SCC Trade & Environment



Breaking the Free Trade Addiction:
An Intervention on Environmental Grounds


Presentation by Sarah Dover
Trade & Environment Programme, Sierra Club of Canada


Conference on "Deep Integration", Organized by CERLAC and the Canadian Center for Policy Alternatives

October 14, 2003


The focus of this conference is the proposal that Canada seek deeper integration with the U.S., a proposal called by some "The Big Idea". Deep integration claims to scratch the Canadian itch for greater economic interdependence and the U.S. itch for homeland security. The proposal continues in the free trade tradition to deny that an environmental crisis is underway in Canada and globally - a crisis exacerbated by trade liberalization.

The proposals for deep integration vary in scope and penetration, but generally include the proposal for a common natural resources market. This presentation argues that environmental concerns should preoccupy Canadian trade policy. Further, suggestions for deeper integration of natural resource markets, including regulatory harmonization, are, at best, politically simplistic and, at worst, a potential furtherance of existing flawed policy.



INTRODUCTION: THE UNREALITY OF TRADE POLICY

Imagine that it's Friday afternoon, around 4pm, and you are getting ready to leave for the weekend when the lights in your office go out. You peak out your office door and see that the entire floor is dark and heads are gophering up inquisitively from cubicles. You make you way out of the building down the stairs and emerge into the chaotic and confused streets of downtown Toronto. More than the building, more than the block or the city, entire grids have gone down and all is dark. People trapped in elevators and subways, hospitals and nursing homes scrambling, car accidents and furious motorists, scurrying and confused 9-1-1 services, cell phone circuits down, etc. Finally, the political leadership surfaces to provide certainty, explanation, leadership, in the context of this disaster, they say:

From a Canadian perspective, the most important policy issue today is managing the Canada - U.S. relationship in light of the changed U.S. role in the world.... Canadians see NAFTA as having outlived its usefulness. Deeper integration is required."[1]

You with your lights out and policy makers talking about the furtherance of an unpopular orientation typified in trade policy! This is the position of many Canadians - struggling for affordable housing, decent and secure jobs, access to health care and adequate protection of remaining environmental values. Some Canadian politicians and pro-free trade pundits are attempting to erect new post-NAFTA goalposts when most Canadians are still unconvinced, based on environmental and social justice imparities, that the free trade game should be played at all.

In terms of public concern over the environment - making the connection between the environmental imperative and trade policy and decision makers remains to be huge challenge. The problem with today's environmental crisis is that it has happened too slowly. If the endangered species crisis, climate change, food security calamity and the rest of it occurred on one Friday afternoon at 4pm, the outrageous unreality of Canadian trade policy would be more obvious, even to decision makers.

WHAT WE ARE LOSING: THE STATE OF CANADA'S ENVIRONMENT

Canada is the trustee of an enormous environmental responsibility. We can boast the world's longest coastline, 20% of the world's remaining natural areas, 25% of all wetlands, 20% of the freshwater and more than 10% of the remaining forests.[2]

Yet, our natural wealth is in decline. The indicators are many, but here's part of the picture:

  • there are 402 species on the Canadian species at risk list, but the actual number is considered to be far higher[3]. Of the species put on this list since 1978 and that have been revaluated, twice as many are in a worse off condition as those that have improved;[4]

  • since 1994, more than a million hectares a year of forests have been cut - an area almost twice the size of PEI[5]

  • since 1994, more than a million hectares a year of forests have been cut - an area almost twice the size of PEI;[6]

  • the average temperature in Canada in 2001 was 1.7 degrees Celsius above normal; in Canada's North the ten warmest years since 1860 have been in the last 15;[7]

  • there have been dramatic declines in both the Atlantic and Pacific fisheries causing environmental and economic collapse in some cases: Northern Cod is now only 3% of its historical average biomass,[8] the value of British Columbia's salmon fisheries has more than halved since 1989;[9]

  • pesticides can pose threats to human health and the environment, yet over half of the pesticides registered by the Pest Management Regulatory Agency (PMRA) are approved despite gaps in the information on their effects;[10]

  • communities in all regions of Canada have struggled with boil-water advisories (including half of all communities in Newfoundland),[11] - on any given day, there are between 300 and 350 boil water advisories in B.C. alone;[12] and

  • and the last remaining population of Southern Maidenhair Fern was last known to be surviving under a leaky hot water pipe !

The common denominator in the threats to the environment are human activities. Human activities can be measured as an "ecological footprint". In Canada, we have the third largest per person ecological footprint in the world - a major contribution to the global footprint which is currently consuming renewable resources three times the rate at which the Earth can replenish[13]. These activities can also be measured as economic activities - activities that are authorized, described, facilitated and even defended through the global trade regime.


ENVIRONMENTAL CONCERN: OF RELEVANCE OVER SUFFICIENCY

Trade rules can negatively affect the environment by replicating and hardening unsustainable economies. They can hamstring institutional responses to environmental crisis and preclude preventive approaches. They can dismantle democratic functionality and give corporate interests supremacy over citizen interests.

One of the most common defences mounted by free trade proponents against environmental concerns is that of insufficiency: that the scope or impact of the negative environmental consequence is inadequate to warrant accommodation. For example, as we will see in the context of environmental concern over the FTAA and WTO, proponents are arguing that there is not sufficient environmental impact to warrant concern since the adaptation costs to the environment have already occurred under the Canada-US Free trade Agreement and under NAFTA.

Insufficiency as justification for the avoidance of environmental consideration is predicated on a misunderstanding of the basic link between trade and the environment. Environmental concern does not begin where scientific certainties prove a negative effect on the environment. Where trade rules touch on an industry or commodity, they also touch on the environmental aspects of that sector or activity. Trade policy on agriculture affects beneficial bugs because 1/3 of Canadian agriculture depends on pollinating insects.[14] Trade policy on forestry affects protected areas because exploitation of the Canadian boreal is foreclosing on conservation opportunities. Trade policy that encourages urbanization affects endangered species because Canada's cities are generally in sensitive Southern habitats.

The message is not that some trade policy may have negative environmental impacts, but that all trade policy has environmental relevance. And in an age of environmental crisis, this relevance should be a paramount and guiding concern. Specifically, the ten-year review of NAFTA, progress towards and negotiation positions respecting FTAA and the WTO and contemplation of “deep integration” must be driven by their relevance to environmental values.

“Deep integration” represents a variety of proposals respecting furtherance of Canada-US interdependence. A good summary of the evolution of these formal proposals can be found in a C.D. Howe publication available on their web site and titled “What Canadians Have to Say about Relations with the U.S.”[15] While there are a host of environment concerns that could be raised in the context of deep integration, we can focus on two:

- further entrenchment of environmental problems created under the NAFTA regime; and
- the specific proposal to establish a natural resources common market.


NAFTA's ENVIRONMENTAL INSTITUTIONS - A SUMMARY

In 1992, during the last days of NAFTA gestation, environment and labour concerns dominated public consciousness. Environmental concerns concentrated, inter alia, on mitigating the impacts of NAFTA on the environment and a citizen's mechanism to match the powerful 'investor-suit' tool given to corporations under Chapter 11.

The vitriolic election promises of Bill Clinton and Jean Chrétien in 1992 were to play out, once they were elected, in the approval of an unaltered NAFTA text and two side agreements. The objectives of the environmental side agreement, the North American Agreement on Environmental Co-operation (NAAEC), included fostering and improving environmental protection and promoting sustainable development. The cornerstone of NAAEC was the establishment of the Commission for Environmental Cooperation (CEC).

The CEC has evolved into a mechanism for investigation, reporting and coordination on continental environmental concerns. Despite successes respecting these functions, it has been an unmitigated failure at moderating the impact of NAFTA on the environment or being a mechanism to ensure the enforcement of domestic environmental laws. The result is that the NAFTA foundation from which deep integration would be built is void of institutional experiences or precedence that effectively address and mitigate environmental impacts. Further, this foundation has only proven to heighten citizen sensitivities toward being locked out of dispute settlement in NAFTA.


BUREAUCRATIC DISCONNECT AND LACK OF COHERENCE

The sequestration of the bulk of the environmental objectives, the principal institution and citizen enforcement mechanism external to the main text in NAFTA may be contributing factors to the ongoing relegation of environmental considerations outside of the main stream of trade policy.[16]

Evidence of this disconnect can be witnessed by the lack of coherence in the implementation of NAFTA within the federal government. Canadian trade policy is driven and coordinated by the Department of Foreign Affairs and International Trade (DFAIT). Environmental considerations respecting trade policy are mainly deferred to a process of strategic environmental assessment (SEA); SEAs have been conducted on NAFTA, FTAA and the WTO. But, most environmental assessments conducted by the Canadian government are done through the Canadian Environmental Assessment Agency (CEAA). If there is a link between the expertise at CEAA (especially in the area of public consultation) and DFAIT then it has not surfaced to the external eye.

It is difficult to take the SEA process conducted by DFAIT seriously, because it lacks the specificity and candor needed to attract and sustain effective public participation. The WTO and FTAA negotiations, for example, together touch upon virtually every aspect of Canadian trade including agriculture, chemicals, fishing, forest products, tourism, transportation, manufacturing, etc. However, the initial SEAs, despite covering a myriad of different trade issues and geographies, conclude with the exact same sentence that pronounces that the negotiations will not directly translate into increased trade flows and therefore have no appreciable environmental impact.[17]

It is apparent that the DFAIT SEA process is formulaic and superficial. Also, it is apparent that there is a lack of coherence necessary between the CEAA, Environment Canada and DFAIT.


ENVIRONMENT IS NOT A PLAYER FOR TRADE: BUT VISA VERSA IS TRUE

Despite underutilization of environmental influencers within the trade context, there is a growing utilization of trade influencers in the environmental context. DFAIT has been an active and substantive contributor on environmental files such as the Canadian position on the precautionary principle and the passage of the Pest Control Products Act. The advancement of trade policy goals and the day-to-day implementation of agreements like NAFTA have invited DFAIT into environmental files in such a manner that they operate more like a central coordinating agency and less like a "line department". This role is structurally supported through the 1999 Regulatory Policy that guides the federal regulatory process. Appendix A to this policy binds regulatory officials to take account of international agreements like NAFTA and the WTO and officially charges DFAIT with coordinating the implementation of these agreements across all departments.

DFAIT's scope of influence then grows proportionally with the scope and depth of international commitments. As the trade regime grows through negotiation and interpretation, so then does DFAIT's role in the corresponding Canadian regulatory process.

So, quite aside from the actual impact of NAFTA on the environment (transportation corridors, etc), the institutional foundations relative to the environment are deficient. Without comprehensive environmental assessment, institutional coherence, citizen enforcement, and sufficient substantive provisions, the continental trade regime remains to be a regional environmental experiment.


TAKING FROM BAD TO WORSE: "THE BIG, STUPID IDEA"

Deep integration, as a progression on the NAFTA trajectory, is an opportunity to take trade policy from bad to worse. The proposals to date concentrate on increasing economic interdependence with the U.S. in such a manner that risk making NAFTA look like the environmental high water mark. Deep integration is scrubbed clean of environmental garnishes, rhetorical mentions to sustainable development or the establishment of lack luster institutional provisions.

"The Big Idea", one deep integration proposal, offers four pillars of further integration: security, defence, natural resources and economic efficiency. The author, Wendy Dobson, argues that energy markets require further integration to satisfy American interests for continental energy self-sufficiency in the wake of the 9-11 disaster.[18]

There is a certain irony to the continental integration of natural resources in the NAFTA-plus context. NAFTA itself recognizes the heightened importance of sovereignty in respect of natural resources exploitation as evident from the NAAEC preamble that states

    REAFFIRMING the sovereign right of States to exploit their own resources pursuant to their own environmental and development policies…

Natural resources have not even had the bantam benefit afforded to the environment through NAAEC. Natural resources are carved out of the environmental side agreement in order to prevent disputes over non-enforcement of domestic laws in the area of natural resources. NAAEC states:

    the term "environmental law" does not include any statute or regulation, or provision thereof, the primary purpose of which is managing the commercial harvest or exploitation…of natural resources.

If the environmental side agreement can be said to have provided any benefits of oversight or mitigation, it has not been afforded to natural resources.

The NAFTA foundation from which deep integration would build toward further integration of natural resources is mostly encapsulated in Chapter 6 of NAFTA. A good review of the operation of this section of NAFTA in relation to deep integration is contained in Andrew Jackson’s paper “Why the ‘Big Idea’ is a Bad Idea: A critical Perspective on Deeper Economic Integration with the United States”.

What warrants further comment here is the means proposed to get to further integration and the scope of this integration. The proponents acknowledge regulatory challenges associated with the federal government negotiating international protocols in an area of primary constitutional jurisdiction of the provinces. The inconvenience of federalism is to be mitigated, so says the author through “quiet discussion with provinces one at a time.” This and other measures are designed to create a “fund of credibility and good will” that Canada may “spend” in order to get what it wants.

Dobson goes on to argue:

    Such an approach could also provide a model for dealing with demand pressures on other politically sensitive natural resources, such as water. Because of these sensitivities, neither Canada nor the United States has addressed the pricing of this resource in a serious way.

Not only could The Bid Idea skirt constitutional impediments, it could manage an extension of the NAFTA into further resource areas, such as bulk water.

Deep integration of natural resources also acknowledges the tricky and meddling business of environmental regulatory regimes. The suggestion is to “harmonize where necessary, but not necessarily harmonize.” To suggest that Canadian environmental laws (endangered species, protected areas, toxics, pesticides, environmental assessment, etc) might have, through harmonization or agreement, a trans boundary legal effect is to formally invite the powerful U.S. lobby interests to Ottawa. Lobbyists and lawyers both will stand in the shadow of formalized integration wherever it extends. If an agreement were struck to harmonize environmental regulations in respect of natural resources, the outcome would either be to relocate the site of Canadian environmental decision to (the lair of U.S. corporate lobby interests) or a made-in-Washington-North solution once the hurricane of U.S. lobby interests had descended.

It is noteworthy to also mention in this context of regulatory harmonization in a so-called “post NAFTA-era”, that Canada's natural resource and environmental regulatory regimes are not comprehensively effective in protecting domestic environmental values. Many of these regimes are under funded, need reform, or are too new to be judged.

In a nutshell, the proposal for greater integration of natural resources is an attempt to decouple a wide range of Canadian resources, including water, from the minimal protections of our domestic regulatory regime. Further, any purported benefit from this integration would be a Trojan horse that would leave Canadian environmental law unguarded against motivated American corporate lobby interests.


CONCLUSION: DEEP INTEGRATION AND ITS POLITICAL CONTEXT

The Canadian public now, more than ever, equates globalization and free trade with environmental destruction and the growing divide between the rich and poor. As in 1992, the U.S. and Canada are both heading into election cycles where public concern for the environment with rank high. In Canada, this issue is sure to be a dominant theme where corporatization, the integrity of public institutions and Canada’s place in the world are front of mind.

The stakes are huge and the opportunity for Governments to change their tune is fading with the daily relinquishment of more habitat, more species, more pollution, etc. The Government who ignores this fact or chases the paper promises of deep integration courts the same fate of those governments defeated in 1992, in large part, by environmental and social justice concerns.


Sarah Dover
Trade and Environment Programme
Sierra Club of Canada
sdover@magma.ca



ENDNOTES




[1]
Dobson, Wendy, "North American Integration in and Integrating World" remarks to Asia Pacific Summit, November 13, 2002.


[2]
The Nature Audit: Setting Canada's Conservation Agenda for the 21st Century, Report No.1 2003 (Toronto: World Wildlife Fund, 2003) p6.


[3]
Dr. David Green quoted in "Caribou, badger now endangered; 14 animals and plants join Canada's 'tragedy' list" by Valerie Lawton, Toronto Star, May 6, 2000.


[4]
State of the Environment Infobase, Environment Canada <www.ec.gc.ca>.


[5]
Infobase, supra.


[6]
Infobase, supra.


[7]
Huebert, Rob, 2002. "Climate Change and Canadian Sovereignty in the Northwest Passage." Isuma Vol.2, No.4, p86-94. Cited in the State of the Environment Infobase, Environment Canada.


[8]
Lien, Jon, "Health of our oceans - a food and health issue", The Food Security Network of Newfoundland and Labrador online newsletter, No. 2, April - December, 2002 <http://www.foodsecuritynews.com/Html/2002/Ed2002no2/Articles/oceans.htm>.


[9]
Statistics Canada, "Canada's Troubled Fisheries", May 23, 2003 <http://142.206.72.67/03/03b/03b_003_e.htm>


[10]
See "Health Canada approves pesticides without knowing risks, report says", CBC News, October 7, 2003, <http://www.cbc.ca/stories/2003/10/07/pesticides_ott031007>. Media report on the release of a report by Environment Commissioner Johanne Gélinas on the PMRA.


[11]
Federation of Canadian Municipalities, "Water Infrastructure: Why Investment Is Needed", Budget Backgrounder Series, <http://www.fcm.ca/english/communications/water.htm>.


[12]
Randy Christensen quoted in "BC drinking water protection - riskiest in Canada: Alarming Walkerton-like outbreak and new investigative report spark concerns about safety of BC drinking water systems", Sierra Legal Defence Fund press release and release of report titled "Watered Down", October 10, 2003, <http://www.sierralegal.org/m_archive/pr03_10_10.html>.


[13]
Loh, Johathan, ed., Living Planet Report 2002, (Switzerland, WWF and UNEP, 2002) p.4.


[14]
The Nature Audit, supra.


[15]
Alexandroff, Alan S. and Guy, Don, "What Canadians have to say about relations with the U.S.", Backgrounder No. 73, C.D. Howe Institute, July 2003. For general critique of deep integration proposals see Jackson, Andrew, "Why the 'big idea' is a bad idea: A critical perspective on deeper economic integration with the United States", Canadian Labour Congress, 2003 and Stanford, Jim, "Canada's Economic Role in North America: Evaluating the Impacts of Integration and Considering Next Steps", Canadian Auto Workers, 2003.


[16]
See Johnson, Pierre-Marc, The Environment and NAFTA: understanding and implementing the new continental law (Washington: Island Press, 1996).


[17]
See "Initial Strategic Environmental Assessment Report of the Free Trade of the Americas Negotiations", DFAIT, May 5, 2003, p5 "Findings of the Initial Environmental Assessment", and "Initial Environmental Assessment: Trade negotiations in the World Trade Organization", DFAIT, November 22, 2002, p.4 "Findings of the Initial Environmental Assessment". On how environmental assessment of trade agreements should be addressed see Swenarchuk, Michelle, "Review of Current Status and Methodologies of Trade Negotiations for both domestic and international impacts", Canadian Environmental Law Association, April 4, 2001.

[18]
This section includes references from Dobson, supra ent. i; Dobson, Wendy, "North America: A Vision for 2020" Notes for remarks to the North America Committee, 2002; Dobson, Wendy, "Wanted: A Big Idea for the U.S. Relationship", Commentary page, The Globe & Mail, April 16, 2002; Dobson, Wendy, "Security and Growth: The Core Issue in Canada-US relations", CIIA Talk, March 29, 2003; Dobson, Wendy, "Trade can brush in a new order", Globe and Mail, January 21, 2003, page A15.




Sierra Club of Canada