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Opening Doors to the World
Canada's International Market Access Priorities 2003
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Opening Doors in Other Key Markets
The year 2003 marks the sixth anniversary of the implementation of the Canada–Israel Free Trade Agreement (CIFTA).
The most significant factors in the increase in trade between Canada and Israel continue to be the absence of tariffs
on virtually all industrial products and the reduction of tariffs on many agricultural and agri-food products. Bilateral
trade has more than doubled since CIFTA came into effect. Trade in goods and services reached almost $1 billion in 2002.
Machinery, newsprint and high-technology products comprise the bulk of Canadian exports. Canadian companies are also
strong services exporters, particularly in sectors such as transportation infrastructure. In addition, Canadian firms
continue to make strong gains in priority sectors such as aerospace, information and communications technologies,
transportation, agriculture and agri-food, and wood and paper products.
As provided for under CIFTA, Canada and Israel continue to engage in discussions to further liberalize bilateral trade
in agricultural and agri-food products. As a result of consultations with Canadian producers and exporters, Canada
continues to press for improved access to the Israeli market for prepared and frozen foods, canola oil, fresh and frozen
fruit and vegetables, pulse crops and pet food. Such access will help maintain Canadian exporters' competitive position
vis-à-vis exports from other countries, and will also help secure long-term opportunities for Canadian agri-food products.
Canada and Israel agreed at the outset of the current round of bilateral negotiations to exclude the supply-managed
sectors of dairy, eggs and poultry. Canada is also seeking improved access for pharmaceutical products.
On July 8, 2002, amendments to CIFTA were implemented that allowed most goods originating from either Canada or Israel
to undergo minor processing in the United States without losing their originating status, thus maintaining preferential
customs duties under CIFTA.
Two-way flows of direct investment were estimated at nearly $1.3 billion for the years 1999 to 2001. There is bilateral
investment activity in a wide range of sectors including information and communications technologies, construction and
life sciences. There are no particular barriers faced by Canadian investors in Israel.
Canada is committed to promoting trade and investment relations with the Palestinians. The Joint Canadian–Palestinian
Framework on Economic Cooperation and Trade, signed in 1999, establishes a commercial relationship based on free trade.
Aside from eliminating tariffs, the framework aims to improve market access and customs procedures while supporting
emerging industries in this market.
Palestinian law stipulates that a local agent or representative is required to sell into this market. The state of the
Middle East Peace Process can affect the movement of goods into and out of the West Bank and Gaza Strip.
Double taxation agreements (DTAs) were finalized with Kuwait and the United Arab Emirates over the course of 2002.
The main objective of DTAs is to facilitate investment between two countries by preventing or giving relief for double
taxation, whereby tax is charged by both countries on the same income or profit. With these agreements in place,
consideration is being given to a DTA with Oman.
Saudi Arabia continues to work toward accession to the WTO. To further secure market access improvements, Canada will
seek to ensure in the working party negotiations that Saudi Arabia fully implements its obligations under all WTO
agreements, including the Agreement on the Application of Sanitary and Phytosanitary Measures and the Agreement on
Technical Barriers to Trade. Canada will also continue to seek access for goods and services of key export interest.
Yemen requested accession to the WTO in 2000, but has not yet submitted its memorandum on its foreign trade regime.
The Maghreb region represents a growing market for Canadian goods and services, with Canadian exports reaching $1.1
billion in 2000. Canadian goods exports increased 26.4% from $625 million in 2001 to $790 million in 2002. The region as
a whole has made important progress in trade liberalization and openness to foreign trade and investment in recent years.
Efforts to encourage foreign investment and improve market access have been undertaken in all Maghreb countries. Algeria,
Morocco and Tunisia have all signed association agreements with the European Union.
Algeria has undertaken an ambitious campaign of privatization and modernization, as well as regulatory reforms that
have opened up sectors such as mining and telecommunications to foreign investors.
Algeria's working party on accession to the WTO was established in 1987, and the fourth meeting of the working party
was held in November 2002. Canada's market access priorities for the coming year will include support for Algeria's
accession to the WTO, as well as the bilateral negotiations related to its accession.
Morocco has been a member of the WTO since January 1995. Its economy is undergoing a period of transition as
substantial economic reforms, encouraged by the International Monetary Fund, are implemented. These reforms should
allow for a modernization of the economy while promoting market access. Morocco has been actively engaged in negotiating
regional free trade agreements. Morocco and the United States agreed to the negotiation of a free trade agreement in
2002.
Libya deposited its application for accession to the WTO in December 2001. A working party has yet to be established.
The Canadian Embassy in Libya officially opened in 2002, and has since made significant progress in expanding access to
the Libyan market for Canadian companies. Canada's exports to Libya increased 120% between 2001 and 2002, rising from
$20.5 million to $45.1 million.
Tunisia is actively pursuing a trade liberalization policy. Tunisia joined the WTO in 1995 and was the first Maghreb
country to sign an association agreement with the European Union. This agreement foresees the progressive elimination of
Tunisian tariffs and the eventual creation of a free trade area with the European Union in 2008. Tunisia has introduced
a large number of structural and regulatory reforms in order to promote foreign investment, including free trade zones
and updating of infrastructure.
Canadian exports to Tunisia increased substantially in 2002, a year in which Canada hosted a Canada–Tunisia Bilateral
Commission to further advance economic cooperation and market access.
African gross domestic product is currently growing faster than the GDP of any other developing in region of the
world. Canada exported $606 million in goods to sub-Saharan Africa in 2002, down from $700 million in 2001. The
addition of services exports would bring total exports to over $1 billion. Goods imports from sub-Saharan Africa
increased by 10% to $1.2 billion, with crude oil accounting for over a third of this figure. On January 1, 2003,
Canada opened its markets to African imports by eliminating tariffs and quotas on most imports from 48 least-developed
countries, of which 34 are located in Africa.
South Africa is Canada's largest trading partner in sub-Saharan Africa. The trading relationship is diverse and well
developed, with exports from Canada ranging from mining machinery through grains to communications equipment.
South Africa continues to pursue an open trading regime. In addition to its international activities in multilateral
organizations such as the Cairns Group, it continues to open its domestic market. Since the end of apartheid, tariffs
have been simplified and reduced and non-tarrif barriers have been scaled back. Competition is being encouraged by
reducing the concentration of business ownership, a legacy of apartheid, and through privatization and deregulation.
South Africa actively encourages foreign investment in order to accelerate development and increase employment. To
encourage greater inclusiveness, the government actively promotes economic empowerment in both the public and private
sectors.
Canada's Market Access Priorities for 2003
- Continue to press South African authorities to clarify and streamline the rules applicable to exchange controls
affecting potential mergers between South African and Canadian firms.
- Ensure full clarity on offset requirements (both military and civilian) for large procurement contracts, which have
in the recent past created transparency problems.
- Continue to monitor Canada's competitiveness in light of the free trade agreements that South Africa has with the
European Union, Mercosur and the Southern African Development Community.
- Monitor South African policies and programs, such as the new natural resources legislation and the economic empowerment
program, to ensure that the interests of Canadian investors are protected.
Canadian exports to the rest of sub-Saharan Africa are concentrated in a few commodities. Exports to the region from
the European Union and the United States suggest that Canadian suppliers are not winning the share of African business
that might be expected. A priority for 2003 will be identifying new opportunities to export to Africa and exploring
reasons for the apparent reduced access of Canadian exporters to African markets. The November 2002 trade and investment
mission to South Africa, Nigeria and Senegal, led by International Trade Minister Pierre Pettigrew, was an important
first step in this direction.
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