NEWS RELEASES

May 18, 2005 (12:00 p.m. EDT)
No. 89

CANADA RELEASES REVISED OFFER IN WTO SERVICES NEGOTIATIONS

The Government of Canada today submitted Canada’s revised General Agreement on Trade in Services (GATS) market access offer to the World Trade Organization (WTO). The offer is part of ongoing negotiations on GATS.

The document outlines how Canada is prepared to open access to its markets in exchange for greater access to foreign markets for services. It contains a number of additions to Canada’s initial GATS offer, which was submitted to the WTO in March 2003.

“An agreement on GATS could help bring better-paying jobs to Canada while providing greater choice and lower costs to Canadian consumers,” said International Trade Minister Jim Peterson. “Successful talks would also mean significant new opportunities for Canadian businesses in new economic powerhouses such as China, India and Brazil, as well as with our established partners in Japan and the European Union.”

In its revised GATS offer, Canada proposes improved market access commitments in the following areas:

•         accounting, engineering and legal services;

•         financial services;

•         courier services;

•         tourism and related services;

•         transport services;

•         the temporary movement of business people;

•         commercial presence; and

•         exemptions to the “most favoured nation” principle.

GATS also allows countries to determine which services will be delivered through public services. Canada’s new offer reaffirms that health, public education, social services or culture will not be included in its agreement. “Our offer clearly indicates that Canada’s public services are not up for negotiation,” said Minister Peterson.

Canada’s participation in the ongoing GATS negotiations is key to improving international market access, transparency and predictability for Canadian service providers. In 2004, Canada exported more than $62 billion in services, over half of which were commercial or business services.

In addition, successful GATS negotiations could allow millions more people from developing countries to participate in the global economy. To help encourage developing and least-developed countries to become involved in international services markets, Canada has further opened market access in professional services and in the temporary movement of business people. A new Web portal launched today by the Government of Canada will also contribute by providing information on Canada’s services, market and regulatory framework to serve suppliers that are engaged in developing countries.

Canada’s revised GATS offer was prepared in consultation with Canadians and in partnership with provincial and territorial governments.

For additional information on GATS, and to view Canada’s revised GATS offer, please consult http://www.dfait-maeci.gc.ca/tna-nac/service-en.asp and http://www.wto.org.

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Backgrounders are attached.

For further information, media representatives may contact:

Andrea Lanthier

Press Secretary
Office of the Minister of International Trade
(613) 992-7332

Media Relations Office
International Trade Canada
(613) 995-1874
http://www.international.gc.ca

Backgrounder

CANADA AND THE GENERAL AGREEMENT ON TRADE IN SERVICES

The services sector is crucial to Canada as it accounts for 65 percent of gross domestic product, is responsible for three in four jobs and leads the country’s transformation to a knowledge-based economy.

As a growing exporter of services, Canada relies on multilateral, legally enforceable rules for trade in services. The ongoing services negotiations at the World Trade Organization (WTO) are critical to Canada, as domestic service exporters need access to international markets, and fair and equitable treatment once there. The current General Agreement in Trade in Services (GATS) negotiations will determine the framework within which domestic entrepreneurs—particularly small and medium-sized enterprises—are able to sell Canadian innovation and know-how to the world.

At their core, these negotiations provide a forum within which each WTO member commits to providing certain levels of market access and non-discrimination in exchange for greater access to foreign-service markets.

Status of negotiations

At the Ministerial Conference in Doha, Qatar, in November 2001, WTO members set two key deadlines for services negotiations. The first deadline, June 30, 2002, was for the submission of each member’s initial requests to other members, stating areas of interest for market access commitments. The second deadline, March 31, 2003, was for the submission of each member’s initial offer on open specific sectors.

Canada presented its initial requests and its initial offer to other WTO members by the agreed deadlines. A description of the initial market access requests that Canada made of other countries, as well as the full text of the initial conditional offer, are available on-line, at http://www.dfait-maeci.gc.ca/tna-nac/TS/gats-negotiations-en.asp.

Canada’s initial conditional offer proposed increased market access commitments in the following service areas: finance, business, communications, construction, distribution, tourism and travel, and transport. Initial offers took into account the basic negotiating objectives that each country had set for itself, as well as the various bilateral requests it had received from other members.

On August 1, 2004, WTO members agreed to table revised offers by May 2005. Canada’s revised offer, which builds on its March 31, 2003, submission, was submitted to the WTO on May 18, 2005. Canada’s revised GATS offer, as well as a document outlining key highlights of the revised offer, is available at the following Web site: http://www.dfait-maeci.gc.ca/tna-nac/TS/revised-offer-2005-en.asp.

Canada’s revised offer does not include any commitments on health, public education, social services or culture.

Canada’s revised offer will only become legally binding if the government is satisfied with the overall level of trade liberalization achieved at the end of negotiations. In other words, Canada is free to add, remove or modify any element of its offer until a final agreement that meets Canada’s objectives is reached.

Progress in the GATS negotiations will be reviewed together with developments in other negotiating areas at the WTO Hong Kong Ministerial Conference in December 2005.

Responding to requests from developing countries

The GATS negotiations are intrinsic to a successful WTO Doha Development Round, which could generate billions of dollars as a result of more liberalized trade. This would translate into millions more people in developing countries participating in the global economy and improving their living conditions.

In GATS negotiations, Canada has given special attention to the requests for market access made by developing countries. For example, it has

•         improved commitments in sectors of interest to developing countries, such as professional services and the temporary movement of business people;

•         created a Web portal to provide information to developing-country services suppliers on Canada’s services market and regulatory framework, http://www.dfait-maeci.gc.ca/tna-nac/TS/contact-point-en.asp; and

•         contributed approximately $318 million in trade-related technical assistance and capacity building between 2001 and 2004. This includes $130,000 in 2003 to assist 10 developing countries to assess their interests in the GATS negotiations.

A commitment to transparency and consultation

The Government of Canada is committed to an ongoing, transparent and accessible consultation process for all of its international trade negotiations, as they are the cornerstones of democracy. Informed and constructive debate is fostered by an open environment, and the Government of Canada has demonstrated its leadership in this issue by undertaking extensive consultations with Canadians and with provincial, territorial and municipal governments.

In keeping with this commitment, the government has made its May 2005 revised GATS offer public, as it did with its 2003 initial GATS offer.

It is important to note that Canada was the first country to commit to making its offer public. This transparent approach to trade negotiations has also been adopted by several other WTO members when tabling their initial offers.

Backgrounder

HIGHLIGHTS OF CANADA’S REVISED CONDITIONAL GATS OFFER

Canada’s revised offer outlines what further commitments for trade in services Canada is willing to make in exchange for improved access to foreign markets. The revised offer was prepared in partnership with Canadian provinces and territories and through close consultation with various domestic stakeholders. As with Canada’s initial offer, Canada’s revised offer takes into account the market access requests made by Canada’s WTO trading partners, and devotes particular attention to the market access requests made by developing and least-developed countries.

Like all offers in the negotiations, Canada’s revised offer is conditional on the overall level of liberalization that is achieved at the end of the negotiations. This means that Canada retains the right to add, remove or modify any element of its offer until a final agreement that meets Canada’s objectives is reached.

Canadian services providers have export interests in a wide range of service sectors, including financial services, professional services, environmental services and energy services. Canada’s revised offer will place it in a solid position to promote progress in these sectors and to continue to play a leading role in the negotiations. To view Canada’s revised GATS offer please visit the following Web site: http://www.dfait-maeci.gc.ca/tna-nac/TS/revised-offer-2005-en.asp.

Canada’s revised conditional services offer includes:

Temporary movement of business people: Canada’s revised offer includes several significant improvements with respect to the temporary entry of services suppliers, which is a priority area for many WTO members in the negotiations, especially developing countries. Canada’s revised offer includes a new category of intra-corporate transferees, which will facilitate the temporary entry of individuals who enter Canada for career development purposes. In addition, Canada has broadened its commitments for senior computer specialists to include the wider category of information communications technology professionals, and has lowered the minimum education and experience requirements for these professionals to allow individuals with a wider range of education and experience levels to supply their services to Canada. Furthermore, Canada has also removed limits on the number of senior computer specialists permitted to enter Canada in order to work on a given project. Canada has also added management consultants to the list of professions covered by its horizontal offer on temporary entry. Finally, to increase the transparency of its revised offer, Canada is scheduling its offer according to the “model schedule” promoted by Canada and several other WTO members.

Professional services: Canada’s revised offer includes improved market access for foreign professionals through the removal or, in some cases, the modification, of several pre-existing requirements. Improvements contained in Canada’s revised offer pertain to three sub-sectors listed under the heading of professional services, namely legal services; accounting, auditing and bookkeeping services; and engineering services. Changes include the removal of several provincial residency requirements, the elimination of several requirements for commercial presence, and, in one case, the substitution of a more liberal requirement for residency. In addition, Canada’s revised offer contains new commitments in one province for the temporary licensing of foreign legal consultants.

Transport services: In response to requests made by numerous WTO members, Canada has amended its offer on maritime transport services to follow more closely the maritime model schedule initially discussed by WTO members during the Uruguay Round. Canada has also provided further definitions for terms used in its offer for increased clarity and transparency. In the area of international maritime transport, Canada has also removed a ship registration restriction on cross-border trade of these services and has added further clarification to a restriction related to fishing vessels. With respect to highway freight transportation, the revised offer removes a provincial requirement for a public convenience and needs test. In the rail transport sector, Canada has removed a “cabotage” limitation on the cross-border supply of rail transport services and a provincial residency requirement for boards of directors.

Financial Services: Canada’s revised commitments in financial services comprise changes to both provincial and federal measures. The provincial measures include the removal of residency requirements for trading in securities and commodities futures and providing auxiliary financial services, and the removal of a provincial requirement that certain insurance services be provided by public monopoly. Regarding federal measures, Canada’s revised offer increases the range of choices available to foreign suppliers of banking services by providing banks the option of establishing more than one form of establishment (e.g. a subsidiary, a lending branch or a full service branch) at the same time, instead of requiring them to choose only one among several forms of establishment. Direct ownership and control requirements for foreign-owned subsidiaries have also been made less restrictive.

Exemptions to the “most favoured nation” (MFN) principle: In order to provide all WTO members with treatment that is as favourable as that accorded to the services and service suppliers of any other country, Canada’s revised offer eliminates three exemptions that Canada had taken to GATS MFN requirements. The removed exemptions include a provincial exemption for the preferential treatment of loan and investment companies incorporated in the United Kingdom and Ireland, and two exemptions that allowed for preferential treatment of the United States with respect to certain activities under maritime transport.

Commercial presence: In response to requests from Canada’s trading partners, the revised offer includes improvements to its horizontal commitments in the area of commercial presence. The improvements include the ability of foreign services suppliers to acquire land in certain provinces, and less restrictive provincial residency requirements for members of the boards of directors of companies.

Tourism services: Canada’s revised offer modifies a provincial citizenship requirement for the provision of tourism services such that citizenship is only required for the sale of alcoholic beverages.

Courier services: Canada’s revised offer removes a provincial requirement for an economic needs test to be performed in order to supply courier services.

What Canada is not offering:

Canada’s revised offer does not include any commitments on health, public education, social services or culture.