NEWS RELEASES

March 14, 2001 (1:00 p.m. EST) No. 32

MINISTER PETTIGREW ANNOUNCES CANADA'S POSITION

IN SERVICE TRADE TALKS

International Trade Minister Pierre Pettigrew today launched Canada's initial negotiating position for the General Agreement on Trade in Services (GATS), including Canada's specific sectoral and horizontal proposals. The Government recently formulated its initial position following extensive consultations with Canadians.

"Canada will take a leading role in these negotiations," declared Minister Pettigrew. "Trade plays a key role in our prosperity, and service sectors are an engine of growth for our economy. Canada is building a new economy based on technology and knowledge-based industries. Clear rules on trade in services will pave the way for greater opportunities for Canadians than ever before."

Minister Pettigrew outlined the key elements of Canada's initial position, including improved access to foreign markets for Canadian service providers, many of whom are small- and medium-sized businesses. Canada will also explore ways to address the special interests and concerns of developing countries.

"Greater access to markets around the world will enable our companies to thrive," said Minister Pettigrew. "Large or small, Canadian companies in engineering, research and development, financial services, information technology, telecommunications and many other service sectors are ready to expand their presence abroad while contributing more and better jobs at home.

"I would like to stress that we will maintain and preserve the ability of all levels of government to regulate and set policy in areas of importance to Canadians," added Minister Pettigrew. "We will not negotiate our health, public education or social services, and we will maintain the flexibility to pursue our cultural policy objectives."

Negotiations are expected to take three years or more. The Government of Canada will continue to consult widely on all issues associated with international trade. This also includes issues covered by the Framework for Conducting Environmental Assessment of Trade Negotiations.

For more information on Canada's initial negotiating position for the GATS, please visit the following Web sites: http://www.dfait-maeci.gc.ca or http://services2000.ic.gc.ca

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Background documents are attached.

For further information, media representatives may contact:

Sébastien Théberge

Office of the Minister for International Trade

(613) 992-7332

Media Relations Office

Department of Foreign Affairs and International Trade

(613) 995-1874

INITIAL CANADIAN NEGOTIATING PROPOSAL

Canada submits this paper, in accordance with the "Roadmap" document agreed upon by the Council for Trade in Services (CTS), Special Session, on May 26, 2000. It proposes principles and objectives for the current General Agreement on Trade in Services (GATS) negotiations, as well as elements for inclusion in the negotiating guidelines and procedures.

PRINCIPLES:

We recognize the increasingly global nature and importance of service industries, and the growing contribution of services exports to the world economy, and specifically to the Canadian economy. This underlines the importance of a successful conclusion to the current services negotiations to increase market access for service providers. Expanded, transparent, and predictable markets benefit countries, businesses - small, medium and large - and consumers. Services particularly contribute to the development of the knowledge-based economy.

While recognizing the importance of a liberalized services trade environment, it is an underlying tenet of the GATS, found in both the Preamble and Article XIX of the Agreement, that the process of progressive liberalization shall take place with due respect for national policy objectives. In particular, the GATS emphasizes the right of Members to regulate, and to introduce new regulations, on the supply of services within their territories, in order to meet national policy objectives. These are important principles of the GATS as they ensure that each Members' ability to implement social and cultural policies is maintained.

The GATS cannot be interpreted as requiring governments to privatize or to deregulate any services. We recognize the right of individual countries to maintain public services in sectors of their choice: this is not a matter for the GATS negotiations. However, in sectors where countries have chosen to undertake specific commitments under the GATS, the mutually-agreed rules of GATS should apply.

Canada also recognizes that the process of progressive liberalization must respect the level of development of individual Members, and facilitate increased participation of developing countries in trade in services. Particular account must be taken of the serious difficulties faced by the least-developed countries. It is in the interest of all Members that developing countries are active participants in, and beneficiaries of, these negotiations.

OBJECTIVES:

Canada reaffirms that the objective of these negotiations is to liberalize trade in services through increased transparency and predictability in services trade regimes and through the provision of effective access to markets while giving due respect to national policy objectives.

Specifically, Canada's objectives at this initial stage of the negotiations are:

1. To obtain improved access to international markets for Canadian service providers.

2. To consider the particular situation of small- and medium-sized service suppliers, in the negotiations.

3. To preserve the ability of Canada and Canadians to maintain or establish regulations, subsidies, administrative practices or other measures in sectors such as health, public education, and social services.

4. To recognize the importance of the framework of rules in enhancing transparency and predictability for Canadian service exporters: in particular, to continue the work of the "built-in agenda" of the emergency safeguard mechanism, subsidies, government procurement and domestic regulation (as set out in GATS Article VI.4).

5. To explore ways to address the interests and concerns of developing countries; in particular, to consider the serious challenges faced by least-developed countries in these negotiations .

Canada also believes that a systematic process of identifying and evaluating likely and significant environmental impacts of trade negotiations is essential, and to this end, will undertake domestically an environmental assessment of the GATS in accordance with Canada's "Framework for Conducting Environmental Assessments of Trade Negotiations".

Canada will also not make any commitment that restricts our ability to achieve our cultural policy objectives until a new international instrument, designed specifically to safeguard the right of countries to promote and preserve their cultural diversity, can be established.

NEGOTIATING GUIDELINES AND PROCEDURES:

Scope:

The negotiations shall be conducted within the existing architecture of the GATS, which allows each Member to choose - through its specific commitments - which service sectors, which modes of service delivery and to what extent they wish to open to foreign service providers. Canada's choices will be guided by the principles and objectives noted above.

The negotiations shall seek to secure an overall balance of rights and obligations over a broad range of sectors.

The negotiations shall preserve the right of Members to regulate and to introduce new regulations in order to meet national policy objectives and will not cover those services specifically excluded by the GATS: i.e., services supplied in the exercise of governmental authority, as well as air transport services excluded from the GATS under the Annex on Air Transport Services.

Special attention shall be given to sectors and modes of supply of interest to developing countries.

Reviews:

Negotiations should take into account the results of ongoing reviews of the "Annex on Air Transport Services" and the "Understanding on Accounting Rates". As specified in the "Annex on Article II Exemptions", Most-Favoured Nation (MFN) Exemptions taken by Members shall be subject to negotiation.

Autonomous Liberalization:

Recognizing transparency and predictability as two cornerstones of the GATS, Canada believes that it is in the interest of all Members to take note of the autonomous liberalization of other Members and to give credit as appropriate.

Assessment:

Much assessment work has been completed, but Canada recognizes the value of ongoing assessment of trade in services work.

Starting Point:

The starting point for negotiations on liberalization should be the existing level of commitments as contained in the GATS schedules

Developing Countries:

Members should consider how to support the negotiating capabilities of developing countries and consideration should be given to providing special treatment for the least developed countries.

Negotiating Approaches:

The request-offer approach should form the basis of the negotiations. Horizontal, formula, model schedule or cluster negotiating approaches could be considered as appropriate, as long as they are consistent with the GATS architecture, which allows Members to individually decide which commitments to undertake.

Technical Review:

Existing provisions of the GATS may be subject to a technical review as agreed, by Members, to improve the clarity and legal consistency of the text. Any technical changes should not alter the structure, meaning or principles of the GATS.

Organization of the Negotiations:

Members should take practical decisions on the appropriate initial organization required for consideration of the various negotiating proposals, taking into account the diversity of interests, representation from capitals, resource implications, and the limited capacity of smaller missions.

Backgrounder

CANADA AND THE GENERAL AGREEMENT

ON TRADE IN SERVICES

Breaking New Ground in Trade Agreements

During the Uruguay Round of trade negotiations, which resulted in the establishment of the World Trade Organization (WTO) in 1995, the 124 participants recognized the need for a comprehensive set of rules governing the growing trade in services.

To ensure that all countries, regardless of their size or power, traded under a set of known and agreed rules, Canada and our partners concluded the General Agreement on Trade in Services (GATS).

Similar in principle to the General Agreement on Tariffs and Trade (GATT), which deals with trade in goods, the primary goal of the GATS is progressive liberalization of trade in services.

All of the WTO's 140 current members have agreed to open up parts of their domestic services markets to international competition through the GATS.

Committing to Openness and Transparency

The GATS negotiations allow for the liberalization of trade barriers generally, as well as enabling further work in the development of rules and their application to specific sectors. In preparation for these negotiations, Canada undertook a wide-ranging series of consultations to develop its initial negotiating position. The Government of Canada has been meeting regularly with the provinces and territories; they consult on an ongoing basis with municipalities, citizen-based organizations, public interest groups, labour unions, businesses and interested individuals.

For example, joint federal and provincial/territorial cross-country consultations were held between June and October 2000. A report providing a general summary of the comments that were made during these consultations can be found on the Internet (http://strategis.ic.gc.ca/SSG/sk00085e.html).

Protecting Canada's Interests

By participating in the GATS negotiations, Canada is helping to set the rules for trade in services, which is so critical to our prosperity. These rules will protect Canadian businesses from unfair competition or discrimination and will help to level the playing field.

We are helping to establish a predictable and transparent regime that facilitates trade.

The GATS has a core set of rules:

that commit all members to inform one another of the conditions for doing business in their countries;

that ensure members are committed to treating all service providers equally; and

that provide all members access to WTO dispute resolution mechanisms.

The GATS also includes individual country commitments with respect to market access and national treatment in the areas each country has opened up to international trade. (The most common areas are distribution, tourism, banking, insurance, telecommunications and professional services.)

We are also ensuring that the right of governments to formulate public policy is respected.

Members have specifically recognized in the GATS the right of governments to regulate services, public or private, in order to meet national policy objectives.

The GATS also specifically excludes services supplied in the exercise of governmental authority.

The GATS further states that liberalization is to take place with due respect for national policy objectives and the level of development of individual members.

No country can be forced to open a sector or service, even if other countries request or offer commitments to liberalize in those areas.

Each country decides which sectors it will open up, on what terms and when.

Canada's Initial Negotiating Position

While the Government of Canada continues to consult with stakeholders on detailed negotiating positions, our general objectives in the GATS negotiations are:

1. to obtain greater market access from our trading partners;

2. to improve the international trade in services system, to make the rules apply fairly to everyone; and

3. to ensure that our right to formulate public policy is respected.

Canada's health, public education and social services are not negotiable. Canada will preserve its ability to maintain or establish regulations, subsidies, administrative practices or other measures in sectors such as health, public education and social services. Pending the development of a new international instrument on cultural diversity, we will not make any commitment that restricts our ability to achieve our cultural policy objectives. For further information, please consult: http://services2000.ic.gc.ca