During the next few weeks, it will be Peru and Canada’s turn to finalise negotiations on a foreign investment agreement, the main effect of which will be, in the words of the Canadian government, “to afford Canadian investors greater protection for their investments in Peru”.

The fact that governments routinely perform environmental assessments alongside trade negotiations shows that they implicitly acceptthe link between foreign investment and the environment.

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Canadian law, for example, requires that all initiatives considered at a ministerial level “must be assessed if implementation of the proposal may result in important environmental effects, either positive or negative”.

Negotiations over the environmental impact of cross-border investment between Canada and Peru are somewhat lop-sided. Peruvian investment in Canada stands at just $1m, while Canadian firms have invested about $2bn in Peru, mostly in mining.

Although Canada’s environmental assessment of its latest treaty accepts the link between the emissions from mining and global warming, it stops short of acknowledging any environmental impact in its own territory.

In an environmental assessment report obtained by fDi magazine, Canadian government researchers catalogued the problems that are likely to occur in mining areas. “The transboundary environmental impacts of concern that could most directly affect the Canadian environment relate to air emissions, which can result in the deposition of heavy metals thousands of miles from the primary source. Emissions from mining can also contribute to global warming,” they said.

Although the research found “no specific evidence that mining in Peru has transboundary impacts on Canada”, the government is giving Peru nearly C$10m ($8.5m) to improve environmental regulation.

Also, in the latest treaty Canada is expected to include clauses that ask Peru not to lower its environmental standards to attract investment and to enforce the laws that are already in place.

Two cheers for Canada’s government for going this far and acknowledging that pollution havens might exist and for refusing to encourage a race to the bottom.