More and more countries are demanding that their imports meet environmental standards, with Europe's fuel-quality directive the most obvious example.
But the National Round Table on the Environment and the Economy says there is little information in Canada for businesses to determine what kind of environmental footprint their production is making.
With no organized effort to deal with such analysis, the round table says Canada's competitiveness and reputation in global trade are at stake.
"Increasingly, market access for our resources and goods will be at risk if we don't act," says the advisory group's president, David McLaughlin, in the report.
The report is in response to a request from Environment Minister Peter Kent. He asked the advisory group to look at the need for a "life cycle" approach to production in Canada — a systematic way of measuring the environmental impact of a good or service, from conception to consumption.
The researchers found that Europe has a life-cycle approach in many parts of its private and public sectors, and the United States is increasingly adopting such an outlook.
Canada, however, has no standards or toools for measuring environmental impacts, nor does it have any guidelines for eco-labelling. Instead, individual companies are taking initiatives in a fragmented way.
"With environmental concerns becoming an increasing determinant of the terms of trade, we need to build up our capacity and step up our expertise in integrating the environment and the economy in business and government decision-making," the report states.
Canada's trading partners could erect barriers to Canadian goods and services unless Canadian accounting of environmental impact meets foreign standards, the report warns.
Indeed, Ottawa is already in a dispute with the European Parliament over its attempts to designate Canadian bitumen too dirty for Europe's fuel quality rules.
Ottawa's response has been to lobby hard for Canadian oil and wave international trade rules at European leaders in an attempt to get them to back down.
But the round table's report says product-footprint standards are probably the way of the future, and Canada should be working domestically and internationally to make sure it is up to speed.
The report recommends setting up a database for the private and public sectors that would detail international trade and market access requirements.
The round table also wants to see Ottawa develop some solid rules and standards that over time would pay off for companies in efficiencies and competitiveness.
These rules would be developed by third parties but the federal government would be in charge of oversight.
While Kent requested the research and advice in the round table's report, the government has largely ignored the agency's advice in the past, and is now moving to eliminate its funding.
The round table, an independent body whose directors were named by the Conservative government, has less than a year left to live.
Kent initially said the funding was cut because the round table's research is replicated in universities and think-tanks, and is readily available on the Internet.
But Foreign Affairs Minister John Baird, a former environment minister, said this week the agency is being shut down because the government disagrees fundamentally with its advice.
The round table has written that a cap-and-trade system to control greenhouse gases would be an effective way for Canada to meet its international obligations to reduce emissions — a message the federal Conservatives say amounts to calling for a punitive carbon tax.Suggest a correction