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Opening Doors to the World
Canada's International Market Access Priorities 2003
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Getting the International Rules Right:
The World Trade Organization (WTO)
Introduction
Canada's prosperity is inextricably linked to international trade. Open markets, combined with a stable and transparent
trading environment, are at the core of our growth and prosperity. However, trading relationships, like any other intense
interaction, sometimes result in disputes. As a medium-sized economy, Canada needs an effective, rules-based multilateral
system so that trade disputes can be settled based on commonly agreed-upon rules, rather than by political or economic
might. Canada's membership in the World Trade Organization (WTO) helps us manage our trade relations and achieve our
objectives for further economic growth.
The WTO system of agreements is the cornerstone of the multilateral trading system. It is the foundation of Canadian
trade policy and governs our trade relations with the European Union, Japan, other industrialized countries and a host
of emerging markets worldwide. It also underpins much of our trade with the United States. The WTO provides a forum
for negotiating trade rights and responsibilities, negotiating market access, monitoring the implementation of
obligations and commitments under various agreements, reviewing members' trade policies and practices, and settling
disputes between members that arise out of differing interpretations of the rules. The WTO is working with other
international organizations in coordinating and sharing information on finance, environment and development issues.
Building a Trading System That Benefits All: The New Round of Multilateral Trade Negotiations
In November 2001, 142 trade ministers met at the fourth WTO Ministerial Conference in Doha, Qatar, and launched a
new round of multilateral trade negotiations—the Doha Development Agenda. Ministers also welcomed the accessions of
China and Chinese Taipei to the WTO. As a result of the launch at Doha, ongoing WTO negotiations on agriculture and
services were joined by negotiations on market access for non-agricultural goods, anti-dumping and subsidy/
countervailing duty disciplines, WTO dispute settlement, a multilateral notification and registration system
for wines and spirits, and certain aspects of trade and the environment. Substantive discussions in all
negotiating areas are well under way. Ministers agreed in Doha to target January 1, 2005, for completion of
this round of negotiations.
Also at Doha, focused work programs were initiated in four areas known as the Singapore issues (i.e, investment,
competition policy, transparency in government procurement and trade facilitation), with a decision to negotiate to be
taken at the fifth Ministerial Conference in 2003. Decisions taken in Doha also included commitments to new work program
areas such as trade, debt and finance, trade and technology transfer, electronic commerce, trade and environment, and
trade-related aspects of intellectual property rights (TRIPS) and public health.
As mandated by the separate declaration issued in Doha on TRIPS and public health, ministers have been actively
involved in addressing the dual objectives of providing poorer countries with access to the medicines they need to
respond to grave public health crises (such as HIV/AIDS, malaria and other epidemics), and ensuring that new and
better medicines can be created by protecting the intellectual property of those who undertake research and development.
The Doha Development Agenda has a significant development theme aimed at addressing the needs of developing countries.
The major challenge in the trade arena is to better integrate developing countries into the global trading system so
they can benefit from the opportunities available in the global economy. WTO trade ministers have committed to helping
the developing world build capacity to negotiate and implement WTO obligations and take advantage of enhanced
opportunities to trade. Canada supports a two-pronged approach to trade and development that includes strengthening
the capacity of countries to trade, especially the least-developed countries (LDCs), in parallel with improving their
access to the world's markets.
The next major event will be the fifth Ministerial Conference, which will be held in Cancun, Mexico, in September
2003. At that time, ministers will take stock of the negotiations and decide how to move forward.
In many ways, this collective agreement to further liberalize trade sent an important signal of confidence in the
WTO system to the global community. The new round of negotiations seeks to benefit all members, with a special emphasis
on providing real gains for developing countries that will contribute to poverty reduction, development and long-term
social and economic progress worldwide.
Canada's Objectives in the Doha Round
The trade negotiations will create new opportunities for Canadian exporters of goods and services by expanding
access to global markets. They will strengthen the rules-based system by clarifying and improving multilateral trade
rules. In addition, they are key to advancing Canada's broader foreign policy goals, most notably our sustainable
development objectives. It is important to note that these negotiations will not affect Canada's ability to establish
regulations in sectors such as health, public education and social services, or to safeguard its right to promote and
preserve its cultural diversity.
Canadians have benefited, and will continue to benefit, from trade. To continue to get the best deal possible for
Canadian farmers, exporters, manufacturers and consumers, the government will be participating actively in all aspects
of the Doha negotiations. Canada will pay particular attention to the core agenda of reforming world agriculture trade,
opening markets for both goods and services in areas of export interest to Canadians, and strengthening the rules,
particularly those that limit U.S. capacity to take unfair trade remedy actions. Canada also strongly supports
negotiations on clarifications and improvements to the dispute settlement mechanism.
Other Canadian objectives with regard to the Doha Development Agenda include concluding negotiations for a voluntary,
facilitative, simple and low-cost registration system for wines and spirits. In the area of trade and environment,
Canada seeks to strengthen the mutually supportive relationship between WTO rules and multilateral environmental
agreements.
Considering the needs of developing countries and tangibly advancing the cause of development through these
negotiations are integral to our objectives in the Doha Round. To that end, the government is actively:
- pursuing initiatives to strengthen technical assistance and capacity building, both at the WTO and bilaterally;
- seeking to address some of the challenges that many
developing countries face in implementing some of the trade agreements; and
- addressing the concerns of some developing countries about taking on new commitments.
These negotiations cover areas where there are potential, significant gains for developing countries. These
include market access, for both agricultural and industrial goods, and a strengthened rules-based system. Facilitating
the integration of developing countries into the global economy requires a coherent approach, including the integration
of trade into poverty-reduction and development plans.
Canada remains committed to a strategy of targeted regional and bilateral free trade agreements that complement its
multilateral trade initiatives. Such strategic agreements can contribute to the development of common rules and standards
to govern international trade, as well as build momentum and capacity for trade liberalization at a global level. As an
increasing number of countries pursue such regional and bilateral arrangements, it is incumbent upon all parties to
ensure that these agreements are fully supportive of and consistent with WTO principles.
Continued consultations with Canadians and improved transparency remain priorities for the government in ensuring an
international strategy that reflects Canadians' goals and values. Therefore, an extensive program of consultations and
outreach with all stakeholders is being pursued throughout the entire negotiation process. As part of this effort, the
government's trade policy Web site (www.dfait-maeci.gc.ca/tna-nac) will continue to provide information on trade policy
issues and invite public comments on negotiating priorities and objectives.
Under the WTO's Doha Development Agenda, the Non-agricultural Market Access Negotiating (NAMAN) Group has been given
a broad mandate to work toward agreement "to reduce, or as appropriate, eliminate tariffs...in particular on products of export interest to developing countries." Within this context, Canada's goals include reducing and binding applied
tariffs that are not yet bound, reducing high bound rates and re-binding them at lower rates, and expanding the scope
of duty-free trade. In addition, we favour eliminating low tariffs and maximizing the use of ad valorem rates.
The first year of work in the NAMAN Group focused on the negotiating modalities (i.e. the methods for achieving trade
liberalization). Possible modalities include a formula approach, where tariffs are reduced according to a mathematical
formula; a sectoral approach, where tariffs for certain sectors are either eliminated or harmonized; and a "request offer" approach, where bilateral negotiations take place on specific tariff items. Canada favours a combination of
these approaches as the best way for us to fully achieve our export objectives. In this connection, Canada advocates
increased participation in existing sectoral agreements and has also proposed new agreements for environmental goods,
forest products, fish and fish products, fertilizers, energy-related equipment and non-ferrous metals. We are also
considering sectoral proposals tabled by other WTO members.
The mandate of the NAMAN Group also includes further efforts to reduce or remove existing non-tariff barriers that
unduly restrict trade. In this regard, Canada has stated that governments must retain the right to apply measures in
support of legitimate objectives, while regulating in the public interest, in the least trade-restrictive manner
possible. It is Canada's view that the NAMAN Group's mandate covers only those non-tariff barriers that are not covered
by existing rules and agreements, and the scope of the group's eventual work in this area remains to be seen.
Canada considers the full and effective participation of developing countries in these negotiations as an essential
element in the success of the Doha Development Agenda. Experience has shown that tariff liberalization attracts increased
trading activity and investment, thus contributing significantly to economic development. That said, special consideration
needs to be given to developing countries' needs and priorities. Canada believes developing countries (particularly the
least developed) should be given more flexibility in implementing their commitments.
Canada conducted a public consultation with respect to non-agricultural market access in the summer and early fall of
2002. As the negotiations proceed, input from the provinces, industry, non-governmental organizations and the general
public will continue to be a valued element in the development of Canada's negotiating positions.
WTO members have set a May 31, 2003, deadline for an agreement on modalities for the negotiations on non-agricultural
market access. There will be a review of the overall progress of the negotiating round at the WTO Ministerial in
September 2003, with conclusion of the round scheduled for the end of 2004.
Canadian farmers and processors operate in a global marketplace, exporting $25.8 billion and importing $20.1 billion
worth of agri-food products in 2002 alone. In fact, Canada is now the world's third-largest exporter of agri-food products,
after the United States and the European Community, and the fifth-largest importer. Given Canada's share of global
agri-food trade, we have a significant interest in ensuring that the international trade rules governing agriculture
are fair. We need to ensure that Canadian producers and processors can obtain access to foreign markets and that they
are not disadvantaged by high subsidy levels offered by other countries. For that reason, the current round of WTO
agriculture negotiations are very important to Canada's agri-food sector.
The WTO Agreement on Agriculture was an important outcome of the Uruguay Round of multilateral trade negotiations,
which ended in 1993. This agreement was a good first step in setting out agricultural trade rules and commitments in
the areas of market access, domestic support and export competition. Despite this progress, WTO members recognized
that much more work would be needed to advance the trade-reform process, and they committed to start new agriculture
negotiations in 2000. As a result, the current WTO agriculture negotiations have been under way since March 2000.
Canada's initial negotiating position for these negotiations was announced in August 1999 by International Trade
Minister Pierre Pettigrew and Agriculture and Agri-Food Minister Lyle Vanclief. This position is the result of extensive
consultations with the provinces and with Canada's agriculture and agri-food stakeholders. The fundamental objectives
of the initial negotiating position are to:
- eliminate all export subsidies as quickly as possible;
- achieve maximum possible reduction or elimination in domestic support that distorts trade or production;
- obtain real and substantial improvements in market access for all agriculture and food products; and
- ensure that decisions about the production and marketing of Canadian products, such as supply management or the
Canadian Wheat Board, are domestic policy choices and will continue to be made in Canada.
Between March 2000 and March 2001, WTO members submitted proposals outlining their ideas and objectives for
agricultural trade reform. A wide range of WTO members, including both developed and developing countries, put
forward proposals that covered issues such as market access, domestic support, export competition, food security,
and special and differential treatment provisions for developing countries. Canada put forward all of its negotiating
objectives through proposals and submissions, either on its own or jointly with the Cairns Group. From March 2001 to
February 2002, members discussed the issues raised in the proposals in more detail.
The agriculture negotiations have become much more intense since the launch of the broader round of WTO negotiations
at Doha in November 2001. The Doha Ministerial Declaration sets out an ambitious negotiating agenda for agriculture.
Ministers have called for the agriculture negotiations to achieve fundamental reform through comprehensive negotiations
aimed at substantial improvements in market access; reductions, with a view to phasing out, of all forms of export
subsidies; and substantial reductions in trade-distorting domestic support. Achieving this ambitious mandate would
go a long way toward addressing the fundamental issues underlying a number of the difficulties facing Canadian farmers
and processors.
The Doha Declaration sets out important milestones for the agriculture negotiations, including the objective of
establishing modalities by March 31, 2003. In December 2002, the chairman of the agriculture negotiations provided
an overview paper summarizing the issues discussed in these negotiations and identifying the key areas of divergence
that required attention. The paper formed the background for comprehensive discussions by WTO members of possible
modalities, which in turn provided the chairman with the material for successive drafts of a modalities text. WTO
members are currently engaged in intense negotiations over the latest version, as they seek to secure greater
convergence in accordance with the Doha mandate.
Ministers will have an opportunity to review the progress of the agriculture negotiations at the fifth WTO
Ministerial Conference in September 2003. At that time, they will provide further direction, if needed, in order
to move the negotiations forward. The target for concluding the entire Doha Round of negotiations, including
agriculture, is January 1, 2005.
The government continues to consult the full range of Canadians and the provinces regarding the agriculture
negotiations through a variety of means, including meetings with industry associations, provincial and industry
advisory groups, DFAIT's trade policy Web site and Agriculture and Agri-Food Canada's trade policy Web site.
Canada's objective is to ensure that regulatory measures and standards relating to goods that exist in other
WTO member economies serve legitimate objectives and do not unreasonably discriminate against Canadian products.
Such measures include mandatory technical regulations, voluntary standards and conformity-assessment procedures
that determine whether a product meets the requirements of a particular regulation or standard.
The WTO Agreement on Technical Barriers to Trade (TBT) defines the international rights and obligations of members
with respect to the development and application of standards-related measures that affect trade. The agreement is
based on the principle that countries have the right to adopt and apply mandatory technical regulations, as long as
these regulations do not restrict international trade more than is necessary to achieve a legitimate objective.
TBT-related measures are subject to WTO rights and obligations, including dispute settlement provisions.
Canada promotes wide acceptance of and adherence to the TBT Agreement and its Code of Good Practice, which applies
to voluntary standards. Canada also participates in the activities of many international standards bodies, including
the International Organization for Standardization (ISO). Canada was among the first countries to develop the
infrastructure necessary for its companies to adopt ISO 14000 environmental management system standards, thus
facilitating our exports by helping them meet the requirements of foreign customers.
The role of precaution in regulation and its implications for trade are important issues that affect many areas
of interest to Canada. The science-based application of precaution is pervasive throughout Canada's regulatory regime,
particularly for protecting the health, social, economic and environmental interests of our citizens, as well as our
international reputation for safe, high-quality products and services. It is Canada's position that the precautionary
approach should be based on science-based risk assessment and/or risk management, and should not be susceptible to
abuse or arbitrary decision making. Moreover, in Canada, legal advice indicates that we do not yet consider the
precautionary approach to be a rule of customary international law.
Canada is working to ensure that there is a clear and coherent Canadian understanding regarding the application
of the precautionary approach, both at home and internationally, and that our rights related to international trade,
including those defined under the WTO agreements, are respected by our trading partners. In this regard, the
government has been consulting with Canadians on "A Canadian Perspective on the Precautionary Approach/Principle."
The consultation document can be found on DFAIT's Web site,
and we expect discussions on this issue to continue for some time, both domestically and in various international forums.
Under the WTO TBT Agreement, Canada will continue to press for the removal of unnecessary or inappropriate regulatory,
standards-based and conformity assessment-based trade barriers, thus maintaining or enhancing market access and lowering
costs to producers and exporters. Specifically, Canada has been raising concerns over other countries' proposals for
unnecessary or unjustifiable barriers to products derived from biotechnology, as well as over mandatory requirements
for non-product–related process and production method labelling. To assist the TBT Committee in addressing labelling
issues, Canada has developed a framework for informal discussions, which covers issues such as policy instruments for
labelling, mandatory versus voluntary measures, harmonization and equivalency, and developing country considerations.
The document can be found on the WTO Web site under its official document number G/TBT/W/174.
We will also work to improve transparency; promote regulatory reform and good regulatory practice by WTO members;
align or harmonize standards internationally and with trading partners; and, if appropriate, negotiate mutual
recognition agreements (MRAs) on conformity assessment. On this point, Canada has developed a policy approach to
MRAs that assesses proposals on a case-by-case basis. It includes full consultation with federal and provincial
regulatory and trade officials (in their areas of jurisdiction), as well as with stakeholders, including industry.
This document is also available on the WTO Web site under document number G/TBT/W/167.
Canada is an active participant in the ongoing work of the WTO Committee on Technical Barriers to Trade. We are
currently preparing for the Third Triennial Review, to be concluded in 2003. The review will provide Canada with an
opportunity to work toward further implementation of the TBT Agreement internationally. In line with the Doha Declaration,
Canada's focus going into the third review will be on issues related to developing-country capacity building and
trade-related technical assistance, as well as conformity assessment procedures and labelling issues. Recognizing
these areas as priorities, the TBT Committee will be hosting two important workshops in 2003: one on trade-related
technical assistance, for which funding will be made available to developing countries, and the other on labelling issues.
Canada played a leadership role in orchestrating these workshops and is fully engaged in and committed to both events.
The Third Triennial Review will also provide Canada with an opportunity to enhance and strengthen its multilateral
discussions on specific issues of importance to Canadian producers, exporters and governments. We will continue to
assist further implementation of the various obligations in the TBT Agreement, which will reduce technical barriers
to trade among Canada's trading partners and potentially facilitate the flow of Canadian goods to other countries.
The WTO Agreement on the Application of Sanitary and Phytosanitary (SPS) Measures (the SPS Agreement) stipulates
that SPS measures must be based on scientific principles and scientific evidence; they must be applied only to the
extent necessary, and they must not result in unfair discrimination or disguised restrictions on trade. The SPS
Agreement has been in force since 1995 and continues to work well. Obviously, Canada is not alone in this view as it
was agreed at Doha that the SPS Agreement would not be reopened during the current round of WTO negotiations.
The SPS Agreement established the Committee on Sanitary and Phytosanitary Measures (SPS Committee), which is
responsible for the operation and implementation of the agreement. The Committee generally meets three times a year.
Canada is an active participant in SPS Committee meetings.
Over the last year, the SPS Committee has continued to focus its efforts on the implementation concerns of developing
countries. In particular, the Committee has considered, as a priority, the implementation constraints facing developing
countries including accessing the special and differential (S& D) treatment provisions of the SPS Agreement.
Canada tabled a proposal that would provide members with information concerning the provision of S& D treatment
through the transparency obligations of the SPS Agreement, thereby encouraging more extensive use of the S& D
provisions. The Committee has also considered issues such as equivalence, transparency and technical assistance.
For example, the Committee developed and adopted a format to notify agreements recognizing the judgment of equivalence;
the Committee also revised and updated the recommended procedures for implementing the transparency obligations of the
SPS agreements; 29 developing countries have submitted responses to the technical assistance questionnaires that the
Committee developed and circulated in late 2001. As well, the Committee agreed that the report of the next review of
the SPS Agreement would be prepared for the sixth Session of the Ministerial Conference in 2005.
The SPS Committee is increasingly being used by Canada and other WTO members, including developing country members,
as a forum for raising bilateral issues. In 2002, WTO members raised more bilateral issues than ever before. Canada
raised 13 bilateral issues including the European Union's moratorium on genetically modified organisms (GMOs), China's
GMO regulations, Brazil's restrictions on potatoes and other plant products, the Philippines' measures on meat products,
Panama's import licences for agricultural products, and Argentina's measures related to Bovine Spongiform Encephalopathy
(BSE).
A number of countries have recently implemented mandatory labelling requirements for food products processed or
produced using genetically modified organisms. The use of labelling to indicate health and safety issues is a legitimate
objective, and Canada supports labelling to convey this sort of important information to consumers. However, Canada
is concerned over the increased tendency toward mandatory method-of-production labelling when other, less
trade-restrictive options are available. The use of mandatory labelling to indicate the production method
(when this does not pertain to the characteristics of a product) could be used to discriminate against
"like products" and could represent a technical barrier to trade. Non-discrimination is a principle enshrined in
the WTO Agreement.
It should be noted that the issue of mandatory method-of-production labelling is not limited to foods derived through
biotechnology. Mandatory method-of-production labelling could have serious implications for other Canadian industries,
including manufacturing, mining, forestry and fisheries.
Canadian industry, producers and consumers are cooperating to provide more information to consumers. Through the
Canadian General Standards Board, these groups are developing a voluntary standard that would provide a framework for
the voluntary labelling of foods derived through or not derived through biotechnology. Canada has been promoting this
approach with our trading partners, such as the European Union, China, Hong Kong (China), Korea and Malaysia, and will
continue to do so with other countries as the opportunities arise.
Canada recognizes the importance of working internationally on biotechnology policy development, and we will continue
to monitor developments in other countries to learn from their successes and failures. Canada is playing a leading role
in setting international standards for genetically modified foods and their labelling through the Codex Alimentarius
Commission. Canada chairs and participates in the Codex Committee on Food Labelling, which is developing guidance on
the labelling of foods derived through biotechnology, and has chaired an international drafting group to provide further
technical input on guidelines for the labelling of these foods.
Bilateral Level
The Canadian government continues to monitor trade remedy developments in countries of trade interest to Canadian
industry and to assist Canadian exporters involved in trade remedy investigations by other countries. Specifically,
the government analyses changes in trade remedy laws and practices of Canada's key trading partners and makes
representations, as appropriate, in specific investigations. In 2002, the government made submissions to U.S.
authorities in the safeguard investigation on steel, the anti-dumping investigations on tomatoes, mussels and
cold-water shrimps, and the anti-dumping and countervailing investigations into wire rod. The outcome of these
cases is found in Chapter 4 ("Opening Doors to the Americas"), in the section dealing with the United States. The
government also actively participated in and made representations to Indian authorities in the safeguard investigation
involving edible vegetable oil. On January 24, 2003, the Government of India determined that there was no evidence of
injury and, consequently, terminated the investigation.
The Canadian government is currently working with affected provinces and with the Canadian Wheat Board to defend
against the allegations of wheat subsidies currently under investigation by the U.S. Department of Commerce. This issue
is discussed in more detail in the U.S. section of Chapter 4. It is worth noting that Canada made representations and
continues to monitor India's anti-dumping investigation involving vitamin C and China's safeguard investigation into
certain steel products. Other cases that the government is currently monitoring include Australia's anti-dumping
investigation involving grinding liners, Russia's safeguard investigation into poultry imports, China's potential
sunset review into newsprint, and NAFTA Chapter 19 disputes involving Canadian exports.
Multilateral Level
World Trade Organization
In the current multilateral trade negotiations, Canada is pursuing more specific disciplines and improved transparency
and clarity in the use of trade remedy measures by our trading partners. In this regard, Canada continues to participate
in the discussion of issues proposed for negotiations and tabled a general paper on anti-dumping, subsidies and
countervailing measures, as well as a more detailed submission on anti-dumping. At the same time, Canada wants to
examine key trade remedy provisions with the goal of strengthening and clarifying the rules to achieve greater
international convergence and predictability in their application. Canada is encouraged by the discussions regarding
the underlying causes of trade remedy measures.
As well as contributing to the work of the WTO Anti-Dumping, Subsidies and Safeguards committees—to ensure that all
members administer their trade remedy laws in a WTO-consistent manner—Canada participates as a third party in WTO
dispute settlement proceedings involving issues of importance to Canada. In this context, Canada participated as a
third party in WTO proceedings regarding Argentina's definitive anti-dumping measure against poultry imports from Brazil,
the European Community's sugar program, the U.S. Foreign Sales Corporation, and the U.S. sunset review of anti-dumping
duties on corrosion-resistant carbon steel flat products from Japan. Canada continued to participate as a co-complainant
in the WTO challenge of the U.S. "Byrd Amendment." For information on the Byrd Amendment, please refer to Chapter 4
("Opening Doors to the Americas").
Organization for Economic Cooperation and Development Steel Initiative
On September 2001, a High Level Group on Steel, under the auspices of the OECD, embarked on a process to establish
possible multilateral disciplines on government intervention in the steel sector. The chief objective of this work is
to establish disciplines on government subsidies and other measures that distort steel markets. Such disciplines,
combined with industry action to close inefficient and excess steel capacity, are an attempt to address the factors
that distort markets and lead to trade actions.
As a result of this initiative, participants are currently considering an agreement regarding possible disciplines on
government intervention in the steel sector. Canada has been and remains highly supportive of the OECD high-level steel
process and its objective of concluding a steel subsidies agreement.
Canada has also been working with its partners in NAFTA to enhance prospects for success. To this end, Canada, Mexico
and the U.S. have tabled a NAFTA joint statement on their commitment to addressing trade-distorting actions, particularly
subsidies, which could be used as a model for a multilateral agreement. In the statement, NAFTA governments declare their
commitment to begin work immediately to develop a Statement of Principles on Steel. NAFTA governments will identify
remaining measures and practices within the North American steel market that could potentially distort the market,
and will detail an action plan for addressing those measures and practices.
Recognizing the importance of maintaining an open steel market within North America, NAFTA governments have also
agreed to establish a NAFTA Steel Trade Committee to give effect to the Statement of Principles and to continue
cooperation for the successful conclusion of the OECD process and other multilateral efforts.
The WTO Agreement on Rules of Origin established a work program to develop common rules of origin for non-preferential
trade. The work program was originally slated for completion in July 1998; however, the deadline for completing the core
policy issues identified in the report of the Committee on Rules of Origin to the General Council has been extended to
July 2003. Should the core policy issues be resolved by July 2003, the Committee on Rules of Origin is to complete its
remaining technical work, including a review of the results for overall coherence, by the end of 2003. The inability
of the Committee on Rules of Origin to meet the deadline for completing the work program is due to the technical
complexity of developing agreement on rules for all products; the entrenched positions of many members, particularly
in the areas of agriculture, textiles and apparel, and industrial products; and the lack of consensus on the
implications of the work program (i.e. if and when the harmonized rules should be used).
In the development of common rules of origin for non-preferential trade, Canada's objectives are threefold: to achieve
common rules that will provide greater transparency and certainty for traders, to prevent countries from using rules of
origin to impair market access, and to achieve rules that are technically proficient, reflecting the global nature of
the production and sourcing of goods and materials. Regarding the implications of harmonized rules of origin,
Canada's position is that members should use such rules in the application of non-preferential commercial policy
instruments only if other WTO agreements require determination of a country of origin.
Over the last few years, a number of factors—including growth in trade, new international trade agreements and
concrete market access impediments faced by traders worldwide—have combined to present governments with ever-changing
demands for fast and predictable release of goods and measures to facilitate the flow of goods across national borders.
WTO rules contain a variety of provisions aimed at enhancing transparency and setting minimum procedural standards
(such as GATT Articles V [freedom of transit], VIII [fees and border formalities] and X [publication and administration
of trade regulations]). However, trade facilitation as a separate topic was not added to the WTO agenda until 1996,
when the Singapore Ministerial directed the WTO Council for Trade in Goods to undertake exploratory and analytical
work on simplifying trade procedures and assessing the scope for WTO rules in this area. At the Doha Ministerial
Meeting in 2001, ministers agreed to a focused trade facilitation work program and to decide on modalities for
trade facilitation negotiations at the 2003 Ministerial.
Canada's overarching goal is to ensure that the 2003 WTO Ministerial in Cancun results in a decision to launch
negotiations on trade facilitation. The government's objectives for negotiations are to build on existing WTO
obligations (i.e. GATT Articles V, VIII and X) and to negotiate disciplines that would maximize transparency;
expedite the release of goods; and reduce, simplify and modernize border-related requirements and formalities.
In seeking agreement to negotiate rules on trade facilitation, Canada, with other like-minded WTO members, came
forward during 2002 with a range of concrete proposals to clarify and improve existing obligations. These proposals
are to be further explored during the next phase of the trade facilitation work program in the first half of 2003.
Canada recognizes the legitimate concerns of various developing countries regarding their capacity to implement any
new obligations. We therefore agree that capacity building should be an integral part of any negotiations on WTO trade
facilitation commitments, and we support technical assistance and capacity building that would help developing countries
meet higher standards of border management.
We believe that WTO rules on trade facilitation would result in enhanced transparency, predictability, due process,
simplification, rapid release, more efficient use of resources and effective border control and enforcement.
We see trade facilitation as a win–win for all countries and a natural complement to market access negotiations
on goods. New trade facilitation rules will help countries modernize border systems to expedite the flow of goods
across borders, while fully meeting non-trade objectives such as security. Improved border systems will help to
reduce business costs for all traders, an issue of particular interest to small and medium-sized companies.
GATS Consultation Process
Domestic consultations are key to enhancing good governance and transparency and to promoting a democratic approach
to trade policy development. Canada's trade policy encompasses interests beyond those of the business world, and all
citizens can have a say in determining this policy.
Intensive and ongoing consultations on the WTO General Agreement on Trade in Services (GATS) remain an important
part of the Canadian government's overall commitment to ensuring that Canada's position on GATS continues to reflect
the interests of all Canadians. The government has been seeking, and will continue to seek, the views of Canadians in
developing trade policies and positions, using a broad range of consultative mechanisms. These mechanisms include the
Standing Committee on Foreign Affairs and International Trade (SCFAIT) process, as well as the sectoral advisory
groups on international trade (SAGITs). The government is also consulting with municipal governments. Equally important,
all interested Canadians are invited to provide their comments and views on the issues via the
GATS 2000 Web site.
The government has been working closely with provincial and territorial governments, which have jurisdiction in many
areas of services trade, to develop our initial negotiating position. For example, in 2002, the government engaged in
a new cycle of cross-sectoral consultations across the country. The consultations covered all services-related bilateral
and multilateral negotiations currently under way (GATS, the Free Trade Area of the Americas, Central America Four,
Canada–Singapore and the Caribbean Community and Common Market). The government coordinated with the provinces and
territories to hear not only from provincial officials but also from local business groups and local non-governmental
organizations regarding the Canadian negotiating position. In addition to opening up a mutually educational dialogue
between government officials and stakeholders, the consultations provided a regional dimension and balance to Canadians'
input concerning the negotiations.
In the context of the guidelines and procedures reaffirmed at the WTO Ministerial Conference in Doha in November 2001,
the government will continue to consult, inform and engage citizens as the negotiations progress, thus ensuring that
Canada's position on GATS continues to reflect the interests of all Canadians.
The government welcomes the views of interested Canadians. To provide your comments, please visit the
Department of Foreign Affairs and International Trade Web site
or the Government of Canada Web site for the GATS negotiations.
As a significant exporter of services, Canada relies on multilateral, legally enforceable rules on trade in services.
These rules improve market access abroad for Canadian services and provide Canadian consumers with a wider choice of
quality services at competitive prices.
Established as part of the WTO agreements in 1995, the General Agreement on Trade in Services (GATS) required that
further negotiations on services begin no later than January 2000. Since then, talks have been taking place in special
negotiating sessions of the WTO Council for Trade in Services. At the Ministerial Conference in Doha, WTO members
agreed that countries would submit their initial requests for market access commitments (i.e. the liberalization
that they seek from their partners) by no later than June 30, 2002, and their initial offers (i.e. the liberalization
commitments that they are willing to offer their partners) by no later than March 30, 2003.
Canada presented its initial requests to other WTO members as per the agreed deadline. A description of the initial
market access requests that Canada made of other countries is available on-line
(www.dfait-maeci.gc.ca/tna-nac/service-en.asp
and services2000.ic.gc.ca). This information was compiled
following detailed consultations with Canadian stakeholders and in close cooperation with the provinces and territories.
In the market access phase of negotiations, WTO member countries have been meeting bilaterally to make initial market
access requests of one another in the 12 broad service sectors covered by GATS. These bilateral meetings enable
countries to gain a clear idea of the liberalization requests of their trading partners. Requests aim to remove
specific trade barriers in countries of export interest.
The initial offers will take into account the basic negotiating parameters that each country has set for itself,
as well as the various bilateral requests it has received from other members. For example, in Canada these basic
parameters make clear that health, public education, social services and culture are not negotiable, therefore Canada
will not make them part of its offer. The initial offer and all subsequent offers are conditional on the overall
level of liberalization achieved at the end of the negotiations.
As part of a government-wide commitment to increasing transparency, the Minister for International Trade announced
on June 11, 2002, Canada's approach to the services negotiations at the World Trade Organization, which will ensure
that Canadians continue to be among the best-informed citizens in the world on trade negotiations. Specifically,
Canada will make public by April 2003 the initial conditional offer that will be presented to WTO trading partners
in the context of the GATS negotiations. Canada was the first country to make this commitment.
At the end of the negotiation process (currently set for 2005), the results of the bilateral request–offer negotiations
will be made available on a most-favoured nation basis (i.e. made available to all WTO countries). In this way, all
member countries benefit from the bilateral negotiations to some extent, regardless of whether they negotiated market
access commitments bilaterally. As well, members retain the flexibility to open the sectors that they choose.
Canada is pursuing multilateral, legally enforceable rules that will allow increased access to foreign markets for
Canadian services firms. It is working collectively with other WTO members to further enhance the transparency and
clarity of GATS, in order to make it more user-friendly. Issues for consideration during the talks include sectors
of export interest to Canadian industry, current or potential barriers faced by Canadian industry in providing services
to foreign markets or consumers, improving access to countries that are key export destinations for Canadian services
providers, and providing Canadians with access to quality services at a competitive price.
Canada will push for greater market access for services suppliers in various sectors, including professional,
business, financial, telecommunications, computer and environmental services. In doing so, Canada will pay particular
attention to the situation of our small and medium-sized enterprises. The government will also preserve the ability
of Canada to maintain and establish regulations in sectors such as health, public education and social services,
and safeguard its right to promote and preserve its cultural diversity. In addition, in the Doha Ministerial
Declaration of November 2001, WTO members reaffirmed their right to regulate and introduce new regulations in
order to meet national policy objectives.
In order to ensure that Canadian industry can take full advantage of access to markets resulting from the 1997
GATS Agreement on Basic Telecommunications (ABT), Canada is closely monitoring implementation of this agreement by
its trading partners. The Agreement on Basic Telecommunications consists of specific commitments by participating
countries on market access, national treatment and the application of pro-competitive regulatory principles.
Eighty-eight countries, accounting for more than 90% of worldwide telecommunications revenues, have made such
commitments.
There is a good basis for further liberalization of the telecommunications services market in negotiations under
GATS, as well as in other bilateral and multilateral forums. Canada's position in all such negotiations is that market
liberalization should be encouraged, based on the principle that all countries benefit from an expansion of the
international market for telecommunications services. Such liberalization would benefit not only services exporters,
but also exporters of telecommunications goods and computer-related goods and services. Moreover, because
telecommunications is the backbone of the Internet, liberalization would facilitate the development of e-commerce.
In particular, the ability of small and medium-sized enterprises to reach new markets through e-commerce depends on
the economical and widespread availability of services such as the Internet.
The Canadian professional services sector, led largely by the engineering, architectural and management consulting
professions, has experienced continuous growth in international activities of about 20% per year ($6 billion in 1999)
over the past 10 years. The capabilities and expertise of Canadian professional services providers are recognized and
sought after around the world: Canadian engineering consulting firms rank fourth in total international billings after
those in the United States, the United Kingdom and the Netherlands. Canadian law firms are well placed to take
advantage of business opportunities worldwide, as Canada functions within the two main law regimes (common law and
civil law). Canadian accountancy firms are increasingly moving to develop international alliances in addition to
the national or interprovincial affiliations that some have established. Our architectural firms have undertaken
projects in areas in which they are recognized world experts (school buildings, airports, Arctic design and
construction technology, and office complexes) and are particularly active in the Asia-Pacific region.
Canadian professional services providers benefited greatly from the commitments that Canada obtained from other
countries in GATS. Moreover, the ongoing GATS negotiations provide an excellent vehicle to promote greater market
access for our professional services, including legal services, accounting, auditing and bookkeeping, taxation
services, architectural services, urban planning and landscape architecture services. Canada has asked its trading
partners to improve their commitments for professional services by eliminating trade barriers related to, for example,
temporary entry regulations, investment and ownership limitations, and nationality and citizenship requirements.
These requests have been made, and are being reinforced, in the current market access phase of the GATS negotiations.
Canada is also seeking to improve market access through strengthening the existing GATS disciplines to ensure that
measures such as qualification requirements and procedures, technical standards and licensing requirements, are based
on objective and transparent criteria. To this end, the World Trade Organization established a Working Party on Domestic
Regulations in April 1999, with a mandate to develop any necessary disciplines for professional services (and potentially
other services), building on the work done since 1995 by the Working Party on Professional Services. Canada is committed
to continuing to work within current and other bodies as appropriate to improve the openness of domestic regulatory
regimes.
Another tool to enhance the potential for Canadian exports of professional services is the facilitation of mutual
recognition agreement negotiations between Canadian and foreign professional bodies. The government will continue to
promote and support the negotiation of such agreements.
Many Canadian firms export their services to foreign markets around the world. In order to expand their export
activities, these businesses require the additional certainty that comes from the development of international
rules on trade in services. This is particularly the case with respect to the mobility of people. In today's
global economy, companies need to move key personnel to foreign markets on a temporary basis to provide services
(e.g. management, executive or specialist) to a subsidiary or affiliate, assist with the sale or delivery of
products or services, or consult with clients or negotiate contracts. In addition, individual services providers
(i.e. professionals) require access to foreign markets to deliver their services.
Canada is party to several regional, bilateral and multilateral trade agreements: NAFTA, the Canada–Chile Free
Trade Agreement (CCFTA), GATS and the Canada–Costa Rica Free Trade Agreement (CCRFTA). These agreements contain
labour mobility provisions that promote trade in goods and services, as well as investment, by facilitating the
temporary cross-border movement of persons. The provisions apply to the movement of short-term business visitors,
intra-company transferees and certain professionals. In addition, NAFTA and the CCFTA facilitate the movement of
traders and investors.
Under NAFTA, GATS and the CCFTA, Canada has set aside the labour market test for certain categories of workers. This
has been done because the positive impact of facilitating the entry of temporary workers has been assessed as outweighing
any negative impacts on the labour market.
Canadian services providers have benefited greatly from the commitments obtained from other countries in the last
round of GATS, and there are opportunities for them to benefit further from increased trade liberalization
in the current GATS negotiations. Canada, as a trading nation, is interested in developing open and more secure
conditions for international trade in services. In the GATS negotiations, we will continue to pursue additional
commitments on temporary entry and increased transparency of commitments to improve and secure access for Canadian
services providers.
At Doha, ministers recognized the importance of a framework to secure transparent, stable and predictable conditions
for foreign direct investment, and agreed to launch investment negotiations after the next WTO Ministerial conditional
upon an agreement on negotiating modalities. Canada believes that for host countries, a framework that enables the
cross-border flow of investment would facilitate technology transfer and contribute to economic growth and development.
Investors would benefit from the certainty provided by enhanced rules on transparency and non-discrimination. Canada
therefore supports the launch of negotiations on a multilateral investment framework at the 2003 WTO Ministerial in
Cancun.
Canada supports the establishment of a multilateral framework on competition policy, and is actively working
toward the launch of negotiations at the Cancun Ministerial. Canada believes that a framework for competition policy
will ensure that the gains from trade and investment liberalization are not undermined by the anti-competitive
behaviour of private actors. By establishing a coherent set of principles for sound competition policy among all
members, a multilateral agreement would ensure a competitive environment and a more transparent and predictable
climate to encourage foreign trade and investment. An agreement would also contribute to the important objective
of building institutional capacity in developing countries.
Canada considers that transparency in government procurement is ready to move to negotiations. At Doha,
WTO ministers addressed a key concern of developing countries, by establishing that a transparency agreement
would not restrict the scope of countries to use domestic preferences in their procurement. Canada's current
transparency practices are compatible with the elements under discussion at the WTO. Such an agreement would
benefit exporters of goods and services seeking opportunities to sell to governments or to sub-contract to
domestic suppliers. As well, an agreement would benefit member countries by increasing the value received for
their procurement expenditures, improving the governance infrastructure and reducing the possibility of corruption.
To take advantage of the significant potential for international trade represented by the hundreds of billions
of dollars spent annually on government procurement worldwide, Canada has pursued market access in the World Trade
Organization. Increased sectoral coverage and a reduction of discriminatory barriers in the United States and other
key markets would create significant opportunities for Canadian exporters. To increase opportunities, Canada supports
a range of activities to broaden and strengthen government procurement disciplines and ensure effective implementation
of existing commitments.
Canada, along with 27 other countries, is party to the WTO Agreement on Government Procurement (AGP). The AGP provides
the basis for guaranteed access for Canadian suppliers to the United States, the European Union, Japan and other key
markets. Canada continues to pursue greater and more secure market access through the AGP. A review of the AGP, with
a mandate to expand coverage, eliminate discriminatory provisions and simplify the agreement remains a priority. Work
is continuing, with input from the provinces and other stakeholders, to establish Canada's priorities for further
market access.
Electronic commerce (e-commerce) can foster remarkable new efficiencies in business processes by greatly expanding
geographical markets available to small and medium-sized enterprises, thereby providing the benefits of increased
integration, competition and product choice to consumers around the globe. The realization of such potential benefits,
however, will depend upon affordable access to infrastructure and e-commerce–related services, as well as an on-line
environment of trust and security. From an international trade policy perspective, this will require greater clarity
with respect to the application of existing international trade rules to electronic transactions.
Since 1998, WTO members have been looking at a variety of trade-related aspects of e-commerce in the context of a
Work Program on E-Commerce. In Canada's view, one of the key objectives of the WTO Work Program is to achieve greater
clarity with respect to the application of international trade rules to e-commerce. Members benefit from an ongoing
dialogue on what measures can be taken to enable the growth of e-commerce, reduce impediments to trade, and realize
the potential benefits of e-commerce for all WTO members.
The WTO currently has 145 members. Thus it is not surprising that disputes occasionally arise within the organization
over the application of the rules contained in the WTO Agreement (Agreement Establishing the World Trade Organization).
What is surprising is how relatively few disputes there are at any given time. To resolve these trade disputes
"peacefully," WTO members have agreed to follow an elaborate process contained in the WTO Dispute Settlement
Understanding (DSU). This process includes consultations, reviews by independent panels when parties are unable
to settle their differences at the consultation stage, and possible recourse to a standing Appellate Body.
In this way, the DSU helps ensure that members adhere to the trade rules they have negotiated; it also reduces
the scope for unilateral trade actions and is without question a key element of the rules-based, multilateral
trading system.
The WTO Dispute Settlement Understanding is arguably the most effective system that exists today for the resolution
of disputes between sovereign states. We believe, however, that it can be further improved. WTO members agreed, at the
fourth Ministerial Conference in Doha, to negotiate improvements and clarifications to the DSU and to do so before May
2003. Since then, a special session of the dispute settlement body has convened to discuss proposals. Included in the
issues Canada would like to see reviewed are the rules relating to implementation and retaliation, which we believe
could benefit from greater clarity, and ways to improve the transparency of the dispute settlement process without
compromising its fundamental state-to-state nature.
During the past year, Canada made use of the dispute settlement provisions of the WTO to challenge several measures
maintained by other members that we consider inconsistent with their international trade obligations. The most significant
of these measures are the anti-dumping and countervailing duties that the United States has imposed on Canadian softwood
lumber exports.
On September 27, 2002, the WTO panel established to hear Canada's claim pertaining to the U.S. Department of Commerce's
preliminary determination of subsidy with respect to certain softwood lumber from Canada ruled in Canada's favour. The WTO
agreed with Canada that the United States' finding that Canadian provincial stumpage programs are countervailable
subsidies was not made in accordance with WTO rules.
On October 1, 2002, a panel was established to hear Canada's claim that the U.S. Department of Commerce's final
determination of subsidy with respect to certain softwood lumber from Canada is inconsistent with the United States'
WTO obligations. Hearings were held in February and March 2003. A decision is expected in July 2003.
On December 20, 2002, the Canadian government requested consultations with the United States concerning the U.S.
International Trade Commission's final affirmative determination of a threat of injury. Canada believes the United
States contravened WTO rules in reaching this determination. A panel could be established in the spring of 2003.
On January 8, 2003, a panel was established to hear Canada's challenge of the U.S. Department of Commerce's final
determination of dumping. Canada believes that the Department of Commerce's final determination is inconsistent with
the United States' WTO obligations. A decision is expected in the fall of 2003.
Canada also joined a number of countries (i.e. European Community countries, Australia, Brazil, Chile, India,
Indonesia, Japan, Korea, Mexico and Thailand) in challenging a U.S. law entitled the Continued Dumping and Subsidy
Offset Act of 2000 (Byrd Amendment). A panel was established in September 2001. In its report of September 16, 2002,
the panel concluded that the Byrd Amendment is inconsistent with the WTO Anti-Dumping and Subsidies and Countervailing
Measures agreements and therefore should be removed. On October 18, 2002, the United States appealed this report. On
January 16, 2003, the WTO Appellate Body upheld the panel's finding that the Byrd Amendment is inconsistent with
certain provisions of the WTO agreements on anti-dumping and on subsidies and countervailing measures.
In 2002, we saw an end to existing WTO litigation between Canada and Brazil over export financing for regional
aircraft. The most recent WTO panel found that Export Development Canada's Corporate and Canada Accounts, as well as
the programs of Investissement Québec, are WTO-compliant in principle. That panel found, however, that Canada's
financing of a transaction with Air Wisconsin contravened WTO rules on export subsidies, notwithstanding that Canada
had matched a subsidized financing offer from Brazil. The panel also found four smaller transactions to be in violation
of the export subsidy rules. Brazil subsequently received authorization from the WTO to impose against Canada trade
retaliation of up to $385 million, far less than either the $5.2 billion Brazil had requested or the $2.1 billion
awarded to Canada as a result of Brazil's violations. Both countries have publicly said that they do not plan to
retaliate, preferring instead to negotiate a permanent resolution to this dispute.
Canada continues to play an active role in the WTO accession process. In this regard, our goals are twofold:
- to secure more open, non-discriminatory and predictable access for Canadian exports of goods and services; and
- to achieve transparent and rules-based trade regimes in new markets, thus contributing to global
economic stability and prosperity.
As stated earlier, the WTO now has 145 members, with China, Chinese Taipei, Lithuania Moldova and Armenia among the
most recent members. The accession package of the former Yugoslav Republic of Macedonia (FYROM) is pending, subject
to national ratification. FYROM will legally become a member 30 days after it has notified the WTO Secretariat of the
completion of its ratification procedures. It is hoped that the accession working party for Cambodia, having moved into
the final phases of its accession process, will notify Cambodia's terms of accession by the fifth WTO Ministerial
Conference in September 2003, which would make Cambodia the first least-developed country (LDC) to join the WTO since
1995.
Over the past year, Canada has been active in accession negotiations with many of the applicants, including Russia,
Saudi Arabia, Ukraine and Vietnam. As well, Canada has been working actively with other members to facilitate LDC
accessions, recognizing that accession would help LDCs in their development efforts and transition to fully
participating members of the world trading system. Membership is also seen to provide greater momentum and support
for trade liberalization and the multilateral trading system more generally. Efforts by members have been heightened
following the commitment made in Doha to facilitate and accelerate negotiations with acceding LDCs.
Accession negotiations take place on two parallel tracks: multilateral and bilateral. During the multilateral
negotiations, a WTO working party, composed of interested WTO members, examines the acceding country's economic
and trade regime to identify inconsistencies with WTO obligations and to ascertain what changes are required to
achieve conformity with WTO rules. Progress depends on those changes, as reflected in the transparency, accuracy
and detail provided by the applicant in response to questions tabled by working party members. By participating in
working party deliberations, Canada satisfies itself that the accession will bring about more predictable and less
discretionary trading conditions in the applicant's market.
In parallel with working party deliberations, WTO members hold bilateral market access negotiations with the acceding
country. During the bilateral negotiations, Canada focuses on obtaining the reduction or elimination of tariffs and
non-tariff barriers affecting access for goods and services that are of interest to Canadian companies.
Canada encourages applicants to bind their tariff commitments, provide non-discriminatory access, and join the
various zero-for-zero tariff elimination agreements and tariff harmonization initiatives developed by the WTO.
Negotiating positions for accessions are developed interdepartmentally and in consultation with provincial and
territorial governments and the private sector. Accession negotiations offer an important opportunity to resolve
Canadian market access problems in the applicants' markets.
Further information on the WTO accession process can be obtained from the
WTO Web site.
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