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NEWS RELEASES

February 5, 2002 (10:15 a.m. EST) No. 10

PETTIGREW TABLES LEGISLATION

Minister for International Trade Pierre Pettigrew today introduced legislation in the House of Commons that will allow Canada to enjoy all the advantages of China's accession to the World Trade Organization (WTO).

"China is Canada's fourth largest trading partner and has one fifth of the earth's population," said Minister Pettigrew. "These legislative measures will allow Canada to take full advantage of the new opportunities that will arise from China's accession to the WTO while ensuring that trade with the new member remains fair and equitable."

The bill will amend existing Canadian legislation, allowing Canada to fully implement safeguards and anti-dumping rights that were agreed to in China's WTO accession negotiations. The safeguards will enable Canada to take temporary measures to protect Canadian industries in the event that there are surges of imports from China that could cause injury.

On December 11, 2001, China formally joined the WTO. China will significantly improve access to its market for a wide range of priority Canadian industrial, agricultural and fish products, including automotive parts, plastics, chemicals, paper products, grains and oilseeds, and frozen shrimp and crab. China will also provide improved access in a wide range of service sectors, including telecommunications, financial services and life insurance.

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A backgrounder is attached.

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Backgrounder

AN ACT TO AMEND CERTAIN ACTS AS A RESULT OF THE ACCESSION OF THE PEOPLE'S REPUBLIC OF CHINA TO THE AGREEMENT ESTABLISHING THE WORLD TRADE ORGANIZATION

This bill includes legislative amendments required to implement special safeguards and anti-dumping procedures agreed to in the course of multilateral negotiations on China's accession to the World Trade Organization.

The accession of a new WTO member does not usually require any amendment of Canadian legislation. However, when the terms of China's membership were set, new rights were given to members.

The proposed amendments will implement these new rights in Canadian legislation. They will allow Canada, under certain circumstances, to apply new safeguards to imports from China and to apply appropriate price comparability rules in anti-dumping investigations on Chinese goods. All WTO members may have recourse to these rights.

Legislative amendments are proposed to the Customs Tariff, the Canadian International Trade Tribunal Act, the Special Import Measures Act, and the Export and Import Permits Act.

Safeguards are common features of trade agreements, such as the WTO and NAFTA, and Canada has existing legislation and regulations to implement them. When faced with unexpected surges of imports that cause or threaten to cause injury to domestic industry, safeguards allow governments to give temporary relief for affected industries to make competitive adjustments. Such relief can take the form of higher import duties, quantitative restrictions on imports, or the imposition of tariff-rate quotas.

The new safeguards obtained in China's accession negotiations differ from standard safeguard provisions in that they will be applicable only to imports from China (as opposed to imports from all sources); they will have a lower injury threshold; and they will be available for a limited period (two safeguard measures will be available until 2013 and the third until 2008).

There are three new safeguards provided for in the terms of China's membership in the WTO:

• a "product-specific safeguard," which could be applied to any good originating in China that was causing or threatening to cause injury to Canadian industry due to an increase in imports;

• a "diversionary safeguard" that would be used to prevent Chinese goods, shut out of one market by a product-specific safeguard, from overflowing into Canada and injuring industry; and

• a third safeguard that will be applicable to imports of Chinese textiles and clothing.

China's access to the Canadian market is already quite open and injurious surges of imports from China are unlikely to occur as a direct result of its WTO membership. Implementation of the proposed China-specific safeguard provisions will allow sensitive Canadian industries to adjust, if necessary, by protecting them from possible surges of Chinese imports that cause or threaten to cause them injury.

It was also agreed during China's accession negotiations that members could apply special terms to China in the course of anti-dumping investigations. Anti-dumping investigations are conducted to determine whether imports are being unfairly sold at prices below the cost of production or below the market price that prevails in the country of origin.

Canadian legislation provides special rules to be applied when costs and prices in the country of origin are not set by the market. However, the current criteria may not fully apply to the transitional nature of the Chinese economy. As such, WTO members negotiated special terms to apply to anti-dumping for a 15-year period following China's accession.

The revised rules will ensure that Canada has adequate flexibility to ensure that domestic industry does not suffer due to the unfair trading practice of dumping.