "trade liberalization can have a positive impact on the environment by improving the efficient allocation of resources"(p.2), and then recognizes "when distortive policies exist, increased economic activity generated by trade liberalization can contribute to environmental problems"(p.2). Secondly, it states that there may be positive effects when appropriate policies, regulations and standards are in place (p.8). Currently distortive policies are in place, due to subsidies and lack of internalization of environmental costs in the market price of products. This must be recognized during trade negotiations.

Recommendation 10




 The DFAIT must lobby federal departments and share findings of the EIA to (1) ensure adequate regulations are in place and (2) promote full-cost pricing that includes environmental externalities. This promotes the stated goal of continuing integration of environment and economics, and the strategy for sustainable development put forth by the Canadian government.
Recommendation 11





A review process for national policies and programs should be developed that requires cabinet's commitment to assessing the environmental impacts of policies and programs before they are agreed to, and throughout their implementation. Therefore, when assessing the viability of a program there should be "green papers" circulated with the white papers and an environmental component to the treasury board. This will help to provide environmental concerns a more equal level of consideration to economics.


In stage 2 of the EIA, the purpose is to identify the likely environmental impacts, including whether "the trade liberalization activity be consistent with Canada's existing commitments under Multilateral Environmental Agreements (MEAs)" (p.9).

Recommendation 12




 The DFAIT should continue to promote an agreement within the WTO to ensure commitments in MEAs are not superceded by disputes within the international trading system. This will ensure all parties to the MEA meet environmental obligations. The EIA findings should be used to strengthen MEAs and identify areas where new agreements are needed. Using the EIA for environmental policy promotes a more proactive than reactive approach.


Accountability, Credibility and Independence of the EA process
Third party involvement increases the transparency and credibility of the process of impact assessment, consequently increasing public support. Many of the mitigative measures and supportive environmental programs should also use a third party verification system. The draft currently states that DFAIT will conduct the assessment and decide its scope and scale.

Recommendation 13








 Require that the Environmental Assessment Framework be conducted in whole, or in part by an independent body that has (1) the authority to report any suspected wrong doings by the trade negotiators prior to the signing of any pacts and (2) initiate where necessary a review of our stance in the proceedings. The use of a third party should continue into the monitoring stage via an environmental audit. Industries are required to use a third party to verify their claims, public institutions should be held to the same standard, especially when there is a conflict of interest issue at stake and when the stakes are high. After all, the outcome of trade negotiations can set the tone for entire industries - entire economies for that matter - should we not make sure that they are done right?
Recommendation 14
















 Model the DFAIT framework after the Canadian Environmental Assessment Act (CEAA) framework. Although the CEAA does not apply to policy assessments, it is a valid model to look to for guidance, has public support and is more action oriented than the current DFAIT framework. CEAA mandates which projects will be subject to self-assessment processes or independent reviews. There are triggers within CEAA that determine which type of EA will apply. DFAIT policies, like CEAA projects, should be subject to independent reviews when there is due cause. DFAIT should clearly define the triggers that would require an independent review process of an environmental assessment of trade policy. This would provide a degree of credibility and independence in the EA process and improve public confidence. The triggers that we recommend for moving a policy from a self-assessment to an independent review are:

· the policy is likely to cause significant irreversible environmental impacts (e.g. species extinction, persistent pollutants);
· the policy has attracted high public concern; and
· the policy is large in potential scale (area of Canada to be affected).
Recommendation 15





Provide for a follow-up study under the DFAIT framework. CEAA mandates follow-up studies to notify the public of the "extent to which the recommendations set out in any report submitted to a mediator or panel review have been adopted and the reasons for not having adopted these recommendations" (Statutes of Canada Chapter 37 Section 39(2)(c)(d)(e). A follow-up study would provide a degree of accountability to the public for trade policy decisions.


Use of the precautionary principle
Canada has referenced the Precautionary Principle in international agreements, but has been slow to adapt it domestically. Considerable attention was given to the principle in a mid 1990's review of the Canadian Environmental Protection Act 1988 (CEPA) and a paper to explore means to incorporate the principle in CEPA was commissioned by the government. This environmental assessment framework provides an opportunity to ensure the principle is incorporated into federal policy, specifically international trade negotiations.

There are various views of the precautionary principle. For this brief it is considered a guide to manage actions that may have environmental impacts -where threats of serious or irreversible damage are present, lack of full scientific certainty should not be a reason for postponing measures to prevent environmental degradation. In the application of the principle, public and private decisions should be guided by: (1) careful evaluation to avoid, where ever practicable, serious or irreversible damage to the environment, and (2) an assessment of the risk-weighted consequences of various options.

Recommendation 16




 The precautionary principle should be applied during trade negotiations, and be informed by the information gathered during the environmental assessment. The adoption of this principle will ensure that environmental impacts are not second to economic priorities. It will lead to long-term business strategies based on a full account of costs and help ensure transparency of government motives in trade agreements.


Continual transparency within trade negotiations
This process illustrates a commitment by the Canadian government to accept feedback from the public regarding trade and environment, and should continue to be the case in the future. In order for this to be effective, the public must be educated about international trade and the associated institutions. This educational process and openness will preclude public backlash as seen in Seattle at the WTO Ministerial.

Recommendation 17





 Communication with the public must go two ways, and must be responsive to the other side's thoughts. The DFAIT must respond to the feedback provided and provide a transparent process as to how recommendations were/ were not included in the assessment framework. During negotiations, the public must continue to be kept up to date wherever possible, and the successes and failures of implementing the findings of the environmental assessment should be highlighted and accompanied by some level of explanation.


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