WORLD TRADE
ORGANIZATIONWT/CTE/W/221
24 January 2003
(03-0432)
Committee on Trade and Environment Original:  English/
French
INITIAL ENVIRONMENTAL ASSESSMENT:
TRADE NEGOTIATIONS IN THE WORLD TRADE ORGANIZATION
Submission by Canada
Paragraph 33 of the Doha Ministerial Declaration encourages Members to share expertise and
experience with environmental reviews at the national level with other WTO Members. Canada has
provided information in past meetings of the Committee on Trade and Environment on the
development and implementation of its Framework for Conducting Envi ronmental Assessments of
Trade Negotiations .
On November 22, 2002, the Government of Canada released its Initial Environmental
Assessment of the World Trade Organization (WTO) Negotiations . This is the first of three reports
that will be prepared for the Strategic Environmental Assessment, which will help negotiators to
better integrate environmental considerations into the negotiating process. The Initial Environmental
Assessment was released to the Canadian public for a sixty-day public comment period. Comments
received will be used to help prepare the next report -- the Draft Environmental Assessment. The
Government of Canada will continue to seek input from Canadians throughout the assessment. The
Final Environmental Assessment report will be released after the conclusion of the Doha Round of
WTO negotiations in 2005.
This document reproduces the Executive Summary and the Conclusion from the Initial
Environmental Assessment .  The complete version of the Canada’s Initial Environmental Assessment
of the World Trade Organization (WTO) Negotiations  can be accessed at the following Government
of Canada website address:    http://www.dfait-maeci.gc.ca/tna-nac/consult1-en.asp#wtoWT/CTE/W/221
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INITIAL ENVIRONMENTAL ASSESSMENT:
TRADE NEGOTIATIONS IN THE WORLD TRADE ORGANIZATION
I. EXECUTIVE SUMMARY
1. The Government of Canada is committed to sustainable development.  Mutually supportive
trade and environmental policies can contribute to this goal.  Environmental assessments of trade
negotiations is one mechanism for doing so.
2. In keeping with a 1999 Cabinet Directive on the Envir onmental Assessment of Policy, Plan
and Program Proposals , Canada is conducting an environmental assessment of the Doha Round of
trade negotiations at the World Trade Organizatio n (WTO).  This work is being guided by the
Framework for Conducting Environmental Assessments of Trade Negotiations , which provides an
analytical process for identifying and addressing likely and significant environmental impacts. The
environmental assessment (EA) is intended to help trade negotiators understand the environmental
implications of trade policy and to assist them in  integrating environmental considerations as trade
negotiations progress.
3. Following the issuance of the Notice of Intent to conduct the environmental assessment, we
have undertaken an Initial Environmental Assessment which identifies the potential sectors or
activities that may be affected by new WTO negotiations.  Its principal aim is to scope out the main
environmental issues that might arise as a result, and which will be given more rigorous analysis in
the third and final stages of the process (Draft and Final EAs).
4. Following the four-staged analytical methodology, the Initial EA examines the coverage of
negotiations and their overall economic relevance in the Canadian context.  It identifies the likely
environmental impacts (positive and negative), if  any, of trade-induced economic and regulatory
changes, and assesses their significance .  The Initial EA also briefly identifies mitigation and
enhancement measures.
5. In undertaking the EA, we recognize that eco nomic growth will continue to influence
agricultural and industrial activity, irrespective of Canadian objectives to liberalize or take action in a
certain area.  We also recognize that trade liberalization outside the WTO context will continue
through Canada’s regional and bilateral free trade agreements and negotiations.  While we realize the
challenge in isolating the incremental economic effect s attributable to trade liberalization per se, the
EA will focus only on the economic activities and trade policy changes resulting from negotiations in
the WTO.
6. The Initial EA takes into account the fact that Canada currently has in place a framework of
policies and legislation for the protection of the environment.  Canadian environmental policy and
legislation will not be affected directly by the negotiations at the WTO, and the negotiations will not
limit the ability of Canadian governments to regulate for environmental protection in the future.
7. The current analysis covers the seven areas of negotiation that were launched in Doha:
agriculture, non-agricultural market access, services, rules, trade and environment, wines and spiritsregistry, and dispute settlement.  Only when an agreement to negotiate an issue is obtained will the
issue be included in an environmental assessment.  Therefore, other subjects often attached to trade
and environment discussions in general, but not specifically mandated for negotiation in the context of
the Doha Round (e.g., precautionary approach, regulation of genetically modified foods, labelling for
non-product related process and production methods) are not covered by the EA as there is noagreement to negotiate on them.  At the WTO’s Fifth Ministerial Conference in Cancun in September
2003, WTO Members will make a decision on whether to expand the negotiation mandate to includeWT/CTE/W/221
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inter alia  any of the so-called Singapore issues of trade and investment, trade and competition policy,
transparency in government procurement and trade facilitation.  Until there is a negotiation mandate
for them, they remain outside the scope of this EA.
8. Scenarios are used in several sections of the Initial EA as tools for analysis, and do not reflect
expected outcomes of the negotiations or Canada’s objectives in the negotiations.
A. FINDINGS OF THE INITIAL ENVIRONMENTAL ASSESSMENT
9. The analysis performed for this Initial EA suggests that in the aggregate, any effects the new
WTO negotiations may have on the Canadian environment are likely to be minimal on account of one
or a combination of three reasons: (1) further trade liberalization affects only a small proportion of
Canada’s trade (the bulk already being subject to NAFTA and other Free Trade Agreements); (2)
federal and provincial environmental legislation that can mitigate negative effects is, or will soon be,
in place; (3) some negotiations that seek clarification in procedures or establish a system ofnotification and registration will not directly translate into increased production or trade.
(a) Agriculture
10. The Doha Declaration calls for negotiations aimed at: reduction, with a view to phasing out,
of all forms of agricultural export subsidies; substantial reductions in trade-distorting domestic
support; and substantial improvements in market access.  As any final agreement will be the result ofnegotiations between parties with divergent interests, it is impossible to accurately ascertain the
outcome of the negotiations.
11. For the Initial EA, an abstract scenario envisioning a 50 per cent reduction in the current
levels of the three trade-distorting agricultural policies, and the continuation of Canada’s supply
management policies, has been used to evaluate the potential environmental impacts of the outcomeof these trade negotiations.  This scenario is used as an analytical tool and is not a statement of
Canada’s objectives, nor a speculation regarding the possible outcome of the negotiations.
12. Reductions in tariffs, trade-distorting domestic support and export subsidies will likely lead to
an increase in trade and in world prices for cereals and red meat.  It is expected that moderate
increases in world prices for cereals and other crops would slightly increase Canadian productionlevels.  For livestock, reduced tariffs and expanded Tariff Rate Quotas (TRQs) would help raise
prices, but given higher feed costs, would result in small increases in beef production and modest
increases in pork production.
13. Overall, the initial findings suggest that further agricultural liberalization is not likely to cause
significant environmental damage since Canada's agriculture is of relatively low intensity.  World
prices and production levels in the Canadian agri-food industry would likely experience modest
increases, both in the aggregate and for most commodities.  Trade liberalization is also expected tohave secondary environmental effects on food processing and transportation.  It should be noted that
federal and provincial environmental legislation is currently in place, and new environmental policies
and initiatives are planned for the near future.  As well, under the current rules of the WTO
Agreement on Agriculture, countries can institute and fund programs with environmental objectives
without limitations as long as those programs are not trade-distorting.WT/CTE/W/221
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(b) Non-agricultural Products
14. For the Initial EA, an overall tariff reduction of 50 per cent is used as an abstract benchmark
to illustrate the potential economic impact of the Doha  Round.  This scenario is intended to be neither
a reflection of Canada's objectives nor a prediction of the possible outcome of the negotiations.
15. Current analysis focuses on those sectors where liberalization to date has not been as
significant or as comprehensive as others and which, therefore, hold the most immediate potential to
generate future incremental trade flows as a result of new substantial liberalization.  These sectors are
chemicals; fertilizers; environmental goods; fish and fish products; forest products (including both
paper and wood); and non-ferrous metals.
16. The environmental impacts of economic changes expected under the 50 per cent scenario are
expected to be minimal in the aggregate.  Furthermore, only a small portion of Canada’s exports
would be affected by liberalization in these negotiations (the preponderant share of trade being subjectto NAFTA and other FTAs).  More generalized environmental effects (e.g., related to the
transportation industry) are also considered to be relatively minor.  As is the case in agriculture, there
are mitigating factors, including federal and provincial legislation, either in place or being planned to
provide for environmentally responsible and sound harvesting or manufacturing, particularly in
sectors where liberalization holds the most immediate potential to generate future incremental tradeflows.
(c) Services
17. Trade in services is not restricted by the use of tariffs and is not easily measured.  Thus, it is
particularly difficult to isolate the environmental im pacts that liberalization might have in this area.
Barriers to trade in services may include such things as: requirements for local partners, foreignownership restrictions, residency requirements, and opaque or non-transparent rules/regulations.  The
potential for the General Agreement on Trade in Services (GATS) to have positive or negative
environmental effects will depend on the extent and magnitude of growth stimulated by further
liberalization of GATS commitments.  A clear picture will emerge once initial offers are finalized in
March 2003.  Therefore, a more detailed analysis may be needed with respect to some services as theGATS negotiations proceed.
(d) Rules
18. Negotiations to clarify or improve existing rules may not translate directly into changes in the
pattern or volume of trade, but clearer rules are expected to contribute to predictability and stability in
the trading system.  Generally, subsidy disciplines may be considered win-win but the extent of the
beneficial impacts of subsidy reduction on the environment will depend on the existence of
appropriate environmental policies and regulations.  Clarifying anti-dumping disciplines could limitthe inconsistent and uneven application of anti-dumping measures, while ensuring that such measures
remain an effective response to the injurious effects of dumped imports.  This will strike an
appropriate balance with respect to their environmental impact.
19. Meanwhile, clarification and improvement of disciplines relating to regional trade agreements
are not seen to result in any trade-induced economic changes; therefore, there will be no directimplications on the environment.WT/CTE/W/221
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(e) Trade and Environment
20. Taken together, the various elements on environment and sustainable development in the
Doha Declaration represent a significant effort on the part of the WTO Members to take
environmental aspects of the negotiations into consideration.
21. The mandate for negotiations on the WTO and Multilateral Environmental Agreements
(MEA) relationship is limited, and the outcome will not affect the balance of rights and obligations of
Members or affect market access.  Results are not expected to generate new economic activity.
22. As to procedures for regular information exchanges between MEA Secretariats and the
relevant WTO Committees, and the criteria for the granting of observer status, the outcome of
negotiations in this area will be an administrative process. Results will not generate any new
economic activity in Canada.  These negotiations are expected to promote coherence between the
multilateral trade system and international environmental governance.
23. Negotiations on environmental goods and services sector will be taken up respectively under
non-agricultural market access and services negotiations.  These two sectors are being factored into
the environmental assessment of non-agricultural market access and services negotiations.
(f) Wines and Spirits Registry
24. Negotiations to establish a multilateral system of notification and registration of geographical
indications for wines and spirits will contain information on which geographical indications are
protected in a given country.  It is not intended to create new obligations, create administrative
burdens, or affect the rights of Members.  The registry is not expected to translate into increased
production or trade.
(g) Dispute Settlement
25. The Dispute Settlement Understanding (DSU) negotiations address the rules and procedures
by which disputes are managed and are aimed at increasing the effectiveness of the dispute settlement
mechanism.  A more effective dispute settlement mechanism will contribute to the overall objectives
of the WTO, including the objective of sustainable development, by better governing Members'
relations in the field of trade and economics.
B. NEXT STEPS
26. The next step of the EA process is the Draf t EA, which will focus on the environmental issues
raised in the Initial EA that require further analys is.  The completion date of the Draft EA will depend
on developments in the negotiations.
27. As Canada will be proactive in the negotiations and will be developing further proposals in
these areas, further analysis will be required of negotiations in agriculture and industrial market
access, services, and rules (as specific elements of the mandate are further clarified) and certainaspects of trade and the environment.  More rigorous analysis will be undertaken, as appropriate, in
the Draft and Final Environmental Assessments.
28. No further analysis will be required in the areas of the multilateral registry for wines and
spirits and dispute settlement.
29. Positive or negative environmental effects that may result from further trade liberalization
may either be enhanced or mitigated by current environmental legislation and measures already inWT/CTE/W/221
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place in Canada, which have promoted environm entally responsible and sustainable production or
manufacturing.  Canadian governments will maintain their ability to adopt environmental policies and
legislation in order to either enhance positive or mitigate negative environmental effects that may
result from trade liberalization.
30. The Government of Canada welcomes comments on this Initial EA. Public consultations are
an integral part of the EA process and will be undertaken throughout the process. Comments can be
sent to: consultations@dfait-maeci.gc.ca  .
II. CONCLUSION
31. From this Initial EA, we may conclude the following:
(a) Overall, the environmental impact of production changes resulting from trade
liberalization in agriculture would likely be minimal.  Furthermore, in the near future,
government policy (i.e., the implementation of the APF) –  in line with citizen
expectations – will increasingly ensure that agriculture is produced in anenvironmentally responsible way.  Already, more rigorous farm environmental
regulations have been implemented in several provinces.  Thus, the potential
environmental impacts of the economic changes flowing from the 50 per cent
liberalization scenario, if any, are expected to be minimal considering: the limited
production changes expected; the federal and provincial environmental legislationcurrently in place; and, the new environmental policies planned by AAFC for the near
future.
(b) With respect to non-agricultural market access, the overall economic impact of the
new round of negotiations is not expected to have likely and significant
environmental impacts.  Over the course of the last few trade rounds, Canada hasalready made accommodations to the demands posed by new liberalization
adjustments.  While further growth is expected as a result of the new WTO
negotiations, the net effect is expected to be  incremental.  In the chemicals, forestry,
fisheries, fertilizers, and non-ferrous metals sectors, environmental measures and
practices are already in place to provide for environmentally responsible and soundharvesting or manufacturing.
(c) A more detailed analysis may be needed with respect to some services as the GATS
negotiations proceed.
(d) Negotiations to clarify or improve existing rules may not translate directly into
changes in the pattern or volume of trade, but clearer rules are expected to contributeto predictability and stability in the trading system.  Further analysis will be required
as the issue-identification phase of the negotiations is completed and specific
elements of the mandate are further clarified.
(e) The mandate for negotiations on the relationship between WTO rules and specific
trade obligations in  MEAs is limited and the possible outcome of the negotiations
will not affect the balance of rights and obligations of Members or affect market
access.  The outcome of negotiations on procedures for regular informationexchanges between MEA Secretariats and the relevant WTO Committees and on the
development of criteria for granting observer status to MEA Secretariats will not
translate into any new economic activity in Canada.WT/CTE/W/221
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(f) Negotiations to create a multilateral wines and spirits registry will result in an
informative tool to facilitate the protection of geographical indications for wines and
spirits.  Its establishment will not translate directly into increased production or trade.
(g) A more effective dispute settlement mechanism will contribute to greater
predictability in the trading system, thereb y encouraging greater trade that will likely
increase economic activity.  Activity that leads to greater efficiencies in production
and utilization of resources would contribute significantly to sustainable development
(h) It should be noted that any positive or negative environmental effects that may result
from further trade liberalization will either be enhanced or mitigated by current
environmental legislation and measures already in place in Canada, which have
promoted environmentally responsible and sustainable production or manufacturing.
32. The next step of the EA process is the Draf t EA, which will focus on the environmental issues
raised in the Initial EA that require further analysis.
33. Meanwhile, as Canada will be proactive in the negotiations and will be developing further
proposals in these areas, the Draft EA will include further analysis of agricultural and industrial
goods, services, rules and certain aspects of trade and environment.
34. No further analysis will be required of the multilateral registry for wines and spirits and
dispute settlement.
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