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Opening Doors to the World:
Canada's International Market Access Priorities 2000
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7. Opening Doors to Other Key Markets
Australia
Overview
Australian imports from Canada were down 3.7 percent to $915 million in 1999, while Canadian imports from Australia decreased by 6.5 percent to $1.21 billion, for a two-way total of $2.13 billion. Canadian sales successes in Australia continue to be oriented toward fully manufactured goods, a pattern closer to that of the United States than of any other Asia Pacific market.
There are natural affinities between Canada and Australia arising from similar legal and regulatory systems, comparable federal structures and a trading relationship reaching back over 100 years. Most trade between the two countries takes place at MFN rates, including substantial amounts at duty-free rates.
As of July 1, 1998, most MFN applied rates were at, or below, 5 percent. However, some tariff peaks reaching into the 25 percent to 30 percent range remain, such as passenger motor vehicles, textiles, clothing and footwear. Some important non-tariff measures have an impact on market access, especially the tough sanitary and phytosanitary requirements imposed by the Australian Quarantine and Inspection Service. Most fisheries, meat, livestock, fruit, vegetable and food product imports face restrictive measures, ranging from prior approval and lengthy time delays in quarantine (e.g. Canadian dairy and beef breeding stock and ostriches) to outright bans (such as previous bans on fresh, chilled and frozen salmon). Other measures affecting access for Canadian goods and services include product standards, government-procurement practices (which vary from sector to sector, and from Commonwealth to state levels) and trade-remedy laws (Australia is among the most active users of anti-dumping and countervailing duty statutes).
Canada and Australia have also announced a joint statement on global e-commerce that articulates a shared vision and a program of cooperation for the growth of global electronic commerce.
Market Access Results in 1999
Improving Access for Trade in Goods
Salmon
Since 1975, Australia has prohibited the importation of fresh, chilled and frozen salmon due to alleged concerns about fish health. Canada's position is that there is no scientific basis for the ban. In June 1998, a WTO dispute settlement panel found that the Australian ban is not based on a risk assessment, is maintained without scientific evidence and reflects an arbitrary and unjustified distinction in levels of protection that results in discrimination of a disguised restriction on trade, in violation of the WTO SPS Agreement. In October 1998, the Appellate Body confirmed the panel's rulings. Following arbitration, Australia was given until July 6, 1999, to implement the rulings.
Australia did not meet the July 6 deadline, but announced, on July 19, new fish import policies, which they claim constitute implementation of the WTO rulings. Canada considers the new Australian fish import policies to be unnecessarily trade-restrictive and not in conformity with Australia's WTO obligations. A WTO panel was set up to determine whether the fish import policies announced on July 19 were consistent with the SPS Agreement.
In parallel to the WTO process and in an effort to facilitate trade wherever possible, technical discussions took place between Canada and Australia following Australia's announcement of its new fish-import policies. In October 1999, Canada informed exporters that an agreement had been reached on an interim fish-health certificate allowing access for Canadian wild-caught pacific salmon, subject to certain product form requirements. In December 1999, the interim fish-health certificate was revised to include Canadian farmed salmon, subject to the same product form requirements. Australia requires that products be in "consumer-ready form", defined as steaks of less than 450 g; skinless fillets of any weight; skin-on fillets of less than 450 g; eviscerated, headless fish of less than 450 g; or products further processed. Products not in consumer-ready form must be further processed in an Australian facility approved by the Australian Quarantine and Inspection Service. Canada has made it clear to Australia that the interim fish-health certificate was without prejudice to Canada's position before the WTO and that the Australian fish-import requirements continue to be unnecessarily trade restrictive.
On January 31, 2000, a WTO panel ruled that Australia's new fish import policies do not comply with its WTO obligations. Canada held discussions with Australia in an attempt to find a mutually acceptable solution that would improve market access for Canadian exporters. Unfortunately, the discussions were not successful. Canada will be allowed to retaliate against Australia following an arbitration over the amount of retaliation.
Current State of GM Foods
Australia and New Zealand continue to move toward mandatory labelling of GM foods. The Australia New Zealand Food Authority (ANZFA) has published a proposed standard for labelling of GM foods, which is currently undergoing public comments. As this requirement may affect Canadian exports, the situation will be monitored closely to protect Canadian trade interests.
Israel
Three years into the Canada-Israel Free Trade Agreement (CIFTA), bilateral trade between the two countries is increasing steadily. Two-way trade in goods expanded to $707 million in 1999, an increase of 12.1 percent from 1998. Canadian merchandise exports to Israel increased 23.6 percent over 1998 to $265 million. Canadian firms continue to make strong gains in such priority sectors as telecommunications, transportation, agri-food, construction equipment and pulp and paper. Telecommunications, in particular, has seen increased investment activity by Canadian firms.
Although negotiations on a FIPA have not progressed, Canadian firms report no difficulties in this market.
The most significant factors in increased trade between Canada and Israel continue to be the absence of virtually all tariffs on industrial products and the reduction of tariffs on many agriculture and agri-food products. As provided for under the CIFTA, Canada and Israel continue to engage in discussions (three meetings were held in 1999 alone) to further liberalize bilateral trade in agriculture and agri-food products. Canadian producers and exporters have advised the Government of the following priority areas in which Canada should seek to improve access to the Israeli market: fish; prepared frozen foods; and fresh and frozen fruit and vegetables.
West Bank and Gaza Strip
Canada is committed to promoting trade and investment relations with the Palestinians. The Joint Canadian-Palestinian Framework on Economic Cooperation and Trade will improve market access and customs procedures while supporting emerging industries in this market.
Advances in the Middle East Peace Process will simplify the movement of goods in and out of the West Bank and Gaza Strip. The opening of the Gaza International Airport and the safe-passage route will ease importers' access to the Palestinian Territories and to other Arab neighbours.
Saudi Arabia
Multilateral negotiations regarding Saudi Arabia's accession to the WTO began in May 1996. Canada's underlying objective in both the bilateral and multilateral negotiations is to secure reform and market access commitments that are commensurate with Saudi Arabia's role in global trade and investment and its importance as Canada's largest export market in the Middle East. In 1999, Canada's merchandise exports totalled $273 million, a decrease of 10.4 percent from 1998. Canadian FDI in Saudi Arabia is $6 million, and investment potential is high given Saudi Arabia's announcement of new investment requirements in the area of power generation/transmission ($160 billion over the next 25 years), telecommunications ($8 billion over the next ten years) and natural gas ($5.5 billion over the next five years). The newly created Supreme Economic Council has been entrusted with a clear mandate to introduce attractive foreign investment regulations, eliminate unnecessary government expenditures, find new sources of government revenue and reduce government bureaucracy.
The WTO working party on Saudi Arabia's accession has made significant progress in its examination of Saudi Arabia's foreign trade regime and is now beginning to shift its focus to setting out the detailed terms of the accession. The sixth working party meeting, which was held in September 1999, focussed on issues such as technical barriers to trade, import licensing, customs valuation and IP production. Members stressed the importance of Saudi Arabia providing copies of draft regulations and legislation in these areas.
Both bilateral and working party negotiations will continue in 2000. While Saudi Arabia has significantly improved its market access offers, Canada will continue to press in the bilateral negotiations for lower tariff rates on key agricultural and industrial exports, such as grains, fish, wood products, paper and medical equipment. Canada is also seeking Saudi Arabian acceptance of other zero-for-zero agreements, the ITA and the Pharmaceutical Agreement; full binding of its tariffs; and membership in the AGP. On services, Canada is seeking more open and predictable access for its services providers in such key sectors as telecommunications, professional services, a broad range of financial services and other business services. In terms of horizontal services commitments, Canada would like to see improvements in Saudi Arabia's services offerings, regarding the types and level of foreign commercial presence permitted and people's ability to enter Saudi Arabia on a temporary basis to provide services, either as individuals or as representatives of Canadian services firms.
South Africa
South Africa remains Canada's top trading partner in Sub-Saharan Africa. In 1999, Canadian merchandise exports to that market totalled $235 million, 24.2 percent below the 1998 level. Canada has extended the General Preferential Tariff to South Africa since 1994. In 1999, Canada imported $487 million from South Africa. This represents a decrease of 5.2 percent over 1998. Two-way investment remains modest, but Canadian direct investment in South Africa reached over $400 million in 1998, increasing by a further $520 million in the first nine months of 1999. Inward investment from South Africa has also risen in recent months to over $350 million, directed mostly at mining operations.
The TICA concluded in September 1998 provides a framework for enhanced dialogue on bilateral and multilateral trade and investment matters. It establishes a Consultative Group, led at the level of senior officials, which will meet every 18 months. The Consultative Group will review trade and investment opportunities and address market access difficulties that may be raised by either party. The TICA also establishes a framework for further training of South African trade-policy specialists. The TICA consultations will provide a forum in which to enhance cooperation on multilateral issues and learn first-hand about developments that could affect Canadian trade and investment interests in South Africa. These consultations are even more valuable given the resumption of WTO negotiations on agriculture and services and South Africa's ongoing trade talks with the EU and neighbours in the Southern African Development Community.
Canada has also signed a FIPA with South Africa. Discussions are ongoing regarding the entry into force of this agreement.
8. Summary of Market Access Results in 1999
The WTO
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New negotiations were launched in agriculture and services aimed at achieving progressively higher levels of liberalization.
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Accession negotiations were concluded between WTO Members and three countries -- Latvia, Estonia and Jordan -- bringing the WTO membership to 136.
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Canada submitted a formal proposal for the establishment of a working party on biotechnology.
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Canada and the other members of the WTO Agreement to Eliminate Duties on Specified Pharmaceutical Products implemented the third tranche of tariff cuts associated with this agreement. This phase included 639 additional products, including inputs.
United States
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The Consultative Committee on Agriculture began operation in 1999 to bring concerns and differences forward for resolution before they become serious bilateral irritants. The committee also involves provinces and states on a more systematic basis.
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The movement of feeder cattle into Canada was facilitated by expanding animal health approvals for cattle from states that meet certain animal health criteria.
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Regulations have been implemented that require a Canadian export permit for access to its tariff rate quota for Canada on sugar-containing products.
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Michigan amended its Single Business Tax (SBT) legislation, significantly reducing its impact on access for Canadian companies. The SBT, currently 2.2 percent, will be phased out at 0.1 percent per year over a 23-year period.
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An agreement-in-principle was reached on the main elements required to resolve problems resulting from changes to the U.S. International Trade in Arms Regulations (ITARs).
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As a result of reviews of 15 long-standing anti-dumping and countervailing duty orders, seven were revoked.
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Anti-dumping and countervailing duty cases against live cattle concluded in the fall of 1999 with neither resulting in permanent additional duties on Canadian cattle. In the anti-dumping case, the International Trade Commission (ITC) found no injury or threat of injury in its final determination; and in the countervailing duty case, the Department of Commerce found that subsidies were below de minimis levels and so were not countervailable.
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An anti-dumping investigation of imports of stainless steel wire did not result in the application of additional duties to imports from Canada.
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Two safeguard investigations involving imports of carbon-steel wire rod and carbon-steel line pipe concluded that imports from Canada were not injuring U.S. industry.
Mexico
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Canada and Mexico signed a satellite services agreement to facilitate the provision of services via commercial satellites licensed by the two countries.
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Canada and Mexico signed a Memorandum of Understanding (MOU) on the acceptance of test data to ensure that telecommunications and IT products meet all necessary safety standards.
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New opportunities for air services between the two countries were created as a result of an agreement on code-sharing that has been effectively implemented.
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A MOU on Cooperation in Food Safety and Inspection and Animal and Plant Health was signed in September 1999 to identify and resolve issues related to bilateral trade in agriculture and food products.
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The Fruit and Vegetable Dispute Resolution Corporation was incorporated in November 1999. This voluntary, industry-based, tri-national dispute settlement mechanism focuses on private commercial disputes involving trade in fruits and vegetables within and among the NAFTA countries.
Free Trade Area of the Americas
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The Administrative Secretariat for the negotiations was established in Miami under the directorship of a Canadian.
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Progress was achieved on the work programs for the nine FTAA negotiating groups and three other bodies addressing the cross-cutting issues of e-commerce, civil society engagement and the participation of smaller economies.
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In Toronto, at a meeting of the 34 hemispheric trade ministers on November 3-4, 1999, ministers: reviewed the progress of the negotiations; adopted a substantive package of business-facilitation measures; agreed on a statement directed at the Seattle WTO Ministerial Conference on the elimination of agricultural export subsidies; instructed negotiators to develop a draft text of the FTAA Agreement by April 2001; and agreed on a renewed mandate for the FTAA Civil Society Committee.
Chile
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On January 1, 2000, the Convention on the Avoidance of Double Taxation and the Prevention of Fiscal Evasion (DTA) came into effect.
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On January 1, 2000, an agreement to accelerate the elimination of tariffs on a selection of products came into effect.
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In May 1999, two MOUs between the CFIA and Chilean Agriculture and Livestock Service on cooperation and the exportation of Canadian pork to Chile were signed.
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Chile lowered its visa processing fee from US$650 to US$100.
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Chile continued to suspend the encaje.
European Union
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In April 1999, the EU dehydrated alfalfa industry imposed a voluntary ban on sales of dehydrated alfalfa to Japan, thus reducing the market disruption that had been occurring in Japan as a result of low-priced, subsidized EU alfalfa.
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In April 1999, the EU opened a single year 4,000-tonne TRQ for cooked and peeled shrimp.
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In November 1999, fisheries ministers from Member States agreed to renew the TRQ for cooked and peeled shrimp for a further three years and increase the quantity to 5,000 tonnes per year.
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In June 1999, Canadian and EU authorities signed an agreement permitting information exchange and cooperation in the area of competition policy and law.
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In September 1999, the EU reduced the gap between the export subsidy levels granted for barley and for malt.
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In September 1999, the EU Standing Plant Health Committee agreed to a multi-year derogation which will allow for the importation of Canadian seed potatoes until March 31, 2002.
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In November and December 1999, explanatory discussions were held on the possible scope of a wine and spirits agreement, which would provide improved market access for Canadian exporters in these areas.
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In December 1999, Canada and the EU announced a Joint Statement on Electronic Commerce in the Information Society, which recognized the potential global benefits of e-commerce and declared the objective of constructing an enabling global environment that maximizes social potential for citizens.
APEC
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Developed an agreement on APEC principles to enhance competition policy and regulatory reform.
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Established a MRA on conformity assessment of electrical and electronic equipment.
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Completed an APEC directory on professional services.
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an APEC website on Y2K for information exchange and preparedness tool kits.
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a study on the development of an APEC food system.
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Published a study on e-commerce adoption by SMEs in APEC Member economies.
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Supported eight specific steps to take the region closer to an open market in air services.
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Published International Commercial Disputes: a Guide to Arbitration and Dispute Resolution in APEC Member Economies, 1999.
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Published Competition Law for Developing Countries.
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Updated the hardcopy and internet versions of the APEC Guidebook on Investment Regimes.
Japan
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Japan revised the Japan Agricultural Standards (JAS) Law allowing foreign organizations to obtain Registered Certification Organization (RCO) and Registered Grading Organization (RGO) status.
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Japan approved the import of all varieties of Canadian tomatoes and agreed to discontinue variety-specific testing for Canadian tomatoes.
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Substantial reform, deregulation and restructuring of Japan's financial services sector resulted in Canada's largest-ever single investment in Japan.
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A new JAS product standard improved access conditions for Canadian plywood.
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Japan moved forward with replacing the system of building product testing and approval based on section 38 of the Building Standards Law toward the new system of foreign recognized evaluation bodies and recognized approval bodies.
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Japan continues to move toward increased adoption of international (ISO) standards for building products.
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Japan discontinued the Dairy Genetics Subsidy Program, which will improve access for Canadian bovine semen.
Korea
India
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Under an agreement announced January 10, 2000, quantitative restrictions (QRs) and import-licensing requirements will be lifted on 1429 agriculture, textile and consumer products. QRs on 714 tariff lines will be eliminated by April 2000, with the remainder phased out by April 2001.
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In October 1999, new telecommunications legislation was passed that will allow basic and cellular service operators to migrate from the existing system of a fixed-licence fee to a revenue-sharing regime. This will enhance market access for new entrants.
Indonesia
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Canada maintained market share in wheat sales, despite the predatory subsidy policies of competing economies, particularly those of the United States.
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The Canadian Embassy continued to press Indonesia customs authorities to improve transparency.
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The Indonesian government implemented new regulations permitting greater foreign ownership of commercial banks. Foreign investors may now own up to 99 percent of a bank's shares.
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Non-food agricultural tariffs have been reduced.
Thailand
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In October 1999, the Thai Parliament adopted a revised Alien Business Law, significantly easing restrictions on foreign companies doing business in Thailand.
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In August 1999, Thailand reduced the tariff on canola meal from 10 percent to 5 percent, making it equivalent to the tariff for soya meal.
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Thailand reduced the tariff for alfalfa from a prohibitive 30 percent to 5 percent.
Vietnam
The Philippines
Australia
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