Mr. Chair, and honourable members, thanks very much for inviting me. I wanted to make three brief points.
First, in 1994 NAFTA and its environmental side agreement, at that point, broke new ground in aligning trade and environmental issues, and at a minimum, those environmental provisions that currently exist within NAFTA and its side agreement should not be weakened with backsliding in the renegotiations.
More importantly, these negotiations also offer a window to craft a new NAFTA for the next quarter-century. We live in a different world from 1994. The science of global environmental change is robust. The economics of the cost of pollution and the benefits of avoided ecological damage are extensive. International markets and international trade in green, low-carbon goods and services as well as e-commerce are rapidly expanding, and the engagement of the financial services sector in climate issues is—as an investment bank CEO said yesterday at the World Economic Forum in New York—at a tipping point.
Much of these actions are taking place under the umbrella not only of the Paris climate agreement and the sustainable development goals, but other commitments such as the UN Declaration on the Rights of Indigenous Peoples. NAFTA can and should be a catalyst to advance these commitments.
My second point focuses more specifically on climate change. We applaud the Government of Canada’s commitment to include climate as a core NAFTA objective. The European Union recently made a similar commitment to link trade, Paris, and the sustainable development goals, primarily through trade-related standards.
Some may argue that trade is not and should not be connected to climate issues. However, the International Monetary Fund and the World Economic Forum have identified climate change as the most pressing economic challenge of the 21st century, and the biggest risk to business stability today. We need to reform core economic policies, including trade, in order to reduce climate risk and scale-up joint action.
With that in mind let me identify a couple of entry points. One is disciplining environmentally damaging subsidies. The WTO, and the GATT before it, had talked about rules to reduce environmentally harmful subsidies for well over two decades. A new NAFTA ought to include disciplines to eliminate fossil fuel subsidies in accordance with G20 commitments.
Another is carving out a NAFTA climate environmental goods and services list, either in a new energy chapter, or through other chapters. The OECD, WTO, APEC, and others have identified lists of traded goods and services as well as their tariff lines. NAFTA has a chance to accelerate trade in clean technologies through not only zero tariffs but, more importantly, eliminating non-tariff barriers within Canada and between Canada, the U.S., and Mexico.
Linking the financial services chapter with climate finance options include climate disclosure; supporting innovative financial instruments like green bonds, climate bonds, sustainable development bonds that the World Bank has just issued; as well as cross-border clean power purchase agreements and energy purchase agreements to scale up North American-wide renewable and energy efficiency activities.
Another is establishing a North American climate-forest sink and offsets system. Frances Seymour, who was in Ottawa last week, reminds us that our forests represent the only proven carbon capture and storage option that is affordable and known. Therefore, North America could be a leader, which would also help our important forestry industry.
Finally, there's scaling up a North American climate adaptation focusing on supply chains, trade corridors, and related vulnerable areas. The more frequent and severe extreme weather events that we see today, literally today, are becoming the new norm for tomorrow.
Mr. Chair, I wanted to make a brief comment as well as about investment. The current chapter 11 was flawed from the outset by emphasizing investor rights without investor responsibilities. There have been several investor-state disputes that raised fundamental concerns with regard to the democratic right to regulate. NAFTA needs to reform. The CETA investment chapter provides a good basis. Moreover, the UN Commission on International Trade Law is discussing right now possible changes to investor-state dispute settlement.
For more than 20 years, IISD has been actively engaged in trade and investment issues, beginning under the leadership of David Runnalls. I would be glad to share the work that we've done related to our NAFTA analysis with the clerk.
Thank you.