Law Times

Page 10 November 5, 2018 • Law Times www.lawtimesnews.com Trade agreement has new environmental rules BY DALE SMITH For Law Times T he conclusion of the re- newed NAFTA agree- ment, renamed the United States-Mexico- Canada Agreement, contains new environmental provisions that have enforceable guidelines around water and air quality that the original agreement did not. Lawyers say the provisions give more weight to these rules and can make a difference on cross-border environmental is- sues. Janet Bobechko, senior part- ner with Norton Rose Fulbright Canada LLP in Toronto, says trade agreements have a pro- found effect on the Canadian economy and that, the more law- yers know about them, the better they can advise their clients. "Environment now has a chapter [in the USMCA], as op- posed to side agreements," says Bobechko. "It's risen in stature, which is a significant improve- ment from the previous NAF- TA." Richard Butler, a partner with Willms & Shier Environ- mental Lawyers LLP in Toron- to, says the agreement has not yet been ratified and the new mechanisms contained within the USMCA are untested. He says the structure of the new agreement has put mechanisms that were "sister" agreements to NAFTA — such as the North American Agreement on Envi- ronmental Cooperation — into the main body of the new agree- ment. "Rather than having those side by side with NAFTA, they're now more explicitly included in chapter 24 of the new agree- ment," says Butler. "The question that we're struggling with and will be in- terested to see how that plays out is whether that has a substantive or procedural change going for- ward." Articles 24.2 and 24.4 talk about promoting trade, but they discourage parties from using or enforcing environmental laws in a way that unduly favours or restricts trade for companies in their countries, which mirrors the anti-dumping provisions of a trade agreement. Butler says that, to a large degree, the new provisions un- der chapter 24 refer back to the original agreements and the Commission for Environmental Cooperation. Bobechko says that, in the new agreement, however, there are provisions within article 24 that set out different levels of pro- tection, along with ways in which to manage those protections. "If a party has a concern that a country isn't enforcing or is backsliding on their environ- mental obligations, the mecha- nism on how to resolve that is set out within the chapter and ulti- mately to the dispute resolution chapter in the agreement," says Bobechko. She says the agreement does recognize sovereignty and that each country can set its own en- vironmental priorities and how it enforces those priorities, but it remains to be seen how that will be interpreted. Bobechko says there are "es- calating" ways to resolve con- cerns. Whereas previously there was the NAAEC, article 24.25 talks about an environmental co-operation agreement that has not yet been signed, she says. "It keeps the Commission for Environmental Cooperation in- tact, but [it] will be updating it," says Bobechko. "That's to be set up within a year of execution of the USMCA." She notes that issues such as protection of the ozone layer, marine environment and ship pollution, fishing issues, air quality and marine litter are all clearly defined in the agreement and that there is a bona fide test to ensure that each country's de- cision-making is done in good faith. If a party feels that the decision-making wasn't made in good faith, it can make a sub- mission to the commission and, from there, it can go up to esca- lating layers of consultations. If that doesn't resolve the matter, it can go to dispute resolution. Butler says the real question is whether the enforcement mech- anisms for the entire USMCA have more "bite" than NAFTA did. With the loss of chapter 11, which was the investor-state dispute settlement mechanism, civil remedies in local courts will likely be necessary instead of NAFTA-based arbitration. "For lawyers and clients, the idea of being pushed to a differ- ent venue could be a real deci- sion-maker in terms of whether to proceed with a remedy or not," says Butler. "It will be relying on differ- ent legal principles, and it will go by way of our Court of Appeal. That could be very interesting." Risa Schwartz of Risa Schwartz International Law in Toronto says that the end of chapter 11 is one of the most im- portant environmental gains in the new agreement. "It's huge," says Schwartz. "There have been a number of disputes related to environment and health measures. ISDS is a threat to a state's sovereignty to regulate in the public interest for health and environment." In announcing the chapter, the federal government stated that the environmental provi- sions would have strong, en- forceable standards. Butler points to article 24.32, where a dispute resolution mechanism is outlined, which could mean the establishment of a panel. "That's going to start look- ing like the anti-dumping trade disputes like we've seen under NAFTA," says Butler. Bobechko says those enforce- able standards are related to the obligations of each party to ensuring the key aspects of the chapter and there is a continu- ous improvement requirement. "They have to move to the higher level of environmental protection," says Bobechko. "It places a positive obligation on the parties to not ignore the en- vironment and to continue to enhance that." That remains couched within the language about countries both setting their own priorities and meeting the bona fide test, says Bobechko. "It tries to balance the fact that, if Canada has a specific agenda item that it wants at the top of the list, that might not be the same top-of-list priority for the U.S. or Mexico." She adds that there are pro- visions within the chapter for a recognized role for Indigenous people and the role they play in conservation and protection of the environment. "From a Canadian's perspec- tive, it's great to see that recogni- tion is right in there," says Bo- bechko. Schwartz says this acknowl- edges the importance of engag- ing with Indigenous people in the long-term conservation of the environment. "It's more of a hint to our consultation requirements in Canada, but it applies to all three countries," she says. Schwartz notes that all three countries have either adopted or endorsed the United Nations Declaration on the Rights of Indigenous Peoples, which con- tains obligations to free prior and informed consent. "Although I would like to see stronger language, I do see this as a nod to the fact that there are consultation requirements for In- digenous people and the link be- tween Indigenous rights and land rights," says Schwartz. "That's a very important statement." LT FOCUS © 2018 Thomson Reuters Canada Limited 00251KU-91325-NP Practical insight and advice on Regulatory Offences Available risk-free for 30 days Online: store.thomsonreuters.ca Call Toll-Free: 1-800-387-5164 | In Toronto: 416-609-3800 Order # L7798-8605-65203 $225 Hardcover approx. 400 pages June 2018 978-0-7798-8605-0 Multiple copy discounts available Shipping and handling are extra. Price(s) subject to change without notice and subject to applicable taxes. New Edition Regulatory Offences in Canada: Liability and Defences, Second Edition John Swaigen and Susan McRory Master the unique problems that arise in defending public welfare law with the new Regulatory Offences in Canada: Liability and Defences, Second Edition. Take advantage of the insights from two leading trial lawyers, who have more than 50 years of combined experience. This reliable resource is packed with valuable, useful advice on how to effectively navigate the complex world where regulatory, criminal, and environmental law intersect. Janet Bobechko says issues such as protec- tion of the ozone layer, marine environ- ment and ship pollution, fishing issues, air quality and marine litter are all contained in the USMCA. For lawyers and clients, the idea of being pushed to a different venue could be a real decision- maker in terms of whether to proceed with a remedy or not. Richard Butler

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