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Canada: December 1998

“ Unemployment had fallen steadily, although it remained relatively high. Members noted, however, the vulnerability inherent in the level of economic integration with the United States, with the U.S. share of Canada's merchandise exports now at 83%.”

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  > Summary of Government report

18 December 1998

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The Trade Policy Review Body of the World Trade Organization (WTO) concluded its fifth review of the trade policies of Canada on 15 and 17 December 1998. The text of the Chairperson's concluding remarks is attached as a summary of the salient points which emerged during the discussion. The review enables the TPRB to conduct a collective examination of the full range of trade policies and practices of each WTO member country at regular periodic intervals to monitor significant trends and developments which may have an impact on the global trading system.

The review is based on two reports which are prepared respectively by the WTO Secretariat and the government under review and which cover all aspects of the country' trade policies, including its domestic laws and regulations, the institutional framework, bilateral, regional and other preferential agreements, the wider economic needs and the external environment. A record of the discussion and the Chairperson's summing up together with the reports will be published in due course as the complete trade policy review of Canada and will be available from the WTO Secretariat, Centre William Rappard, 154 rue de Lausanne, 1211 Geneva 21.

Since December 1989, the following reports have been completed: Argentina (1992), Australia (1989, 1994 & 1998), Austria (1992), Bangladesh (1992), Benin (1997), Bolivia (1993), Botswana (1998), Brazil (1992 & 1996), Burkina Faso (1998), Cameroon (1995), Canada (1990, 1992, 1994, 1996 & 1998), Chile (1991 & 1997), Colombia (1990 & 1996), Costa Rica (1995), C˘te d'Ivoire (1995), Cyprus (1997), the Czech Republic (1996), the Dominican Republic (1996), Egypt (1992), El Salvador (1996), the European Communities (1991, 1993, 1995 & 1997), Fiji (1997), Finland (1992), Ghana (1992), Hong Kong (1990, 1994 & 1998), Hungary (1991 & 1998), Iceland (1994), India (1993 & 1998), Indonesia (1991, 1994 & 1998), Israel (1994), Jamaica (1998), Japan (1990, 1992, 1995 & 1998), Kenya (1993), Korea, Rep. of (1992 & 1996), Lesotho (1998), Macau (1994), Malaysia (1993 & 1997), Mali (1998), Mauritius (1995), Mexico (1993 & 1997), Morocco (1989 & 1996), New Zealand (1990 & 1996), Namibia (1998), Nigeria (1991 & 1998), Norway (1991 & 1996), Pakistan (1995), Paraguay (1997), Peru (1994), the Philippines (1993), Poland (1993), Romania (1992), Senegal (1994), Singapore (1992 & 1996), Slovak Republic (1995), the Solomon Islands (1998), South Africa (1993 & 1998), Sri Lanka (1995), Swaziland (1998), Sweden (1990 & 1994), Switzerland (1991 & 1996), Thailand (1991 & 1995), Trinidad and Tobago (1998), Tunisia (1994), Turkey (1994 & 1998), the United States (1989, 1992, 1994 & 1996), Uganda (1995), Uruguay (1992 & 1998), Venezuela (1996), Zambia (1996) and Zimbabwe (1994).

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The fifth Trade Policy Review of Canada was conducted by the TPR Body on 15 and 17 December 1998. These remarks, prepared on my own responsibility, are intended to summarize the main points of the discussion; they are not intended as a full report. Further details of the discussion will be fully reflected in the minutes.

The discussion developed under three main themes: (i) economic and institutional environment; (ii) trade measures; and (iii) sectoral issues.

Economic and institutional environment

Members praised Canada's strong economic performance since the last Review, an outcome due to Canada's macroeconomic discipline and continued efforts towards trade liberalization and domestic deregulation. Unemployment had fallen steadily, although it remained relatively high. Members noted, however, the vulnerability inherent in the level of economic integration with the United States, with the U.S. share of Canada's merchandise exports now at 83%.

Participants recognized Canada's efforts to further increase transparency in policy-making, and asked about the role of the TPR in helping Canada formulate domestic policies. Members noted the progress made in removing inter-provincial trade barriers under the Agreement on Internal Trade, but expressed concerns about remaining provincial measures in areas such as standards, alcoholic beverage marketing, government procurement and subsidies.

Canada's continued commitment to strengthening the multilateral trading system was fully acknowledged, but Members were concerned that the growing number of preferential arrangements might cause trade diversion. Some Members suggested that Canada consider extending on a MFN basis the bilateral and regional preferences already covering most of its imports. Questions were raised about Canada's market access for exports from developing countries.

In response, the representative of Canada confirmed that the TPR had contributed to better public understanding of, and had helped build support for, Canada's trade policy. The recent tariff simplification exercise was a concrete example of the positive influence of TPR discussions.

Canada did have a heavy reliance on the U.S. market but this was seen as representing opportunity rather than vulnerability. On the multilateral/regional relationship, Canada considered regional and multilateral liberalization as complementary and sharing the same ultimate end; regional initiatives could allow moving ahead more quickly. On developing countries issues, the representative described several Canadian initiatives which had resulted in a growth of imports from developing countries into the Canadian market, with the trade balance in their favour.

The representative drew attention to a number of general points concerning federal-provincial relationships, including the legitimate and increasing provincial interest on the broader international agenda, especially trade. The status of the Agreement on Internal Trade, of which the Federal Government was but one of 13 parties, did not affect Canada's ability to meet its WTO obligations. Further answers to questions on the AIT would be provided in writing after the appropriate consultations were undertaken. Canada was of the view that it had met its obligations under the WTO Government Procurement Agreement.

Trade policies and measures

Members welcomed the autonomous liberalization and rationalization of Canada's tariff, but noted that the tariff structure remained uneven, with tariff peaks still affecting items such as food products, textiles and clothing, footwear, and shipbuilding. Certain import regulations could favour selected trading partners, for example rules of origin or mutual recognition agreements on standards. The number of anti-dumping measures in force had fallen, but certain concerns remained both about their concentration in the steel sector and the duration of orders.

Information was also requested on recent amendments to the Patent Act , and on Canada's regulations covering parallel imports, particularly of books, levies on blank tapes, and trademarks. Questions were also asked regarding Canada's foreign direct investment rules.

In response, the delegate from Canada stressed that Canada had actively pursued the reduction of MFN tariffs, notably on pharmaceutical and information technology products. Rules of origin had no effect on the MFN import regime. Details were given of proposed amendments to the legislation on trade remedies, including with respect to transparency of procedures, public interest inquiries, and lesser-duty provisions; these are expected to enter into law in the new year. To date, provincial governments had not advised that they maintained any notifiable subsidy programmes. The investment screening mechanism was fulfilling its established objectives. Answers in writing had been provided to questions regarding intellectual property rights, except on those associated with the Patents Act which touch on matters currently on the agenda of the Dispute Settlement Body.

Sectoral issues

On agriculture, Members welcomed reductions in public financial support, including to exports, but were concerned that the supply management regimes for dairy, poultry and egg products still restricted foreign access. Members also questioned the high out-of-quota rates, and the administration of quotas including the reserved access for preferential suppliers. It was recognized that Canada had gone beyond the requirements of the WTO Agreement on Textiles and Clothing but several Members noted that high tariffs and tariff escalation continued to restrict market access in this area of interest to developing countries. Members also noted the differential tariff on assembled cars applied to imports by Auto Pact and non-Auto Pact car companies.

On services, participants commended Canada for making commitments during the 1997 Financial Services negotiations to allow foreign bank branching, and enquired about the timeframe for implementation. The recent liberalization of telecommunications was also welcomed and Members asked whether restrictions on foreign investment might be lifted in this area. A number also asked about the prospects for harmonizing provincial regulations on professional services, and for providing greater market access to foreign suppliers. Members took note of the importance Canada attached to protecting its cultural identity, emphasizing however that this should be done in the least trade restrictive manner.

In response, the delegate from Canada noted that since 1995 Canada had eliminated agricultural export subsidies and significantly reduced trade-distorting domestic support to agriculture. Current commodity markets had made the recent emergency assistance necessary, but Canada was seeking ways to assist farmers without distorting world trade; support levels, however, were low and could even fit within Canada's AMS commitment. Detailed written replies had been provided to questions regarding agricultural measures, including tariff quota administration, domestic support, specific food safety and plant and animal health issues.

Canada had gone beyond its obligations under the Agreement on Textiles and Clothing, and reduced MFN tariffs on these products; it remains fully committed to the integration of the sector into GATT by January 2005. The Auto Pact was consistent with Canada's WTO obligations and Canada was prepared to consider further liberalization through mutually beneficial negotiations in this sector. Policies and practices on marketing of alcoholic beverages were determined by provincial liquor boards, were based on market considerations and did not discriminate against foreign products.

On financial services, the representative indicated that legislation on foreign bank branching would be introduced soon, and that the Financial Services Agreement would be ratified before the end of January 1999. He noted that Canada was implementing its commitments under the Basic Telecommunications Agreement on or ahead of time, and had announced steps to end the last telecoms monopoly on schedule in March 2000. In professional services, Canada had eliminated a number of discriminatory measures, and intended to pursue broader market access results in the next round of negotiations.


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In conclusion, it is clear that this Body appreciates Canada's commitment to a strong rules-based multilateral trading system, demonstrated through its active and constructive participation in all aspects of the WTO work. They welcome Canada's commitment to contribute to international economic stabilization by keeping its markets open. Delegations fully acknowledge Canada's efforts during the past two years to move forward internal deregulation, enhance transparency, rationalize its import regime and generally further its integration into the global economy.

It is also clear, however, that a number of concerns evident in earlier Reviews remain. These include high dependence on a single market, complexities arising from the federal-provincial division of responsibilities and the possible trade diversion inherent in Canada's preferential arrangements. Concerns also persist on market access for developing countries as well as trade and investment barriers in sensitive sectors, particularly in certain areas of agriculture and textiles and clothing. Welcoming what has been achieved, delegations continue to signal the scope for further improvements commensurate with Canada's leadership role in the multilateral system.