I'd be happy to do that. Thank you.
Thank you for the opportunity to be here and to highlight some of the work we're doing in the area of trade and low-carbon economy.
My name is Silvia Maciunas. I'm the deputy director of the environmental program at CIGI, which is a think tank based in Waterloo, Ontario. It's an independent, non-partisan think tank. Our focus is on international governance. We work in three areas: one is international law, and the other two are global security and politics, and the global economy. Those areas often interrelate, as I'm sure we are all aware.
The law program, called the ILRP, international law research program, works in four areas: international economic law, international environmental law, international intellectual property law and international indigenous law.
I am the deputy director of the international environmental law section. In that area we have three areas of focus. I'll be finished my lists pretty soon. We work on climate, oceans, and emerging issues of global environmental governance.
On international climate law, we look at issues relating to the UNFCCC, the convention on climate change, and the Paris Agreement. We also look at linkages between the climate regime and other international instruments. The reason we look at that is that I don't think you can solve the climate problem solely within the UNFCCC or the Paris Agreement. You have to look at how other elements of the international legal framework fit into that.
There are many linkages between climate and trade. The UNFCCC remains the primary instrument to address climate. Of course, the WTO and its related agreements and the many regional and multilateral trade agreements are the instruments to deal with trade. We have to look at how those link together, because there is a fear in the environmental law community that some of the trade rules may in fact limit domestic responses on climate.
As you may know, the Paris Agreement has very general obligations with respect to climate measures. There is no standard set of measures that must be taken by parties. There is no one size fits all; therefore, it is a little bit difficult to assess what might work and what might not.
Canada has a history of regional and bilateral trade agreements that address the environment. You may already be familiar with many of these. They generally have a requirement for parties to strive to provide high levels of environmental protection and to avoid lowering standards to attract trade investment. They were originally housed in separate side agreements, and currently the model is to have an environmental chapter within the trade agreement.
Recent models, such as the TPP and the USMCA, have included more substantive provisions regarding the need to implement specific multilateral environmental agreements. They also include some innovative provisions about subsidies—for example, removing fishing subsidies for overfished stocks, as well as requiring conservation measures for flora and fauna. The trade agreements have gone a long way in accommodating some of the environmental concerns that are out there.
The TPP is unique in that it has a binding dispute resolution process. The CETA is very interesting because it has an innovative approach that requires a work program on trade rules and environmental regulation. It also commits Canada and the EU to facilitate and promote trade investment in environmental goods and services, which comes close to the area that this committee is concerned about: clean tech.
There are other provisions in bilateral trade agreements also of interest. There's one between Japan and the EU that requires both parties to effectively implement the UNFCCC and the Paris Agreement and includes an obligation to promote the contribution of trade to the transition to low greenhouse gas emissions and climate resilient development. That's an interesting model that Canada might think about when it's negotiating its regional and bilateral agreements.
An agreement between New Zealand and Taiwan commits to reducing tariffs on environmental goods to zero. Again, this is possibly a model for Canada's agreement to try to move along the agenda on environmental goods.
The recommendation would be that Canada continues to conclude innovative provisions in its regional and bilateral trade agreements, particularly in areas that might assist with the transition to a low-carbon economy and with trade of environmental goods and services.
The WTO has some provisions that allow for environmental agreements. It has an environmental exception that allows for certain measures if they are necessary to protect the human, animal and plant life and health, but that requires that an issue be brought to the trade dispute level. That is a lot of uncertainty, and one never knows until that trade dispute is completed whether the measure will survive.
The issue, then, is how we can move forward on some of the issues. Does the WTO have enough in it? Do the environmental agreements have enough in them? How do we manage some of the outstanding issues that might impede clean tech and the transition?
In the reading and the work that we've done, we've identified a number of issues. One is the issue of subsidies: how to address and encourage green subsidies while taking steps to step back from fossil fuel subsidies, how to take into account the carbon footprint of products, and how to increase trade in environmental goods. All of those, I think, would assist in developing clean tech for Canada.
Subsidies are important in the context of the development and diffusion of clean technologies. They are controlled by the Agreement on Subsidies and Countervailing Measures, one of the WTO agreements. Green subsidies fall under the category of actionable. If they are specific to an industry or a group of companies and they cause an adverse impact on trade, they can be challenged at the WTO.
In the case of the Canada-FIT case in Ontario, that case was taken up by the WTO. It was challenged. Eventually there was no finding that there was a subsidy. This was less because there was really not enough evidence of a subsidy and more because of some rather convoluted and highly criticized legal reasoning, which talked about the establishment of two separate markets. Many commentators in this area are not confident that, if there were a subsidy involved in supporting renewable energy or other clean tech, it would actually pass the test for the WTO. The law is still highly uncertain.
Subsidies have been shown to be an effective tool to encourage investment in clean energy and clean tech. FIT programs are used broadly. More than 60 countries have used them, and they have been found to be quite effective in increasing investment in renewable energies.
What we learned is that the WTO is blind to the public policy rationale for the subsidy and, therefore, subsidy regimes may be at risk from trade rules. The local content requirements of any subsidy program will certainly be struck down, but there might be ways for Canada to lead in this area. Like-minded countries could seek to negotiate a clean-tech agreement that would deal with subsidies. There is an agreement already on agriculture that provides special rules for agricultural subsidies, so it wouldn't be the first time that this would be approached.
Like-minded countries could also seek to negotiate a clean-tech agreement outside the WTO on a regional basis. Provisions on subsidies could be included in bilateral or regional agreements, and Canada could also propose an interpretation within the subsidies agreement to allow subsidies with a justifiable public purpose.
I am going to quickly go through some of the other areas, and then maybe we can elaborate during the questions.
The other side of the green subsidies is how to take steps to address fossil fuel subsidies, which tend to be a perverse incentive but are widely used by most developed and developing countries. In this area, Canada has committed to an international review of its fossil fuel subsidies. Transparency on this matter is important, and Canada should, in good faith, continue to seek to find ways to address fossil fuel subsidies.
Trade in environmental goods has been stalled at the international level. You may be familiar with the fact that there were negotiations going on with regard to environmental goods and services. The last session was in 2016, and nothing else has taken place. It's not impossible to have that kind of agreement. APEC, an agreement between 21 countries, has an environmental goods list on which tariffs were lowered. I think the solution here would be to try to restart negotiations on a bilateral or regional basis, and perhaps seek a way to define environmental goods and establish a process of experts to do that.
I have one more issue and one solution to discuss.