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Canada–Jordan Free Trade Agreement: Initial Environmental Assessment

June 2008

Table of contents

1. Executive Summary

In response to today’s rapidly evolving global trading environment, as part of the Global Commerce Strategy, the Government of Canada is committed to an aggressive bilateral trade negotiations agenda, which is supported by Budget 2008 and the Government’s economic plan, Advantage Canada. As part of this agenda, the Government announced, on February 20, 2008, the launch of free trade agreement (FTA) negotiations with the Hashemite Kingdom of Jordan (Jordan). The first round of negotiations took place from April 13-17, 2008, in Amman, Jordan with the second round scheduled for late July 2008 in Ottawa.

There is a strong correlation between open markets, economic development and enhanced environmental protection. Liberalized rules-based trade and efficiently regulated markets are key building blocks for economic growth and development. It has been observed that wealthier countries are better able to implement effective environmental policies than are poorer countries, and that public support for measures to protect the environment generally increases as incomes rise. Open markets also help to foster the development of new, more environmentally friendly technologies, and liberalized trade and investment help to accommodate technology transfer.

Improved understanding of the relationship between trade, economic growth and the environment can assist in the formulation of government policy to reduce potential conflicts between commercial and environmental objectives. In accordance with the 2001 Framework for Conducting Environmental Assessments of Trade Negotiations (Framework), an initial environmental assessment (Initial EA) of a Canada-Jordan FTA has been conducted to assist Canada’s policy makers in addressing potential environmental issues arising from the FTA that may affect Canada.

This Initial EA was conducted as part of Canada’s commitment to achieving a mutually supportive relationship between trade and the environment. It is intended to assist Canadian negotiators in integrating environmental considerations into the negotiating process by providing information on the environmental impacts of the proposed trade agreement, and to help inform related public considerations by outlining how environmental factors are being considered in trade negotiations.

Canada’s broad environmental objectives in negotiating trade agreements are:

In order to ensure that Canada’s environmental quality is protected when liberalizing trade, Canada includes trade-related environmental provisions in appropriate sections of the FTA (i.e. preamble, initial provisions, general exceptions), and negotiates parallel agreements on the environment.

The context of this EA is the Canada-Jordan FTA negotiations to date, focusing on the potential incremental environmental impacts, if any, of trade-induced economic and regulatory changes in Canada. It applies the analytical methodology outlined in the Framework, which outlines the process for conducting EAs, and identifies the main environmental issues expected to arise as a result of a free trade initiative. As such, it should be underscored that this is a strategic assessment and is intended to inform policy making as the proposed FTA is being negotiated. The findings of this Initial EA have been shared with the interdepartmental EA Committee,which includes broad inter-departmental representation, so as to facilitate informed and inclusive federal policy development and decision-making.

Canada’s exports to Jordan nearly doubled from $30.8 million in 2003 to $60.4 million in 2007. Between 2003 and 2007, Canadian exports to Jordan increased in every year with the exception of 2006 (this one-time, year-over-year decrease reflected a spike in exports of Canadian aircraft in 2005). Jordan was Canada’s 87th largest export market in 2007, representing 0.01% of total Canadian goods exports that year. Top exports to Jordan include forest products, agriculture and agri-food products, and electrical machinery. Canada imported $16 million worth of goods from Jordan in 2007, up from $5.8 million in 2003. Jordan was Canada’s 111th largest source of imports in 2007, and accounted for only 0.004% of Canada’s total global imports that year. Apparel represented 84% of Canada’s total goods imports from Jordan in 2007. Aside from apparel, Canada’s main imports from Jordan in 2007 were cucumbers and fertilizer.

An FTA between Canada and Jordan has the potential to expand opportunities for Canadian companies in Jordan’s rapidly growing economy, and in the broader Middle East and North African region. Tariff reduction in the context of an FTA with Jordan is expected to generate commercial benefits in a variety of sectors, including forest products, agriculture and agri-food, and machinery. Nevertheless, given the relatively low levels of trade between Canada and Jordan and the overall size of the Jordanian economy, even a dramatic increase in exports to Jordan would have a modest impact in relation to overall Canadian trade and production levels. Therefore, any environmental impacts resulting from Canadian export and production increases are expected to be of minimal significance. Tariff reduction is also expected to result in increased Canadian imports from Jordan, notably in the apparel sector, although these would continue to constitute a very small share of Canada’s global imports in this sector. No environmental impacts are expected to derive from increases of imports from Jordan as a result of an FTA.

2. Overall Environmental Assessment Process

Given the government’s view that trade and environment policies should be mutually supportive, it is Canada’s practice to pursue trade agreements in a manner consistent with, among other things, environmental protection and conservation. Undertaking environmental assessments (EAs) is an effective way to address potential environmental impacts that may result from the implementation of a trade agreement. The EA process is a mechanism through which to ensure that protection of the Canadian environment is a priority in trade negotiations. It does this by assisting decision makers in understanding the environmental implications of anticipated changes in production and trade flows and by maintaining and enhancing overall policy coherence at the national level.

The Government of Canada is committed to conducting environmental assessments (EAs) for all trade and investment negotiations using a process that involves both interdepartmental coordination and public consultations. The 2001 Framework for the Environmental Assessment of Trade NegotiationsFootnote 1 (Framework) sets out this process. It was developed in response to the 1999 Cabinet Directive on Environmental Assessment of Policy, Plan and Program Proposals,Footnote 2 which requires that all initiatives considered by Ministers or Cabinet must be environmentally assessed if implementation of the proposal may result in important environmental effects, either positive or negative. Detailed guidance for applying the Framework is contained in the Handbook for the Environmental Assessment of TradeFootnote 3 (Handbook).

The framework is intended to be flexible and generic so that it can be adapted and applied to a variety of trade negotiations on a case-by-case basis according to the nature of the agreement to be negotiated while ensuring a systematic and consistent approach to meet two key objectives:

Both trade negotiators and environmental experts are involved in the EA and work proceeds in tandem with the negotiations. In addition, the Framework contains a strong commitment to communication and consultation as part of each EA of trade negotiations.

The Framework provides for up to three increasingly detailed phases of assessment: the Initial, Draft, and Final EA. These phases correspond to progress in the negotiations. The Initial EA is a preliminary examination to identify key issues. The Draft EA builds on the findings of the Initial EA and requires more detailed analysis, though the Draft EA is not required if the Initial EA finds little likelihood of significant environmental impacts as a result of the agreement. However, in such circumstances, environmental considerations will continue to be integrated into ongoing negotiations and a Final EA will be completed. The Final EA is conducted at the conclusion of the negotiations. At the completion of each phase, a public report is issued together with a request for feedback.Footnote 4

Following the conclusion of the Final EA, follow-up and monitoring may be undertaken in order to review any mitigation or enhancement measures recommended in the Final EA report. Such activities can be undertaken any time during the implementation of the concluded trade agreement in order to gauge the effects of its provisions from an environmental perspective.

Assessment Methodology

Pursuant to the EA Framework, this Initial EA is being conducted in an ex ante fashion (before the negotiations are completed). A Notice of Intent to conduct a Strategic Environmental Assessment of the Canada-Jordan free trade agreement (FTA) was published in the Canada Gazette on March 1, 2008, though no comments were submitted to the government. It should be underscored that this is a strategic assessment and is intended to inform the decision-making process as the proposed FTA is being negotiated. Consequently, there is some uncertainty associated with identifying likely economic and environmental impacts. Nevertheless, the analysis allows for the early identification of national goals and priorities with respect to trade and environmental interests, as well as any mitigation and enhancement options that can be taken into account while the trade negotiations are underway.

Consistent with the methodology prescribed in the Framework, this assessment explores the link between trade rules and regulatory policy and focuses on the potential, incremental economic and environmental impacts of a Canada-Jordan FTA on Canada. That is, the effects of new trade that may result directly from the proposed trade agreement. Transboundary, regional and global environmental impacts of the FTA are considered insofar as they have a direct impact on the Canadian environment.

The Framework includes a four-stage analytical methodology, as summarized below. The Handbook provides additional guidance on how to conduct each stage of the analysis.

In conducting EAs of trade negotiations, the Government of Canada is committed to a process that involves, inter alia, interdepartmental coordination. An interdepartmental committee is established to undertake the EA of each negotiation. The department leading the negotiations heads these EA committees, which are chaired by the Deputy Chief Negotiator for the applicable FTA and includes officials responsible for each negotiating area. The EA Committee also includes representation from Environment Canada and the Canadian Environmental Assessment Agency. All other government departments and agencies are welcome to participate, and many do so, based on the nature and scope of the agreement being assessed.

Results from the EA analysis are also enhanced through consultations with the Provincial and Territorial Governments, stakeholders including representatives from business, academic and non-governmental organizations (NGOs), and the public. In the preparations for the Initial EA, a Notice of Intent is issued inviting the public to provide their thoughts on the potential impacts of the proposed agreement on the Canadian environment. At the conclusion of each phase, EA reports are shared with provinces and territories and environmental expertsFootnote 5 and then issued publicly with a request for feedback.

The Government of Canada welcomes comments on this Initial EA Report, including with respect to the analysis of the economic relevance of new negotiations and the initial assessment of the likelihood and significance of resultant environmental impacts. Comments on opportunities to mitigate any negative environmental impacts and to enhance any positive effects as may already be identified at this stage are also welcome. Comments should be sent to:

Mail:

Consultations & Liaison Division
Environmental Assessment Consultations–Jordan FTA
International Trade Canada
125 Sussex Drive
Ottawa, ON
K1A 0G2

E-mail: consultations@international.gc.ca
Fax: (613) 944-7981

3. Overview of the Trade and Investment Relationship Between Canada and Jordan

In response to today’s rapidly evolving global trading environment, as part of the Global Commerce Strategy, the Government of Canada is committed to an aggressive bilateral trade negotiations agenda, which is supported by Budget 2008 and the Government’s economic plan, Advantage Canada. As part of this agenda, the Government announced, on February 20, 2008, the launch of free trade agreement (FTA) negotiations with Jordan. The first round of negotiations took place from April 13-17, 2008, in Amman, Jordan with the second round scheduled for late July 2008 in Ottawa.

An FTA with Jordan would improve bilateral trade and economic ties, and better position Canadian business vis-à-vis competitors in this market, such as the United States and European Union, which already have FTAs with Jordan. The scope of these FTA negotiations is limited to goods. They build on a bilateral Air Services Agreement, which was announced in July 2007, and a Foreign Investment Promotion and Protection Agreement (FIPA), for which negotiations were concluded in June 2007.

Table 1: Economic Indicators for Jordan

YearPopulaton (Millions)IncomeTrade (USD Billions)Economic Structure: Shares of GDP
Gross Domestic Product (USD Billions)GDP Per Capita (USD Market PricesGoods ExportsGoods ImportsTrade BalanceAgricultureMining & QuarryingManifacturingOthersServices
Sources: World Development report 2007 (World Bank); International Financial Statistics and Direction of Trade Statistics (International Monetary Fund); Country Profile: Jordan (Economist Intelligence Unit).
20004.88.51,7651.34.6-3.32316772
20065.614.12,5195.211.5-6.23320767

The Jordanian economy has experienced rapid growth in recent years, from GDP of US$8.5 billion in 2000 to $14.1 billion in 2006. Despite having limited natural resources (no significant oil reserves, limited arable agricultural land, and limited supplies of water), Jordan has achieved above-average development outcomes compared to other lower middle-income countries in the region. In 2006, Jordan’s GDP per capita was US$2,519 (or US$5,988 measured at the purchasing power parity exchange rates), compared to US$1,843 for Syria and US$1,488 for Egypt. This strong economic performance in recent years can be attributed to several factors, including:

  1. Sound development policy: According to the World Bank, Jordan is ranked among the best economic reformers in comparison with other lower middle income-countries. Structural reforms have been especially successful in liberalizing the country’s private investment regime, opening to international trade and investment, and establishing modern regulation and institutions for private sector development.Footnote 6
  2. Foreign direct investment: FDI into Jordan more than tripled from US$3.1 billion in 2000 to US$12.7 billion in 2006.
  3. FTA with the United States: Since the Jordan-US FTA entered force in 2001, the U.S. has become the dominant export market for Jordanian goods. Exports to the U.S. grew from US$63 million in 2000 to US$1.3 billion in 2006.
  4. Worker remittances and public grants from abroad: In recent years, capital inflows in the form of workers’ remittances and public grants from abroad accounted for 20-25% of GDP¾one of the world’s highest rates for unilateral transfers.

During this period of economic growth, Jordan’s total global goods imports more than doubled from US$4.6 billion in 2000 to US$11.4 billion in 2006. Consistent with Jordan’s economic and import growth, Canada’s exports to Jordan nearly doubled from $30.8 million in 2003 to $60.4 million in 2007. Between 2003 and 2007, Canadian exports to Jordan increased in every year with the exception of 2006 (this one-time year-over-year decrease was due mainly to high value exports of Canadian aircraft in 2005). Jordan was Canada’s 87th largest export market in 2007, representing 0.01% of Canada’s global goods exports that year. Top Canadian exports to Jordan in 2007 included forest products, electrical machinery, and agricultural and agri-food products led by pulses and cotton.

Table 2: Canada-Jordan Trade Summary (CAD Millions)

Activity20032004200520062007
Source: Statistics Canada.
CDN Goods Exports to Jordan30.842.2122.556.360.4
CDN Goods Imports from Jordan5.86.78.714.616.0
Goods Trade Balance25.035.4113.741.744.5

Jordan’s global goods exports increased from US$1.3 billion in 2000 to US$5.2 billion in 2006. Canada imported $16 million worth of goods from Jordan in 2007, up from $5.8 million in 2003. Jordan was Canada’s 111th largest source of imports in 2007, and accounted for 0.004% of Canada’s global goods imports that year. Apparel represented 84% of Canada’s total imports from Jordan in 2007. Aside from apparel, Canada’s main imports from Jordan in 2007 were cucumbers and fertilizer.

Although the current levels of both Canadian investment in Jordan and Jordanian investment in Canada are modest, it is expected that the expanding Jordanian economy and the Canada-Jordan Foreign Investment Promotion and Protection Agreement (FIPA), for which negotiations were concluded in June 2007, will provide increased opportunities for Canadian investors in a variety of sectors, including manufacturing, mining, telecommunications, and transportation. Current Canadian investment in Jordan is concentrated in the potash mining sector.

While the Jordanian economy is strongly oriented towards the services sector, services trade between Canada and Jordan is modest, with bilateral flows totaling $5 million in 2004, the most recent year of data availability. Services are not included in the Canada-Jordan FTA negotiations because bilateral services interests are being adequately addressed in the WTO context.

4. Trade and the Environment

Public support for trade liberalization in Canada is linked to the expectation that the environment will be protected. Canada is committed to achieving mutually supportive trade and environment outcomes with its trading partners, and includes as a broad environmental objective when negotiating free trade agreements Canada’s continued ability to protect the environment. Where global and trans-boundary environmental impacts due to increased economic activity directly affect Canada’s environment, economy and the health of Canadians, Canada seeks to work with trading partners to strengthen their national environmental management systems.

There is a strong correlation between open markets, economic development and enhanced environmental protection. Liberalized rules-based trade and efficiently regulated markets are key building blocks for economic growth and development. It has been observed that wealthier countries are better able to implement effective environmental policies than are poorer countries, and that public support for measures to protect the environment generally increases as incomes rise. Open markets also help to foster the development of new, more environmentally friendly technologies, and liberalized trade and investment help to accommodate technology transfer.

In the context of increased economic activity related to trade liberalization, it is important to ensure that Canada and its trading partners maintain high levels of environmental protection and do not lower their standards or enforcement to attract trade or investment. Accordingly, and in order to ensure that economic development remains sustainable, Canada will negotiate with Jordan environment-related provisions in appropriate sections of the FTA and a parallel Environment Agreement.

Incorporating Environmental Provisions into the Canada-Jordan Free Trade Agreement

In the context of the Canada-Jordan FTA negotiations, Canada will negotiate an Environment Chapter within the FTA that includes environmental objectives and a reference to obligations set out in the parallel Environment Agreement.

The parallel Environment Agreement will set out mutual environmental obligations that address, inter alia:

The Environment Agreement will also provide a framework for environmental cooperation aimed at strengthening the Parties’ environmental management systems. So as to emphasize the need for sustainable development on all fronts, Canada will endeavour to leverage its expertise on key issues of interest to both Parties, including enforcement and compliance issues, corporate social responsibility, and the enhancement of trade and environment linkages.

Canada-Jordan Environmental Cooperation Activities

In addition to concluding a bilateral Environment Agreement as part of the FTA package, Canada will continue to work with Jordan on a number of environmental initiatives currently underway. The Canadian International Development Agency (CIDA) contributed approximately $4 million over seven years, from 1998 to 2005, to the Jordan Valley Integrated Waste Management project. Through this project Canada assisted Jordan in introducing an improved technology for community waste management in the Jordan Valley. It involved the creation of a new and efficient waste management system and the introduction of appropriate cost-effective waste water treatment technology. The project also included a strong community-participation element and a revenue-generation component.

Jordan is also part of CIDA’s Water Demand Initiative in the Middle East and North Africa (MENA) region. The goal of the project is to facilitate the adoption and implementation of water demand management strategies, policies and tools in countries of the MENA region. The program is comprised of a number of components including: action research,Footnote 7 field-level pilot activities, regional exchange,Footnote 8 knowledge networking and capacity development. The $2 million project, which began in 2005, is expected to run until 2010.

CIDA is currently funding the $2 million dollar Mediterranean Wetlands Capacity Building project, which is operational in four countries including Jordan. The project is designed to build civil society's capacity to engage with their governments concerning improved wetlands management. The wetlands are an important water resource for many communities in a region where annual water consumption outstrips renewable resources. An increased focus on civil society on these issues will help reduce possible tensions and more effectively take into account the opinions of those people who rely on the wetland resources. This project, which began in 2007, is expected to run until 2012.

5. Initial Environmental Assessment Findings

The Initial EA findings are the result of a scoping exercise and subsequent analysis based on the analytical methodology outlined in the EA Framework. Table 1 presents the findings of the scoping exercise for each issue area (and corresponding FTA chapter) that were identified as not requiring in-depth analysis for the purposes of the Initial EA. This is followed by a more detailed analysis of trade in goods.

Results of Initial EA Analysis

Preamble: Anticipated outcome and Potential environmental implications and provisions

The preamble will provide guidance on the general intentions of the two Parties to the agreement, but is not binding. The preamble is expected to reference the Parties’ ongoing commitment to sustainable development and cooperation on environmental matters.

Initial Provisions: Anticipated outcome and Potential environmental implications and provisions

This chapter will establish the free trade area between Canada and Jordan, define the relation of the FTA to other agreements, and the extent of obligations. A proposed provision will make reference to the mutual commitments to multilateral environmental agreements (MEAs) and the relationship between the FTA and MEA obligations.

Rules of Origin: Anticipated outcome and Potential environmental implications and provisions

This chapter will include rules of origin that are clear, as simple as possible, and leave little room for administrative discretion. The rules are intended to ensure that the benefits of the FTA accrue only to goods qualifying as originating in the territory of either Party. Production and consumption changes resulting from rules of origin will be included in the Trade in Goods section of this Report.

Customs Procedures: Anticipated outcome and Potential environmental implications and provisions

This chapter will seek to ensure that the rules of origin are administered and enforced in a fair and transparent manner. There are no foreseen environmental impacts as a result of this chapter.

Trade Facilitation: Anticipated outcome and Potential environmental implications and provisions

This chapter will seek to streamline customs processes and facilitate the movement of goods across borders more efficiently. It is expected that any measures agreed to between the Parties would have minimal impact on the environment. Outcomes related to trade facilitation would not impact the Government of Canada’s ability to implement measures or regulations to protect the environment.

Emergency Action: Anticipated outcome and Potential environmental implications and provisions

This chapter will establish the Parties' rights and obligations with respect to the temporary suspension of FTA tariff concessions in the event that a surge in imports resulting from these tariff concessions causes serious injury or threat thereof to domestic industry producing like or directly competitive goods. There are no foreseen environmental impacts as a result of this chapter.

Sanitary and Phytosanitary Measures (SPS): Anticipated outcome and Potential environmental implications and provisions

This chapter will reaffirm commitments made under the WTO Agreement on the Application of Sanitary and Phytosanitary Measures (SPS Agreement) and confirm the continued use of the WTO dispute settlement procedures for any formal disputes regarding SPS measures. As provided in the WTO Sanitary and Phytosanitary Measures Agreement, all Members maintain the right to take measures necessary for the protection of human, animal or plant life or health. All Members are required to ensure that SPS measures are applied only to the extent necessary to protect human, animal or plant life or health, and are based on scientific principles.

Technical Barriers to Trade (TBT): Anticipated outcome and Potential environmental implications and provisions

TBT provisions will affirm commitments made under the WTO Technical Barriers to Trade Agreement (TBT Agreement); promote greater cooperation in the field of standards, technical regulations and conformity assessment procedures; and address horizontal transparency issues, including notifications and participation in consultation processes. These provisions will reaffirm WTO TBT rights and obligations, including the right of all Members to take measures necessary to ensure the protection of human, animal or plant life or health. All Members are required to ensure that TBT measures are not more trade-restrictive than necessary to fulfil such legitimate objectives.

Monopolies and State Enterprises: Anticipated outcome and Potential environmental implications and provisions

This chapter will include provisionsthat permit the designation of monopolies and stateenterprises but place disciplines on a Party with respect to such entities.These include disciplines to ensure that a Party does notcircumvent obligations under the agreement, and that monopolies and state enterprises provide non-discriminatory treatment to investors of the other Party, act in accordance with commercial considerations and do not act anti-competitively outside of their monopoly designation. Canada will safeguard its ability to delegate governmental authority to monopolies and state enterprises. No environmental impacts are expected as a result of these provisions.

Environment: Anticipated outcome and Potential environmental implications and provisions

This chapter will outline principles and objectives that are elaborated upon in the Environment Agreement. There will be no binding obligations in this Chapter – these are set out in the Environment Agreement. No environmental impacts are expected as a result of this chapter.

Labour: Anticipated outcome and Potential environmental implications and provisions

This chapter will outline principles and objectives that are elaborated upon in the Labour Cooperation Agreement There will be no binding obligations in this Chapter – these are set out in the Labour Cooperation Agreement. No environmental impacts are expected as a result of this chapter.

Transparency: Anticipated outcome and Potential environmental implications and provisions

This chapter will facilitate the administration and smooth operation of the agreement by reiterating the Parties’ commitment to transparency and due process regarding matters covered by the FTA. This chapter will allow the Parties to review and comment in a transparent manner on any new laws or regulations, including those that may have negative environmental implications.

Dispute Settlement: Anticipated outcome and Potential environmental implications and provisions

This chapter will include state-to-state dispute resolution procedures based on the dispute settlement provisions of the NAFTA, but simplified and improved where possible. No environmental impacts are expected as a result of this chapter.

Exceptions: Anticipated outcome and Potential environmental implications and provisions

This chapter will include exceptions for measures such as those necessary to protect, inter alia, human, animal or plant life or health, as well as the environment. A GATT (Article XX) type exception will allow for the adoption or enforcement of measures to protect animal or plant life or health, and measures relating to the conservation of exhaustible natural resources.

Trade in Goods

In accordance with the Environmental Assessment Methodology, as outlined in Section II (A), this section includes:

Anticipated Trade and Economic Effects of FTA

The proposed FTA will seek to improve market access in goods, principally through bilateral elimination of tariffs. The largest trade gains resulting from the FTA are expected in currently traded sectors facing significant tariff barriers. Canadian negotiators will also seek to include provisions that would facilitate increased cooperation with the government of Jordan to make trade more efficient, including through trade facilitating measures and customs procedures designed to provide certainty, transparency and effective verification. Rules of origin that are transparent, predictable and consistent in application will be developed to ensure that the benefits negotiated under the trade agreement accrue to its Parties.

The Canada-Jordan bilateral trade relationship has grown in recent years even in the absence of an FTA. An FTA is expected to further bolster this commercial relationship, particularly in the sectors outlined below. However, the Canada-Jordan trade relationship assumes a very small role in the context of Canada’s overall global trade flows. This would continue to be the case even if trade expanded dramatically as a result of an FTA.

Canadian Exports to Jordan

The Jordanian economy has experienced rapid growth in recent years, from GDP of US$8.5 billion in 2000 to US$14.1 billion in 2006. During this period of economic expansion, Jordan’s total global goods imports more than doubled from US$5.8 billion to US$13.0 billion per year. Consistent with this trend, Canada’s exports to Jordan nearly doubled from $30.8 million in 2003 to $60.4 million in 2007, making Jordan Canada’s 87th largest export destination in that year. Between 2003 and 2007, Canadian exports to Jordan increased in every year with the exception of 2006 (this one-time, year-over-year decrease was due mainly to high value exports of aircraft in 2005). Despite recent growth of Canadian exports to this market, Canadian exports to Jordan represented only 0.01% of total Canadian global goods exports that year. Even if Canadian exports to Jordan were to expand ten-fold in the years following the implementation of the Canada-Jordan FTA, Canada’s exports to this market would represent only 0.1% of Canada’s 2007 global goods exports, suggesting that export growth resulting from an FTA with Jordan would have only a modest effect on Canada’s overall trade and production levels.

The table below lists Canada’s top 10 exports to Jordan in 2007 by product sectors. Exports from these groups accounted for 82% of Canada’s total exports to Jordan in that year. Canada’s top three sectors exporting to Jordan (forest products, agriculture, and electrical machinery) totalled a combined $38 million, or 62% of Canada’s total exports to Jordan in 2007. Exports to Jordan did not account for over 0.1% of Canadian global exports in any of these top ten export sectors in 2007.

Table 3: Canadian Exports to Jordan by Sector ($ CAD Millions)

Sector20032004200520062007% 2007 Total CDN Exports to Jordan% 2007 Total CDN Global Exports2007 Avg. Jordan Tariff
Note 1 AdValorem simple average MFN rate, WTO 2007 calculation.
Sources: World Trade Atlas (Statistics Canada Data); 2007 Jordan Customs Tariff.
Forest Products7.218.819.419.619.532.19%0.06%12.1%
Agriculture3.82.93.811.712.520.27%0.04%18.1%Note 1
Electrical Machinery3.21.96.43.85.99.70%0.03%10.5%
Textiles0.30.70.92.72.74.49%0.10%5.4%
Areospace Products0.81.262.60.61.72.86%0.01%7.8%
Industrial Machinery1.63.612.63.51.72.79%0.01%4.9%
Plastics0.40.20.50.91.62.72%0.01%2.6%
Auto Parts1.10.82.40.81.42.24%0.01%21.8%
Pharmaceuticals1.80.71.20.91.32.22%0.02%0.6%
Iron and Steel1.81.41.90.81.32.15%0.01%11.3%
Subtotal22.133.3111.745.248.381.63%  
Others8.78.910.711.111.118.37%  
Total CDN Exports to Jordan30.842.2122.556.360.4100.00%0.01% 

Canadian non-agricultural exports to Jordan totalled $48 million in 2007. Jordan applies, on average, an MFN tariff of 10.4% on non-agricultural products and many goods from key Canadian non-agricultural export sectors face Jordanian tariffs of up to 30%. An FTA is expected to eliminate tariffs on all non-agricultural goods within a specified number of years and could therefore be expected to facilitate further growth in Canadian non-agricultural exports to this market. Canadian sectors with the highest recent exports to Jordan and which face high Jordanian tariffs are expected to see the largest commercial gains as a result of tariff elimination.

Canada’s top non-agricultural sector exporting to Jordan in 2007 was forest products, including pulp, paper, wood and other products, which totalled $19.5 million (roughly equivalent to figures from 2004 to 2006). This sector accounted for 41% of non-agricultural exports or 32% of total Canadian exports to Jordan in 2007. Jordan’s average applied MFN tariff on forest products is 12.1%, with tariffs of 20–30% applied on many products of Canadian export interest, suggesting that tariff elimination in the context of a Canada-Jordan FTA would result in commercially significant benefits for Canadian exporters in this sector. However, Canada’s 2007 forest products exports to Jordan represented only 0.06% of Canada’s $34.9 billion global forest product exports. Moreover, Jordan’s global forest product imports in 2007 amounted to only $491.4 million, less than 1.5% of Canada’s global forest product exports. These figures suggest that even very strong growth of forest product exports resulting from an FTA would have only a relatively small effect on Canada’s overall export and production levels in this sector.

Electrical machinery, including information and communications equipment, represented Canada’s second largest non-agricultural sector exporting to Jordan in 2007, with exports totalling $5.9 million, the second-highest annual total over the 2003 to 2007 period ($6.4 million of exports to Jordan were recorded in 2005). Electrical machinery accounted for over 12% of Canada’s non-agricultural exports to Jordan in 2007 and 10% of total exports. Jordan’s average applied tariff on electrical machinery is 10.5%, with tariffs of up to 30% on products of Canadian export interest, suggesting that this sector could also see significantly expanded commercial opportunities as a result of a Canada-Jordan FTA. However, similar to forest products, an increase of electrical machinery exports to Jordan following an FTA would have a modest effect on Canadian production and global export levels in this sector, as exports to Jordan represented only 0.03% of Canadian global exports in this sector in 2007.

Other significant non-agricultural product groups exported to Jordan in 2007 included textiles ($2.7 million, 4.5% total exports to Jordan), aerospace products ($1.7 million, 2.9% total exports to Jordan), and industrial machinery ($1.7 million, 2.8% total exports to Jordan). These sectors could also see meaningful commercial gains as a result of an FTA, although in all cases, 2007 exports to Jordan represented less than 0.03% of Canadian global exports.

Canada exported $12.2 million of agricultural and agri-food products to Jordan in 2007. Leading agricultural exports include pulses ($5.7 million), cotton ($4.2 million), prepared foods ($700,000), and frozen french fries and other potato products ($600,000). An FTA is expected to eliminate Jordanian tariffs for most agricultural products of export interest, such as pulse crops, frozen french fries, various prepared foods and animal feeds, which face high tariffs of as much as 30%. While the reduction or elimination of tariffs could significantly increase Canadian agricultural export flows to Jordan, overall economic effects on Canada’s agriculture sector would be modest given that Canada’s $12 million of agricultural exports to Jordan in 2007 represents 0.04% of Canada’s $31.8 billion of global agricultural exports that year. Even if agricultural exports were to expand dramatically as a result of an FTA, total Canadian exports to Jordan in this sector would still amount to a very small share of Canadian global exports and production.

Canadian Imports from Jordan

Under an FTA, Canada would be prepared to eliminate tariffs on most goods imported from Jordan, which would tend to result in an increase in Canadian imports from Jordan. While Jordan is a recipient of Canada’s General Preferential Tariff (GPT), which provides preferential tariff rates for certain goods of qualifying developing countries, the vast majority of imports from Jordan are apparel products for which there is no preferential GPT tariff. Canada imported $16 million worth of goods from Jordan in 2007, up from $5.8 million in 2003. Jordan was Canada’s 111th largest source of imports in 2007, and accounted for only 0.004% of Canada’s total global imports that year. The table below lists Canada’s top ten imports from Jordan in 2007 by product sectors. Imports from these groups accounted for 99% of Canada’s total imports from Jordan that year.

Table 4: Canadian Imports from Jordan by Sector ($ CAD Millions)

Sector20032004200520062007% 2007 Total CDN Imports from Jordan% 2007 Total CDN Global Imports2007 Avg. CDN Tariff
Note 2 AdValorem simple average MFN rate, WTO 2007 calculation.
Sources: World Trade Atlas (Statistics Canada Data); 2007 Jordan Customs Tariff.
Forest Products4.444.756.5710.7113.3683.719%0.182%16.3%
Agriculture0.520.831.381.291.287.91%0.005%17.4%Note 2
Electrical Machinery0.000.000.000.000.422.64%0.063%0.0%
Textiles0.000.000.080.330.281.75%0.005%1.3%
Areospace Products0.140.020.070.600.120.77%0.001%0.1%
Industrial Machinery0.010.040.090.080.090.57%0.007%2.5%
Plastics0.020.010.080.110.090.54%0.000%0.4%
Auto Parts0.050.050.070.030.050.30%0.001%0.8%
Pharmaceuticals0.120.180.140.180.040.25%0.002%2.2%
Iron and Steel0.250.040.040.030.030.19%0.001%2.9%
Subtotal5.55.98.513.415.798.62%  
Others0.20.80.31.20.21.38%  
Total CDN Exports to Jordan5.76.78.814.615.9100.00%0.004% 

Apparel constituted a large majority of Canada’s annual imports from Jordan each year from 2003 to 2007. Imports of apparel in 2007 totalled $13.4 million and represented 84% of Canada’s total imports from Jordan. Canada applies tariffs of 17–18% on these apparel imports. Due to the large share of Canada’s recent imports from Jordan in this sector and the relatively high tariff rates applied on these imports, it is expected that this sector will be the predominant beneficiary of Canadian tariff elimination in the context of an FTA. However, as apparel imports from Jordan represented less than 0.2% of Canada’s global apparel imports in 2007, and because imports from Jordan in this sector are expected to largely displace imports from other international suppliers, it is expected that increased imports in this sector resulting from an FTA would have negligible effects on overall Canadian imports and production levels.

Aside from apparel, Canada’s main imports from Jordan in 2007 were agricultural products ($1.3 million), predominantly cucumbers ($770,000) and fertilizer ($420,000). Both of these products qualify for duty-free treatment under Canada’s GPT, and are therefore not expected to see notable gains as a result of tariff elimination under an FTA.

Potential Environmental Impacts and Significance

In light of the relatively small bilateral trade relationship between Canada and Jordan, environmental impacts resulting from a Canada-Jordan FTA are expected to have minimal significance. It is expected that any environmental impacts would be related to increased Canadian production due to greater Jordanian demand for Canadian exports as a result of tariff elimination. In particular, due to their large shares of Canadian exports to Jordan, the forest products and agricultural sectors are the areas in which production increases, and potentially environmental impacts, could be most likely as a result of an FTA with Jordan. However, as outlined below, minimal environmental impact is anticipated from increased Canadian exports to Jordan as a result of an FTA.

As noted in the previous section, forest products, with $19.5 million of exports to Jordan in 2007, are Canada’s largest non-agricultural export sector by a wide margin and the only non-agricultural sector with 2007 exports to Jordan exceeding $10 million. In principle, increased output in this sector could have environmental impacts, particularly regarding the sustainability of Canadian forests. However, as noted above, exports to Jordan accounted for only 0.06% of Canada’s $34.9 billion in total global exports of forest products in 2007, illustrating that even in the event of dramatic export growth in this sector as a result of an FTA, they would still constitute a very small share of Canadian exports and production. As such the significance of any environmental impact resulting from export expansion in the forest product sector is expected to be minimal and easily accommodated by current forest management programs.

Regarding increased agricultural exports and potential environmental impacts, the most significant changes in agricultural production are changes that affect land use (e.g. cropland under summerfallow, use of marginal lands) and changes in livestock numbers. Similar to the forest product sector, while the elimination of tariffs could increase Canadian agricultural export flows to Jordan, the significance of any environmental impacts would be minimal given that Canada’s $12 million of agricultural exports to Jordan in 2007 represents a very small share (0.04%) of Canada’s $31.8 billion of global agricultural exports that year. Even given very significant export growth, exports in this sector would still amount to a very small share of Canadian global exports and production. Further, Canada’s agricultural production is of relatively low intensity and, thus, any increase in domestic production in response to higher market demand in Jordan for Canadian agricultural products would be expected to have minimal environmental impact.

It is also reasonable to expect that some of the increases in Canadian agricultural and non-agricultural exports to Jordan made possible by tariff elimination may reduce exports to other less profitable destinations, thus further mitigating any potential environmental impact anticipated from increased trade flows.

Regarding the environmental implications of increased imports from Jordan as a result of an FTA, as noted above, increases of imports are expected to be concentrated in apparel products, and would represent a very small fraction of Canadian global apparel imports and domestic production in this sector. Further, it is anticipated that any increases of apparel imports from Jordan would come largely at the expense of other international suppliers, with limited impacts on Canadian production. No environmental impact is expected to result from increased apparel imports from Jordan, and virtually no environmental impact is expected to result from increased imports from Jordan in all sectors combined.

Mitigation and Environmental Enhancement Measures

Although minimal environmental impacts are expected to result from a Canada-Jordan FTA, given the predominance of the forest product sector amongst Canadian non-agricultural exports to Jordan, it is important to underscore that Canadian governments at the federal, provincial and territorial levels have taken steps to ensure that forests are managed in accordance with sustainable development principles. Canada’s commercial forest resources are largely managed by the provinces through forest management tenure agreements that strictly regulate harvesting, silviculture and forestry practices. These policies provide for regulatory and audit mechanisms based on sustainable development principles to ensure that timber is not harvested at rates exceeding a forest’s capacity to regenerate. Any marginal increase in production of those products that might result from tariff elimination in the context of a Canada-Jordan FTA could be easily accommodated within current forest management programs.

While minimal environmental impact is likewise expected to result from increased agricultural exports to Jordan as a result of the FTA, should there be any discernable environmental impacts, Agriculture and Agri-Food Canada (AAFC) has a number of programs in place intended to improve the environmental performance of the agriculture and agri-food sector. In conjunction with the provincial and territorial governments, AAFC, through the Agricultural Policy Framework (APF) 2002-2009, assists producers in accelerating the adoption of improved environmental practices.

AAFC funds various initiatives intended to improve the environmental performance of the agri-food sector, including:

In addition, provincial environmental legislation and initiatives normally have a direct impact on farming operations. They include a range of mechanisms designed to encourage or require environmentally sound farming practices:

Efforts related to the above and other programs will help offset any negative environmental impact that may result from liberalized agricultural trade with Jordan. In the event the environmental impacts as a result of the FTA turn out to be greater than expected, consideration will be given to expanding existing programs or creating new ones to deal with any negative effects.

A detailed list of federal, provincial and territorial legislation and regulations that may enhance positive environmental impacts or mitigate against negative environmental impacts of trade agreements is attached as Appendix 1 of this report.

6. Conclusion

The conclusion of a Canada-Jordan FTA would strengthen the existing bilateral commercial relationship. Given the relatively low levels of existing trade between Canada and Jordan and the overall size of the Jordanian economy, however, even a dramatic increase in exports would have a modest impact in relation to overall Canadian trade and production levels. Therefore, any environmental impacts resulting from Canadian export and production increases are expected to be of minimal significance.

In circumstances where the Initial EA does not anticipate significant environmental impacts for Canada, the Framework for the Environmental Assessment of Trade Negotiations does not require the Draft EA phase. Accordingly, the next environmental assessment covering the Canada-Jordan free trade initiative is expected to be the Final EA. That said, the findings of the Initial EA, published herein, public comments, and other new information that may become available will continue to inform both the negotiations and the EA process.

In accordance with the Framework, the Final EA will be conducted based on the outcome of the negotiations, and the findings will be made public. As such, it will include a discussion of any comments received in response to the Initial EA and further analysis regarding the anticipated environmental impacts of the agreement on Canada.

Following the conclusion of the Final EA, follow-up and monitoring can be undertaken in order to review any mitigation or enhancement measures recommended in the Final EA report. Monitoring and follow-up activities can be undertaken anytime during the implementation of a concluded trade agreement in order to gauge the performance of its provisions from an environmental perspective.

In tandem with the FTA negotiations with Jordan, a separate but parallel environmental agreement is being pursued. The Environment Agreement will, inter alia, provide a framework for environmental cooperation aimed at strengthening the Parties’ environmental management systems. Recognizing the need to reinforce sustainable development on all fronts, Canada will endeavour to leverage its expertise on related issues of interest to both Parties, which may include environmental enforcement and compliance issues, corporate social responsibility, and enhancing trade and environment linkages.

Appendix 1 - Environmental Legislation and Regulations

Below is a non-exhaustive list of federal, provincial and territorial legislationFootnote 9 and regulations that may enhance positive environmental impacts or mitigate against negative environmental impacts of trade agreements.

Laws of General Application

Federal

Provincial/Territorial

Ontario
Quebec
Nova Scotia
New Brunswick
Manitoba
British Columbia
Prince Edward Island
Alberta
Saskatchewan
Newfoundland and Labrador
Northwest Territories
Yukon
Nunavut

Laws impacting air

Federal

Provincial/Territorial

Ontario
Nova Scotia
New Brunswick
Manitoba
British Columbia
Prince Edward Island
Alberta
Saskatchewan
Newfoundland and Labrador

Laws impacting flora and fauna

Federal

Provincial/Territorial

Ontario
Quebec
Nova Scotia
New Brunswick
Manitoba
British Columbia
Prince Edward Island
Saskatchewan
Northwest Territories
Yukon

Laws impacting water and fisheries

Federal

Provincial/Territorial

Ontario
Quebec
Nova Scotia
New Brunswick
Manitoba
British Columbia
Prince Edward Island
Alberta
Saskatchewan
Newfoundland and Labrador
Northwest Territories
Yukon
Nunavut

Laws impacting land and non-renewable resources

Federal

Provincial/Territorial

Ontario
Quebec
Nova Scotia
New Brunswick
Manitoba
British Columbia
Prince Edward Island
Alberta
Saskatchewan
Newfoundland and Labrador
Northwest Territories
Yukon

Laws impacting trade

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