North American leaders sign off on climate, energy plan

8 July 2016

Leaders from Canada, the US, and Mexico have signed off on a joint partnership on climate and clean energy issues, including the goal to provide half of North America’s power from “clean” sources by 2025.

The 29 June meeting was held in Ottawa, Canada, and marked the last such summit for US President Barack Obama, while being the first for Canadian Prime Minister Justin Trudeau. Mexican President Enrique Peña Nieto has been attending these summits since taking office in 2012.

Other topics on the docket included bilateral meetings between Obama and Trudeau on issues such as softwood lumber trade, along with discussions on the ramifications of the UK’s vote in late June to leave the European Union. (See Bridges Weekly, 30 June 2016) [Editor's note, Bridges Weekly is ICTSD's flagship publication on trade and sustainable development news]

The US election process also featured prominently in remarks to reporters after the meet, with leaders touting the benefits of free, fair trade and warning against politicians who may try to diminish its value and instead support anti-globalisation, isolationist messages under the guise of populism. 

Clean power, methane targets

The North American Climate, Clean Energy, and Environment Partnership Action Plan announced last week includes various ongoing or planned steps – some via regulation or legislation, others via international negotiating processes – aimed at boosting the use of cleaner energy sources and cutting emissions from various pollutants.

Along with drawing 50 percent of the region’s power from cleaner energy sources by 2025, the three leaders have also said that they will work to advance the use of cross-border transmission lines, including for renewable electricity sources, citing various planned or existing projects in this area.

Both the US and Canada have also announced their goal to source all of the federal government’s power from clean sources by 2025. Other energy-related steps confirmed last week are plans to harmonise energy efficiency standards for appliances and equipment, along with working to improve the reliability of electricity across all three countries and phasing out inefficient fossil fuel subsidies by 2025. For the latter, they said they would advocate for the same approach by fellow members of the G-20 coalition of major advanced and emerging economies.

In addition, Mexico has now joined the US and Canada in their plans to slash methane emissions from oil and gas by 40 to 45 percent by 2025. Their efforts in this area also include various steps aimed at information sharing, together with strategies to cut methane from certain sectors. They will also take steps at the national level to tackle “black carbon” – known also as soot – in agriculture, industry, and heavy-duty vehicles, citing the related public health impacts. (See Bridges Weekly, 17 March 2016)

At the broader international level, all three leaders have confirmed that they hope to ratify the Paris Agreement on climate change this year, while advocating that others do the same. They have pledged to take steps in working together on both climate mitigation and adaptation as they implement their national contributions to the deal.

Furthermore, they said that they would work to help developing countries in this area, while pledging their backing to the Paris accord’s language on carbon markets and transparency.

Leaders have also reiterated their support for an amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer that would entail a “phase-down” in hydrofluorocarbons, an extremely potent greenhouse gas with a warming potential over 10,000 times that of carbon dioxide. (See Bridges Weekly, 14 April 2016)

Parties to the Montreal Protocol are due to meet later this month in Vienna, Austria, for a meeting aimed at advancing these negotiations, in the hopes of setting the stage for clinching a deal by the 28thMeeting of the Parties this coming October in Kigali, Rwanda.

TPP, NAFTA questions

The US presidential election process loomed over the summit, particularly in light of Republican candidate Donald Trump having recently pledged to press Mexico and Canada for a renegotiation of the North American Free Trade Agreement (NAFTA) – or instead leave it altogether. (See Bridges Weekly, 30 June 2016)

NAFTA entered into force over two decades ago, in January 1994. In the years since, how much the deal has helped or hindered the competitiveness of certain industries has been a hotly debated subject in both trade and political circles.

Trump has also said that he would withdraw the US from the 12-country Trans-Pacific Partnership (TPP) Agreement, which includes Canada and Mexico as well. That deal has been signed by all participating countries and is now in the ratification stage. (See Bridges Weekly, 11 February 2016)

Speaking to reporters on the way to the Ottawa meeting, White House Press Secretary Josh Earnest answered questions on Trump’s NAFTA plan by suggesting that the TPP is, in actuality, already a “renegotiation” of the original NAFTA deal.

“That’s exactly what the TPP does, is it includes obviously countries in the Asia-Pacific as well, but it includes Canada and Mexico. And it raises standards related to the environment and to labour conditions in all of the countries that have signed the agreement. It also makes those higher standards enforceable in a way that they weren’t in NAFTA,” said Earnest.

Brexit parallels?

During last week’s meeting, the North American leaders also faced questions over developments seen across the Atlantic, namely the 23 June referendum that saw UK citizens vote by a slim majority to leave the European Union. (See Bridges Weekly, 30 June 2016)

The debate within the UK leading up to the vote focused heavily on issues relating to immigration, and the result was credited partly to growing scepticism of globalisation among the country’s citizens.

However, following the result, politicians backing the “Leave” campaign have struggled to form a consistent view on how to move forward, including on trade. EU leaders, meanwhile, have said that should the UK wish to keep its access to the bloc’s single market, it will need to sign on to all four of its freedoms – including freedom of movement.

“Now, with respect to Brexit, I think it’s important to point out that those who argued about leaving the European Union are the same folks who the very next day are insisting, don’t worry, we’re still going to have access to the single market,” said Obama to reporters in Ottawa last week.

The US president cautioned against creating “easy analogies” with last week’s “Brexit” vote and the trade context in the US, Canada, and Mexico, including with regards to the TPP. The sentiment was echoed by both Peña Nieto and Trudeau.

Furthermore, he said, while there is a “legitimate gripe about globalisation,” the issue is more about the actual policy prescription to address it.

“My pushback on both the left and right when it comes to protectionism or anti-trade arguments is you are right to be concerned about the trends, but what you’re prescribing will not work,” he said.

US-Canada softwood lumber talks

The 29 June meeting also gave Obama and Trudeau the chance to discuss the ongoing negotiations for a new Softwood Lumber Agreement (SLA), after the previous version expired last October. (See Bridges Weekly, 15 October 2015)

Back in March, the two leaders had given their negotiators a window of 100 days to sort out the key features that would help define a new SLA. Top trade officials from both sides reported in June that while their talks had shown some movement, “significant differences” remain between them. (See Bridges Weekly, 23 June 2016)

Following their discussions, Obama and Trudeau released a joint statement outlining in further detail the “key features” and “common goals” that would feature in a new softwood lumber deal.

“A new softwood lumber agreement will need to reflect the realities of Canadian timber management policies and the US domestic market,” they said, calling for an equitable outcome that ensured both predictability and the ability to respond to market dynamics.

The planned agreement would need to limit Canadian exports to a certain threshold, specifically a to-be-confirmed level of US market share, with the possibility of excluding regions or companies; support regional policies that would tackle the source of bilateral “trade frictions; and include the necessary institutional provisions for putting a future deal into practice.

The deal would also need to address the issue of trade remedies, along with including enforcement tools and ways to ensure transparency.

The two leaders have now directed their ministers to keep “an intensive pace of engagement” in order to clinch a deal this autumn, particularly given the impending end to the October “standstill” which is currently preventing the US from potentially seeking new trade remedies on imported Canadian lumber.

ICTSD reporting.

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