Canada's hope to get climate change into NAFTA could prove difficult

A frank report on climate change in America leaked to the New York Times a week before the U.S. sits down to begin renegotiating NAFTA may give some weight to Canada's push to get climate change mitigation included as part of the new continental trade deal.

Leaked U.S. report says climate change is real and caused by humans - but will Donald Trump accept that view?

Canada would like a re-negotiated NAFTA to address carbon pricing and climate change, but President Donald Trump has pulled the United States out of the Paris Accord and referred to climate change as a "hoax." (Michael Sohn/Associated Press)

A frank report on climate change in America leaked to the New York Times a week before the U.S. sits down to begin renegotiating NAFTA may give some weight to Canada's push to get climate change mitigation included as part of the new continental trade deal.

But that, of course, would require U.S. President Donald Trump to buy into even some of what the report says, which, in short, is that climate change is real, caused by people and that some extreme weather events can now be attributed to the warming planet.

The special report on climate change by scientists at 13 U.S. federal agencies hasn't been approved yet by the White House and was leaked by scientists who fear Trump will refuse to release it because it counters his belief that climate change is a "hoax."

Prime Minister Justin Trudeau said last week Canada wants climate change, reduced emissions and efforts to shift to a low-carbon economy written into the new NAFTA.

Canada, the U.S. and Mexico are to start renegotiating the 23-year-old trade deal on Aug. 16.

"We are certainly looking for a better level playing field across North America on environmental protections," Trudeau said last week.

However with Trump withdrawing the U.S. from the Paris climate change agreement and pledging to return the U.S. coal industry to its glory days, the White House and the Canadian government are far apart on many environmental issues.

Even getting the words "climate change" into the agreement could be a struggle.

China, under President Xi Jinping, left, and the United States, under then president Barack Obama, ratified the Paris agreement on climate change in 2016 - before the election of Donald Trump, who promptly served notice the U.S. would withdraw. (How Hwee Young/pool photo via Associated Press)

Canada sees EU deal as template

A government official speaking on background told The Canadian Press last week that, on the environment side, Canada will be looking to the free trade agreement recently signed with Europe, known as the Comprehensive Economic and Trade Agreement, or CETA, as a template.

Foreign Affairs Minister Chrystia Freeland has referred to CETA as the gold standard of trade agreements when it comes to the environment and said she wants to push CETA's environment chapter with the U.S. and Mexico on NAFTA.

However, several trade experts say the United States is going to be pushing for the environment chapter in NAFTA to be more closely aligned with the now-defunct Trans Pacific Partnership or TPP.

One key difference?

CETA mentions climate change. TPP does not.

"CETA is more relevant to Canada and the TPP is more relevant to the United States," said Peter Clark, an international trade expert and president of the Ottawa firm Grey, Clark, Shih and Associates.

This is not really a typical trade negotiation- Peter Clark, international trade expert

The new U.S. climate report puts new weight behind Canada's contention that climate change is real and is caused by people, two things the Trump White House disputes.

The report says the earth has already warmed almost a full degree in the last 150 years, triggering numerous changes to the earth's climate, pointing to "thousands of studies conducted by tens of thousands of scientists" as evidence of changes in temperature of the surface, atmosphere and oceans, melting glaciers, shrinking sea ice and rising sea levels.

"Many lines of evidence demonstrate that human activities, especially emissions of greenhouse (heat-trapping) gases are primarily responsible for recent observed climate changes," the report said.

The report is part of the National Climate Change Assessment, which is required in the United States every four years under the Global Change Research Act of 1990.

Impact of carbon pricing

Getting climate change into NAFTA could help Canada push for a broader carbon price across North America to prevent the national carbon price Trudeau is imposing from hurting Canadian competitiveness.

Some in Canada want NAFTA to include a carbon price applied at the border on goods coming from states in the U.S. where there is no such policy.

In its list of objectives for NAFTA released last month, the Office of the United States Trade Representative said it wants NAFTA to require signatories to adopt and uphold their obligations under several such pacts, including the Convention on International Trade in Endangered Species of Wild Fauna and Flora.

"I think Canada should immediately add the Paris accord to that list," said Clark.

Robert Lighthizer was sworn in as the U.S. Trade Representative in May, just days before writing the U.S. Congress to formally trigger plans to re-negotiate the free-trade agreement with Canada and Mexico. (Evan Vucci/Associated Press)

CETA includes a provision that says the costs of pollution are borne by the polluter and requires Canada and Europe to prioritize trade in environmental goods and services related to renewable energy and co-operate on climate change adaptation and mitigation. It also makes clear that foreign companies cannot claim compensation when they believe a government's environmental regulations or policies harm their business.

Canada has been subject to several such challenges under NAFTA and lost many of them, paying millions in compensation.

TPP, on the other hand, includes a provision to allow countries to suspend trade benefits with a country that doesn't respect its environmental responsibilities.

Getting it into NAFTA

One area where both Canada and the United States agree is in bringing the environment chapter into the main NAFTA papers. In 1994 it was included as a separate annex.

Including it as its own chapter in NAFTA would make whatever environmental obligations it puts forward subject to the agreement's dispute resolution provisions.

However, Clark said Canada cannot really insist that environmental provisions are make-or-break requirements.

"I can't see us walking away over it," he said. "It's important, but what kind of leverage do they have?"

If Canada says it will leave the table unless Trump agrees to put climate change into the agreement, he's likely to say "fine, go ahead," said Clark.

"This is not really a typical trade negotiation," he added.