Environment and the Canada Korea free trade agreement

Canada’s Prime Minister Harper announced the conclusion of a free trade agreement with South Korea earlier this week. There is still no full text for the agreement but Foreign Affairs, Trade and Development Canada has released an Overview and Final Agreement Summary document. It is unclear as to whether the agreement will put in place a separate environment agreement, as with NAFTA and other trade agreements which Canada has ratified or whether environment will be included in the main agreement. However, it appears that environment matters will be addressed by committees, working groups, or other bodies under the joint trade commission.

Key environmental elements of the agreement, as described in the summary, which appears to some extent to be a promotional document, include:

  • Ambitious environmental obligations consistent with Canada’s other agreements, including commitments to:
    • maintain high levels of environmental protection, effectively enforce environmental laws, not waive or derogate from such laws to promote trade or investment;
    • ensure transparency and public participation in the making of such laws, if any; and
    • reaffirm commitments to multilateral environmental agreements Canada and South Korea have ratified.
  • A framework for cooperation in areas of mutual interest.
  • A dispute resolution process to address any questions regarding compliance, including review by an independent panel of experts whose recommendations will be made publicly available.
  • Canada’s industrial good sectors (such as chemicals and plastics, information and communications technology, aerospace, metals and minerals, medical devices, and textiles and apparel), agricultural and agri-food products, wines and spirits, fish and seafood, and forestry and value-added wood products, will benefit from more trading opportunities and duty-free access to South Korea.
  • Canada’s world-class service sectors, including professional services, environmental services and business services, will also benefit from improved market access.

FATDC states that products of export interest include (incomplete list):

  • unwrought and unalloyed aluminum, aluminum alloys, unwrought nickel, nickel powders, certain ferro-alloys, and cobalt powder.
  • ethylene glycol, germanium oxides and carbides and catalysts.
  • ethylene polymers, polyamides and self-adhesive flat plastics.
  • antibiotics, certain other medicines and anti-tuberculosis medications.
  • diagnostic/laboratory reagents, medical apparatus parts, and thermometers.
  • certain nitrogenous, potassic and phosphatic fertilizers as well as fertilizers containing two or more of these elements.
  • liquefied natural gas
  • lumber, plywood and oriented strand board.
  • wheat, pork and pork offal, hides, skins and furs, refined and crude canola oil, malt and prepared foods, meats, grains, oilseeds and pulses.
  • rye whisky and ice wine.
  • furskins.

Other measures of possible environmental interest, as described by the FATDC summary, include:

  • WTO rights and obligations to help ensure that sanitary and phytosanitary measures, which governments use to regulate the protection of human, animal and plant life and health, are not used as a cover to unnecessarily restrict trade.
  • Building on the WTO Agreement on Technical Barriers to Trade and incorporates its substantive provisions to encourage greater transparency and cooperation between Canada and South Korea on standards-related measures, including on conformity assessment.
  • The Agreement will provide a level playing field for Canadian service suppliers against key competitors from the United States and the European Union, both of whom have implemented their own respective free trade agreements with South Korea.
  • A “negative list” approach for listing reservations to the obligations of the cross-border trade in services chapter, which means that everything is open unless otherwise listed in a reservation.
  • Any future changes designed to make it easier for Canada’s service providers to access the South Korean market (or for Canadian investors to obtain better treatment) will be locked in every time they result in improved access. This is referred to as the “ratchet mechanism.” This mechanism means that if South Korea liberalizes a law, policy or regulation that makes it easier for Canadians to conduct their services or investment activities in South Korea, the liberalization becomes South Korea’s new obligation under the Canada-Korea Free Trade Agreement.
  • Nothing in the Canada-Korea Free Trade Agreement prevents governments from regulating in the public interest, including in areas related to the delivery of public services, the provision of preferences to Aboriginal peoples or the adoption of measures to protect or promote Canadian culture. For example, public services such as health, public education and other social services have been excluded from Canada-Korea Free Trade Agreement obligations.
  • Temporary-entry provisions will provide new, preferential access to the South Korean market as well as increased transparency and predictability, facilitating movement between Canada and South Korea for business visitors, traders and investors, intra-company transferees, professionals (contract service suppliers and independent professionals) and their spouses.
  • Canadian firms can send their employees to South Korea to fulfill service contracts, for instance, in the science, engineering and information technology fields. Canadian independent professionals (i.e. self-employed professionals contracted directly by a South Korean or South Korean company), such as architects, engineers, management consultants and veterinarians, may enter the South Korean market with a pre-arranged contract.
  • Canadian businesses are to be treated no less favourably in South Korea than South Korean businesses, will further reduce the risks associated with investing abroad.
  • The investment chapter provides protection against discriminatory treatment, protection from expropriation without prompt and adequate compensation, and access to independent international investor-state dispute settlement.
  • Canadian suppliers will have additional access to procurement by South Korean central government agencies, for contracts valued above 100 million South Korean Won ($100,000). South Korea will have access to Canadian central government procurement opportunities for contracts valued above $100,000.  Canada and South Korea will have commitments in relation to sub-national procurement (provincial, territorial or municipal government procurement) once the revised WTO GPA comes into force.
  • Includes a provision on the relationship between Canada-Korea Free Trade Agreement obligations and certain multilateral environmental agreements (MEAs). This ensures that Canada will be able to fulfill its MEA obligations without facing trade challenges.

The complete text of the 51 page summary document is available at http://international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/korea-coree/overview-apercu.aspx#seven

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