3 Reasons Why CETA Is Good for the Economy BUT Bad for the Environment

Last Wednesday, I was speaking at the French Vancouver Chamber of Commerce (Chambre de Commerce Française de Vancouver) and before my talk, the French ambassador to Canada, Nicolas Chapuis, stopped by to share his opinion about the Canada European Trade Agreement (CETA). He started his speech explaining about his earlier trip in the Canada’s North Baffin Island where he was shocked by the rapidly melting ice cap and lost wild life habitat. He pointed out how sad it was that the people who did not have anything to do with climate change were the first one severely impacted.

The second part of his talk was mostly focus on how great CETA would be not only for Europe, who is still in a little recovery mode after the Brexit shock, but also for Canada. This new free trade agreement would open barriers to a new market of over 35 million customers to the European market. Mr. Chapuis carefully demonstrated how CETA would also be benefit Canada as Canadian companies would now have access to a new barrier free market of over 500 millions potential consumers.

This is good for Canada because:

1- Canada highly relies on its exportation to the United States (75%) and having new partnerships to do business with will reduce the stress that it has on Canada's economy during US recessions or dollar disparity.

2- Canadians exporters would have access to a new market that buys differently than Americans, therefore creating more variety in exportable products and services that one company can offer. Consequently, companies being able to create new products and services will generate more revenues, creating stronger and bigger organizations paying additional taxes to the Canadian system to support public infrastructure; In three words, Growing Canada’s Economy.

3- This will be a great thing for the maritime provinces as they will have a bigger free trade market to serve an additional 500 million people with fishery products. To assure the maximum economic benefits, Canada would have to not simply ship the products to Europe but complete the processing process creating new and supporting existing jobs in the Maritimes provinces. The only downfall is that we know fishing is not as abundant as it used to be since many areas of the North Atlantic have already been over fished and are now under strict quota to maintain the remaining ocean fish stock.

On the other hand, it can also be bad for Canada:

1- The main concern is that all of the European companies will now be allowed to bid on government contracts without any additional costs which creates a much more fierce competition for Canadian companies as the pool of bidders just increase by 10+ times especially during this hard economic time when Canada is funding public projects to boost employment.

2- Drinking water service is not excluded within CETA which means that the two biggest private water companies could start sending lobbyists to Canada in the hope of getting their hands on public water rights. This would result in water privatization increasing the price not for bottled but tap water. 3- Coming out of COP 21 last year, it is very difficult for Canada to put regulations in place to meet its environmental target by 2030. As the Trudeau government has already difficulties putting environmental regulations in place, CETA will make it that much harder since there is now a new 500 million people market that will be entering Canada. How will we measure these new emissions generated by this new free trade agreement?

Is CETA Good Overall? What about its Environmental Impact?

My opinion is the overall CETA will be a good thing for Canada mostly due to the fact that it will release a lot of pressure from our dependency on the country’s exports to the US. On the flip side, even though the French ambassador started his speech with being horrified with the climate change effect on the environment, nowhere in CETA's process has an environmental impact of the free trade agreement has even been investigate. Following Mr. Chapuis's presentation, it was my turn to talk about climate change and sustainable business strategies that can be done on the market place. One part of that speech was specifically about the amount of fossil fuel required to sustain globalization since everything we consume coming from abroad needs to be shipped either by plane or by boat. The economic cost is very positive on a dollar perspective but globalization is also a disaster on the environmental cost which is never taken in to consideration. While the ambassador was speaking I was thinking to myself; What will the environmental impact of the CETA be once we start trading goods from Canada to Europe on a much larger scale? How many additional ships at sea? How many additional planes in the air? How many more first class business trips for meetings, business deals and trade shows?

How to Include Environment in Business?

Do not get me wrong, I am not against economic development. However, I have a hard time understanding how we can forget the environmental footprint of this agreement while climate change and sustainability are at the forefront of business decisions and political issues. The carbon tax is a good place to start as long as when a nation, province or state implement a carbon tax it is imperative to create separate account (call it green account) to be later used on green initiatives whether it is for new technologies or sustainable agriculture or renewal energy projects. Failing to create such an account will result in supplementary taxes for the government to play with but may also be rerouted towards things like healthcare and other public services where there are absolutely no environmental benefits defeating the idea behind creating the carbon tax in the first place.

To really fight the corporations' procrastination towards environmental initiatives, a law assuring that all companies add a row to their balance sheet to add their environmental cost of doing business is imperative. For each ton of CO2 emitted in the atmosphere, the companies must add $30 (or any amount set) and then pay that price to either themselves towards greening their own operations or in a government account use solely for sustainable projects like the carbon tax account previously mentioned. We simply cannot keep treating the environmental impact of our actions as externalities but rather as a cost of doing business.

Final Words

I spoke with a delegate afterwards to verify and no research has been done on the environmental impact of this new agreement. It is ironic to hear the ambassador worrying about the tragedy that is happening in Northern Canada and then completely shift gear and solely talk about the economic benefit of CETA and leave the environmental impact, one more time, as an externality. The real irony is that more we delay green initiatives, more our children will suffer. Another party who would have had nothing to do with the causes of the consequences they’ll be facing.

How will CETA affect your business?