RESTRICTED
WORLD TRADE WT/REG4/1/Add.1/Corr.1
23August 1996
ORGANIZATION(96-3338)
Original: English Committee onRegional Trade Agreements
NORTH AMERICAN FREE TRADE AGREEMENT
Questions andReplies -Goods
Corrigendum
Thefollowing communication wassubmitted bytheNAFTA Parties on30July1996.
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12. Thereply states that"Itispremature toassess theimpact onproduction inside theNAFTA
area...". However, Japan doesnotconsider itpremature toassess, asthree years have
already elapsed since theAgreement wassubstantially reached inAugust 1992. Bearing
thisinmind, please provide detailed explanations oftheeffects, based ondataachieved
andnotjustonsimple speculation.
Withregard totheimpact oftheNAFTA onoverseas investment, particularly toAsia, bythe
Parties, theCanadian experience reflects some ofthetrends. BothFDItoCanada andCanadian foreign
direct investment haveincreased substantially toJapan andthePacific Rimbetween 1990 and1994.
Thestock ofCanadian direct investment rosefrom$7.2billion to$12.8 billion between 1990and1994
intheregion. Inthisperiod, Canadian investment inJapan increased from$919million to$3billion.
Atthesame time, investment toCanada from thePacific Rimincreased from $8.2 billion to
$10.3 billion, anddirect investment fromJapan toCanada increased from$5.2billion to$5.85 billion
inthisperiod. While theNAFTA isprobably onedeterminant ofthisincreased investment, itcertainly
doesnotappear thatitwasdetrimental. While itisinteresting tonotetherelatively small change in
percentage terms inJapanese investment, thisislikely tobeduetointernal problems intheJapanese
economy incontrast toexistence oftheNAFTA.
With regard toMexico, itshould benoted thatMexico isnotacapital exporting country.WT/REG4/1/Add.1/Corr.1
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19. Itcanbereadintheanswer tothisquestion thattheonlysignificant exception listed in
Annex 301.01istheexclusion oftrade inmarine vessels. Why isthisthecaseandthe
other exceptions arenotsignificant? Could youplease describe thenature oftherestrictions
currently being applied inrespect ofthose specific cases, including trade inmarine vessels.
Withrespect toMexico, theonlyexceptions tonational treatment listed inAnnex 301.3 regard
export oflogs,certain services andoperations relating tomaritime transport ofgoods, andexport permit
measuresappliedtogoodssubjecttoquantitativerestrictionsortariffratequotasintheNAFTAimporting
party.
Under Annex 301.3, Canada maintains thefollowing restrictions:
1. Export ofLogs: Under theNAFTA, provincial government haveretained theright
tocontrol theexport oflogsbutnoprovince hassuchasprohibition andthere is
considerable trade inlogs.
2. Unprocessed fish: Regulation ofoff-shore processing offishisaprovincial
responsibility andEastCoast provinces retain therighttomaintain existing provincial
controls ontheexport ofunprocessed fish.
3. Prohibited goods: Schedule VIIoftheCustoms Tariff listsgoods thatareprohibited
from entering Canada. Included intheschedule are: mongooses andlivebirds of
thestarling family andplume ofwildbirds, counterfeit coins, used mattresses,
pornography, printed matter depicting violence, special edition periodicals, reprints
ofCanadian copyrighted works, goods manufactured from prison labour, restricted
weapons, andwhite phosphorous matches. Alsoincluded under Schedule VIIofthe
Customs Tariffs aresmoke screen apparatus, usedvehicles andusedaircraft; however,
those measures arebeing removed.
4. Liquor: Theexportation ofliquor toanycountry intowhich theimportation ofliquor
isprohibited.
5. Foreign Vessels: TheCoasting Trade Actprovides forthetemporary importation of
foreign andnon-duty-paid Canadian registered vessels when ithasbeendetermined
thatnosuitable Canadian shipisavailable toprovide service inrespect tothetransport
ofgoods andpassengers ortoundertake acommercial marine activity.
6. Quantitative Restrictions onMarine Vessels: TheUnited States maintains restrictions
under theMerchant Marine Act; inresponse, Canada hasreserved therighttoapply
quantitative restrictions onU.S. vessels until such timeastheU.S. removes the
prohibitions onCanadian vessels.
1Would itnotbeAnnex 301.3? Ourefforts toidentify Annex 301.1 have been fruitless andthere is
noreference toit,asonewould expect, inArticle 301. Thesame applies toAnnex 301.2.
Annexes 301.1 and301.2 donotexist. Thecorrect reference istoAnnex 301.3.WT/REG4/1/Add.1/Corr.1
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Pursuant toAnnex 301.3, theUnited States maintains measures under certain provisions of
theMerchant Marine Actof1920, thePassenger Vehicle Actandsection 12108 ofTitle 46ofthe
United States Code thatwereinexistence atthetimethattheNAFTA entered intoforce, aswellas
controls ontheexport oflogs. Alsopursuant toAnnex 301.3, theUnited States maymaintain taxes
onimported perfume containing distilled spirits, butthese measures wererepealed bysection 136of
theUruguay Round Agreements Actof1994.