  
  
WT/REG407/1  
23 August  2021 
(21-6187) Page: 1/101 
Committee on Regional Trade Agreements    
 
 
FACTUAL PRESENTATION  
AGREEMENT BETWEEN THE UNITED STATES, MEXICO AND CANADA (USMCA/CUSMA/T -MEC) 
(GOODS AND SERVICES ) 
Report by the Secretariat  
This report, prepared for the consideration of the Agreement  between  the United States, 
Mexico and Canada (USMCA/CUSMA/T -MEC), has been drawn up by the 
WTO Secretariat on its own responsibility and in full consultation with the Parties. The 
factual present ation reproduces as closely as possible the terminology used in the 
Agreement and in the comments provided and does not imply official endorsement or 
acceptance by the Secretariat of such terminology. The report has been drawn up in 
accordance with the rul es and procedures contained in the Decision for a Transparency 
Mechanism for Regional Trade Agreements (WT/L/671) and thus does not imply any 
value judgement by the Secretariat regarding the contents of the Agreement.  
Any technical questions arising from t his report may be addressed to  Rohini Acharya  
(tel: +41 22 739 5874) and Alberto Osnago (tel: +42 22 739 6969). Any 
statistical  questions arising from this report may be addressed to  Rowena Cabos 
(tel: +41 22 739 5185)  and Thakur Parajuli (tel:  + 41 22 739  5473). 
 
  WT/REG407/1  
 
- 2 - 
 
  Table o f Contents  
Page 
1   TRADE ENVIRONMENT  ................................ ................................ ................................ . 5 
 Background information  ................................ ................................ ...............................  5 
 Merchandise trade  ................................ ................................ ................................ ....... 5 
 Trade in services and investment  ................................ ................................ ..................  8 
2   CHARACTERISTIC ELEMENTS OF THE AGREEMENT  ................................ ....................  13 
 Background Information  ................................ ................................ .............................. 13 
 Structure of the Agreement  ................................ ................................ ......................... 13 
3   PROVISIONS ON TRADE IN GOODS  ................................ ................................ ...........  15 
 Import duties and charges, and quantitative restrictions ................................ .................. 15 
3.1.1    General provisions  ................................ ................................ ................................ ...15 
3.1.2    Liberalization of trade and tariff lines  ................................ ................................ ......... 18 
3.1.3    Liberalization schedule  ................................ ................................ ............................. 20 
3.1.4    Tariff rate quotas  ................................ ................................ ................................ .....25 
 Rules of origin  ................................ ................................ ................................ ............ 25 
3.2.1    Rules of origin for textiles and apparel  ................................ ................................ ........ 26 
3.2.2    Rules of origin for automotive goods  ................................ ................................ .......... 27 
 Export duties and charges, and quantitative restrictions  ................................ .................. 28 
 Regulatory provisions on trade in goods  ................................ ................................ ........ 29 
3.4.1    Standards  ................................ ................................ ................................ ............... 29 
3.4.1.1    Sanitary and phytosanitary measures  ................................ ................................ ......29 
3.4.1.2    Technical barriers to trade  ................................ ................................ ..................... 31 
3.4.2    Safeguard mechanisms  ................................ ................................ ............................ 32 
3.4.2.1    Global safeguards  ................................ ................................ ................................ .32 
3.4.2.2    Bilateral safeguards  ................................ ................................ ............................... 33 
3.4.2.3    Special safeguards  ................................ ................................ ................................ 33 
3.4.2.4    Balance of payments safeguards  ................................ ................................ ............. 33 
3.4.3    Anti-dumping and countervailing measures  ................................ ................................ .33 
3.4.4    Subsidies and State -aid ................................ ................................ ............................ 34 
3.4.5    Customs -related procedures and trade facilitation  ................................ ........................ 35 
3.4.6    Other regulations  ................................ ................................ ................................ .....37 
 Sector -specific provisions on trade in goods  ................................ ................................ ...37 
3.5.1    Agriculture  ................................ ................................ ................................ .............. 37 
3.5.2    Automo biles ................................ ................................ ................................ ............ 38 
4   PROVISIONS ON TRADE IN SERVICES AND INVESTMENT  ................................ .........  38 
4.1   Scope and definitions  ................................ ................................ ................................ ..39 
 Denial of benefits  ................................ ................................ ................................ .......40 
 General provisions on trade in services and investment  ................................ ................... 40 
4.3.1    Market access  ................................ ................................ ................................ ......... 40 
4.3.2    National and MFN treatment  ................................ ................................ ...................... 40 WT/REG407/1  
 
- 3 - 
 
  4.3.3    Commercial presence  ................................ ................................ ............................... 40 
4.3.4    Performance requirements  ................................ ................................ ........................ 40 
4.3.5    Senior Management and Boards of Directors  ................................ ............................... 41 
4.3.6    Movement of natural persons  ................................ ................................ .................... 41 
 Liberalization commitments  ................................ ................................ ......................... 41 
4.4.1    Canada  ................................ ................................ ................................ ................... 42 
4.4.1.1    MFN and horizontal commitments  ................................ ................................ ........... 42 
4.4.1.2    Sector specific commitments  ................................ ................................ .................. 43 
4.4.2    Mexico ................................ ................................ ................................ .................... 46 
4.4.2.1    MFN and horizontal commitments  ................................ ................................ ........... 46 
4.4.2.2    Sector specific commitments  ................................ ................................ .................. 47 
4.4.3    United States  ................................ ................................ ................................ .......... 52 
4.4.3.1    MFN and horizontal commitments  ................................ ................................ ........... 52 
4.4.3.2    Sector specific commitments  ................................ ................................ .................. 52 
 Regulatory provisions  ................................ ................................ ................................ ..56 
4.5.1    Domestic regulation  ................................ ................................ ................................ .56 
4.5.2    Recognition  ................................ ................................ ................................ ............. 57 
4.5.3    Subsidies  ................................ ................................ ................................ ................ 57 
4.5.4    Safeguards  ................................ ................................ ................................ ............. 58 
4.5.5    Other provisions on investment  ................................ ................................ ................. 58 
 Sector specific provisions on trade in services  ................................ ................................ 59 
4.6.1    Financial services  ................................ ................................ ................................ .....59 
4.6.2    Telecommunication Services  ................................ ................................ ..................... 60 
4.6.3    Delivery services  ................................ ................................ ................................ .....61 
4.6.4    Programming services  ................................ ................................ .............................. 61 
5   GENERAL PROVISIONS OF THE AGREEMENT  ................................ .............................  61 
 Transparency  ................................ ................................ ................................ ............. 61 
 Current payments and capital movements  ................................ ................................ .....61 
 Exceptions  ................................ ................................ ................................ ................. 62 
5.3.1    General and security exceptions  ................................ ................................ ................ 62 
5.3.2    Taxation exceptions  ................................ ................................ ................................ .62 
5.3.3    Other exceptions  ................................ ................................ ................................ .....63 
 Accession and withdrawal  ................................ ................................ ............................ 64 
 Institutional framework  ................................ ................................ ............................... 64 
 Dispute settlement  ................................ ................................ ................................ .....65 
 Relationship with other agreements concluded by the parties  ................................ ........... 68 
 Government procurement  ................................ ................................ ............................ 71 
 Intellectual property rights  ................................ ................................ .......................... 73 
 Competition  ................................ ................................ ................................ ............. 75 
 State -owned enterprises and designated monopolies ................................ ..................... 76 WT/REG407/1  
 
- 4 - 
 
  
 Environment  ................................ ................................ ................................ ............ 79 
 Labour  ................................ ................................ ................................ .................... 81 
 Electronic commerce  ................................ ................................ ................................ .82 
 Small and medium -sized enterprises  ................................ ................................ ........... 83 
 Other provisions  ................................ ................................ ................................ .......84 
5.16.1    Good Regulatory Practices  ................................ ................................ ....................... 84 
5.16.2    Anti-corruption  ................................ ................................ ................................ ......85 
5.16.3    Macroeconomic policies and exchange rate  ................................ ................................ 85 
ANNEX 1  ................................ ................................ ................................ ........................  86 
ANNEX 2  ................................ ................................ ................................ ........................  95 
 
  WT/REG407/1  
 
- 5 - 
 
  Key Facts  
 
Parties to the Agreement:  Canada, Mexico and the United States  
 
Date of Signature:   30 November 2018, and amended on 
10 December 2019  
 
Date of Entry into Force:  1 July 2020 
 
Date of Notification:   16 September 2020  
 
Full implementation:    1 January 2030  
 
1  TRADE ENVIRONMENT  
Background information  
1.1.  The Agreement between the United States, Mexico and Canada (USMCA/CUSMA/T -MEC, 
hereinafter the Agreement) supersedes , except as expressly provided for by the Agreement, the 
North American Free Trade Agreement (NAFTA) between the Parties.1 Negotiations sta rted in 2017 
and ended on 30 September 2018 . The Agreement was signed on 30 November 2018 , amended on 
10 December 2019  and entered into force on 1 July 2020.  The Agreement is the 12th agreement in 
force and notified to the WTO by Canada, the 21st for Mexic o and 14th for the United States.2 
Merchandise trade  
1.2.  Table 1.1 shows the Parties merchandise trade in 2019. The United States is the largest trader  
and ranked first in terms of imports and second  in terms of exports of goods. Canada and Mexico 
have comparable shares in world trade, with Canada ranking 1 3th and 12th largest importer and 
exporter and Mexico 12th and 11th largest importer and exporter in 2019. Manufactured products 
account for the ma jority of both exports and imports of the Parties, with exports ranging from 48% 
of total exports for Canada, to 71% and 81% for the United States and Mexico respectively, while 
imports range from 75% of total imports for Mexico, and around 77% for both Ca nada and the 
United States.  
Table 1.1 Merchandise trade and GDP by Party, 2019  
Party  Merchandise trade - 2019  GDP 
USD 
billion  
(201 9) Imports  Exports  
Value  
(USD 
billion)  Share in world  
total (%)  Ranka Value  
(USD 
billion)  Share in world 
total (%)  Ranka 
Canada  464 2.4 10 447 2.4 9 1,736 
Mexico  467 2.4 9 461 2.4 8 1,269  
United States  2,494 13.0 1 1,643  8.7 3 21,433  
a  Rank excludes intra -EU trade.  
Source:  WTO Statistics Database, Trade Profiles (20 20) and World Bank database . 
1.3.  Chart 1.1 shows  trends in the merchandise trade of the Parties between 2009 and 2019. Both 
Canada and Mexico have maintained a n overall  balance in their global  trade for most of the period  
while the US has had a trade deficit . In bilateral merchandise trade Canada  has maintained a steady 
trade deficit in its trade with Mexico, while its trade surplus with the United States grew during this 
period ; Mexico's trade surplus with the United States grew during this period .  
 
1 The NAFTA was signed on 17 December 1992 and entered into force on 1 January 1994. It was 
superseded by the Agr eement on 1 July 2020 (WT/REG4/N/1, 9 October 2020).  
2 See WTO RTA Database (rtais.wto.org).  WT/REG407/1  
 
- 6 - 
 
  Chart 1.1 Merchandise trade: bilateral and with world, 2009 -2019  
 
Source:  UNSD Comtrade database.  
1.4.  Chart 1.2 shows merchandise trade between the Parties by broad HS Section. Canada's three 
largest export categories (minerals, vehicles and machinery which accounted for 52% of its average 
global exports during the period 2017 -19), were also the largest imports by the United States from 
Canada (accounting for 5 6% of its imports from Canada during this period) ; Mexico imported mainly 
vehicles and machinery (which accounted for 36% of its imports from Canada), along with base 
metals which accounted for 14% of its imports from Canada. Mexico's largest export categories 
machinery and vehicles (which accounted for 62% of its global exports during 2017 -19) were also 
the largest imports by Canada (accounting for 70% of its imports from Mexico) and the United States 
(64% of its imports from Mexico).  The United States' two largest categories of exports (machinery 
and ve hicles which accounted for 41%  of its global exports) were also Canada's two largest import 
categories from the United States (43% of imports). For Mexico, the two categories accounted for 
34% of its imports from the United States, accompanied by minerals which accounted for 18% of 
its imports from the United States.  
0100200300400500600700800900
05001,0001,5002,0002,5003,0003,5004,000
2009 2011 2013 2015 2017 2019C. United States (USD billion)
Imports from Mexico (Right Axis)
Exports to Mexico (Right Axis)
Imports from Canada (Right Axis)
Exports to Canada (Right Axis)
Total Imports
Total Exports0100200300400500600
0100200300400500600
2009 2011 2013 2015 2017 2019B. Mexico (USD billion)
Imports from USA (Right Axis)
Exports to USA (Right Axis)
Imports from Canada (Right Axis)
Exports to Canada (Right Axis)
Total Imports
Total Exports0100200300400500600700
0100200300400500600700
2009 2011 2013 2015 2017 2019A. Canada (USD billion)
Imports from USA (Right Axis)
Exports to USA (Right Axis)
Imports from Mexico (Right Axis)
Exports to Mexico (Right Axis)
Total Imports
Total ExportsWT/REG407/1  
 
- 7 - 
 
  Chart 1.2 Product composition of merchandise trade, annual average, 2017 -2019  
 
Source:  UNSD, Comtrade database.  
19 
17 
14 10 9 6 5 4 15 24
10
8
4981818Mexico imports from 
Canada and USA25 
19 
9 8 7 5 4 23Canada global imports
37
1010877418Mexico global imports35
3565431419
24
7 9651119Canada imports from 
Mexico and USA
24 
17 
11 7 6 5 4 4 23 Canada global exports
CRI35
27744419Mexico global exports
Average: 2017 -2019
USD 440 billionAverage: 2017 -2019
Mexico: USD 28 billion (inner circle)
USA:USD 229 billion (outer circle)Average: 2017 -2019 
USD 449 billionAverage: 2017 -2019 
USD 439 billion
Average: 2017 -2019
Canada: USD 10 billion (inner circle)
USA: USD 206 billion (outer circle)Average: 2017 -2019
USD 447 billion
VegetablesLive animals
ChemicalsMinerals
Prepared foods PlasticsPrecious stonesTextiles
VehiclesMachinery
Base metalsOtherMiscellaneous
Optical27
19
108644224
28
364423USA imports from Canada 
and Mexico
Average: 2017 -2019
Canada: USD 319 billion (inner circle) 
Mexico: USD 342 billion (outer circle)29
13
9 9554421USA global imports
Average: 2017 -2019
USD 2,528 billion24
17
12106544415USA global exports
Average: 2017 -2019 
USD 1,618 billionWT/REG407/1  
 
- 8 - 
 
  
Trade in services and investment  
1.5.  Among the three Parties the United States is the largest trader in services, followed by Canada 
and Mexico. In 2019 the US' share in global exports and imports of commercial services was 
respectively 14.07% and 9.85 % and it ranked first in the w orld for exports and imports of services . 
Canada's share in global exports and imports of services was 1.63% and 1.99% respectively  while 
Mexico's shares of exports and imports were respectively 0.5% and 0.63%.  Their respective global 
rankings were 1 8 and 14 for Canada's exports and imports and 41 and 34 for Mexico's exports and 
imports.  
1.6.  Chart 1.3 shows Canada's global trade in commercial services during 2009 -19. In 2019 
Canada's exports of commercial services were valued at USD  99,057 million in 2019  and imports at 
USD 114,093 million . Canada has run a deficit on its balance of services trade for the period. Travel 
and transport services are the two most important sectors both for exports and imports. 
Telecommunication services and financial services are im portant exports while the share of imports 
and exports of other business services declined considerably during this period . In its trade with the 
Parties Canada had a deficit during 2017-2019 (Table 1.2) .  
Chart 1.3 Canada: Trade in commercial services with world, 2009 -2019  
 
Note:  Based on BPM6. Exchange rates to convert C AD to US D for 2017 -2019 are: 2017 (1.30), 2018 
(1.30) and 2019 (1.33).  
Source:  WTO Statistics Database and the authorities (2017 -2019).  
Table 1.2 Canada: Bilateral trade in co mmercial services with Mexico and USA, 2017 -
2019 , USD Million  
Service  Mexico  USA 
Export  Import  Export  Import  2017  
2018  
2019  
2017  
2018  
2019  
2017  
2018  
2019  
2017  
2018  
2019  
Manufacturing 
services on physical 
inputs owned by 
others              
Manufacturing services
Maintenance & repair services
Transport 
Travel Insurance and pension 
services
Financial services
Charges for the use of 
intellectual property Telecommunication, 
computer and information 
services
Other business servicesConstruction 
Personal, cultural and 
recreational services020406080100120
2009 2011 2013 2015 2017 2019Canada imports from world
2009 -2019
(US$ Billion)
020406080100120
2009 2011 2013 2015 2017 2019Canada exports to world
2009 -2019
(US$ Billion)WT/REG407/1  
 
- 9 - 
 
  Service  Mexico  USA 
Export  Import  Export  Import  2017  
2018  
2019  
2017  
2018  
2019  
2017  
2018  
2019  
2017  
2018  
2019  
Maintenance and 
repair services n.i.e.  2 6 8 1   1,068  1,303  1,523  368 398 434 
Transport services  103 96 96 216 234 240 6,625  6,579  6,589  7,452  7,959  7,848  
Travel services  532 573 672 2,260  2,608  2,596  9,285  9,759  9,304  18,582  18,905  19,44
2 
Construction 
services   10 10    198 88 86 228 138 139 
Insurance and 
pension services  1   1   438 417 424 836 876 862 
Financial services  31 39 30 25 56 48 4,422  5,275  5,116  5,574  6,110  6,101  
Charges for the use 
of intellectual 
property n.i.e.  182 248 243 21 32 32 3,130  3,497  3,428  7,541  7,984  7,750  
Telecommunications
, computer, and 
information services  59 157 156 8 15 14 5,452  6,997  6,998  3,680  4,264  4,136  
Other business 
services  6 2 2 7 2 2 1,127  1,282  1,318  987 1,294  1,397  
Personal, cultural, 
and recreational 
services 18 38 40 1 1 1 3,204  3,404  3,649  2,042  2,291  2,462  
Note:  Based on BPM6 . Exchange rates to convert C AD to US D for 2017 -2019 are: 2017 (1.30), 2018 (1.30) 
and 2019 (1.33).  
Source:  Data provided by the  authorities.  
1.7.  Chart 1. 4 shows Mexico's global trade in commercial services during 2009 -19. In 2019 Mexico's 
exports of commercial services were valued at USD 30,062 million in 2019 and imports at USD 
36,132 million. Mexico has  had a growing deficit on its balance of services tr ade for the period. 
Travel and transport services are the two most important sectors both for exports and imports  with 
travel an especially important source of receipts . Insurance and pension services, financial services, 
financial services and other busin ess services are also important imports.  
Chart 1. 4 Mexico: Trade in commercial services with world, 2009 -2019  
 
Note:  Based on BPM6.  
Source:  WTO Statistics Database and the authorities (2017 -2019).  
Manufacturing services
Maintenance & repair services
Transport 
Travel Insurance and pension 
services
Financial services
Charges for the use of 
intellectual property Telecommunication, computer 
and information services
Other business servicesConstruction 
Personal, cultural and 
recreational services051015202530354045
2009 2011 2013 2015 2017 2019Mexico imports from world
2009 -2019
(USD Billion)
051015202530354045
2009 2011 2013 2015 2017 2019Mexico exports to world
2009 -2019
(USD Billion)WT/REG407/1  
 
- 10 - 
 
  1.8.  Chart 1.5 shows the United States' global trade in commercial services during 2009 -19. In 
2019 US exports of commercial services were valued at USD 853,270  million in 2019 and imports 
at USD 564,276  million. The United States  has run a growing surplus  on its balance of services trade 
for the period. Travel, transport and other business services are the two most important sectors 
both for exports and imports. Financial services and charges for the use of intellectual property  are 
important exports. In its tr ade with the other two Parties the United States  maintained a steady 
trade surplus  during the three years preceding entry into force of the Agreement (Table 1. 3).  
Chart 1. 5 USA: Trade in commercial services with world, 2009 -2019  
 
Note:  Based on BPM6.  
Source:  WTO Statistics Database and the authorities (2017 -2019).  
Table 1.3 USA: Bilateral t rade in commercial services with Canada and Mexico, 2017 -
2019 , USD Million  
Service  Canada  Mexico  
Export  Import  Export  Import  2017  
2018  
2019  
2017  
2018  
2019  
2017  
2018  
2019  
2017  
2018  
2019  
Manufacturing services 
on physical inputs 
owned by others              
Maintenance and 
repair services n.i.e.  932 1,038  1,073  1,281  1,560  1,725  583 732 821 287 225 235 
Transport services  8,052  8,205  8,373  5,851  5,881  5,851  2,900  3,225  3,189  4,440  4,831  4,850  
Travel services  18,044  18,254  16,909  9,399  9,798  9,244  15,687  16,121  15,286  17,271  17,535  18,947  
Construction services  229 346 241 242 393 421 38 18 35 25 21 52 
Insurance and pension 
services  1,836  1,808  1,817  664 694 777 428 426 469 19 9 19 
Financial services  8,324  8,434  8,470  2,557  2,940  2,967  2,635  2,891  3,195  382 428 481 
Charges for the use of 
intellectual property 
n.i.e. 7,785  7,922  7,478  1,560  1,696  2,020  3,321  3,358  3,326  340 432 806 
Telecommunications, 
computer, and 
information services  4,877  5,439  5,983  4,610  5,132  4,883  1,392  1,684  2,068  953 902 860 
Other business 
services  12,632  15,257  15,186  8,120  7,803  8,514  3,402  3,394  3,355  3,512  2,886  2,864  
Manufacturing services
Maintenance & repair services
Transport 
Travel Insurance and pension 
services
Financial services
Charges for the use of 
intellectual property Telecommunication, 
computer and information 
services
Other business servicesConstruction 
Personal, cultural and 
recreational services0100200300400500600700800900
2009 2011 2013 2015 2017 2019USA imports from world
2009 -2019
(USD Billion)
0100200300400500600700800900
2009 2011 2013 2015 2017 2019USA exports to world
2009 -2019
(USD Billion)WT/REG407/1  
 
- 11 - 
 
  Service  Canada  Mexico  
Export  Import  Export  Import  2017  
2018  
2019  
2017  
2018  
2019  
2017  
2018  
2019  
2017  
2018  
2019  
Personal, cultural, and 
recreational services  1,927  1,793  1,741  1,668  1,912  1,824  901 776 721 414 525 562 
Note:  Based on BPM6.  
Source:  Data provided by the authorities.  
1.9.  Tables 1.4 -1.6 show FDI stocks and flows in the three Parties. While Canada and the United 
States are net outward investors of FDI globally, Mexico is a net recipient of FDI. Canada is also a 
net investor in both the United States and Mexico, with its net investment  stock in Mexico increas ing 
significantly during the three years before the Agreement entered into force.  While Canada's FDI 
flows to the United States decreased especially between 2017 and 2018, inward flows from the 
United States grew substanti ally between 2017 and 2019 (Table 1.4).  
Table 1.4 Canada: FDI stock and flow with Mexico, USA and world 2009 -2019, USD 
Million  
Year FDI Stock  
World  Mexico  USA 
Outward  Inward  Outward  Inward  Outward  Inward  
2009 892,257  867,387      
2010 983,889  983,889      
2011 891,619  862,698      
2012 972,042  953,503      
2013 1,149,974  982,529      
2014 1,169,024  994,712      
2015 1,156,042  806,298      
2016 1,290,015  903,453      
2017 1,532,230  966,685  15,795  2,073  408,640  295,398  
2018 1,366,192  852,196  20,380  1,842  481,415  322,732  
2019 1,652,480  1,037,092  20,192  1,705  485,717  335,956  
Year FDI Flow  
World  Mexico  USA 
Outward  Inward  Outward  Inward  Outward  Inward  
2009 39,601  22,700      
2010 34,723  28,400      
2011 52,148  39,669      
2012 55,864  43,111      
2013 57,362  69,368      
2014 60,271  59,005      
2015 67,440  43,836      
2016 69,507  36,056      
2017 78,348  26,522  884.6  192 67,921  12,613  
2018 49,880  43,459  158.5  25 37,222  16,900  
2019 76,602  50,322  754.9  -10    25,965  20,796  
Note:  Exchange rates to convert CAD to USD for 2017 -2019 are: 2017 (1.30), 2018 (1.30) and 2019 
(1.33).  
Source:  UNCTADStat and the authorities (2017 -2019).  
1.10.   Mexico's outward and inward FDI in terms of stocks has increased gradually during the period 
2009-19. Outward investment flows increased between 2009 and 2012 but have since declined 
especially until 2016. Inward flows have remained relatively steady since 2014. FDI inflows from the 
other Parties show that investment from Canada has increased generally w hile US investment has 
declined (Table 1.5).  WT/REG407/1  
 
- 12 - 
 
  Table 1.5 Mexico: FDI stock and flow with Canada, USA and world, 2009 -2019, USD 
Million  
Year FDI Stock  
World  Canada  USA 
Outward  Inward  Outward  Inward  Outward  Inward  
2009 86,443  286,620      
2010 119,967  355,512      
2011 117,592  336,179      
2012 154,746  426,101      
2013 145,921  469,236      
2014 152,103  456,569      
2015 143,720  430,576      
2016 149,645  432,742      
2017 180,077  495,953      
2018 159,328  515,015      
2019 172,419  567,747      
Year FDI Flow  
World  Canada  USA 
Outward  Inward  Outward  Inward  Outward  Inward  
2009 9,861  17,854   2,153   8,441  
2010 14,560  27,140   2,131   11,192  
2011 13,311  25,574   1,590   13,090  
2012 22,313  21,741   1,681   9,726  
2013 15,459  48,217   5,105   16,947  
2014 7,507  30,450   2,963   10,480  
2015 10,672  35,437   1,097   19,332  
2016 193  31,069   2,299   11,047  
2017 3,988  34,200   2,827   15,530  
2018 8,365  33,730   4,194   11,718  
2019 10,985  34,097   2,950   12,879  
Note:  Data on bilateral FDI stocks are not available. Data on bilateral outflows are not available for 
confidentiality reasons.  
Source:  Mexican authorities.  
1.11.   The United States' net outward investment global stock remained steady for much of the 
period and has widened since 2016. Inflows increased significantly between 2014 and 2015 before 
declining to their previous levels. The US is a net recipient of FDI from  Canada, although FDI inflows 
declined between 2017 and 2019. Its net FDI in  Mexico was relatively stable during this period, 
despite outflows declining in 2019.  
Table 1.6 USA: FDI stock and flow with Canada, Mexico and world, 2009 -2019,  USD 
Million  
Year FDI Stock  
World  Canada  Mexico  
Outward  Inward  Outward  Inward  Outward  Inward  
2009 3,565,020  2,069,438      
2010 3,741,910  2,280,044      
2011 4,050,026  2,433,848      
2012 4,410,015  2,584,708      
2013 4,579,713  2,727,825      
2014 5,108,835  2,945,795      
2015 5,289,071  3,354,907      
2016 5,518,644  3,561,808      
2017 6,097,690  3,786,848  371,274  395,495  100,169  20,693  
2018 5,801,025  4,127,175  368,498  442,802  95,873  21,050  
2019 5,959,592  4,458,362  402,255  495,720  100,888  21,526  WT/REG407/1  
 
- 13 - 
 
  Year FDI Flow  
World  Canada  Mexico  
Outward  Inward  Outward  Inward  Outward  Inward  
2009 287,901  143,604      
2010 277,779  198,049      
2011 396,569  229,862      
2012 318,196  199,034      
2013 303,432  201,393      
2014 333,014  201,733      
2015 264,359  467,625      
2016 289,261  471,792      
2017 327,781  295,296  16,356  83,657  5,907  3,191  
2018 -194,412  223,401  17,752  39,115  5,998  -117 
2019 93,552  261,412  29,889  36,489  4,507  256 
Source:  US authorities.  
2  CHARACTERISTIC ELEMENTS OF THE AGREEMENT  
Background Information  
2.1.  The Agreement w as signed on 30 November  2018 and amended on 10 December 2019 . It 
entered into force on 1 July 20 20 and was notified to the WTO on 16 September 2020  under  Article 
XXIV:7(a) of GATT 1994 and Article V:7(a) of the GATS.3 The text of the Agreement and its annexes 
and side letters is available on the Parties' websites.4 
2.2.  The Protocol Replacing the North American Free Trade Agreement (NAFTA) with the Agreement 
notes that , upon its entry into force, the Agreement, attached as an annex to the Protocol shall 
supersede the NAFTA without prejudice to those provisions set forth in the Agreement that refer to 
the provisions of the NAFTA (paragraph 1 of the Protocol).  The Parties accordingly notified  the 
cessation of the NAFTA , without prejudice to these provisions .5  
Structure of the Agreement  
2.3.  The text of the Agreement along with its annexes and side letters is available on the Parties' 
websites. The Agreement has 34 Chapters, se veral annexes and side letters as well as an 
Environment Cooperation and Customs Verification Agreement between Mexico and the United 
States which form an integral part of the Agreement (Box 2.1).  The Protocol of Amendment covers 
issues relating to Chapter s 1 (initial provisions and general definitions), 4 (rules of origin), 
20 (intellectual property rights), 23 (labour), 24 (environment), 30 (administrative and institutional 
provisions), and 31 (dispute settlement) . 
Box 2.1 Structure of the Agreement  
Chapter  Title 
Preamble   
Chapter 1  Initial provisions and general definitions  
Chapter 2  National treatment and market access  for goods  
Chapter 3  Agriculture  
Chapter 4  Rules of origin  
Chapter 5  Origin procedures  
Chapter 6  Textiles and apparel  
Chapter 7  Customs administration and trade facilitation  
Chapter 8  Recognition of ownership of Mexican hydrocarbons  
Chapter 9  Sanitary and phytosanitary measures  
Chapter 10  Trade remedies  
 
3 WTO documents WT/REG407/N/1 and  S/C/N/1017.  
4 Canada: https://www.international.gc.ca/trade -commerce/trade -agreements -accords -
commerciaux/agr -acc/cusma -aceum/t ext-texte/toc -tdm.aspx?lang=eng ; Mexico: https://www.gob.mx/t -
mec/acciones -y-programas/textos -finales -del-tratado -entre-mexico -estados -unidos -y-canada -t-mec-
202730?state=published ; and the United States: https://ustr.gov/trade -agreements/free -trade -
agreements/united -states -mexico -canada -agreement/agreement -between .  
5 WTO document WT/REG4/N/1 and S/C/N/4/Add.1, dated 9 October 2020.  WT/REG407/1  
 
- 14 - 
 
  Chapter  Title 
Chapter 11  Technical barriers to trade  
Chapter 12  Sectoral Annexes  
Chapter 13  Government procurement  
Chapter 14  Investment  
Chapter 15  Cross border trade in services  
Chapter 16  Temporary entry  
Chapter 17  Financial services  
Chapter 18  Telecommunications  
Chapter 19  Digital trade  
Chapter 20  Intellectual property rights  
Chapter 21  Competition policy  
Chapter 22  State -owned enterprises  
Chapter 23  Labour  
Chapter 24  Environment  
Chapter 25  Small and medium sized enterprises  
Chapter 26  Competitiveness  
Chapter 27  Anticorruption  
Chapter 28  Good regulatory practices  
Chapter 29  Publication and administration  
Chapter 30  Administrative and institutional provisions  
Chapter 31  Dispute settlement  
Chapter 32  Exceptions and general provisions  
Chapter 33  Macroeconomic policy and exchange rate matters  
Chapter 34  Final provisions  
Annexes   
Annex I  Investment and services non -conforming measure s 
Annex II  Investment and services non -conforming measures  
Annex III  Financial services non -conforming measures  
Annex IV  SOEs—non-conforming activities  
Side Letters   
All Parties  Regarding Article 23.6  
Mexico -United States  on Auto Safety Standards  
 on Cheeses  
 on Distilled Spirits  
 on Prior Users  
 On the Ramsar Convention  
 on 232 Dispute Settlement  
 on 232 Process  
 on 232  
Canada -United States  On Wine  
 On Natural Water Resources  
 On Energy  
 On Research and Development Expenditures  
 On 232 Future Measures  
 On 232 Autos and Auto Parts  
Environment  Cooperation and Customs Verification Agreement between the United States and Mexico  
Source:  WTO Secretariat based on the Agreement.  
2.4.  Chapter 34 of the Agreement details the transition provisions from the NAFTA.  Specifically, 
issues under consideration by the Commission or subsidiary body under the NAFTA (including 
documents or other work under development) may be continued under any equivalent body under 
the Agreement, subject to any decision by the Parties on w hether and how that continuation is to 
occur. With regard to alternative dispute resolution the Membership of the Committee established 
by Article 2022 of NAFTA may be maintained for the Committee under Article 31.22.4 of the 
Agreement. For the review of and dispute settlement for anti -dumping and countervailing matters, 
Chapter 19 of the NAFTA will continue to apply to binational panel reviews related to final 
determinations published by a Party before the entry into force of the Agreement; the Secretariat  
established under Article 30.6 of the Agreement shall perform the functions assigned to the NAFTA 
Secretariat under Chapter 19 of the NAFTA and under the domestic implementation procedures 
adopted by the Parties in connection therewith, until the bination al Panel has made a decision and 
a Notice of Completion of Panel Review has been issued by the Secretariat.  Finally, appropriate 
measures shall be made to ensure that claims for preferential treatment made under the NAFTA are 
granted after the entry into f orce of the Agreement. The provisions of Chapter 5 of NAFTA (customs 
procedures) will also continue to apply for goods for which preferential tariff treatment was claimed  
under the NAFTA (Article 34.1) . WT/REG407/1  
 
- 15 - 
 
  3  PROVISIONS ON TRADE IN GOODS  
Import duties and charge s, and quantitative restrictions  
3.1.1   General provisions  
3.1.  Chapter 2 covers trade in  goods. The Parties agree to provide each other national treatment in 
goods in accordance with Article III of GATT 1994 including its interpretative notes, which are 
incorporated into the Agreement, mutatis mutandis ; exceptions to national treatment are laid out in 
Annex 2 -A (see Table 3.1 below ). National treatment with respect to a regional level of government 
is treatment no less favourable than the most favourable treatment it accords to any like, directly 
competitive, or substitutable goods, of the Party of which it forms a part.6  
3.2.  Refunds, waivers or reductions of customs duties owed on a good imported into its territory by 
any Party are not permitted by paragraph 1 of Article 2.5 on condition that the good is (a) 
subsequently exported to the territory of another Party; (b) used as a material in the production of 
another good that is subsequently exported to the territory of another Party; or (c) substituted by 
an identical or  similar good that is subsequently exported to the territory of another Party, in an 
amount that exceeds the lesser of the total amount of customs duties paid or owed on the good 
upon import into its territory and the total amount of customs duties paid to  another Party on the 
good that has been subsequently exported to the territory of that other Party.  
3.3.  The Parties also shall not, on condition of export, refund, reduce or waive (i) an anti -dumping 
or countervailing duty; (ii) a premium offered or collected  on an imported good arising from any 
tendering system from the administration of quantitative import restrictions or tariff rate quotas, or 
tariff preference levels; (iii) or customs duties paid or owed on a good imported into their territory 
and substitu ted by an identical or similar good that is subsequently exported to the territory of 
another Party.  
3.4.  Customs duties for g oods imported under a duty deferral programme which are subsequently 
exported to another Party or used as an input or substituted by an identical or similar input to 
produce another good that is subsequently exported, shall be assess ed by the exporting Par ty as if 
the exported good had been withdrawn from domestic consumption; and may be waive d or reduce d 
to the extent permitted under paragraph 1 of Article 2.5.  
3.5.  Article 2.5 on drawback and duty deferral programmes does not apply to :  
a. goods entered under bon d for transport and export to another Party;  
b. goods exported to another Party in the same condition as when imported into the territory 
of a Party from which they are exported;  
c. goods imported into the territory of a Party and deemed to be exported from it s territory, 
used as materials in the production of other goods deemed to be exported to another Party 
or substituted by identical or similar good s that is deemed to be exported to another Party 
by reason of delivery to a duty free shop, ships stores or su pplies for ships and aircraft or 
delivery for use in joint undertakings of two or more of the Parties and that will 
subsequently become the property of the Party into whose territory the goods were 
deemed to be exported;  
d. refund of customs duties by a Part y on goods imported and subsequently exported to 
another Party if the refund is due to the failure of the goods to conform to sample or 
specification or due to shipment of the goods without the consent of the consignee ; 
 
6 A side letter between Canada and the United States addresses the US trade concern on measures 
maintained by the Canadian Province of British Colombia (BC) governing the sale of wine in its grocery stores. 
Canada agreed to ensure that BC modifies the measu res and implements any changes no later than November 
1, 2019. The United States agreed to take no further action under WTO disputes WT/DS520 and WT/DS531, 
prior to November 1, 2019. (CA -US Side Letter on Wine, dated 30 November 2018).  WT/REG407/1  
 
- 16 - 
 
  e. originating goods that are imported into a Party, or used as inputs to produce another 
good, or substituted by identical or similar goods, and subsequently exported to another 
Party;  
f. exports from the United States to Canada or Mexico  under US tariff lines 1701.13.20 or 
1701.14.20 that are i mported into the United States under any re -export or like 
programme and used as a material in the production of, or substituted by an identical or 
similar good used as a material in the production of : (i) a good falling under Canad ian 
tariff line 1701.99. 00 or Mexican tariff lines 1701.99.0 1, 1701.99.02 or 1701.99.99 or (ii) 
sugar containing products that are prepared foodstuffs or beverages under headings 17.04 
and 18.06 or Chapters 19 -22; 
g. for trade between Canada and the United States: (i) imported citru s products; (ii) imported 
goods or substituted by identical or similar goods used as materials to produce goods 
under US tariff items 5811.00.20 (quilted cotton piece goods), 5811.00.30 (quilted man -
made piece goods) or 6307.90.99 (furniture moving pads) , or Canadian tariff items 
5811.00.10 (quilted cotton piece goods) , 5811.00.20 (quilted man -made piece goods)  or 
6307.90.30 (furniture moving pads) , that are subject to the MFN rate of duty when 
exported to the other Party; and (iii) imported goods used as m aterials to produce apparel 
that is subject to the MFN rate when exported to the other Party.  
3.6.  Customs duties may not be waived if conditioned, explicitly, or implicitly, on the fulfilment of 
a performance requirement  (Article 2.6) . Article 2.7 lists goods that will be grant ed temporary  duty-
free entry , while under Articles 2.8 and 2.9 respectively goods re -entered after repair or alteration 
(as defined) and commercial samples of negligible value  and printed advertising materials  are not 
subject to customs duties.  
3.7.  Except as otherwise provided by the Agr eement, the Chapter prohibits the Parties from 
adopting or maintaining import (or export) prohibitions or restrictions in their mutual trade except 
in accordance with Article XI of the GATT 1994, which, along with its interpretative notes is 
incorporated i nto and made part of the Agreement, mutatis mutandis  (Article 2.11.1); this provision 
applies to prohibitions and restrictions on imports (and exports) of remanufactured goods 
(Article  2.12) .7 For imports, the measures include: an import price requirement , except as permitted 
in enforcement of anti -dumping and countervailing duty orders or price undertakings; and import 
licensing conditioned on the fulfilment of a performance requirement. National treatment  provisions , 
and import ( or export)  prohibition s and restrictions do not apply to the continuation, renewal or 
amendment to any law, statute, decree or administrative regulation giving rise to a measure in 
Annex 2 -A to the extent that the continuation, renewal or amendment does not decrease the 
conformity  of the measure listed in Article 2.11.  National treatment and the general prohibition on 
import ( or export) prohibitions and restrictions also do not apply for specific measures (Table 3.1).  
Table 3.1 Excepti ons to national treatment and import and export prohibitions and 
restrictions  
Products  Does not apply to provisions on  
All Parties  National treatment and import and export restrictions  
Rough diamonds (HS 7102.10, 7102.21, 7102.31) under the Kimberley Process Certification Scheme and any 
subsequent amendments  to that scheme.  
Canada  National treatment and import and export restrictions  
Export of l ogs of all species   
Export of unprocessed fish pursuant to Provincial laws and regulationsa 
Prohibited provisions of tariff items 9897.00.00, 9898.00.00 and 9899.00.00 except as otherwise provided  
 
7 The Parties may ne vertheless, subject to their obligations under the Agreement and the WTO 
Agreement, require that a remanufactured good (a) be identified as such, including through labelling, for 
distribution or sale in their territories, and (b) meet all applicable techni cal requirements that apply to an 
equivalent good in new condition (Article 2.12.2). If a Party adopts or maintains a prohibition or restriction on 
a used good, the measure shall not be applied to a remanufactured good (Article 2.12.3).  WT/REG407/1  
 
- 17 - 
 
  Products  Does not apply to provisions on  
The use of ships in the coasting trade of Canada  
Excise duties on the absolute volume of ethyl alcohol for 2207.10.90 listed in Canada's Schedule of 
Commitments to GATT 1994 used in manufacturing under the provisions of the Excise Act 2001  
Originating goods from the United States under 89.01, 89.04, and 89.05 and tariff items 8902.00.10 and 
8903.99.90 (of an overall length exceeding 9.2 m only) as lon g as the measures adopted under the Merchant 
Marine Act of 1920 and Passenger Vessel Services Act  and 46 U.S.C. §§ 12102, 12113 and 12116, apply with 
quantitative effect to comparable originating goods from Canada sold or offered for sale in the US market.  
Mexico  Import and export restrictions (paragraphs 1 -4 of 
Article 2.11)  
Export measures pursuant to Article 48 of the Hydrocarbons Law ( Ley de Hidrocarburos ) published in Mexico's 
Official Gazette on 11 August 2014 for items under the Agreement that amends and establishes the 
classification and codification of Hydrocarbons and Petroleum Products subject to import and export permits 
by the Ministry of Energyb published in Mexico's Official Gazette on 4 December 2017 subject to Mexico's 
rights and obligations under the WTO Agreements including with regard to transparency and non -
discriminatory treatment.  
Prohibitions or restrictions on imports of used tyres, used apparel, non -originating used vehicles and used 
chassis equipped with vehicl e motors set forth in paragraphs 1(I) and 5 of Annex 2.2.1 of the Resolution 
through which the Ministry of the Economy establishes Rules and General Criteria on International Tradec 
published in Mexico's Official Gazette on 31 December 20 12.  
United State s National treatment and import and export restrictions  
Control s on the export of logs of all species  
(i) measures under existing provisions of the Merchant Marine Act of 1920 and Passenger Vehicle Services Act 
and 46 U.S.C.§§12102, 12113 and 12116, to the extent that such measures were mandatory legislation at 
the time of the accession of the United States to the GATT 1947 and have not been amended s o as to decrease 
their conformity with Part II of the GATT 1947.  
(ii) the continuation or prompt renewal of a non -conforming provision of any statute referred to in (i); and  
(iii) the amendment to a non -conforming provision of any statute referred to in (i ) to the extent that the 
amendment does not decrease the conformity of the provision with Articles 2.3 (national treatment) and 2.11 
(import and export restrictions).  
a (i) New Brunswick Seafood Processing Act, SNB 2006, c S -5.3, and Fisheries and Aquaculture Development 
Act, SNB 2009, c F -15.001 ; (ii) Newfoundland and Labrador Fish Inspection Act, RSNL 1990, c F -12; (iii) Nova 
Scotia Fisheries and Coastal Resources Act, Chapter 25 of the Acts of 1996; (iv) Prince Edward Islands Fisheries 
Act, R.S.P .E.I. 1988, Cap F -13.01 and Fish Inspection Act, R.S.P.E.I. 1988, Cap. F -1; and (v) Quebec Marine 
Products Processing Act CQLR c T -11.01.  
b Acuerdo que modifica al diverso por el que se establece la clasificación y codificación de Hidrocarburos y 
Petrolíferos cuya importación y exportación está sujeta a Permiso Previo por parte de la Secretaría de Energía . 
c Acuerdo por el que la Secretaría de Economía emite reglas y criterios de carácter general en materia de 
Comercio Exterior . 
Source:  Annex 2 -A of th e Agreement . 
3.8.  If a Party adopts or maintains a prohibition or restriction on imports (or exports) of goods from 
a non -party, it may  limit or prohibit the import of the good from the non -party from the territory of 
another Party  (or require, as a condition for  exporting the good of the Party to the territory of another 
Party, that the good not be re -exported to the non -Party, directly or indirectly, without being 
consumed in the territory of the other Party ). However, if a Party adopts o r maintains a prohibitio n 
or restriction on imports from a non -party, the Parties, upon request from a Party, shall consult with 
a view to avoiding undue interference with or distortion of pricing, marketing or distribution 
arrangements in another Party. No requirements shall be placed by a Party on persons of the other 
Parties, to establish or maintain a contractual or other relationship with a distributor in its territory, 
as a condition for engaging in imports of a particular good. Conditions are also in place for export  
restri ctions  (see Section 3.3 below).  WT/REG407/1  
 
- 18 - 
 
  3.9.  The Parties must notify each other of their existing import licensing procedures, if any, as soon 
as practicable once the Agreement enters into force  (Article 2.13) .8 Any new or modified import 
licensing procedure shall be published on an official government website, to the extent possible, at 
least 20 days before it takes effect  (Article 2.13.3) . Each Party has 60 days in which to respond to 
a reasonable enquiry from another Party concerning its licensing rules and procedur es for the 
submission of applications for import licences. A Party denying an application for an import licence 
for a good of another Party shall, upon request by the applicant and within a reasonable period of 
time from receipt of the request, provide a w ritten explanation for the reason for denial.  Finally, no 
Party shall apply an import licensing procedure on a good from another Party unless the Party has 
complied with the requirements of Articles 2.13.1 -2.13.3.  
3.10.   In accordance with Article VIII:1 of GATT 1994 and its interpretative notes, all fees and 
charges imposed on or in connection with import (or export) are limited in amount to the 
approximate cost of services rendered and do not represent an indirect protection to a domestic 
good or a taxation of a n import (or export) for fiscal purposes  (Article 2.16) . Consular transactions 
including related fees or charges in connection with imports from another Party as well as customs 
users fees on originating good may not be applied.9 
3.11.   Chapter 2 establishes a Committee on Trade in Goods which will meet on the request of a 
Party or the Commission established by the Agreement, to consider any matter arising under the 
Agreement (see Section 5.5 below).  
3.1.2   Liberalization of trade and tariff lines  
3.12.   The Par ties agree to apply customs duty on an originating good in accordance with their 
Schedules of liberalization in Annex 2 -B. Unless otherwise provided in the Agreement they shall not 
increase any existing customs duty or adopt any new customs duty on an orig inating good.  
3.13.   Tariff liberalization continues the process started under the NAFTA. It is to be implemented in 
annual stages over a period of up to 10 years from the date of entry into force of the Agreement  
from a base rate of 1 July 2017  for Canada and th e United States and 1 September 2018 for Mexico . 
The acceleration or broadening of tariff liberalization commitments shall be considered by the Parties 
upon request by a Party. An agreement between two or more Parties on such broadening or 
acceleration sha ll supersede any tariff elimination commitment in Annex 2 -B of the Agreement for 
the good concerned once approved by each Party under its applicable legal procedures.  A Party may 
at any time unilaterally accelerate the elimination of customs duties as sche duled in Annex 2 -B. 
3.14.   The Parties agree to MFN duty -free treatment  for automatic data processing goods, and digital 
processing units, parts of computers, computer power suppliers, metal oxide varistors, some 
semiconductor products and local area network (LAN ) apparatus as detailed in Tables 2.10.1, 2.10.2 
and 2.10.3.10  
3.15.   Tables 3.2 -3.4 show tariff elimination commitments under the Agreement by the Parties. In 
2020, around 70.4% (4,806 tariff lines) of Canada's tariff was already duty free on an MFN basis.11 
On average, almost 81% of imports from the United States and 72.8% of imports from Mexico 
entered Canada under these duty -free tariff lines during 2017 -2019.   
 
8 The notification shall include information specified in Article 5.2 of the WTO Agreement on Import 
Licensing and in the annual questionnaire on import licensing procedures under the Import Licensing 
Agreement; and be without prejudice as to whether the procedures are consi stent with the Agreement 
(Article  2.13.1).  The Party notifying shall be deemed to be in compliance with this obligation if it has provided 
to the WTO Committee on Import Licensing the information specified in Article 5.2 of the Agreement on Import 
Licensin g as well as the information requested in the questionnaire on import licensing procedures under Article 
7.3 of the Agreement on Import Licensing in its most recent notification before the entry into force of the 
Agreement (Article 2.13.2).  
9 The fees to w hich the exception applies are the customs user fee in the United States and the derecho 
de tramite aduanero  in Mexico (footnote 3 of Chapter 2).  
10 Regardless of the rules of origin the products in Table 2.10.1 shall be considered to be originating.  
11 In 2020 Canada's MFN tariff consisted of 6,827 lines at the eight -digit level. Of these 6,569 or 
96.22% carried ad valorem  rates of duty, while 133 lines had specific rates, 41 mixed duties and 78 compound 
rates of duty. No rates were reported for six lines.  WT/REG407/1  
 
- 19 - 
 
  3.16.   With regard to tariff commitments already made under the NAFTA, under the Agreement 
Canada has a dded three tariff lines to be liberalized for imports from the United States.12 There are 
no changes to its commitments on imports from Mexico. In addition to MFN duty -free tariff lines,  
Canada  continued the liberalization of NAFTA of  a further 1,914 lines  (28% of the tariff) for imports 
from the United States, corresponding to 19.2% of imports during 2017 -2019; and 1,875 lines 
(27.5%), corresponding to 27.1% of its imports from Mexico during 2017 -19. Canada will liberalize 
an additional 2 lines in 2025 and  one line in 2030  for imports from the United States . At the end of 
implementation Canada will retain duties on 10 3 lines (1.5% of the tariff) for imports from the United 
States and 146 lines (2.1% of the tariff) for imports from Mexico.   
Table 3.2 Canada: Tariff elimination commitments under the Agreement and 
correspondin g average trade  
Partner  USA Mexico  
Duty 
phase -
out 
period  Tariff lines in 
Canada's tariff 
schedule  Canada's imports  
(2017 -2019)a Tariff lines in 
Canada's tariff 
schedule  Canada's imports  
(2017 -2019)a 
Number  % Value 
(USD 
billion)  % Number  % Value 
(USD 
billion)  % 
MFN 
2020 
duty-free 4,806  70.4 144.6  80.7 4,806  70.4 14.8 72.8 
2020 1,915  28.0 34.5 19.2 1,875  27.5 5.5 27.1 
2025 2 0.0 0.0 0.0     
2030 1 0.0 0.0 0.0     
Remain 
dutiableb 103 1.5 0.1 0.0 146 2.1 0.0 0.0 
Total  6,827  100.0  179.1  100.0  6,827  100.0  20.3 100.0  
a Import coverage is from HS chapters 1 -97. 
b 6 tariff lines (1701.91.10, 1701.99.10, 1702.90.21, 1702.90.61, 1702.90.70, 1702.90.81) which are 
only applicable for Canada -Peru/Honduras FTA are counted as dutiable. These lines are not part of the 
Agreement but are included in the calculation of the total number of lines in Canada's tariff.  
Note:  Tariff lines subject to in -quota rates are excluded from the computation. For the calculation of averages, 
specific rates are excluded, and the ad valorem  parts of alternate rates are included.  
 Based on the HS 2017 nomenclature.  
Source:  WTO estimates b ased on data from the authorities and the WTO -IDB. 
3.17.   Table 3.3 shows Mexico's tariff elimination commitments. In 2020 7,103 lines (56.7% of the 
tariff) were duty free on an MFN basis for imports by Mexico from the other Parties.13 These lines 
corresponded on  average to 64.2% and 62.6% of Mexico's imports from the United States and 
Canada during 2017 -2019.  
3.18.   In 2020 , in continuation of liberalization commitments under the NAFTA,  the remaining 5,433 
lines became duty free for imports from the United States while  5,338 lines became duty free for 
imports from Canada. At the end of implementation 95 lines or 0.8% of the tariff will remain dutiable 
for imports from Canada.  
 
12 Of the three lines added to its commitments two (1517.10.20 and 1517.90.22) are to be liberalized in 
2025 and one (0404.10.22) in 2030.  
13 In 2020 Mexico's MFN applied tariff consisted of 12,536 lines at the eight -digit level. Of these 12,456 
(99.36%) car ried ad valorem  rates of duty, 14 lines had specific rates of duty, 44 had compound rates and 22 
lines relate to prohibited products.  WT/REG407/1  
 
- 20 - 
 
  Table 3.3 Mexico: Tariff elimination commitments  under the Agreement and 
corresponding average trade  
Partner  USA Canada  
Duty 
phase -
out 
period  Tariff lines in 
Mexico's tariff 
schedule  Mexico's imports  
(2017 -2019)  Tariff lines in 
Mexico's tariff 
schedule  Mexico's imports  
(2017 -2019)  
Number  % Value 
(USD 
billion)  % Number  % Value 
(USD 
billion)  % 
MFN 
2020 
duty-free 7,103  56.7 122.1  64.2 7,103  56.7 5.6 62.6 
2020 5,433  43.3 68.0 35.8 5,338  42.6 3.3 37.1 
Remain 
dutiable      95 0.8 0.0 0.2 
Total  12,536  100.0  190.1  100.0  12,536  100.0  8.9 100.0  
Note:  Based on the HS 2012 nomenclature.  
Source:  WTO estimates based on data from the authorities and the WTO -IDB. 
3.19.   Table 3.4 shows tariff elimination commitments by the United States. In 2020 4,199 lines 
(37.8% of the tariff) were duty free on an M FN basis.14 During 2017 -2019 37.9% and 37.3% of US 
imports on average entered respectively from Canada and Mexico under these lines.   
3.20.    With regard to tariff commitments already made under the NAFTA, the US added 15 tariff 
lines to its tariff liberalization commitments under the Agreement for imports from Canada. In 2020  
the U nited States maintained its NAFTA liberalization for  6,722 lines for imports from Canada and 
further liberalized an additional  15 lines. the United States maintained its NAFTA liberalization for  
6,913 lines for imports from Mexico . These lines corresponded to 62.1% of imports from Canada 
and 62.7% of imports from Mexi co during 2017 -2019. A further 13 and two lines will be liberalized 
for imports from Canada, respectively in 2025 and 2030.  At the end of implementation 1 67 lines will 
remain dutiable for imports from Canada.  
Table  3.4 USA: Tariff elimination commitments under the Agreement and corresponding 
average trade   
Partner  Canada  Mexico  
Duty phase -out 
period  Tariff lines in 
USA's tariff 
schedule  USA's imports  
(2017 -2019)a Tariff lines in 
USA's tariff 
schedule  USA's imports  
(2017 -2019)a 
Number  % Value 
(USD 
billion)  % Number  % Value 
(USD 
billion)  % 
2020 (MFN)  4,199  37.8 111,113.6  37.9 4,199  37.8 122,791.7  37.3 
2020 6,731  60.6 182,252.4  62.1 6,913  62.2 206,425.0  62.7 
2025 13 0.1 0.1 0.0 - - - - 
2030 2 0.0 - - - - - - 
Remain dutiable  167 1.5 25.0 0.0 - - - - 
Total 11,112  100.0  293,391.0  100.0  11,112  100.0  329,216.7  100.0  
a Import coverage is from HS chapters 1 -97. 
Note:  Tariff lines subject to in -quota rates are excluded in the computation.  
 Based on the HS 2017 nomenclature.  
Source:  WTO estimates based on data provided by the USA and the WTO -IDB. 
3.1.3   Liberalization schedule  
3.21.   Tariff elimination commitments by the Parties un der the Agreement are shown by broad 
HS Section in Tables 3.5 -3.7. Continuing liberalization under the NAFTA Canada liberalized the 
 
14 In 2020 the MFN applied tariff of the United States consisted of 11,112 tariff lines at the eight -digit 
level of which 9,895 lines (89.05%) had ad valorem  rates of duty. Of the remaining 1,217 lines, 752 had 
specific duties, 410 compound rates and 12 lines had mixed rates of duty. 43 lines had other rates of duty.  WT/REG407/1  
 
- 21 - 
 
  majority of its tariff in 2020. All the lines remaining dutiable once the Agreement is implemented 
are found in HS Sections I (68 for imports from the United States and 85 for imports from Mexico), 
IV (33 lines for imports from the United States and 59 lines for imports from Mexico), and VI (2 lines 
for imports from both the United States and Mexico). The average rates of duty for the products 
remaining dutiable are 228% for HS Section I and 228.5% for Section IV  for imports from the United 
States and 155.3% in HS Section IV and  188.6% in Section I for imports from Mexico.  The two lines 
in Section VI are subject to specific rate s of duty.   
Table 3.5 Canada: Tariff elimination commitments under the Agreement, by HS Section   
HS 
Section  MFN 2020  Partner: USA  Mexico  
Avg. 
% No. of 
lines  Duty - 
free 
lines  Duty -free lines  
under the  
Agreement  Remain 
dutiable  Avg. Final 
Tariff  
(Dutiable)  Duty -free 
lines  
under the  
Agree -
ment 
2020  Remain 
dutiable  Avg. Final 
Tariff  
(Dutiable)  2020  
2025  
2030  
I 34.5 449 306 74  1 68 228.0  58 85 188.6  
II 3.1 438 326 112     112   
III 7.0 61 33 26 2    28   
IV 16.3 544 190 321   33a 228.5  295 59a 155.3  
V 0.4 158 150 8     8   
VI 1.2 924 796 126   2 - 126 2 - 
VII 1.7 256 194 62     62   
VIII 3.7 83 52 31     31   
IX 2.1 153 98 55     55   
X 0.0 141 141         
XI 6.5 903 543 360     360   
XII 10.2 97 30 67     67   
XIII 2.5 173 106 67     67   
XIV 1.8 58 43 15     15   
XV 1.4 652 517 135     135   
XVI 0.7 976 877 99     99   
XVII 5.3 257 108 149     149   
XVIII  1.7 275 198 77     77   
XIX 3.8 29 7 22     22   
XX 4.8 191 84 107     107   
XXI 1.4 9 7 2     2   
Total  5.8 6,827  4,806  1,915  2 1 103 228.2  1,875  146 177.6  
-  contains specific duties only.  
a 6 tariff lines (1701.91.10, 1701.99.10, 1702.90.21, 1702.90.61, 1702.90.70, 1702.90.81) which are 
only applicable for Canada -Peru/Honduras FTA are counted as dutiable. These tariff lines are not part 
of the Agreement but are included to count the total num ber of lines in Canada's tariff.  
Note:  Tariff lines subject to in -quota rates are excluded from the computation. For the calculation of 
averages, specific rates are excluded, and the ad valorem  parts of alternate rates are included.  
 Based on the HS 2017 nomenclature.  
Source:  WTO estimates based on data from the authorities and the WTO -IDB. 
3.22.   Chart 3.1 shows average remaining tariffs applied by Canada on imports from Mexico and the 
United States compared to the corresponding MFN rates. For imports from Mexico, both preferential 
and MFN average rates are equivalent with average tariff rates ranging from 104.3% in 
HS Chapter  23 (residues and waste from the food industries) to 254.3% in HS Chapter 19 
(preparations of cereals, flours). For i mports from the United States, both preferential and MFN 
average rates are equivalent and range from 19 9.3% for Chapter 2 (meat and edible meat offal ) to 
265% for Chapter  18 (cocoa and cocoa preparations).  WT/REG407/1  
 
- 22 - 
 
  Chart 3.1 Canada: Average of dutiable rates, by HS Chapter  
 
Note:  
* HS chapters 17 and 35 contain specific duties only.  
 For the calculation of averages, specific rates are excluded, and the ad valorem  parts of alternate 
rates are inc luded.  
 Based on the HS 2017 nomenclature.  
Source:  WTO estimates based on data from  the Canadian authorities and the WTO -IDB. 
3.23.   Mexico liberalized the majority of its tariff in 2020  for imports from Canada and all tariffs for 
imports from the United States . All the lines remaining dutiable for imports from Canada once the 
Agreement is implemented are found in HS Sections I (6 9 lines) , IV (24 lines ), and VI (2 lines). The 
average rates of duty for the products remaining dutiable range from 7.5% in Section VI t o 34.5% 
in Section I. Chart 3.3 shows average remaining preferential duties and corresponding MFN rates by 
HS Chapter. The remaining average preferential tariffs are equal to their corresponding average MFN 
rates in 2020, which range from 7.5% in HS Chapter 35 to 56.3% in HS Chapter 2. Chapters 17 and 
18 which have 11 and 1 lines remaining dutiable respectively, have specific rates of duty.  
Table 3.6 Mexico: Tariff elimination commitments under the Agreement, by HS Section  HS 
Section  MFN 2020  Partner:  USA Canada  
Average  
% Number  
of lines  Duty free 
lines  Duty -free lines  
under the  
Agreement  Remain 
dutiable  Avg. Final 
Tariff  
(Dutiable)  2020  
I 15.7 439 62 377 308 69 34.5 
II 11.7 519 117 402 402   
III 8.5 72 17 55 55   
IV 18.4 357 31 326 302 24 19.5 
V 0.3 219 211 8 8   
VI 1.4 2,865  2,286  579 577 2 7.5 
VII 3.8 570 347 223 223   
VIII 4.8 124 92 32 32   
IX 6.7 188 66 122 122   
X 2.8 311 182 129 129   
XI 13.3 1,422  159 1,263  1,263    
XII 17.2 167 18 149 149   
XIII 5.8 313 162 151 151   
XIV 3.3 65 47 18 18   
XV 4.8 1,267  791 476 476   
XVI 2.7 2,492  1,901  591 591   
XVII 7.6 402 200 202 202   
XVIII 2.6 450 319 131 131   
XIX 11.2 33 2 31 31   
050100150200250300
1 2 4 16 17* 18 19 21 22 23 35*Average Duty Rate (%)
HS ChapterCanada -Mexico
Preferential MFN MFN=Preferential duties050100150200250300
1 2 4 16 17* 18 19 21 22 23 35*Canada -USAWT/REG407/1  
 
- 23 - 
 
  
HS 
Section  MFN 2020  Partner:  USA Canada  
Average  
% Number  
of lines  Duty free 
lines  Duty -free lines  
under the  
Agreement  Remain 
dutiable  Avg. Final 
Tariff  
(Dutiable)  2020  
XX 8.9 247 79 168 168   
XXI 0.0 14 14     
Total  5.8 12,536  7,103  5,433  5,338  95 31.8 
Note:  For the calculation of averages, specific rates are excluded, and the ad valorem  parts of alternate 
rates are included.  
 Based on the HS 2012 nomenclature.  
Source:  WTO estimates based on data from the authorities and the WTO-IDB. 
Chart 3.2 Mexico: Average of dutiable rates, by HS Chapter  
 
Note:  
* HS chapters 17 and 18 contain specific duties only  
 For the calculation of averages, specific rates are excluded, and the ad valor em parts of alternate 
rates are included.  
 Based on the HS 2012 nomenclature.  
Source:  WTO estimates based on data from the authorities and the WTO -IDB. 
3.24.   The United States liberalized the majority of its tariff in 2020 for imports from Canada and all 
tariffs for imports from Mexico , maintaining its liberalization under the  NAFTA . Further liberalization 
of imports from Canada will take place in 2025 ( 13 lines in HS Sections II, III, IV and XI) and 2030 
(2 lines in HS Section I).  All the lines remaining dutiable for imports from Canada once the 
Agreement is implemented are found in HS Sections I (76 lines),  and IV (9 1 lines). The average 
rates of duty for the products remaining dutiable will be 24.1% in HS IV and 44.2% in HS Section I . 
Chart 3.3 shows tha t for imports from Canada, preferential tariffs will remain in HS Chapters 4, 17 -
19 and 21 -23 with the remaining preferential tariff  rates being  equivalent to the corresponding MFN 
average rates and rang ing from 12.6% in HS 18 (cocoa and cocoa preparations ) to 44.2% in HS 4 
(dairy produce, eggs, natural honey and edible products of animal origin) . 
0102030405060
1 2 4 16 17* 18* 19 21 35Average Duty Rate (%)
HS ChapterPreferential MFN
MFN=Preferential dutiesWT/REG407/1  
 
- 24 - 
 
  Table 3.7 USA: Tariff elimination commitments under the Agreement, by HS Section   HS Section  MFN 2020  Partner:  Canada  Mexico  
Avg. 
% No. of 
lines  Duty 
free 
lines  Duty -free lines  
under the  
Agreement  Remain 
dutiable  Avg. Final 
Tariff  
(Dutiable)  Duty -free 
lines  
under the  
Agreement 
2020  Remain 
dutiable  2020  
2025  
2030  
I 8.4 699 283 338  2 76 44.2 416  
II 3.9 567 153 411 3    414  
III 3.7 70 17 52 1    53  
IV 12.0 790 156 540 3  91 24.1 634  
V 0.6 204 151 53     53  
VI 3.5 1,804  554 1,250      1,250   
VII 3.7 376 86 290     290  
VIII 4.9 231 42 189     189  
IX 2.3 300 174 126     126  
X 0.0 275 275        
XI 9.0 1,681  221 1,454  6    1,460   
XII 13.4 197 35 162     162  
XIII 5.5 317 99 218     218  
XIV 3.0 105 48 57     57  
XV 2.0 988 536 452     452  
XVI 1.4 1,383  828 555     555  
XVII 2.3 272 140 132     132  
XVIII 2.5 518 252 266     266  
XIX 2.2 33 18 15     15  
XX 3.6 295 124 171     171  
XXI 0.0 7 7        
Total  4.9 11,112  4,199  6,731  13 2 167 33.2 6,913  - 
Note:  Tariff lines subject to in -quota rates are excluded in the computation. For the calculation of averages; 
specific rates are excluded, and the ad valorem  parts of the alternate rates are included and AVEs 
(ad valorem  equivalent) are used to the tariff lines where USA has provided.  
 Based on the HS 2017 nomenclature.  
Source:  WTO estimates based on data provided by the USA and the WTO -IDB. 
Chart 3.3 USA-Canada: Average of dutiable rates, by HS Chapter  
 
Note:  Tariff lines subject to in -quota rates are excluded from the computation. For the calculation of averages 
specific rates are excluded and the ad valorem  part of the alternate rates are included  and AVEs are 
used as provided by the authorities.  
Source:  WTO estimates based on data provided by the authorities and the WTO -IDB. 
05101520253035404550
04 17 18 19 21 22 23Average Duty Rate (%)
HS ChapterPreferential MFN
MFN=Preferential dutiesWT/REG407/1  
 
- 25 - 
 
  3.1.4   Tariff rate quotas  
3.25.   Appendix 2 of Chapter 2 details TRQs applied by Canada and the United States. Mexico does 
not have TRQs u nder the Agreement.  Canada has TRQs for a number of dairy products including 
milk, cream, milk powder, butter and cream powder, cheese, concentrated or condensed milk, 
yoghurt and buttermilk and ice cream and ice cream mixes, as well as chicken and eggs.  In addition, 
Canada maintains  its WTO TRQs with respect to imports of turkey and turkey products  and/or  broiler 
hatching eggs and chicks , and it commits to certain obligations in determining the TRQ quantities 
and in administering the TRQs .15 The United States has TRQs on dairy products  including cream, 
skim milk powder, butter, cream and cream powder, cheese, whole milk powder, concentrated milk 
and sugar and sugar containing products. Canada and the United States will gradually increase the 
quota quantity for most products over a 19 -year period . The in -quota rates are zero while the out 
of quota rates will be the applied MFN duties. Details of the products covered, the rates and the 
quantities are in Annex 2.  While Canada administers quotas using an allocation mechanism , the 
United Stat es does so  on a first come first served basis.  
3.26.   Article 3.A.2 deals with tariff quota administration. The Parties shall implement and administer 
their TRQs in accordance with Article XIII of the GATT including its interpretative notes, the Import 
Licensing Agreement and Article 2.15 on transparency in import licensing. The procedures for 
administering TRQs shall be transparent; fair and equitable; use clearly specified timeframes, 
administrative procedures and requirements; are no more administratively burde nsome than 
necessary; are responsive to market conditions; and are administered in a timely manner. 
Transparency provisions include publication of information on TRQ administration on a designated 
website at least 90 days before the beginning of the TRQ ye ar and a commitment to administer TRQs 
in a manner that gives importers an opportunity to utilize TRQ quantities fully. No new TRQ 
conditions, limits or eligibility requirements on the utilization of the TRQ for import of an agricultural 
good are to be add ed except following prior notification and consultations with the Party concerned. 
No conditions, limits or eligibility requirements shall in any case be imposed on the quota applicant 's 
nationality or location of headquarters; requiring physical presence in the Party except doing 
business or having a business office or having an employee, agent for service of process or a legal 
representative in the territory of the Party. There are also transparency requirements for any change 
to the allocation mechanism used for TRQs and publication of TRQ allocations and, if possible, 
utilization rates ; once quotas administered by an allocation mechanism are filled a notice shall be 
published as early as practicable . For TRQs issued on a first come first served basis, ut ilization rates 
and remaining TRQ quantities available shall be published over the course of each TRQ year in a 
timely and on -going basis; once such quotas are filled a notice shall be published  within 10 days. 
Consultations shall be held on the request of the exporting Party within 30 days of the request being 
made to the Party administering the TRQ.  
Rules of origin  
3.27.   A good is considered to be originating if it is (a) wholly obtained or produced entirely in the 
territory of one or more of the Part ies; (b) produced entirely in the territory of one or more of the 
Parties using non -originating materials which must satisfy the product -specific rules in Annex 4 -B; 
(c) produced entirely in the territory of one or more of the Parties exclusively from orig inating 
materials; or (d) except for a good in HS Chapters 61 -63 (i) produced entirely in the territory of one 
or more of the Parties; (ii) one or more of the non -originating materials used in the production of 
the good cannot satisfy the product specific rules because both the good and the materials used are 
classified in the same sub -heading or heading that is not further subdivided into sub -headings or 
the good was imported into the territory of a Party in an unassembled or disassembled form but was 
classified as an assembled good; and (ii i) the regional value content (RVC) of the good is not less 
 
15 Canada's global import quota on turkey and turkey product s for any given year shall be no less than 
3.5% of the previous year's Canadian production. Except for 10 years after the entry into force of the 
Agreement Canada shall calculate the difference in any given year between (i) 3.5% of the previous year's 
turkey production in Canada and (ii) 3.5% of that year's Canadian turkey production quota. If (i) exceeds (ii) 
by 1,000 MT or more, Canada may restrict the level of global imports of such products for that quota year to 
no more than 3.5% of that year's Canadia n domestic turkey production quota plus 1,000 MT. The combined 
level of global import quotas on broiler hatching eggs and chick products, for any given year shall be no less 
than 21.1% of the estimated Canadian production of broiler hatching eggs for that year. Further details are 
provided in Section C of Annex 2 -B of Chapter 2.  WT/REG407/1  
 
- 26 - 
 
  than 60% under the transaction value method or not less than 50% under the net cost method; and 
that the good satisfies all other applicable requirements of Cha pter 4 . 
3.28.   The RVC is calculated using either the transaction value method or the net cost method as 
defined in Article 4.5. For a small number of goods, the net cost method may be used . The value of 
non-originating materials used in the production of a good shall not include the value of non -
originating materials used to produce originating materials subsequently used in the production of 
the good.  
3.29.   In general, the product specific rules of origin require a change in tariff classification (CTC) 
mostly at the heading level but also at the subheading and Chapter levels. A chemical reaction rule 
applies for certain Chapters such as 27 (mineral fuels) or Sections VI and VII (products of the 
chemicals or allied industries and plastics); other rules such as purifica tion, mixtures and blends and 
standards materials also apply to Sections VI and VII. Accumulation rules in Article 4.11 provide 
that an originating good or material of one or more of the Parties is considered originating in the 
territory of another Party, and that production undertaken on a non -originating material in the 
territory of one or more of the Parties may contribute towards the originating status of a g ood, 
regardless of whether that production was sufficient to confer originating status to the ma terial itself.  
De minimis  rules apply if the value of non -originating materials used in the production of a good  that 
do not undergo an applicable CTC as in Annex 4 -B do not exceed 10% either of the transaction value 
of the good adjusted to exclude any int ernational shipment costs or the total cost of the good 
(Article  4.12), provided that the good meets all other applicable requirements of Chapter 4. Annex 
4-A lists the exceptions to this rule and includes certain agricultural products.  
3.2.1   Rules of origin fo r textiles and apparel  
3.30.   For textiles or apparel classified in HS 50-60 or HS 96.19  the de minimis  rule applies . If the 
product  contains non -originating materials that do not satisfy the applicable change in tariff 
classification requirement specified in Annex 4 -B, it shall nonetheless be considered to be an 
originating good if the total weight of all those materials  does not exceed 10% of the total weight of 
the good (of which the total weight of elastomeric content may not exceed 7% of the t otal weight 
of the good). For apparel goods the de minimis rule applies if the total weight of non -originating 
fibres or yarns does not exceed 10% of the component that determines the tariff classification of 
the good (of which the total weight of elastome ric content may not exceed 7% of the total weight 
of component) (Article 6.1). Under the NAFTA the de minimis level was 7%.16 Other rules for textiles 
and apparel under HS Chapters 50 -63 are mostly continued from the NAFTA, with a few adjustments 
as follow s: The yarn forward rule that applied in NAFTA is continued under the Agreement, whereby 
most textile and apparel products must be made from originating yarns for tariff preferences to 
apply.  In addition, there is a provision under which the United States will not apply tariffs on textiles 
and apparel imported from Mexico and assembled from fabrics wholly formed and cut, and exported 
from and reimported by the United States. In addition , textile and apparel goods sold as sets will 
only be considered as orig inating if each of the goods in the set is originating or the total value of 
the non -originating goods in the set does not exceed 10% of the value of the set (Article  6.1). As in 
the NAFTA certain handmade, traditional folkloric or indigenous handicrafts s hall also be eligible for 
duty free treatment (Article 6.2). Subject  to trilateral agreement  (instead of bilateral under the 
NAFTA) , the P arties can consider changes to the product -specific rules of origin in the case of  fabrics, 
yarns and fibres which are  not commercially available in the region  (the "short supply list") . The 
tariff preference level (TPL) categories have been largely maintained as in the NAFTA although the 
volume that may be imported under certain categories has been adjusted and the scope  of eligible 
goods has been expanded in some instances  (Section C of Chapter 6).17  
 
16 Article 405 of the NAFTA.  
17 TPLs are used to provide duty free treatment to limited quantities of imports of certain textiles and 
apparel products that do not meet the yarn -forwa rd product -specific rules of origin , but that are cut and sewn, 
or knit to shape, in the territory of a Party.  The categories under which such imports take place are: cotton or 
man-made fibre apparel, wool apparel, cotton or man -made fibre fabrics and made -up goods, and cotton or 
man-made fibre spun yarn (Appendix 1 – 3 of Chapter 6).  WT/REG407/1  
 
- 27 - 
 
  3.2.2   Rules of origin for automotive goods  
3.31.   For passenger vehicles18 and light trucks19 to qualify as originat ing, they must meet five 
requirements: vehicle regional value content (RVC), core parts RVC, aluminium, steel, and labour  
value content  (LVC) . Heavy trucks20 are subject to the same requirements, except for the core parts 
RVC. For passenger vehicles and light  trucks, the vehicle RVC requirement based on the net cost 
method is set at 66% on July 1, 2020 and gradually increasing to 75% over a three -year period.21 
For heavy trucks, the vehicle RVC requirement based on the net cost method is being increased to 
70% over a 7 -year period. For passenger vehicles and light trucks to originate, the rules also require 
that their core parts (engine, transmission, body and chassis, axle, suspension system, steering 
system and advanced battery) meet a 75% RVC based on the ne t cost method.  Most other 
components are subject to a CTC or an alternative rule that includes an RVC threshold of 65% or 
70%, thresholds that are higher than those that applied under the NAFTA. These increases in RVC 
requirements are being phased -in over a three -year period. The RVCs for other vehicles range fr om 
at least 50% to 62.5% using the net cost method (Article 10 of the Appendix to Annex 4 -B), and 
remain largely unchanged from NAFTA.  For vehicles other than passenger vehicles, light trucks, and 
heavy trucks, the rules of origin have largely not changed from NAFTA.  
Table 3.8: Transition rules of origin for passenger motor vehicles, light trucks and 
components  
Product  Transition rules of origin  
Passenger motor 
vehicles, light trucks 
and components  Entry into force  Year 1 Year 2 Year 3 
Passenger vehicles, 
light trucks  66% (NC)  69% (NC)  72% (NC)  75% (NC)  
Core parts listed in 
Table A.1  66% (NC), 76% 
(TV) 69% (NC), 
79% (TV)  72% (NC), 82% 
(TV) 75% (NC), 85% (TV)  
Parts listed in Table Ba 62.5% (NC), 
72.5% (TV)  65% (NC), 
75% (TV)  67.5% (NC), 
77.5% (TV)  70% (NC), 80% (TV)  
Parts listed in Table Cb 62% (NC), 72% 
(TV) 63% (NC), 
73% (TV)  64% (NC), 74% 
(TV) 65% (NC), 75% (TV)  
Heavy trucks and 
components  entry into force  Year 4  Year 7  
Heavy trucks  60% (NC) 64% (NC)  70% (NC)  
Parts listed in Table D  60% (NC), 70% (TV)  64% (NC), 74% (TV)  70% (NC), 80% (TV)  
Parts listed in Table E  54% (NC), 64% (TV)  57% (NC), 67% (TV)  60% (NC), 70% (TV)  
NC net cost method . 
TV transaction value method . 
a Notwithstanding the requirements, a part of the list in Table B is considered originating if it meets 
the applicable CTC requirements in the product -specific rules of origin.  
b Notwithstanding the requirements a part of the list in Table C is considered originating if it meets the 
applicable CTC requirements in the product -specific rules of origin.   
Source:  Appendix to Annex 4 -B, the Agreement . 
3.32.   In addition to these requirements under Article 6 of the Appendix to Annex 4 -B, a passenger 
vehicle, light truck or heavy truck shall be con sidered as originating only if at least 70% of the 
vehicle producers purchases of steel and aluminium by value are of originating goods; the producer 
may calculate the purchases of steel and aluminium over the previous fiscal year of the producer, 
over the  previous calendar year, or over the quarter or month, fiscal year or calendar year to date 
in which the vehicle is exported.  Finally, in order for a passenger vehicle to originate, Article 7 
requires a minimum labour value content (LVC) of at least 30% as of 1 July 2020. In order to be 
 
18 passenger vehicle means a vehicle of subheading 8703.21 through 8703.90, except for:  
(a) a vehicle with a compression -ignition engine classified in subheading 8703.31 through 8703.33 or a 
vehicle of 8703.90 with both a compression -ignition engine and an electric motor for propulsion; (b) a three or 
four-wheeled motorcycle; (c) an all -terrain vehicle; (d) a motorhome or entertainer coach; an ambulance; or a 
vehicle inten ded principally for off -road use.  
19 light truck means a vehicle of subheading 8704.21 or 8704.31, except for a vehicle that is solely or 
principally for off -road use . 
20 heavy truck means a vehicle of subheading 8701.20, 8704.22, 8704.23, 8704.32, 8704.90, or 87.06, 
except for a vehicle that is solely or principally for off -road use . 
21 Under Article 403 of the NAFTA, the RVC requirement was 62.5% for passenger vehicles and light 
trucks and 60% for heavy trucks, based on the net cost method.  WT/REG407/1  
 
- 28 - 
 
  considered high -wage and contribute to meeting the LVC threshold, a material must be produced in 
a plant located in the territory of a Party in which the average base wage for direct production 
workers is at least USD 16 per  hour. This 30% LVC must consist  of at least 15 percentage points of 
high wage material and manufacturing expenditures, no more than 10 percentage points of high 
wage technology expenditures and no more than 5 percentage points of high wage assembly 
expend itures). The LVC  threshold for passenger vehicles will increase to 33% on 1 July 2021 
(one year after entry into force); 36% on 1 July 2022 or two years after entry into force; and 40% 
on 1 July 2023 or three years after entry into force.  The LVC threshold  for light trucks and heavy 
trucks is 45% beginning on July 1, 2020.  
3.33.   Under Article 8, producers are also permitted to individually request additional time and 
flexibility to meet the new rules of origin requirements for limited quantities of their vehicles  under  
an alternative staging regime (ASR) .22 Trilateral agreement is required for a company to trade on 
the basis of an ASR. Companies granted permission to use an ASR are entitled to duty -free treatment 
for some of the vehicles they produce for a limited  period of time, based on satisfying less restrictive 
rules of origin. The Parties may, upon request from a Party, review the requirements of the Appendix 
for motor vehicles to ensure that they reflect the composition of the vehicles, especially advanced 
technology vehicles and in light of technological developments (Article 9). T he Parties indicate that 
to date, no such review has been requested.   
Export duties and charges, and quantitative restrictions  
3.34.   The Parties may not adopt or maintain any duty, tax o r other charge on the export of any 
good to the territory of another Party unless it is also applied to the good if destined for domestic 
consumption (Article 2.15).  
3.35.   As for imports  above, restrictions or prohibitions on the export or sale for export to an other 
Party are not permitted by Chapter 2 of the Agreement except in accordance with Article XI of the 
GATT 1994 and its interpretative notes. If a Party maintains restrictions on exports to a non -party, 
nothing in the Agreement shall be construed to prev ent the Party from requiring, as a condition for 
exporting the good concerned from its territory to another Party, that the good not be re -exported 
to the non -party, directly or indirectly, without being consumed in the territory of the other Party.  
3.36.   Along with national treatment , and similar to import restrictions, with respect to export 
restrictions , Article 2.11  does not apply to the continuation, renewal or amendment to any law, 
statute, decree or administrative regulation giving rise to measures in Table 3.1 above, to the extent 
that the continuation, renewal or amendment does not decrease the conformity of the meas ure with  
Article 2.11 on import and export restrictions.  
3.37.   Under Chapter 3 on agriculture, the Parties recognize that under Article XI:2(a) of the GATT 
1994 a Party may temporarily apply an export prohibition or restriction that is otherwise prohibited 
under  Article XI:1 of the GATT 1994 on a foodstuff to prevent or relieve critical shortages, subject 
to meeting the conditions in Article 12.1 of the WTO Agreement on Agriculture . Paragraph 3 of Article 
3.5 sets out notification requirements.23 The Party notify ing shall, upon request, consult with a Party 
that has a substantial interest as an importer of the foodstuff, provide that Party with relevant 
economic indicators  on whether  a critical shortage exists or is likely to exist in the absence of the 
measure, a nd respond in writing to any question posed by another Party within 14 days of receipt 
of the questions.  Measures requiring notification shall normally be terminated within six months . An 
intention to extend the measure shall be notified to the other Parti es no later than five months after 
the date of adoption of the measure. The measure may not be continued beyond 12 months from 
the date of adoption unless the Party has consulted with other Parties that are net importers of the 
product concerned; the measu re shall be discontinued immediately when the critical shortage or 
threat thereof ceases  to exis t. No notification is required if the measure covers foodstuffs that the 
Party has been a net importer of during each of the three calendar years preceding the imposition 
 
22 Some ASRs apply  to only up to 10% of the producer's total North American passenger vehicle or light 
truck production. For other companies the ASR may cover more than 10% of their North American production.  
23 A Party imposing a prohibition or restriction on exports to ano ther Party shall notify the measure to 
the other Parties at least 30 days before the date on which the measure takes effect except in cases of force 
majeure in which case the notification should be made prior to the measure taking effect; or maintaining an  
export prohibition or restriction as of the date of entry into force of the Agreement shall notify the measure to 
the other Parties within 30 days of the date of entry into force of the Agreement.  WT/REG407/1  
 
- 29 - 
 
  of the measure (excluding the year in which the measure is imposed). The Party shall nevertheless, 
within a reasonable period of time, provide to the other Parties, trade data demonstrating that it 
was a net importer of the foodstuff during the three preceding years.   
3.38.   With regard to export licensing, Article 2.14 requires that each Party, within 30 days of the 
entry into force of the Agreement, shall notify the other Parties in writing of the publications in which 
its export licensing procedures,  if any, are set out.24 Any new export licensing procedure or any 
modification to an existing export licensing procedure adopted shall be published as soon as 
practicable but no later than 30 days after the new procedure or modification takes effect.25  
3.39.   Upon request from a Party each Party must provide to the extent practicable, particular 
information regarding an export licensing procedure that the Party adopts or maintains, except when 
doing so would reveal business proprietary or other confidential infor mation. The information 
includes the aggregate number of licences granted by the Party over a recent period as specified in 
the request; and measures, if any, adopted by the Party in conjunction with the licensing procedure 
to restrict domestic production or consumption or to stabilize production, supply or prices of the 
good concerned. Article 2.14 does not require export licences to be granted, or prevent a Party from 
implementing its obligations under United Nations Security Council Resolutions and other  multilateral 
non-proliferation regimes as listed in Article 2.14.4.  
Regulatory provisions on trade in goods  
3.4.1   Standards  
3.4.1.1   Sanitary and phytosanitary measures  
3.40.   Under Chapter 9 on sanitary and phytosanitary (SPS) measures, the Parties affirm their rights 
and obl igations under the WTO SPS Agreement. SPS measures which conform to the relevant 
provisions of Chapter 9 are presumed to be consistent with the Parties' obligations under Chapter 2 
on national treatment and market access, relating to the use of SPS measure s and Article XX(b) of 
the GATT 1994 as incorporated into Article 32.1 on general exceptions.26  
3.41.   Each Party has the right t o adopt or maintain SPS measures necessary for the protection of 
human, animal or plant life or health, provided that the measures ar e not inconsistent with the 
provisions of Chapter 9.  The Parties shall base their SPS measures on relevant international 
standards, guidelines and recommendations provided that they meet their appropriate levels of 
sanitary or phytosanitary protection. If the measures are not based on relevant international 
standards , guidelines, or recommendations, or if there are no relevant international standards, 
guidelines or recommendations , the Parties shall ensure their SPS measures are based on an 
assessment, as appropriate to the circumstances, of the risk to human, animal or plant  life or health.  
Chapter 9 does not prevent a Party from establishing the level of protection it deems to be 
appropriate; establishing or maintaining an approval procedure requiring a risk assessment before 
 
24 Export licensing procedure is defined by Article 2.14.5 as a requirement that a Party adopts or 
maintains under which an exporter must, as a condition for exporting a good from the Party's territory, submit 
an application or other documentation to an administrative body or bodies, but does not include customs 
documentation required in the normal course of trade or any requirement that must be fulfilled prior to 
introduction of the good into commerce within the Party's territory.  
25 The publication shall include (a) the texts including any modifications of licensi ng procedures; (b) the 
goods subject to the procedure; (c) a description of the process for applying for the licence and any criteria to 
be met; (d) a contact point from which further information can be obtained on the conditions for obtaining the 
licence;  (e) an administrative body to which the application is to be made; (f) a description of or a citation to a 
publication reproducing in full any measure that the export licensing procedure implements; (g) the period 
during which each export licensing proced ure will be in effect, unless the procedure will remain in effect until 
withdrawn or revised in a new publication; (h) if the Party intends to use a licensing procedure to administer an 
export quota, the overall quantity and, if practicable, the value of t he quota, and the opening and closing dates 
of the quota; and (i) any exemptions from or exceptions to the requirement to obtain an export license that 
are available to the public, how to request or use these exemptions or exceptions, and the criteria for the 
exemptions or exceptions.  
26 Furthermore, SPS measures which conform to relevant international standards, guidelines and 
recommendations are deemed to be necessary to protect human, animal, or plant life or health, and presumed 
to be consistent with the  relevant provisions of Chapter 9, Chapter 2, relating to the use of SPS measures, and 
Article XX(b) of the GATT 1994 as incorporated into Article 32.1.  WT/REG407/1  
 
- 30 - 
 
  the Party grants a product access to its market; or adopting or maintain an SPS measure on a 
provisional basis if relevant scientific evidence is insufficient  (Article 9.6) .27  
3.42.   Each Party shall ensure that its SPS measures : are applied only to the extent necessary to 
protect human, animal or plant life or health; are based on scientific principles taking into account 
relevant factors  including, if appropriate, different geographic conditions; are not maintained if there 
is no longer a scientific basis; do not arbitrarily or unjustifiably discriminate between Parties with 
identical or similar conditions, including between its own territory and that of other Parties; and are 
not applied in a manner that constitutes a disguised restriction on trade between the Parties. Risk 
assessment and risk management for an SPS regulation within the scope of Annex B of the WTO 
SPS Agreement shall be conducted  in a manner that is  documented and provide s the other Parties 
and persons of the Par ties opportunity to comment , in a manner to be determined by that Party . 
The Parties will ensure that their risk assessment is appropriate to the circumstances of the risk to 
human, anima, or plant life or health and takes into account the available releva nt scientific 
evidence, including qualitative and quantitative data and information . In conducting its risk 
assessment and risk management, each Party shall take into account the relevant guidelines of the 
WTO SPS Committee and relevant international stand ards, guidelines and recommendations  of the 
relevant international organization . The Parties shall consider not taking any measure if that would 
achieve their appropriate level of protection.  They shall also select measures that are not more 
restrictive th an required to achieve the level of protection they have determined to be appropriate.  
3.43.   Each Party shall endeavour to enhance compatibility of its SPS measures with those of the 
other Parties and is encouraged to consider relevant actual or proposed SPS measures of the other 
Parties in the development, modification or adoption of its own measures and making its SPS 
measures equivalent, or if appropriate, identical to those of the other Parties  to the extent that doing 
either does not reduce its appropriat e level of protection, (Article 9.7). The Parties shall apply the 
recognition of equivalence to a specific sanitary or phytosanitary measure or, to the extent feasible 
and appropriate, to a group of measures or on a systems -wide basis . In determining equiv alence, 
each Party shall  take into account the relevant guidance of the WTO SPS Committee and relevant 
international standards, guidelines and recommendations. The importing Party  shall, without delay, 
initiate an assessment upon receipt of sufficient info rmation from the exporting Party  and shall 
finalize and communicate the results of its assessment to the exporting Party  (Article 9.9) .  
3.44.   Under Article 9.8 the Parties agree to cooperate on the recognition of pest - or disease -free 
areas and areas of low pes t or disease prevalence to acquire confidence in each others' procedures 
for the recognition of such areas. They shall take into account the relevant guidance of the WTO SPS 
Committee and international standards, guidelines and recommendations.  
3.45.   Article 9.1 0 provides for audits of the exporting Party's competent authorities, including 
associated or designated inspection systems,  to determine an exporting Party's ability to comply 
with the importing Party's SPS requirements or to verify an exporting Party 's compliance with its 
SPS requirements that the importing Party has determined to be equivalent. Prior to the 
commencement of an audit,  the auditing and audited Parties shall decide on the itinerary and 
procedures for conducting the audit.  A decision or actio n taken by the auditing Party as a result of 
the audit must be supported by objective and verifiable evidence and data which the auditing Party 
shall provide if requested by the audited Party.  A Party may use import checks to assess compliance 
with its SPS  measures and to obtain information to assess risk or to determine the need for, develop, 
or periodically review a risk-based import check. If it prohibits or restricts the import of a good from 
another Party on the basis of an adverse result of an import check , it shall provide an opportunity 
for a review of the decision (Article 9.11)  and consider any relevant information submitted to assist 
the review . 
3.46.   The Parties recognize that assurances on SPS requirements may be provided by means other 
than certifica tes and shall ensure that at least one of the following conditions is met before imposing 
a SPS certification requirement : the certification requirement is based on the rel evant international 
standards and is appropriate to the circumstances of risks to human, animal or plant life or health 
at issue.  In applying certification requirements, an importing Party  shall take into account relevant 
guidance from the WTO SPS Committee and relevant international standards , guidelines, and 
 
27 In the latter case, the Party shall, within a reasonable period of time, seek to obtain additional 
information necessary for a more objective assessment of risk; complete the risk assessment after obtaining 
this information; and review and if appropriate, revise the provisional measure in light of the assessment.  WT/REG407/1  
 
- 31 - 
 
  recommendations.  The Parti es shall promote the use of electronic certification and other technologies 
to facilitate trade (Article 9.12). Article 9.14 addres ses emergency measures to address an urgent 
problem of human, animal or plant life or health. The provisions require prompt n otification and the 
Party taking the measure shall review the scientific basis of the measure within six months, and 
make the results of the review available to any Party on request.  If the reason for adoption of the 
measure remains, the Party should revie w the measure periodically thereafter.  
3.47.   Transparency provisions envisage information sharing, notification and publication of 
proposed SPS measures  that constitute SPS regulations for the purposes of  Annex B of the WTO SPS 
Agreement (Article 9.13). Other pr ovisions include Article 9.15 on information exchange, and 9.16 
on cooperation. The Agreement addresses  contact points and requires that  the Parties establish a 
Committee on Sanitary and Phytosanitary Measures  that shall meet once a year unless the Parties  
decide otherwise  to, inter alia , consider matters relating to the Chapter and its implementation, to 
improve understanding of SPS issues relating to the implementation of the WTO SPS Agreement or 
the Chapter, and identify and discuss at an early appropriate stage, proposed SPS measures or 
revisions to existing measures that may have a significant effect on trade in the region  (Article 9.17) . 
The Committee may establish technical working groups . The Parties may seek to resolve any specific 
trade concerns related to the application of a sanitary or phytosanitary measure  through the relevant 
technical working group (Article 9.18) . Under procedu res in Article 9.19 ; dispute settlement under 
Chapter 31 of the Agreement is not possible without first seeking to resolve the matter  through 
technical consultations (Article 9.20).  
3.4.1.2   Technical barriers to trade  
3.48.   Chapter 11 on technical barriers to tr ade (TBT ) incorporates various parts of the WTO 
Agreement on Technical Barriers to Trade, mutatis mutandis .28 The sections of the WTO TBT 
Agreement that are incorporated into the Chapter are therefore not subject to dispute settlement 
under the Agreement. Also exc luded are (i) measures that the Party alleges to be inconsistent with 
the Chapter that were referred to or subsequently referred to a WTO dispute settlement panel, (ii) 
were taken to comply in response to a recommendation or ruling by the WTO Dispute Settl ement 
Body or (iii) bear a close relationship with a measure under (ii) above  (Article 11.3) .  
3.49.   The Chapter applies to the preparation, adoption and application of standards, technical 
regulations and conformity assessment procedures, including any amendmen ts of central level of 
government bodies, which may affect trade between the Parties. It does not apply to technical 
specifications prepared by a government body for production or consumption requirements of a 
governmental body or SPS measures  (Article 11. 2). The role played by international standards in 
encouraging regulatory alignment is recognized and the Parties agree to follow only the WTO TBT 
Committee Decision on International Standards in determining international standards, guides or 
recommendation s within the meaning of Articles 2 and 5 and Annex 3 of the TBT Agreement.29 The 
Parties will also cooperate to ensure that international standards, guides and recommendations that 
are likely to become a basis for technical regulations and conformity asses sment procedures do not 
create unnecessary barriers to international trade  (Article 11.4) . Article 11.5 deals with the 
preparation, and review of technical regulations and the use of standards in technical regulations.  
3.50.   The Parties commit to provide nationa l treatment to conformity assessment bodies located in 
the territory of the other Parties including for procedures, criteria, fees and other conditions relating 
to accrediting, approving, licensing or otherwise recognizing conformity assessment bodies. If a 
Party maintains procedures, criteria or other conditions as above, and requires conformity 
assessment results as positive assurance that a product conforms to a technical regulation or 
standard, (i) it shall not require the conformity assessment body to  be located in its territory, (ii) 
not effectively require it to operate an office within the Party's territory, and (iii) permit conformity 
assessment bodies in other Parties' territories to apply to the Party or any body it has recognized or 
approved for  this purpose, for a determination that they comply with any procedures, criteria and 
other conditions the Party requires.  
 
28 The Sections incorporated are: Articles 2.1-2.5, 2.9 -2.12; Articles 3.1, 4.1 and 7.1; Articles 5.1 -5.9; 
and paragraphs D, E, F and J of Annex 3 of the WTO TBT Agreement.  
29 Criteria that are not be considered in this regard include the domicile of the standards body, whether 
the body is non -gover nmental or inter -governmental and whether it limits participation to delegations.  WT/REG407/1  
 
- 32 - 
 
  3.51.   Transparency provisions include participation by persons from the other Parties in the 
development of technical regulation s, standard s and conformity assessment procedures at terms no 
less favourable than for its own persons. Based on  the WTO TBT Agreement, Article 11.7 requires 
the Parties to  publish proposed technical regulations or conformity assessment procedures and allow 
and consi der written comments from persons of the other Parties  to revise the proposed measure ; 
endeavour to promptly publish any written comments received ; and publish the final technical 
regulation or conformity assessment procedure and an explanation of how it h as addressed 
substantive issues raised in comments.  Additional transparency through the use of electronic tools 
and public outreach and consultations is also encouraged.  In addition to notification under the TBT 
Agreement, the Parties will also endeavour t o notify proposed technical regulations and conformity 
assessment procedures of regional levels of governments that may have a significant impact on 
trade and that are in accordance with the technical content of relevant international standards, 
guides and  recommendations.  The "reasonable interval" between the publication of a technical 
regulation or conformity assessment procedure and its entry into force is defined by Article 11.8 as 
not less than six months except when this would be ineffective in fulfil ling the legitimate objectives 
of the technical regulation or conformity assessment procedure.  
3.52.   To facilitate the acceptance of conformity assessment results, Article 11.9 goes beyond the 
WTO TBT Agreement by requiring the Parties to give consideration to a  request by another Party on 
any sector -specific proposal for cooperation. The Parties also recognize mechanisms to support 
greater regulatory alignment and eliminate unnecessary technical barriers to trade in the region 
such as through regulatory dialogue  and cooperation, facilitation of the greater use and alignment 
of standards, technical regulations and conformity assessment procedures with international 
standards, guides and recommendations and promotion of equivalence of other Parties' technical 
regulations.  Article 11.10 sets up a framework for information exchange and technical discussions 
between the Parties to address trade concerns. A Committee on Technical Barriers to Trade as well 
as contact points are established  (Articles 11.11 and 11.12) . The Committee shall meet at least once 
a year unless otherwise determined by the Parties.  
3.53.   In addition to Chapter 11, there are specific annexes that deal with inter alia  the preparation, 
adoption and application of technical regulations, standards, conformit y assessment and notification 
procedures for chemicals (12 -A), cosmetic products (12 -B), information and communication 
technology (12 -C), energy performance standards (12 -D), medical devices (12 -E) and 
pharmaceuticals (12 -F). A side letter on auto safety s tandards affirms Mexico's continued recognition 
of certain US auto safety standards, as long as these standards are useful to fulfil Mexico 's legitimate 
objective.30 
3.4.2   Safeguard mechanisms  
3.4.2.1   Global safeguards  
3.54.   As under the NAFTA, a ll the Parties retain their ri ghts and obligations under Article XIX of the 
GATT 1994 and the WTO Agreement on Safeguards except those regarding compensation or 
retaliation and exclusion from any action to the extent that the rights and obligations are inconsistent 
with Article 10.2 of  the Agreement. A Party taking any actions under Article XIX or the Agreement 
on Safeguards shall exclude imports from the other Parties from the action unless (a) imports from 
a Party, considered individually, account for a substantial share of total impo rts31; and (b) imports 
from a Party, considered individually, or in exceptional circumstances, considered collectively with 
all Parties, contribute importantly to the serious injury, or threat thereof, caused by imports.32 Any 
goods imported from one of th e Parties that has been excluded from safeguard action under this 
provision, may subsequently be included if the competent investigating authority determines that a 
surge in imports of the good from the other Party or Parties undermines the effectiveness o f the 
action. The action may only be taken once prior written notice has been provided to the Commission 
(see Section 5.5 below ), and adequate opportunity for consultations has been provided to the 
 
30 MX-US Side Letter on Auto Safety Standards, dated 30 November 2018.  
31 Substantial share is defined in Article 10.2 as imports from the Party being among the top five 
suppliers of the good, in terms of import share during the most recent three -year period.  
32 Imports from a Party shall not normally be deemed to contribute imp ortantly to serious injury, or the 
threat thereof, if the growth rate of imports from a Party during the period in which the injurious surge in 
imports occurred is appreciably lower than the growth rate of total imports from all sources over the same 
period.  WT/REG407/1  
 
- 33 - 
 
  affected Parties as far in advance as is practicable. In addition , the action may not be taken if it 
would have the effect of reducing imports of the good from a Party below the trend o f its imports 
from the Party over a recent representative base period with allowance for reasonable growth.  
3.55.   Compensation in the form of concessions having substantially equivalent trade effects or 
equivalent to the additional value of the duties to result from the action shall be provided to the 
affected Parties. If the Parties are unable to agree on the compensation the Party against whose 
good the safeguard is taken may take action with trade effects that are substantially equivalent to 
the safegua rd measure.  
3.56.   The Parties agree to entrust determinations of serious injury, or threat thereof, in safeguard 
action proceedings to a competent investigating authority33, and review by judicial or administrative 
tribunals, to the extent provided by domestic l aw. Negative injury determinations shall not be 
modified unless they are reviewed.  
3.4.2.2   Bilateral safeguards  
3.57.   There are no specific provisions on bilateral or transitional safeguards.  The longest period for 
applying t ransitional safeguards under the NAFTA ended in 2008.  
3.4.2.3   Special safeguards  
3.58.   Under Chapter 3 on agriculture, originating agricultural goods under preferential tariff 
treatment shall not be subject to any duties that the importing Party applies pursuant to a special 
safeguard it takes pursuant to the WTO  Agreement on Agriculture  (Article 3.9) . 
3.4.2.4   Balance of payments safeguards  
3.59.   Safeguards may be adopted or maintained in the event of serious balance of payments  (BOP)  
and external financial difficulties or threats thereof. The measure must not be inconsistent w ith 
national and MFN treatment commitments with regard to investment, cross border trade in services, 
and financial services; be consistent with the Articles of Agreement of the IMF; avoid unnecessary 
damage to the commercial, economic and financial intere sts of another Party; not exceed those 
necessary to deal with the BOP or external financial difficulties  or threats thereof ; be temporary and 
phased out progressively  as the BOP or external financial difficulties or threats  thereof  improve and  
not exceed 1 2 months in duration (extendable in exceptional circumstances by one more year); not 
be inconsistent with Article 14.8 on expropriation and compensation;  in the case of restrictions on 
capital outflows , not interfere with investors' ability to earn a marke t rate of return in the territory 
of the restricting Party on assets invested in that territory  by an investor of a Party that are restricted 
from being transferred out of the territory of the restricting Party  and not be used to avoid necessary 
macroecono mic adjustment.   
3.60.   The Parties shall endeavour to use price -based measures and if not, shall explain the rationale 
for using quantitative restrictions. For trade in goods, the Parties incorporate Article XII of the GATT 
1994 and the Understanding on the Balance of Payments Provisions of the GATT 1994 into the 
Agreement, mutatis mutandis (Article 32.4) . Further procedural r equirements, including notification 
and a time schedule or the conditions necessary for the removal  of the measure are provided in 
Article 32.4.  
3.4.3   Anti-dumping and countervailing measure s 
3.61.   Section 10 -B and Annex 10 -A deal with anti -dumping and countervailing measures. As under 
the NAFTA, u nder Article 10.5 the Parties retain their rights and obligations under Article VI of the 
GATT 1994, the Anti -Dumping (AD) Agreement and the Agreement on Subsidies  and Countervailing 
Measures (SCM Agreement).  Articles 10.10 -10.18 are unchanged from the provisions on the NAFTA. 
Article 10.10  gives the Parties the right to apply their anti -dumping and countervailing laws to goods 
imported from each others ' territories and to modify such laws . Article 10.11 provides that the Parties 
 
33 The competent authorities are: the Canadian International Trade Tribunal or its successor for Canada; 
the International Trade Practices Unit of the Secretaria de Economia  or its successor for Mexico; and the 
International Trade Commission or its succ essor for the United States.  WT/REG407/1  
 
- 34 - 
 
  may request a binational pa nel review of another Party 's statutory amendments for a declaratory 
opinion as to whether such amendments: 1) do not conform with GATT 1994, the AD Agreement or 
the SCM Agreement, or with the object and purpose of the Agreem ent and Chapter 10; or 2) have 
the function and effect of overturning a prior decision of a panel under Article 10.12 . 
3.62.   Section 10 -B and Annex 10 -A are not subject to the dispute settlement mechanism under 
Chapter 31 or Chapter 10 of the Agreement.  Annex 10 -A includes new provisions that were not in 
NAFTA, which enhance transparency of trade remedy proceedings . As under the NAFTA,  the review 
of final antidumping and countervailing duty determinations may be carried out by a binational panel , 
as an alternative to domestic judicial review . A Party may request the establishment of a panel in 
writing to the other Party  involved  within 30  days of the publication of the final determination by the 
importing Party. The decision taken by the panel will be binding on the Parties involved with respect 
to the matter that is brought before the panel. The final determination by the panel may not be  
appealed through any judicial review procedures by the importing Party  (Article 10.12) . As in the 
NAFTA each Party shall maintain a Secretariat to facilitate the operation of the Section (Article 10.16) 
while Article 10.17 commits the Parties to maintaini ng a code of conduct for pane lists and members 
of committees established under Article s 10.11, 10.12 and 10.13 (safeguarding the panel review 
system). The procedures on the establishment of bi -national panels (Annex 10 -B-1), panel 
procedures under Article 10.11 (Annex 10 -B-2), extraordinary challenge procedures (Annex 10 -B-3) 
and special committee procedures (Annex 10 -B-4) are also unchanged from the NAFTA.  Annex 10 -
B-5 lists domestic laws that shall be amended by the Parties to bring them into line with th e 
provisions of the Agreement.  Canada and Mexico have amended the relevant domestic laws.  
3.63.    Another  novelty in the Chapter is Section C on cooperation on preventing duty evasion of 
trade remedy laws  including to strengthen and expand customs and trade enfor cement efforts  in 
matters related to trade remedy duty evasion . The Parties shall share customs information on 
exports, imports and transit transactions, subject to their laws,  to help enable the Parties to combat 
duty evasion  and conduct joint or coordina ted analysis and investigations of suspected duty evasion.  
Under paragraph 5 of Article 10.7, a Party may also request that another Party conduct  a duty 
evasion verification  on the requested Party 's territory to obtain information that would enable the 
requesting Party to determine whether an import is subject to antidumping, countervailing or 
safeguard duty imposed by the requesting Party. The request must be made  in writing by a Party 
and the requested Party must respond within 30 days to indicate whether  it will conduct the 
verification . If a verification is conducted, the report must be provided to the requesting Party 
promptly (Article  10.7).34 Paragraph 7 of Article 10.7 also provides for the possibility that the 
requesting Party participate in  duty evasion verification in the relevant facilities in the territory of a 
requested Party. Paragraph 7 also provides that duty evasion verifications are subject to mutually 
agreed conditions between the Parties, advanced notice to the requested Party, an d consent by the 
parties to be verified.   
3.4.4   Subsidies and State-aid 
3.64.   While there are no provisions on State-aid as such, Chapter 22 deals with State owned 
enterprises and designated monopolies in both goods and services (see Section 5.11 below).  
3.65.   There are spe cific provisions on agricultural export subsidies  and fish subsidies . Article 3.4 
prohibits the Parties from maintaining an export subsidy on agricultural goods destined for the 
territory of another Party. If a Party considers that support for export finan cing by another Party 
results or may result in a distorting effect on trade between the Parties or consider that an export 
subsidy for an agricultural good is being granted by another Party, it may request a discussion with 
the other Party . The other Party  shall agree to the request as soon as practicable.   
3.66.   Articles 24.20 and 24.21 deal with fisheries subsidies and illegal, unreported and unregulated 
(IUU) fishing. Under paragraph 1 of Article 24.20 t he Parties agree not to grant or maintain the 
following s ubsidies within the meaning of Article 1.1 of the WTO Subsidies and Countervailing 
Measures (SCM) Agreement that are specific within the meaning of Article 2 of the SCM Agreement:  
a. Subsides provided to a fishing vessel, or operator listed for IUU fishing by  the Flag State 
(as defined by the Article), the subsidizing Party or a relevant RFMO or RFMA in accordance 
 
34 If it is not, the requested Party must indicate the reason for refusal in its response to the request.  WT/REG407/1  
 
- 35 - 
 
  with the rules and procedures of that organization or arrangement and in conformity with 
international law; and  
b. Subsidies for fishing that negatively affect fish stocks that are in an overfished condition.  
3.67.   Article 24.20 also requires that subsidy programmes under b above already in force be 
brought into conformity with the Agreement as soon as possible and no later than three years after 
the entry into force of the Agreement. For subsidies that are not prohibited, and taking into 
consideration each Party's social and developmental priorities, best efforts shall be made to refrain 
from introducing new, or extending existing subsidies within the  meaning of Article 1.1 of the SCM 
Agreement that are specific within the meaning of Article 2 of the SCM Agreement, to the extent 
that they contribute to overfishing or overcapacity. The Parties will also review the disciplines in 
paragraph 1 at regular m eetings of the Environment Committee with a view to eliminating subsidies 
that contribute to overfishing or overcapacity. There is also a notification requirement for subsidies 
under Article 1.1 of the SCM Agreement including for activities not covered by paragraph 1 such as 
fuel subsidies. The Parties also  foresee  a number of measures to support international efforts to 
combat IUU fishing and to help deter trade in products from IUU fishing. Each Party will also provide, 
to the extent possible, the other P arties the opportunity to comment on proposed measures to 
prevent trade in fisheries products derived from IUU fishing.  
3.68.   More generally, the Parties recognize the need for individual and collective action in 
international fora to address urgent resource pro blems resulting from overfishing and unsustainable 
use of fisheries resources (Article 24.17). They also recognize the importance of promoting and 
facilitating trade in sustainably managed and legally harvested fish and fish products while ensuring 
that su ch trade is not subject to unnecessary or unjustifiable barriers to trade.35 Each Party shall 
seek to operate a fisheries management system36; take measures to prevent the use of poisons and 
explosives for commercial fish harvesting and to prohibit the pra ctice of shark finning (Article 24.18) ; 
and a commitment to promoting long -term conservation of marine species (Article 24.19 ). 
3.4.5   Customs -related procedures  and trade facilitation  
3.69.   Customs related origin procedures are covered in Chapter 5 and 6 of the Agreem ent, while 
Chapter 7 deals with customs administration and trade facilitation.  
3.70.   Under Chapter 5 certifications of origin are required to claim preferential treatment and may 
be completed by the exporter, producer or importer. Where the importer completes a certification 
of origin each Party may require supporting documents; establish legal conditions to be met; and 
prohibit the importer from providing its own certification if the legal conditions are not met. The 
certification of origin need not follow a spe cific format but must contain a set of minimum data 
elements indicated in Annex 5 -A37, provided on an invoice or any other document, describe the 
originating good in sufficient detail to enable its identification and meet the requirements of the 
Uniform Regulations established under Article 5.16. Claims for preferential tariff treatment may not 
be rejected for the sole reason that the invoice is issued in a non -party but a certification of origin 
shall not be provided on an invoice or other commer cial document issued in a non -party. 
Furthermore, the Parties shall allow the certification of origin to be completed and submitted 
electronically and shall accept it with an electronic or digital signature (Article 5.2).  
3.71.   Certifications of origin may be pr ovided for a single shipment of a good into the territory of a 
Party, or multiple shipments of goods within a period specified in the certification, which shall not 
exceed 12 months. The Parties shall also ensure that the certification of origin be accepte d by their 
customs administrations for four years following the completion of the certification (Article 5.3). 
Exceptions to the certification of origin requirement are provided in certain cases: (a) the value of 
 
35 They recognize that any restrictive trade measures be based on the best scientific evidence available, 
tailored to the c onservation objective, implemented after the importing Party has consulted with the exporting 
Party and provided a reasonable opportunity for the exporting Party to take appropriate measures to address 
the issue.  
36 The system shall aim to regulate marine w ild capture fishing that is designed to prevent overfishing 
and overcapacity through appropriate measures; reduce by -catch of non -target species and juveniles; promote 
the recovery of overfished stocks for all marine fisheries in which that Party has fishi ng activities; and protect 
marine habitat by cooperating as appropriate, to prevent or mitigate significant adverse impacts of fishing.  
37 Annex 5 -A contains details of the minimum date elements required for the certification of origin and 
of the importer, exporter or producer, and a description of the good and its HS tariff classification.  WT/REG407/1  
 
- 36 - 
 
  import does not exceed USD1,000, or equival ent, or any higher amount established by the importing 
Party; or (b) it is an import for which the importing Party has waived the certification of origin 
requirement (Article 5.5).   
3.72.   Verification of origin may be conducted through a written request or quest ionnaire seeking 
information from the importer, exporter or producer; a verification visit to the premises of the 
exporter or producer to request information and to observe the production process and related 
facilities; or any other procedure decided by th e Parties; for textiles and apparel, a Party may request 
a site visit to verify whether a good qualifies for preferential treatment under the Agreement, or if 
customs offenses are occurring or have occurred following the procedures in Article 6.6 of the 
Agreement. The verification shall be completed as expeditiously as possible and within 120 days of 
receipt of all the necessary information, which can be exceptionally extended by a further 90 days 
after notifying the importer, and any exporter or producer t hat is subject to or provided information 
for the verification. Prior to this the importing Party shall inform the importer and any qualified 
exporter or producer affected by the verification if it intends to deny preferential treatment of when 
the denial will be effective and provide for at least 30 days for the submission of additional 
information relating to the origin status. Preferential treatment may be withheld if verification 
indicates a pattern of conduct by an importer, exporter or producer of fal se or unsupported 
representations that a good imported into its territory qualifies as an originating good until the 
person complies with Chapters 4, 5 and 6 (Article 5.9). A Party may also deny preferential treatment 
if (a) it determines that the good doe s not qualify for preferential treatment; (b) following verification 
of origin it does not have sufficient information to determine that the good qualifies as originating; 
(c) the exporter, producer or importer fails to respond to a written request or ques tionnaire for 
information including under Article 5.9; (d) the exporter or producer fails to provide its written 
consent for a verification visit under Article 5.9; (e) the importer, exporter or producer fails to comply 
with the requirements of the Chapter ; or (f) the exporter, importer or producer fails to maintain 
records or documentation or denies access to them if requested by a Party (Article 5.10).  
3.73.   Articles 5.13 and 5.15 respectively establish criminal, civil or administrative penalties for 
violations  of the provisions of the Chapter, and review and appeal by exporter, producers and 
importers of decisions taken by the customs administrations. Finally , Article 5.18 establishes a 
Committee on Rules of Origin and Origin Procedures to consult regularly and  ensure that Chapters 
4 and 5 are administered effectively, uniformly and consistently with the spirit and objectives of the 
Agreement. It shall also consult to discuss possible amendments to product specific rules of origin 
(except those relating to texti les and clothing). A Sub-committee on Origin Verification shall meet 
to discuss matters relating to verification of origin (Article 5.19). The Committee on Rules of Origin 
and Origin Procedures met  on May 12 and 14, 2021 where the Parties committed to continue to 
work on updating the USMCA rules of origin to reflect changes to the Harmonized System and 
amending the Rules of Origin Uniform Regulations to, among other things, include examples relating 
to the rules of origin for automotive goods and to continu e to work on amending the Origin 
Procedures Uniform Regulations.  The Committee on Textile and Apparel Trade Matters met on 
March  30, 2021.  
3.74.   Under Section A of Chapter 7 the Parties affirm their rights and obligations under the WTO 
Agreement on Trade Facili tation (TFA). As in the TFA the Chapter requires online publication of 
procedures for import, export and transit, related laws, weblinks to current customs duties, taxes 
and fees as well as procedures to correct errors in customs transactions (Article 7.2) ; and the 
establishment of enquiry points (Article 7.4). It also goes beyond the TFA provisions including for :  
a. advance rulings are to be issued for (i) tariff classification, (ii) customs valuation criteria 
for a particular case in accordance with the Cus toms Valuation Agreement (iii) origin of a 
good and whether it qualifies as originating under the Agreement , (iv) whether a good is 
subject to a tariff rate quota or quota and , (v) other matters as agreed upon by the Parties 
in addition to tariff classific ation; advance rulings are to be issued as expeditiously as 
possible and no later than 120 days after obtaining all the necessary information.  
b. the Parties agree to maintain procedures that provide for immediate release of goods upon 
fulfilment of all requirements; release of express shipments based on, to the extent 
possible, minimum documentation or a single submission of information such as a 
manifest; procedures that apply fewer customs formalities than under formal entry 
procedures to express shipments  valued under  USD 2,500 for the U.S. and Mexico and WT/REG407/1  
 
- 37 - 
 
  under CAD 3 ,300 for Canada ; and use information technology to expedite procedures 
(Article s 7.7; 7.8; 7.9).  
c. For the single window, the Parties agree to (i) incorporate as appropriate, the World 
Customs Organization Data Model for data; (ii) endeavour to implement standards and 
data for import, export and transit that are the same as the other Parties ' single win dow 
system s; and (iii) continuously streamline the single window system to improve 
transparency and reduce release times and costs (Article 7.10) . Record -keeping 
obligations must have a fixed and finite period (Article 7.13 ); and  
d. maintain a trade facilita tion partnership programme for authorized economic operators, 
who meet specified security criteria in accordance with the Framework of Standards to 
Secure and Facilitate Global Trade  of the World Customs Organization (Article 7.14 ). 
3.75.   Article 7.15 ensures administrative and judicial or quasi -judicial procedures to review and 
appeal customs determinations . Article 7.18 allows the imposition of penalties by a Party's customs 
administration for breach of its customs laws, regulations or procedural requirements , but plac es 
disciplines on penalt ies.38  
3.76.   Article 7.16 establishes a procedure for requesting administrative guidance for a prospective, 
pending or completed transaction.  Article 7.20 provides for self -filing of customs declarations and 
other documentation without the services of a customs broker, transparency of broker requirements, 
and precludes a Party from imposing arbitrary  limits  on the ports or locations at which a cu stoms 
broker may operate.   
3.77.   Article 7.22 ensures that information that a Party 's customs administration collects from 
traders will be protected, in accordance with its law, from use or disclosure that could prejudice the 
competitive position of the trader.   
3.78.   A Committee on Trade Facilitation is established under Article 7.24 to facilitate the exchange 
of information regarding their experiences on single window, AEO programs and voluntary 
compliance by traders; to identify joint customs actions; discuss techni cal assistance; serve as a 
forum to share views on individual cases; review international initiatives on trade facilitation; and 
endeavo ur to resolve issues relating to Chapter 7, as well as other activities as the Parties may 
decide.  Under Article 7.23, t he Parties are to cooperate in the development and implementation of 
trade facilitation initiatives, which may also be supported by the Committee.  And, under Article 
7.1.3, the Parties are to discuss additional measures to facilitate trade.  The Committee o n Trade 
Facilitation met on September 9, 2020.  
3.4.6   Other regulations  
3.79.   Chapter 8 of the Agreement recognizes Mexico's direct, inalienable and imprescriptible 
ownership of hydrocarbons in its territory, including the Continental shelf and the exclusive economic 
zone, pursuant to its Constitution.  
Sector -specific provisions on trade in goods  
3.5.1    Agriculture   
3.80.   In addition to provisions on agriculture mentioned in other parts of the factual presentation 
Article 3.6 requires that, if a Party supports its agricul tural producers, the Part y consider s domestic 
support measures  that have no, or at most minimal, trade distorting effects or effects on production. 
If a Party raises concerns that another Party's measures have had a negative impact on trade 
between the Par ties, the Parties shall share relevant information on the measures among themselves 
and discuss with a view to seeking to minimize any negative effect.  
 
38 The disciplines on penalties including that clerical or minor errors in customs transactions are not 
treated as a breach and may be corrected without penalty, unless th e error is part of a consistent pattern of 
such errors and that there must be a fixed, finite period for initiating penalty proceedings. Further, each Party 
shall maintain measures to deter the use of a customs official's public position for private gain, and provide a 
mechanism for the submission of complaints (Article 7.19).  WT/REG407/1  
 
- 38 - 
 
  3.81.   Article 3.10 provides for transparency and consultations between the Parties, including the 
provision, u pon request, of available information on measures relating to trade in agricultural goods 
taken by a regional level of government in their territories that may have significant impact on trade 
between the Parties concerned. At the request of another Party,  a Party shall meet to discuss, and 
if appropriate, resolve matters, arising from grade, quality, technical specifications and other 
standards that affect trade between the Parties.  
3.82.   In Section B of Chapter 3 the Parties confirm the importance of encouraging agricultural 
innovation and facilitating trade in agricultural biotechnology products, while fulfilling legitimate 
objectives, including by promoting transparency and cooperation and exchange of information. The 
Parties are not required to mand ate authorization for agricultural biotechnology products to be on 
the market.  Paragraph 4 of Article 3.14 includes action s to reduce the likelihood of disruptions to 
trade in agricultural biotechnology products such as encouraging the submission of timely  and 
concurrent applications to the Parties and measures  to be taken by a Party related to the 
authorization of such products.  
3.83.   Article 3.15 requires the Parties to adopt or maintain policies or approaches designed to 
facilitate the management of the occur rence of any low level presence (LLP) of recombinant 
deoxyribonucleic acid (DNA)  plant materials that have passed food safety assessments according to 
Codex  guidelines but which may be inadvertently present in food or feed in importing countries in 
which t he food safety of the relevant recombinant DNA plant has not been determined. Finally, 
Article 3.16 establishes a Working Group for Cooperation on Agricultural Biotechnology  for 
information exchange and cooperation on policy and trade -related matters assoc iated with 
agricultural biotechnology products.39 
3.84.   In a side letter between the United States and Mexico , Mexico agreed to initiate the process 
to recognize American Rye Whiskey as a distinctive product of the United States, and the United 
States agreed to initiate the process to recognize Bacanora, Charanda, and Sotol as distinctive 
products of Mexico.  This agreement is without prejudice to the outcome of the processes initiated 
by the United States and Mexico pursuant to this letter.  Mexico and the United States also exchanged 
a side letter  on cheese s. The side letter on cheeses includes Mexico 's confirmation that market access 
of U.S. products in Mexico is not restricted due to the mere use of the individual terms listed in the 
letter.  The letter also conf irms that those terms are terms used in connection with cheeses from 
U.S. producers currently being marketed in Mexico.  
3.5.2   Automobiles  
3.85.   Through the Canada -US 232 Future Measures and Mexico -US 232 Process side letters,  the 
Parties have agreed that should the United States adopt a measure pursuant to section 232 of the 
Trade Expansion Act of 1962, it shall not impose the measure on imports from Mexi co and Canada  
for at least 60 days. D uring this period, the parties shall seek to  "negotiate an appropriate outcome 
based on industry dynamics and historical trading patterns". For all goods, i f the US takes action 
that is inconsistent with the Agreement, Canada and Mexico may take a measure of equivalen t 
commercial effect in response.  If the United States imposes  a measure pursuant to section 232 on 
automotive goods, a separate Canada -US 232 Autos and Auto Parts side letter exempts up to 2.6 
million passen ger motor vehicles annually  (HS 8703.21 -HS 8703.90), all light trucks (HS 8704.21 
and HS 8704.31), and any auto parts within the scope of the measure up to USD 32.4 billion  
annually. Similarly for Mexico , a separate Mexico -US 232 Autos and Auto Parts side letter exempts 
up to 2.6 million passenger motor vehicles annually (HS 8703.21 -HS 8703.90), all light trucks (HS 
8704.21 and  HS 8704.31), and any auto parts within the scope of the measure up to USD 108 billion 
US dollars annually.  The excluded automotive products will be subject to tariffs under NAFTA or the 
Agreement as applicable. Canada and Mexico may, moreover, only bring disputes under the 
Agreement that challenge whether the US has excluded the agreed number of passenger motor 
vehicles, light trucks and auto parts from a measure taken under Section 232. Canada and Mexico 
retain their WTO rights to challenge any such measure.  
4  PROVISIONS ON TRADE IN SERVICES  AND INVESTMENT  
4.1.  Provisions on trade in services and investment are found in Chapters 14 (investm ent), 15 
(cross -border trade in services) and 16 (temporary entry for business persons). Chapters 17 and 18 
 
39 The Working Group shall meet annually unless otherwise decided by the Parties.  WT/REG407/1  
 
- 39 - 
 
  contain specific disciplines on financial services and telecommunications. These chapters are 
complemented by the Parties' lists of reservations in Annexes I, II, and III. Annexes I and II contain 
reservations for existing and future measures for all sectors, except financial services which are 
listed in Annex III.  
4.2.  Chapters 14 and 15 build on Chapter 11 and 12 of the NAFTA and introduce new provisions  on 
subrogation (Article 14.15), corporate social responsibility (Article 14.17), market access 
(Article  15.5), small and medium enterprises (Article 15.10) and payments and transfers (Article 
15.12). The main provisions of Chapter 16 are similar to those in Chapter 16 of the NAFTA while 
Chapters 17 and 18 differ from the respective chapters of the NAFTA on financial services (Chapter 
14 of the NAFTA) and telecommunications (Chapter 13 of the NAFTA). The Chapter on financial 
services includes new discipline s on, inter alia , expedited availability of insurance services and the 
location of computing facilities while the Chapter on telecommunications introduces new disciplines 
on, for example, major suppliers of public telecommunication services, roaming, numbe r portability 
and submarine cable systems.  
4.1  Scope and definitions  
4.3.  Chapter 15 applies to measures adopted or maintained by a Party relating to cross -border 
trade in services by a service supplier of another Party (Article 15.2).40 It does not apply to financ ial 
services  and air services , with some exceptions .41 Government procurement, service s supplied in 
the exercise of governmental authority , and subsid ies or grant s provided by a Party or a State 
enterprise  are also excluded from the application of the Chapter .  
4.4.  Chapter 14 applies to measures adopted or maintained by a Party relating to investors of 
another Party, covered investment and, with respect to Articles 14.10 ( performance requirements ) 
and 14.16 ( investment and environmental, health, safety and other regulatory objectives ), all 
investment in its territory  (Article 14.2) .42 The Parties' obligations under the Chapter apply to 
measures adopted or maintained by the central, regional, or local governments  or authorities and a 
person, including a State enterprise or another body, when it exercises any governmental authority 
delegated to it by centr al, regional, or local governments or authorities.  
4.5.  Chapter 16 applies to measures affecting the temporary entr y of business persons of a Party 
into the territory of another Party (Article 16.2). It does not apply to measures affecting natural 
persons seeking access to the employment market of another Party and to measures regarding 
citizenship, nationality, reside nce or employment on a permanent basis.  
4.6.  Chapter 17 applies to measures adopted or maintained by a Party relating to financial 
institutions of another Party, investors of another Party and their investments in financial institutions 
in the Party's territory and cross -border trade in financial ser vices (Article 17.2).  
4.7.  Chapter 18 on telecommunications applies to measures relating to access to and use of public 
telecommunications services, obligations regarding its suppliers, the supply of value -added services 
and any other measure relating to telec ommunications services (Article 18.2). The Chapter does not 
apply to measures relating to broadcast or cable distribution of radio and television programming, 
except for access to and use of public telecommunications services and transparency in regard to 
technical measures to the extent that they also affect public telecommunications services.  
 
40 Cross -border trade in or supply of services are defined in Article 15.1 as the supply of a service f rom 
the territory of a Party into the territory of another Party (mode 1), in the territory of a Party by a person of 
that Party to a person of another Party (mode 2) or by a national of a Party in the territory of another Party 
(mode 4).  
41 Articles 15.5 ( market access) and 15.8 (development and administration of measures) apply to a 
financial service if it is supplied by a covered investment that is not a covered investment in a financial 
institution as defined in Article 17.1 in the Party 's territory . The Chapter applies to aircraft repair or 
maintenance services during which an aircraft is withdrawn from service, excluding so -called line maintenance 
and specialty air services.  
42 Covered investment is defined in Article 14.1 as an investment in the territory of a Party of an 
investor of another Party in existence as of the date of entry into force of the Agreement or established, 
acquired, or expanded thereafte r.  WT/REG407/1  
 
- 40 - 
 
  
Denial of benefits  
4.8.  A Party can deny the benefits of Chapters 14 ,15 and 17  if the service supplier or investor (or 
its investments) of another Party is an enterprise owned or controlled by persons of a non -party or 
the denying Party, and has no substantial business activities in the territory of any Party other than 
the denying Party (Articles 14.14 , 15.11  and 17.2.2(a) ).  
4.9.  An anti -circumvention clause is also part of t he denial of benefits provision. Under the clause, 
a Party can also deny the benefits of Chapters 14 , 15 and 17 if the enterprise is owned or controlled 
by a person of a non -party, and the denying Party adopts or maintains measures with respect to the 
non-party or person of that non -party that prohibit transactions with that enterprise or would be 
violated or circumvented if the benefits of the Chapters were accorded to the enterprise.  
General provisions on trade in services  and investment  
4.3.1   Market access  
4.10.   Article 15.5 lists the limitations on market access that the Parties cannot adopt or maintain 
unless otherwise specified in their lists of reservations. These mirror those found in GATS 
Article  XVI.2 (a) -(e). The same commitments apply to measures adopted or maintained by a Party 
affecting the supply of a service in its territory by a covered investment (Articles 15.2 and 14.3), 
and to measures with respect to financial institutions of another Party , investors of another Party 
seeking to establish a financial institution  and certain cross -border financial services  (Article 17.5).  
4.3.2   National and MFN  treatment  
4.11.   The Parties agree to grant MFN and national treatment to each others' services and service 
providers (Articles 15.3 and 15.4) and investors and cov ered investments of other Parties with 
respect to the establishment, acquisition, expansion, management, conduct, operation, and sale or 
other disposition of investments (Articles 14.4 and 14.5).43 
4.12.   For financial services, MFN and national treatment is gran ted to investors and financial 
institutions of another Party, investments by investors of another Party in financial institutions,  
financial services  or cross-border suppliers of financial services of another Party (Articles 17.3 and 
17.4).44  
4.13.   Exemptions f rom these commitments are specified in the Parties' lists of reservations 
(Annexes I, II and III). Moreover, the provisions on national and MFN treatment for investment do 
not apply to certain measures related to intellectual property (namely Articles 3 an d 4 of the TRIPS 
Agreement and Article 20.8 of the Agreement) and to government procurement, subsidies or grants 
provided by a Party (Article  14.12).  
4.3.3   Commercial  presence  
4.14.   Unless listed in their reservations, a Party cannot require a services supplier of an other Party 
to establish or maintain a representative office or an enterprise, or be resident , in its territory as a 
condition for the cross -border supply of a service (Article s 15.6 and 17.5.3 ). 
4.3.4   Performance requirements  
4.15.   The Agreement prohibits the applica tion of performance requirements for the establishment, 
acquisition, expansion, management, conduct, operation or sale or other disposition of a covered 
 
43 The Agreement specifies that whether national and MFN treatment is accorded in "like circumstances" 
depends on the totality of the circumstances, including whether the relevant treatment distinguishes between 
services or service suppliers on the basis of legitimate public welfare objectives.  
44 For financial institutio ns of another Party, investors of another Party, and their investments in 
financial institutions, the obligation of national treatment applies with respect to the establishment, acquisition, 
expansion, management, conduct, operation and sale or other dispo sition of financial institutions or 
investments in financial institutions in the Parties' territory.  WT/REG407/1  
 
- 41 - 
 
  investment under Chapter 14. Detailed provisions and applicable exceptions are found in 
Article  14.10.   
4.3.5   Senior Manage ment  and Boards of Directors  
4.16.   The Parties cannot impose nationality requirements for senior management positions of a n 
enterprise  that is a covered investment, but may require that a majority of its board of directors, or 
any committee thereof,  be of a particular nationality, or resident in the territory of the Party, 
provided that the requirement does not materially impair the ability of the investor to exercise 
control over its investment (Article 14.11).  For financial services, the Parties shall not require a 
financial institution of another Party to engage a natural person of a particular nationality as senior 
managerial or other essential personnel  and n o Party shall require that more than a simp le majority 
of the board of directors of a financial institution of another Party be composed of nationals of the 
Party, persons residing in the territory of the Party, or a combination thereof (Article 17.9).  
4.3.6   Movement of natural persons  
4.17.   Chapter 16 discipl ines the temporary entry of business persons of a Party into the territory of 
another Party . Each Party shall grant temporary entry to a business person who is otherwise qualified 
for entry under its measures on public health and safety and national securi ty, in accordance with 
the Chapter, including Annex 16 -A which includes conditions, limitations or other commitments, 
including business activities and minimum education requirements, for business visitors, traders and 
investors, intra -company transferees and professionals (Article 16.4) .45 A Party  may refuse to grant 
temporary entry or issue an immigration document to a business person of another Party if the 
temporary entry of that person might affect  adversely the settlement of a ny labour dispute in 
progress, or the employment of any natural person involved in such a dispute.  
4.18.   The Parties shall apply their measures on temporary entry expeditiously so as to avoid unduly 
impairing or delaying trade in goods or services or the conduct of investment activitie s under the 
Agreement and they shall endeavour to develop and adopt common criteria, definitions and 
interpretations for the implementation of the Chapter (Article 16.3). They agree to publish online or 
otherwise make publicly available explanatory materia l regarding the requirements for temporary 
entry (Article 16.5).  
4.19.   The Parties may not initiate proceedings under Article 31.5 (Commission Good Offices, 
Conciliation, and Mediation) of the Agreement regarding a refusal to grant temporary entry unless 
it involves a pattern of practice and the business persons affected have  exhausted all available 
administrative remedies regarding the matter (Article 16.7).  
4.20.   A Temporary Entry Working Group is established to consider a number of issues under Chapter 
16 including its implementation and administration, the development of new fa cilitating measures 
and the waiving of labour certification tests for spouses of business persons  (article 16.6).  
Liberalization commitments  
4.21.   Commitments on cross -border trade in services and investment are scheduled on a negative 
list basis so that obligat ions on national and MFN treatment, market access, local presence (only for 
Chapter 15), performance requirements (only for Chapter 14) and senior management and boards 
of directors (only for Chapter 14) apply to all services or investments unless specifie d otherwise in 
the Parties' schedules of existing and future non -conforming measures  under Annexes I and II . 
Commitments in financial services also use a negative list with the Parties' reservations listed in 
Annex III for existing (Section A) and future ( Section B) measures for national and MFN treatment, 
market access and senior management and board of directors. Moreover, reservations on national 
and MFN treatment and senior management and boards of directors in Annexes I and II also apply 
to financial s ervices to the extent that the measure or activity in the reservation is covered by 
Chapter 17 (Article 17.10).  
 
45 Business person means a citizen of a Party who is engaged in trade in goods, the supply of services or 
the conduct of investment activities  (Article 16.1 ).  WT/REG407/1  
 
- 42 - 
 
  4.22.   For existing non -conforming measures listed in Annex I and Section A of Annex III, a standstill 
and a ratchet mechanism apply , except for existing non -conforming measures relating to cross-
border financial services, where only the standstill applies . Under the standstill mechanism, the 
Parties can maintain non -conforming measures that existed when the Agreement was signed, and 
which are listed in the Annex, but cannot increase their restrictiveness. Under the ratchet 
mechanism, any amendment that decrease s the restrictiveness of a non -conforming measure, as it 
existed immediately before the amendment, is automatically incorporated into th e Agreement.  
4.23.   All Parties listed a reservation in their respective Annex II reserving the right to adopt or 
maintain any measure consistent with their obligations under GATS Article XVI while providing for 
specific market access improvements beyond their G ATS schedules.  
4.4.1   Canada  
4.24.   Under the Agreement, Canada listed 49 reservations for existing and future non -conforming 
measures: 13 reservations apply horizontally, 36 are specific to one or more sectors. Commitments 
are in general broader than under the GATS de spite some reservations.   
4.4.1.1   MFN and horizontal commitments  
4.25.   In its GATS schedule, Canada lists horizontal limitations on the disposal of government assets, 
approval requirements for direct acquisitions of Canadian businesses, restrictions at the federal level  
on tax measures on scientific research and experimental development services, federal and sub -
central tax measures, measures conferring a tax exemption or reductions, approvals for the 
acquisition of businesses related to Canada's industries, subsidies fo r research and development, 
supply of social services, incorporation requirements for federal corporations, and agreements 
between Canada and aboriginal persons.  
4.26.   Under the Agreement, Canada listed 13 horizontal reservations seven of which cover existing 
non-conforming measures and six cover future non -conforming measures. The seven reservations 
on existing non -conforming measures mainly refer to investment measures and include a 
review/approval mechanism for investments (direct acquisitions) by foreigners,  as well as nationality 
restrictions on the ownership of land in the Province of Alberta and the shares of corporations and 
cooperatives. A similar approval mechanism for foreign investment is also listed in the GATS except 
that it only applies to direct a cquisition. Under the Agreement Canada also restricts equity 
participation by non -residents in selected Canadian corporations46 and imposes residency 
requirements on the holders of import and export permits and transit authorization certificates. 
Moreover,  Canada reserves the right to maintain all existing non -conforming measures in its 
provinces and territories. Canada's horizontal reservations under the Agreement are to a large extent 
similar to those under the NAFTA.47  
4.27.   Under the six horizontal reservati ons on future measures Canada reserves the right to adopt 
or maintain measures on social services and measures conferring rights or preferences to aboriginal 
people and to socially or economically disadvantaged minorities. Moreover, it reserves the right t o 
adopt or maintain any measure relating to residency requirements for ownership of oceanfront land, 
the acquisition, sale or disposal of equity interests or assets in government enterprises (like in the 
GATS) and any measure that is not inconsistent with its market access obligations under GATS 
Article XVI and its GATS schedule of commitments. Canada's specific schedules of commitments are 
modified as indicated in Appendix I to Annex II.48 Finally, Canada reserves the right to adopt or 
maintain any measure  that grants differential treatment to countries under any bilateral or 
multilateral agreement in force or signed prior to the Agreement's entry into force, as well as 
agreements in force or signed after the Agreement's entry into force involving aviation,  fisheries or 
maritime matters including salvage.  Except for the improvements to its GATS schedule of 
commitments, the horizontal reservations on future measures listed by Canada are the same as 
those under the NAFTA.  
 
46 The Canadian corporations listed are Cameco limited, Nordion international INC, Theratronics 
International limited, and Canadian Arsenals Limited.   
47 Differences with respect to the NAFTA include, for example the list of Canadian corporations subject  
to ownership restrictions or the thresholds for the review of direct acquisitions of control.  
48 These updates relate for the most part to the removal of restrictions at the provincial level.  WT/REG407/1  
 
- 43 - 
 
  4.4.1.2   Sector specific commitments  
4.28.   Table 4.1 compares Canada's sectoral  market access and national treatment  commitments 
under the Agreement and under its GATS schedule for modes 1 -3. Horizontal limitations and MF N 
reservations are not taken into account in the table which should be read in conjunction with Annexes 
I, II, and III of the Agreement containing Canada's schedule of specific commitments for cross -
border trade in services and investment.  
Table 4.1 Canada: comparison between the GATS and Agreement specific commitments  
Sectors / Sub -sectors  GATS  FTA 
Compared 
to GATS  Existing  
non-conforming 
measure(s)  Reservation(s) for future 
measuresa 
Investment  Cross -
border 
trade  Investment  Cross -
border 
trade  
1. Business services        
A. Professional  Services  Partial  Improved   ✓ ✓ ✓ 
B. Computer  and Related  Services  Full Same      
C. Research  and Development  Services  Partial  Improved      
D. Real  Estate  Services  Partial  Improved      
E. Rental/Leasing  Services  without   
Operators  Partial  Improved      
F. Other  Business  Services  Partial  Improved  ✓ ✓ ✓ ✓ 
2. Communication services        
A. Postal  services  --- Same      
B. Courier  services  Partial  Improved      
C. Telecommunication  services  Partial  Improved  ✓    
D. Audiovisual services  --- Same      
E. Other  --- New     
3. Construction and related 
engineering services        
A. General  construction  work for buildings  Partial  Improved      
B. General  construction  work for civil  
Engineering  Partial  Improved      
C. Installation  and assembly  work  Full Same      
D. Building  completion  and finishing  work  Full Same      
E. Other  Partial  Improved      
4. Distribution services        
A. Commission  agents'  services  Full Same      
B. Wholesale  trade  services  Partial  Improved      
C. Retailing  services  Partial  Same      
D. Franchising  Full Same      
E. Other  Partial  Same      
5. Education services        
A. Primary education services  --- New   ✓ ✓ 
B. Secondary education services  --- New   ✓ ✓ 
C. Higher education services  --- New   ✓ ✓ 
D. Adult education  --- New   ✓ ✓ 
E. Other education services  --- New   ✓ ✓ 
6. Environmental services        
A. Sewage services  Full Same      
B. Refuse disposal services  Full Same      
C. Sanitation and similar services  Full Same      
D. Other  Full Same      
7. Financial services        
A. All insurance  and insurance -
related  services  Partial  Improved  ✓ ✓ ✓ ✓ 
B. Banking  and other  financial  services  Partial  Improved  ✓ ✓ ✓ ✓ 
8. Health related and social services        
A. Hospital services  --- New   ✓ ✓ 
B. Other Human Health Services  --- New   ✓ ✓ 
C. Social Services  --- New   ✓ ✓ 
D. Other  --- New   ✓ ✓ 
9. Tourism and travel related services        
A. Hotels  and restaurants (including 
catering)  Partial  Improved      
B. Travel  agencies  and tour operators   
services  Partial  Improved      
C. Tourist  guides  services  --- New     
D. Other  --- New     
10. Recreational and cultural and 
sporting services        
A. Entertainment  services  --- New     
B. News agency services  --- Same      WT/REG407/1  
 
- 44 - 
 
  Sectors / Sub -sectors  GATS  FTA 
Compared 
to GATS  Existing  
non-conforming 
measure(s)  Reservation(s) for future 
measuresa 
Investment  Cross -
border 
trade  Investment  Cross -
border 
trade  
C. Libraries, archives, museums and other 
cultural services  --- New     
D. Sporting and other recreational services  --- New     
E. Other  --- New     
11. Transport services        
A. Maritime Transport Services  Partial  Improved  ✓ ✓ ✓ ✓ 
B. Internal Waterways Transport  --- Improved  ✓ ✓ ✓ ✓ 
C. Air Transport  Services  Partial  Improved  ✓ ✓   
D. Space  Transport  --- New     
E. Rail  Transport  Services  Partial  Improved      
F. Road  Transport  Services  Partial  Improved   ✓   
G. Pipeline  Transport  --- New     
H. Services  auxiliary  to all modes  of  
transport  Partial  Improved      
I. Other  Transport  Services  --- New     
Note:  The comparison to GATS is with respect to market access and national treatment commitments  only. 
MFN and Horizontal limitations, as well as Mode 4 commitments/limitations not considered.  
Partial:  Commitments are subject to one or more sector -specific limitation/reservation.  
Full: Commitments are not subject to any sector -specific limitation/reservation.  
---: No specific commitments under GATS.  
New: New commitments full or partial, with or without limitations.  
Improved: Overall improved commitments under the Agreement compared to those under the GATS.  
Same:  Commitments under the Agreements are the same as under th e GATS.  
✓: Indicates that existing non -conforming measures specific to the sector or sub -sector have been listed 
in Annex I or Annex III -A (for financial services) or Canada reserve d the right to impose future 
measures as specified in Annex II or Annex III -B (for financial services).  
a The columns do not reflect the modification to Canada's GATS commitments as indicated in Appendix  I 
to Annex II.  
Source:  Draft Consolidated GATS Sch edule of Specific Commitments (S/DCS/W/CAN), prepared by the 
Secretariat (in 2003) and Canada's Schedules annexed to the Agreement.  
4.29.   Compared to NAFTA, Canada did not list under the Agreement a number of reservations such 
as, for example, on loans by the F arm Credit Corporation, the provision of specialty air services and 
telecommunications transport networks and services. Other differences between the NAFTA and the 
Agreement can be found in financial services.  
4.4.1.2.1   Business services  
4.30.   Canada improved its GATS com mitments by removing some regional limitations on market 
access for accounting, auditing and bookkeeping services, architectural, urban planning, engineering 
and integrated engineering services. It maintains residency requirements for patent and trade -marks 
agents. Health -related services for public purpose  remain unbound. Canada also broadened its GATS 
commitments in research and development services by expanding the sectoral coverage and 
removing some regional limitations. In real estate services, which a re subject to reservations only 
at the regional level under the GATS, Canada removed  certain regional limitations on market access 
and national treatment  but maintained the rest pursuant to the Agreement's reservation on existing 
non-conforming measures fo r provinces and territories.  
4.31.   In other business services, while some improvements were made mainly at the regional level 
most of the exclusions and limitations under the GATS continue to apply under the Agreement.49 
Services incidental to fishing also cont inue to be unbound since Canada reserves the right to take 
any non -conforming measure with its national treatment and MFN obligations with respect to licences 
for fishing and fishing related activities. In services incidental to energy distribution, unboun d under 
the GATS, Canada listed various reservations affecting investment including nationality, 
 
49 Canada removed some of its market access limitations at the r egional level for management 
consulting services, investigation and security services, related scientific and technical consulting services and 
other business services, but other regional limitations, mostly in the form of residency and local requirements,  
are maintained as per the reservation on non -conforming measures in provinces and territories.  WT/REG407/1  
 
- 45 - 
 
  performance, and legal form requirements, as well as transfer of technology conditions.50 Other 
reservations also apply to uranium mining, customs brokers, dut y-free shop operators and 
examination services relating to the export and import of cultural property. Finally, in computer and 
related services, commitments under the Agreement are the same as those under the GATS.   
4.4.1.2.2   Communication services  
4.32.   Canada expands i ts GATS commitments in courier and telecommunications services. In 
courier services, it broadened sectoral coverage and removed its GATS regional limitations. In 
telecommunications, it maintains one reservation affecting mode 3, which is similar to that un der 
the GATS, and limits foreign equity participation in facilities -based telecommunications service 
suppliers and requires inter alia  that 80% of the members of their board of directors be Canadians.  
Small telecommunications service suppliers ( i.e. those with a share of less than 10% of the total 
Canadian telecommunications revenues) are exempt from the Canadian ownership and control 
requirement s. Postal services remain largely unbound as a postal monopoly is maintained. Like in 
the GATS, Canada made no market access commitments in audiovisual services as it reserves the 
right to adopt or maintain any measures that are not inconsistent with its GATS  schedules.  
4.4.1.2.3   Construction and related engineering services  
4.33.   Under the Agreement, Canada's commitments in construction and related engineering 
services are to a large extent the same as those under its GATS schedule, except for some 
improvements in sectoral coverage and at the regional level in general construction work for building 
and for civil engineering.  
4.4.1.2.4   Distribution services  
4.34.   In distribution services, except for the removal of a regional limitation for wholesale trade, 
Canada's commitments under the Agr eement are the same as under the GATS.  
4.4.1.2.5   Education services  
4.35.   In education services, unbound under the GATS, Canada undertook commitments for private 
but not public education, which is covered by a broad reservation on social services. This reservation 
allows Canada to adopt or maintain any non -conforming measure in public education and training.  
4.4.1.2.6   Environmental services  
4.36.   As under the GATS, full commitments are made without limitations.  
4.4.1.2.7   Financial services  
4.37.   In banking and other financial services  and insurance services Canada generally simplifi ed 
and improved its GATS commitments.51 For example, it removed nationality restrictions for the 
directors of the subsidiary of a foreign institution. It listed the requirement for bank branches to be 
establ ished directly under the authorized foreign bank incorporated in the jurisdiction where the 
authorized foreign bank principally carries on business. Similarly, a foreign entity authorized to 
insure must be established directly under the foreign insurance c ompany incorporated in the 
jurisdiction where the foreign insurance company, either directly or through a subsidiary, principally 
carries on business. Cooperative credit associations or fraternal benefit societies cannot be 
established in Canada through a branch of corporations organized under a foreign country's law. 
Other limitations for banks, including the requirement to establish a subsidiary for accepting  retail 
deposits, are listed.  
 
50 In a side letter dated 30 November 2018, Canada and the US agreed that the Guidelines for Research 
and Development Expenditures (2004) would not be listed as a non -conforming measure in Canada's 
reservation I -C-14 related to oil and gas.  
51 Under the NAFTA, Canada listed a limitation regarding the purchase of reinsurance services from non -
resident reinsurers and it reserved the right to adopt or maintain any me asure relating to cross -border trade in 
securities services  and measures that require an enterprise of another Party be controlled by one or more 
residents of the other Party . WT/REG407/1  
 
- 46 - 
 
  4.38.   In addition, Canada reserves the right to adopt or maintain any mea sure on market access at 
the regional level provided that it is not inconsistent with its obligations under GATS Article XVI or 
with the Canada -European Union Comprehensive Economic and Trade Agreement, as well as to 
adopt or maintain measures relating to cross-border trade in securities and derivatives services. 
Finally, it reserves the right to maintain all existing non -conforming measures applied by its 
provinces and territories.  
4.4.1.2.8   Health related and social services  
4.39.   Like under the GATS, no commitments were  made in health related and social services under 
the Agreement. These services are covered by a broad reservation on social services which allows 
Canada to adopt or maintain any non -conforming measure with respect to cross -border trade and 
investment in v arious sectors including public health and childcare services, social welfare, social 
security, and correctional services.  
4.4.1.2.9   Tourism and travel related services  
4.40.   In tourism and travel related services, Canada made some commitments in touris t guide 
services an d other tourism and travel related services, that are new compared to its GATS 
commitments. For the remaining subsectors in this area (i.e. hotels and restaurants, and travel 
agencies and tour operator services) , Canada improved its commitments at the regi onal level . 
4.4.1.2.10   Recreational, cultural and sporting services  
4.41.   In recreational, cultural and sporting services, which are unbound under the GATS, Canada 
expanded its GATS commitments in almost all subsectors while reserving the right to adopt or 
maintain any mea sure that is not inconsistent with its market access obligations under GATS 
Article  XVI and its GATS schedule.  
4.4.1.2.11   Transport services  
4.42.   In transport services Canada expanded its GATS commitments by removing some of its 
regional limitations affecting market acce ss in railway and road transport services and making some 
commitments in space, pipeline, and internal waterways transport services, all unbound under the 
GATS. Reservations were taken in  air, water and land transport services. For instance, in water 
transportation services, Canada scheduled  nationality, and local presence requirements for ship 
registration, and local presence requirements for shipping conferences.52 It also applies 
nation ality/residency and certification requirements for ship crews and pilots. In addition, Canada 
reserves the right to adopt or maintain any measure relating to the investment in, or provision  of 
marine cabotage services. In air transport services Canada impo ses ownership and control 
requirements for the provision of commercial air transport services and it requires authorization to 
supply specialty air transport services  and reserves the supply of aircraft repair and maintenance 
services to approved maintenan ce organisations and aircraft maintenance engineers located in its 
territory.  In railway transport services Canada removes the cabotage limitation while in road 
transport services Canada removes some provincial requirements for public conveniences and need s 
tests for investment. In road transport, it also continues to reserve the supply of truck or bus services 
between two points in Canada for Canadians using Canadian registered vehicles.  
4.4.2   Mexico  
4.43.   Under the Agreement, Mexico listed 61 reservations for existi ng and future non -conforming 
measures: ten reservations apply horizontally, 51 are specific to one or more sectors. Commitments 
are in general broader than under the GATS despite some reservations.   
4.4.2.1   MFN and horizontal commitments  
4.44.   Mexico listed ten horizont al reservations: six for existing non -conforming measures and four 
for future non -conforming measures. As in its GATS schedule, Mexico restricts foreign invest ment in 
 
52 A shipping conference is an association of ocean carriers that has the purpose  or effect of regulating 
rates and conditions for the transportation by those carriers of goods by water.   WT/REG407/1  
 
- 47 - 
 
  activities reserved for Mexican nationals and prohibits foreigners from acquiring land al ong its 
borders and coasts. Other reservations on existing measures in the Agreement include foreign 
ownership restrictions for micro -industry enterprises and cooperative production enterprises and 
authorisation requirements for foreign investment in Mexic an enterprises  of a certain size operating 
in an unrestricted sector. Mexico also lists the criteria used to evaluate applications for acquisitions 
or establishment of investment s which are subject to the authorisation of the National Commission 
on Foreign  Investments . It also reserves the right to maintain all its existing non -conforming 
measures at the regional  level. Mexico's horizontal reservations under the Agreement are similar to 
those under the NAFTA with substantial improvements.53 
4.45.   Under its reserv ations on future measures, Mexico reserves the right to adopt or maintain 
any measure restricting the acquisition, sale or other disposition of bonds, treasury bills and other 
debt securities issued by federal, state or local governments. It reserves the r ight to adopt or 
maintain measures on specific social services54 and measures conferring rights or preferences to 
socially or economically disadvantaged groups. It may also adopt or maintain any measure that 
grants differential treatment to countries under  an international agreement in force prior to the 
Agreement's entry into force and all agreements in force or signed thereafter involving aviation, 
fisheries or maritime matters (including salvage). In addition, Mexico reserves the right to adopt or 
mainta in any market -access measure compatible with its market access obligations under GATS 
Article XVI and its GATS schedule of commitments as modified in the Agreement. The modified 
schedule under the Agreement consists of improvements with respect to its GATS  commitments on 
market access. Except for the improvements to its GATS schedule of commitments, the horizontal 
reservations on future measures listed by Mexico are the same as those under the NAFTA.  
4.46.   Mexico's cultural exceptions are included in Annex 15 -E which, essentially, replicates the 
reservations taken in Annexes I and II for broadcasting, newspaper publishing, cinema services and 
audiovisual.  
4.4.2.2   Sector specific commitments  
4.47.   Table 4.2 compares Mexico's sectoral market access and national treatment commitments 
under the Agreement and under its GATS schedule for modes 1 -3. Horizontal limitations and MFN 
reservations are not taken into account in the table which should be read in conjunction with 
Annexes  I, II, and III of the Agreement containing Mexico's schedule of specific commitments for 
cross-border trade in services and investment.  
Table 4.2 Mexico: comparison between the GATS and Agreement specific commitments  
Sectors / Sub -sectors  GATS  FTA 
Compared 
to GATS  Existing  
non-conforming 
measure(s)  Reservation(s) for 
future measuresa 
Investment  Cross -
border 
trade  Investment  Cross -
border 
trade  
1. Business services        
A. Professional  Services  Partial  Improved  ✓ ✓   
B. Computer  and Related  Services  Partial  Improved      
C. Research  and Development  Services  Partial  Improved      
D. Real  Estate  Services  --- New     
E. Rental/Leasing  Services  without   
Operators  Partial  Improved      
F. Other  Business  Services  Partial  Improved  ✓ ✓   
2. Communication services        
A. Postal  services  --- Same    ✓  
B. Courier  services  Partial  Improved      
C. Telecommunication  services  Partial  Improved  ✓ ✓ ✓  
D. Audiovisual services  Partial  Improved  ✓ ✓ ✓  
 
53 Differences with respect to commitments under the NAFTA include, for example, a longer maximum 
duration of trusts to acquire and use real estate lo cated in the Restricted Zone and a higher applicable 
threshold for the review of an acquisition of a Mexican enterprise . 
54 Mexico stressed that the broad reservation on social services applies to the supply of public law 
enforcement and correctional servic es, income security or insurance, social security or insurance, social 
welfare, public education, public training, and health and child care, to the extent that they are social services 
established or maintained for a public purpose.  WT/REG407/1  
 
- 48 - 
 
  Sectors / Sub -sectors  GATS  FTA 
Compared 
to GATS  Existing  
non-conforming 
measure(s)  Reservation(s) for 
future measuresa 
Investment  Cross -
border 
trade  Investment  Cross -
border 
trade  
E. Other  --- New     
3. Construction and related engineering 
services        
A. General  construction  work for buildings  Partial  Improved      
B. General  construction  work for civil  
Engineering  Partial  Improved  ✓ ✓   
C. Installation  and assembly  work  --- New     
D. Building  completion  and finishing  work  Partial  Improved      
E. Other  Partial  Improved      
4. Distribution services        
A. Commission  agents'  services  --- New     
B. Wholesale  trade  services  Partial  Improved      
C. Retailing  services  Partial  Improved  ✓    
D. Franchising  --- New     
E. Other  --- New     
5. Education services        
A. Primary education services  Partial  Improved  ✓  ✓ ✓ 
B. Secondary education services  Partial  Improved  ✓  ✓ ✓ 
C. Higher education services  Partial  Improved  ✓  ✓ ✓ 
D. Adult education  --- New   ✓ ✓ 
E. Other education services  Partial  Improved  ✓  ✓ ✓ 
6. Environmental services        
A. Sewage services  --- New     
B. Refuse disposal services  --- New     
C. Sanitation and similar services  --- New     
D. Other  --- New     
7. Financial services        
A. All insurance  and insurance -
related  services  Partial  Improved  ✓ ✓ ✓ ✓ 
B. Banking  and other  financial  services  Partial  Improved  ✓ ✓ ✓ ✓ 
8. Health related and social services        
A. Hospital services  Partial  Improved    ✓ ✓ 
B. Other Human Health Services  Partial  Improved   ✓ ✓ ✓ 
C. Social Services  --- New   ✓ ✓ 
D. Other  --- New   ✓ ✓ 
9. Tourism and travel related services        
A. Hotels  and restaurants (including 
catering)  Partial  Improved      
B. Travel  agencies  and tour operators   
services  Partial  Improved      
C. Tourist  guides  services  Partial  Improved      
D. Other  --- New     
10. Recreational and cultural and 
sporting services        
A. Entertainment  services  --- New  ✓   
B. News agency services  --- New     
C. Libraries, archives, museums and other 
cultural services  --- New     
D. Sporting and other recreational services  --- New   ✓ ✓ 
E. Other  --- New     
11. Transport services        
A. Maritime Transport Services  --- New ✓ ✓  ✓ 
B. Internal Waterways Transport  --- New ✓ ✓  ✓ 
C. Air  Transport  Services  Partial  Improved  ✓ ✓  ✓ 
D. Space  Transport  --- New     
E. Rail  Transport  Services  --- New ✓ ✓   
F. Road  Transport  Services  Partial  Improved  ✓ ✓   
G. Pipeline  Transport  --- New  ✓   
H. Services  auxiliary  to all modes  of  
transport  Partial  Improved    ✓  
I. Other  Transport  Services  Partial  Improved      
Note:  The comparison to GATS is with respect to market access and national treatment commitments  only. 
MFN and Horizontal limitations, as well as Mode 4 commitments/limitations not considered.  
Partial:  Commitments are subject to one or more sector -specific limitation/reservation.  
---: No specific commitments under GATS.  
New: New commitments full or partial, with or without limitations.  
Improved: Overall improved commitments under the Agreement compared to those under the GATS.  
Same:  Commitments under the Agreements are the same as under the GATS.  WT/REG407/1  
 
- 49 - 
 
  ✓: Indicates that existing non -conforming measures specific to the sector or sub -sector have been listed 
in Annex I or Annex III -A (for financial services) or Mexico reserved the right to impose future 
measures as specified in Annex II or Annex III -B (for fin ancial services).  
a The columns do not reflect the modification to Mexico 's GATS commitments as indicated in the last 
reservation in Annex II.  
Source:  Draft Consolidated GATS Schedule of Specific Commitments (S/DCS/W/ MEX), prepared by the 
Secretariat (in 2003) and Mexico 's Schedules annexed to the Agreement.  
4.48.   Compared to the NAFTA, Mexico did not list under the Agreement a number of limitations  
including, for example, on enhanced or value -added communication services, the acquisition, 
establishment or operation of retail outlets engaged in the sale or distribution of gasoline, diesel, 
lubricants and liquified petroleum gas and the provision of air navigation services. Notwithstanding, 
Mexico reserved the right to adopt or m aintain any measure regarding investment and cross -border 
trade in services with respect to sectors or sub -sector for which no specific reservation was taken in 
its schedules to Annexes I and II, only to the extent consistent with the least restrictive mea sures 
that Mexico may adopt or maintain under the terms of applicable reservations and exceptions to 
parallel obligations in other trade and investment agreements that Mexico has ratified prior to entry 
into force of the Agreement, including the WTO Agreem ent (Article 32.11).  
4.4.2.2.2   Business services  
4.49.   In business services, Mexico expands its GATS commitments by making full commitments in 
all subsectors, except for professional and other business services which continue to be restricted. 
Despite such restrictions, b oth subsectors benefit from better commitments under the Agreement. 
In professional services, Mexico expanded its GATS coverage and added legal services, integrated 
engineering services, urban planning and landscape architectural services, medical and dent al 
services and religious services to its schedule.55 Health -related services for public purpose s 
(i.e. medical services, and services provided by mid -wives, nurses, physiotherapists, and para -
medical personnel) remain unbound as they are covered by the mu lti-sector reservation on social 
services.  
4.50.   Some reservations were taken for professional services. For instance, Mexico allows the 
provision of legal services by foreign professionals based on reciprocity and subject to compliance 
with other requirements. Also, only Mexican nationals and enterprises  can provide commercial notary 
public services and only Mexican nationals licensed as doctors may supply in -house medical services 
in Mexican enterprises. In other business services, Mexico added a few new activities to its list of 
commitments (e.g. services incidental to fishing and printing and publishing services) and re moved 
most of its GATS limitations on market access in the subsectors listed therein. Some limitations 
remain for agricultural services such as only Mexican nationals or enterprises may obtain a 
concession to spray pesticides and foreign investment is limi ted to 49% of "T" shares, which is a 
special type of share representing the value of  land for agriculture, livestock or forestry. It also limits 
foreign investment to 49% of the ownership interest of Mexican companies performing coastal, and 
fresh-water fi shing, printing and publishing of daily newspapers56 and the manufacturing of 
explosives, fireworks, firearms, cartridges and ammunitions.   
4.4.2.2.3   Communication services  
4.51.   Compared to the GATS, Mexico made broader commitments in all subsectors of 
communications ser vices, except postal services which continue to be reserved for the State. In 
courier services, Mexico removed the GATS limits on foreign equity but maintained authorization 
and nationality requirements for the means of transport used to deliver such servi ces. In 
telecommunications services, Mexico maintained most of its GATS reservations for basic and value -
added telecommunications services but removed the foreign equity caps in some basic 
telecommunications services, including telephony services. While th ese restrictions were removed, 
Mexico continues to reserve the provision of telegraph and radiotelegraph services for the Mexican 
State. Investment by foreign governments and States is not allowed in Mexican companies providing 
 
55 In order to practice  a profession in Mexico, it is necessary to have a degree that has been recognized 
or confirmed by the Ministry of Public Education and to obtain a profes sional license. Special requirements 
apply to engineers, architects and doctors.  
56 The scope of the reservation on the publishing of daily newspapers is limited to those whose 
distribution is not free and that are published at least seven days a week.  WT/REG407/1  
 
- 50 - 
 
  communication services, incl uding telecommunications and postal services. Moreover, only Mexican 
nationals and companies can hold sole concessions and frequency band concessions and be resellers.  
4.52.   In audiovisuals, Mexico expanded sectoral coverage which is limited under the GATS to p rivate 
production of cinematographic films and private film -screening services and relaxed its GATS 
reservations; it reduced to 10% (from 30% in the GATS) the percentage of screen time that theatres 
must reserve for Mexican movies and removed the limitatio n on foreign investment in companies 
engage in film screening and production services. In radio, television and related broadcasting 
services, Mexico made some commitments while maintaining various reservations. For example, 
only Mexican nationals or compa nies will be granted sole concessions and frequency band 
concessions to provide broadcasting services ( radio and free to air television services) . Investors of 
another Party may participate up to 49% in concessionaire enterprises providing broadcasting 
services conditional on reciprocity.  
4.4.2.2.4   Construction and related engineering services  
4.53.   In construction and related engineering services, Mexico improved its commitments under the 
GATS by removing the equity ceiling of 49% for foreign investment in all sectors. At the same time, 
only Mexican nationals or Mexican enterprises, subject to a concession, are allowed to build or 
operate marine or river works or to build, operate, exploit, conserve or maintain federal roads and 
bridges.  
4.4.2.2.5   Distribution services  
4.54.   Mexico made  commitments in commission agents' services and franchising, excluded from its 
GATS schedule, and expanded those in wholesale and retail services, while maintaining a reservation 
restricting foreign participation to 49% in the capital of Mexican companies engaged in  retail 
distribution of explosives, firearms, cartridges, ammunition and fireworks.  
4.4.2.2.6   Education services  
4.55.   Mexico made no commitments regarding public education which is covered by the multi -sector 
reservation on social services. As for private educ ation services, it removed the ceiling of 49% in 
private institutions providing pre -school, primary, secondary, high school, higher and combined 
private education services but such activities remain subject to authorization.  
4.4.2.2.7   Environmental services  
4.56.   The pro vision of environmental services, unbound under the GATS, has been liberalized under 
the Agreement.  
4.4.2.2.8   Financial services  
4.57.   Mexico broadened its GATS commitments in financial services while several restrictions and 
prohibitions continue to apply.57 In insurance  and insurance related services, Mexico prohibits foreign 
companies from providing insurance for, inter alia , maritime or aircraft hulls, and any kind of vehicle, 
for risks inherent to the maritime and transportation industries, provided that such hulls an d vehicles 
have Mexican registration or are owned by persons domiciled in Mexico ; credit, housing credit,  surety 
and financial guarantee, if the insured is subject to Mexican law ; and third party liabilities derived 
from events that may take place in Mexico.  Moreover, only a Mexican or a Mexican legal entity with 
a foreigners exclusion clause may participate in agricultural and rural insurance funds. In banking 
and other financial serv ices, Mexico expanded sectoral coverage but maintained some reservations. 
For example, it allows foreign investment in credit unions of up to 15% of their capital, which under 
the GATS is prohibited. Mexico also reserves the right to adopt or maintain meas ures that grant 
 
57 Under the NAFTA, Mexico's reservations included limitations on foreign investments ( including by 
foreign governments and foreign state enterprises ) in, inter alia , holding companies, securities firms, financial 
leasing companies, credit unions, development banks and insurance companies.  It also listed the existing 
prohibitions and restric tions on cross -border trade in some insurance services . WT/REG407/1  
 
- 51 - 
 
  exclusive rights to development banks, as well as the right to grant at the discretion of financial 
authorities a concession to establish  a stock exchange.  
4.58.   Mexico also listed various reservations that apply to the entire sector. It prohibi ts the 
establishment in its territory of branches of financial institutions of another Party and , with some 
exceptions,  participation by foreign governments in the capital stock of Mexican financial institutions, 
including insurance companies. It also appl ies nationality or residency requirements for the members 
of the boards of directors of financial services companies. Under its future non -conforming measures, 
Mexico reserves the right to prohibit or impose limitations on foreign investment in the ownersh ip 
or sale of existing State enterprises and to adopt or maintain measures that grant advantages or 
exclusive rights to national insurance institutions.  
4.4.2.2.9   Health related and social services  
4.59.   Health related and social services are subject to a broad reservation allowing the application 
of any measure affecting investment and cross -border trade in social services such as health. At the 
same time, under the Agreement, Mexico improved its GATS com mitments by removing the 
limitation of 49% on foreign capital participation in private hospital services, clinical laboratories, 
other services auxiliary to medical treatment and dental prosthesis laboratory services.  
4.4.2.2.10   Tourism and travel related services  
4.60.   Mexico maintained the requirement of a permit from the relevant  authority to engage in the 
activity , but it removed the GATS ceiling of 49% on the participation of foreign capital for 
restaurants, cabarets, and nightclubs and bound mode 1 for travel agencie s, tour operators, and 
tourist guide services.  
4.4.2.2.11   Recreational, cultural and sporting services  
4.61.   In recreational, cultural and sporting services, unbound under the GATS, Mexico made 
commitments without limitations except for gambling and betting services for wh ich it reserves the 
right to adopt or maintain any measure affecting cross -border trade or investments.  
4.4.2.2.12   Transport services  
4.62.   In transport services, Mexico expanded the sectoral coverage, limited under the GATS to 
certain air, road, auxiliary and other (i.e.  tramway and subway) transport services, and added rail, 
space, pipelines, maritime and internal waterways transport services to its list of committed activities 
while maintaining a number of reservations.  
4.63.   In maritime and internal waterways transport serv ices, Mexico imposes, for example, 
restrictions on foreign investment in Mexican companies supplying services related to port 
administration, port services, piloting, inland and coastal navigation, and cabotage. In rail transport 
services, it imposes natio nality and establishment requirements on companies willing to engage in 
the construction, operation and exploitation of railroads and railway transportation public services. 
In air transportation, Mexico expands sectoral coverage by making some commitments  in 
commercial air transport services (scheduled and non -scheduled) and specialty air services, both 
excluded under the GATS, but maintains a number of reservations. For instance, foreign equity 
participation is limited to 49% in Mexican companies that hav e been granted a concession to operate 
airports and heliports (instead of 30% under the GATS).58 In road transport services, Mexico expands 
sectoral coverage, which is limited to vehicle maintenance and repair services under the GATS but 
also maintains some reservations. Only Mexican nationals or companies may obtain a permit to 
establish or operate a bus or truck station and can provide bus and truck services for the 
transportation of goods or passengers within Mexico.  
4.64.   In services auxiliary to all modes of transport, Mexico reserves the provision of auxiliary 
services to federal road transportation to Mexican nationals and companies. Mexico prohibits 
investment by foreign governments or States in Mexican enterprises engaged in transportation, and 
 
58 Higher equity participation is possible subject to authorization.  WT/REG407/1  
 
- 52 - 
 
  also reserves the right to adopt or maintain any measure with respect to specialized personnel in 
the tra nsportation sector, which reflect its GATS reservations.  
4.4.3   United States  
4.65.   Under the Agreement, the US listed 40 reservations for existing and future non -conforming 
measures: six reservations apply horizontally, 34 are specific to one or more sectors. Commitm ents 
are in general broader than under the GATS despite some reservations.   
4.4.3.1   MFN and horizontal commitments  
4.66.   In its GATS schedules, the US included horizontal reservations on the acquisition of land, 
taxation measures, subsidies and temporary entry and stay of natural persons. Under the Agreement 
(as under the NAFTA), it scheduled an exemption on the use of small business registration forms 
under the Agreement (except for Canadian issuers). A broad reservation for investment limits access 
to Overseas Private Investment Corporation (OPIC) program mes to US citizens and OPIC insurance 
and loan guaranties to i) US citizens, ii) corporations, partnerships or other associations created 
under the laws of the US and substantially beneficially owned by US citizens and iii) foreign 
partnerships or associations 100 % owned, or foreign corporations at least 95 % owned, by one or 
more US citizens, corporations, partnerships, or associations.59 Under the NAFTA, OPIC insurance 
and loan guarantees were not available to certain a liens, foreign enterprises or foreign -controlled 
domestic enterprises.  The US includes one horizontal reservation at the sub -federal level, under 
which it schedules an exception for all existing non -conforming measures of all states, the District 
of Colomb ia and Puerto Rico.  
4.67.   For future measures, the US reserves the right to adopt or maintain any measure on social 
services and measures according rights or preferences to socially or economically disadvantaged 
minorities. It may also adopt or maintain any mea sure that grants differential treatment to countries 
under an international agreement in force prior to the Agreement's entry into force and all 
agreements in force or signed thereafter involving aviation, fisheries or maritime matters (including 
salvage).  In addition, the US reserves the right to adopt or maintain any market -access measure 
compatible with its market access obligations under GATS Article XVI and its GATS schedule of 
commitments as modified in the Agreement. The US's market access  commitment s are improved 
upon as indicated in Appendix II -A to Annex II. Except for the improvements beyond  its GATS 
schedule of commitments, the horizontal reservations on future measures listed by the US are the 
same as those under the NAFTA.  
4.4.3.2   Sector specific commi tments  
4.68.   Table 4.3 compares the US's sectoral market access and national treatment commitments 
under the Agreement and under its GATS schedule for modes 1 -3. Horizontal limitations and MFN 
reservations are not taken into account in the table which should be read in conjunction with 
Annexes  I, II, and III of the Agreement containing the US's schedule of specific commitments for 
cross-border trade in services and investment.  
Table 4.3 US: comparison between the GATS and Agreement specific commitments  
Sectors / Sub -sectors  GATS  FTA 
Compared 
to GATS  Existing  
non-conforming 
measure(s)  Reservation(s) for 
future measuresa 
Invest -
ment  Cross -
border 
trade  Invest -
ment  Cross -
border 
trade  
1. Business services        
A. Professional  Services  Partial  Improved   ✓   
B. Computer  and Related  Services  Partial  Same      
C. Research  and Development  Services  --- New     
D. Real  Estate  Services  Partial  Same      
E. Rental/Leasing  Services  without   
Operators  Partial  Same      
F. Other  Business  Services  Partial  Improved  ✓ ✓   
 
59 OPIC may issue insurance to non -eligible investors in special cases and under certain conditions.  WT/REG407/1  
 
- 53 - 
 
  Sectors / Sub -sectors  GATS  FTA 
Compared 
to GATS  Existing  
non-conforming 
measure(s)  Reservation(s) for 
future measuresa 
Invest -
ment  Cross -
border 
trade  Invest -
ment  Cross -
border 
trade  
2. Communication services        
A. Postal  services  --- Same      
B. Courier  services  Partial  Improved      
C. Telecommunication  services  Partial  Same      
D. Audiovisual services  Partial  Improved  ✓  ✓ ✓ 
E. Other  --- New     
3. Construction and related engineering 
services        
A. General  construction  work for buildings  Partial  Same      
B. General  construction  work for civil  
Engineering  Partial  Same      
C. Installation  and assembly  work  Partial  Same      
D. Building  completion  and finishing  work  Partial  Same      
E. Other  Partial  Same      
4. Distribution services        
A. Commission  agents'  services  Full Same      
B. Wholesale  trade  services  Partial  Same      
C. Retailing  services  Partial  Same      
D. Franchising  Full Same      
E. Other  --- New     
5. Education services        
A. Primary education services  --- New   ✓ ✓ 
B. Secondary education services  --- New   ✓ ✓ 
C. Higher education services  --- New   ✓ ✓ 
D. Adult education  Partial  Same    ✓ ✓ 
E. Other education services  Partial  Same    ✓ ✓ 
6. Environmental services        
A. Sewage services  Partial  Improved      
B. Refuse disposal services  Partial  Improved      
C. Sanitation and similar services  Partial  Improved      
D. Other  Partial  Improved      
7. Financial services        
A. All insurance  and insurance -related  services  Partial  Improved  ✓ ✓   
B. Banking  and other  financial  services  Partial  Improved  ✓ ✓ ✓ ✓ 
8. Health related and social services        
A. Hospital services  Partial  Improved    ✓ ✓ 
B. Other Human Health Services  --- New   ✓ ✓ 
C. Social Services  --- New   ✓ ✓ 
D. Other  --- New   ✓ ✓ 
9. Tourism and travel related services        
A. Hotels  and restaurants (including catering)  Full Same      
B. Travel  agencies  and tour operators   
services  Partial  Same      
C. Tourist  guides  services  Partial  Same      
D. Other  Full Same      
10. Recreational and cultural and sporting 
services        
A. Entertainment  services  Full Same      
B. News agency services  Full Same      
C. Libraries, archives, museums and other 
cultural services  Full Same      
D. Sporting and other recreational services  Partial  Same    ✓ ✓ 
E. Other  --- New     
11. Transport services        
A. Maritime Transport Services  --- New   ✓ ✓ 
B. Internal Waterways Transport  --- New   ✓ ✓ 
C. Air  Transport  Services  Partial  Improved  ✓ ✓   
D. Space  Transport  --- New     
E. Rail  Transport  Services  Partial  Same      
F. Road  Transport  Services  Partial  Improved  ✓ ✓  ✓ 
G. Pipeline  Transport  --- New     
H. Services  auxiliary  to all modes  of  
transport  Partial  Improved      
I. Other  Transport  Services  --- New     
Note:  The comparison to GATS is with respect to market access and national treatment commitments  only. 
MFN and Horizontal limitations, as well as Mode 4 commitments/limitations not considered.  
Partial:  Commitments are subject to one or more sector -specific limitation/reservation.  
Full: Commitments are not subject to any sector -specific li mitation/reservation.  
---: No specific commitments under GATS.  
New: New commitments full or partial, with or without limitations.  WT/REG407/1  
 
- 54 - 
 
  Improved: Overall improved commitments under the Agreement compared to those under the GATS.  
Same:  Commitments under the Agree ments are the same as under the GATS.  
✓: Indicates that existing non -conforming measures specific to the sector or sub -sector have been listed 
in Annex I or Annex III -A (for financial services) or the US  reserved the right to impose future 
measures as specified in Annex II or Annex III -B (for fin ancial services).  
a The columns do not reflect the modification to the US 's GATS commitments as indicated in Appendix 
II-A to Annex II.  
Source:  Draft Consolidat ed GATS Schedule of Specific Commitments (S/DCS/W/ USA), prepared by the 
Secretariat (in 2003) and the US 's Schedules annexed to the Agreement.  
4.69.   Compared to the NAFTA, the US did not list under the Agreement a number of limitations 
including, for example, on  enhanced or value -added communication services, aircraft repair, waste 
management and publishing of daily newspapers. Other differences between the NAFTA and the 
Agreement can be found in financial services.  
4.4.3.2.2   Business services  
4.70.   The US improved its GATS comm itments for a number of professional services by adding new 
services or removing some restrictions in some states. At the same time, it scheduled some 
reservations for specific sectors. Nationality and residency restrictions are maintained for patent 
attorneys and agents while practitioners in trademark and non -patent cases must be licensed in the 
US or in a country that accords equivalent treatment to attorneys. Social  services for public purpose 
remain unbound.  
4.71.   The acquisition of rights -of-way for oil or gas pipelines across on -shore federal lands and of 
leases or interests in certain minerals (such as coal or oil) is restricted to domestic corporations but 
non-US citizens may own a 100% interest in such corporation unless the foreign investor 's home 
count ry denies similar or like privileges.  
4.72.   A customs broker's license can be obtained only by US citizens or corporations established 
under US law. The issuance of certificates of review with respect to export conduct is limited to 
residents of the US, partners hips and corporations created under and existing pursuant to Federal 
or state laws, or any association or combination between such persons. Licensing requirements are 
scheduled for certain exports and re -exports of commodities, software, and technology.  
4.4.3.2.3   Communication services  
4.73.   The US expanded  upon its GATS commitments in courier, including express and other 
delivery, services with no limitations for modes 1 -3. Postal services remain largely unbound as a 
postal monopoly is maintained. In audiovisual, the US i mproved its GATS commitments by including 
and fully liberalizing multi -channel video services over provider -owned cables systems, information 
services and a number of motion picture and video tape production and distribution services. It 
maintained one res ervation affecting mode 3 for radiocommunications, restricting ownership of radio 
licences, and it reserves the right to adopt or maintain any measure that prohibits a person of 
another Party from owning or operating a cable television system in its territ ory unless the other 
Party allows a US person to own or operate such systems in its territory under similar circumstances 
and treats the domestic supply of video content no more favourably than the supply of content of 
any other Party or non -Party.  
4.4.3.2.4   Constr uction and related engineering services  
4.74.   In construction and related engineering services, the US did not list any reservation and its 
commitments under the Agreement are the same as under the GATS.  
4.4.3.2.5   Distribution services  
4.75.   In distribution services, the US did not list any reservation and the scope for its market access  
commitments under the Agreement is the same as under the GATS with wholesale trade of alcoholic 
beverages and retail trade of alcoholic beverages, firearms an d military equipment remaining 
unbound.  WT/REG407/1  
 
- 55 - 
 
  4.4.3.2.6   Education services  
4.76.   The US made no commitments regarding public education which is covered by the multi -
sector reservation on social services. For private education services it added new commitments with 
no limitatio ns on market access for modes 1 -3 on higher education services while maintaining its 
GATS market access  limitations for adult and other education services.  
4.4.3.2.7   Environmental services  
4.77.   While the liberalization of environmental services under the GATS was limited to a number of 
activities, the US removed all limitations on market access for modes 1 -3 on wastewater and solid 
waste management, refuse disposal services, sanitation and similar services, protection of ambient 
air and climate, remediation and cle an-up of soil and water, noise abatement services, protection of 
biodiversity and landscape and other environmental services.  
4.4.3.2.8   Financial services  
4.78.   The US's commitments under the GATS include the imposition, not listed in Annex III of the 
Agreement, of federa l excise taxes on life and non -life insurance premia and on premia covering US 
risks.60 The US also scheduled a number of limitations at the state level for the provision of direct 
insurance and services auxiliary to insurance (modes 1 and 3) such as the p rohibition on 
government -owned or controlled insurance companies to provide insurance services in certain states 
and residency requirements for mutual insurance companies. Similar limitations are included in an 
illustrative list of non -conforming measures affecting insurance at the regional level in Appendix III -
B to Annex III of the Agreement. The list includes measures regarding juridical forms, citizenship 
and residency requirements for senior management and boards of directors and restrictions relating 
to government ownership or control. Under the Agreement, branches of foreign insurance companies 
are not permitted to provide surety bonds for US government contracts. As under the GATS, when 
more than 50 % of the value of a maritime vessel whose hull was b uilt under federally guaranteed 
mortgage funds is insured by a non -US insurer, the insured must demonstrate that the risk was 
substantially first offered in the US market.  
4.79.   As for banking and other financial services, the US scheduled several limitations on  market 
access for mode 3 under the GATS including, inter alia , citizenship requirements for directors, 
limitations for credit unions, savings banks, home loan or thrift business and a number of other 
limitations at the state level. Under the Agreement, th e citizenship requirement for directors of 
national banks is maintained but it may be waived for not more than a minority of the total number 
of directors. As under the GATS, foreign ownership of Edge Act corporations is limited to foreign 
banks and US sub sidiaries of foreign banks and credit unions, savings banks or savings associations 
cannot be established through branches of corporations organized under a foreign country 's law. 
Similarly, a registration requirement to engage in securities advisory and i nvestment management 
services is maintained for foreign banks and foreign banks cannot be members of the Federal 
Reserve System. The US's commitments regarding the establishment of a federal branch or agency 
by a foreign bank are improved with respect to t he GATS but establishment of a federal branch or 
agency by a foreign bank remains unavailable in certain states and the authority to act as a sole 
trustee of an indenture for a bond offering and designation as a primary dealer in US government 
debt securit ies are subject to reciprocity.  
4.80.   The US undertakes no commitment under the Agreement on market access restrictions or 
requirements for a specific type of legal entity or joint venture in relation to the expansion, by a 
foreign bank into a state from another  state if not permitted by the state in which the resulting 
branch is or would be located. A broker -dealer registered under US law that has its principal place 
of business in Canada may maintain its required reserves in a bank in Canada subject to supervis ion 
 
60 Under the NAFTA, the US listed  a number of reservations including, for example, citizenship 
requirements for directors of a national bank, limitations to the establishment of or acquisition of an interest in 
a bank subsidiary within a state by a foreign bank that has a full -service bra nch in the US, limitations to the 
ownership of edge corporations, the prohibition for foreign firm s from being designated as a primary dealer in 
US government debt obligations  and for foreign insurance companies to provide surety bonds for US 
government co ntracts . WT/REG407/1  
 
- 56 - 
 
  by Canada. Finally, the US may grant certain advantages to a number of government -Sponsored 
Enterprises (GSEs).  
4.81.   As to future measures, with respect to housing finance, the US reserves the right to adopt or 
maintain measures that grant advantages to cer tain GSEs or any new, reorganized or transferee 
entity with similar functions and objectives.61 With respect to Canada, the US reserves the right to 
adopt or maintain any measure relating to cross -border trade in securities and derivatives services.  
4.4.3.2.9   Health  related and social services  
4.82.   Social services are subject to a broad reservation allowing the application of any measure 
affecting investment and cross -border trade in social services for a public purpose . At the same time, 
under the Agreement, the US liber alized physical wellbeing services such as spas, and fitness centers 
which are not liberalized under the GATS.  
4.4.3.2.10   Tourism and travel related services  
4.83.   In tourism and travel related services, the US did not list any reservation and its commitments 
under the Agr eement are the same as under the GATS.  
4.4.3.2.11   Recreational, cultural and sporting services  
4.84.   In recreational, cultural and sporting services, the US's commitments under the Agreement 
are the same as under the GATS and it reserves the right to adopt or maintain any measure relating 
to betting and gambling services.  
4.4.3.2.12   Transport services  
4.85.   The US improved  upon its GATS commitments by adding and liberalizing road freight transport 
and cargo -handling services, storage and warehouse services and freight transport agency servi ces 
(except maritime or air transport services). It also scheduled a number of limitations in air and land 
transportation services. For example, only US air carriers can provide cabotage services and 
international scheduled and non -scheduled air service as  US air carriers and an authorization for the 
supply of specialty air services is required. As for land transport services, the provision of truck 
services by Mexican persons between points in the US for the transportation of goods other than 
international  cargo is subject to reciprocity and only persons of the US may provide truck or bus 
services between points in its territory.  
4.86.   Under its list of future non -conforming measures, the US reserves the right to adopt or 
maintain any measure relating to the provision of maritime transportation services and the operation 
of US -flagged vessels and any limitations on grants of authority for persons of Mexico to provide 
cross-border long -haul truck services in the its territory outside the border commercial zones  if such 
limitations are required to address material harm or the threat of material harm to US suppliers, 
operators or drivers.62 
Regulatory provisions  
4.5.1   Domestic regulation  
4.87.   Each Party shall ensure that a measure of general application affecting trade in se rvices is 
administered in a reasonable, objective, and impartial manner (Article 15.8). If a Party adopts or 
maintains a measure relating to licensing or qualification requirements and procedures affecting 
trade in services, it shall ensure that i) it is b ased on objective and transparent criteria, ii) the 
competent authority is independent, and iii) the procedure itself does not prevent the fulfilment of 
 
61 The reservation regards Federal Home Loan Banks, Federal Home Loan Mortgage Corporation and 
Federal National Mortgage Association and the advantages that may be granted include exemptions from 
certain taxation, registration and periodic reportin g requirements . 
62 The Parties shall meet no later than five years after the entry into force of the Agreement to 
exchange views on the reservation . WT/REG407/1  
 
- 57 - 
 
  a requirement. In addition, the Party shall avoid requiring an applicant to approach more than one 
comp etent authority for each application for authorization.  
4.88.   The Parties agree that where authorisation is required for the supply of a service, they shall 
ensure that applicants can apply at any time allowing for a reasonable period of time. If examinations 
are required, the competent authorities shall schedule the m at reasonably frequent intervals and 
provide for a reasonable period of time to enable applicants to request to take an examination. 
Indicative timeframes for processing an application shall be provided and the completeness of 
applications shall be ascer tained without undue delay. The competent authorities endeavour to 
accept electronic applications and copies of documents authenticated in accordance with a Party's 
law in place of original documents. Information on the status, completeness and rejection o f an 
application shall be provided to the applicant. Authorization fees shall be reasonable, transparent 
and not restrict the supply of the relevant service. Each Party shall encourage its competent 
authorities, when adopting a technical standard, to adopt  technical standards developed through an 
open and transparent process.  
4.89.   If a Party requires authorization for the supply of a service, it shall provide to a service supplier 
the information necessary to comply with requirements or procedures for obtaining , maintaining, 
amending, and renewing that authorization. The information includes, inter alia , any fee, the contact 
information of a relevant competent authority, any procedure for appeal or review of a decision and 
for monitoring or enforcing compliance,  any requirement or procedure and any technical standard.   
4.90.   A side letter exchanged between Canada and the US dated 30 November 2018 introduces 
specific disciplines related to energy regulatory measures and energy regulatory transparency. The 
Annex to the s ide letter also encourages Canada and the US to promote North American energy 
cooperation.  
4.5.2   Recognition  
4.91.   Article 15.9 on recognition reproduces paragraphs 1 to 3 of Article VII of the GATS but also 
adds new provisions. When a Party recognizes, autonomously o r by agreement, the education or 
experience obtained, requirements met, or licenses or certifications granted in the territory of 
another Party or a non -party, the Party is not obliged to accord the same recognition to another 
Party. Moreover, the Parties shall endeavour to facilitate trade in professional services as set out in 
Annex 15 -C.  
4.92.   According to Annex 15 -C, the Parties shall consult to identify professional services for which 
at least two of the Parties are mutually interested in establishing a dia logue on issues that relate to 
the recognition of professional qualifications, licensing, or registration. If such professional services 
are identified, the Parties' relevant bodies are encouraged to establish dialogues on, inter alia , the 
recognition of p rofessional qualifications and facilitating licensing and registration procedures 
through mutual recognition agreements, autonomous recognition of education or experience, the 
development of mutually acceptable standards and criteria for authorization, tem porary or project -
specific licensing or registration based on a foreign supplier's home license or recognized professional 
body membership, without the need for further written examination.  
4.93.   Appendix 1 sets out guidelines for the negotiation of a mutual re cognition agreement that can 
be followed by the relevant bodies if they enter into discussions for the purpose of creating a mutual 
recognition agreement.63  
4.5.3   Subsidies  
4.94.   Chapter 15 does not apply to subsidies or grants , and Chapter 14 excludes subsidies from  the 
Parties' obligations regarding national and MFN treatment and senior management and boards of 
directors (Article s 14.12  and 15.2.3(d) ).64  
 
63 The Parties communicated that s everal mutual recognition agreements have been in existence prior to 
the en try into force of the Agreement but new ones have not been negotiated yet. 
64 Investors of another Party and covered investments shall benefit from non -discriminatory treatment 
with respect to measures relating to subsidies adopted or maintained in the case  of armed conflict or civil strife 
unless such measures are listed in the Parties' Annexes of non -conforming measures (Article 14.7).  WT/REG407/1  
 
- 58 - 
 
  4.5.4   Safeguards  
4.95.   The Agreement allows the Parties to maintain or adopt restrictive measures affecting trade in 
service s, payments or transfers in the event of serious balance of payments or macroeconomic 
difficulties or threats thereof (Article 32.4).65 Such measures must be consistent with the Parties' 
national and MFN treatment obligations in Chapters 14, 15 and 17, the ir commitments on 
expropriation and compensation in Article 14.8, and with IMF clauses. Moreover, they must be 
temporary, progressively phased out and shall not exceed 12 months in duration, except in 
exceptional circumstances and subject to notification p rocedures and the Parties' agreement. In the 
case of restrictions on capital outflows, they shall not interfere with the investors' ability to earn a 
market rate of return in the territory of the restricting Party on any restricted assets. Measures 
should be price -based and, in the case of a Party using quantitative restrictions, it shall explain the 
rationale. Article 32.4 also provides for the obligation to notify in writing a measure together with 
its rationale and a time schedule or conditions necessary  for their removal.  
4.5.5   Other provisions on investment  
4.96.   In addition to the provisions on denial of benefits, performance requirements, senior 
management and board of directors, and MFN and national treatment, described in previous 
sections, Chapter 14 includes provisions dealing with minimum standards of treatment (Article 14.6), 
treatment in case of armed conflict or civil strife (Article 14.7), expropriation and compensation 
(Article  14.8), transfers (Article 14.9), special formalities and information requirem ents 
(Article  14.13), subrogation (Article 14.15), the need to ensure environment, health, safety and 
other regulatory objectives (14.16) and corporate social responsibility (Article 14.17).  
4.97.   The Parties agree to accord to covered investments a minimum sta ndard of treatment in 
accordance with applicable customary international law principles, including fair and equitable 
treatment and full protection and security (Article 14.6). Article 14.6 is to be interpreted in 
accordance with Annex 14 -A on customary in ternational law.  
4.98.   No Party shall expropriate or nationalise a covered investment either directly or indirectly 
through measures equivalent to expropriation or nationalisation except for public purposes, in a non -
discriminatory manner, on payment of prompt, adequate and effective compensation and in 
accordance with due process of law (Article 14.8).66 The provision on expropriation does not apply 
to the issuance of compulsory licenses granted in accordance with the TRIPS Agreement.  
4.99.   Each Party shall permit all transfers relating to a covered investment to be made freely and 
without delay into and out of  its territory in a freely usable currency at the market rate of exchange 
prevailing at the time of transfer (Article 14.9). Returns in kind are also permitted. A Party may 
prevent or delay a transfer through the equitable, non -discriminatory, and good fai th application of 
its laws relating to, inter alia , bankruptcy, insolvency and issuing, trading, or dealing in securities or 
derivatives.  
4.100.   No Party shall, under any measure adopted after the Agreement's entry into force and 
covered by Annex II, require an i nvestor of another Party, by reason of its nationality, to sell or 
otherwise dispose of an investment (Article 14.12). Article 14.13 allows the Parties to adopt or 
maintain measures that prescribe special formalities and to require an investor to provide 
information for informational or statistical purposes.  
4.101.   Nothing in Chapter 14 shall prevent a Party from adopting, maintaining or enforcing 
measures otherwise consistent with the Chapter to ensure that its investment activity is undertaken 
in a manner sensi tive to environmental, health or other regulatory objectives (Article 14.16).  
4.102.   The Parties also reaffirm the importance of encouraging enterprises to voluntarily 
incorporate internationally recognised standards, guidelines and principles of corporate socia l 
responsibility including the OECD Guidelines for Multinational Enterprises (Article 14.17). These 
 
65 Payments or transfers relating to foreign direct investment are excluded from the application of such 
measures.  
66 The ar ticle on expropriation and compensation is to be interpreted in accordance with Annex 14 -B. WT/REG407/1  
 
- 59 - 
 
  standards, guidelines, and principles may address areas such as labour, environment, gender 
equality, human rights, indigenous and aboriginal peoples ' rights, and corruption.  
Sector specific provisions on trade in services  
4.6.1   Financial services  
4.103.   Chapter 17 contains rules governing financial services. It applies to measure s of a Party 
relating to a financial institution of another Party, investor s of another Party and their investment in 
a financial institution in the Party's territory and cross -border trade in financial services 
(Article  17.2).67 It does not apply to measur es related to activities or services forming part of a 
public retirement plan or social security system or for the account or with the guarantee of the Party 
or using its financial resources unless a Party allows any of these activities or services to be 
conducted by its financial institutions in competition with a public entity or a financial institution . 
Government procurement of financial services and subsidies or grants with respect to the cross -
border supply of financial services are also excluded from  the scope of the Chapter.68  
4.104.   The Chapter contains the Parties' liberalization commitments in financial services as well as 
exceptions for regulatory measures , which are built upon those under the GATS Annex on Financial 
Services and Understanding on Commi tments in Financial Services (hereafter the GATS 
Understanding). It contains provisions on MFN and national treatment, exceptions and prudential 
measures, market access, new financial services, transfer of information, the location of computing 
facilities,  senior management and boards of directors ' requirements, recognition, self -regulatory 
organisations, access to payment and clearing systems, expedited availability of insurance services, 
consultations, and dispute settlement.  
4.105.   In addition, Chapter 17 incor porates various obligations from Chapters 14 and 15. These 
provisions refer to minimum standards of treatment, treatment in case of armed conflict or civil 
strife, expropriation and compensation, special formalities and information requirements, denial of 
benefits and investment and environmental, health , safety and other regulatory objectives. 
Additionally, provisions related to payments and t ransfers  are also incorporated subject to 
obligations pursuant to national t reatment , market a ccess and cross-borde r trade s tandstill.  
4.106.   The Parties allow cross -border supply (mode 1) of the financial services as specified in 
Annex  17-A. The list of activities is country -specific and is broader than that in the GATS 
Understanding for all the Parties as it includes certai n electronic payment services, investment 
advice, portfolio management, intermediation services and other insurance related services.  
4.107.   The supply of financial services through modes 1 -3 is subject to a negative list approach 
where  the Parties list all the measures that do not conform to national and MFN treatment  
obligations , market access, cross -border trade standstill  and senior management and boards of 
directors provisions in a schedule as set out in Annexes III -A for existing measu res and III -B for 
future measures (Article  17.10). Annex III -A is subject to a standstill obligation  and, for mode 3, a  
ratchet obligation.69 Moreover , the Parties shall not adopt a measure restricting any type of cross -
border trade in financial services b y cross-border financial service suppliers of another Party that 
the Party permitted on 1 January 1994, or that is inconsistent with Article 17.3.3 (National 
Treatment), with respect to the supply of those services (Article 17.6).  
4.108.   Annex 17 -C modifies Annex  14-D (Mexico -US investment disputes  in financial services ) for 
the settlement of qualifying investment disputes under Chapter 17.  
4.109.   Article 17.19 establishes a Committee on Financial Services that supervises the 
implementation of Chapter 17 and its further  elaboration. The inaugural Financial Services 
Committee met virtually on 15 April 2021 to discuss the implementation of the agreement  and other 
issues relevant to the financial sector.  
 
67 Financial services are defined as in the GATS Annex on Financial Services.  
68 Subsidies or grants with respect to the cross -border supply of financial services include government -
supported loans, guarantees and insurance.  
69 Under the standstill provisions, a Party cannot amend a non -conforming measure to make it more 
restrictive th an the one listed in Annex III -A, while a ratchet mechanism binds autonomous liberalization.  WT/REG407/1  
 
- 60 - 
 
  4.6.2   Telecommunication Services  
4.110.   Chapter 18 applies to any measure affecting  trade in telecommunications services including 
for access to and use of public telecommunications networks or services, obligations of suppliers of 
public telecommunications services, the supply of value -added services and any other measure 
relating to te lecommunications network and services (Article 18.2). It does not apply to measures 
relating to broadcast or cable distribution of radio or television programming, except to ensure that 
an enterprise operating a broadcast station or cable system has contin ued access to and use of 
public telecommunications networks and services.  
4.111.   Chapter 18 expands upon the GATS Annex on Telecommunications and the Reference Paper. 
It includes more detailed provisions on the access to and use of public telecommunications serv ices, 
the conduct and obligations of major suppliers of telecommunications services, allocation and use of 
scarce resources, transparency, the resolution of disputes, licensing and on the independence of 
regulatory bodies. The provisions on universal servi ce (Article 18.19) and competitive safeguards 
(Article 18.6) are identical (or almost) to those in the GATS Reference Paper.  
4.112.   Article 18.4 entails obligations for suppliers of public telecommunications services regarding 
interconnection, resale, roaming, nu mber portability, dialling parity and access to numbers.  Each 
Party must ensure that suppliers of public telecommunications services in its territory provide 
interconnection with suppliers of those services of another Party and number portability without 
impairment to quality and reliability, and on reasonable and non -discriminatory terms and 
conditions.  It also must ensure that suppliers of public telecommunications services of another Party 
established in its territory have access to telephone numbers on a non -discriminatory basis.  
4.113.   No Party shall prevent suppliers of public telecommunications services in its territory to 
choose the technologies they wish to use to supply their services, subject to requirements necessary 
to satisfy legitimate public policy  interests . If a Party adopts a measure restricting technologies 
choice,  it shall do so consistent with its transparency obligations (Article 18.15).  
4.114.   In the area of international mobile roaming, the Parties agree to cooperate on promoting 
transparent and reasonable rates for these services and a Party may take steps to enhance 
transparency and competition with respect to international mobile roaming rates and technological 
alternatives to roaming services (Article 18.25)  
4.115.   On enforcement, the  Parties shall provide their competent regulatory body with the authority 
to enforce the obligations set out in Chapter 18 including the ability to impose effective sanctions 
which may include financial penalties, injunctive relief (on an interim or final basis), corrective 
orders, or the modification, suspension or revocation of licences (Article 18.22). They shall also 
ensure that their enterprises have recourse to the telecommunications regulatory body to resolve 
disputes regarding the obligations of the  Chapter and that they have access to appeal procedures 
should their legally protected interests be adversely affected (Article 18.23).  
4.116.   The Parties recognize that regulatory needs and approaches differ by market and that it is 
up to the Party to determine  how to implement its obligations under the Chapter (Article 18.16). 
The Parties shall ensure that their telecommunications regulatory body is independent of any 
supplier of public telecommunications services (Article 18.17). Article 18.24 provides for 
transparency in general while Article 18.20 specifies the information that needs to be made publicly 
available in case a license is required.  
4.117.   In the event of any inconsistency between the Chapter and another Chapter of the 
Agreement, Chapter 18 prevails (Art icle 18.26).  
4.118.   The Parties agree to establish a Telecommunications Committee, which shall meet at times 
as the Parties may decide (Article 18.27).70 The functions of the Committee include reviewing and 
monitoring the implementation of the Chapter and discuss ing issues relevant to telecommunications 
sector.  
 
70 As of 14 July 2021, the Telecommunications Committee ha d not yet held a meeting . WT/REG407/1  
 
- 61 - 
 
  4.6.3   Delivery services  
4.119.   Annex 15 -A in Chapter 15 deals with delivery services which comprise the collection, sorting, 
transport and delivery of documents, printed matter, parcels, goods or other items. The Annex does 
not apply to maritime, internal waterway, air, rail, or road  transportation  services , including 
cabotage.  
4.120.   The Parties have an obligation to define the scope of  a postal monopoly (if they maintain 
one) based on objective criteria, including quantitati ve elements such as price or weight thresholds. 
Each Party retains the right to define the kind of universal service obligation it wishes to adopt or 
maintain. The Parties shall not allow a supplier of delivery services covered by a postal monopoly to  
use revenues derived from the supply of such services to  cross-subsidize the supply of a delivery 
service not covered by postal monopoly and to unjustifiably differentiate among mailers or 
consolidators with respect to tariffs or other terms and conditions for  the supply of a delivery service 
covered by a postal monopoly. Moreover, they shall ensure that a supplier of services covered by a 
postal monopoly does not abuse its monopoly position.  
4.121.   The Parties cannot require a delivery service supplier of another Par ty to provide a basic 
universal postal service, as a condition for authorization or licensing, or assess fees or other charges 
exclusively on express delivery service suppliers for the purpose of funding the supply of another 
delivery service. They shall e nsure that the authority responsible for regulating delivery services is 
independent and that its decisions and procedures are impartial, non -discriminatory and 
transparent.  
4.122.   No Party may require a supplier of a delivery service not covered by a postal mono poly to 
contract, or prevent such a supplier from contracting, with another service supplier to supply a 
segment of the delivery service.  
4.6.4   Programming services  
4.123.   Annex 15 -D includes provisions specific to programming services. Canada shall rescind its 
Broadcasting Regulatory Policy CRTC 2016 -334 and Broadcasting Order CRTC 2016 -335 and, with 
respect to simultaneous substitution of signals during the retransmission in Canada of the program 
referenced in those measures, it may not accord treatment less fa vourable than the treatment 
accorded to other programs originating in the US retransmitted in Canada. Moreover, both the US 
and Canada shall provide in their copyright laws that authorization of the holder of the copyright in 
the program is required for re transmission.  Canada shall ensure that US programming services 
specializing in home shopping, including modified versions of these services for the Canadian market, 
are authorized for distribution in Canada and may negotiate affiliation agreements with Can adian 
cable, satellite, and IPTV distributors.  
5  GENERAL PROVISIONS OF THE AGREEMENT  
Transparency  
5.1.  Transparency provisions are found in various chapters across the Agreement. There is no 
specific chapter dealing with transparency in the Agreement.  
Current pa yments and capital movements  
5.2.  Article 32.4 permits the adoption or maintenance of restrictive measures with regard to 
payments or transfers for current account transactions or relating to the movement of capital (except 
payments or transfers relating to FDI ) in the even t of serious balance of payments and external 
financial difficulties or threats thereof ; in the case of capital movements, restrictive measures may 
also be taken if, in exceptional circumstances, payments or transfers relating to capital movem ents 
cause or threaten to cause serious difficulties for macroeconomic management.  Such measures must 
not be inconsistent with MFN and national treatment provisions on investment (Articles 14.4 and 
14.5), cross border trade in services (Articles 15.3 and 1 5.4) and financial services (Articles 17.3 
and 17.4)  and Article 14.8 on expropriation and compensation;  be consistent with the Articles of the 
IMF; avoid unnecessary damage to the commercial, economic and financial interests of another 
Party; be temporary  and be phased out progressively as the situation improves and shall not exceed WT/REG407/1  
 
- 62 - 
 
  12 months (extendable under exceptional circumstances by one year through written notification to 
the other Parties at least 30 days before the extension); in the case of restr iction on capital outflows, 
not interfere with investors' ability to earn a market rate of return in the restricting Party on assets 
invested in the restricting Party by an investor of a Party that are restricted from being transferred 
out of the restricti ng Party; and not be used to avoid unnecessary macroeconomic adjustment . The 
Parties shall endeavour to ensure that the measures are price -based; if not, they shall explain the 
rationale for using quantitative restrictions when notifying the other Parties of the measure.  
5.3.  As soon as practicable after imposing a measure, a Party shall submit the current account 
restrictions to the IMF for review and approval under Article VIII of the Articles of Agreement of the 
IMF, enter into good faith consultations with the IMF on economic adjustment measures necessary 
to remove the restrictions and adopt or maintain economic policies consistent with these 
consultations  (paragraph 5 of Article  32.4) . The Party must also promptly publish the measure and 
notify it or any changes to it, along with the rationale for its imposition, in writing to the other Parties 
within 30 days of imposing it; present a time schedule or conditions for its removal as soon as 
possible; and promptly consult with the other Parti es to review the measure  (paragraph 9 of 
Article  32.4) . 
Exceptions  
5.3.1   General and security exceptions  
5.4.  Chapter 32 deals with exceptions and general provisions which are along the lines of the WTO 
general and security exceptions. Article XX of the GATT 1994 and  its interpretative notes are 
incorporated into and made part of the Agreement mutatis mutandis with regard to Chapters 2 
(national treatment and market access for goods), 3 (agriculture), 4 (rules of origin), 5 (origin 
procedures), 6 (textile and apparel goods), 7 (customs administration and trade facilitation), 
9 (sanitary and phytosanitary measures), 11 (technical barriers to trade), 12 (sectoral annexes), 
and 22 (State -owned enterprises and designated monopolies); for Chapter 22 Article XX only applies 
to measures of a Party (including through the activities of SOEs or designated monopolies) affecting 
the purchase, production or sale of goods or activities that result in in the production of goods .  
5.5.  Paragraphs (a), (b) and (c) of Article XIV of the GATS are incorporated into and made part of 
the Agreement mutatis mutandis for Chapters 15 (cross -border trade in services), 16 (temporary 
entry for business persons), 18 (telecommunications), 19 (digital trade), and 22 (State -owned 
enterprises and designated m onopolies); for Chapter 22 Article XIV only applies to measures of a 
Party (including through the activities of SOEs or designated monopolies) affecting the purchase or 
supply of services or activities that result in the supply of services.71 
5.6.  The Parties a re authorized to take action, including maintaining or increasing a customs duty 
if authorized by the WTO Dispute Settlement Body, or by a dispute settlement panel under a free 
trade agreement to which both the Party taking action and the Party affected ar e party.72  
5.3.2   Taxation exceptions   
5.7.  The Agreement maintains the rights and obligations of the Parties under a tax convention and 
in the event of inconsistency between a tax convention and the Agreement, the former prevails to 
the extent of the inconsistency  (paragraph 3 of Article 32.3)  except in respect of  the obligations in 
paragraph 5 . Under paragraph 5 of Article 32.3, Article 2.3 on national treatment and other 
provisions of the Agreement that are necessary to give effect to Article 2.3 apply to taxation 
measures to the same extent as Article III of the GATT 1994 including its interpretative notes. In 
addition , Article 2.15 on export duties, taxes and other charges also applies to taxation measures   
 
71 It is understood that the measures under GATT Article XX(b) and GATS Article X IV include 
environmental measures necessary to protect human, animal or plant life or health and that Article XX(g) of 
the GATT 1994 applies to the measures relating to the conservation of living and non -living exhaustible natural 
resources.  
72 The Parties shall not be required to furnish or allow access to information, whose disclosure are 
determined by the Parties as being contrary to their security interests or preclude them from applying 
measures that they consider necessary for the fulfilment of obligat ions on the maintenance or restoration of 
international peace or security, or the protection of their security interests.  WT/REG407/1  
 
- 63 - 
 
  5.8.  Under paragraph 6 of Article 32.3 , Articles 15.3 and 17.3 (respectively national treatment for 
cross border trade in services and financial services) apply to a taxation measure on income, capital 
gains or the taxable capital of corporations that relate to the purchase or consumption of par ticular 
services. A Party may however condition the receipt or continued receipt of an advantage from the 
purchase or consumption of particular services on requirements to provide the service in its territory.   
5.9.  National treatment provisions on investment ( Article 14.4), cross border trade in services 
(15.3), and financial services (17.3), MFN treatment for  investment (Article 14.5), cross border trade 
in services (Article 15.4), and financial services (17.4) as well as non -discriminatory treatment of 
digita l products (Article 19.4) also apply to a taxation measure, other than on income, capital gains, 
on the taxable capital of corporations or taxes on estates, inheritances, gifts, and generation skipping 
transfers.  Article 19.4 also applies to taxation measu res on income, capital gains or on the taxable 
capital of corporations but a Party may condition the receipt or the continued receipt of an advantage 
relating to the purchase or consumption of particular digital products on requirements to provide the 
digital product in its territory.73 All of the obligations in paragraph 6 are subject to a number of 
exceptions.  
5.10.   Subject to paragraph 3 of Article 32.3 and without prejudice to the rights and obligations of 
the Parties under paragraph 5 of Article 32.3, Articles 14.10.2 (performance requirements), 14.10.3 
and 14.10.4 apply to taxation measures.  
5.11.   With regard to expropriation and compensation, Article 14.8 applies to a taxation measure. 
However , between the United States and Mexico no investor may invoke Art icle 14.8 as a basis for 
a claim if it has been determined that the measure is not an expropriation.  If an investor from the se 
Parties  wishes to invoke Article 14.8 with respect to a taxation measure it must first refer to the 
designated authorities of the  Party of the investor and the respondent Party on whether the taxation 
measure is not an expropriation. If the designated authorities do not agree to consider the issue or 
fail to agree within six months of the referral that the measure is not an expropri ation, the investor 
may submit its claim to arbitration under Annex 14.D.3 (submission of a claim to arbitration) or 
paragraph 2 of Annex 14 -E (Mexico -United States Investment Disputes related to Covered 
Government Contracts).  
5.12.   In the case of a tax conventi on between two or more Parties, any inconsistency between the 
convention and the Agreement shall be referred to the designated authorities of the Parties. The 
designated authorities have six months (extendable up to 12 months if the Parties agree) from the  
date of referral to determine the existence and extent of any inconsistency.  Dispute settlement 
provisions under the Agreement do not apply to such issues or under Annex 14 -D (investment 
disputes) or Annex 14 -E (investment disputes related to covered Gove rnment contracts) between 
the United States and Mexico until the expiry of the six -month period or any other period agreed by 
the designated authorities.  A panel or tribunal established to consider a dispute related to a taxation 
measure shall accept the d etermination of the designated authorities of the Parties under paragraph 
4 of Article 32.3 as binding.  
5.3.3   Other exceptions  
5.13.   Measures adopted or maintained by Canada with respect to its cultural industry are not 
subject to the provisions of the Agreement, exce pt as provided in Article 2.4 (customs duties) or 
Annex 15 -D (programming services) (Article 32.6).74 The United States and Mexico may adopt or 
maintain a measure on goods, services or content from Canada, that, if adopted by Canada, would 
be inconsistent with the provision above. A Party may take a measure of equivalent commercial 
effect in response to a measure taken by another Party that is inconsistent with the provisions above. 
Safeguard measures for cultural industries are subject to the Agreement's d ispute settlement 
mechanism under Chapter 31 but the panel may make findings only with respect to whether an 
 
73 The exceptions include MFN and non -conforming provisions existing at the entry into force of the 
NAFTA.  
74 Cultural industries are de fined in Chapter 32 as: a person engaged in: (a) the publication, distribution 
or sale of books, magazines, periodicals or newspapers in print or machine readable form but not including the 
sole activity of printing or typesetting any of the foregoing; (b)  the production, distribution, sale or exhibition 
of film or video recordings or of audio or video music recordings; (c) the publication, distribution or sale of 
music in print or machine readable form; or (d) radiocommunications in which the transmissions  are intended 
for direct reception by the general public, and all radio, television and cable broadcasting undertakings and all 
satellite programming and broadcast network services (Article 32.6).  WT/REG407/1  
 
- 64 - 
 
  action to which another Party responds is a measure adopted or maintained for cultural industries 
for the purposes of Article 32.6; and whether the  responsive action of a Party is "of equivalent 
commercial effect" to the relevant action of the Party.  
5.14.   The Agreement permits a Party to adopt or maintain measures it deems necessary to fulfil its 
legal obligations to indigenous peoples, provided that the measure is not used as a means of 
arbitrary or unjustified discrimination against persons of the other Parties or as a disguised restriction 
on trade in goods, services and investment (Article 32.5).  
Accession and withdrawal  
5.15.   There are no provisions for ac cession by third parties  to the Agreement.  
5.16.   A Party may withdraw from the Agreement by providing written notice of withdrawal to the 
other Parties. The withdrawal shall take effect six months after the written notice is provided. The 
Agreement will remain i n force for the other Parties following withdrawal by one Party  (Article 34.6) . 
5.17.   The Agreement shall terminate within 16 years of its entry into force unless each Party 
confirms that it wishes to continue the Agreement for a new 16 -year period in accordance with 
procedures in Article 34.7 of the Agreement. Under Article 34.7 there will be  a joint review meeting 
of the Commission six years after entry into force of the Agreement, to assess  the operation of the 
Agreement . The Commissio n will also  review any recommendations for action submitted by a Party 
at least one month before the review meeting and deci de on appropriate actio n. The Agreement will 
be automatically extended for 16 years if confirmed by all the Parties in writing and t he Commission 
will conduct a further review and extension of the Agreement no later than at the end of the next 
six-year period.  If, as part of the Commission's reviews , any Party(ies) that does not confirm its 
wish to renew the Agreement for another 16 ye ars, the Commission shall meet every year for the 
remainder of the term of the Agreement.  Any Party that did not confirm its renewal of the Agreement 
at the conclusion of a joint review, can still do so at any time between the conclusion of the review 
and expiry of the Agreement.  
5.18.   Following each renewal of the 16 -year period of validity of the Agreement, the  Commission 
will hold joint reviews every six years and the Parties shall have the ability to extend the Agreement 
for a further 16 years after each join t review.   
5.19.   The Parties may agree in writing to amend the Agreement. An amendment will enter into 
force 60 days following the date on which the last Party provides written notice to the other Parties 
of the approval of the amendment in accordance with its a pplicable legal procedures, or any other 
date agreed by the Parties  (Article 34.3) . The Parties shall, unless otherwise provided in the 
Agreement, consult of whether to amend any provision, following an amendment to the WTO 
Agreement that amends a provisio n in the Agreement (Article 34.4).  
Institutional framework   
5.20.   A Free Trade Commission is established under Article 30.1 to inter alia  consider matters 
relating to implementation or operation of the Agreement; proposals to amend or modify the 
Agreement; supe rvise the work of committees, working groups and other subsidiary bodies; consider 
ways to further enhance trade and investment between the Parties; adopt and update the Rules of 
Procedure and Code of Conduct for dispute settlement proceedings; and review the Roster of 
Panellists  every three years and when appropriate, constitute a new Roster  (Article 30.2) . The 
Commission shall establish and oversee a Secretariat comprising national section s, to assist the 
Commission; provide administrative assistance to p anels and committees established for the review 
and dispute settlement in anti -dumping and countervailing matters and dispute settlement; and 
support the work of other committees as directed by the Commission  (Article 30.6) . The first Decision 
of the Commi ssion on 2 July 2020 included the adoption of the Uniform Regulations (required for 
rules of origin, origin procedures, textiles and clothing and customs administration and trade 
facilitation), rules of procedure and code of conduct for state-to-state dispute settlement and 
binational panels for the review of final anti -dumping and countervailing duty determinations, and 
the establishment of a Secretariat for the Agreement as well as rosters of individuals to serve as 
panelists for disput es under Chapter 31 and Chapter 10.  The second Decision was taken on 18 May 
2021, following the first meeting of the Commission. The second Decision adopted updated rules of WT/REG407/1  
 
- 65 - 
 
  procedure for binational panels for the review of final anti -dumping and counterva iling duty 
determinations as well as rules of procedure for the Extraordinary Challenge Procedure and the 
Special Committee Procedure for safeguarding the Panel Review System. The second Decision also 
adopted an interpretation of Article 34.1.4 (Transition al Provision from NAFTA 1994). Finally, the 
second Decision also adopted French and Spanish versions of the Uniform Regulations, rules of 
procedure for state -to-state dispute settlement and the code of conduct .  
5.21.   Various committees are established by the Ag reement to implement and monitor different 
chapters. The Committee on Trade in Goods  is created , to inter alia , monitor the implementation of 
Chapter 2; promot e trade in goods between the Parties; provid e a forum for consultation and to 
resolve issues rela ting to the Chapter including jointly with other Committees working groups or 
other subsidiary bodies established by the Agreement; and promptly seek to address tariff and non -
tariff barriers to trade in goods between the Parties and if appropriate, refer the matter to the 
Commission.  Under Chapter 3 a specific Committee for Agriculture as well as consultative 
committees on agriculture are established. The Committee for Agriculture shall focus on promoting 
trade in agricultural goods between the Parties; mo nitor and promote cooperation on implementation 
and administration of the Chapter; and provide a forum for consultation on trade barriers and to 
improve access to the Parties' markets; and report annually to the Commission.  
5.22.   There are also Committees on Rules of Origin and Origin Procedures (Article 5.18)  to ensure 
effective, uniform implementation of Chapters 4 (rules of origin) and 5 (origin procedures); on 
Textiles and Apparel Matters (Article 6.8) to consider any matter arising under Chapter 6 including  
a review of the implementation of the Chapter, consultation on technical or interpretative difficulties 
and discuss ways to improve the effectiveness of cooperation; on Trade Facilitation (Article 7.24) to 
facilitate exchange of information on various asp ects of trade facilitation ; a sub -Committee on 
customs enforcement (Article 7.29) to address customs offenses and exchange of information to 
detect, prevent and address customs offenses; on SPS and TBT measures (Articles 9.17 and 11.11 
respectively); on Go vernment Procurement (Article 13.21) on matters relating to the operation and 
implementation of Chapter; Intellectual Property rights (Article 20.14); on State owned enterprises 
and designated monopolies (Article 22.12); Environment (Article 24.26); on SME  Issues 
(Article  25.4), including to convene a trilateral SME Dialogue  (Article 25.5)  involving  the private 
sector, employees, non -governmental organizations and other stakeholders from each Party; a 
North American Competitiveness Committee (Article 26.1) to promote further integration between 
the Parties and enhance the competitiveness of their exports; on Good Regulatory Practices (Article 
28.18); and a Macroeconomic Committee (Article 33.6) to consider the macroeconomic and 
exchange rate policies of the Parties as well as issues, challenges or efforts to strengthen capacity 
with respect to transparency or reporting.  
5.23.   With regard to services, there are specific Committees on Transportation Services (Annex 15 -
B) to discuss issues arising from the implementat ion and operation of the Parties' obligations on 
transportation services in Chapters 14 on investment and 15 on cross border trade in services; 
Financial Services (Article 17.19) to supervise implementation of the Chapter on financial services; 
and t elecom munications services (Article 18.27) to review and monitor the implementation of the 
Chapter on telecommunications services .  
Dispute settlement  
5.24.   Dispute settlement provisions under Chapter 31 apply , unless otherwise provided  for in the 
Agreement : 
a. With respect to the avoidance or settlement of disputes between the Parties regarding the 
interpretation or application of the Agreement;  
b. When a Party considers that an actual or proposed measure of another Party is or would 
be incon sistent with an obligation  of the Agreement or that another Party has otherwise 
failed to carry out an obligation under the Agreement; or  
c. When a Party considers that a benefit it could reasonably have expected to accrue to it  
under Chapters 2 (national treatment and market access for goods), 3 (agriculture), 4 
(rules of origin), 5 (origin procedures), 6 (textile and apparel goods), 7 (customs 
administration and trade facilitation), 9 (SPS measures), 11 (TBT), 13 (government WT/REG407/1  
 
- 66 - 
 
  procurement), 15 (cross -border trade in services), or 20 (intellectual property rights) is 
being nullified or impaired as a result of the applicatio n of a measure by another Party 
that is not inconsistent with the Agreement (Article 31.2).  
5.25.   The Parties agree t o endeavour to agree on the interpretation and application of the 
Agreement at all times, and shall make every attempt through  cooperation and consultations to 
arrive at a mutually satisfactory resolution of a matter that might affect its operation or appl ication 
(Article 31.1).  
5.26.   A choice of forum clause is provided under Article 31.3. Once a complaining Party has selected 
either the dispute settlement forum under Chapter 31 or another international trade agreement to 
which the disputing Parties are party, i ncluding the WTO Agreement, the forum selected shall be 
used to the exclusion of the other fora.  Article 32.6 provides an exception for disputes involving 
safeguards taken for cultural industries which requires that all disputes be settled under the 
Agreem ent unless the Party seeking to establish the Panel has been unable to do so within 90 days 
of request for consultations. Consultations on any matter arising under Article 31.2 must be 
requested in writing , with copies  to the other Parties and the Secretar iat, and shall set out the reason 
for the request including identification of the specific measure at issue and an indication of the legal 
basis for the complaint.75 Unless decided otherwise, the consultations shall be held no later than 30 
days (15 days f or perishable items) after the date of delivery of the request.  
5.27.   If there is no resolution of the matter through consultations within 75 days (30 days for 
perishable goods) after the delivery of the request for consultations, or another period agreed by 
the Parties, a consulting Party may request the establishment of a panel in writing to the responding 
Party with a copy to the Secretariat and to the other Parties.76 The Panel is formed upon delivery of 
the request.77 A third party that considers it has a s ubstantial interest in the matter may join  the 
dispute by making a written notice of its intention to participate no later than seven days after the 
delivery of the request to establish a panel  (Article  31.6) .  
5.28.   The Panel shall submit its initial report to the disputing Parties no later than 150 days (120 
days for cases related to perishable goods) after the date of appointment of the last pane llist. In 
exceptional cases if the panel feels that it cannot release its report within this time -period, it shal l 
inform the Parties in writing of the reasons for the delay (which shall not exceed 30 days unless 
otherwise decided by the Parties) with an estimate of the expected date of submission of the report.  
The final report including any separate opinions on mat ters not unanimously agreed is to be 
submitted to the disputing Parties not later than 30 days after presentation of the initial report unless 
the disputing Parties decide otherwise.78 After taking any steps to protect confidential information 
and no later  than 15 days after presentation of the final report, the disputing Parties shall make the 
final report available to the public  (Article 31.17) .79  
5.29.    Within 45 days from receipt of a final report that contains findings that the measure is 
inconsistent with a Party's obligations under the Agreement; a Party has otherwise failed to carry 
out its obligations under the Agreement; or the measure at issue is causing nullification or 
impairment within the meaning of Article 31. 2 the disputing Parties shall endeavou r to agree on the 
resolution of the dispute . This could include elimination of the non -conformity or the nullification or 
impairment, if possible, the provision of mutually acceptable compensation or another remedy 
 
75 A third Party may indicate its interest in joining the co nsultations in writing to the Secretariat no later 
than seven days following the date of delivery of the request for consultations.  
76 The Parties may decide at any time to voluntarily undertake an alternative method of dispute 
resolution such as good offic es, conciliation or mediation. They may decide to continue such methods while a 
dispute proceeds for resolution before a panel established under Article 31.6 or decide to suspend or terminate 
those proceedings (Article 31.5).  
77 The Panel, whose terms of re ference are provided in Article 31.7 and is chosen from a roster of 30 
individuals established under the provisions of Article 31.8, shall comprise five members unless the disputing 
Parties agree to a panel of three members. The panel shall operate under t he rules of procedure established by 
Article 31.11 and functions under Article 31.13.  
78 Comments on the initial report may be submitted to the panel by a disputing Party no later than 15 
days after the presentation of the initial report or any other period  decided by the disputing Parties.  
79 The Panel may suspend its work at any time at the request of the complaining Party, for a period not 
to exceed 12 consecutive months. It shall suspend its work at any time at the disputing Parties' request. If the 
suspe nsion exceeds 12 consecutive months, the panel proceedings shall lapse unless the disputing Parties 
decide otherwise (Article 31.16).  WT/REG407/1  
 
- 67 - 
 
  agreed by the disputing Parties  (Article 31.18) . If the disputing Parties are unable to agree on a 
resolution to the dispute within 45 days from receipt of the final report, the complaining Party may 
suspend the application to the responding Party, of benefits of equivalent effect to the non -
conformity or nullification or impairment until the disputing Parties agree on a resolution to the 
dispute (Article 31.19).80 If the responding Party considers that (a) the level of benefits proposed is 
excessive or (b) it has eliminated the non -conformity, nu llification or impairment as determined by 
the panel, it may request the complaining Party in writing that the panel be reconvened to consider 
the matter. The panel shall reconvene as soon as possible after the date of delivery of the request 
and shall pre sent its determination to the disputing Parties no later than 90 days after it reconvenes 
to review a request under either (a) or (b) or 120 days for requests under both (a) and (b). If the 
panel considers that the level of benefits the complaining Party p roposes to suspend is manifestly 
excessive, it shall provide its views as to the level of benefits it considers to be of equivalent effect. 
If the panel concludes that the responding Party has not eliminated the non -conformity, nullification 
or impairment,  the complaining Party may suspend benefits up to the level determined by the Panel  
(Article 31.19).  
5.30.   Section B of Chapter 31 is on domestic proceedings and private commercial dispute 
settlement. If an issue relating to the interpretation or application of the Agreement arises in a 
domestic judicial or administrative proceeding of a Party, that a Party considers would merit its 
intervention, or if a court or administrative body asks for the Party's views, that Party shall notify 
the other Parties and the Sec retariat. The Commission shall try and agree on an appropriate response 
as expeditiously as possible. If the Commission is unable to agree, a Party may submit its own views 
to the court or administrative body in accordance with the rules of that forum.  Private rights of action 
against another Party on the ground that its measures are inconsistent with the Agreement are not 
permitted under the law of any Party (Article 31.21). Article 31.22 encourages the use of alternative 
dispute resolution such as arbitra tion, mediation, online dispute resolution and other procedures for 
the prevention and resolution of international commercial disputes between private parties in the 
free trade area.  The Commission is to establish and maintain an Advisory Committee on Priv ate 
Commercial Disputes  which shall, to the extent possible, encourage, facilitate and promote through 
education, the use of arbitration, mediation, online dispute resolution and other procedures for the 
resolution of international commercial disputes betw een private parties in the free trade area. The 
Committee will report and provide recommendations to the Commission on general issues 
concerning such alternative dispute resolution mechanisms.  
5.31.   Annex es 31-A and 31 -B provide for a Facility -Specific Rapid Res ponse Labour Mechanism (the 
Mechanism) respectively , between Mexico and the United States  and between Canada and Mexico . 
The Mechanism shall apply whenever a Party has a good faith basis belief that workers at a Covered 
Facility81 are being denied the right of free association and collective bargaining under laws 
necessary to fulfil the obligations of the respond ent Party under the Agreement.82 A Party shall notify 
the other Party within five business days of initiating it s domestic process for determin ing whether 
to invoke the Mechanism , if that Party has such a process , and that the process has started regarding 
a Covered Facility in the other Party.83 
 
80 A complaining Party should first seek to suspend benefits in the same sector as that affected by the 
measure or other ma tter that was the subject of the dispute; if the complaining Party considers it is not 
practicable or effective to suspend benefits in the same sector it may suspend benefits in other sectors unless 
otherwise provided for in the Agreement (Article 31.19).  
81 A Covered facility is defined as a facility in the territory of a Party that produces a good or supplies a 
service traded between the Parties or produces a good or supplies a service that competes in the territory of a 
Party with a good or service of the  other Party and is a facility in a priority sector, defined as a sector that 
produces manufactured goods (including aerospace products and components, autos and auto parts, cosmetic 
products, industrial baked goods, steel and aluminium, glass, pottery, pl astic, forgings and cement), supplies 
services or involves mining (Articles 31 -A.15 and 31 -B.15). The Parties shall review the priority sectors 
annually and determine whether to add any new sectors (Article 31 -A.13 and 31 -B.13).  
82 With respect to the Unite d States, a claim can be brought only with respect to an alleged Denial of 
Rights owed to workers at a covered facility under an enforced order of the National Labour Relations Board. 
With respect to Canada, a claim can be brought only with respect to an a lleged Denial of Rights owed to 
workers at a covered facility under an enforced order of the Canada Industrial Relations Board. With respect to 
Mexico, a claim can be brought only with respect to an alleged Denial of Rights under legislation that complies 
with Annex 23 -A (Worker Representation in Collective Bargaining in Mexico).  
83 Consistent with Articles 31 -A.4 and 31 -B.4, the United States and Canada, respectively, established 
such a process under which their respective governments will strive to complete initial reviews of complaints 
 WT/REG407/1  
 
- 68 - 
 
  5.32.   If a complainant Party has good faith basis to believe that  workers at a Covered Facility are 
being d enied their rights, it shall first request that the respondent Party conduct its own review of 
whether a Denial of Rights exists.84 If the respondent Party finds that there is a Denial of Rights, it 
shall attempt to remediate the situation within 45 days o f the request. The respondent Party has 10 
days to notify the complainant Party on whether it intends to conduct the review. If it does not notify 
within the 10 -day period , or decides not to conduct a review , the complainant Party may request 
the formation  of a Rapid Response Labour Panel to conduct a verification and determination pursuant 
to Article 31 -A.5 and 31 -B.5 respectively.  If the respondent Party conducts the review it shall report 
the results and any remediation to the complainant Party within 45  days. If it finds that there is a 
Denial of Rights, the Parties shall consult in good faith for 10 days and shall endeavour  to agree 
upon action to remediate the Denial of Rights without interrupting trade. If the Parties agree on a 
course of remediation, t he respondent Party shall take action by the date agreed upon and no 
remedy shall be imposed by the complainant Party until the end of the agreed period.85 If the  Parties 
disagree  on whether the Denial of Rights has been remediated, the compl ainant Party may write to 
the respondent Party of its intention to impose remedies at least 15 days prior to imposing remedies . 
The respondent Party may, within 10 days of receipt of the notice , request the Panel to determine 
whether the Denial of Rights p ersists under Article 31 -A.5 or 31 -B.5. The complainant Party may not 
impose remedies until the Panel's determination.86 After conditions precedent for the establishment 
of a panel are met, the  complainant Party may request the establishment of a Panel if it continues 
to have a good faith basis that a Denial of Rights is occurring at a Covered Facility (Article 31 -A.5 
and 31 -B.5). Under Article 31 -A.7 and 31 -B.7 the Panel shall issue a request for  verification and 
shall make a determination on whether there  is a Denial of Rights within 30 days of conducting the 
verification or after it is constituted if there has been no verification. The Panel 's determination shall 
be in writing and made public.  The complainant Party may impose remedies if the Panel finds t here 
is a Denial of Rights after providing written notice to the respondent Party at least five business days 
in advance  (Article 31 -A.9 and 31 -B.9). Remedies may be taken under Article 31 -A.10 and 31 -B.10.   
5.33.   Annex 14 -C deals with legacy investment claims a nd pending claims under NAFTA.87 The 
Parties consent, with respect to a legacy investment, to the submission of a claim to arbitration in 
accordance with Section B of Chapter 11 ( Investment ) of NAFTA and Annex 14-C of the Agreement 
alleging breach of an obligation under  Section A of Chapter 11 of NAFTA or some provisions of NAFTA 
on monopolies and State enterprises. A Party's consent expires three years after the termination of 
NAFTA. An arbitration initiated pursuant to the submission of a claim under pa ragraph 1  of Annex 
14-C or under Section B of Chapter 11 of NAFTA  while it is still in force may proceed to its conclusion 
in accordance with Section B of Chapter 11 of NAFTA . The tribunal 's jurisdiction with respect to such 
a claim is not affected by the expiry of consent or the termination of NAFTA.  
5.34.   Annex 14 -D provides for a mechanism for the settlement of investment disputes between 
Mexico and the US while Annex 14 -E modifies the mechanism for investment disputes related to 
covered Government contracts b etween Mexico and the US.  
Relationship with other agreements concluded by the parties  
5.35.   Under Article 1.2 each Party affirms its existing rights and obligations with respect to each 
other under the WTO Agreements and other agreements to which it and another Party are party.  
 
received by the government about a Covered fa cility in the other Party in 30 days.  Mexico has not established 
such a process yet.   
84 Once it makes its request the complainant Party may delay final settlement of customs accounts for 
goods from the Covered facility. The settlement of accounts must be r esumed immediately upon an agreement 
between the Parties that there is no denial of rights or a finding by a panel of no denial of rights.  
85 If the respondent Party determines that there is no denial of rights the complainant Party may either 
agree or if i t disagrees it may communicate this in writing and may request a panel verification and 
determination pursuant to Article 31 -A.5 or 31 -B.5 
86 If the Parties cannot agree on remediation measures at the end of 10 days, the complainant Party 
may request a pane l verification and determination pursuant to Articles 31 -A.5 or 31 -B.5. 
87 Legacy investment means an investment of an investor of another Party in the territory of the Party 
established or acquired between 1 January 1994 and the date of termination of NAFT A and in existence on the 
date of entry into force of the Agreement . WT/REG407/1  
 
- 69 - 
 
  5.36.   At least 3 months before commencing free trade agreement negotiations with a non -market 
country88 a Party must inform the other Parties of its intentions to do so  and shall provide, upon 
request, as much information as possible abo ut the objectives for such negotiations.  As early as 
possible and no later than 30 days before signature, a Party intending to sign an FTA with a non -
market country shall provide the other Parties with an opportunity to review the text, annexes and 
any side letters of the FTA for them to be able to review the FTA and assess its potential impact on 
the Agreement. If a Party enters into an FTA with a non -market country the other two Parties may 
terminate the Agreement on six months ' notice, and replace it wit h a bilateral agreement between 
them which shall include the provisions of the Agreement except those which the Parties agree shall 
no longer apply (Article 32.10).  
5.37.   Table 5.1 lists all other agreements to which the Parties are party.  
Table 5.1 Canada, Mexico and the United States: participation in other RTAs (notified 
and non -notified in force), as of 2 August  2021  
RTA Name  Date of 
entry into 
forcea Coverage  GATT/WTO Notification  
Year WTO Provisions  
CANADA  
United Kingdom – Canada  01-Jan-21 
01-Apr-21 Goods  
Services  2020 
2021 GATT Art. XXIV  
GATS Art. V  
Comprehensive and 
Progressive Agreement for 
Trans -Pacific Partnership 
(CPTPP)  30-Dec-18 Goods & 
Services  2018 GATT Art. XXIV & GATS Art. V  
EU – Canada  21-Sep-17 Goods & 
Services  2017 GATT Art. XXIV & GATS Art. V  
Canada – Ukraine  01-Aug-17 Goods  2017 GATT Art. XXIV  
Canada - Republic of Korea  01-Jan-15 Goods & 
Services  2015 GATT Art. XXIV & GATS Art. V  
Canada – Honduras  01-Oct-14 Goods & 
Services  2015 GATT Art. XXIV & GATS Art. V  
Canada – Panama  01-Apr-13 Goods & 
Services  2013 GATT Art. XXIV & GATS Art. V  
Canada – Jordan  01-Oct-12 Goods  2013 GATT Art. XXIV  
Canada – Colombia  15-Aug-11 Goods & 
Services  2011 GATT Art. XXIV & GATS Art. V  
Canada – Peru 01-Aug-09 Goods & 
Services  2009 GATT Art. XXIV & GATS Art. V  
EFTA – Canada  01-Jul-09 Goods  2009 GATT Art. XXIV  
Canada - Costa Rica  01-Nov-02 Goods  2003 GATT Art. XXIV  
Canada – Chile 05-Jul-97 Goods & 
Services  1997 GATT Art. XXIV & GATS Art. V  
Canada – Israel  01-Jan-97 Goods  1997 GATT Art. XXIV  
MEXICO  
United Kingdom – Mexico  01-Jan-21 Goods & 
Services  2021 GATT Art. XXIV & GATS Art. V  
Comprehensive and 
Progressive Agreement for 
Trans -Pacific Partnership 
(CPTPP)  30-Dec-18 Goods & 
Services  2018 GATT Art. XXIV & GATS Art. V  
Pacific Alliance  01-May-16 Goods & 
Services  2016 GATT Art. XXIV & GATS Art. V  
Mexico – Panama  01-Jul-15 Goods & 
Services  2016 GATT Art. XXIV & GATS Art. V  
Mexico - Central America  01-Sep-12 Goods & 
Services  2014 GATT Art. XXIV & GATS Art. V  
Peru – Mexico  01-Feb-12 Goods & 
Services  2012 GATT Art. XXIV & GATS Art. V; 
Enabling Clause - Changes to 
LAIA TM 80  
 
88 A non -market country is defined by Article 32.10 as a country (a) that on the date of signature of the 
Agreement has been determined to be a non -market country by a Party for purpose of  its trade remedy laws; 
and (b) with which no Party has signed a free trade agreement.  WT/REG407/1  
 
- 70 - 
 
  RTA Name  Date of 
entry into 
forcea Coverage  GATT/WTO Notification  
Year WTO Provisions  
Mexico - Plurinational State of 
Bolivia  07-Jun-10 Goods  2019 Enabling Clause  
Japan – Mexico  01-Apr-05 Goods & 
Services  2005 GATT Art. XXIV & GATS Art. V  
Mexico – Uruguay  15-Jul-04 Goods & 
Services  2013 GATT Art. XXIV & GATS Art. V; 
Enabling Clause - Changes to 
LAIA TM 80  
Brazil – Mexico  02-May-03 Goods  2019 Enabling Clause  
MERCOSUR - Mexico  
[LAIA, AAP.CE 55]  01-Jan-03 Goods  2020 Enabling Clause - Changes to 
LAIA TM 80  
EFTA – Mexico  01-Jul-01 Goods & 
Services  2001 GATT Art. XXIV & GATS Art. V  
Mexico – Cuba 28-Feb-01 Goods  2019 Enabling Clause  
Mexico - Guatemala  
[LAIA, AAP.A25TM 37]  05-Dec-00 Goods  
Services  2020 
Not no tified Enabling Clause - Changes to 
LAIA TM 80  
EU – Mexico  01-Jul-00 
01-Oct-00 Goods  
Services  2000 
2002 GATT Art. XXIV  
GATS Art. V  
Israel – Mexico  01-Jul-00 Goods  2001 GATT Art. XXIV  
Latin American Integration 
Association (LAIA) - Accession 
of Cuba  26-Aug-99 Goods  1999 Enabling Clause  
Chile – Mexico  01-Aug-99 Goods & 
Services  2001 GATT Art. XXIV & GATS Art. V; 
Enabling Clause - Changes to 
LAIA TM 80  
Colombia – Mexico  01-Jan-95 Goods & 
Services  2010 GATT Art. XXIV & GATS Art. V; 
Enabling Clause - Changes to 
LAIA TM 80  
Global System of Trade 
Preferences among 
Developing Countries (GSTP)  19-Apr-89 Goods  1989 Enabling Clause  
LAIA - Cultural Goods  
[LAIA , AAR.CEYC 7]  01-Jan-89 Goods  2020 Enabling Clause - Changes to 
LAIA TM 80  
Argentina – Mexico  01-Jan-87 Goods  2019 Enabling Clause  
LAIA- Preferences in favour of 
Paraguay  
[LAIA, AAR.AM 3]  01-Jul-84 Goods  2020 Enabling Clause - Changes to 
LAIA TM 80  
LAIA – Agreement on Regional 
Tariff Preference  
[LAIA, AAR.PAR 4]  01-Jul-84 Goods  2020 Enabling Clause - Changes to 
LAIA TM 80  
Mexico – Paraguay  01-Jan-84 Goods  2019 Enabling Clause  
Ecuador – Mexico  01-May-83 Goods  2019 Enabling Clause  
LAIA - Preferences in favour 
of Ecuador  
[LAIA, AAR.AM 2]  01-May-83 Goods  2020 Enabling Clause - Changes to 
LAIA TM 80  
Latin American Integration 
Association (LAIA)  18-Mar-81 Goods  1982 Enabling Clause  
Protocol on Trade 
Negotiations (PTN)  11-Feb-73 Goods  1971 Enabling Clause  
LAIA - Accession of Panama  03-May-12 Goods  Not notified  
UNITED STATES  
United States – Panama  31-Oct-12 Goods & 
Services  2012 GATT Art. XXIV & GATS Art. V  
United States – Colombia  15-May-12 Goods & 
Services  2012 GATT Art. XXIV & GATS Art. V  
Republic of Korea – United 
States  15-May-12 Goods & 
Services  2012 GATT Art. XXIV & GATS Art. V  
United States – Peru 01-Feb-09 Goods & 
Services  2009 GATT Art. XXIV & GATS Art. V  
United States – Oman  01-Jan-09 Goods & 
Services  2009 GATT Art. XXIV & GATS Art. V  
United States – Bahrain  01-Aug-06 Goods & 
Services  2006 GATT Art. XXIV & GATS Art. V  
Dominican Republic – Central 
America – United S tates Free 
Trade Agreement (CAFTA -DR) 01-Mar-06 Goods & 
Services  2006 GATT Art. XXIV & GATS Art. V  WT/REG407/1  
 
- 71 - 
 
  RTA Name  Date of 
entry into 
forcea Coverage  GATT/WTO Notification  
Year WTO Provisions  
United States – Morocco  01-Jan-06 Goods & 
Services  2005 GATT Art. XXIV & GATS Art. V  
United States – Australia  01-Jan-05 Goods & 
Services  2004 GATT Art. XXIV & GATS Art. V  
United States – Singapore  01-Jan-04 Goods & 
Services  2003 GATT Art. XXIV & GATS Art. V  
United States – Chile 01-Jan-04 Goods & 
Services  2003 GATT Art. XXIV & GATS Art. V  
United States – Jordan  17-Dec-01 Goods & 
Services  2002 GATT Art. XXIV & GATS Art. V  
United States - Israel  19-Aug-85 Goods  1985 GATT Art. XXIV  
United States – Japan  01-Jan-20 Goods & 
Services  Not notified  
a Dates of the first entry into force for at least one of the Parties.  
Note:  The LAIA reference is indicated in brackets for some RTAs notified as a change to LAIA's TM 80. Further 
details can be found at: http://www.aladi.org . 
Source:  WTO Secretariat. Further information on these Agreements and on specific dates of entry into 
force/provisional applications may be found in the WTO Database on RTAs: http://rtais.wto.org . 
Government procurement  
5.38.   Chapter  13 applies between Mexico and the United States to measures relating to government 
procurement .89 The substantive obligations in Chapter 13 generally accord with the substantive 
obligations in the revised WTO Agreement on Government Procurement.   
5.39.   Unless o therwise provided in Annex 13 -A, and as in the GPA, the following are not covered:  
a. The acquisition or rental of land, existing buildings or other immovable property or the 
rights thereon;  
b. Non-contractual agreements or any form of assistance that a Party or  its procuring entities 
provides including cooperative agreements, grants, loans, equity infusions , guarantees, 
subsidies, fiscal incentives and sponsorship arrangements;  
c. The procurement or acquisition of: fiscal agency or depository services; liquidation and 
management services for regulated financial institutions; or services related to the sale, 
redemption and distribution of public debt, including loans and government bonds, notes 
and other securities;  
d. Public employment contracts; and  
e. Procurement conduc ted (i) for the specific purpose of providing international assistance, 
including development aid; (ii) under the particular procedure or condition of an 
international agreement relating to the stationing of troops to the joint implementation by 
the signat ory countries of a project; or (iii) under the particular procedure or condition of 
an international organization, or funded by international grants, loans, or other assistance 
if the applicable procedure or condition would be inconsistent with the Chapter  
(Article  13.2) . 
5.40.   The Chapter accords with  the provisions in the GPA on valuation and exceptions , rules of 
origin, offsets and procurement by electronic means,  and commits to national and non -
 
89 Procurement of (a) of a good, service or any combination thereof as specified in a Party's Schedule to 
Annex 13 -A; (b) by any contractual means, including: purchase; r ental or lease, with or without an option to 
buy; build -operate -transfer contracts and public works concessions contracts; (c) for which the value as 
estimated in accordance with paragraphs 9 and 10 of the Chapter equals or exceeds the relevant threshold 
specified in a Party's Schedule to Annex 13 -A, at the time of publication of a notice of intended procurement; 
(d) by a procuring entity; and (e) that is not otherwise excluded from coverage under the Agreement.  WT/REG407/1  
 
- 72 - 
 
  discriminatory treatment in procurement. Procur ing entities shall  use open tendering unless Articles 
13.8 (Qualification of suppliers) or 13.9 ( limited tendering) apply.  
5.41.   For covered procurement , the procedures and conditions for participation are similar to those 
in the WTO GPA. Paragraph 5 of Article 13.7 clarifies that the conditions for participation do not 
preclude a procuring entity from promoting compliance with laws in the territory in which the good 
is produced or the service is performed relating to labour rights as recognized by the Parties in 
Article 23.3 provided that the measures are applied in a manner that is consistent with Chapter 29 
(publication and administration) and not in a manner that constitutes a means of arbitrary or 
unjustifiable discrimination between the Parties or a disguised res triction in their mutual trade.  With 
regard to limited tendering the procedures are also similar to those in  the WTO GPA.  
5.42.   Article 13.17 requires each Party to ensure that criminal, civil or administrative measures 
exist to address corruption, fraud and ot her wrongful acts in its government procurement. The 
measures may include procedures to debar, suspend or declare ineligible from participation in the 
Party's procurements for a stated period of time, a supplier that the Party has determined to have 
engage d in such activities. Article 13.17 provides guidelines on procedures that the Parties could 
follow in such cases.  The Parties shall also put in place policies or procedures to address potential 
conflicts of interest for those involved in, or having an inf luence over, the procurement process. 
They may also include policies or procedures requiring successful suppliers to maintain and enforce 
effective internal controls, business ethics, and compliance programmes  taking into account the size 
of the supplier, particularly SMEs, and other relevant factors.  Procedures and requirements for 
domestic review are set out in Article 13.18 and accord with those in the WTO GPA.  
5.43.   Proposed m odifications and rectifications to the Parties' Schedules in Annex 13 -A shall be 
notified in writing through the Agreement Coordinator designated under Article 30.5.  As in the GPA 
a Party whose rights may be affected by the proposed modification shall notify any objection to the 
other Party within 45 days of the notification and the modif ying and objecting Parties shall make 
every effort to resolve the objection through consultations. Compensatory adjustments shall be 
provided , if necessary , to maintain a level of coverage comparable to that which existed prior to the 
modification  (Article  13.19) . 
5.44.   Specific provisions are made to facilitate participation by SMEs including : the provision of 
comprehensive information on procurement including a definition of SMEs in a single electronic 
portal; endeavour to make all tender documentation availabl e free of charge; conduct procurement 
electronically or through other new information and communication technologies; and consider the 
size, design and structure of the procurement, including the use of subcontracting by SMEs. Any 
measures that provide preferential treatment for SMEs , including any eligibility criteria,  shall be 
transparent (Article 13.20).  
5.45.   The Chapter  also establishes a Committee on Government Procurement which shall meet upon 
request by a Party to address matters related to the operation and implementation of the Chapter.  
5.46.   The United States and Canada are  party to the GPA; Mexico is neither a party nor an observer 
to the GPA.  The thresholds for procurement established in  the Chapter are based upon the same 
values in the NAFTA, but  they reflect adjustments for inflation . The United States' thresholds under 
the GPA are substantially higher than under the Chapter  (Table 5. 2). The thresholds are to be 
adjusted following the formula provided in Section G of Annexes 13 -A and 13 -B. Mexico and the 
United States list central government and other entities covered by the Agreement in Annexes 13 -
A and 13 -B respectively.90  
 
90 There are several exceptions to procurement  by the entities covered, including procurement of fuel 
and gas by PEMEX, certain textiles and clothing products and agricultural products, as well as certain goods 
procured by the Ministries of Defence and Navy and certain services by Mexico and procureme nt of agricultural 
goods related to agricultural support or human feeding programmes, certain goods procured by the 
Department of Defence procured by the Department of Energy as well as certain goods procured by the 
Department of Homeland Security in the U nited States.  WT/REG407/1  
 
- 73 - 
 
  Table 5.2 Government procuremen t: thresholds, USD  
 Entities  Procurement of  Mexico  United States  
Agreement  Central govt entities  Goods and services  80,317  80,317  
  Construction services  10,441,216  10,441,216  
 Other entities  Goods and services  401,584  401,584  
  Construction services  12,851,327  12,851,327  
NAFTA  Central government 
entities  Goods and services  50,000  50,000  
  Construction services  6,500,000  6,500,000  
 Government enterprises  Goods and services  250,000  250,000  
  Construction services  8,000,000  8,000,000  
GPA Central govt entities  Goods and services  n.a. 182,000  
  Construction services  n.a. 7,008,000  
 Sub-central government 
entities  Goods and services  n.a. 498,000  
  Construction services  n.a. 7,008,000  
n.a. not applicable . 
Source:  Annexes 13 -A and 13 -B of the Agreement, WTO Agreement on Government Procurement and 
Chapter 10 of the North American Free Trade Agreement.  
Intellectual property rights  
5.47.   Chapter 20 on intellectual property rights (IPRs) builds on provisions in the T RIPS Agreement 
and NAFTA. Its obligations include providing to nationals of another Party adequate and effective 
protection and enforcement of IPRs while ensuring that the enforcement measures themselves do 
not become a barrier to trade . It aims to contrib ute to the promotion of technological innovation and 
to the transfer and dissemination of technology , drawing from the TRIPS Agreement  (Article 20.2) . 
As under  the NAFTA, a  Party may, but is not obliged to, provide more extensive protection for, or 
enforce ment of , IPRs under its law than is required by the Chapter as long as this does not 
contravene the Agreement (Article 20.5). The Parties also affirm their ratification of , or accession 
to, International Agreements listed in Article 20.7 and affirm their c ommitments regarding public 
health measures , in particular those related to the Declaration on TRIPS and Public Health  
(Article  20.6).  
5.48.   The Parties under Article 20.8 commit to providing national treatment to each other 's 
nationals in respect of intellectua l property protection and enforcement although derogation is 
permitted under certain circumstances. They agree to endeavour to publish online their laws, 
regulations, procedures and administrative rulings of general application concerning the protection 
and enforcement of IPRs as well as information concerning applications for trademarks, geographical 
indications , designs, patents and plant variety rights  (Article 20.9) . Further measures on 
transparency include the establishment of contact points for cooper ation (Article 20.12) ; agreement 
to endeavour to cooperate on subject matters covered by the Chapter (Article 20.13) ; and the 
establishment of a Committee on Intellectual Property Rights to exchange information on IPR  
matter s, work towards strengthening bo rder protection of IPRs  through promotion of collaborative  
operations and sharing best  practices  , exchange information regarding trade secret -related matter s, 
discuss proposals to enhance procedural fairness in patent litigation , including with respect to choice 
of venue , and upon request, endeavour to reach a mutually acceptable solution before taking 
measures on future requests o f recognition or protection of a geographical indication from any third 
country through a trade agreement (Article 20 .14).91 
5.49.   Section C on trademarks, includes provisions on the kinds of signs to be covered, collective 
and certification marks, the use of identical or similar signs, limited exceptions to the rights conferred 
by a trademark, and well -known trademarks (Artic les 20.17 -20.21). The Parties will provide a 
system for the examination and registration of trademarks as provided by Article 20.22. They shall 
also provide an electronic trademarks system which is publicly available (Article 20.23). The ten-
year term of p rotection is the same as under the NAFTA, but more than the seven years under the 
TRIPS Agreement .  
 
91 The Committee shall meet annually unless otherwise decided by the Parties.  WT/REG407/1  
 
- 74 - 
 
  5.50.   In Section E on geographical indications (GIs) , the Parties recognize that GIs may be 
protected through trademarks or a sui generis  system or other legal me ans. Administrative 
procedures for the protection or recognition of GIs, whether through a trademark or a sui generis  
system, must include certain transparency and due process elements , described in Article 20.30.  
Such administrative procedures  must also a llow interested persons to object to the protection or 
recognition of a GI on the grounds given in Article 20.31.  The date of protection for a GI under the 
procedures in Article 20.30 shall be no earlier than the filing date or registration date in the Par ty 
(Article 20.34) . A side letter between the United States and Mexico recognizes "prior users" under 
the Mexico -European Union Global Agreement.92  
5.51.   With regard to patents, the definition of patentable subject matter is unchanged from the 
NAFTA  (Article 20.36),  with limited exceptions provided under Article 20.39.93 Furthermore nothing 
in the Chapter limits the Parties' rights and obligations under Article 31 of the TRIPS Agreement and 
any waiver or amendment to the Article accepted by the Partie s (Article 20.40) . For new agricultural 
chemical products ,94 Article 20.45 guarantees protection of undisclosed test or other data from third 
parties for at least 10 years from the date of marketing approval of the new product.  Article 20.46  
requires  the Parties to make available an adjustment of the patent term fo r pharmaceutical products 
(including through a period of additional sui generis  protection) to compensate the patent holder for 
unreasonable curtailment of the effective patent term due to the marketing approval process. In 
implementing th is obligation, t he Parties may impose  conditions  and limitations .95 Article 20.47 , 
provides an exception to allow third persons to make, use, sell, offer to sell or import in the territory 
of the Party a patented product solely to generate information to meet requirements for marketing 
approval of the product.  Any undisclosed data that is required to be submitted as a condition for 
granting marketing approval for a new pharmaceutical product96 is protected from third parties for 
at least five years from the date of marketin g approval  (Article 20.48) . Article 20.50 requires t he 
Parties to provide measures that promote the early resolution of potential pharmaceutical patent 
disputes.  As an alternative to Article 20.50, Annex 20 -A permits Mexico to maintain a  system  other 
than judicial proceedings that precludes the issuance of marketing approval to any third person to 
market a pharmaceutical product, including through direct coordination between the marketing 
approval authority and the patent office.  The Parties may take m easures to protect public health in 
accordance with the Declaration on TRIPS and Public Health as well as any waivers or amendments 
to the TRIPS Agreement to implement the  Declaration (Article 20.48).  
5.52.   Industrial designs shall be protected consistent with t he provisions of the TRIPS Agreement  
for a period of 15 years from either the date of filing or the date of granting the protection  (compared 
to 10 years under the NAFTA)  (Section G).  
5.53.   With regard to copyright  and related rights , protection is extended to at least the life of the 
author and 70 years after the death of the author; or 75 years from the end of the calendar year of 
the first authorized publication of a work, performance or phonogram, or if not published within 25 
years from the creation of the work, performance or phonogram, not less than 70 years from the 
end of the calendar year of the creation of the work, performance or phonogram ( compared to 50 
years in the NAFTA) (Article 20.62).  Article 20.66 provides for legal protection and legal remedi es 
 
92 MX-US Side Letter on Prior Users, dated 30 November 2018. The Side Letter describes prior users as 
any natural or legal persons, including their successors and assignees, who have used the corresponding term 
in good faith, in Mexico, in any of the followi ng activities: production, distribution, marketing, importation and 
exportation to Mexico of cheeses. Mexico also confirms that with respect to some terms, "prior users" only 
refers to persons having used the term in a continuous manner, prior to the agree ment in principle between 
Mexico and the European Union.  
93 Limited exceptions may be provided, if the exceptions do not unreasonably conflict with a normal 
exploitation of the patent and do not unreasonably prejudice the legitimate interests of the patent owner, 
taking account of the legitimate interests of third parties (Article 20.39).  
94 Defined as one that contains a chemical entity that has not been previously approved in the territory 
of the Party for use in an agricultural chemical product.  
95 Such con ditions may include: (i) limiting compensation to a single patent term adjustment for each 
product that has been granted marketing approval; (ii) requiring the adjustment to be made on the first 
marketing approval granted to the product in the Party; (iii)  limiting the period of adjustment to a maximum of 
five years; and (iv) limiting the period of any additional sui generis  protection to a maximum of two years 
(Article 20.46).  
96 Defined as a pharmaceutical product that does not contain a chemical entity th at has been previously 
approved in that Party (Article 20.49).  WT/REG407/1  
 
- 75 - 
 
  against the circumvention of effective technological measures97 that authors, performers and 
producers of phonograms  use, while Article 20.67 has provisions to provide adequate and effective 
legal remedies to protect rights management information.   
5.54.   Section I ensures that persons are provided legal means to prevent trade secrets that are 
lawfully in their control from being disclosed to, acquired or used by others (including state -owned 
enterprises) without their consent. The Parties shall provide civil j udicial procedures to address trade 
secret misappropriation, as well as criminal procedures and penalties for the unauthorized and wilfu l 
misappropriation of trade secrets (Articles 20.70 and 20.71).  
5.55.   Section J deals with enforcement  and includes civil and administrative procedures and 
remedies and criminal procedures and penalties  (Articles 20.81 and 20.84) . Article 20.83 provides 
for ex officio  action at the border against suspected counterfeit trademark goods or pirated copyright 
goods under customs control that are imported, destined for export, in transit and admitted into or 
exiting from a free trade zone or a bonded warehouse.  Article 20.85 provides for the protection of 
encrypted programme -carrying satellite and cable signals , including by imposing criminal penalties 
and civil remedies . The  Parties  also recognize the importance of facilitating the continued 
development of legitimate online services operating as intermediaries and , accordingly,  shall provide 
legal remedies for ri ght holders to address copyright infringements and shall establish or maintain 
appropriate safe harbours for Internet Service Providers (Article 20.88).98  
5.56.   Finally Article 20.89 on final provisions relates to transition periods provided to Mexico to 
meet i ts obligations under the Chapter (between 3 and 5 years from the date of entry into force of 
the Agreement), and Canada (between 2.5 and 4.5 years).  
Competition   
5.57.   The Parties shall maintain national competition laws that proscribe anti -competitive business 
conduct to promote competition so as to increase economic efficiency and consumer welfare  and to 
take appropriate action in that regard . They shall endeavour to apply their competition laws to all 
commercial activities in their territories; they may also a pply their national competition laws to 
commercial activities outside their borders that have an appropriate nexus to their jurisdiction. 
Exemptions from the application of national competition laws  may be applied provided they are 
transparent, established  in the Party's national law, and based on public interest or public policy 
grounds. The Parties will also maintain a national competition authority or authorities to enforce 
national competition policy.99  
5.58.   Article 21.2 on procedural fairness requires the Parties to provide transparency, regarding 
their applicable competition laws, regulations and procedural rules under which competition law 
investigations and enforcement is conducted; conduct investigations within a set or reasonable time -
frame  if the inve stigations are not subject to definitive deadlines ; afford a person a reasonable 
opportunity to be represented by legal counsel; recognize lawful communications between the legal 
counsel and the person  as confidential ; and permit early consultations between the national 
competition authority and any merging persons to provide their views concerning the transaction. 
All information gathered by the authorities in their investigations and merger reviews that is 
protected by  the law is to be treated as confidential and not disclosed  subject to applicable legal 
exceptions. All final decisions in contested civil or administrative matters that find a violation of 
national competition law shall be set out in writing, indicating t he findings of fact and conclusions of 
law on which they are based. Final decisions shall be made public, except for any confidential 
material.  Before applying any sanctions or remedies on a person for violation of national competition 
laws, a Party must a fford reasonable opportunity to that person to obtain information  regarding the 
national authority's concerns; engage with the authority at key points on significant legal, factual 
and procedural issues; have access to information necessary to prepare an a dequate defen ce; be 
 
97 Defined as a technology, device or component that, in the normal course of its operation, controls 
access to a protected work, performance or phonogram, or protects copyrights or related righ ts (Article 20.66).  
98 Internet Service Provider is defined in Article 20.87.  
99 Enforcement by a Party will: ensure that persons of another Party are treated no less favourably than 
persons of the Party in like circumstances; consider, if applicable, the ef fect of enforcement activities on 
related enforcement activities by a national competition authority of another Party; and limit remedies to 
conduct or assets outside the Party's territory to situations in which there is an appropriate nexus to harm or 
threatened harm affecting the Party's territory or commerce.  WT/REG407/1  
 
- 76 - 
 
  heard and present evidence in its defen ce; cross examine any witness testifying in an enforcement 
proceeding; and contest an allegation that the person has violated national competition laws.100 The 
Parties must also provide for an oppor tunity to persons who have been subject to a fine, sanction or 
remedies, the opportunity to seek judicial review through a court or independent tribunal, including 
review of alleged substantive or procedural errors, unless the person voluntarily agrees to the 
imposition of the fine, sanction or remedy.  
5.59.   The Parties shall seek to further strengthen cooperation and coordination between their 
respective national competition authorities, particularly  on commercial practices that hinder market 
efficiency and redu ce consumer welfare within the free trade area.  Their national competition 
authorities shall also seek to cooperate on their national competition policies and enforcement of 
their competition laws, which may include coordination of investigations that rais e common law 
enforcement concerns.  Other provisions on cooperation include the sharing of experiences  and 
considering undertaking  agreed technical cooperation activities, including training . The Parties 
acknowledge the importance of international cooperati on at multilateral organizations  such as in the 
Competition Committee of the OECD and the International Competition Network (Article 21.3). 
Article 21.5 ensures transparency, including the provision to a Party, upon request, of public 
information on nation al competition law enforcement policies and practices , and any exemptions 
from and immunities to national competition laws.  
5.60.   Each Party shall maintain national consumer protection laws or other laws or regulations 
proscribing fraudulent and deceptive commer cial activities, recognizing that the enforcement of 
these criminal or civil laws is in the public interest.  The Parties recognize  that fraudulent and 
deceptive commercial activities transcend national boundaries  and that cooperation and coordination 
is in the public interest.  The Parties agree to promote, as appropriate, cooperation and coordination 
on matters of mutual interest  relating to fraudulent or deceptive commercial activities (Article 21.4).  
5.61.   Consultations, upon request from a Party, are envisaged under Article 21.6 to  foster 
understanding between the Parties, or to address specific matters arising from the Chapter. The 
Chapter on competition is not subject to the dispute settlement provisions  under the Agreement  in 
Chapter 31, nor Chapter  14 on Investment (Article 21.7) . 
State -owned enterprises and designated monopolies  
5.62.   Chapter 22 applies to the activities  (or delegated regulatory, administrative or other 
governmental authority)  of State -owned enterprises  (SOEs) , State enterprises  or desig nated 
monopolies of a Party that affect or could affect trade or investment between the Parties within the 
free trade area or that cause adverse effects in the market of a non -party101 except:  
a. Regulatory or supervisory activities or monetary and related cre dit policy and exchange 
rate policy, of a central bank or monetary authority of a Party;  
b. The regulatory or supervisory activities of a financial regulatory body of a Party, including 
a non -governmental body, such as a securities or futures exchange or mark et, clearing 
agency or other organization or association, that exercises regulatory or supervisory 
authorities over financial services suppliers ; 
c. Activities undertaken by a Party or one of its State enterprises or state -owned enterprises 
for the purpose of  the resolution of a failing or failed financial institution or other failing or 
failed enterprise principally engaged in the supply of financial services;  
d. An independent pension fund of a Party;  
e. An enterprise owned or controlled by an independent pension fund of a Party except the 
provisions on non -commercial assistance (Articles 22.6.1, 22.6.2, 22.6.4, and 22.6.6) 
apply (i) only to a Party's direct or indirect provision of non -commercial assistan ce to an 
enterprise owned or controlled by an independent pension fund, and (ii) only to a Party's 
 
100 As an exception the Party may provide for these opportunities within a reasonable period of time 
after it imposes an interim measure.  
101 Adverse effects are described in Article 22.7  WT/REG407/1  
 
- 77 - 
 
  indirect provision of non -commercial assistance through an enterprise owned or controlled 
by an independent pension fund; and  
f. Government procurement.  
5.63.   The Cha pter also applies to State Productive Enterprises (SPEs) referred to in the Decree 
Amending the Political Constitution of the United Mexican States (the Decree) of 20 December 2013 
as well as subsidiaries and affiliates of the SPEs. It does not apply to sp ecial purpose vehicles (SPVs) 
except for paragraphs 3 and 4 of the Annex 22 -E which contain rules on SPVs.102 
5.64.   Nothing in the Chapter shall  be construed to prevent  a Party from establishing or maintaining 
a State enterprise or a n SOE  or designating a monopol y. In addition, provisions on non -
discriminatory treatment  (Article 22.4)  do not apply to the extent that a Party's SOE or designated 
monopoly makes purchases and sales of goods or services pursuant to: (a) an existing non -
conforming measure  that the Party  maintains, continues, renews, or amends in accordance with 
Articles 14.12.1, 15.7.1, or 17.10.1, in its Schedule to Annex I or in Section A of its Schedule to 
Annex III; or (b) a non -conforming measure that the Party adopts or maintains with respect to 
sectors, subsectors or activities in accordance with Articles 14.12.2, 15.7.2 or 17.10.2 in its Schedule 
to Annex II or in Section B to its Schedule to Annex III  (Article 22.2) . Exceptions are also contained 
in Article 22.13. Measures to respond temporarily to a national or global economic emergency are 
permitted. The supply of financial services by a SOE pursuant to a government mandate if the service 
supports certain exports or imports, or private investment outside the territory of the Party, u nder 
certain conditions, is carved -out from the non -discrimination and commercial considerations 
provisions . 
5.65.   Article 22.6 on non -commercial assistance does not apply to  an enterprise located outside the 
territory of a Party over which an SOE of that Party has assumed temporary ownership due to a 
foreclosure or similar action related to a defaulted debt or payment of an insurance claim by an SOE 
associated with the financial services mentioned in paragraph 5.62 above, provided that any support 
provided by th e Party, the state enterprise or SOE during the period of temporary ownership is 
provided to recoup the SOEs investment under a restructuring or liquidation plan that will result in 
divestment of the enterprise. Finally, Articles 22.4 (non -discriminatory t reatment and commercial 
considerations), 22.6 (non -commercial assistance), 22.10 (transparency) and 22.12 (Committee on 
SOEs and designated monopolies) do not apply to an SOE or designated monopoly if in any one of 
the three previous consecutive fiscal yea rs, the annual revenue from its commercial activities was 
less than a threshold to be calculated in accordance with Annex 22 -A.  
5.66.   Non-discriminatory treatment and commercial considerations apply to SOEs when engaging 
in commercial  activities or designated m onopolies , subject to the provisions of Article 22.4 . Article 
22.6 prohibits certain non -commercial assistance if provided to an  SOE primarily engaged in the 
production or sale of goods other than electricity  and the construction of general infrastructure 
subject to the conditions in footnote 13 .103 Non-conforming activities to which the obligations under 
Articles 22.4 and 22.6 will not apply are listed in Annex IV to the Agreement. Each Party shall 
furthermore ensure that the Party, its state enterprises an d SOEs do not cause adverse effects to 
the interests of another Party through the use of direct or indirect non -commercial assistance 
provided to its SOEs with respect to: (a) the production and sale of a good by an SOE; (b) the supply 
 
102 Mexico will ensure that SPVs are established as a result of competitive processes under its laws and 
regulations applicable to SPEs; pursue commercial activities on equal circumstances and conditions available to 
competitors on a level playing field with no intention of displacing or impeding competitors from the relevant 
market; be aimed at generating economic value and profitability under commercial conditions; follow generally 
accepted accounting principles and international corporate governance rules such as G20/OE CD Principles of 
Corporate Governance; and act in accordance with rules on non -discriminatory treatment and commercial 
considerations (Article 22.4), courts and administrative bodies (Article 22.5) and non -commercial assistance 
(Article 22.6). Mexico shall  also provide information on the SPV and any assistance provided to it, to the extent 
reasonably available, if it is requested in accordance with the relevant provisions on transparency (Article 
22.10).  
103 The prohibited assistance includes loans or loan gu arantees provided by a state enterprise or an SOE 
of a Party to an uncreditworthy SOE of that Party; non -commercial assistance by a Party, a state enterprise or 
an SOE of a Party to an SOE of that Party in circumstances where the recipient is insolvent or on the brink of 
insolvency without a credible restructuring plan to return the SOE to long term viability within a reasonable 
period of time; and conversion by a Party or a state enterprise or an SOE of a Party of the outstanding debt of 
an SOE of that Par ty to equity, in circumstances where this would be inconsistent with the usual investment 
practice of a private investor.  WT/REG407/1  
 
- 78 - 
 
  of a service by an S OE from the territory of  the Party into the territory of another Party; or (c) the 
supply of a service in the territory of another Party through an enterprise that is a covered 
investment in the territory of that other Party or any other Party. No Party sh all cause injury to a 
domestic industry of another Party through the use of direct or indirect non -commercial assistance 
to an SOE that is a covered investment in the territory of the other Party in circumstances in which 
(a) the non -commercial assistance is provided for the production and sale of a good by the SOE in 
the territory of the other Party; and (b) a like good is produced and sold in the territory of the other 
Party by the domestic industry of that other Party.104 
5.67.   Article 22.10 requires each Party to provide to the other Parties or publish on an official 
website a list of its SOEs no later than six months after entry into force of the Agreement; the list 
shall be updated annually thereafter.  Each Party must also not ify the other Parties promptly or 
publish on a website, the designation of a monopoly or expansion of the scope of an existing 
monopoly  and the terms of its designation  and provide information on the provision of any non-
commercial assistance or any equity  capital to SOEs  upon a written request from a Party.105 If 
appropriate, and subject to available resources, the Parties shall mutually decide on technical 
cooperation activities (Article 22.11).  
5.68.   In certain circumstances, each Party's courts have jurisdicti on over civil claims against an 
enterprise owned or controlled through ownership interests by a foreign Government based on a 
commercial activity carried out in its territory (Article 22.5).  This shall not be construed to require a 
Party to provide jurisdi ction over those claims if it does not provide jurisdiction over similar claims 
against enterprises that are not owned or controlled through ownership interests by a foreign 
government.   
5.69.   A Committee on State -Owned Enterprises and Designated Monopolies shall review and 
consider the operation and implementation of the Chapter or any other matter raised by a Party,  
and develop cooperative efforts to promote the principles underlying the disciplines in the Chapter.  
It shall meet within one year of the Agreement  entering into force, and at least annually thereafter, 
unless decided otherwise by the Parties  (Article 22.12) . The Committee held its first meeting on April 
12, 2021.  
5.70.   Finally, further negotiations are foreseen under Annex 22 -C within six months from the date 
of entry into force of the Agreement. The Parties have held two rounds of discussions so far . The 
negotiations aim to extend the application of the obligations of t he Chapter to the activities of SOEs 
owned or controlled by a sub -central level of government if the obligations are listed in Annex 22 -D106 
and to extend the disciplines of the Chapter on non -commercial assistance (Article 22.6) and adverse 
effects (Articl e 22.7) to address effects caused in a market of a ] non-party of the supply of services 
 
104 A service supplied by an SOE of a Party within that Party's territory shall be deemed to not cause 
adverse effects.  Adverse effects in relation to non -commercial assistance are defined in Article 22.7 while 
injury, including the determination of material injury, is defined in Article 22.8.  
105 The information to be provided on SOEs and government monopolies includes details of the shares  
held by the Party, its state enterprises, SOEs or designated monopolies, the government titles of any 
government official serving on the board of directors, annual revenue and total assets of the entity for the 
most recent three year period available, any  exemptions or immunities from the law provided to the entity, 
and any additional publicly available information. The information to be provided on a Party's policy or 
programme includes the form of the non -commercial assistance provided, the names of the government 
agencies or SOEs providing and receiving the assistance, the legal basis and policy objective of the 
programme, the amount per unit of the assistance for goods and the annual budgeted amount for services, the 
amount of the loan or the amount inv ested, details of the shares received and any assessment of the financial 
health and prospects of the enterprise, duration of the policy or programme and statistical data permitting an 
assessment of the effects of the non -commercial assistance.  
106 The prov isions are for all three Parties: non -discriminatory treatment and commercial considerations 
(Articles 22.4.1(a) -(c)(i)); non -discriminatory treatment and commercial consideration for monopolies 
designated by a sub -central level of government (22.4.2); cou rts and administrative bodies with respect to 
administrative regulatory bodies established or maintained by a sub -central level of government (22.5.2); non -
commercial assistance (22.6.1 -22.6.3); non -commercial assistance (22.6.4(a)) and non -commercial assi stance 
for the production and sale of a good in competition with a like good produced and sold by a covered 
investment (22.6.5(a)), non -commercial assistance (22.6.4(b) and (c), 22.6.5(b) and (c) and 22.6.6), and 
transparency (Article 22.10.1); Canada has additional transparency provisions which do not apply under 
Articles 22.6.6 and 22.10.4.  WT/REG407/1  
 
- 79 - 
 
  by an SOE.  The Parties shall meet every three months and endeavour to complete negotiations 
within three years of entry into force of the Agreement.  
Environment  
5.71.   Chapter  24 on the environment, while recognizing the sovereign right of each Party to 
establish its own level of domestic environmental protection, and priorities, and to establish, adopt 
or modify its environmental laws and policies as appropriate,  agree s that i t is inappropriate to 
establish or use environmental laws or other measures in a manner which would constitute a 
disguised restriction on mutual trade or investment.  Each Party shall strive to ensure that its 
environmental laws and policies provide for, an d encourage, high levels of environmental protection, 
and to continue to improve its respective levels of environmental protection  (Article 24.3) . In the 
event of any inconsistency under the Agreement and the environment and conservation agreements 
listed in Article 1.3, a Party's obligations under the Agreement shall not preclude it from taking a 
measure to comply with its obligations under the listed agreements provided that the primary 
purpose of the measure is not to impose a disguised restriction on tr ade.107  
5.72.   No Party shall fail to effectively enforce its environmental laws through a sustained or 
recurring course of action or inaction in a manner affecting trade or investment between the Parties  
following the entry into force of the Agreement . However , they have  discretion to make decisions 
regarding investigatory, prosecutorial, regulatory and compliance matters; and the allocation of 
environmental enforcement resources for other environmental laws which have higher priority.108 In 
accordance wi th the recognition that it is inappropriate to encourage trade or investment by 
weakening or reducing protection provided by environmental laws, a Party shall not waive (or offer 
to waive) or otherwise derogate from, its environmental laws in a manner that  weakens or reduces 
the protection afforded in those laws in order to encourage trade or investment between the Parties 
(Article 24.4).  
5.73.   Public awareness of environmental laws and policies and enforcement and compliance 
procedures is to be promoted by makin g relevant information available to the public  and by enabling 
cooperation and a written exchange of views on the implementation of the Chapter  (Article 24.5) . 
The Parties will  ensure that interested persons may request the competent authorities to investi gate 
alleged violations of environmental laws ; the requests shall be given due consideration, in 
accordance with their laws. Administrative, quasi -judicial, or judicial proceedings for the 
enforcement of environmental laws shall be ensured a s will fair, eq uitable, transparent  proceedings , 
that comply with due process of law  (Article 24.6) .109 Article  24.6 also envisages that the parties to 
the proceedings  have the right to review, and if warranted, to correct or redetermin e final decisions 
of the proceedings.  The Article also provides that each Party shall provide  appropriate sanctions or 
remedies for violations of the Parties' environmental laws.  
5.74.   Appropriate procedures are to be maintained for the environmental impact asses sment of 
proposed projects that are subject to an action by the central level of government that may cause 
significant effects on the environment , with a view to avoiding, minimizing or mitigating adverse 
effects (Article 24.7)110; the Parties must  implement the multilateral environmental agreements 
(MEAs) to which they are  party and adopt, maintain and implement laws, regulations and measures 
necessary to meet their obligations under MEAs listed in Article 24.8 .111 They also agree to consult 
and coo perate as appropriate on environmental issues of interest, in particular trade related issues, 
relating to relevant MEAs.  Commitments are also in place for the protection of the ozone layer 
 
107 The environmental agreements listed in Article 1.3 may be amended pursuant to Article 34.3 
(amendments) of the Agreement.  
108 Thus, the Parties understand that with r espect to the enforcement of environmental laws, a Party is 
in compliance with the commitments above if a course of action or inaction reflects a reasonable exercise of 
that discretion, or results from a bona fide decision regarding the allocation of those  resources in accordance 
with priorities for enforcement of its environmental laws.  
109 The hearings shall be open to the public except when the administration of justice decides otherwise; 
the final decisions on the merits of the case be provided in writing ; made available to the parties to the 
proceedings without delay; and be based on information or evidence presented by the parties to the 
proceedings and in accordance with the Parties' laws.  
110 Each Party shall ensure that such procedures provide for the d isclosure of information to the public 
and, in accordance with its law, allow for public participation.  
111 Further clarification with respect to the Ramsar Convention is provided in a side letter between 
Mexico and the United States (Side Letter on the Ramsar Convention, dated 10 December, 2019).  WT/REG407/1  
 
- 80 - 
 
  including measures to control the production, consumption and trad e in, substances controlled by 
the Montreal Protocol; public participation and consultation in the development and implementation 
of measures concerning the protection of the ozone layer; and cooperation , including in the areas 
listed in Article 24.9 .3, to address matters of mutual interest related  to such substances.  The Parties 
also commit to taking measures to prevent the pollution of the marine environment from ships  
(Article 24.10) , air pollution (Article 24.11) and to  reduce marine litter (Article 24. 12). 
5.75.   Each Party shall encourage enterprises organized or constituted under its laws , or operating 
in its territory , to adopt and implement voluntary best practices of corporate social responsibility 
related to the environment, such as those in internationa lly recognized standards and guidelines 
that the Party has  endorsed , to strengthen coherence between economic and environmental 
objectives  (Article 24.13) . The use of flexible, voluntary mechanisms to protect the environment and 
natural resources is also e ncouraged  (Article 24.14) . Other provisions deal with trade and 
biodiversity (Article 24.15), invasive alien species (Article 24.16) , marine wild capture fisheries 
(Article 24.17)  sustainable fisheries management,  conservation of marine species,  fisheries subsidies 
and IUU fishing (Articles 24.1 8-21), conservation and trade (Article 24.22), sustainable forest 
management and trade (Article 24.23), environmental goods and services (Article 24.24), and 
environmental cooperation (Article 24.25) .  
5.76.   Article 24.26 establishes an Environment Committee and  contact points  for each Party . The 
Environment Committee shall meet within one year of the date of entry into force of the Agreement, 
and thereafter, every two years unless it agrees otherwise.  The Commit tee will oversee 
implementation of the Chapter and , among other functions provid e a forum to discuss and review 
implementation of the Chapter . It will periodically inform the Commission and the Council for the 
Commission for Environmental Cooperation (Coun cil) originally established under the North 
American Agreement on Environmental Cooperation (NAAEC) in 1993 and continued under the 
Agreement on Environmental Cooperation (ECA) , regarding the implementation of the Chapter . The 
Council, along with a Secreta riat and a Joint Public Advisory Committee are part of the Commission  
(Article 2 of the ECA) and shall convene at least once a year in regular session unless decided 
otherwise and in special session at the request of any Party  (Article 3 of the ECA) . The C ouncil  may 
also establish ad hoc  or standing committees, working groups or expert groups,  such as the 
Traditional Ecologic al Knowledge (TEK) Expert Group112, seek the advice of non -governmental 
organizations or persons, or take other actions  (Article 3 of the ECA) . The Council shall also 
undertake a review of the implementation of the ECA with a view to improving its operation and 
effectiveness within five years of its entry into force  of the ECA (Article 4 of the ECA) . It may also 
periodicall y exchange information with the Environment Committee under Article 24.26 of the 
Agreement.  The Secretariat shall provide technical, administrative and operational support to the 
Council and the committees or working or expert groups and other support requ ired by the Council. 
The Joint Public Advisory Committee may provide advice to the Council on matters within the scope 
of the ECA and other functions as directed by the Council.  Under Article 10 of the ECA, the Council 
shall develop and approve strategic p riorities for the Commission and define a Work Programme, 
including specific goals, objectives, and areas for cooperation.113 (Article 11 of the ECA).  
5.77.   An Environment Cooperation and Customs Verification Agreement between the US and Mexico 
aims to strengthen  cooperation and enforcement of environmental laws related to the obligations 
under Chapter 24 . The Agreement establishes cooperation provisions for  customs verification related 
to trade in illegally taken wild f lora and fauna, including trans hipment ; fish ing practices; and 
harvesting of forest products .114 
 
112 The mandate of the TEK expert Group, established under the CEC , is to identify opportunities to 
apply T raditional Environmental Knowledge  to the CEC's operations and policy recommendations. The TEK 
Expert Group is the first traditional ecological knowledge panel to contribute to an intergovernmental 
organization like  the CEC . 
113 The Work Programme may include cooperative activities such as strengthening environmental 
governance; reducing pollution and supporting strong, low emissions, resilient economies; conserving and 
protecting biodiversity and habitats; promoting t he sustainable management and use of natural resources; and 
supporting green growth and sustainable development.  
114 Environment Cooperation and Customs Verification Agreement between the United States and 
Mexico . WT/REG407/1  
 
- 81 - 
 
  
Labour  
5.78.   The Parties reaffirm their obligations as members of the International Labour Organization 
(ILO) including those stated in the ILO Declaration on Rights at Work and the ILO Declaration on 
Social Ju stice for a Fair Globalization (2008). They recognize the important role of workers' and 
employers' organizations in protecting internationally recognized labour rights and the goal of 
trading only in goods produced in compliance with Chapter 23.  The Parties shall  adopt and maintain 
in their statutes and regulations and practices  thereunder , a number of rights included in the ILO 
Declaration on Rights at Work115 and statutes and regulations and practices for acceptable conditions 
of work with respect to mini mum wages, hours of work and occupational safety and health  (Article 
23.3.2) .  
5.79.   The Parties recognize under Article 23.4 that it is inappropriate to encourage trade or 
investment by weakening or reducing the protections afforded in each Party's labour laws.  They shall 
not therefore , in a manner affecting trade or investment,  derogate from or offer to waive their 
statutes and regulations  implement ing labour rights (Article 23.3.1) if the derogation is inconsistent 
with these rights; and implementing Articles 23.3.1 and 23.3.2 if the waiver or derogation would 
weaken or reduce adherence to a right or condition of work set out in Articles 23.3.1 and 23.3.2 in 
a special trade or customs area (such as export processing or foreign trade zones) in their 
territor ies.116 
5.80.   The Parties shall not fail to enforce their labour laws through a sustained or recurring course 
of action or inaction in a manner affecting trade or investment  between the Parties .117 A decision 
made by any Party on the provision of enforcement resources  cannot be used as an excuse to not 
comply with the obligations under the Chapter although each Party maintains discretion on 
enforcement and to make bona fide  decisions on the distribution of enforcement resources between 
the labour enforcement activities  that are the subject s of Articles 23.3.1 and 23.3.2 provided that 
the exercise of the discretion and decisions taken are not inconsistent with its obligations under the 
Chapter.118 
5.81.   Import of goods into the  Parties'  territories from other sources produced i n whole or in part 
by forced or compulsory labour including forced or compulsory child labour is prohibited. The Parties 
shall establish cooperation for the identification and the movement of goods produced by forced 
labour (Article 23.6). Recognizing the rights of workers and labour organizations to exercise labour 
rights, the Parties shall address violence or threats of violence against workers directly related to 
exercising or attempting to exercise the labour rights identified in the Chapter, in a manne r affecting 
trade or investment between the Parties (Article 23.7). They shall also  ensure that migrant workers 
(both nationals and non -nationals of a Party) are protected under their labour laws (Article 23.8).  
With the goal of eliminating  discrimination in employment and occupation, and support the goal of 
promoting equality of women in the workplace each Party shall implement policies that it considers 
appropriate to protect workers against employment discrimination on the basis of sex (including with 
regard to sexual harassment), pregnancy, sexual orientation, gender identity and caregiving 
responsibilities; provide job -protected leave for birth or adoption of a child and care of family 
members; and protect against wage discrimination (Article 23.9).  
 
115 These include freedom of association and t he effective recognition of the right to collective 
bargaining; elimination of all forms of forced or compulsory labour; the effective abolition of child labour and 
for the purposes of the Agreement, a prohibition on the worst forms of child labour; and th e elimination of 
discrimination in employment and occupation (Article 23.3.1).  
116 The Article defines a waiver or derogation "in a manner affecting trade or investment between the 
Parties " as involving: (i) a person or industry that produces a good or suppl ies a service traded between the 
Parties or has an investment in the territory of the Party that has failed to comply with this obligation; or (ii) a 
person or industry that produces a good or supplies a service that competes in the territory of a Party wi th a 
good or a service of another Party.  
117 A course of action or inaction is "sustained " if it is consistent or ongoing, and is "recurring " if it 
occurs periodically or repeatedly and when the occurrences are related or the same in nature. A course of 
action or inaction does not include an isolated instance or case (Article 23.5).  
118 Nothing in the Chapter shall be construed to empower a Party 's authorities to undertake labour law 
enforcement activities in the territory of another Party (23.5.4).  WT/REG407/1  
 
- 82 - 
 
  5.82.   Public awareness and procedural guarantee provisions in Article 23.10 require the publication 
of information on labour laws and enforcement and compliance procedures; as well as ensuring 
appropriate access to tribunals for enforcement of labour laws as provid ed for in each Party's laws.  
5.83.   A Labour Council is established  and shall meet within one year from the date of entry into 
force of the Agreement and every two years thereafter, unless the Parties decide otherwise.  It shall 
review the operation and effective ness of the Chapter during the fifth year after the date of entry 
into force of th e Agreement, or as otherwise decided by the Parties ; it may  thereafter hold reviews 
as decided by the Parties.  The Labour Council held its first meeting on 29 June 2021. Contact points 
were to be designated 60 days upon entry into force of the Agreement to address matters related 
to the Chapter.   
5.84.   There are various channels for the settlement of disagreements. A Party may request dialogue 
with another Party on any matter arising under Chapter 23 at any time through a written request to 
the contact point established by that Party.119 Unless the dialoguing Parties decide otherwise, 
dialogue must commence within 30 days of a Party 's receipt of a request for dialogue. If the 
dialoguing Parties resolve the matter, they shall document the outcome, including, if appropriate, 
specific steps and timelines that they have decided upon  and make  the outcome available to the 
public,  unless they decide otherwise.  Article 23.17 envisages consultations between the Parties to 
arrive at a mutually satisfactory resolution of any matter arising under the Chapter  through written 
requests by a Party . The consultations may be held without prej udice to the commencement or 
continuation of a cooperative labour dialogue under Article 23.13. Unless the consulting Parties 
decide otherwise, the consultations shall be held within 30 days of the request and the Parties shall 
make every effort to arrive at a mutually satisfactory resolution of the matter. Failing resolution, 
they may make a written request to their relevant Ministers or their designees to convene to consider 
the matter. If they in turn are unable to resolve the matter within  75 days of th e request, or any 
other period agreed by the consulting Parties, the requesting Party may request the establishment 
of a Panel under the Agreement's dispute settlement mechanism in Chapter 31. However, the Parties 
must first seek to resolve the matter in a ccordance with Article 23.17. In addition, Annexes 31 -A 
and 31 -B provide for a Facility -Specific Rapid Response Labour Mechanism respectively, between 
Mexico and the United States and between Canada and Mexico . 
Electronic commerc e 
5.85.   Provisions on electronic commerce are found in Chapter 19 on digital trade.  It applies to 
measures adopted or maintained by the Parties that affect trade by electronic means but does not 
apply to government procurement or to information held or processed by or on behalf  of the Parties 
or measures relating to that information or its collection (except for Article 19.18 on Open 
Government Data).120 
5.86.   Customs duties, fees or other charges in connection with imports or exports of digital products 
transmitted electronically betw een persons of the Parties, shall not be imposed by the Parties ; 
internal taxes, fees or other charges may be imposed on a digital product transmitted electronically, 
provided they are imposed in a manner that is consistent with the Agreement  (Article 19.3 ).  
5.87.   Article 19.4 ensures non -discriminatory treatment by the Parties of digital products creat ed, 
produced, published, contracted for, commissioned or first made available on commercial terms in 
the territory of another Party, or digital product s of which the author, performer, producer , developer 
or owner is a person of another Party.121 There are also provisions to ensure that the Parties maintain 
a legal framework governing electronic transactions consistent with the principles of the UNCITRAL 
Model Law on Electronic Commerce, 1996 (Article 19.5), do not deny the legal validity of a signature  
solely on the basis that the signature is in electronic form  except in circumstances provided for in 
 
119 The contact points established under Article 23.15 are: in the case of Mexico, the Secretariat of 
Labour and Social Welfare and the Secretariat of E conomy. In the case of the United States, the Department of 
Labor 's Bureau of International Labor Affairs (ILAB) , in regular consultation and coordination with USTR 's Office 
of Labor Affairs .  
120 A measure affecting the supply of a service delivered or perf ormed electronically is subject to 
Chapter 14 on investment, Chapter 15 on cross border trade in services, and Chapter 17 on financial services, 
including any exception or non -conforming measure in the Agreement that is applicable to obligations in these 
Chapters (Article 19.2).  
121 Except for a subsidy or grant provided by a Party, including a government supported loan, guarantee 
or insurance.  WT/REG407/1  
 
- 83 - 
 
  their respective laws (Article 19.6), adopt or maintain  consumer protection laws to proscribe 
fraudulent and deceptive commercial activities  when consumers  engage in online commercial 
activities (Article 19.7)  adopt or maintain a legal framework that provides for personal information 
protection for users of di gital trade (Article 19.8)  and endeavour to accept of a trade administration 
document submitted electronically as the legal equivalent of the paper version of that document  
(Article 19.9) .122 Articles 19.11 and 19.12 prohibit the Parties from prohibiting or  restricting the 
cross border transfer of information, including personal information, by electronic means if the 
activity is for the conduct of the business of a covered person123, and requiring a covered person to 
use or locate computing facilities in a P arty's territory as a condition for conducting business in that 
territory.  Article 19.16 prohibits the Parties from requiring the transfer of, or access to, a source 
code of software owned by a person of another Party , or to an algorithm expressed in that source 
code, as a condition for the import, distribution, sale or use of that software or of products containing 
that software in its territory.  
5.88.   The Parties shall adopt or maintain measures to limit unsolicited commercial electronic 
communications and sha ll endeavour to adopt or maintain measures that enable consumers to 
reduce or prevent unsolicited commercial electronic communications sent other than to electronic 
mail addresses. They  shall also provide recourse under the law against  suppliers of unsolic ited 
commercial electronic communications that do not comply with the above measures (Article 19.13).  
5.89.    The Parties  shall endeavo ur to exchange information and share experiences  on regulations, 
policies, enforcement, and compliance relating to digital trade (Article 19.14)  and to build the 
capabilities of their respective national entities responsible for cybersecurity incident response and 
strengthen their cooperation in the are a (Article 19.15). With regard to interactive computer 
services, the Parties commit to not adopt or maintain measures that treat a supplier or user of such 
a service as an information content provider in determining liability for harms related to informati on 
stored, processed, transmitted, distributed or made available by the service, except to the extent 
the supplier or user has, in whole or in part created, or developed the information (Article 19.17). 
Annex 19 -A provides a three -year transition to Mexico  to implement Article 19.17.  
Small and medium -sized enterprises  
5.90.   Recognizing the role of SMEs in maintaining dynamism and enhancing competitiveness in their 
economies , the Parties agree to foster closer cooperation between their SMEs and cooperate to  
promot e jobs and growth in SMEs. Chapter 25 therefore includes provisions  on cooperation to 
support small business infrastructure;  the promotion of SME's owned by under -represented groups 
including women, indigenous peoples, youth and minorities; exchange inform ation and best 
practices in areas including SME access to capital and credit; and encourage participation in 
platforms, including web based, to share information  and best practices.  The Parties also agree to 
make the Agreement (including text, and summary of the Agreement as well as information relevant 
for SMEs) available on their own, free, publicly accessible website with links to the websites of the 
other Parties  and relevant agencies of the Parties .124 
5.91.   In addition to the provisions in Chapter 25 the Par ties recognize that there are provisions in 
other parts of the Agreement that benefit SMEs. These include provisions on rules of origin 
procedures, Government procurement, cross border trade in services, digital trade, intellectual 
property rights, labour,  environment, competitiveness, anti -corruption and good regulatory 
practices.  
 
122 Article 32.8 furthermore requires the Parties to adopt or maintain a legal framework to protect 
personal informati on taking into account principles and guidelines of relevant international bodies such as the 
APEC Privacy Framework and the OECD Recommendation of the Council Concerning Guidelines governing the 
Protection of Privacy and Transborder Flows of Personal Data  (2013).  
123 The Parties may adopt or maintain a measure that is inconsistent with this prohibition to achieve a 
legitimate public policy objective, provided the measure is not applied in a manner which would constitute a 
means of arbitrary or unjustifiable discrimination or a disguised restriction on trade; and does not impose 
restrictions on transfers of information greater than are necessary to achieve the objective.  
124 Paragraph 3 of Article 25.2 provides an indicative list of information to be provided, i ncluding 
customs regulations, procedures or enquiry points; regulations or procedures on IPRs; technical standards, 
SPS measures; foreign investment regulations; business registration procedures; trade promotion and SME 
financing programmes. The informatio n, if possible, provided in English, and in another language as 
appropriate, is to be reviewed regularly and be kept up to date.  WT/REG407/1  
 
- 84 - 
 
  5.92.   The Agreement's dispute settlement provisions do not apply to the  SME C hapter.  
5.93.   Under Article 25.4 a Committee on SME Issues (SME Committee) is established  to inter alia  
identify  ways to assist the Parties' SMEs, to take advantage of the commercial opportunities resulting 
from the Agreement and to strengthen the ir competitiveness  and to  identify and recommend ways 
for further cooperation between the Parti es. It shall  submit on an annual basis, a report  of its findings 
and make recommendations to the Commission. It shall also convene a trilateral SME dialogue (SME 
dialogue) annually unles s otherwise agreed  and may include participants from the  private secto r, 
non-government organizations, academic experts, SMEs owned by diverse and under -represented 
groups and other stakeholders from each Party . It shall convene within a year of entry into  force of 
the Agreement and annually thereafter, unless the Parties decide otherwise.  
Other provisions  
5.16.1   Good Regulatory Practices  
5.94.   Chapter  28 sets out specific obligations with respect to good regulatory practices .125 The 
chapter clarifies  that no provision p revents a Party  from pursuing public policy objectives , including  
health, safety,  and environment al goals  and that a Party is not prevented from determining the 
appropriate method to implement its obligations in this Chapter , within the framework of its ow n 
legal system and institutions . There are commitments relating to internal consultation, coordination 
and review (Article 28.4);  publication of annual plans of expected regulations (Article 28.6); public 
consultations on draft texts of regulations; and reliance on evidence -based analysis and explanations 
of the scientific or technical basis for new regulations (Article 28.9).  The Parties recognize that 
regulatory impact assessments (RIAs) are a tool to assist regulatory authorities in as sessing the 
need for and potential impact s of regulations and  the use of RIAs is encouraged in appropriate 
circumstances when developing proposed regulations that have anticipated costs or impacts 
exceeding certain thresholds established by the Party (Arti cle 28.11).  Each Party  agree s to maintain  
certain procedures when conducting  an RIA.  
5.95.   Transparency provisions cover requirements to publish key information online, including draft 
regulations (notice and comment)  in Article 28.9 and final regulations (Arti cle 28.12)  and 
descriptions of regulatory agencies ' functions and legal authorities; applicable forms used by 
regulatory agencies; fees associated with licensing, inspection, audits, etc.; and judicial or 
administrative procedures available to challenge re gulations  (Article 28.15) . 
5.96.   The c hapter  provides for  the possibility of relying on expert  advisory groups , and it is 
recognized that obtaining advice and recommendations by these groups should be a complement 
instead of a substitute for the processes  for se eking public comments  (Article 28.10) . There are a lso 
provisions on  information quality  (Article 28.5) , and  the opportunity for any interested person to 
submit to any regulatory authority written suggestions to propose  issuing, modifying or repealing a 
regulation  (Article 28.14).  There is also a non -comprehensive list of mechanisms that support 
regulatory compatibility and cooperation , as appropriate to  the particular circumstances  
(Article  28.17).  
5.97.   A Committee on Good Regulatory Practices is established under Article 28.18 to consider 
issues associated with the implementation and operation of the Chapter, and consider developments 
in the areas of good regulatory practices with a view to making recomm endations to the Commission 
for improvements to the Chapter to enhance the benefits of the Agreement. The Committee must 
provide an annual report to the Commission on its activities  and meet at least once a year, unless 
the Parties decide otherwise  The Com mittee has already met and reported to the Commission on its 
activities.  
5.98.   The provisions of this Chapter are subject to dispute settlement  under Chapter 31 (Dispute 
Settlement)  only to address a sustained or recurring course of action or inaction that is in consistent 
with a provision of this Chapter (Article 28.20), al though the Parties recognize that a mutually 
acceptable solution can often be found outside of recourse to dispute resolution . As such, a Party 
 
125 Good governance procedure s to promote transparency , predictability  and accountability when 
developing and implementing the Pa rties' respective regulations .  WT/REG407/1  
 
- 85 - 
 
  shall exercise its judgement as to whether recour se to dispute settlement under Chapter 31 would 
be fruitful.   
5.16.2   Anti-corruption   
5.99.   Chapter 2 7 includes commitments by the Parties to prevent and  combat  bribery and 
corruption in international trade and investment; they also support the principles contained in  the 
APEC Conduct Principles for Public Officials , July 2007, and encourage observance of the APEC Code 
of Conduct for Business: Business Integrity and Transparency Principles for the Private Sector , 
September 2007. They also affirm the  Parties ' adherence to  the United Nations Convention against 
Corruption , 31 October 2003.  
5.100.   The Parties commit to adopt or maintain legislative and other measures as may be necessary  
to combat and prevent corruption (Article 2 7.6) and to promote integrity among their public officials 
(Article 2 7.4). No Party shall fail to enforce its laws or other measures adopted or maintained to 
comply with Article 2 7.3 on measures to combat corruption through a sustained or recurring course 
of action or inaction, after entry into fo rce of the Agreement, to encourage trade and investment  
(Article 2 7.6). The Parties also affirm their commitments under applicable international agreements 
or arrangements to cooperate with each other to enhance law enforcement effectiveness with regard 
to corruption.  
5.16.3   Macroeconomic policies and exchange rate  
5.101.   The Parties affirm their obligations under the IMF Articles of Agreement to avoid 
manipulating exchange rates or the international monetary system to prevent effective balance of 
payments adjustments or  to gain an unfair competitive advantage.126 Any Party intervening with 
regard to another Party's currency should inform that Party promptly and discuss if needed when 
the intervention has been carried out (Article 33.4). Transparency and reporting requirem ents 
including public disclosure of data on monthly foreign -exchange reserves and forward positions, 
monthly interventions in spot and forward foreign exchange markets, quarterly balance of payments 
portfolio capital flows, and on quarterly exports and imp orts. The Parties also agree to consent to 
the public disclosure of IMF Article IV Staff Reports and the Party's participation in the IMF COFER 
database (Article 33.5).  
5.102.   A Macroeconomic Committee is established by the Agreement to monitor the implementation  
of the Chapter and its further development. It shall meet within one year after the date of entry into 
force of the Agreement and at least annually thereafter unless decided otherwise by the Parties. It 
shall consider the macroeconomic and exchange rate p olicies of each Party and their consequences 
on various macroeconomic variables; issues, challenges or efforts to strengthen capacity with 
respect to transparency or reporting; and undertaking other activities as it may decide. The 
Macroeconomic Committee may also decide to amend the provisions of the Chapter  except 
Article  33.3 (Scope).   
5.103.   A Party may request expedited bilateral consultations on policies or measures of another 
Party that the Party considers is associated with competitive devaluation, the targeting of exchange 
rates for competitive purposes, fulfilment of requirements under Article 33.5 or any other issues 
under Articles 33.4 or 33.5. The Party not engaged in the consultations may also be invited to 
participate. If the cons ultations do not resolve the issue raised under Article 33.5 the consulting 
Parties may request the IMF to undertake rigorous surveillance of the macroeconomic and exchange 
rate policies and data transparency and reporting policies of the requested Party, or initiate formal 
consultations and provide input, as appropriate (Article 33.7). Only claims that a Party has failed to 
carry out an obligation on transparency and reporting in a recurring or persistent manner and has 
not remediated the action through co nsultations, are subject to the dispute settlement mechanism 
of the Agreement (Article 33.8).127 If the Panel finds in favour of the complainant the complaining 
Party may not suspend benefits that are in excess of benefits equivalent to the effect of the fa ilure 
of the obligation under Article 33.5.  
 
126 This includes achieving and maintaining a market determined exchange rate regime; to refrain from 
competitive devaluation including by intervening in the foreign exchange market; and strengthening underlying 
economic funda mentals which reinforces the conditions for macroeconomic and exchange rate stability.  
127 Procedural changes are made to the dispute settlement mechanism under Chapter 31 for the 
purpose of disputes on transparency and reporting (Article 33.8).  WT/REG407/1  
 
- 86 - 
 
  ANNEX 1  
1. A comparison between the scheduled elimination of tariffs by the Parties under the Agreement 
is shown in  Table A1.1 and A1.2 , by HS Chapters 1 -24 (agricultural products), 25 -97 (industrial 
products) and total products. Applied MFN duty rates in 2020 serve as a comparison.  
2. Canada's  overall average applied MFN tariff rate in 2020 was 5.8% (Table A1.1).  The average 
applied tariff on agricultural goods (HS 1 -24) was considerably higher at 17.6 %, compared to an 
average applied tariff of 2.6% on industrial goods. Duty -free tariff lines accounted for 70.4% of the 
tariff, while the share of duty -free lines wa s 57.3% for agricultural products and 74.1% for industrial 
products .  
3. In 2020 when the Agreement came into force, Canada's average applied tariff for imports 
from the United States was 3.1% overall (giving US exporters a relative margin of preference of 
46.6%) and 14.1% and zero for agricultural and industrial products (resulting in a relative margin 
of preference for US exporters of 19.9% for agricultural products and 100% for industrial products). 
The share of duty -free tariff lines rose to 98.4% overall and to 93% and 100% respectively for 
agricultural and industrial products. By the end of implementation in 2030, the share of duty -free 
lines is expected to rise to 98.5% overall and to 93.2% and 100% for agricultural and industrial 
products respectively. With regard to imports from Mexico, Canada's average applied tariff for 
imports was 3.1% overall (giving Mexican exporters a relative margin of preference of 46.6%); the 
average applied tariff for Mexico was 14.3% and zero respectively for imports of agric ultural and 
industrial products, giving Mexican exporters a relative margin of preference of 18.8% for 
agricultural products and 100% for industrial products.  The share of duty -free tariff lines for imports 
from Mexico was 97.9% overall (90.3% and 100% res pectively for agriculture and industrial 
products).  
Table A1. 1 Canada: Indicators of MFN tariff rates and preferential rates for imports from 
the United States and Mexico  
Origin 
of 
goods  Year ALL PRODUCTS  HS Chapters 1 -24 HS Cha pters 25 -97 
Average 
applied tariff  Share of 
duty-
free 
tariff 
lines 
(%) Average 
applied tariff  Share of 
duty-
free 
tariff 
lines 
(%) Average 
applied tariff  Share of 
duty-
free 
tariff 
lines 
(%) Overall 
(%) 
On 
dutiable 
(%) 
Overall 
(%) 
On 
dutiable 
(%) 
Overall 
(%) 
On 
dutiable 
(%) 
MFN 2020 5.8 20.1 70.4 17.6 44.8 57.3 2.6 10.1 74.1 
USA 2020 3.1 227.2  98.4 14.1 227.2  93.0 0.0 0.0 100.0  
 2021 3.1 226.6  98.4 14.1 226.6  93.0 0.0 0.0 100.0  
 2022 3.1 226.0  98.4 14.1 226.0  93.0 0.0 0.0 100.0  
 2023 3.0 225.4  98.4 14.0 225.4  93.0 0.0 0.0 100.0  
 2024 3.0 224.8  98.4 14.0 224.8  93.0 0.0 0.0 100.0  
 2025 3.0 226.7  98.5 13.9 226.7  93.2 0.0 0.0 100.0  
 2026 3.0 226.5  98.5 13.9 226.5  93.2 0.0 0.0 100.0  
 2027 3.0 226.3  98.5 13.9 226.3  93.2 0.0 0.0 100.0  
 2028 3.0 226.1  98.5 13.9 226.1  93.2 0.0 0.0 100.0  
 2029 3.0 225.9  98.5 13.9 225.9  93.2 0.0 0.0 100.0  
 2030 3.0 228.2  98.5 13.9 228.2  93.2 0.0 0.0 100.0  
Mexico  2020 3.1 177.6  97.9 14.3 177.6  90.3 0.0 0.0 100.0  
Note:  Tariff lines subject to in -quota rates are excluded in the computation; For the calculation of 
averages, specific rates are excluded, and the ad valorem  parts of alternate rates are included.  
 Based on the HS 2017 nomenclature.  
Source:  WTO estimates based  on data from the Canadian authorities and the WTO -IDB. WT/REG407/1  
 
- 87 - 
 
  4. Mexico's  overall average applied MFN tariff rate in 2020 was 5.8% (Table A1.2 ). The average 
applied tariff on agricultural goods (HS 1 -24) was considerably higher at 14.5 %, compared to an 
average appl ied tariff of 4.7% on industrial goods. Duty -free tariff lines accounted for 56.7% of the 
tariff, while the share of duty -free lines was 16.4% for agricultural products and 61.7% for industrial 
products . In 2020 when the Agreement came into force, Mexico's  overall average applied tariff for 
imports from the United States was zero, giving US exporters to Mexico a relative margin of 
preference of 100%. For imports from Canada the overall average applied rate was 0.2% (giving 
Canadian exporters to Mexico a rel ative margin of preference of 96.6%) . The overall average tariff 
for agricultural products was 1.9% for agricultural products and zero for industrial products, thereby 
giving Canadian exporters a relative margin of preference of 86.9% for agricultural products and 
100% for industrial products.  The share of duty -free tariff lines rose to 99.2% overa ll and 93.3% 
for agricultural products and 100% for industrial products.  
Table A1. 2 Mexico: Indicators of MFN tariff rates and preferential rates for imports from 
the United States and Canada  
Origin 
of 
goods  Year ALL PRODUCTS  HS Chapters 1 -24 HS Chapters 25 -97 
Average 
applied tariff  Share 
of duty -
free 
tariff 
lines 
(%) Average 
applied 
tariff  Share 
of duty -
free 
tariff 
lines 
(%) Average 
applied tariff  Share 
of duty -
free 
tariff 
lines 
(%) Overall 
(%) 
On 
dutiable 
(%) 
Overall 
(%) 
On 
dutiable 
(%) 
Overall 
(%) 
On 
dutiable 
(%) 
MFN 2020 5.8 13.4 56.7 14.5 17.4 16.4 4.7 12.3 61.7 
USA 2020 0.0 0.0 100.0  0.0 0.0 100.0  0.0 0.0 100.0  
Canada  2020 0.2 31.8 99.2 1.9 32.4 93.3 0.0 7.5 100.0  
Note:  For the calculation of averages, specific rates are excluded, and the ad valorem  parts of alternate 
rates are included.  
 Based on the HS 2012 nomenclature.  
Source:  WTO estimates based on data from the Mexican authorities and the WTO -IDB. 
5. The United States'  overall average applied MFN tariff rate in 2020 was 4.9% (Table A1. 3). The 
average applied tariff on agricultural goods (HS 1 -24) was double that of the tariff on industrial 
products  (8.4%, compared to an average applied tariff of 4.1% on industrial goods ). Duty -free tariff 
lines accounted for 37.8% of the tariff, while the share of duty -free lines was 28.6% for agricultural 
products and 40% for industrial products . In 2020 when the Agreem ent came into force, the United 
States'  overall average applied tariff for imports from Canada  was 0.5% , giving Canadian  exporters 
to the United States  a relative margin of preference of 89.8% over the MFN rate . The share of duty -
free tariff lines rose to 98.4% overall and to 91.7% and 99.9% respectively for agricultural and 
industrial products. At the end of implementation in 2030 the share of duty -free lines is expected to 
rise to 98.5% overall and to 92.1% and 100% respectively for agricultural and indus trial products. 
For imports from Mexico  the overall average applied rate  was zero compared to the MFN rate of 
4.9%  in 2020 when the Agreement came into force . 
Table A1. 3 United States: Indicators of MFN tariff rates and preferen tial rates for 
imports from Canada and Mexico   
Origin 
of 
goods  Year ALL PRODUCTS  HS Chapters 1 -24 HS Chapters 25 -97 
Average 
applied tariff  Share of 
duty-
free 
tariff 
lines 
(%) Average 
applied tariff  Share of 
duty-
free 
tariff 
lines 
(%) Average 
applied tariff  Share of 
duty-
free 
tariff 
lines 
(%) Overall 
(%) 
On 
dutiable 
(%) 
Overall 
(%) 
On 
dutiable 
(%) 
Overall 
(%) 
On 
dutiable 
(%) 
MFN 2020  4.9 7.9 37.8 8.4 11.8 28.6 4.1 6.8 40.0 
Canada  2020 0.5 34.3 98.4 2.7 34.3 91.7 0.0 0.0 99.9 
 2021 0.5 34.0 98.4 2.7 34.0 91.7 0.0 0.0 99.9 
 2022 0.5 33.7 98.4 2.7 33.7 91.7 0.0 0.0 99.9 WT/REG407/1  
 
- 88 - 
 
  Origin 
of 
goods  Year ALL PRODUCTS  HS Chapters 1 -24 HS Chapters 25 -97 
Average 
applied tariff  Share of 
duty-
free 
tariff 
lines 
(%) Average 
applied tariff  Share of 
duty-
free 
tariff 
lines 
(%) Average 
applied tariff  Share of 
duty-
free 
tariff 
lines 
(%) Overall 
(%) 
On 
dutiable 
(%) 
Overall 
(%) 
On 
dutiable 
(%) 
Overall 
(%) 
On 
dutiable 
(%) 
 2023 0.5 33.4 98.4 2.7 33.4 91.7 0.0 0.0 99.9 
 2024 0.5 33.1 98.4 2.6 33.1 91.7 0.0 0.0 99.9 
 2025 0.5 33.2 98.5 2.6 33.2 92.1 0.0 0.0 100.0  
 2026 0.5 33.2 98.5 2.6 33.2 92.1 0.0 0.0 100.0  
 2027 0.5 33.2 98.5 2.6 33.2 92.1 0.0 0.0 100.0  
 2028 0.5 33.2 98.5 2.6 33.2 92.1 0.0 0.0 100.0  
 2029 0.5 33.2 98.5 2.6 33.2 92.1 0.0 0.0 100.0  
 2030  0.5 33.2 98.5 2.6 33.2 92.1 0.0 0.0 100.0  
Mexico  2020  0.0 0.0 100.0  0.0 0.0 100.0  0.0 0.0 100.0  
Note:  Tariff lines subject to in -quota rates are excluded in the computation. For the calculation of averages; 
specific rates are excluded, and the ad valorem  parts of the alternate rates are included and AVEs  
(ad valorem  equivalent) are used to the tariff lines where USA has provided.  
 Based on the HS 2017 nomenclature.  
Source:  WTO estimates based on data provided by the USA and the WTO -IDB. 
6. Tables A1 .4-A1.5 show market access conditions for the top 25 global exports of the United 
States and Mexico in Canada as a result of the Agreement . The top 25 global exports of the United 
States accounted during 2017 -19 for 26.9% of its exports and were covered by 52 tariff lines at the 
HS 6-digit level. Of these lines 34 were alread y duty -free on an MFN basis in 2020. The remaining 
18 tariff lines were duty free for imports from the United States in 2020.  Mexico's top 25 global 
exports accounted during 2017 -19 for 44.4% of its exports and were covered by 76 tariff lines at 
the HS 6 -digit level. Of these lines 41 were already duty -free on an MFN basis in 2020. The remaining 
35 tariff lines were duty free for imports from Mexico in 2020.   
Table A1. 4 Canada: Market access opportunities under the agreement for USA's top 25 
exports to the world  
United States top export products  
in 2017 - 2019  Access Conditions to 
Canada's import markets  
HS number and description of the product  Share in 
global 
exports 
(%) MFN 2020  Duty -
free in 
2020  Average 
MFN rate 
(%) 
Duty -free 
Dutiable 
lines  
271019  Medium oils and preparations, of petroleum or 
bituminous minerals, not containing biodiesel, 
n.e.s.  3.2 1.0 4 1 1 
270900  Petroleum oils and oils obtained from bituminous 
minerals, crude  2.8 0.0 1   
271012  Light oils and preparations, of petroleum or 
bituminous minerals  2.1 1.7 2 1 1 
854231  Electronic integrated circuits as processors and 
controllers  1.3 0.0 1   
120190  Soya beans, whether or not broken  1.2 0.0 1   
710812  Gold, incl. gold plated with platinum, unwrought, 
for non -monetary purposes  1.2 0.0 1   
870323  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  1.2 6.1  1 1 
710239  Diamonds, worked, but not mounted or set  1.1 0.0 1   
300490  Medicaments  1.1 0.0 1   
851762  Machines for the reception, conversion and 
transmission or regeneration of voice, images or 
other data  1.1 0.0 1   WT/REG407/1  
 
- 89 - 
 
  United States top export products  
in 2017 - 2019  Access Conditions to 
Canada's import markets  
HS number and description of the product  Share in 
global 
exports 
(%) MFN 2020  Duty -
free in 
2020  Average 
MFN rate 
(%) 
Duty -free 
Dutiable 
lines  
870324  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  1.1 6.1  1 1 
847330  Parts and accessories of automatic data -processing 
machines or for other machines of heading 8471, 
n.e.s.  1.0 0.0 3   
901890  Instruments and appliances used in medical, 
surgical or veterinary sciences, n.e.s.  0.8 0.0 3   
271112  Propane, liquefied  0.8 6.3 1 1 1 
848620  Machines and apparatus for the manufacture of 
semiconductor devices or of electronic integrated 
circuits  0.7 0.0 1   
851712  Telephones for cellular networks "mobile 
telephones" or for other wireless networks  0.7 0.0 1   
854239  Electronic integrated circuits  0.7 0.0 1   
270112  Bituminous coal, whether or not pulverised, non -
agglomerated  0.6 0.0 1   
870899  Parts and accessories, for tractors, motor vehicles  0.6 3.3 4 5 5 
870431  Motor vehicles for the transport of goods  0.6 6.1  1 1 
300215  Immunological products, put up in measured doses 
or in forms or packings for retail sale  0.6 0.0 1   
100590  Maize  0.6 0.0 1   
970110  Paintings  0.6 2.8 1 1 1 
870829  Parts and accessories of bodies for tractors, motor 
vehicles  0.6 3.8 3 4 4 
711319  Articles of jewellery and parts thereof  0.6 5.8  2 2 
 Total of the above  26.9  34 18 18 
Note:  For the calculation of averages, specific rates are excluded, and the ad valorem  parts of alternate 
rates are included.  Based on the HS 2017 nomenclature.  
Source:  WTO estimates based on data provided by the authorities  and UNSD, Comtrade database.  
Table A1 .5 Canada: Market access opportunities under the agreement for Mexico's top 
25 exports to the world  
Mexico's top export products  
in 2017 - 2019  Access Conditions to 
Canada's import markets  
HS number and description of the product  Share in 
global 
exports 
(%) MFN 2020  Duty -
free in 
2020  Average 
MFN rate 
(%) 
Duty -free 
Dutiable 
lines  
270900  Petroleum oils and oils obtained from bituminous 
minerals, crude  5.2 0.0 1   
847150  Processing units for automatic data-processing 
machines  3.9 0.0 1   
870431  Motor vehicles for the transport of goods  3.6 6.1  1 1 
870340  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  3.2 6.1  2 2 
870360  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  3.2 6.1  2 2 
851762  Machines for the reception, conversion and 
transmission or regeneration of voice, images or 
other data  3.1 0.0 1   
852872  Reception apparatus for television  2.4 3.7 4 11 11 WT/REG407/1  
 
- 90 - 
 
  Mexico's top export products  
in 2017 - 2019  Access Conditions to 
Canada's import markets  
HS number and description of the product  Share in 
global 
exports 
(%) MFN 2020  Duty -
free in 
2020  Average 
MFN rate 
(%) 
Duty -free 
Dutiable 
lines  
870323  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  2.3 6.1  1 1 
870120  Road tractors for semi -trailers  1.8 6.1  1 1 
854430  Ignition wiring sets and other wiring sets for 
vehicles, aircraft or ships  1.8 0.0 1   
847149  Data-processing machines, automatic  1.5 0.0 1   
870829  Parts and accessories of bodies for tractors, motor 
vehicles  1.3 3.8 3 4 4 
940190  Parts of seats  1.3 0.0 1   
853710  Boards, cabinets and similar combinations of 
apparatus for electric control or the distribution of 
electricity  1.0 0.0 9   
220300  Beer made from malt  0.9 0.0 1   
870899  Parts and accessories, for tractors, motor vehicles  0.9 3.3 4 5 5 
870840  Gear boxes and parts thereof  0.9 3.0 2 2 2 
870850  Drive -axles with differential  0.9 3.0 3 3 3 
870422  Motor vehicles for the transport of goods  0.9 6.1  1 1 
840734  Spark -ignition reciprocating piston engine  0.8 0.0 3   
901890  Instruments and appliances used in medical, 
surgical or veterinary sciences  0.8 0.0 3   
841810  Combined refrigerator -freezers, with separate 
external doors  0.7 4.0 1 1 1 
870322  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  0.7 6.1  1 1 
840991  Parts suitable for use solely or principally with 
spark -ignition internal combustion piston engine  0.7 0.0 1   
901839  Needles, catheters, cannulae and the like  0.6 0.0 1   
 Total of the above  44.4  41 35 35 
Note:  For the calculation of averages, specific rates are excluded, and the ad valorem  parts of alternate 
rates are included.  Based on the HS 2017 nomenclature.  
Source:  WTO estimates based on data provided by the authorities  and UNSD, Comtrade database.  
7. Tables A1.6 -A1.7 show market access conditions for the top 25 global exports of the United 
States and Canada  in Mexico  as a result of the Agreement. Of the  225 lines covering the top 25 
exports of the United States, 154  were already duty -free on an MFN bas is in 2020. The remaining 
71 tariff lines were duty free for imports from the United States in 2020. Canada's  top 25 global 
exports were covered by 152 tariff lines at the HS 6 -digit level. Of these lines  115 were already 
duty-free on an MFN basis in 2020.  The remaining 37 tariff lines were duty free for imports from 
Canada  in 2020 . WT/REG407/1  
 
- 91 - 
 
  Table A1. 6 Mexico: Market access opportunities under the agreement for USA's top 25 
exports to the world  
United States  top export products  
in 2017 - 2019  Access Conditions to Mexico's 
import markets  
HS number and description of the product  Share in 
global 
exports 
(%) MFN 2020  Duty -
free in 
2020  Average 
MFN rate 
(%) 
Duty -free 
Dutiable 
lines  
271019  Medium oils and preparations, of petroleum or 
bituminous minerals, not containing biodiesel, 
n.e.s.  3.2 0.3 10 1 1 
270900  Petroleum oils and oils obtained from 
bituminous minerals, crude  2.8 0.0 4   
271012  Light oils and preparations, of petroleum or 
bituminous minerals  2.1 0.0 11   
854231  Electronic integrated circuits as processors 
and controllers  1.3 0.0 3   
120190  Soya beans, whether or not broken  1.2 7.5 1 1 1 
710812  Gold, incl. gold plated with platinum, 
unwrought, for non -monetary purposes  1.2 0.0 1   
870323  Motor cars and other motor vehicles 
principally designed for the transport of <10 
persons  1.2 35.0  2 2 
710239  Diamonds, worked, but not mounted or set  1.1 0.0 1   
300490  Medicaments  1.1 1.8 36 14 14 
851762  Machines for the reception, conversion and 
transmission or regeneration of voice, images 
or other data  1.1 0.0 17   
870324  Motor cars and other motor vehicles 
principally designed for the transport of <10 
persons  1.1 35.0  2 2 
847330  Parts and accessories of automatic data -
processing machines or for other machines of 
heading 8471, n.e.s.  1.0 0.0 3   
901890  Instruments and appliances used in medical, 
surgical or veterinary sciences, n.e.s.  0.8 5.6 11 21 21 
271112  Propane, liquefied  0.8 0.0 1   
848620  Machines and apparatus for the manufacture 
of semiconductor devices or of electronic 
integrated circuits  0.7 0.0 2   
851712  Telephones for cellular networks "mobile 
telephones" or for other wireless networks  0.7 0.0 2   
854239  Electronic integrated circuits  0.7 0.0 2   
270112  Bituminous coal, whether or not pulverised, 
non-agglomerated  0.6 0.0 1   
870899  Parts and accessories, for tractors, motor 
vehicles  0.6 1.3 11 4 4 
870431  Motor vehicles for the transport of goods  0.6 22.0  5 5 
300215*  Immunological products, put up in measured 
doses or in forms or packings for retail sale  0.6 3.9 8 15 15 
100590  Maize  0.6 4.0 4 1 1 
970110  Paintings  0.6 0.0 1   
870829  Parts and accessories of bodies for tractors, 
motor vehicles  0.6 0.8 21 4 4 
711319  Articles of jewellery and parts thereof  0.6 3.8 3 1 1 
 Total of the above  26.9  154 71 71 
* Equivalent HS 2012 Subheading in the Mexican tariff is 300210.  
 Based on the HS 2017  nomenclature . 
Source:  WTO estimates based on data from the authorities, WTO -IDB and the UNSD, Comtrade database.  WT/REG407/1  
 
- 92 - 
 
  Table A1. 7 Mexico: Market access opportunities under the agreement for Canada's top 
25 exports to the world  
Canada's top export products  
in 2017 - 2019  Access Conditions to Mexico's 
import markets  
HS number and description of the product  Share in 
global 
exports 
(%) MFN 2020  
Duty -free 
under the 
Agreement 
(2020)  Average 
MFN rate 
(%) 
Duty -free 
Dutiable 
lines 
270900  Petroleum oils and oils obtained from bituminous 
minerals, crude  14.4 0.0 4   
870324  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  4.4 35.0  2 2 
870323  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  3.5 35.0  2 2 
710812  Gold  3.1 0.0 1   
271121  Natural gas in gaseous state  1.7 0.0 1   
271019  Medium oils and preparations, of petroleum or 
bituminous minerals  1.6 0.3 10 1 1 
870322  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  1.3 35.0  2 2 
270112  Bituminous coal  1.2 0.0 1   
271012  Light oils and preparations, of petroleum or bituminous 
minerals  1.1 0.0 11   
440719
* Coniferous wood sawn or chipped lengthwise, sliced or 
peeled  1.0 2.0 3 2 2 
310420  Potassium chloride for use as fertiliser  1.0 0.0 1   
120510  Low erucic acid rape or colza seeds "yielding a fixed oil 
which has an erucic acid  1.0 0.0 1   
100199  Wheat and meslin  1.0 7.5 1 1 1 
880240  Aeroplanes and other powered aircraft of an of an 
unladen weight > 15.000 kg  1.0 0.0 1   
870829  Parts and accessories of bodies for tractors, motor 
vehicles  0.9 0.8 21 4 4 
470321  Semi-bleached or bleached coniferous chemical wood 
pulp, soda or sulphate  0.9 0.0 2   
300490  Medicaments  0.9 1.8 36 14 14 
760110  Aluminium  0.7 0.0 2   
260300  Copper ores and concentrates  0.6 0.0 1   
760120  Unwrought aluminium alloys  0.6 0.0 2   
260111  Non-agglomerated iron ores and concentrates  0.6 0.0 1   
870899  Parts and accessories, for tractors, motor vehicles  0.5 1.3 11 4 4 
840734  Spark -ignition reciprocating piston engine, of a kind 
used for vehicles of chapter 87, of a cylinder capacity 
> 1.000 cm³  0.5 0.0 3   
271600  Electrical energy  0.5 0.0 1   
870431  Motor vehicles for the transport of goods  0.5 22.0  5 5 
 Total of the above  44.5  115 37 37 
* Equivalent HS 2012 Subheading in the Mexican tariff is 440710.  
 Based on the HS 2017 nomenclature . 
Source:  WTO estimates based on data from the authorities, WTO -IDB and the UNSD, Comtrade database.  
8. Tables A1.8 -A1.9 show market access conditions for the top 25 global exports of Canada and 
Mexico in the United States as a result of the Agreement. The top 25 global exports of the United 
States were c overed by 69 tariff lines at the HS 6 -digit level. Of these lines  29 were already duty -
free on an MFN basis in 2020. The remaining 40 tariff lines were duty free for imports from Canada  
in 2020.  Mexico's top 25 global exports were covered by 111 tariff lin es at the HS 6 -digit level. Of 
these lines 56 were already duty -free on an MFN basis in 2020. The remaining 55 tariff lines were 
duty-free for imports from the Mexico in 2020 . WT/REG407/1  
 
- 93 - 
 
  Table A1. 8 United States: Market access opportunities under the agreement for Canada's 
top 25 exports to the world  
Canada's top export products  
in 2017 - 2019  Access Conditions to USA's 
import markets  
HS number and description of the product  Share in 
global 
exports 
(%) MFN 2020  
Duty -free 
under the 
Agreement 
(2020)  Average 
MFN rate 
(%) 
Duty -free 
Dutiable 
lines 
270900  Petroleum oils and oils obtained from bituminous 
minerals, crude  14.4 0.1  2 2 
870324  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  4.4 2.5  1 1 
870323  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  3.5 2.5  1 1 
710812  Gold  3.1 2.1 1 1 1 
271121  Natural gas in gaseous state  1.7 0.0 1   
271019  Medium oils and preparations, of petroleum or 
bituminous minerals  1.6 2.0  11 11 
870322  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  1.3 2.5  1 1 
270112  Bituminous coal  1.2 0.0 1   
271012  Light oils and preparations, of petroleum or 
bituminous minerals  1.1 1.7  5 5 
440719  Coniferous wood sawn or chipped lengthwise, sliced or 
peeled  1.0 0.0 3   
310420  Potassium chloride for use as fertiliser  1.0 0.0 1   
120510  Low erucic acid rape or colza seeds "yielding a fixed 
oil which has an erucic acid  1.0 0.4  1 1 
100199  Wheat and meslin  1.0 1.7  1 1 
880240  Aeroplanes and other powered aircraft of an of an 
unladen weight > 15.000 kg  1.0 0.0 1   
870829  Parts and accessories of bodies for tractors, motor 
vehicles  0.9 1.9 1 3 3 
470321  Semi-bleached or bleached coniferous chemical wood 
pulp, soda or sulphate  0.9 0.0 1   
300490  Medicaments  0.9 0.0 2   
760110  Aluminium  0.7 1.3 1 1 1 
260300  Copper ores and concentrates  0.6 0.8  1 1 
760120  Unwrought aluminium alloys  0.6 1.6 1 2 2 
260111  Non-agglomerated iron ores and concentrates  0.6 0.0 1   
870899  Parts and accessories, for tractors, motor vehicles  0.5 0.8 9 4 4 
840734  Spark -ignition reciprocating piston engine, of a kind 
used for vehicles of chapter 87, of a cylinder capacity 
> 1.000 cm³  0.5 1.3 4 4 4 
271600  Electrical energy  0.5 0.0 1   
870431  Motor vehicles for the transport of goods  0.5 25.0  1 1 
 Total of the above  44.5 1.9 29 40 40 
Note:  Tariff lines subject to in -quota rates are excluded in the computation. For the calculation of averages; 
specific rates are excluded, and the ad valorem  parts of the alternate rates are included and AVEs  
(ad valorem  equivalent) are used as provided by the United States . Based on the HS 2017 
nomenclature.  
Source:  WTO estimates based on data provided by the authorities and UNSD, Comtrade database.   WT/REG407/1  
 
- 94 - 
 
  Table A1 9 United States: Market access opportunities under the agreement for Mexico's 
top 25 exports to the world  
Mexico's top export products  
in 2017 - 2019  Access Conditions to USA's 
import markets  
HS number and description of the product  Share in 
global 
exports 
(%) MFN 2020  
Duty -free 
under the 
Agreement 
(2020)  Average 
MFN rate 
(%) 
Duty -free 
Dutiable 
lines 
270900  Petroleum oils and oils obtained from bituminous 
minerals, crude  5.2 0.1  2 2 
847150  Processing units for automatic data-processing 
machines  3.9 0.0 1   
870431  Motor vehicles for the transport of goods  3.6 25.0  1 1 
870340  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  3.2 2.5  1 1 
870360  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  3.2 2.5  1 1 
851762  Machines for the reception, conversion and 
transmission or regeneration of voice, images or other 
data  3.1 0.0 1   
852872  Reception apparatus for television  2.4 2.8 8 14 14 
870323  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  2.3 2.5  1 1 
870120  Road tractors for semi -trailers  1.8 4.0  1 1 
854430  Ignition wiring sets and other wiring sets for vehicles, 
aircraft or ships  1.8 5.0  1 1 
847149  Data-processing machines, automatic  1.5 0.0 1   
870829  Parts and accessories of bodies for tractors, motor 
vehicles  1.3 1.9 1 3 3 
940190  Parts of seats  1.3 0.0 6   
853710  Boards, cabinets and similar combinations of apparatus 
for electric control or the distribution of electricity  1.0 2.0 1 3 3 
220300  Beer made from malt  0.9 0.0 1   
870899  Parts and accessories, for tractors, motor vehicles  0.9 0.8 9 4 4 
870840  Gear boxes and parts thereof  0.9 1.1 4 3 3 
870850  Drive -axles with differential  0.9 1.5 6 9 9 
870422  Motor vehicles for the transport of goods  0.9 14.5  2 2 
840734  Spark -ignition reciprocating piston engine  0.8 1.3 4 4 4 
901890  Instruments and appliances used in medical, surgical 
or veterinary sciences  0.8 0.0 10   
841810  Combined refrigerator -freezers, with separate external 
doors  0.7 0.0 1   
870322  Motor cars and other motor vehicles principally 
designed for the transport of <10 persons  0.7 2.5  1 1 
840991  Parts suitable for use solely or principally with spark -
ignition internal combustion piston engine  0.7 2.0 1 4 4 
901839  Needles, catheters, cannulae and the like  0.6 0.0 1   
 Total of the above  44.4 2.9 56 55 55 
Note:  Tariff lines subject to in -quota rates are excluded in the computation. For the calculation of averages; 
specific rates are excluded, and the ad valorem  parts of the alternate rates are included and AVEs 
(ad valorem  equivalent) are used as provided by the United States . Based on the HS 2017 
nomenclature.  
Source:  WTO estimates based on data provided by the authorities  and UNSD, Comtrade database.   
  WT/REG407/1  
 
- 95 - ANNEX 2  
Table A2. 1 Canada: Tariff Rate Quotas for imports from the United States Table A2.1 Canada: Tariff Rate Quotas for imports from the Unit ed 
States   
In-Quota  Out-of-Quota  Aggregate Quantity  
Product/  
HS Code  In-quota rate  MFN 2020  HS Code  MFN 2020  
Milk  
0401.10.10  
0401.20.10  0 7.5%  0401.10.20  
0401.20.20  241% but not less than 
CAD34.50/hl  8,333 MT in year 1 to 56,905 by year 19 
and onwardsa 
Cream   
0401.40.10  
0401.50.10  0 7.5%  0401.40.20  
0401.50.20  292.5% but not less than 
CAD2.48/kg  1,750 MT in year 1 to 11,950 by year 19 
and onwardsa 
Skim milk powder   
0402.10.10  0 3.32¢/kg  0402.10.20  201.5% but not less than 
CAD2.01/kg  1,250 MT in year 1 to 8,536 MT by year 19 
and onwardsa 
Butter and cream powder   
0402.21.21  
0402.29.21  
0405.10.10  
0405.20.10  
0405.90.10  0 6.5%  
6.5%  
11.38¢/  
kg 
7.0%  
7.5%  0402.21.22  
0402.29.22  
0405.10.20  
0405.20.20  
0405.90.20  295.5% but not less than 
CAD4.29/kg  
298.5% but not less than 
CAD4.00/kg  
274.5% but not less than 
CAD2.88/kg  
313.5% but not less than 
CAD5.12/kg  750 MT in year 1 to 5,121 MT by year 19 
and onwardsa 
Industrial cheeses; cheese of all types   
0406.20.11  
0406.90.11  
0406.10.10  
0406.20.91  
0406.30.10  
0406.40.10  
0406.90.21  
0406.90.31  
0406.90.41  
0406.90.51  
0406.90.61  
0406.90.71  
0406.90.81  
0406.90.91  
0406.90.93  
0406.90.95  0 2.84¢/kg  
3.32¢/kg  0406.20.12  
0406.90.12  
0406.10.20  
0406.20.92  
0406.30.20  
0406.40.20  
0406.90.22  
0406.90.32  
0406.90.42  
0406.90.52  
0406.90.62  
0406.90.72  
0406.90.82  
0406.90.92  
0406.90.94  
0406.90.99  245.5% but not less than 
CAD3.58/kg  
245.5% but not less than 
CAD3.53/kg  
245.5% but not less than 
CAD4.52/kg  
245.5% but not less than 
CAD5.11/kg  
245.5% but not less than 
CAD4.34/kg  
245.5% but not less than 
CAD5.33/kg  
245.5% but not les s than 
CAD5.78/kg  
245.5% but not less than 
CAD5.50/kg  1,042 MT in year 1 to 7,113 MT by year 19 
and onwards   
  WT/REG407/1  
 
- 96 - In-Quota  Out-of-Quota  Aggregate Quantity  
Product/  
HS Code  In-quota rate  MFN 2020  HS Code  MFN 2020  
0406.90.98  245.5% but not less than 
CAD4.23/kg  
245.5% but not less than 
CAD5.08/kg  
245.5% but not less than 
CAD3.53/kg  
245.5% but not less than 
CAD4.34/kg  
245.5% but not less than 
CAD5.26/kg  
245.5% but not less th an 
CAD4.34/kg  
245.5% but not less than 
CAD5.08/kg  
245.5% but not less than 
CAD3.53/kg  
Milk powders   
0402.21.11  
0402.29.11  0 3.32¢/kg  0402.21.12  
0402.29.12  243% but not less than 
CAD2.82/kg  115 MT in year 1 to 785 MT by year 19 and 
onwardsa 
Concentrated or condensed milk   
0402.91.10  
0402.99.10  0 2.84¢/kg  0402.91.20  
0402.99.20  259% but not less than 
78.9¢/kg  
255% but not less than 
95.1¢/kg  230 MT in year 1 to 1,571 MT by year 19 
and onwards  
Yoghurt and buttermilk   
0403.10.10  
0403.90.91  0 6.5%  
7.5%  0403.10.200403.90.92  237.5% but not less than 
46.6¢/kg  
216.5% but not less than 
CAD2.15/kg  689 MT in year 1 to 4,706 MT by year 19 
and onwards  
Powdered buttermilk   
0403.90.11  0 3.32¢/kg  0403.90.12  208% but not less than 
CAD2.07/kg  87 MT in year 1 to 592 MT by year 19 and 
onwards  
Whey powder   
0404.10.21  0 3.32¢/kg  0404.10.22*  208% but not less than 
CAD2.07/kg  
Preferential tariffs (out -quota):  
2021: 189% but not 
<CAD1.88/kg  
to 0% in 2030 689 MT in year 1 to 4,303 MT by year 10 
and eliminated thereaftera 
Products consisting of natural milk constituents   
0404.90.10  0 3.0%  0404.90.20  270% but not less than 
CAD3.15/kg  460 MT in year 1 to 3,141 MT by year 19 
and onwards   
  WT/REG407/1  
 
- 97 - In-Quota  Out-of-Quota  Aggregate Quantity  
Product/  
HS Code  In-quota rate  MFN 2020  HS Code  MFN 2020  
Ice cream and ice cream mixes   
1806.20.21  
1806.90.11  
1901.90.31  
1901.90.51  
2105.00.91  
2202.99.32  0 5.0%  
6.5%  
 
7.5%  1806.20.22  
1806.90.12  
1901.90.32  
1901.90.52  
2105.00.92  
2202.99.33  265% but not less than 
CAD1.15/kg  
267.5% but not less than 
$1.16/kg  
277% but not less than 
CAD1.16/kg  
256% but not less than 
CAD36.67/hl  115 MT in year 1 to 785 MT by year 19 and 
onwards  
Other dairy   
1517.90.21  
 
 
 
1901.20.11  
1901.20.21  
1901.90.33  
1901.90.53  
2106.90.31  
2106.90.33  
2106.90.93  
2309.90.31  0 7.5%  
 
 
 
4.0%  
3.0%  
6.5%  
5.0%  
7.0%  
2.0%  1517.90.22 * 
 
 
 
1901.20.12  
1901.20.22  
1901.90.34  
1901.90.54  
2106.90.32  
2106.90.34  
2106.90.94  
2309.90.32  218% but not less than 
CAD2.47/kg  
Preferential tariffs (out -quota):  
2020:  181.5% but not 
<CAD2.05/kg  
to 0% from year 2025  
246% but not less than 
CAD2.85/kg  
244% but not less than 
CAD2.83/kg  
250.5% but not less than 
CAD2.91/kg  
212% but not less than 
CAD2.11/kg  
274.5% but not less than 
CAD2.88/kg  
205.5% but not less than 
CAD1.64/kg  115 MT in year 1 to 785 MT by year 19 and 
onwards  
Chicken   
0105.94.91  
0207.11.91  
0207.12.91  
0207.13.91  
 0 
 
 1.9¢/kg  
5% but not 
<4.74¢/  
kg or >9.48¢/  
kg 0105.94.92  
0207.11.92  
0207.12.92  
0207.13.92  
0207.13.93  238% but not less than 
CAD1.25/kg  
238% but not less than 
CAD1.67/kg  
249% but not less than 
CAD3.78/kg  
249% but not less than 
CAD6.74/kg  
238% but not less than 
CAD6.45/kg  47,000 MT (eviscerated product basis) in 
year 1 to 62,963 MT (eviscerated product 
basis) by year 16 and onwards   
  WT/REG407/1  
 
- 98 - In-Quota  Out-of-Quota  Aggregate Quantity  
Product/  
HS Code  In-quota rate  MFN 2020  HS Code  MFN 2020  
0207.14.21  
0207.14.91  
0209.90.10  
0210.99.11  
 
 
1601.00.21  
1602.20.21  
1602.32.12  
1602.32.93  
 0 0 
5% but not less 
than 4.74 ¢/kg or 
more than 9.48 
¢/kg 
12.5%  
0 
7.5%  
5% but not less 
than 4.74 ¢/kg or 
more than 9.48 
¢/kg 0207.14.22  
0207.14.92  
0207.14.93  
0209.90.20  
 
0210.99.12  
0210.99.13  
1601.00.19  
1602.20.22  
1602.32.13  
1602.32.94  
 238% but not less than 
CAD6.45/kg  
249% but not less than 
CAD3.78/kg  
249% but not less than 
CAD6.74/kg  
249% but not less than 
CAD5.81/kg  
249% but not less than 
CAD10.36/kg  
0 
238%  
253% but not less than 
CAD5.91/kg  
249% but not less than 
CAD5.81/kg   
Eggs and egg products   
0407.11.91  
0407.21.10  
0407.90.11  
0408.11.10  
0408.19.10  
0408.91.10  
0408.99.10  
2106.90.51  
3502.11.10  
3502.19.10  0 1.51¢/  
dozen  
8.5%  
6.63¢/kg  
8.5%  
6.63¢/kg  
6.68¢/kg  
8.5%  
6.63 ¢/kg  0407.11.92  
0407.21.20  
0407.90.12  
0408.11.20  
0408.19.20  
0408.91.20  
0408.99.20  
2106.90.52  
3502.11.20  
3502.19.20  163.5% but not less than 79.9 
¢/dozen  
CAD6.12/kg  
CAD1.52/kg  
CAD6.12/kg  
CAD1.52/kg  
CAD1.45/kg  
CAD6.12/kg  
CAD1.52/kg  1,666,667 dozen eggs in year 1 to 
11,046,221 dozen eggs by year 16 and 
onwards  
a From 1 August to 31 July (dairy year basis).  
*  The out -of-quota preferential tariffs for tariff lines 0404.10.22 and 1517.90.22 are not the MFN duties.  
Source:  Section B of Appendix 2 of the Agreement, WTO -IDB and the authorities.  WT/REG407/1  
 
- 99 - 
 
  Table A2. 2 United States: Tariff Rate Quotas for imports from Canada  
Products/Tariff lines  Tariff rate  MFN 2021  
Aggregate 
quantity per year  In-
Quota  Out-
of-
Quota  
TRQ – US 1: Fluid Cream, Sour Cream, Ice Cream, and Milk Beverages   
0401.40.25, 0401.50.25, 0403.90.16  0 MFN 77.2 cents/litre  From 1,750 litres in 
year 1 to 10,500 
litres by year 6. 
From year 7 the 
quota will increase at 
a compound rate of 
1%/year for 13 
years  2105.00.20  0 MFN 50.2 cents/kg + 17%  
2202.99.28  0 MFN 23.5 cents/litre + 
14.9%  
TRQ – US 2: Skim Milk Powder   
0402.10.50, 0402.21.25  0 MFN 86.5 cents/kg  From 1, 250 litres in 
year 1 to 7,500 litres 
by year 6. From year 
7 the quota will 
increase at a 
compound rate of 
1%/year for 13 
years  
TRQ – US 3: Butter, Cream, and Cream Powder   
0405.10.20  0 MFN USD1.541/kg  From 750 metric 
tonnes (MT) in year 
1 to 4,500 MT by 
year 6. From year 7 
the quota will 
increase at a 
compound rate of 
1%/year for 13 
years  0405.20.70  0 MFN 70.4 cents/kg + 8.5%  
0402.21.90, 0403.90.65  0 MFN USD1.556/kg  
0401.50.75, 0403.90.78  0 MFN USD1.646/kg  
0405.90.20  0 MFN USD1.865/kg + 8.5%  
0405.20.30, 2106.90.26, 2106.90.36  0 MFN USD1.996/kg  
TRQ – US 4: Cheese   
0406.10.38, 0406.20.39, 0406.20.71, 
0406.30.38, 0406.30.71, 0406.90.54, 
0406.90.84  0 MFN USD1.055/kg  From 2,083 MT in 
year 1 to 12,500 MT 
by year 6. From year 
7 the quota will 
increase at a 
compound rate of 
1%/year for 13 
years  0406.10.78, 0406.20.87, 040 6.30.87, 
0406.90.94, 1901.90.36  0 MFN USD1.128/kg  
0406.10.28, 0406.20.33, 0406.20.67, 
0406.30.28, 0406.30.67, 0406.90.12, 
0406.90.78  0 MFN USD1.227/kg  
0406.10.68, 0406.20.83, 0406.30.53, 
0406.30.83, 0406.90.92  0 MFN USD1.386/kg  
0406.10.08, 0406.10.88, 0406.20.91, 
0406.30.91, 0406.90.97  0 MFN USD1.509/kg  
0406.10.48, 0406.20.48, 0406.20.75, 
0406.30.48, 0406.30.75, 0406.90.18, 
0406.90.88  0 MFN USD1.803/kg  
0406.90.48  0 MFN USD1.877/kg  
0406.10.58, 0406.20.53, 0406.20.79, 
0406.30.79, 0406.90.32, 0406.90.37, 
0406.90.42, 0406.90.68  0 MFN USD2.146/kg  
0406.10.18, 0406.20.28, 0406.20.63, 
0406.30.18, 0406.30.63, 0406.40.70, 
0406.90.74  0 MFN USD2.269/kg  
TRQ – US 5: Whole Milk Powder   
0402.21.50  0 MFN USD1.092/kg  From 115 MT in year 
1 to 690 MT by year 
6. From year 7 the 
quota will increase at 
a compound rate of 
1%/year for 13 
years  0402.29.50  0 MFN USD1.104/kg + 14.9%  
2309.90.28, 2309.90.48  0 MFN 80.4 cents/kg + 6.4%  WT/REG407/1  
 
- 100 - 
 
  Products/Tariff lines  Tariff rate  MFN 2021  
Aggregate 
quantity per year  In-
Quota  Out-
of-
Quota  
TRQ – US 6: Dried Yogurt, Sour Cream, Whey, and Products of Milk 
Constituents   
0403.90.95  0 MFN USD1.034/kg + 17%  From 1,838 MT in 
year 1 to 11,030 MT 
by year 6. From year 
7 the quota will 
increase at a 
compound rate of 
1%/year for 13 
years  0403.10.50  0 MFN USD1.035/kg + 17%  
0404.10.15  0 0% by 
2030 USD1.035/kg + 8.5%  
0403.90.55  0 MFN USD1.092/kg  
0404.90.50  0 MFN USD1.189/kg + 8.5%  
0403.90.45  0 MFN 87.6 cents/kg  
0404.10.90  0 0% by 
2030 87.6 cents/kg  
TRQ – US 7: Concentrated Milk   
0402.91.70, 0402.91.90  0 MFN 31.3 cents/kg  From 230 MT in year 
1 to 1,380 MT by 
year 6. From year 7 
the quota will 
increase at a 
compound rate of 
1%/year for 13 
years  0402.99.90  0 MFN 46.3 cents/kg + 
14.9%  
0402.99.45, 0402.99.55  0 MFN 49.6 cents/kg  
TRQ – US 8: Other Dairy   
1901.10.66, 1901.90.65, 1901.10.56, 
1901.90.62  0 MFN USD1.035/kg + 13.6%  From 317 MT in year 
1 to 1,900 MT by 
year 6. From year 7 
the quota will 
increase at a 
compound rate of 
1%/year for 13 
years  1901.10.16, 1901.10.26, 1901.10.36, 
1901.10.44  0 MFN USD1.035/kg + 14.9%  
2106.90.87  0 MFN 28.8 cents/kg + 8.5%  
1517.90.60  0 0% by 
2026 34.2 cents/kg  
1806.20.26, 1806.20.36, 1806.32.06, 
1806.32.16  0 MFN 37.2 cents/kg + 4.3%  
1806.32.70, 1806.90.08, 1806.90.18, 
1806.90.28  0 MFN 37.2 cents/kg + 6%  
1806.20.82, 1806.20.87  0 MFN 37.2 cents/kg + 8.5%  
1704.90.58  0 MFN 40 cents/kg + 10.4%  
1901.20.15, 1901.20.50  0 MFN 42.3 cents/kg + 8.5%  
2105.00.40  0 MFN 50.2 cents/kg + 17%  
1806.20.28, 1806.20.38, 1806.32.08, 
1806.32.18  0 MFN 52.8 cents/kg + 4.3%  
1806.32.80, 1806.90.10, 1806.90.20, 
1806.90.30  0 MFN 52.8 cents/kg + 6%  
1806.20.83, 1806.20.89  0 MFN 52.8 cents/kg + 8.5%  
2106.90.66  0 MFN 70.4 cents/kg + 8.5%  
2106.90.09  0 MFN 86.2 cents/kg  
TRQ – US 9: Sugar   
1701.13.50, 1701.14.50  0 MFN 33.87 cents/kg  9,600 MT per year 
but must be wholly 
obtained from sugar 
beet produced in 
Canada.  1701.12.50, 1701.91.30, 1701.99.50, 
1702.90.20  0 MFN 35.74 cents/kg  
TRQ – US 10: Sugar Containing Products   
1702.20.28, 1702.30.28  0 MFN 16.9 cents/kg of total 
sugars + 5.1%  9,600 MT per year  
1806.10.15  0 MFN 21.7 cents/kg  
1901.10.76, 1901.90.68, 1901.90.71  0 MFN 23.7 cents/kg + 8.5%  WT/REG407/1  
 
- 101 - 
 
  Products/Tariff lines  Tariff rate  MFN 2021  
Aggregate 
quantity per year  In-
Quota  Out-
of-
Quota  
2106.90.91, 2106.90.94, 2106.90.97  0 MFN 28.8 cents/kg + 8.5%  
2103.90.78  0 MFN 30.5 cents/kg + 6.4%  
1806.20.73, 1806.20.77, 2101.12.38, 
2101.12.48, 2101.12.58, 2101.20.38, 
2101.20.48, 2101.20.58  0 MFN 30.5 cents/kg + 8.5%  
1806.10.28, 1806.10.38, 1806.10.55, 
1806.10.75  0 MFN 33.6 cents/kg  
1701.91.48, 1701.91.58, 1702.40.28, 
1702.60.28, 1702. 90.58, 1702.90.68  0 MFN 33.9 cents/kg + 5.1%  
2106.90.46  0 MFN 35.74 cents/kg  
1806.90.39, 1806.90.49, 1806.90.59  0 MFN 37.2 cents/kg + 6%  
1806.20.94, 1806.20.98  0 MFN 37.2 cents/kg + 8.5%  
1704.90.68, 1704.90.78  0 MFN 40 cents/kg + 10.4%  
1901.20.25, 1901.20.35, 1901.20.60, 
1901.20.70  0 MFN 42.3 cents/kg + 8.5%  
2106.90.72, 2106.90.76, 2106.90.80  0 MFN 70.4 cents/kg + 8.5%  
Source:  Chapter 2, Appendix 2: Tariff Schedule of the United States.  
__________  