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Natural resources and international trade have always been at the heart of the Canadian economy and will very likely remain so into the future. Like other export-intensive countries, Canada faces critical challenges ahead. The global economy is undergoing fundamental changes as a result of the global economic downturn and the emergence of new consumer economies such as Brazil, Russia, India, and China.

As a trading nation, Canada looks beyond its borders to generate jobs, economic growth, and prosperity. Today, roughly 30 percent of Canada’s gross domestic product (GDP) is fuelled by exports, and natural resources account for half of that. The federal government estimates that the natural resource sector provided jobs for over 750,000 Canadians in 2010 and is poised to grow even more. It also estimates that more than 600 major resource projects, representing $650 billion in new investments, are under way or planned across the country for the next 10 years.

The expected boom in natural resource development brings not only economic opportunities, but also environmental challenges. For at least the past two decades, international markets, trade rules, and the private sector have recognized that economic growth, international trade, and environmental protection are interlinked. For example, Canada has been at the forefront—both in global trade agreements like those of the World Trade Organization, and regional and bilateral agreements—in acknowledging the critical role that environmental stewardship plays in the global economy. This year marks the 20th anniversary of the North American Free Trade Agreement, an agreement that codified explicit environmental commitments within trade rules and a parallel environmental cooperation agenda. Since then, Canada has completed a number of other trade agreements, including those with Costa Rica, Colombia, and Chile, which recognize that international trade and high levels of environmental protection go hand in hand.

As I noted in my 2012 Spring Report to Parliament, there is a growing list of Canadian companies that are integrating environmental performance into how they do business both here and abroad. For example, after years of facing consumer boycotts, Canada’s forestry sector is now a world leader in sustainably produced timber and forest products. In a number of global industries, Canadian companies continue to demonstrate environmental leadership.

A key challenge in expanding Canada’s development and export of natural resources—from oil and gas to minerals and metals—will involve meeting or exceeding the environmental standards and consumer expectations of foreign markets. Trade cases continue to underscore that the environmental characteristics of a product, as well as how it is processed and transported, can affect market access and consumer choice. Therefore, it is vital from an economic perspective that Canada’s environmental protections keep pace with economic development.

This report examines the following federal environmental programs and activities, which help ensure that natural resource development is both responsible and sustainable:

• protecting our ocean resources by establishing marine protected areas;
• managing environmental risks associated with offshore oil and gas development; and
• setting financial guarantees and liability limits for mining, shipping and offshore platforms, and nuclear power.

We have also included a study of federal support to the fossil fuel sector. This study highlights the critical link between environmental and economic issues raised in past reports. In the annual environmental petitions report, we follow up on questions posed in three petitions received in recent years. We present what Environment Canada and Health Canada are doing with regard to substances used in hydraulic fracturing for shale gas.

Looking forward, in 2013 we will be reporting on several aspects of the federal government’s sustainable development strategy. In particular, we will be assessing the fairness of the information contained in the next progress report on the Federal Sustainable Development Strategy 2010–2013, as well as providing feedback to the Minister of the Environment on the government’s next draft of the Federal Sustainable Development Strategy. In addition, we will be reporting on the implementation of the federal and departmental strategies.

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