WORLD TRADE
ORGANIZATIONWT/TPR/M/78
5 February 2001
(01-0543)
Trade Policy Review Body
13 and 15 December 2000
TRADE POLICY REVIEW
CANADA
Minutes of Meeting
Chairperson:  H.E. Dr. Iftekhar Ahmed Chowdhury (Bangladesh)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF CANADA 4
III. STATEMENT BY THE DISCUSSANT 6IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 8
V. REPLIES FROM THE REPRESENTATIVE OF CANADA AND
ADDITIONAL COMMENTS 16
VI. CONCLUDING REMARKS BY THE CHAIRPERSON 21
ANNEX RESPONSES PROVIDED BY CANADA TO ADVANCE
WRITTEN QUESTIONS AND TO OTHER QUESTIONS
RAISED DURING THE MEETING 23WT/TPR/M/78
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The sixth Trade Policy Review of Canada was held on 13 and 15 December 2000.  The
Chairperson, H.E. Dr. Iftekhar Ahmed Chowdhur y (Bangladesh), welcomed Mr. Brian Morrisey,
Director General for the Economic Policy Bureau and Acting Assistant Deputy Minister for the Trade,
Economic and Environmental Policy Branch, as head of the Canadian delegation, and the delegation
from Ottawa and from the Canadian Mission in Geneva.  He also introduced the discussant,
H.E. Mr. István Major (Hungary) and reminded Me mbers that the discussant would speak in his
personal capacity and not as a representative of his government.  In accordance with the established
procedure, the discussant had made available in advance an outline of the main issues he intended to
raise.  This was contained in document WT/TPR/D/57.
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures of the meeting.  The Report by the Government of Canada was contained in documentWT/TPR/G/78, and that of the WTO Secretariat in document WT/TPR/S/78.  Copies of advance
written questions submitted by Hong Kong, China;  Australia;  Chile;  the European Union;  Korea;
Guatemala;  Uruguay;  Malaysia;  New Zealand;  Japan;  India;  Norway;  the United States;  Peru;
and Brazil had been transmitted to the delegation of Canada.  Replies to these questions are
reproduced in the Annex.WT/TPR/M/78
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF CANADA
3. The representative of Canada stated that the Canadian economy had expanded rapidly in the
1990s and that growth prospects were good as the economic fundamentals and policy environment
remained sound.  Trade had made a significant and ri sing contribution to economic growth.  Over the
last decade, exports had typically risen at more than twice the rate of real GDP growth.  Indeed the
growth in exports of goods and services represented almost the entire overall growth in real GDP over
the last few years.
4. Reflecting the gain in output, employment had risen steadily since 1993, apart from a brief
interruption in mid 1995.  The improved job situation had led to a rebound in the labour market
participation rate, despite developments, such as the ageing of the baby boomers and longer schooling
for youths, which tended to hold down participation in  labour markets.  As a result, the unemployment
rate had fallen rapidly from its November 1992 high of 12.1%, to less than 7% in recent months, eventhough more and more people were joining the labour force.  Nevertheless, there was little concern on
the inflation front;  core inflation continued to be stable in 2000, although higher energy prices
boosted year-over-year growth in the Consumer Price Index to around 3%.
5. Government finances were in good order.  Canada's total government net debt as a percentage
of GDP had declined substantially, more rapidly than the G-7 average since 1995, with furtherdeclines anticipated.  Since the January 1999 introduction of the euro, the Canadian dollar had
strengthened against the C-6 country trade-weighted exchange rate.
1   Over this period, the Canadian
dollar had appreciated by 15% against the currencies of the C-6 countries other than the United States.
Since 1989, all major currencies in the world, with the exception of the yen, had lost value vis-à-vis
the U.S. dollar.
6. Average tariff rates for Canada's imports had come down substantially over the last decade.
At the same time, imports entering Canada duty free had risen more significantly than overall imports.The rapid growth in Canada's foreign trade had led to an improvement in the trade balance.  In the
first nine months of 2000, the current account balance swung into a surplus of Can$11.6 billion, more
than twice the annual surplus of Can$4.6 billion recorded in 1996.  Canada's current account balance
had historically posted a deficit, primarily due to the deficit in the investment account associated with
payments of interest and dividend abroad.
7. Canada had become a much more open economy after the implementation of the Canada-U.S.
Free Trade Agreement, the NAFTA, and the Uruguay Round.  As a result, exports and imports
of goods and services had risen from 25.6% of GDP in 1989 to 45.1% and 40.9% respectively over
the first nine months of 2000.  Canada's dependence on constant-dollar exports of resource
products had declined markedly, reflecting in part increased utilization of raw materialsfor domestic manufacturing.  In the 1990s, exports became dominated by manufacturing and other
non-resource-based products.
8. Canada's merchandise trade had been led by trade in hi-tech products and the rise in the share
of hi-tech products as a percentage of constant-dollar trade was more rapid in exports than in imports
(hi-tech products include aircraft, computers and other office and business machines, electronics,telecommunication and other machinery and equipment).  However, Canada's hi-tech trade was still
dominated by imports, reflecting rising application of new technology to production in various sectors
of the Canadian economy.
                                                     
1 The C6 currencies are the U.S. dollar, the euro, the Japanese yen, the pound Sterling, the Swiss franc
and the Swedish krone.WT/TPR/M/78
Page 5
9. As the United States' economy has grown, Canada has maintained its export penetration into
the U.S. market.  Indeed, Canada's share of the U.S. market was 19% in 1999 compared to 19.5% in1996.
10. Over the last decade, Canada's merchandise exports to regions outside the United States had
declined markedly as a percentage of total trade, particularly in the case of Asia and Europe.
However, Canada's imports of merchandise from Asia, Europe, and Latin America had gained
importance in relation to Canada's overall imports in recent years, reflecting in part the strength ofCanadian demand for investment and consumer goods.
11. Over the last decade, Canada's exports to the LDCs had declined markedly as a percentage of
total trade and while Canada's imports from LDCs had also trended down over much of the 1990s,
they had rebounded noticeably in the course of the 12 months to September 2000.WT/TPR/M/78
Page 6
III. STATEMENT BY THE DISCUSSANT
Recent macroeconomic developments, trade and investment flows
12. The discussant (H.E. Mr. István Major) described as admirable the macroeconomic
developments in Canada in the review period.  Referring to the Secretariat Report (SR para. 6) he
requested further information on whether the budgetary surplus was also to be used to further decrease
the debt-GDP ratio, which was still high in international comparison, and the policy rationale behind
such a decision.  He also asked about the expected fiscal effects of the tax reduction package,especially in light of expectations of a slow-down in the United States.
13. In light of trade and investment trends, which both showed an enhanced integration with the
United States and reflected the accompanying increased dependence on the performance of the U.S.
economy, he asked what strategies and initiatives were being followed, in addition to the free-trade
agreements (FTAs), to mitigate this exposure, especially in case of a hard landing of the U.S.economy.
Developments in trade and investment policies
14. He noted the federal government's plans to further improve the AIT (SR paras. 22, 139 and
140) with the aim of addressing differences that may translate into barriers to international trade.
Perhaps more importantly, these differences hindered the free movement of persons, goods, servicesand capital and impacted negatively on the efficiencies inherent in a single, large domestic market.
He wanted to know how these plans would impact on the provinces' adherence to WTO rules and
disciplines.
15. He then asked about the consistency between Canada's concerns over mandatory labelling
requirements imposed on foods derived from biotechnology (SR, para. 29), and its support for the
"precautionary approach that allows nations to take action even in the absence of full scientific
certainty".
16. He noted that neither the FTA with Chile nor the forthcoming EFTA-Canada agreement
covered the supply-managed dairy, poultry and egg sectors.  He asked the Canadian delegation to
indicate the intention and time-frame for the elimination of duties on the remaining goods under the
agreement with Chile.  He also asked if the agreement negotiated with EFTA would be an agreement
under Article XXIV of the GATT and Article V of th e GATS.  He asked whether there were plans to
further improve market access for LDCs, especially in light of the extremely low share of these
countries in Canada's imports.
17. Regarding the Investment Canada Act of 1985 he asked what criteria were used in
determining whether a notified acquisition ensured "net benefits to Canada".  He also asked about the
factors on which decisions to review a notified acquisition were based.
Tariffs and other policies effecting market access
18. The discussant asked whether Canada intended to reduce high tariffs and tariff peaks,
especially in the sensitive sectors;  and if so, what timeframe could be envisaged.  He asked whether
there was any plan to simplify the rather complex tariff relief measures in the near future.
19. He pointed out the lengthy duration of anti-dumping actions, with 16% of measures in place
for ten years or more (SR, para. 82).  He wondered whether there had been any changes in the share of
such measures since the entry into force of the WTO, and if so, in what direction.  He was interestedWT/TPR/M/78
Page 7
to know the approximate share of anti-dumping reviews that were started on the initiative of the
Tribunal or the CCRA, and the reason for giving the right to initiate ex officio reviews to two, ratherthan one institution.
20. There had been a progressive reform of agricultural support policies in certain subsectors in
recent years, resulting in a significant shift away  from price support.  At the same time some other
agricultural activities continued to rely mostly on this rather distortive form of domestic support.  He
asked the Canadian delegation to give an insight into  the rationale for this apparent inconsistency and
explain the reasons for maintaining supply management schemes for some selected sectors but not for
others.
21. Five out of 21 tariff quotas included reserved access in favour of four trading partners;  in
addition, some of these countries enjoyed preferences in in-quota tariff treatment.  He asked about the
criteria that had to be met in order for country reserves and preferential in-quota tariffs to becompatible with the relevant rules of the WTO.
22. Meat imports were allowed from only a few countries;  this could be interpreted in several
ways.  It could mean that the Canadian market attracted relatively little attention from exporters, but it
could also mean that only these few out of 140 WTO Members had been able so far to demonstrate
that their sanitary measures achieved the appropriate level of protection.  He asked Canada toelaborate on this, including on the practice followed by  the relevant Canadian authority in recognising
equivalence on a formal or ad hoc basis;  and he asked if there were any requests for such status being
considered at present with regard to meat.
Trade policy in selected services sectors
23. Limitations had been introduced on the deposit taking activities of foreign bank branches
(SR, Annex V.1);  these were reportedly in place so as not to place funds of "unsophisticated"
Canadians at risk.  He asked whether, in place of these limitations, a special or strengthened depositinsurance scheme had been considered to address the risks referred to, and why Canada opted for
the restrictions instead.  He also asked for an update on the subject of the "widely held rule"
(SR, paras. 162-164).
24. He enquired about the purpose of limitations on foreign equity in all facilities-
based telecommunication service suppliers, as well as control and nationality requirements(SR, paras. 179-180).  He also asked if Canada was ready to reconsider these limitations in the context
of the GATS 2000 negotiations.
25. He requested further comments on the issue of air transport (SR, paras. 170-178), particularly
in light of the stated objectives of the legislation passed in July 2000 to protect public interest against
excessive pricing in the dominant carrier environment.  He asked whether these objectives would havebeen efficiently served by permitting cabotage.
26. In the field of cultural services (SR, paras. 181-187), he asked how Canada's cultural policy
could cope with the new challenges posed by the Internet.
27. He took note that the Canadian Government was seeking to reconcile the differences in
occupational standards for over 50 regulated professions and had already prepared guidelines layingout a process of mutual recognition and reconciliation (SR, para. 91).  He was interested in hearing
more about the application of these guidelines and possible further plans to increase competition and
reduce the fragmentation of the professional services market.WT/TPR/M/78
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IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
28. Members praised the performance of the Canadian economy, and Canada's generally liberal
and transparent trade regime.  This, together with a sound approach to broader questions of economic
policy, had contributed to the strong recent econom ic performance.  They also commended Canada's
active participation in WTO activities as well as Ambassador Marchi's chairmanship of the Council of
Trade in Services.  In particular, many welcomed Canada's support for the launching of a new round
of trade negotiations, based on a broad agenda, to be launched at the earliest opportunity.
29. The representative of the Czech Republic welcomed the concise Secretariat Report in which
the attention was focused on market access and various trade policies and practices were balanced
against this perspective.
30. The representative of Uruguay noted the difficulty faced by smaller countries when three or
four meetings were held at the same time.  The representative of the European Union supported this
comment, voicing his frustration at clashes between Trade Policy Review meetings and other
important meetings.  The representative of Canada agreed with the comments made on scheduling
conflicts but feared this might be unavoidable.
Canada's participation in the WTO
31. The representative of Japan found that Canada's position on a new round was not entirely
clear, with Canada's support for a multilateral agreement on investment having become mainly limited
to the "analytical and educative" work in the WTO (SR, para. 43).  He noted that Canada's support for
the launching of negotiations on a WTO investment agreement hinged on the outcome of the
consultations with domestic stakeholders, and thought this position too modest.
32. The representative of New Zealand emphasized the two countries' close working relationship
across a broad range of WTO issues, for example in the areas of trade facilitation and customs
valuation, and on trade and environment issues.  Recent efforts led by Canada to revive the IntegratedFramework for LDCs were truly co mmendable.  He hoped that Canada, as a founding Member of the
WTO, would seize the opportunity of the next few years to ensure that the free-trade policies it
advocated would be applied consistently throughout its own system.
33. The representative of the United States  asked the Canadian delegation to touch upon the
outreach efforts undertaken in Canada to build support for further trade liberalization through the
WTO.  She commended Canada's arguments for increased transparency in WTO Councils and
Committees so as to improve public and private sector understanding of the WTO, and praised
Canada's proposal to have its Review meeting webcast on the Internet.  She regretted that the
opportunity had been missed and hoped it would be possible to act upon this proposal in the future.
34. She also praised Canada's commitment to make progress in the built-in agenda negotiations,
in particular the objective that the negotiations shou ld lead to the elimination of export subsidies, an
objective shared by the United States.  However, while substantial improvements in market access
were identified as one of Canada's key objectives for these negotiations, she was disappointed by the
virtual exclusion of Canada's supply-managed sectors from real liberalization under Canada's market
access proposal, and asked Canada to reconsider its position on improving market accessopportunities.
35. The representative of the European Union spoke of the close relationship between Canada and
the EU, a relationship based on an important commonality of views and values, including on foreign
and security policy issues.  In the economic sphere, the EU-Canada trade initiative had proven to be aWT/TPR/M/78
Page 9
productive framework for their relations.  Thus, they had achieved important progress via a Mutual
Recognition Agreement and a Competition Agreement.  Another useful area of cooperation wasthat of electronic commerce.  The Canada-Europe Roundtable for Business provided a valuable
business-driven dimension to their economic dialogue.  He agreed with Canada that a successful
round of negotiations must encompass the interests of all WTO Members, and be based on a broad
and balanced programme.
36. The representative of the Republic of Korea said that since 1994 Korea and Canada had
endeavoured to expand the scope and depth of their cooperation, in an ever expanding array of fields,
through the Special Partnership Working Group.  Korea joined Canada in its support for the launch of
a new round with a broad-based negotiating agenda that would allow the interests of all Members to
be met.
37. The representative of Brazil said that Canada was an important trading partner for Brazil, with
total bilateral trade amounting to approximately US$1.4 billion in 1999 and covering a wide range of
products.  Canada also had a significant participation in foreign direct investment in Brazil in sectors
such as telecommunications and distribution.  He hoped that the dynamism of the bilateral trade and
investment relationship would not be hampered by recent initiatives on the part of Canada (to take
countermeasures against Brazil regarding export subsidies on aircraft) which had already beenadequately commented upon by Brazil in the appropriate forum in the WTO.  As always, Brazil
would have preferred a trade creating solution which would have been more in keeping with the trade
liberalizing stance of the WTO.
38. The representative of Norway commended Canada for its open and basically liberal trade and
investment regime and strongly supported Canada's stand on the issue of a government's right to
regulate.
39. The representative of the Czech Republic, referring to the Secretariat Report, agreed that
"Canada's trade and investment regime is amongst the world's most transparent and liberal,
notwithstanding persistent barriers in a few but important areas, including certain agri-food industries,
textiles and clothing, and some service activities".
40. The representative of Peru said that Canada was a large and important trade partner for Peru;
she echoed both the Government and Secretariat Reports in highlighting the growth of the Canadian
economy, and of trade, in part due to the liberal and transparent investment regime;  and the Canadian
commitment to the multilateral trading system.  Howe ver, she had concerns about certain obstacles in
some major sectors, particularly the food industry, textiles, and certain services.
41. The representative of Argentina  said that Argentina and Canada had been cooperating for
many years in the Cairns Group, and expressed the hope for Canada that its economic expansion
would be maintained over the coming years.
42. The representative of Hungary  commended Canada for its strong commitment to the
multilateral trading system and for the active and constructive role Ambassador Marchi's team played
in the WTO.  Hungary had been even more impressed when the ambitions of Canada were somewhat
higher, but was confident that in the preparatory process for the fourth Ministerial Conference,Canada would forcefully support once again such issues as investment and competition policy.  The
representative of Uruguay also praised Canada and Ambassador Marchi for their active participation
in the WTO.  He also noted the joint work Canada and Uruguay undertook as members of the CairnsGroup and participants in the FTAA.WT/TPR/M/78
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Free-trade agreements (FTAs)
43. The representative of Japan was concerned about some trade distortive measures taken in the
context of NAFTA, for example its local-content requirement on automobiles.  If a Canadian
company produced goods in a third country, which was not a party to the NAFTA, and that third
country subsequently joined another regional integration, was it correct to assume that Canada
considered it to be consistent with the WTO agreements, and therefore, non-problematic, even if the
third country in question raised its local-content requirement on the products from a Canadiancompany?
44. The representative of Chile praised Canada for closing the gap between South America and
Canada over the last 15 years.  Since the free-trade agreement between the two countries, which was
signed in 1997, Chile's exports to Canada had doubled.  He also praised their close working
relationship in APEC, the Cairns Group, and the WTO.  Canada was a very good partner with regardto investment.
45. He congratulated Canada on its coordinated work with civil society, from which Chile had
learned a great deal.  Chile and Canada shared the same concerns for the environment and the
sustainable development of natural resources, as well as for the respect of labour standards, which
were recognized internationally, and for this reason both Chile and Canada had signed separateinstruments for cooperation on the environment and on labour cooperation in the context of their trade
agreements.
46. With regard to anti-dumping, Chile and Canada shared the view that unnecessary restrictions
on trade and trade distortions on the market must be limited.  He expressed disappointment with the
negative response by Canada to negotiating an open skies agreement.
47. The representative of the United States asked Canada to discuss its experience with the
Canada-Chile FTA and its parallel agreement on labour cooperation, and how Canada intended to
proceed to address the labour issue in broader trade policy deliberations, including at the WTO.  She
also praised Canada's commitment to the U.S.-Canada Free Trade Agreement and then to the NAFTA.
Trade had played an important role in fostering and sustaining Canada's economic growth;  Canada's
exports of goods and services now represented about 45% of GDP.
48. The representative of the European Union  asked whether the permanent process of
consultation with civil society established under the FTAA could be used as a model for other trade
negotiations.  He was also interested to know if Canada carried out environmental impact assessments
of its trade policies.
49. The representative of Hong Kong, China expressed concern about the possible trade diverting
effect of Canada's extensive preferential arrangements.  He noted that the NAFTA had seen a marked
increase in trade between Canada and the United States and Mexico, whereas trade with other
countries had not shone so brightly.  He agreed with Canada that any new preferential arrangements
must be consistent with WTO rules.  The curren t rules in many such agreements nowadays however
were not clear enough and thus might not have the effect of "helping to strengthen the multilateral
system" as Canada had put it.
50. The representative of Hungary was interested in possible plans to decrease the exposure of the
Canadian economy to developments in the economy of its largest trading partner.
51. The representative of Korea hoped that Canada would do its best to ensure that its expanding
network of preferential arrangements would be conducive to trade creation.WT/TPR/M/78
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52. The representative of India was concerned that over 80% of Canada's trade was with countries
with which it had a free or preferential trading arrang ement.  This meant that the Canadian market for
products from other countries was much smaller than the potential and was shrinking further.  He
requested that the Canadian delegation also reflect on the trade distorting potential of FTAs and the
serious derogation of the MFN principle that FTAs implied.
53. The representative of Switzerland noted that the FTA currently under negotiation between
Canada and EFTA respected the primacy of the WTO framework.
Team Canada, export assistance and export control
54. The representative of Japan was concerned about some export control measures, including the
measures concerning the "US-Canada Soft Wood Lumber Pack", as well as the measures taken by the
province of British Columbia for limiting the exports of logs and chips.
55. The representative of the Czech Republic praised the activities of Team Canada, which was
extremely efficient in promoting the principle "o ne country – one voice" and in helping business
participants network with the business community of visited countries.  This added a new dynamism
to mutual economic, trade, and investment relations.
56. The representative of New Zealand referred to the statement in Canada's Report, with respect
to its subsidization policies:  that it was "seeking the elimination of all export subsidies as quickly as
possible".  However, Canada would maintain export subsidies for dairy products up to its commitment
level (SR, para. 114);  and he noted that the level of domestic support given to farmers had expanded
in the last two years.
57. The representative of the United States  was also concerned about recent modifications to
Canada's dairy supply-management programme.  These,  she felt, failed to comply with the decision by
the WTO Appellate Body, which found that Canada's special class milk regime, which provided
reduced priced milk for export, was an export subsidy, and that Canada was shipping subsidized dairyexports in excess of its export subsidy commitment levels, inconsistent with Canada's obligation
under the Agreement on Agriculture.
58. The representative of Brazil  considered that Canada maintained an array of export assistance
programmes with potentially distortive effects.  He made specific reference to three export assistance
programmes mentioned in the Secretariat report, namely "Northstar", the "Canadian CommercialCorporation", and the "Programme for Export Market Development".  These programmes offered
terms and conditions that appeared to be inconsistent with the WTO Agreement on Subsidies and
Countervailing Measures.
State trading entities
59. The representative of Japan  referred to  the export credit programme by the Canadian Wheat
Board (CWB), as well as available financing at a lower rate, and called for guaranteed transparency
and predictability when managing such state-trading enterprises.
60. The representative of the United States expressed concern about the Canadian Wheat Board, a
state-trading enterprise, which maintained unfair trading practices.  Because of its monopoly status,
lack of transparency in operations, and government backing, the CWB had an unfair competitiveadvantage in world wheat markets.WT/TPR/M/78
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61. The representative of the European Union remained concerned over conditions for the sale of
alcoholic beverages in Canada;  the constraints resulting from the monopoly position of the Canadian
Liquor Boards seriously impaired the possibilities for European producers of taking advantage of
important market opportunities.  Furthermore, the WTO compatibility of these measures appeared
questionable.  He asked for information on the steps Canada intended to take to remedy the situation
for the benefit of both Canadian consumers and European suppliers.
Government procurement
62. The representative of Japan said that Canada had yet to fulfil its commitment under the GPA
to notify sub-federal entities subject to the GPA, and asked when Canada intended to improve its offer
on Provincial Governments.  The representative of Korea asked whether there had been any
significant progress, since the 1998 Trade Policy Review of Canada, in extending the WTOGovernment Procurement Agreement coverage to its sub-federal entities.
63. The representative of Switzerland noted that buy-local restrictions remained in government
procurement regulations and that the number of disputes relating to federal procurement had increased
to 50 annually (SR, para. 152).  He asked about the evolution of the number of cases involving foreign
companies.
Trade in services
64. The representative of Japan noted that Canada's overall market access in services was
relatively liberal and had been further enhanced since 1998 in financial and telecommunications
services.  However, he thought that further liberalization was necessary.
65. The representative of Australia looked forward to further movement in Canada's services
sector, especially regarding remaining restrictions on financial and professional services, as well as
transport and telecommunications.  He encouraged Canada to engage fully in the ongoing services
negotiations.  With regard to the banking sector, he welcomed Canada's new regime as it applied toforeign banks wishing to operate in Canada.  He also welcomed the proposals for liberalizing banking
trade by extending ownership regulations, put forward in the June 1999 policy paper.  He looked
forward to Canada federalizing its remaining province-based barriers to financial services such as
ownership and licensing.
66. The representative of Hong Kong, China  noted Canada's remaining trade and investment
restriction in areas such as financial services, transportation, and cultural services, and the barriers that
exist in the professional services sector.  He did not see any conflict between a Member wishing to
preserve its cultural identity and the rules-based trading system covering such issues.
67. The representative of Norway  noted the absence of Canadian shipping policy in this Review.
Canada was a constructive participant in the maritime negotiations during the Uruguay Round, and
was one of the Members that chose to bind this sector, even though Article II, regarding MFN, was
suspended.
68. The representative of Switzerland  asked when the new banking ownership rules
(SR, paras. 162-164) were expected to pass Parliament.
Supply management programmes
69. The representative of New Zealand  considered that among the apparent blind spots in
Canada's generally coherent liberal trade policy were the five product areas covered by systems ofWT/TPR/M/78
Page 13
"supply management".  Even within the limits of the tariff rate quotas, access opportunities were often
checked by the quota administration system adopted.  For butter, for example, an import monopoly inthe hands of the Canadian Dairy Commission meant that New Zealand's ability to seek a reasonable
market return on the small level of access allocated to New Zealand was severely frustrated.
70. The representative of Brazil noted that reserved access to the tariff quotas for certain trading
partners constituted a clear limitation for access on the part of other WTO Members.
Anti-dumping actions
71. The representative of Hong Kong, China was concerned about Canada's frequent resort to
anti-dumping:  85 definitive duties were in force at the end of June 2000, up from 73 in June 1998,
with the lengthy duration of AD actions.  He mentioned the possible trade distortive effect brought by
these measures and was concerned about misuse of this instrument.  The representative of Brazil
noted that Canada was one of the most intense us ers of anti-dumping measures, and that 58% of the
85 duties covered steel products.
72. The representative of Korea noted that more than 16% of Canada's anti-dumping measures
had been in place for ten years or more (SR, para. 82), in some cases despite virtually non-existent
exports to Canada.  He asked whether Canada was actually maintaining some of its measures only to
the extent necessary to counteract injurious dumping.  Canada's recently introduced provision oncumulative assessment of the effects of dumping during expiry reviews, raised further concerns.
Section 76.03 of Canada's Special Import Measures  Act required only that competitive conditions
among imported goods or like domestic goods be considered, while the WTO anti-dumping
agreement required, in addition to this condition, that the volume of imports from each country not be
negligible.
73. The representative of Norway asked whether Canada saw a need to put anti-dumping on the
agenda of the next round of multilateral negotiations.
74. The representative of the Czech Republic stated that anti-dumping procedures had negatively
influenced Czech trade with Canada.
75. The representative of Malaysia referred to an AD investigation into corrosion resistant steel
sheets, initiated against Malaysian manufacturers in December 2000.  She hoped the Canadian
authorities would be sympathetic to imports from developing countries and would exerciseconsideration when dealing with imports from these countries, which were mainly in small quantities
and which would help these countries in their recovery process.
76. The representative of Romania said that Romani a's exports to Canada were dominated by two
categories of goods:  textile and clothing and steel products.
Assistance to agriculture
77. The representative of Australia expressed concern at the significant increase in government
expenditure in support of the agriculture and agri-food industries since 1998.  Nevertheless, he
welcomed the Canadian Government's commitment to  ensuring that such support was least trade
distorting.  He also welcomed Canada's progressive move away from price support, but noted the
continuing reliance of the supply-managed sectors on this distortive form of support.  For example, inCanada's dairy sector, over half of milk-farm in come was provided by budgetary transfers and price
support.  The representative of Hungary shared the same views.WT/TPR/M/78
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Sanitary and phytosanitary measures
78. The representative of the United States said that Canada's technical and sanitary and
phytosanitary barriers to potatoes, wheat and othe r commodities continued to affect trade from the
United States;  she requested reassurance that these had now been removed.
79. The representative of Argentina, noting the strong advances in bilateral trade and investment,
said that Argentina's main export to Canada, frozen meat, had shown a remarkable growth.  She was
worried about the possible establishment of a Canadian Meat Investigation, Development andPromotion Agency and asked about the purpose of  this agency and its expected trade impact.
80. The representative of Hungary noted that Hungarian exporters had encountered serious
problems meeting the complex Canadian requirements for SPS information.
Assistance to industry
81. The representative of the United States looked forward to hearing Canada's response to U.S.
concerns in the area of subsidies.  A proposed $1.5 billion subsidy package for a DRAM
manufacturer, Mosel Vitelic, was reportedly being reviewed by Canadian federal authorities.  She
asked for clarification as to why Canada considered this to be a viable investment in view of the state
of the market and the apparent fact that the project was unable to fund itself from normal commercial
sources.
Tariffs and non-tariff barriers
82. The representative of Peru noted the very high level of protection concentrated on a few
sensitive products, for example foodstuffs, metals, textiles and clothing, which she said were precisely
products of interest to the developing countries, including Peru.  She asked whether the Canadian
Government planned to reduce tariffs and simplify the tariff structure in the short or medium term.
83. The representative of the European Union aske d whether Canada intended to extend duty-free
and quota-free access to imports from LDCs.
84. The representative of Hong Kong, China noted that the average MFN rate still stood at 7.2%,
partly due to the high tariff rates on a number of textiles and clothing products.  He urged Canada to
lower these tariff rates.
85. The representative of the Czech Republic said that quantitative restrictions on textiles and
clothing were another subject of frequent complaint by Czech exporters.  In addition, the Canadian
market remained effectively closed for a number of agricultural products.
86. The representative of India noted that Canada's autonomous tariff concessions in favour of
developing countries remained modest, and request ed that Canada take steps to stimulate imports
from these countries.
87. The representative of the European Union queried why some lines in the tariff Schedule of
Canada remained unbound, notably those corresponding to certain petroleum and gas products,
electricity, and most ships and boats.  The representative of Norway asked why Canada maintained
high and unbound tariffs on a number of products that fell within the scope of HS Chapter 89 on anMFN basis.  With the exception of pleasure vessels and some fishing boats, she noted that these
products were not manufactured in Canada.WT/TPR/M/78
Page 15
88. The representative of Brazil noted that the average tariff on dutiable items was 13%, due to
the higher tariffs applied to a number of products that were of export interest to many developing
countries, Brazil amongst them.
89. The representative of Brunei Darussalam, on behalf of ASEAN stated that textiles and
clothing from the ASEAN countries represented the third largest export of these countries to Canada.
She called for preferential tariff concessions to also be extended on an MFN basis, which would
further benefit developing countries like ASEAN.  The representative of Malaysia encouraged Canada
to review tariff escalation on those items.
Investment Canada Act
90. The representative of Korea noted that the Investment Canada Act (ICA), called for the
review of significant acquisitions of control of Canadian businesses by non-Canadians to ensure net
benefit to Canada.  In particular he was concerned with the ICA provision that included the effect of
investment on the utilization of Canadian parts and on exports from Canada, in the factors to be
considered in determining what constituted "net benefit".  He asked about Canada's position on how
this provision figured into its obligations under Article 2 of the WTO Agreement on Trade-Related
Investment Measures, and whether Canadian firms were also subject to similar requirements when
making acquisitions exceeding the threshold level.  The representative of Norway shared these
concerns about the Investment Canada Act.
Non-trade concerns
91. The representative of Japan noted Canada's emphasis on the importance of social dimensions,
which he considered to be a kind of non-trade concern.  He called Canada's attention to Japan's
position on the multifunctional role of agriculture, which was based on a similar concern, and to the
ways to take care of Japan's non-trade concerns in  a satisfactory manner with in the framework of the
WTO.WT/TPR/M/78
Page 16
V. REPLIES FROM THE REPRESENTATIVE OF CANADA AND ADDITIONAL 
COMMENTS
92. The Chairperson invited the representative of Canada to focus his responses on three main
themes:  (i) economic and institutional environment;  (ii) trade policies by measure;  and (iii) sectoral
policies.
(i) Economic and institutional environment
93. The representative of Canada confirmed that trade had been a major driver in Canada's
economic growth over the past decade.  The Government Budget update of 18 October had set out a
number of objectives for the years to come w ith respect to spending on social programmes,
investment in innovation, paying down the national debt and cutting taxes.
94. Much of Canada's collective efforts were directed towards a new round of negotiations.  In
addition, day to day implementation of the existing agreement was equally important.  Themultilateral system of trade rules embodied in the WTO was the touchstone of Canada's trade policy;
its solid trade performance had been rooted in the WTO rules, which was why Canada supported the
improvement and expansion of these rules to the benefit of all Members.  In response to Brazil's
reference to a Canadian initiative in recent days (to take countermeasures against Brazil), he said that
Canada attached great importance to relations with Brazil, a leading nation in the western hemisphere,the multilateral trading system and globally.  The focus in this organization should not be on the
initiative by Canada but on the lack of an initiative by the Government of Brazil.  What Canada was
seeking was full implementation of WTO obligations.
95. He commented on the explosion of interest by delegations on the impact of regional and
bilateral preferential arrangements.  Canada was working with trading partners in the Western
Hemisphere, Europe, and Asia on such arrangements, which, it believed, were trade liberalizing and
supportive of the multilateral trading system.  Canada also noted that these arrangements enhancedbilateral relations and promoted growth, which also benefits third parties.  He noted a number of
cross-regional bilateral initiatives whose links helped avoid the possibility of closed regional trading
blocks.  He recognized that some viewed them as having the potential to erode the multilateral system
and he took note of the interventions regarding the need for them to be consistent with WTO
provisions.
96. In looking at Canada's extensive trade relations with its NAFTA partners, he said that he had
seen no evidence that trade and investment patterns had been measurably distorted by Canada's
preferential trade arrangements.
97. He disagreed with some comments implying that the provinces did not fully commit to WTO
obligations.  Where Canada committed to obligations under the WTO, it was with the knowledge and,as appropriate, the concurrence of the provinces and territories.  Similarly he described the extensive
mechanism in place for consultation with the provinces on trade policy issues, which included them
having access to all aspects of this Trade Policy Review.
98. On the subject of transparency and consultations with civil society, there was a proliferation
of interest from Canadian citizens in matters concerning trade.  While at a general level Canadianswere favourably disposed towards trade and globalization, they were concerned to preserve their
valued social programmes and cultural identity.  From this perspective, the Government considered it
important to take citizen interests and concerns into account.  Consultations were essential to maintain
public understanding and support for the open rules-based multilateral trading system and future
negotiations, and Canada had promoted greater internal and external transparency in the WTO.WT/TPR/M/78
Page 17
Canada was ahead in its engagement with civil society, and was encouraged by the efforts in the
FTAA and APEC to begin to broach these issues carefully.
99. The discussant said that during the preparatory phase leading up to the Singapore Ministerial
Meeting Canada had been strikingly ambitious concerning a possible agenda for the future.  He
wondered why the Canadian position on the new round seemed much more cautious and less
ambitious, given that Canadian civil society was generally optimistic about free trade and
globalization.
100. With reference to the discussant's question, the representative of Canada said that Canada was
maybe a victim of its own success, particularly vis-à-vis  the United States, which received 86% of
Canada's exports.  With such a large percentage of the export market on its doorstep, it was hard to
convince Canadians to keep working on the rest of the world's market.  However, Canada had been
taking steps to enlarge its trading relationship around the world, with the FTAA and the Organizationof American States opening up the Spanish speaki ng community to Canada, and as part of APEC.
Canada now considered itself not just an Atlantic nation but a Pacific nation as well.  Although the
majority of Canadian society supported globalization, there was a strong vociferous group in Canada
who were not in favour of any kind of trade liberalization and whose valid questions and concerns
deserved consideration from the Canadian Government.
(ii) Trade policies by measure
101. The representative of Canada agreed with the assertion in the Secretariat Report, that
Canada's trade and investment was amongst the world's most transparent and liberal, and said Canada
would be prepared to consider further tariff reductions in the context of new negotiations in the WTO.
With respect to unbound tariffs, out of a tariff schedule of 8,000 less than 30 were unbound;  given the
importance of the unbound energy-related products, electricity, gas and oil, Canada, like others,
wanted to retain this flexibility.  He noted that the 25% unbound tariff on ships was the onlyinstrument to protect the small Canadian shipbuilding industry.
102. He justified Canada's frequent use of contingency measures by the extensive instances of
products being dumped injuriously on one of the most  liberalized markets in the world.  About 80%
of complaints were rejected by the CCRA in Canada.  Almost 60% of the measures in effect related to
steel products, where the problem was one of global oversupply.  Canada did not subsidize the steelindustry and its tariffs were bound at very low rates, from 2% – 5%.  The industry was vital to the
Canadian economy, and automobiles and related parts represented 25% of Canada's exports.  The only
recourse the steel industry had in response to injurious imports was anti-dumping measures, which he
considered to be the only remedy left in the WTO available for the industry to use.
103. With respect to government procurement, the Canadian position remained unchanged since
the last Review, the issue being whether there was sufficient balance in the package for Canada.
104. Recognizing that the Canadian trade regime was extremely liberal and open, and the economy
internationally competitive, the discussant asked why there were some small segments in industry,
agriculture and services where the Canadian Government was becoming extremely cautious, perhaps
even over protective.  He praised Canada for withstanding the challenges of living so close to theworld's strongest economy.
105. Precaution was a fundamental element of Ca nada's risk management system.  Where
scientific uncertainty justified taking a precautionary measure, there remained a requirement to
continue to seek additional information necessary for a science-based approach.  Canada did not
support the mandatory labelling of foods based solely on the non-product related process andWT/TPR/M/78
Page 18
production method (such as to indicate that it contai ns genetically modified organisms), in the absence
of a scientific basis for the protection of health and safety.  In such cases, Canada supported anindustry-driven voluntary labelling standard.
106. The representative of the European Union voiced concern about the Canadian Wheat Board;
he indicated that any further information on this subject would be greatly appreciated, especially with
regard to written questions by Brazil and Japan.  He asked why there had been no consolidation of
certain tariff lines, including for shipbuilding.  He was not fully convinced by Canada's argument thatthese were subsidized exports, and referred to HS 8901, an unbound tariff where the applied rate was
25%;  in other countries, including the United States, Japan, and Korea the rate was 0%.
107. The representative of the European Union from Brussels referred to a list of geographical
indications that existed in Canada and asked whether the list contained only wines and spirits, or
whether other products could be put on the list, and if so, which products.  She enquired about the
rights conferred from being on this list.  She clarified that the question from the European Union on
generic products, referred to "generic" under the meaning of Article 24 of TRIPS, meaning a term
whose use had become common and therefore was no longer receiving protection as a geographical
indication.
108. The representative of Brazil thanked Canada for its answers but noted that Canada still had to
provide responses to the written questions by Brazil concerning the Canadian Wheat Board and export
assistance programmes, namely "Northstar", the "Canadian Commercial Corporation" and the
"Programme for Export Market Development".  He urged Canada to provide those responses as soon
as possible.  Referring to the dispute about Brazil's export subsidies, he said that lack of initiative was
one thing Brazil could not be accused of in this organization, particularly in the case in point.  Brazil
had done all that was necessary to comply with its WTO obligations, and could not go beyond its
obligations simply because one Member unilaterally decided that this was the way the rules should beapplied.
109. The representative of Canada, responding to Brazil, indicated that responses to Brazil's
written questions would be forthcoming as soon as possible.  He considered that the TPRB was not
the place for discussing this issue, but noted that the Panel had found that as of 18 November 1999
Brazil was engaging in illegal export subsidies on aircraft.  The proposal that Brazil had put forwardin the DSB did not however go back to 18 November 1999.  Canada was ready to continue the
discussion about these measures, which would not affect bilateral relations with Brazil.
110. The representative of the United States echoed concerns about the Canadian Wheat Board and
asked for further comments.  He also asked for responses to questions on local-content requirements
for wine production and marketing, and remained concerned about the Government ProcurementAgreement.
111. The representative of Korea had difficulty understanding why granting third-country
suppliers access to its sub-federal procurement market should be conditional upon Canada's access to
U.S. markets.  He also found confusing Canada's st atement that the previous levels of import, while
anti-dumping measures were in place, were not determinant factors to be considered in the expiryreview, when in fact the Special Import Measures Act stated that during an expiry review only the
likelihood of dumping, and the likelihood of injury should be considered.  He was concerned that
Canada had been maintaining anti-dumping measures despite non-existent import levels.
112. The representative of Canada explained that a degree of caution was being applied to
furthering liberalization, reflecting the need to provide Canadians with solid rationale and specific
data to demonstrate how further liberalization would benefit Canada.  He thought that Canada hadWT/TPR/M/78
Page 19
done very well and would continue on the same path, but there were sensitive sectors that Canada
would continue to protect such as dairy and poultry, and textiles and clothing.
113. The Canadian Wheat Board was a legitimate enterprise exporting Canadian wheat;  it was no
different from other major private companies that exported wheat around the world.  He was
convinced the system was fair and competitive and consistent with the WTO.
114. He made no apologies for the 25% unbound tariff on shipping, which, he argued, was a small
industry in Canada.  The other countries mentioned were able to have a zero tariff due to other factors,such as the Jones Act in the United States, high levels of production in Japan and high subsidies in
Korea.
115. Korea had made a valid point regarding government procurement and giving other countries
an opportunity in the Canadian sub-national market.  However, in reality, when over 80% of Canada's
market was in the United States it would be foolish to jeopardize this relationship.
116. On intellectual property, with particular reference to Article 24.2, written responses would be
provided.  The Trade Market Act explained the rights conferred to geographical indication protection,
and that Act was consistent with the TRIPS Agreement.
117. Sunset reviews had been taking place in Canada since 1984, and were carried out every five
years.  The comments by Korea about non-existent imports or low volume of imports was perhaps anindication that the anti-dumping measure was having its intended effect in terms of eliminating
injurious goods into the Canadian market.  A sunset review looked at two things:  whether the expiry
of the measure was likely to result in the continuation or resumption of dumping, and whether the
expiry of the measure was likely to result in injury to domestic industry.
118. The discussant asked whether Canadian intellectual property protection rules in the field of
geographical indications provided protection only for wines or for wines and spirits or for wines,
spirits and other items.
119. The representative of Canada said that under Article 22 the definition for geographical
indications went beyond wines and spirits and that he would provide the exact citation under the
Trade Market Act.
(iii) Sectoral policies
120. The representative of Canada referred to the detailed information and written answers already
provided regarding Canada's level of support for the agriculture sector.  Canada adopted a "whole
farm" approach to its support, which involved all the agricultural activities on the farm, so the benefits
were not separable by sector.  Canada had made substantial efforts and new farm income programmes
complied fully with the criteria of Annex II of the Agreement on Agriculture, and did not distort
production and trade.
121. With regard to tariff quotas and market access, Canada had tabled a market access proposal in
the Agriculture negotiations that sought real and substantial improvement in market access for all
agricultural and food products.  Canada remained committed to implementing fully the Agreement on
Textiles and Clothing, including its transitional provision
122. As for services, Canada had participated since early 2000 in the mandated negotiations under
the GATS.  Canada was committed to ensuring progressively higher levels of liberalization in the area
of international services and trade while preserving the sovereign right to regulate in the publicWT/TPR/M/78
Page 20
interest, and the flexibility to maintain or impl ement measures especially in key public services
including health, education, and cultural policy.
123. With regard to financial services, legislation had been introduced in June 2000 implementing
a reform of the financial sector and creating a new policy framework for financial services.
Particularly notable in that legislation were measures that changed ownership rules, provided for a
transparent bank merger review process and allowed foreign banks to offer services to businesses and
individual consumers via branches.  This latter provision was intended to ensure that the foreign entryregime for banks was consistent with the new domestic policy framework in areas such as permitted
investment and business powers.  The proposed regime  was designed to provide flexibility for foreign
banks wishing to operate in Canada and to streamline regulatory approvals.
124. Since the last Review of Canada, the Canadian authorities had been working to reduce
barriers concerning provincial licensing requirements and mobility rights for licensed practitionerswithin Canada.  Canada's provisions for facilitating the employment of spouses of temporary high
skilled workers were now a permanent immigration programme, and he spoke of the consideration for
expanding the programme for temporary workers at technical and administrative levels.
125. The representative of Japan referred to the Multimedia Fund (SR, para. 181) and asked
Canada to provide more details on the conditions for applying this Fund and what role Canada
envisaged for the future of the Fund.
126. With regard to financial services, the representative of Korea asked why a foreign subsidiary
was allowed to engage in retail deposits in Canada without the restrictions faced by a full service
branch when both were obliged to meet the Can$5 billion requirement in worldwide assets.  Given the
substantial similarity in requirements for branches and subsidiaries he asked why their ability to
engage in retail deposit operations differed so significantly.  He rejected Canada's statement that
Korea had subsidized its shipping industry, and said that this was not the practice of the KoreanGovernment.
127. The representative of Canada said he would send Japan the address for the Heritage Canada
website, which contained the necessary data on the Multimedia Fund.  With regard to Korea's
questions on banking, a more detailed written response would be prepared but he referred to his
previous statement that full branch banking at retail level carried greater risk, and subsidiaries weresubject to the national banking laws of their country as well as those of Canada, which therefore
provided greater protection for the consumer.WT/TPR/M/78
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VI. CONCLUDING REMARKS BY THE CHAIRPERSON
128. We have had an open and stimulating discussion on the trade policies and practices of
Canada.  Members were impressed by Canada's sustained, strong economic performance, attributing
this to its generally liberal trade regime, sound macroeconomic policies and the U.S. cyclical lead.
Trade had been an important element in this performance, the share of exports to GDP rising from
some 25% to 45% over the last decade and imports following a similar path.  However, the high and
growing share of exports destined for the United States was seen as a source of potential vulnerability.
129. In this, its sixth Review, Canada's continued commitment to, and active participation in the
work of the WTO was again fully acknowledged, with  several Members welcoming its support for the
launching of a new round of negotiations with a broad agenda.  Canada has also been an active
promoter of both greater internal and external transparency in the WTO.  On the other hand, some
Members reiterated concerns that Canada's growing number of preferential arrangements might causenet trade diversion and questioned the exclusion of some agri-food products from such arrangements.
Relative to FTA partners, preferences to developing countries and LDCs appeared modest;  it was
urged that access be improved.
130. Participants once more recognized that access to the Canadian market is generally liberal
although barriers have persisted in a few but important sectors.  Thus, Members expressed concernsabout a few remaining unbound tariff lines, and tariff peaks still affecting items such as food products,
textiles and clothing, footwear, and shipbuilding.  It was noted that several of these products are of
particular export interest to developing countries.  Market access in textiles and clothing was
restricted  by quotas, while certain import regulations for example the NAFTA rules of origin,
favoured particular trading partners.
131. The number and duration of anti-dumping measures in force, and their concentration in the
steel sector, were of particular concern to many Members.  Foreign access restrictions in the supply-managed dairy, poultry and egg sectors had not abat ed, including through high out-of-quota rates that
acted as de facto quantitative restrictions.  Also queried was the recent increase in financial support to
the agri-food sector.  Information was sought on subsidies under the new dairy export regime and on
the exports of the Canadian Wheat Board.  Interest was expressed in reforms to the Export
Development Corporation.
132. Investment and ownership are generally open to foreigners but some restrictions continue.
Participants asked about the scope for additional foreign market access under Canada's new bank
branching regime.  In air transport, Members noted the links between foreign entry conditions and the
degree of competition in Canada's airline market.  Members asked about recent pro-competitive
developments in the telecommunications sector and when restrictions on foreign investment might belifted.  They took note of the importance Canada attaches to protecting its cultural, health and
educational sectors.
133. Members asked about further progress in removing inter-provincial trade barriers in areas
such as standards, wine and other alcoholic beverage marketing.  Questions were also asked with
respect to the role of provinces in Canada's trade policy.  Several Members asked if there were plansto include government procurement at sub-federal level under the rules of the WTO Agreement on
Government Procurement, and about a number of federal and provincial assistance programmes.
134. Questions were also asked regarding:
• Canada's review of foreign acquisitions;WT/TPR/M/78
Page 22
• its support for a multilateral agreement on investment;
• protection of IPRs including geographical indications;
• its ratification of the Cartagena Protocol on Biosafety;  and
• Canada's experience on consultations with civil society.
• 
135. Members clearly appreciated the comprehensive responses provided by Canada to most
questions raised during the Review and looked forw ard to receiving the outstanding answers.  I thank
in particular the Canadian delegation for the efforts it made to provide written answers to advance
questions at the start of our first session on Wednesday.
136. In conclusion, it is clear that this Body appreciates Canada's commitment to a strong rules-
based multilateral trading system.  Members concurred in characterizing Canada's trade regime as
transparent and liberal, although a number of concerns remain.  In this respect, several Membersbelieved that liberalization should also extend to those sensitive areas that to date lag the process of
reform.  This would bring them in line with Canada's generally liberal policies in other areas to the
benefit of both Canada's economy and of the multilateral trading system.WT/TPR/M/78
Page 23
ANNEX
RESPONSES PROVIDED BY CANADA TO ADVANCE WRITTEN QUESTIONS
AND TO OTHER QUESTIONS RAISED DURING THE MEETING
ARGENTINA
Please explain the purpose of the proposed beef marketing agency, and its expected impact on trade?
National and provincial associations of beef cattle producers requested that a Canadian Beef
Cattle Research, Market Development and Promotion Agency be created under the Farm Products
Agencies Act.  The agency would undertake promotion, export development, and research (not
marketing), funded by a non-refundable levy initially set at $1 per head and applied to Canadian beef
cattle marketed domestically, to imported beef cattle, and to the carcass equivalent of imported beef
and beef products.  It is not anticipated that an agency, if created, would have an impact on trade inbeef cattle or beef.  The National Farm Products Council completed its review of the proposal based
on extensive consultations and input received from domestic and international stakeholders in public
hearings.  The proposal may be found on the fo llowing web site: www.nfpc-cnpa.gc.ca/english/
mainnfpc.html.
The Council met on December 6, 2000, and agreed to forward its report to the Minister of
Agriculture and Agri-Food, with recommendations.  The next step will be for the Minister to provide
direction to the Council.
ASEAN
BRUNEI DARUSSALAM ON BEHALF OF ASEAN
What are Canada's intentions with respect to improving market access for textile and clothing
products, reducing tariff peaks, and on reviewing its antidumping policies?
Canada has made the commitment to eliminate all Agreement on Textiles and Clothing
(ATC) quotas by January 2005, and its industry has accepted the obligation to move towards a
quota-free environment.  The ATC provides for a 10-year period to achieve the elimination of quotas,
and Canadian industry will need the full length of this transition period to restructure itself and adjust
to a quota-free world.  The Canadian industry has undergone great changes since the 1970s, both in
terms of loss of employment and share of domes tic market. Still, Canada went beyond its ATC
commitments in the two first phases.
Canada's current tariff structure reflects, among other things, the particular economic interests
and competitive positions of Canadian industries over time, as well as the concessions that Canada
and other countries have made in successive rounds of international tariff negotiations.  The relatively
small number of tariffs that remain in place reflects the needs of certain sensitive domestic sectors,which Canada views as currently requiring tariffs because of their competitive situation. Canada's
policy in this area is comparable to that of most other WTO members, who generally maintain tariffs
to protect those industries in their economies that they consider sensitive to duty-free trade.   Having
said this, Canada is certainly prepared to discuss additional tariff reductions in the context of future
trade negotiations.
Canada recently completed a review of its anti-dumping system and implemented the
resulting changes to its anti-dumping law in April 2000.  As noted in the Secretariat’s report, these
changes included clarifying the provisions of the Special Import Measures Act that allow forWT/TPR/M/78
Page 24
anti-dumping duties to be reduced for reasons of public interest. Moreover, Canada is supportive of
efforts to undertake negotiations respecting the WTO Anti-dumping Agreement with a view tostrengthening and clarifying the rules to ensure greater international consistency and predictability in
the use of such measures.
AUSTRALIA
We would be interested in an update on the details of the new three year $CD5.5 million safety net
scheme for agriculture. Does the Canadian Governm ent have plans for further increases in support?
The three-year safety net framework agreement will provide up to Cdn $5.5 billion over three
fiscal years (2000/01, 2001/02 and 2002/03, –fiscal y ear - April 1 - March 31).  This represents
$1.1 billion for basic safety net programs (Net In come Stabilization Account (NISA), crop insurance,
and companion programs) and up to $725 million for the Canadian Farm Income Program (CFIP) for
a maximum of $1.825 billion annually for three years.  The cost of these programs will be cost-sharedon a 60:40 basis between the federal and provincial governments, respectively.
Net Income Stabilization Account (NISA)
NISA assists producers in stabilizing their farm income through an individual account
concept.  Governments match annual producer depo sits into an individual NISA account up to a
maximum of 3% of their eligible net sales (ENS) of agricultural commodities.  The funding of thesematching deposits are split between the federal and provincial governments, at 2% and 1% of ENS,
respectively.  Producers may also deposit up to an additional 20% of eligible net sales into their
account.  The annual eligible net sales limit for an individual is $250,000.
Producers may access funds from their accounts on an annual basis through two calculations
which determine the amount they are able to withdr aw.  The main program trigger - the Stabilization
Trigger - provides access to funds when the farm’s  operating margin (gross margin) drops below the
average operating margin for the previous five years.  In addition, the Minimum Income Triggerallows a withdrawal from the account to bring the producer’s individual or family income up to a
pre-determined threshold.  The threshold is currently set at $20,000 for an individual or $35,000 for a
family.  NISA accounts cannot go into deficit, so producers must make deposits in stable or
improving income periods to ensure that they will have sufficient funds accumulated to make up a
short to medium term income shortfall.
Crop Insurance (CI)
Crop Insurance stabilizes a farmer's income by moderating the economic effects of crop
losses caused by natural hazards such as drought, flood, hail, frost, excessive moisture, and insects.
Producers and federal and provincial governments pay premiums into crop insurance accounts.
Payouts are based on a farmer's average crop yield and are triggered when a farmer suffers a yield lossdue to a covered hazard.
Companion Programs
The Companion Programs are to assist producers to adapt to increased responsibility for risk
management associated with agriculture as well as to address agricultural development.  The
province-based initiatives include research and development activities by industry groups; adaptationinitiatives to help address structural adjustments; and initiatives to complement existing programs,
such as NISA and crop insurance.WT/TPR/M/78
Page 25
The companion programs that relate to research and development have been reported as
"green" programs consistent with Annex 2 of the WTO Agreement on Agriculture(G/AG/N/CAN/29).  Those programs that compleme nt existing programs have been reported within
the Aggregate Measurement of Support as "amber" non-product specific support (ST DS:9).
Agricultural Income Disaster Assistance (AIDA)/Canadian Farm Income Program (CFIP)
The Agricultural Income Disaster Assistance (AIDA) covered the 1998 and 1999 tax years
and provided assistance to Canadian producers who experienced a sudden and severe drop in theirfarm income for reasons beyond their control.  It was carefully designed to meet the criteria of
Annex 2, paragraph 7, of the WTO Agreement on Agriculture (G/AG/N/C AN/36).  Producers were
eligible to receive a payment if their current gr oss margin dropped below 70 percent of their historic
average gross margin.  The gross margin is defined as the difference between farm revenues and
allowable operating expenses.  Payments brought producers’ margins up to 70 percent of theirreference margin.
The Canadian Farm Income Program (CFIP) is a three year extension of AIDA covering the
2000, 2001 and 2002 tax years.  The total cost of CFIP may not exceed $725 million annually.  A
DS:2 notification for CFIP has been forwarded to the WTO Secretariat.
What factors determine when and how substant ial supplementary beef import permits will be
established? To what extent, if any, is domestic price stability a factor in deciding the level of
supplementary permit allocations? Does Canadian policy allow all supplementary entitlements to be
allocated in the first six months of the quota year?
The TRQ access level for beef and veal is 76,409 tonnes.  The import regime is intended to
reflect the integrated North American beef market, and substantial supplementary imports above the
TRQ are common to meet market demands.  There is a reference level of 114,000 tonnes, after which
the Government is committed to consulting stakehol ders in determining whether further imports are
warranted. Details are laid out in Notice to Importers No. 607 dated November 9, 2000.  Please visit:
http://www.dfa it-maeci.gc.ca/~eicb/notices/ser607-e.htm.
Domestic price stability is not a criterion in deciding the level of supplementary import
permits issued. Under the present policy, firms may apply for supplementary import permits at any
time during the year; however, before requests are accepted, applicants must have used at least 80%of their TRQ allocation.
Is there a preferential element to compensation arrangements being discussed in the WTO aircraft
case involving Canada and Brazil?  If so, how would such arrangements be reconciled with the
requirement that compensation must comp ly with WTO obligations, including MFN?
As far as Canada is aware, all aspects of a possible compensation arrangement that have been
under discussion between Canada and Brazil comply with Brazil's WTO obligations.
We would appreciate  information on recent chan ges to Canada's provincial milk export contract
schemes.
As a result of the World Trade Organization (WTO) ruling that certain Canadian export
pricing practices for dairy products conferred export subsidies, major changes have been made to theway milk is marketed in Canada.  At the federal level, the operation of Special Classes 5 (d) and (e)
(those that were found by the WTO to confer export subsidies) have been modified such that 5(e) has
been eliminated and exports under 5(d) will be limited to our WTO export subsidy commitments.WT/TPR/M/78
Page 26
In addition, changes to the federal dairy marketing regulations will be completed shortly per
the terms of the implementation agreement.  These changes will deregulate the sale of milk outsidethe domestic supply management system where a similar deregulation has been effected at the
provincial level.
As a result, new dairy export mechanisms have been created at the provincial level.  All the
mechanisms are based on individual contracts be tween producers and processors, with no government
intervention (including by the marketing boards) on quantities, prices, products, or export markets.All mechanisms were operational by August 1, 2000.
We would be interested in an update on Canada's consideration of a proposal by the Canadian
Cattlemen's Association to establish a new Research and Marketing Authority funded by a “check
off” on imported and domestic beef.
The National Farm Products Council has completed its review of the Canadian Cattlemen’s
Association’s proposal to establish a national research, promotion and market development agency.
The review was based on extensive consultations and through input received from both domestic and
international stakeholders in public hearings held to inquire into the merits of establishing the
proposed agency.  Details are available at  http://www.nfpc-cnpa.gc.ca/english/mainnfpc.html.
The Council met on December 6, 2000 and agreed to forward their report to the Minister of
Agriculture and Agri-Food with their recommendations in this matter.  The next step in the process
will be for the Minister to provide his direction to the National Farm Products Council.
Any future action on this matter will be at the direction of the Minister.
As the Canadian market is highly valued by the Australian wine industry, we would be interested to
learn of future plans regarding the monopoly control exercised by provincial liquor boards over the
introduction and distribution of wine. Is there any prospect of the removal of restrictions which
currently limit the movement of wine into and w ithin Canada through the federal postal system?
With regard to possible 'future plans' for changes in Canada's provincial liquor boards, we are
aware of no plans at this time to change the Boards.  They have been in existence since before the
GATT was created and are consistent with the provisions of GATT Article XVII.  They operate as
businesses whose decisions are based solely on commercial considerations and market forces.
Imported products compete on an equal footing with domestic products and enjoy a large share of theCanadian market (imported spirits - 31%, imported wines - 62%).
With reference to restrictions on the movement of wine into and within Canada through the
federal postal system, there are no prospects for removal of these restrictions.  Aside from the
practical safety problems of breakage and control over underage purchasers, federal law prohibits
importation and distribution of beverage alcohol except by provincial liquor boards.  The onlyexception is the personal exemptions for small amounts permitted travellers returning to or visiting
Canada.
We are concerned that sub-federal regulation can restrict trade for professional services. For
example, a number of provinces retain residency/citizenship or commercial presence requirements for
accounting, legal, architectural, engineering and travel agency services. We would welcomeinformation on any plans to remove these requirements.WT/TPR/M/78
Page 27
Since the conclusion of the Uruguay Round of negotiations, there have been significant
changes in the regulation of the professions, particularly as concerns provincial licensing requirementsand mobility rights for licensed practitioners within Canada.
As Australia has noted, the licensing of  professional service providers in Canada is largely
the responsibility of provincial governments.  This responsibility has been devolved to self-regulatory
authorities which license and  govern professionals operating in their respective jurisdiction.
In regard to regulatory changes, Members are aware that Canada has notified the WTO
(reference Canada’s notification to Council for Trade in Services, S/C/N/86-90 of 14 December 1998)
of the removal of discriminatory measures respecting the national treatment and market access
provisions of the GATS.  These include for example, the elimination of citizenship, permanent
residency and residency requirements in a number of provinces and professions, including legal,
accounting, engineering, land surveying, and architectural services.
As well, in the area of legal services, since the last Round, most Canadian provinces (with the
exception of Quebec) have implemented non-discriminatory regimes for the licensing of foreign legal
consultants.  Foreign legal consultants are currently in the forefront of liberalization in the legal
services sectors.
As concerns mobility rights, all professions are currently working under the auspices of the
Agreement on Internal Trade to allow full portability of licenses from province to province,
eliminating the need to re-certify in each sub-national jurisdiction.
Has policy consideration been given to the postal services sector, particularly in light of the apparent
inconsistency between MFN obligations under th e WTO and proposed arrangements on terminal dues
entered into at the 1999 Beijing Congress of the Universal Postal Union?
We have considered this issue and we believe that the terminal dues provisions adopted by the
UPU represent transitional arrangements moving towards a country specific payment system.  Itreflects a compromise which takes into account the position of high cost and low cost industrialised
countries and those of developing countries.
We support progress for a solution to what Australia refers to as the apparent inconsistency
between the arrangements on terminal dues and MFN obligations under the WTO.  The development
of a new terminal dues system for the next UPU congress in 2004 may be able to provide progress inthis area.
BRAZIL
Developments in Trade and Investment Policy
(Secretariat Report, page 9, para 30) Given Canada's active participation in the negotiation of the
Cartagena Protocol on Biosafety to the Conven tion on Biological Diversity, can you explain why
Canada has not signed the instrument?
Canada was an active participant in the negotiation of the Cartagena Protocol.  Following the
completion of the negotiations, the government decided to consult all major stakeholders on the issues
of signature and ratification of the Protocol.  The first consultations were completed this fall.  A
federal election was called in the fall and held in late November.  Recommendations have beenprepared by officials.  We expect that considerati on of the Protocol will be accorded a high priority byWT/TPR/M/78
Page 28
the new government.  In the meantime, Canada intends to take an active part in the intergovernmental
committee (ICCP), which is preparing for entry into force of the Protocol.
The Secretariat Report mentions that (page viii, item VII) "the average on dutiable items is some 13%
due to the higher tariff applied to a number of sensit ive products. This includes foodstuff, textiles and
clothing, and footwear many of which are of export interest to developing countries." Since these are
products of clear export interest to developing countries, is not there a contradiction with Canada's
policy for developing countries?
Canada's current tariff structure reflects, among other things, the particular economic interests
and competitive positions of Canadian industries over time, as well as the concessions that Canada
and other countries have made in successive rounds of international tariff negotiations.  The relatively
small number of tariffs that remain in place reflects the needs of certain sensitive domestic sectors.
Having said this, Canada is certainly prepared to discuss additional tariff reductions in the context offuture trade negotiations.  With respect to agricultu re, Canada is already participating in the current
round of agricultural negotiations and has tabled its position on a variety of issues to be addressed in
negotiations, including market access.
Tariff quotas
(Sec. Report, page 21 (2) "Tariff quotas constitute the main instrument of import protection in the
agrifood industry." What are the criteria adopted in  the determination and distribution of tariff quotas
by Canada? Could Canada explain in more detail how its tariff quota system is administrated?
Canada’s TRQ administration methods are similar across all 21 TRQs, while allocation
methodologies vary among the products controlled, from first-come first-served to historical
allocations. Each commodity or group of commodities has an advisory committee which provides
advice to the Canadian government on TRQ administration.  There are no plans to alter the current
allocation systems at this time, although stakeholder recommendations have resulted in changes to theallocation systems in the past.
All agricultural TRQ commodities are governed on a broader basis by the Export and Import
Permits Act and related regulations which ensure that all TRQs are administered on a fair, transparent
and consistent basis.  Detailed information on the administration of all TRQs is available from a
website which includes access to the relevant legislation, regulations, and notices to importers. Theadministration of TRQs is very transparent and upcoming improvements to the computer system used
in the administration of TRQs should simplify the process further. Additional details are available at:
http://www.dfait-maeci.gc.ca/~eicb/agric/agric-e.htm.
Tariffs
Could Canada explain what is the method and criter ia used for application of specific duties in
conjunction with "ad valorem" tariffs?
In Canada’s Tariff, specific duty rates and compound duty rates are applied in conjunction in
the following instances:
1. Compound rates of duty, where an ad valorem  plus a specific rate is applicable to imported
goods – e.g. 1901.20.24 – which provides for certain baker’s mixes and doughs has a rate of11.93c/kg plus 6%.
2. Combination rates of duty:WT/TPR/M/78
Page 29
• an ad valorem  rate of duty, with a minimum specific duty rate – e.g. 2009.70.10 – which
provides for concentrated or reconstituted apple juice has a rate of 9.35c/litre but not less than
8.5%;
• an ad valorem  rate of duty, with a maximum specific duty rate – e.g. 5111.11.90 – which
provides for certain woven fabrics of carded wool or of carded fine animal hair has a rate of16% but not to exceed $4.58/kg;
• an ad valorem  rate of duty, with a minimum and a maximum specific duty rate – e.g.
0207.11.91 – which provides for certain fowl of the species Gallus domesticus, within accesscommitment, has a rate of 5% but not less than 4.74c/kg or more than 9.48c/kg;
• a specific rate of duty, with a minimum ad valorem  duty rate – e.g. 0702.00.10 – which
provides for a seasonal* rate of duty on fresh or chilled tomatoes for processing, has a rate of
1.88c/kg but not less than 9.5%;
• a specific rate of duty, with a minimum ad valorem  duty rate plus an additional ad valorem
rate– e.g. 0704.10.11 – which provides for a seasonal
2 rate of duty on cauliflower and headed
broccoli in packages of a weight not exceeding 2.27 kg each, has a rate of 1.88c/kg but not
less than 4% plus 4%.
The specific rates are calculated on the basis of the volume, weight or value, as the case may
be, of each respective shipment imported.
According to the Secretariat Report, Canada comple ted its revision in tariffs resulting from the
introduction of the HS 96 nomenclature (page 17 (1) (a)).  Can Canada explain what were the main
criteria used in its revisions?
The main criteria Canada used in its revision of tariffs resulting from the introduction of the
HS 96 Nomenclature were:
• incorporation  into the Canadian Tariff of all changes to the Harmonized System
Nomenclature pursuant to  Article 16 of the International Convention on the Harmonized
Commodity Description and Coding System,  adopted from July 5-7, 1993 by the Customs
Cooperative Council;  and
• revenue neutrality, that is to say the rate of duty applicable to any given product after the HS96
nomenclature was incorporated into Canada’s Customs Tariff was the same rate that would
have been applicable to that product if HS96 changes had not been introduced.  In other
words, the introduction of the HS nomenclature did not result in any tariff rate increases or
rate reductions for goods imported into Canada.
Does the Government of Canada maintain any mechanisms that allow temporary tariff increases for
reasons of emergency and/or supply shortages?
No.
                                                     
2 It should be noted that none of the dutiable seasonal rates in Canada’s Customs Tariff for fruits and
vegetables tariff items have been applied since 1997, at which time they were applied only in the case of about
half of the dutiable items.  As most fresh fruits and vegetables imported into Canada during the Canadian seasonare from the U.S., these dutiable tariff items have no t been applied in recent years largely due to the phased
reduction and eventual elimination of duties on all U.S. goods under NAFTA, which was fully implemented in1998.WT/TPR/M/78
Page 30
Standards and Technical Regulations
The Secretariat Report states that "technical regulations and standards continue to differ among
provinces" (page 30 (iv)). Can Canada inform what is being done in order to make these practices
consistent with its obligation in the WTO? Can Canada explain the rationale for the adoption of
special measures for margarine by the province of Quebec?
As Brazil will understand, federal states like Canada have technical regulations developed and
implemented at both the federal and provincial levels.  Canada has created a trade related consultationforum under which the federal government, among other things, disseminates information (including
provision of guidance and advice on their obligations) related to international trade agreements to
provincial representatives.
Furthermore, under the Agreement on Internal Trade (AIT), there is an agriculture and food
chapter to oversee the interprovincial movement of agri-food products.  This Chapter applies to tradebarriers with policy implications. Currently there are only a small number of outstanding barriers to
the movement of agri-food products in Canada. These barriers are of a technical nature, and are
closely monitored by federal and provincial officials on a regular basis.
Federal and provincial officials have successfully resolved technical issues in the past and are
considering whether to look at renegotiating th e Chapter to ensure that all barriers to the
interprovincial movement of agri-food products are resolved in the future.
In the event that federal and provincial officials cannot resolve problems involving barriers to
trade through discussion, there is a dispute settlement process that can be used to resolve disputes overthe interprovincial movement of agri-food products.
In regards to Quebec’s margarine there is no special measure in Quebec other than the
maintenance of standards to secure fair marketing practices. For consumer health protection reasons,
standards for the packaging, colouring and retailing of margarine have been in place since 1987 to
differentiate the product from butter.
The Secretariat Report (page 28, para 98) states th at "The import controls implemented in Canada in
relation to Transmittable Spongiform Encephal opathy (TSE), including Bovine Spongiform
Encephalopathy (BSE) remain in place." Docume nt G/SPS/GEN/222, containing a submission by the
World Health Organization on the Variant Creutzfeldt-Jakob disease, states in paragraph 15 that
"Small numbers of (BSE) cases have also been reported in Canada (...)" What measures has the
Government of Canada taken to address this problem?
BSE does not exist in Canada. Canada’s only case of BSE was diagnosed in December 1993,
in a cow imported from the United Kingdom in 1987. The entire herd containing the BSE- infectedcow was destroyed and all cattle imported from the UK to Canada since 1982 were either destroyed or
removed from Canada.
In addition, Canada ordered the destruction of all the first generation progeny from the index
case and the first generation progeny from any imported animals whose UK herd of origin had a BSE
diagnosed in it after the export of the animal to Canada . All carcasses were incinerated.
The Canadian Food Inspection Agency has implemented a domestic surveillance program for
BSE. Any cattle over two years of age exhibiting nervous system sings are submitted by provincial,
federal or university pathology laboratories for a BSE laboratory examination. Cattle over two years
of age that are submitted to federal laboratories for rabies examination and are subsequently found
rabies-negative are sent for BSE examination.WT/TPR/M/78
Page 31
Anti-dumping and Countervailing Actions
The Secretariat Report states that "Canada has maintained its position as one of the most active users
of antidumping actions (page 23, para 78). "85 AD duti es were in force... 58% of which cover steel
products." This high proportion of AD duties on steel products seems to indicate a problem of
competitiveness in this sector. How is the protection given to domestic industry consistent with
Canada's position in the WTO to retrain the use of AD measures? Would not the application of
safeguard measures in this specific case be more appropriate?
Canada has one of the most open steel markets in the world.  This is evident from the import
penetration figures - in 1998, 50% of Canadian apparent domestic consumption was made up of
imports, compared to 5.8% for Brazil, 7.1% for Japan, 14.9% for Korea, 16.4% for EU, and 32.6% for
the United States [Source: OECD Stee l Committee document DSTI/SU/SC(2000)2].
The Canadian steel industry has responded to import competition by improving productivity
and developing new products over the last decade.  Unfortunately, these activities cannot sufficiently
address current global overcapacity in steel production which is leading to distressed prices and the
dumping of imports into Canada as export-dependent steel producing countries seek out relatively
open markets such as in Canada.  The Canadian steel industry has responded to dumping practices by
seeking relief under Canada's trade remedy laws.
Canada uses anti-dumping measures to ensure a level playing field in one of the most open
steel markets in the world and has no plans to change its policies regarding the steel industry.  Canada
is interested, however, in pursuing options thr ough the OECD Steel Committee to address problems
such as the global overcapacity of steel production.
The Secretariat Report states that "Over the pe riod under review, preliminary findings resulted in
provisional duties ranging from 12% to 136%...obliging exporters in some cases to increase their
price by over 100%." (page 24, para 81). "In the Canadian system exporters can avoid the payment ofduties if they raise the relevant price to or a bove the level of normal value" (footnote 64). Can
Canada explain how this is consistent with the WTO Agreement on Anti-Dumping?
Article 9.3 of the WTO Anti-dumping Agreement allows for either a prospective or
retrospective method of anti-dumping duty assessment.  Canada operates a largely prospective
assessment method which provides for greater transparency and predictability for importers andexporters of products that are subject to anti-dumping measures.  This assessment method is
consistent with the WTO Anti-dumping Agreement.
Canada’s anti-dumping enforcement system works as follows:
Exporters can obtain normal values from the Canada Customs and Revenue Agency for any
products that are subject to an anti-dumping measure. If, for an import transaction into Canada, theexport price is less than the normal value, anti-dumping duties will be assessed equal to the amount by
which the export price is below the normal value.  This will be a specific amount, not an ad valorem
duty that is assessed regardless of the price level.  If the exporter prices its products at a level equal to
the normal value, then no anti-dumping duty will be assessed.
Thus, anti-dumping duties are only assessed if there is a margin of dumping on the
transaction. By knowing the normal value in advance, the exporter can avoid the imposition of
anti-dumping duties and can be certain as to the final landed price to its customer in Canada.  It
should be noted that exporters are only “obliged” to raise their prices on sales to Canada if they want
to avoid the imposition of anti-dumping duties.WT/TPR/M/78
Page 32
Local content requirements
Paragraph 105 of the Secretariat Report mentions that "a number of local content requirements are
in place at the provincial level." Could Cana da provide further information about the programmes
mentioned that paragraph and explain how their local content requirements are in line with Canada's
WTO obligations?
Ontario wine :  Ontario's Wine Content Act  has been revised and liberalized.  The new Wine
Content and Labelling Act , which received Royal assent on December 15 for implementation on
January 1, 2001, makes a number of changes to Ontario's regime.  The new Act allows for foreign
products to be blended with wine manufactured in  Ontario.  The 25,000 tonne purchase requirement
has been eliminated, while the minimum content requirement for Ontario grapes has been set at 30%.
The Act allows for the adoption of basic labelling requirements (e.g. content requirements for Product
of Ontario and Product of Canada wine).  Labellin g standards will be based on those developed at the
national wine standard table.
Currently, wine that is a blend of foreign and domestic product can be sold through the
Ontario off-site winery retail store network, which was grandfathered under NAFTA for domestic
products.  Wineries can also bottle 100% foreign wine, although this wine may only be sold through
the LCBO.
Alberta (forestry sector) :  The Alberta Forests Act  does not require that all wood taken from
provincial lands be processed within the province.  The Forests Act  allows for the export of logs,
woodchips or trees if they are "dry pulpwood" or "Christmas trees" without requiring the permission
of the Minister.  All other trees, woodchips or logs may be exported with the permission of the
Minister.  There are no restrictions on how many years such permission can be renewed.  Logs and
woodchips are currently being exported from the province.  Mills are not required to use wood from
only within the province.  Thus, there are no local content requirements.
Newfoundland (petroleum and gas) :  The petroleum and gas projects referred to in the
Secretariat’s report are part of the Canada/Newfoundland Atlantic Accord .  The Accord is federal and
provincial legislation which allows for joint management of the offshore petroleum and gas resources.
Section 45 of the Accord provides that only first consideration be given to services provided within
the province and to goods manufactured in the province, where those services and goods arecompetitive in terms of fair market price, quality a nd delivery.  This is in relation to contracts awarded
by the companies developing the offshore projects (please note that government does not award the
contracts).  The contracts are awarded following a public tender call.
Nova Scotia (petroleum exploration) :  The Offshore Accord  and legislation related to
development of the offshore petroleum resource have similar provisions to the effect that developerswill put forward benefits plans to ensure local suppliers and workers have equal access to
opportunities and, more specifically, be given "first consideration" as long as their "goods and
services are competitive in terms of fair market price, quality, and delivery".
Subsidies
The Secretariat Report states that "Available information suggests significant differences in trade and
investment policies and practices between the federal and provincial governments as well as across
provinces (page 7, para 22). With regard to financing and investment incentives, how does Canada
ensure that the different policies and practices are consistent with WTO rules?WT/TPR/M/78
Page 33
The Canadian provinces have shared jurisdiction with the federal government in certain areas
of investment policy. However, all jurisdictions in Canada, both federal and provincial, have policiesdesigned to facilitate inward FDI and there are very limited differences in FDI policy between
provinces. Investment policies of the federal and provincial governments tend to be complementary
and mutually reinforcing.
With respect to their WTO-consistency, federal and provincial trade policy officials meet
formally at regular intervals throughout the year to  address current international trade and investment
issues. They are also in contact, as frequently as is required, to review trade and investment aspects of
particular policies and programmes.  These are the officials who advise their respective governments
regarding WTO obligations.  Government decisions on policies and programmes at both levels of
government reflect Canada's international obligations.
In the Government Report it is stated that "Canada was involved in several disputes under both
NAFTA and the WTO" and that (...) "Canada has consistently complied fully with the
recommendations and rulings of the DSB" (page 8). With regard to the Article 21.5 panel concerning
Canada-Brazil, could Canada explain how it has im plemented the recommendations of the DSB with
regard to the Canada Account?
Canada is in the process of drafting a compliance measure that will ensure that Canada
Account transactions in the regional aircraft sect or comply fully with Canada’s WTO obligations and
the rulings of the Article 21.5 panel in the Canada Case.
There has only been one Canada Account transaction in the regional aircraft sector since the
rulings by the Article 21.5 panel, and this transaction was structured to comply fully with the panel
rulings.
Rules of origin
According to the Secretariat Report (page 20,. para 68), “Canada has traditionally imported inputs
for its clothing industry from MFN sources. Ho wever, under the NAFTA "yarn forward" rule of
origin, Canada is being obliged to import from NAFTA sources." How does Canada evaluate the
impact of this trade diverting measure on the competitiveness of its domestic textile and clothing
industry?
Canada imports textiles inputs from many countries;  it is important to note that the USA is
and has traditionally been by far our largest supplier, supplying almost always over 50% of total
import value in the past 20 years.  The "yarn forward" rule is applied to trade partners under the
NAFTA and the Canada-Chile FTA.  It determines that the only textiles and apparel items to fully
benefit from the free-trade between the signatories to these FTAs are items which were produced from
inputs originating in their free trade area, starting with yarn/fibre and including all its transformations.
The NAFTA does not raise barriers to the import of products from third countries, including
products entering under our MFN tariffs.  The "yarn forward" rule of origin simply granted tariff
preference to North American products. For various reasons, it has been Canadian textile and apparel
industry's preference to import from the USA over the decades, and the NAFTA has served our
industry by facilitating this trade. Further, Canadian industry has made and continues to  undergo theappropriate adjustments to take full advantage of this trade agreement.WT/TPR/M/78
Page 34
State Trading
With respect to the Canadian Wheat Board (page 31), how does the participation of the producers
affect the definition of policies adopted by this STE?  Does the CWB receive any direct or indirect
financial resources from the Government?
Producers influence the formulation of the CWB’s policies through a 15-member Board of
Directors, ten of which are regularly elected by, and directly accountable to, Western Canadian wheat
and barley producers.  In addition, the Canadian Wheat Board Act provides that the Ministerresponsible for the Canadian Wheat Board must consult the Board of Directors and conduct a vote
among producers before any proposal can go to Parliament to change the marketing mandate of the
CWB.
The Government of Canada guarantees the CWB's initial payments to producers which has
involved direct transfers of financial resources from the Government when the producer pool accountshave gone into deficit.  This has occurred infrequently, and not since 1990/91.  In the past, accounts
have gone into deficit largely as a result of major declines in world prices stemming from dramatic
increases in export subsidies provided by other countries.
Under the Government of Canada’s export credit guarantee programs, the Government
guarantees repayment to the CWB of the principal and interest of all credit receivables.  In some cases
overdue accounts are rescheduled or the principal owed by a debtor country is reduced for a variety of
reasons, including humanitarian concerns.  When the Government of Canada has agreed to debt
reduction arrangements, the Government pays the amount owing to the CWB due from debtor
governments.  This is notified in the CWB annual report.  As in the case of other creditor countries
which also reschedule and reduce the debt of debtor countries, this is usually done in the context of
broad debt relief packages.
The CWB administers, on behalf of the Government of Canada, the leasing of hopper cars to
transport Prairie grain, and the advance payments programs for wheat and barley.  All costs associated
with these activities are recoverable from the government and are notified as amber support in
Canada’s domestic support notification in Supporting Table DS 7.
According to the Secretariat Report (page 31, para 109), "the Federal Government guarantees allow
the CWB to borrow money to finance its operation at "lower rates of interest than any private sectorcompany of comparable size  and credit worthiness." In the corrigendum to the document
G/AG/NG/R/3, of 10 November 2000 (Report of the Third Special Session of the Committee on
Agriculture – 28-29 September), Canada states that  "on state trading enterprises, while Canada
accepted that there is was a theoretical possibility that any entity, public or private, with market
power, could act to distort markets, Canada did not identify any real-world trade problems arising
from the activities of single-desk exporters of agricultural products."  How does Canada consider the
practice referred to above not to arise in any real world trade problems?
At the September 2000 Special Session of the WTO Committee on Agriculture, Canada
accepted that while there was a theoretical possibility that any entity, public or private, with market
power could act to distort markets, the [EC] propo sal did not identify any real world trade problems
arising from the activities of single-desk exporters of agricultural products.  This is clear in the
Secretariat’s corrigendum (G/AG/NG/R3/Corr.1) and has been misquoted above.  The statement in
para. 109 of the Secretariat’s Report does not demonstrate that the federal government guarantees to
the CWB distort trade.WT/TPR/M/78
Page 35
Services - General
What are the criteria adopted by the Government of Canada to determine the origin of a service or
service supplier for purposes of granting preferences or denying benefits under preferential trade
agreements?
Under the NAFTA (Article 1211) and the Canada-Chile FTA (Article H-11), a Party may
grant benefits to a service provider of another Party where the Party establishes that the service is
being provided by an enterprise owned or controlled  by nationals of the other Party.  Conversely, a
Party may deny benefits to a service provider of another Party where the Party establishes that the
service is being provided by an enterprise owned or controlled by nationals of a non-Party.  A Party
may also deny benefits to a service provider of another Party where the Party establishes that the
service is being provided by an enterprise that is owned or controlled by persons of a non-Party and
has no substantial business activities in the territory of any Party.
The reference to “substantial business activities” was fully discussed by the WTO Committee
on Regional Trade Agreement (CRTA) within the context of the examination of the NAFTA.  In
examining the NAFTA provisions on denial of benefits, the Committee observed that the terminology
used in the NAFTA differed from the one adopted in the GATS.  While GATS Article V:6 refers to
“substantive business operations in the territory of the parties to such agreement”, the NAFTA refersto “substantial business activities”.  This difference in wording gave rise to questions, but the
Committee took note of the explanations provided by the NAFTA Parties confirming that service
suppliers constituted under the law of a NAFTA Party, irrespective of whether they were owned or
controlled by nationals of a NAFTA Party or non-NAFTA Member, were entitled to the preferential
treatment provided for in Article V:6 in accordance with the NAFTA.
Services - Telecommunications
The Secretariat Report states (page 50, para 180) "Foreign investment in facilities-based
telecommunications service suppliers is permitted up to a cumulative total of 46.7% of total voting
shares, based on 20% direct investment and 33.3% indirect investment. In addition, at least 80% of
the members of the board of directors must be Canadian citizens and the service supplier must be
Canadian controlled."  Could Canada explain the rationale for these restrictions on market access
and national treatment?
Canadian telecommunications ownership and control were important elements of the Policy
Framework for Telecommunications in Canada, an nounced by the Minister of Communications on
July 22, 1987.  The rules were considered necessary "to ensure national sovereignty over this vital
sector of the Canadian Economy and for reasons of national security and economic, social and
cultural well-being".
Could Canada provide information on the applicati on of the CRTC Decision "Price Cap Regulation
and Related Issues" which came into force on 1 January 1998?  What are the criteria adopted for
establishing the price caps?
On May 1, 1997 the CRTC released its major decision with respect to the introduction of
local competition in Canada, CRTC Decision 97-8.  The same day the CRTC also releaseddecision 97-7, Price Cap Regulation and Related Issues.  Viewed as an effective way to manage the
transition to a fully competitive local service environment, price cap regulation limits, or caps, the
price charged for a particular basket of services.  Price caps are designed to imitate a competitive
marketplace by controlling prices, not profits.  The CRTC has introduced a four year price cap plan,
beginning January 1, 1998, under which all capped services will form a single 'basket' and will beWT/TPR/M/78
Page 36
subject to a price cap index (PCI).  The PCI will co nstrain changes in prices to the annual change in
the rate of inflation minus an adjustment for productivity gains of 4.5% (productivity offset), adjustedfor limited exogenous factors arising from events which are beyond the telephone company's control.
The productivity offset serves to ensure that overall telephone rates continue to decline relative to
inflation.  Three sub-baskets consisting of basis residential services, basic  business local services and
other local services will be subject to additional pricing constraints.
Further information on Price Cap Regulation and the CRTC Decision 97-8 can be found at
http://www.crtc.gc.ca/archive/Decisions/1997/DT97-9.htm.
Export Assistance
The Secretariat Report (page 32, para. 112) mentions that “Federal and provincial governments have
developed an array of programmes and services over the years to assist exporters”... “These
programmes range from export promotion to financia l assistance, mainly in the form of export
finance, equity, guarantees and insurance”. They are “intended to boost exports of goods and
services which have in fact increased dramatically and now account for 45% of GDP, up from 27% in
1986”. With regard to the Canadian Commercial Cor poration, according to information provided in
the programme’s website (www.ccc.ca, see footnote 92), it is an export sales agency that complements
the export financing and insurance activities of the EDC. Furthermore the programme’s role isdescribed as follows: “Using our governmental stat us to sign sales contracts on behalf of Canadian
exporters, CCC puts the power of Canada behind an exp ort sale guaranteeing its full and satisfactory
completion...”.  Does this mean that the programme provides export credit guarantees?  If so, what
are the premiums charged for the operations?
No, the CCC does not provide export credit guarantees.
The same website informs that the CCC, in its role as prime contractor in export transactions “helps
Canadian companies to enjoy more favourable cont ract terms including a reduction or waiver of
bid and performance bonds and payment guarante es, an introduction of advanced and progress
payments on the contract, and generally preferred contract terms” (www.ccc.ca/english/services_
International.cfm). Additionally, it is informed that “financing would not have been available without
the programme, and in most instances, the companies would not otherwise have been able to finance
those exports through existing credit facilities”. How does Canada feel that these more favorableterms comply with the SCM Agreement, Article 3 in particular?
To clarify, the following elaborates on the description of the two services that CCC offers in
support of Canadian suppliers that are referenced in the question:
- The CCC enters into contracts with foreign customers for the provision of Canadian goods or
services.  The CCC then subcontracts with the Canadian supplier.  A fee is payable by theCanadian supplier to cover the CCC’s direct and indirect costs.
- CCC's "Progress Payment Programme" facilitates the provision of working capital financing
by commercial banks during the production phase, i.e. prior to export. A fee is payable by the
Canadian supplier to cover CCC's direct and indirect costs.
With regard to Northstar (www.northstar.ca, see footnote 92), the website informs that the
programme provides fixed-term loans to foreign buyers of Canadian exporters. The loan is secured by
a registered lien over the exported goods, and insured by the EDC (www.northstar.ca/services/
products.html). Does the financing provided by Nort hstar comply with the OECD Arrangement terms
or is financing provided through the “market win dow” or other similar mechanism? What premiums
are charged by the EDC for the guarantee of these loans?WT/TPR/M/78
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Northstar Trade Finance is a private commercial financial institution which provides asset-
based financing on commercial terms.  Therefore EDC's support (insurance) is in the category of"Pure Cover". The premia charged by EDC are consistent with the OECD Minimum Premium
Benchmark system.
With regard to the Program for Export Market Development, the website (www.infoexport.gc.ca/
PEMD_e.asp, see footnote 92), informs that any financial assistance provided by PEMD is to be
repaid, but the repayment is conditional - based on th e incremental export sales or contracts made by
the recipient. Since the programme is export oriented and repayment is conditional upon export sales
or contracts how does Canada explain the complian ce of the programme with Article 3 of the SCM
Agreement? Since the PEMD assists Canadian com panies in bidding outside Canada against foreign
competition (www.infoexport.gc.ca./PEMD_pr ojects-e.asp) how does Canada explain the
programme’s compliance with Article 3 of the SCM Agreement, Article 3 in particular?
Assistance provided to companies under the PEMD facilities for companies is repayable.
Details of how the repayment mechanism operates in each of the three facilities available to eligible
companies are found at the following website:  http://www.infoexport.gc.ca/pemd/menu-e.asp.
CHILE
With regard to labelling and other requirements for fresh produce and for the certification of
professional services, provincial regulations vary widely among the various provinces and are in
many cases more restrictive than the regulations at federal level.  Since it is the central Government
which negotiates trade agreements, and the province s do not necessarily subscribe to them, how can
Canada claim that such practices are in line with the Government's stated interest in liberalizing
markets, given the fact that in nearly all cases the provincial measures have a more restrictive effect
on international trade than the relevant rules agreed to by the central Government?
It is unclear from the question as to what aspects of labelling of fresh produce Chile is
referring to and in what manner Chile considers some provinces to be more restrictive than federal
requirements.
Pre-packaged fresh produce labelling is governed by federal requirements, for example with
respect to statement of net weight.
Bulk produce sold at retail is governed by provincial requirements.  For labelling, in the
absence of any further specific details from Chile, we are not aware of any provincial requirements
regarding labelling of bulk fresh produce at retail, other than requiring the name of the product and
the country of origin to be indicated by placard or other means.  The country of origin is required by
some but not all provinces.  It is not clear how this retail requirement for bulk produce is "more
restrictive" than federal requirements because this is a provincial jurisdiction for bulk retail labelling.
Should Chile wish to elaborate on its question, Canada is prepared to provide any further
information.
Given the specialized education and practical training required by individuals engaged in the
supply of professional services, these activities tend to be highly regulated.  Regulation of
professionals in Canada is undertaken by provincial and territorial bodies, while incorporation ofprofessional service firms may fall under either provinci al or federal authorities.  In international trade
relations, the Federal Government negotiates commitments to be taken by Canada, but in some
instances, implementation can be the responsibility of sub-national entities.  Various mechanisms
exist to facilitate consultations, and coordination between federal and sub-national bodies.WT/TPR/M/78
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Nevertheless, Canada's decentralized regulatory system has resulted in certain impediments to trade in
professional services, including to interprovincial labour mobility.  In order to address some of theseconcerns, the Agreement on Internal Trade is seeking the maximum possible reconciliation of
differences in occupational standards for over 100 regulated professions and trades.  In this context,
guidelines have already been prepared laying out a process for mutual recognition and reconciliation
of occupational standards across provinces.
We should like to know what provincial regulations concerning local content are applied to wine
production and what are the market conditions governing local wines in certain provinces.
Ontario and British Columbia are the two principal wine producing provinces in Canada.
In Ontario, the new Wine Content and Labelling Act will enter into force on January 1, 2001.
It provides for regulations for the establishment of a minimum Canadian content limit for wine
produced in Ontario.  The regulations have not yet been finalized; however it is anticipated that the30% level originally established under the Wine Content Act in 1989, and subsequently reduced to
25% in 1992, will provide the basis for a similar level in the new regulations.  Labelling regulations
will be based on the National Wine Standard expected to be completed in March 2001.  British
Columbia has no minimum Canadian content requirements for wine produced there.
In paragraph 27 reference is made to "orderly ma rketing systems" and some examples are provided.
We should like to be provided with further detail s of how these systems operate, for example, the
products to which they apply, the existence of preferences for local products over foreign products,
the role of the State and the provinces in such systems and the amounts involved.
By orderly marketing systems Canada is referring to the Canadian Wheat Board and supply
management for dairy, poultry and egg products.
The Canadian Wheat Board (CWB) is the marketing agency for western Canadian wheat and
barley growers, responsible for the sale of thei r wheat and barley in export markets and in the
domestic market when it is for human consumption. Its role is to market these grains for the best
possible price. Proceeds from all sales, less the marketing costs, are passed back to farmers.
Authority is granted to the CWB through the federal Canadian Wheat Board Act .  Provincial
governments do not participate.  No local over foreign product preferences exist under the legislation.
The CWB does not have any jurisdiction over the im portation of wheat and wheat products or barley
and barley products; importation of these products is conducted by the private trade at prevailing
market prices.  Tariff rate quotas which are in place for these products are administered on a first-
come first-served basis at the border.
For more information on the Canadian Wheat Board visit the web site: www.cwb.ca.
Supply management is enabled through federal-provincial agreements, whereby national and
provincial agencies jointly exercise the authority  to determine the amount of commodity which may
be produced.  Provincial governments are responsible for intra-provincial trade, while the federal
government is responsible for interprovincial and international trade.
Supply management is exercised in both the fluid milk and industrial milk segments of the
Canadian dairy industry.  The fluid milk market is a provincial responsibility while industrial milk is afederal one.  Fluid milk supply is regulated by quota determined by individual provincial milk
marketing boards and is allocated to individual producers.  Fluid milk sales totalled 2.61 billion litres
in 1999.  For the industrial milk market, each year, the Canadian Milk Supply Management
Committee (CMSMC), gathering together representatives from producers organizations and each
provincial governments, sets a national productio n target or Market Sharing Quota (MSQ) forWT/TPR/M/78
Page 39
industrial milk which is then allocated at the provincial and individual producer level by provincial
marketing authorities.  The MSQ was set at 161 million kg. of butterfat for the dairy year 1999-2000.
For more information on the Canadian dairy sector visit the web site:  www.dairyinfo.agr.ca.
The Canadian Egg Marketing Agency (CEMA), the Canadian Broiler Hatching Eggs
Marketing Agency (CBHEMA), the Canadian Turkey Marketing Agency (CTMA) and the Chicken
Farmers of Canada (CFC) are producer-run organi zations, with downstream industry representation
on their boards, that control the supply of eggs, broiler hatching eggs, turkey and chicken respectivelyby establishing a national production quota that is divided among the respective provincial boards,
which then allocate it to individual producers.  In 1999, the total Canadian production of eggs was
487 million dozen, while that of chicken was 839,000 tonnes, and turkey 139,000 tonnes.  The
National Farm Products Council (NFPC) is a federal body which oversees these national orderly
marketing agencies.  The agencies receive no financial assistance from government, but rather financetheir operations through producer levies.
For more information on these organizations please visit the National Farm Products Council
web site:  www.nfpc-cnpa.gc.ca.
In paragraph 31 concerning trade in services, it is stated that Canada's public health and public
education systems will not be jeopardized in the negotiations on services.  We should like to be given
further details about the scope of this policy objective.  Does it mean that Canada will make no
further commitments in the educational and health sectors, in respect of the four modes of supply?
Canada's position regarding commitments to be undertaken as a result of the current GATS
negotiations remains to be defined.  It is too early in the negotiations to make a determination of the
sectors for which Canada will undertake specific commitments, as this will be a function of what our
trade partners are prepared to commit to.
That being said, Canada's Minister for International Trade has stated on several occasions
that Canada’s public health and public education system are not negotiable.  In previous trade
negotiations, the Government of Canada has consistently preserved the ability of Canadian authoritiesat all levels to regulate and to retain policy flexibility in the public education and public health
sectors, based on Canadian objectives and priorities.  The Government of Canada intends to ensure
that the same ability is preserved in the context of the current GATS negotiations.
Paragraph 54 refers to Canada's continuing negotiation of a free-trade agreement with EFTA.
However, it is also stated that certain agricultural sectors will not be covered and that no new
obligations will be established in respect of market access, services, investments, intellectual property
and government procurement.  What, then, is the purpose of the agreement and what does it cover?
The Canada-EFTA Free Trade Agreement will be a “first generation” trade agreement,
focusing on the elimination of industrial tariffs, some liberalisation for agriculture, and new
co-operation in the area of trade facilitation and competition policy.  The removal of tariffs and
improvement of market access conditions will provide immediate and tangible benefits to exporters
and investors.  The initiative reaffirms the Govern ment's commitment to the importance of trade and
investment liberalisation and  will demonstrate the possibilities for co-operation between two
important, economically well-developed regions.
With regard to agriculture, we should like to be given more background information on the "net
income stabilization account" as well as on the "province-based safety nets".  Similarly, could
Canada provide more details on the decoupled income support provided in 2000-2001 to producers inSaskatchewan and Manitoba?WT/TPR/M/78
Page 40
Net Income Stabilization Account (NISA)
NISA assists producers in stabilizing their farm income through an individual account
concept.  Governments match annual producer depo sits into an individual NISA account up to a
maximum of 3% of their eligible net sales (ENS) of agricultural commodities.  The funding of these
matching deposits are split between the federal and provincial governments, at 2% and 1% of ENS,
respectively.  Producers may also deposit up to an additional 20% of eligible net sales into their
account.  The annual eligible net sales limit for an individual is $250,000.
Producers may access funds from their accounts on an annual basis through two calculations
which determine the amount they are able to withdr aw.  The main program trigger - the Stabilization
Trigger - provides access to funds when the farm’s operating margin (gross margin) drops below
the average operating margin for the previous five years.  In addition, the Minimum Income
Trigger allows a withdrawal from the account to bring the producer’s individual or family income upto a pre-determined threshold.  The threshold is currently set at $20,000 for an individual or $35,000
for a family.  NISA accounts cannot go into deficit, so producers must make deposits in stable or
improving income periods to ensure that they will have sufficient funds accumulated to make up a
short to medium term income shortfall.
Companion (Provincial) Programs
The Companion Programs are to assist producers to adapt to increased responsibility for risk
management associated with agriculture as well as to address agricultural development.  The
province-based initiatives include research and development activities by industry groups; adaptation
initiatives to help address structural adjustments; and, initiatives to complement existing programs,
such as NISA and crop insurance.  In both Ontari o and Quebec, one of the companion programs is an
income stabilization program that provides payments when the actual market price received by
producers is lower than the target support price.
The companion programs that relate to research and development have been reported
as "green" programs consistent with Annex 2 of the WTO Agreement on Agriculture
(G/AG/N/CAN/29).  Those programs that compleme nt existing programs have been reported within
the Aggregate Measurement of Support as "amber" non-product specific support (ST DS:9).
The Canada-Saskatchewan Adjustment Progra m and Canada-Manitoba Adjustment Program
is available to producers in Saskatchewan and Ma nitoba who grew crops in 1999 that were once
eligible under the Western Grain Transportation Act .  This would include all major grains, oilseeds
and special crops.  The total cost of the program is Cdn $360 million which is cost shared between the
federal and provincial governments ($240 million federal, $160 million provincial).  The amount of
the payment is based on a percentage of the first $125,000 of a producer’s qualifying sales of thesecrops in a historic period.  The payment percentage will be determined by dividing the total availablefunds by the total eligible sales in the province.
This program was notified by Canada as a measure exempt from reduction commitments
(G/AG/N/CAN/36).
We should like to know whether the review of the "lar gest regulatory barriers to entry into the airline
industry" requested by the Competition Bureau has b een completed.  What are the conclusions of that
study?  How is air transport policy towards other countries affected by the excessive concentration of
the airline market in Canada, the lack of competition and the size of the bilateral market with theUnited States?  In the specific case of Chile, is Canada interested in establishing an open skies regime
or at least a suitable framework for direct air transport links between the two countries, for both
passengers and cargo?WT/TPR/M/78
Page 41
Like many countries around the world Canada considers the airline industry to be
fundamental to the domestic economy and an important national symbol.  In the legislation passed inJuly 2000, the Canadian Government  retained provisions requiring that the Canadian airline industry
remain owned and controlled by Canadians and that the prohibition on cabotage be maintained.
However, the Minister of Transport has stated that if an adequate level of competition does not
develop in the Canadian domestic market, he will reconsider these issues.
In his December 21, 1999 announcement approving the acquisition of Canadian Airlines,
Canada’s Minister of Transport announced that air service markets with over 300,000 annual
scheduled passengers would be open for designation to any number of Canadian airlines that wish to
operate a scheduled international service.  He also announced that he would conduct a review of
Canada’s international air policy in one year with a view to further liberalization.  The Department of
Transport will soon initiate the review by conducting consultations with Canadian stakeholders.  Thenew policy will be implemented in November, 2001.
Canada and Chile have met several times in recent years to discuss ways to liberalize
arrangements for air services between their terr itories.  Canada remains ready to continue this
dialogue, but believes it is best conducted through diplomatic channels between air negotiators.
The prohibition of cabotage is included in the above-mentioned review.  The Secretariat report also
states that, in the opinion of experts on the question of cabotage, the opening of domestic routes to
foreign airlines could promote competition for th e benefit of consumers.  However, under the Canada
Transportation Act, "only" Canadian companies may provide domestic air transport services and
international services negotiated under bilateral air agreements.  How are these proposals
compatible with existing legislation?
As described in our answer to the above questions, the Canadian Government has retained
provisions requiring that the Canadian airline industry remain owned and controlled by Canadians andthat the prohibition on cabotage be maintained.
The authorities have reacted to Air Canada's dominant position in the domestic market by adopting
legislation to prevent excessive pricing of airline tickets.  Could Canada state how compliance with
this legislation is monitored and how competition in this market is affected?
Pricing by airlines in Canada continues to be determined independently by each airline and
without government regulation.  Some safeguards ha ve been put in place however and are designed to
protect the public from excessive prices on routes served by only one carrier and its affiliates.
Specifically, the Canada Transportation Act has been amended to provide the Canadian
Transportation Agency with increased authority to review passenger fares and cargo rates on
monopoly routes.  The Agency has the power to investigate complaints and monitor airline prices todetermine that fares and rates are reasonable, and that carriers are offering an adequate range of fares
and rates to travellers and shippers.  The agency has the power to disallow a fare, rate or price
increase; direct the carrier to reduce the fare, rate or increase; and order the payment of refunds, if
practical, to passengers who were found to have been overcharged.  This new law is designed to
provide a level of protection to the Canadian consumer on routes where competition is lacking.  It isnot a law that has a direct impact on competition itself.
The provisions of Canada’s Competition Act continue to apply and new regulations
identifying examples of potentially anti-competitive activity by persons operating a domestic air
service have been brought into force.  The Compet ition Act prohibits predatory pricing, for example,
which, while temporarily resulting in lower prices, substantially lessens competition and ultimatelyleads to higher prices for the consumer.WT/TPR/M/78
Page 42
Does Canada agree with the Secretariat assertion at the end of paragraph 174 concerning the
advantages of multilateral air transport libera lization?  What sectors should be covered?
Canada continues to participate in a variety of multilateral fora and believes that there is merit
in considering potential alternatives to the bilate ral process for negotiating air traffic rights.  The
multilateral approach is being raised as an issue in the review of Canada’s international air policy that
will be taking place over the next year.  At the same time Canada believes that the bilateral system is
one that works efficiently and effectively and itself offers much flexibility in terms of further airliberalization.  Canada anticipates that the bilateral system will remain in place for the foreseeable
future.
Given the existence of provincial regulations on the import of Pacific and Atlantic salmon, namely,
"Federal – Provincial Policy for the Importat ion of Pacific Salmon into British Columbia" and
"Policy for the Importation of Atlantic Salmon in to British Columbia", how does Canada justify the
existence of provincial requirements more restrictive than those applied at federal level?
The measures (policies) in question are applied by the federal government (namely, the
Department of Fisheries and Oceans) under national legislation (Section 43 of The Fisheries Act).
There are two distinct policies on the introduction of live salmon and breeding material
(e.g. eggs) into British Columbia:
1. the Federal Policy on Atlantic Salmon Introductions;  and
2. the Federal/Provincial Policy on Pacific Salmon Introductions.
As the titles indicate, the first is a federal policy and the second is a policy established jointly
by the two levels of government (through a federal-provincial Memorandum of Understanding).  In
practice, both policies are carried out through consultation in the federal-provincial
Transplant/Introductions Committee, which reviews all applications for introductions or transfers.
However, the federal government (Department of Fi sheries and Oceans) has the exclusive authority to
approve such transfers.
The policy on Atlantic salmon introductions, for example, provides for an extra level of
health security to protect wild Pacific salmon from diseases of Atlantic salmon that might have an
impact on wild Pacific salmon stocks.  This is accomplished through a requirement that Atlantic
salmon eggs be placed into quarantine on arrival in the province.  When the eggs hatch, the progeny(fry) are subject to a further quarantine for 4 months or until they reach 3 grams in weight.  The fry
are then placed into isolation until they are read y to enter sea water, provided that no diseases of
concern are found.
Separate ‘introduction and transfer’ policies exist with respect to salmon and other fish
species in several other provinces of Canada, depending on the particular fish health needs of thoseprovinces.
Have these more restrictive measures been notified to the WTO?  If not, why not?
These policies are applied by the federal government in respect of one particular sub-national
jurisdiction (the Province of British Columbia).  Separate introduction/transfer policies exist with
respect to salmon and other species in several other provinces of Canada, depending on the particularneeds of those provinces.WT/TPR/M/78
Page 43
The policy for Pacific salmon introductions into British Columbia has been in place
since 1988, and the policy applicable to Atlantic salmon was first issued in 1985-86 and revisedin 1992.  Both of these policies pre-date the SPS Agreement and, accordingly, have not been notified
to the WTO.
As a Party to the WTO and its Agreements, Canada is cognisant of, and strongly committed
to, its obligations regarding transparency.  These policies are administered in a fully transparent
manner.
Under the provincial regulations applicable to the import of Atlantic and Pacific salmon, ("Federal-
Provincial Policy for the Importation of Pacific Salmon into British Columbia"), is more favourable
differential treatment authorized in respect of countries which demonstrate that they are free of the
diseases it is sought to prevent?
The policies are based on the fish health status of the facility supplying the eggs.  In this
regard, all supplying facilities are treated equally, regardless of the country in which they are located,
including facilities in Canada.
CZECH REPUBLIC
Over the past two years, Canadian authorities hav e undertaken consultations with domestic and other
partners on investment issues, including the possibility of a WTO agreement on investment.  Pleasecomment on the results of these consultations on the eventual negotiation of multilateral investment
rules at the WTO.
Investment issues have clearly been a key element of the globalization debate.  Similarly, in
Canada, investment rules remain a sensitive issue.  Canada conducted extensive consultations with
Canadians in the lead-up to Seattle.  Following  from these consultations, Canada indicated that,
irrespective of the position which is taken on investment, we are committed to safeguarding the right
to regulate in the public interest in strategic sectors such as health, education, environmentalprotection and culture.  Clearly, there is no consensus among WTO members to move forward on
investment rules at this time.  Canada remains committed to ongoing consultations with Canadians to
seek their views on international investment issues including investment rules.
The Czech Republic is undergoing substantial transformation of its textile and clothing industry,
analogous to changes which have taken place in this sector of Canadian industry in the past twodecades, causing a loss of 250,000.  Please prov ide information on the Canadian experience with
social problems relating to the transformation of  its textile industry.  Was the modification of
Canada's status from a producing country to a market dominated by imports, supported by some
re-qualification programs?
In 1995 HRDC established a steering committee of business, labour, education and
government representatives to oversee a human resource needs analysis of the Canadian apparel
industry.  The research, which included a survey of some 300 apparel companies, was concluded
in 1996.  The report which is entitled Human Resources Needs Analysis of the Apparel Industry  can
be ordered through the HRDC web site:  http:/ /www.hrdc-drhc.gc.ca/hrib/hrp-prh/ssddes/english/
industryprofiles/243/index.shtml.
The research identified a number of needs, including better human resource planning; the
development of strong networks across the indust ry, especially between manufacturers and between
educators and manufacturers; improvement of the industry's image; consolidation of apparel education
programs; and better industry-wide data gathering methods.WT/TPR/M/78
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Canada implements the relatively st rict "Importation of Intoxicating Liquors Act" that provides each
province with a monopoly on the introduction of all alcoholic beverages into its territory.  Is thereany intention by the Canadian authorities to liberalize the licensing system of beverages?
We have no plans to amend the IILA.  Likewise, we are not aware of any plans for possible
changes in Canada's provincial liquor boards at this  time.  They have been in existence since before
the GATT was created and are consistent with the provisions of GATT Article XVII.  They operate as
businesses whose decisions are based on commercial considerations and market forces.  They operateas businesses whose decisions are based on commercial considerations and market forces.  Imported
products compete on an equal footing with domestic products and enjoy a large share of the Canadian
market (imported spirits - 31%, imported wines - 62%).
DISCUSSANT
Recent macroeconomic developments and investment flows
The Secretariat Report (in paragraph 6 on page 3) informs us that the Canadian Government is using
the budgetary surplus to increase spending on sectors such as public health and education and
intends to continue this practice in 2001.  It also says that a five-year tax reduction plan was
introduced which includes the restoration of full indexation of the personal income tax system to
inflation, as well as the reduction of personal income, capital gains and corporate taxes.  I would beinterested in further information on whether the budgetary surplus is also planned to be used to
further decrease the debt-GDP ratio, which is still high in international comparison, and the policy
rationale behind such a decision.  It would also be interesting to hear a bit more from the Canadian
delegation on the expected fiscal effects of the tax reduction package, especially in light of
expectations of a slow-down in the U.S.
Mr. Chairman, in light of these trends (in both trade and investment), which show an enhanced
integration with the United States and reflect the accompanying increased dependence on theperformance of the U.S. economy, I would like to ask the delegation of Canada what strategies they
are following, what efforts, initiatives they are c onsidering, in addition to FTAs mentioned in the
reports, to mitigate this exposure, especially in case of a hard landing of the U.S. economy.
Historically, the lion’s share of Canada’s trade and investment is conducted with the United
States, Canada’s neighbour and the world’s largest market.  Canada has benefited significantly fromthis exposure, reflecting the healthy state of the U.S. economy and the success of sound
macroeconomic policy in the U.S.
However, this exposure can be problematic in the case of a hard landing of the U.S. economy.
Realistically, in a worst-case scenario, Canada (or any other major trading partners of the U.S.) cannot
escape unscathed.  Fortunately, the likelihood of such a scenario materializing is low, since that the
U.S. policy environment remains conducive to non- inflationary growth.  Indeed, the consensus
forecast calls for solid growth of 3.5% in the U.S. next year.
Meanwhile, Canada has maintained an independent macroeconomic policy, even with its
increased integration with the United States.  For ex ample, Canada’s ability to achieve a low-inflation
environment permitted cuts in interest rates to levels below those in the United States, thus helpingmitigate the adverse impacts of the 1997-1998 crisis in Asia.  Sound domestic macroeconomic
policies are the surest instrument to promote prosperity in Canada, irrespective of developments
abroad.WT/TPR/M/78
Page 45
Addressing the differences in trade and invest ment policies at federal and provincial levels
Let me ask the Canadian delegation to give us some indication about the federal government's plans
to further improve the AIT with the aim of addressing these differences.  I would be interested in
particular in how these plans would impact on the provinces adherence to WTO rules and disciplines.
The federal, provincial and territorial governments are continuing negotiations to clarify and
improve the Code of Conduct on Incentives under the Agreement on Internal Trade.  Ministers will be
presented with recommendations at their next meeting.  Officials are continuing negotiations on theimplementation of Annex 606, Corporate Registration and Reporting Requirements, which has thereconciliation of these requirements as its goal.
It should be noted, however, that the AIT pertains to how we organize ourselves on internal
trade, not on international trade, or on our international obligations.  Its current status does not affectCanada’s ability to meet its obligations under the WTO.”
GMOs and the precautionary principle
I have two questions here. Firstly, the two cited stat ements, at least to me Mr Chairman - and I have
to admit that even as a former Chair of the CTE I am not an expert on all issues at the
trade-environment interface - seems to be somewhat inconsistent.  I would be glad for clarificationfrom the Canadian delegation.  Secondly, paragraph 30 on page 9 of the Secretariat Report says that
Canada has not signed for ratified the [Biosafety] Protocol.  I would appreciate information on the
prospects for and possible date of ratification.
Canada is committed to pursuing mutually supportive trade and environment policies, and
noting the two references in question, we do not believe that there is any inconsistency in ourpositions on GMO labelling and the precautionary approach in the Biosafety Protocol.
To reiterate our policy on GMO labelling, Canada is concerned over mandatory labelling
requirements for foods derived from biotechnology which appears to go beyond a scientifically-based
food safety objective.  We believe that government-regulated GMO labelling based on the fact that
the food is derived from biotechnology would represent labelling based on non-product relatedprocess and production methods, and that the mandatory nature of such npr PPM labelling would
violate the non-discrimination principle for like products in both GATT and the WTO/TBT
Agreement.
On the Biosafety Protocol, this multilateral environment agreement governs the transport of
Living Modified Organisms (LMOs) and not GMOs.  The Biosafety Protocol calls for documentation
requirements for bulk shipments, and does not have any requirements for labelling of GMO foods.
On the issue of ratification of the Biosafety Protocol, formal consultations were held earlier
this fall with major stakeholders on the issues of signature and ratification of the Protocol.  Both
issues are being accorded a high priority for co nsideration by the new government. In the meantime,
Canada is taking an active part in the Intergovernmental Committee (ICCP) process, addressing
relevant issues to be resolved prior to the Protocol's entry into force.
Preferential trade agreements
I have two related questions.  Firstly, could th e Canadian delegation indicate the intention and
timeframe for the elimination of duties on the remaining goods under the Agreement with Chile?
Secondly, will the agreement negotiated with the EFTA be an agreement under Article XXIV of the
GATT and Article V of the GATS?WT/TPR/M/78
Page 46
Regarding the Canada-Chile FTA, on July 5, 1997, tariffs were eliminated on the majority of
products that make up Canada-Chile bilateral trade.  As a result of a November 4, 1999 agreement,Canada eliminated  tariffs on an additional  selection of products, mainly man-made filaments and
fibres, on January 1, 2000.
For products on which tariffs are being gradually eliminated, the fifth round of cuts will
be made on January 1, 2001.  Two successive rounds of tariff cuts will follow on January 1, 2002
and 2003, at which time all remaining tariffs on goods covered by the agreement will have beeneliminated.
The Canada-EFTA Free Trade Agreement will fo cus on the elimination of industrial tariffs,
some liberalisation for agriculture, and new co-operation in the area of trade facilitation and
competition policy.  It will not include new commitments in the areas of services, investment, or
intellectual property.
Market access for LDCs
May I ask Mr Chairman the Canadian delegation, wh ether there are plans to further improve market
access for LDCs, especially in light of the extremely low share of these countries in Canada's imports.
After extensive consultations with Canadian industry, Canada improved its market access for
products from LDCs, such that 90% of all Canadian tariff lines are duty-free.  Any furtherimprovements would require a new round of consultations with domestic industry.  Canada’s
unilateral tariff preferences for developing and least developed countries will be reviewed by the
Canadian Government by 2004.
Investment Canada Act of 1985
I have two questions concerning the Act.  What are the criteria used in determining whether a notified
acquisition ensures "net benefits to Canada"?  In addition what are the factors on the basis of which
the decisions to review a notified acquisition is made?
The Investment Canada Act provides for the review of significant acquisitions of Canadian
business to ensure net benefit to Canada.  A range of factors are considered but the Act does not
require that an investor undertake obligations in any of these areas as a condition of approval.  The
factors considered  for "net benefit" pursuant to the Investment Canada Act are outlined in Sections 20
and 21.  The Act can be found on the web at http://investcan.ic.ca.
With regard to the second question, the Investment Canada Act provides for the review of
significant acquisitions of Canadian businesses (e.g. direct acquisitions of Canadian businesses worth
more than $192 million) to ensure net benefit to Canada.  For certain sensitive sectors (uranium,
transport, financial services, cultural industries), the review threshold for all countries is $5 million for
direct acquisitions and $50 million for indirect acquisitions (that is, foreign acquisitions of foreign-owned business in Canada) if the assets in Canada are 50 per cent or more of the assets or the targeted
company.  Except for investments in the cultural industries, the Investment Canada Act applies only
to acquisitions of large Canadian companies and not to greenfield investments or acquisitions of
smaller Canadian companies.WT/TPR/M/78
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Tariffs
I would like to ask whether it is the intention of Canada to reduce high tariffs and tariff peaks,
especially in the sensitive sectors.  If yes, what timeframe could be envisaged.  Is there any plan to
simplify the rather complex tariff relief measures in the near future?
Canada's current tariff structure reflects, among other things, the particular economic interests
and competitive positions of Canadian industries over time, as well as the concessions that Canada
and other countries have made in successive rounds of international tariff negotiations.  The relativelysmall number of tariffs that remain in place reflects the needs of certain sensitive domestic sectors,
which Canada views as currently requiring tariffs because of their competitive situation.  Canada's
policy in this area is comparable to that of most other WTO Members, who generally maintain tariffs
to protect those industries in their economies that they consider sensitive to duty-free trade.  Having
said this, Canada is certainly prepared to discuss additional tariff reductions in the context of future
trade negotiations.
We are not clear on the reference to complex tariff relief measures.  If you could provide us
with more information on this, we would be pleas ed to provide you with information. In general
terms, there are no plans for changes.
Anti-dumping and countervailing actions
Here, what I would like to ask are the following:  (1) Have there been changes in the share of such
measures since the entry into force of the WTO, and if so, in what direction?  (2) What is the
approximate share of anti-dumping reviews that are started on the initiative of the Tribunal or the
CCRA?  (3) What is the reason for giving the right to initiate ex-officio reviews to two, rather than
one institution?
When the WTO Agreements were implemented on January 1, 1995, Canada had 88 anti-
dumping measures in place, of which 14 measures, or 16 percent, had been in place for 10 years ormore.  Thus, the percentage of measures in place for 10 years or more is the same as it was then.
Canada has been required to conducted sunset reviews of anti-dumping orders since the
implementation of the Special Import Measures Act in 1984, approximately 11 years prior to the
WTO requirement to conduct such reviews.
No expiry reviews have been "self-initiated" by Canadian officials. In practice, expiry reviews
are initiated based on submissions from the domestic industry.  The submissions must satisfy the
CITT that a review is warranted.  A review may result in the anti-dumping measure being allowed to
expire on its 5-year anniversary or it may result in the measure being continued (in which case it will
be reviewed or allowed to expire in another 5 years).  If a review is not conducted, the measure will
expire on its 5-year anniversary.
Only one Canadian institution, the CITT, can init iate an expiry review.  Under the legislation,
these reviews may be initiated on the CITT's own initiative or at the request of the Minister of
Finance, the Commissioner of the CCRA or any other person or of any other government.  However,
as mentioned in the previous answer, in practice, ex piry reviews are initiated only if submissions from
the domestic industry satisfy the CITT that a review is warranted.WT/TPR/M/78
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Agriculture
It would be interesting to receive from the Canad ian delegation an insight into the rationale for this
apparent inconsistency in agricultural support policy and to hear what are the reasons for
maintaining supply management schemes for some selected sectors but not for others?
At this time, supply management systems exist for dairy, chicken, turkey, eggs and broiler
hatching eggs and chicks.  Supply management as a marketing system was chosen by producers in
each of these sectors.  The sectors operating supply management marketing systems do so under theauthority of federal and provincial marketing legisl ation and regulations, in conformity with Canada’s
international obligations.
Since the issue of various forms of preferential trea tment within tariff quotas has attracted attention in
the past it would be of benefit to us if the Canadi an delegation could share its views on this issue, in
particular on the criteria which have to be met in order for country reserves and preferential in-quotatariffs to be compatible with the relevant rules of the WTO.
Country reserves are used by a number of WTO Members.  In the case of some agricultural
TRQs, the Uruguay Round modalities for current access called for current access opportunities onterms at least equivalent to those existing to be maintained, and these terms may have included
country reserves.  In other cases, country allocations have been established by Members pursuant to
GATT 1994 Article XIII.  As is the practice of other Members, Canada may provide preferential
tariffs within quotas to some Members.  The origin of these tariff preferences may be under regional
and bilateral trade agreements, under Article I.2(a) of the GATT 1994, and under GSP and otherpreferences in favour of developing countries.
Sanitary and Phytosanitary Measures
The Overview of the Secretariat Report indicates that there has been a sharp increase in the number
of Canadian notifications submitted to the SPS Comm ittee.  It is striking that the meat imports are
allowed from only four countries.  This figure c an be interpreted in several ways.  For example it
could mean that the Canadian market attracts relatively little attention from exporters, but it couldalso mean that in the view of the relevant Canadian authority only four out of 140 Members of the
WTO have been able so far to demonstrate that their sanitary measures achieve the Canadian
appropriate level of protection and therefore most of the requests for exportation have been turned
down on this basis.  It would be highly appreciated if Canada could elaborate on this, including on
the practice followed by the relevant Canadian aut hority in recognising equivalence on a formal or
ad hoc basis (are there any requests for such status being considered at present with regard to
meat?).
The volume of Canadian notifications reflects Canada's commitments to our transparency
requirements under the WTO SPS Agreement.
In terms of meat imports, indeed, in the face of BSE, TSEs, foot-and-mouth disease and other
meat related human and animal health risks, Canada implements those measures necessary to achieve
our appropriate level of protection.  However, the Secretariat's report which indicated that Canada
only imports meat from four countries is factually incorrect.  Many more than four countries have met
Canadian meat import requirements and enjoy access for pork, poultry, beef and meat of other animal
species.
For example, in the fresh, chilled and frozen category alone, for pork, poultry and beef,
12 countries have successfully met Canadian import requirements and are currently shipping to
Canada: USA, Mexico, Costa Rica, Nicaragua, Argentina, Uruguay, Chile, Australia, New Zealand,
Denmark, Finland, and France.WT/TPR/M/78
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The list grows significantly when we look at cooked pork, poultry and beef meats, to a total of
28 countries which are successfully shipping to Canada: USA, Mexico, Nicaragua, Costa Rica, Brazil,Argentina, Uruguay, Chile, UK, Ireland, Denmark,  Germany, Belgium, Holland, France, Portugal,
Italy, Switzerland, Slovenia, Romania, Hungary, Poland, Finland, Israel, Thailand, Peoples Republic
of China, Cook Islands and Puerto Rico.
Canada stands prepared to enter into consultations with the aim of achieving bilateral and
multilateral agreements on recognition of the equivalence of specified sanitary or phytosanitarymeasures.  In practice however, as was recognised at the November SPS Committee meeting there are
few true equivalency agreements world-wide and th e large volume of trade flows from less formal
arrangements.  In Canada for example, we are working on such arrangements in the poultry sector
with Chile, Korea and Hungary.  Canada also expects that the equivalency discussions in the Codex
Alimentarius will greatly facilitate the recognition of equivalency in the future.
Financial Services
The Secretariat Report referring to Canadian sources states that these restrictions are in place so as
not to place funds of "unsophisticated" Canadians at  risk.  I would like to ask whether in place of
these limitations, a special or strengthened deposit insurance scheme was considered to address the
risks referred to.  If yes, why did Canada opt for the restrictions instead?
The branching regime provides a more flexible means of entry for foreign banks.  Extending
permission to take retail deposits to foreign bank branches would have required a more onerous
regulatory framework to address the added risk th at retail deposit-taking would pose.  The results
would be a less flexible entry regime, and make the regime less attractive to foreign banks.
The relevant part of the Secretariat Report gives a factual account of changes in the "widely held
rule" as proposed in the framework of the financial  sector reform.  The report indicates that the
ownership rules are expected to pass Parliament before the end of 2000.  I would appreciate if theCanadian Delegation could update us on the situation.
It is expected that the bill detailing reforms to the Canadian financial sector will be introduced
in Parliament in the next session, which begins at the end of January.
Telecommunications services
It has been added [in the Secretariat's Report] that some limitations still exist on foreign equity in all
facilities-based telecommunications service su ppliers and that Canada maintains control and
nationality requirements.  According to the Secretariat Report, Canada, for the time being, intends to
maintain these limitations/requirements.  I would be interested to hear the reasons behind this
position and whether Canada is ready to reconsider it when the market access talks start in the
framework of the GATS 2000 negotiations.
Canadian telecommunications ownership and control were important elements of the Policy
Framework for Telecommunications in Canada, announced by the Minister of Communications
in 1987.  Restrictions on foreign investment in facilities-based telecommunications service suppliers,
and control and nationality requirements, are necessary "to ensure national sovereignty over this vital
sector of the Canadian Economy and for reasons of national security and economic, social andcultural well-being."  Canada has no present plans to change these restrictions and requirements.WT/TPR/M/78
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Air Transport Services
While Canada maintains barriers to foreign entry in the sector, Air Canada was allowed to acquire
Canadian Airlines in 1999 and became the dominant carrier on the domestic market.  This move in
combination with the restrictions on foreign ownership and control, and the prohibition of cabotage
raised competition concerns.  In July 2000 legislation was passed to protect public interest against
excessive pricing in the dominant carrier environment, foster competition and protect consumers.
However, in contrast to the recommendations of the Competition Bureau the restrictions onownership and control and the prohibition of cabotage  were not reviewed.  I would appreciate if the
Canadian delegation would offer further comments on this  issue, in particular in light of the stated
objectives of the legislation passed, which, it seems, could have been efficiently served by permitting
cabotage.
On December 21, 1999, Canada's Minister of Transport and Canada’s Commissioner of
Competition announced that they were prepared to approve Air Canada’s acquisition of Canadian
Airlines.  This approval followed a lengthy and full review of the transaction by the Minister and the
Competition Bureau.  Air Canada agreed to abide by enforceable undertakings designed to enhance
the competitive climate in the airline industry in Canada.  Air Canada also made commitments to the
Minister of Transport on key public concerns.  These undertakings and commitments weresubsequently passed into legislation.
The Government of Canada is aware of the competition concerns that have arisen as a result
of the industry consolidation and is committed to ensuring that the necessary conditions are in place
for attracting competition from new and existing Canadian carriers.  It believes that such competition
can be fostered domestically by reducing barriers to entry and encouraging existing operators and new
entrants to expand into new markets, thereby m itigating the potential negative effects of the
consolidation.
Like many countries around the world Canada considers the airline industry to be
fundamental to the domestic economy and an important national symbol.  In the legislation passed in
July 2000, the Canadian Government has retained provisions requiring that the Canadian airline
industry remain owned and controlled by Canadians and that the prohibition on cabotage be
maintained.
Cultural Services
Paragraph 181 first sentence says that some types of content distributed on the Internet is subject
to a number of specific production, trade and investment measures designed to ensure the
preservation and promotion of Canadian culture and identity.  Then the following paragraph informs
us about the decision not to regulate services on the Internet under the broadcasting Act or the
Telecommunications Act.  This raises and interesting general question that I would like to ask:  howcan Canada's cultural policy cope with the new ch anges that emerged with the birth and development
of the Internet.
The development of the Internet and multimedia content has provided a new medium for
Canadian creators to tell Canadian stories and to share our unique identity.  And in a world where
borders are quickly fading, the availability of - and access to - Canadian content in the form of
multimedia products in both official languages is of great importance to the Government of Canada.
For example, the Government of Canada announced the creation of the Multimedia Fund in
June 1998.  Administered by Telefilm Canada, the Multimedia Fund is committed to supporting high-
quality, original, interactive Canadian multimedia works in both official languages intended for the
general public.WT/TPR/M/78
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In addition to the Multimedia Fund, two othe r programs provide financial assistance for
multimedia content.  The Cultural Industries Development Fund provides financial assistance toentrepreneurs working in cultural industries such  as multimedia.  The Canadian Studies Program
provides financial support for the development of a variety of learning materials, including
multimedia learnware applications.
Other government agencies involved in developing and providing access to Canadian on-line
content include our national museums, the Nationa l Library of Canada, the National Archives, the
National Film Board, the CBC, and the Canadian Heritage Information Network (CHIN).
Professional Services
The Secretariat Report informs us that the Canadian Government is seeking to reconcile the
differences in occupational standards for over 50 regulated professions and has already prepared
guidelines laying out a process of mutual recognition and reconciliation.  I would be interested tohear more about the experience with the application of these guidelines and possible further plans to
increase competition and reduce the fragmentation of the professional services market .
Since the Agreement on Internal Trade (AIT) came into effect, the Parties have:  i) amended
non-conforming measures, such as residency requirements as a condition of employment or licensing;
ii) taken significant measures to seek compliance with the Chapter 7 on Labour Mobility, including:the preparation of detailed guidelines on compliance requirements which were mailed to over
400 regulatory bodies, participation in hundreds of meetings with affected bodies to explain their
obligations, and supporting the provision of funding to regulatory bodies through a Human Resources
Development Canada program to assist them in their compliance efforts;  iii) developed detailed
procedures for facilitating the resolution of complaints under the Chapter 7 on Labour Mobility;  and
iv) developed a strategy to support achievement of full compliance with the chapter by July 1, 2001.
(In the Social Union Agreement of February 4, 1999, First Ministers (except for the Premier ofQuebec) agreed that entities subject to Chapter 7 mu st be in full  compliance with it's provisions by
July 1, 2001.)  Work still to be completed include implementing the strategy to support compliance
with the chapter by occupational regulatory bodies.  Additional information on progress to date on the
implementation of the agreement is available from the Internal Trade Secretariat website:
www.intrasec.mb.ca/eng/progress.htm.
Does Canada afford GI protection to products other than wines and spirits?  Please advise the
specific section of the Trade-marks Act that covers this issue
Geographical indications for products other than wines and spirits may be protected through
different means.  For goods and services in general, protection is provided in the common law
provinces through the common law of passing off; in Quebec, under Article 1457 of the Civil Code ofQuebec.  In addition, paragraph 7 d)i) of the Trade-marks Act  prohibits making use, in association
with wares or services, of any description that is false in a material respect and likely to mislead the
public as to ... the geographical origin ... of the wares or services.  Section 12, regarding trademark
registrability reinforces this prohibition in regard s to trademarks.  Canada has conferred the right to
pursue legal means to prevent these activities as required by Article 22.2.
In regard to article 22.3, the Trade-marks Act  provides a variety of protections.  The Registrar
shall not permit the registration of a mark that is known by the Registrar to be prohibited (section 37).
The Registrar takes into account all the provisions of the Trade-marks Act  including those relating to
any geographical indication (e.g. sections 7, 12, 23-25).  There are a variety of legal procedures open
to persons wanting to contest an application for a trademark or the registration of a trademark whichthey believe inappropriately contains an indication of source, including geographical indications asWT/TPR/M/78
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defined in 22.1 of the Agreement on TRIPS.  A person may oppose an application preventing the
application from registering if the case is proved valid (section 38).  If the trademark is registered itcan be invalidated if certain criteria are met (sections 17-18) when an interested party takes legal
action in the courts.
Canada provides further protection to that required in the TRIPS Agreement in order to
protect products other than wines and spirits.  The owner of rights in such geographical indications
may apply for protection, as a registered trademark, if the requirements of the Act are met.  Thisincludes the ability to protect certification marks under sections 2, 23-25 of the Trade-marks Act .
Certification marks “distinguish wares or services that are of a defined standard with respect to:
• the character or quality of the wares or services;
• the working conditions under which the wares have been produced or the services performed;
• the class of persons by whom the wares have been produced or the services performed;  or
• the area within which the wares have been produced or the services performed.”
Examples of certifications marks include GRANA PADANO, for cheese made in a region of
Italy; FRIEBURGER, for cheese made in a region of Switzerland; SWISS, for chocolate and related
products made in Switzerland; and FLORIDA fo r oranges and related products from Florida.
EUROPEAN UNION
Recent economic developments, Balance of  payments, trade and investment flows
Secretariat report page 5, Paragraph 13 and 14: The Canadian economy is strongly interlinked with
the U.S. economy.  Canada relies heavily on the U .S. both for exports and for imports.  How does this
fit in the overall trade policy of Canada and how does Canada assess this situation in terms of risksand benefits to Canada's economy?
Canada will continue to accord priority attention to its trade and investment relationship with
the U.S., by far its most important trading partner.
We do not see this strong interlinkage with th e U.S. economy to be a risk.  Our ability to
compete in this very competitive market speaks well for the quality of our goods and services, and ourability to compete globally.  We are fortunate to have a basically open, dynamic market on our
doorsteps.  The U.S. has demonstrated a commitment to sound macroeconomic policies, as has
Canada: sustainable economic growth consistent with low inflation and a balanced budget.  These
reduce the likelihood of “shocks” to the U.S. economy, which may impinge on the Canadian
economy.
Canada will continue to broaden trade relationships internationally through multilateral,
regional, and other bilateral agreements to  reduce trade and investment barriers and to secure greater
market access.
Trade policy regime:  Framework and objectives
We would like more information on what means Canada uses to make its trade policy supportive of
sustainable development.  To what extent, fo r example, is Canada planning to use analytical
instruments such as sustainability impact assessments, as a tool to develop trade policy and relatedpolicies more conducive towards achieving sustainable development?WT/TPR/M/78
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The Government of Canada is committed to sustainable development, and we have put this
commitment into practice.  In developing our trade policy and trade agreement objectives, Canadatakes economic, environmental and social factors into consideration.
In line with the 1999 Cabinet Directive on the Environmental Assessment of Policy, Plan and
Program Proposals, Canada is placing additional emphasis on environmental considerations, through
the development of a framework to conduct strategi c environmental assessments of trade negotiations.
The Framework establishes an open process and analytical requirements for identifying andevaluating likely and significant environmental impacts of trade policy.  This methodology is rooted
from a variety of sources, including OECD and NAFTA work.
The Framework will be implemented at the earliest stages to ensure information is available
for trade negotiators during the negotiations.  The Framework is also flexible, and generic so that it
can be applied to a variety of trade negotiations (e.g. WTO Agreements as well as regional (FTAA)and bilateral (Costa Rica)).
Extensive public consultations were involved in preparing this Framework, and the
penultimate draft can be accessed via the DFAIT website.  We expect the final version will be
released shortly and we look forward to working with other members in refining this tool as we begin
implementation.
The EU would like to have more information on th e experience gained from the operation of the
permanent consultation forum for civil society, established for the FTAA negotiations.  Does Canada
see this as a model for its other FTA negotiations?
Openness and transparency are the key to informed debate. Canada’s experience shows that
citizens’ ability to communicate directly with government advances public understanding of trade and
ensures that citizens’ priorities and interests are reflected in the development of trade policy.
Canada’s negotiating policies and positions remain consistent with our belief that citizen engagementenriches and informs the decisions leaders can make to achieve a fairer and prosperous world
economy.
The FTAA is one component of a wide-ranging program of cooperation in place through the
Summit of the Americas process to address trade and related issues raised by individuals and civil
society groups.  The FTAA operates within this framework by addressing specific issues on whichthere is agreement by its Members to negotiate.
Canada has been at the forefront of efforts to establish a substantive role for the FTAA
Committee on Civil Society, and has chaired the process in the absence of agreement on a permanent
chair. As host of the FTAA Ministerial meeting held in Toronto in November 1999, Canada
established a forum for NGOs and government representatives to discuss greater engagement andparticipation of civil society representatives in the FTAA negotiating process.  The consultative
process itself, however, is a new experience for many governments, and differences persist among
members on how the process should be further developed.  Canada will continue to build a consensus
among Committee members on achieving a constructive dialogue and expand engagement with
members of civil society.
The FTAA is but one example where Canada has actively supported openness and
transparency in international fora. Canada has ta ken the lead in the APEC process by helping to
expand discussions with non-governmental organi zations and members of civil society.  Most
recently, Canada achieved consensus on the creation of an Ad-Hoc Task Force to explore ways to
broaden the interaction with international institutions, the business sector, and other non-WT/TPR/M/78
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governmental groups and individuals within the APEC community.  Within the OECD, Canada has
encouraged continued informal consultations  between civil society and non-governmental
representatives and the Trade Committee.
Canada also recently circulated a proposal with specific recommendations on improving
external transparency in the WTO that include expanding outreach with non-governmental
organizations and the public release of working papers and agendas.  A greater window on the WTO
will help publics in all Member countries better understand and appreciate how clear and equitablerules governing liberalized trade provide opportunities and benefits to all.
Canada endeavours to lead by example in making citizen engagement an integral part of our
domestic public policy agenda. Elected officials have heard Canadians’ views directly through the
most extensive parliamentary consultations ever conducted across Canada on Canada’s trade policy
objectives within the FTAA and the WTO.  The government has continued that commitment by usinga variety of mechanisms to engage citizens in round-table discussions; in their involvement in ad-hoc
and institutionalized advisory groups;  and by inviting their views in ‘virtual’ or online surveys to
ensure that Canadians values and priorities are reflected in our trade policies and positions. Via a
dedicated website, Canada provides current information on trade objectives, through which citizens
are also encouraged to provide their comments and vi ews on the issues of interest to them when they
choose to do so, regardless of where they live or work.
Recognizing that trade agreements address areas of shared jurisdiction on matters of trade
policy, the Government of Canada works closely with provincial and territorial levels of government
to apprise provincial/territorial officials of emerging issues, and seek their views on optimal
approaches and negotiating positions development.
In Canada’s view, consultations, whether at the domestic or the multilateral level, greatly
reinforce public awareness and understanding of th e importance of trade.  Seeking citizens’ views
does not suppress criticism or debate. But in mobilizing popular opinion, and keeping publics fully
informed of issues and the direction of trade negotiations, transparency and engagement combine to
establish the legitimacy, consistency and the durability of policy decisions and outcomes. In an
increasingly globalized world, public support is critical to efficient and effective trade policy
implementation for us, and for our trading partners.
The Secretariat Report (page 16) refers to the negotiations and likely content of an EFTA/Canada
FTA and that this will be a "free trade bridge" to Europe. The report states, however, that a number
of agricultural products will not be covered "nor will it include new obligations in areas such as
market access, services, investment, intellectual property and government procurement". How can
this amount to the promised "free trade bridge" to Europe?
The Canada-EFTA Free Trade Agreement will fo cus on the elimination of industrial tariffs,
some liberalisation for agriculture, and new co-operation in the area of trade facilitation and
competition policy.  The removal of tariffs and improvement of market access conditions will provide
immediate and tangible benefits to exporters and investors.  The initiative reaffirms the Government's
commitment to the importance of trade and investment liberalization and  will demonstrate thepossibilities for co-operation between two important, economically well-developed regions in North
America and Europe.WT/TPR/M/78
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Tariffs
Secretariat report page 17, paragraph 58:  Could Canada please explain why she has not bound some
tariff lines (notably on some petroleum and gas products, electricity, and most ships and boats) and
indicate whether she intends to bind them?
Similar to many other developed and developing countries Canada has reserved its right not
to bind tariffs on certain energy items.  That said, Canada would consider binding tariffs on these
goods in the context of a future multilateral trade negotiation.  As well, Canada has applied “Free”rates of duty on these products for decades.
During the Uruguay Round, Canada was not prepared to make any changes to the tariff
applied on vessels given the wide-spread use of subsidies for this sector by many governments.  The
tariff provisions in place in Canada are the only protection this industry receives to counter subsidized
import competition.  In view of this situation, Canada has no plans to consider the reduction orelimination of its vessel tariffs until such time as the question of government subsidies is addressed.
On Secretariat report paragraph 57 and Government report paragraph 16: What is Canada's
response to the comment by the Secretariat that her "autonomous tariff concessions in favour of
developing countries remain modest compared with preferences established under reciprocal free
trade agreements. Extending such preferences on a MFN basis would both enhance welfare inCanada itself and improve market access to developing and other partners"?
As a founding member of the GATT, Canada has participated in numerous rounds of
multilateral trade negotiations.  These multilateral negotiations have resulted in significant decreases
in Canada's MFN tariffs.  Like most countries, Canada views its free trade agreements as incremental
steps towards wider liberalization to be negotiated in a multilateral/WTO context. Our free trade
agreements with developed and developing countries are negotiated agreements that offer significant
benefits to both/all parties of the agreement, not only by opening Canada’s market but also allowingCanada’s FTA partners to fully enjoy the benefits of free trade through their own market
liberalization.
On paragraph 34: Concerning tariff and duty-free access for the least developed countries, does
Canada intend to take further steps to impro ve access beyond the measures introduced in
September 2000, which still exclude refined sugar and out-of-quota agri-food products as well asmost textiles, clothing and footwear?
Canada has since 1983, accorded stable, unconditional, duty-free access for most products
originating in what are known as least-developed countries. Our preferential market access program
includes simple and transparent rules of origin that allow an unencumbered flow of developing
country products into Canada.  In fact, as a result of Canada's most recent tariff elimination initiativefor LLDCs, tariffs have now been eliminated on virtually all agricultural products imported from
LLDCs (i.e. on over 99% of imports). Canada’s unilateral tariff preferences for developing and least
developed countries will be reviewed by the Canadian Government by 2004.
Canada shares the view that all major trading economies, both developed and developing,
need to work together to enhance real market access for these countries and the capacity to take
advantage of market access. Working jointly together on ways and means to ensure that these
countries have viable opportunities in all markets provides the best means of meeting this objective.
We are encouraged by the recent positive efforts of Canada and the other industrialized countries in
improving market access for least-developed countries.  Canada has actively supported the confidence
building package of WTO Director General Mike Moore. We have also been particularly active in theWT/TPR/M/78
Page 56
capacity building area, for example through funding the integrated framework, and in actively
encouraging development agencies to promote development of supplier capabilities in LDCs throughinstruments such as the World Bank’s Comprehensive Development Framework and the poverty
reduction strategy papers (PRSPs), its key development programming tools.  Canada will continue to
work with our trading partners to ensure LDCs can take advantage of trade opportunities where they
are not already competitive.
On paragraphs 57 and 60: Canada has a simple average MFN tariff of over 13% on dutiable items
reflecting sizeable tariff barriers concentrated in a few of Canada's sensitive sectors, which are often
of particular interest to developing countries - ce rtain foods, alcoholic beverages, textiles, clothing,
ships and boats. As a result, tariff dispersion is relatively high and several drawback, concession and
remission scheme are used to offset the cost-raising effects of tariffs (para 57). Could Canada please
indicate whether and, if so, how she intends to reduce tariff dispersion, which has increased in recentyears from 3.1 to 3.5 (para 60)?
Canada has international tariff peaks (>15%) on 700 tariff lines, consisting mostly of textiles and
clothing products, wine, cider, sugar, footwear, vegetables and cut flowers, while tariffs on ships and
boats are set at 25%. Could Canada please indicate  whether and, if so, how she intends to reduce or
eliminate such tariff peaks?
The level of current Canadian MFN tariffs reflects the results of previous rounds of
multilateral trade negotiations in which Canada participated.  Overall, Canada has one of the world’s
most liberal tariff regimes and is certainly prepared to consider further reductions in our tariffs in the
context of  future trade negotiations.  With respect  to agriculture, Canada is already participating in
the current round of agricultural negotiations and has tabled its position on a variety of issues to be
addressed in the negotiations, including market access.
On agricultural products tariff quotas (para. 73): It is indicated that quotas are administered “in a
variety of methods”. Does Canada have plans to  simplify the administration of such quotas?
Canada’s TRQ administration methods are similar across all 21 TRQ's, while allocation
methodologies vary among the products controlled, from first-come first-served to historical
allocations. Each commodity or group of commodities has an advisory committee which provides
advice to the Canadian government on TRQ administration. There are no plans to alter the currentallocation systems at this time, although stakeholder recommendations have resulted in changes to the
allocation systems in the past.
All agricultural TRQ commodities are governed on a broader basis by the Export and Import
Permits Act and related regulations which ensure that all TRQ's are administered on a fair, transparent
and consistent basis. Detailed information on the administration of all TRQ's is available from awebsite which includes access to the relevant legislation, regulations, and notices to importers.  The
administration of TRQ's is very transparent and upc oming improvements to the computer system used
in the administration of TRQ's should simplify th e process further.  Consult: http://www.dfait-
maeci.gc.ca/~eicb/epd_home.htm and http://www .dfait-maeci.gc.ca/~eicb/agric/agric-e.htm.
Anti-dumping
Page 24, paragraph 82:  What proportion of expiry r eviews are self-initiated (i.e. by the Tribunal or
at the request of the CCRA), and what proportion result from an expiry review request by the industry
concerned?WT/TPR/M/78
Page 57
Article 11.3 of the Anti-dumping Agreement states that a request by a domestic industry for an expiry
review must be ‘duly substantiated’. Does Canada apply the same standard of evidence beforeself-initiating expiry reviews?
Canadian authorities have never self-initiated an expiry review. Canada’s expiry review
procedures are initiated as a result of written submissions received from interested parties that
have demonstrated to the Tribunal that a review was warranted.  If the Tribunal is not convinced that
an expiry review is warranted based on the evidence, the findings will be allowed to expire withoutreview. Thirty-seven anti-dumping measures have been allowed to expire without review because
either there were no requests for a review or insufficient information was submitted in support of a
request for a review.
Market access in goods, state trading monopolies and other exclusivity rights affecting trade
Secretariat report, page 31, paragraph 111: Canadian alcohol monopolies apply conditions of trade
to imports of alcoholic beverages which may not be fully in line with Canada’s undertakings under
the WTO Agreements. What is Canada's assessment of the situation? What steps does Canada
envisage to remedy the situation?
At the request of the European Union, Canada provided a large volume of information on the
policies of all twelve provincial and territorial liquor boards during 2000.  Extensive consultationshave been ongoing between Canadian and EU au thorities regarding the treatment of alcoholic
beverages in both the EU and Canada.  Canada's assessment of the situation is that our liquor boards
are consistent with Article XVII of the GATT and operate as businesses whose decisions are based on
commercial considerations and market forces.
Other policies affecting trade in goods: Agricultural export subsidies
Page 32, paragraphs 113-114: Canada's single desk export policy causes the EU some concern.
Specifically, it is of concern that all exports of grain must pass through the Canadian Wheat Board,which has control over the publication of prices. Although export prices are publicly posted, the
actual price at which the board sells to individual customers remains very untransparent. What plans
does Canada have to increase the transparency of the actual price of her grain exports to individual
customers?
The Canadian Wheat Board (CWB) is responsible for the export of wheat and barley, and not
any other grains.  It does post its export prices publicly, but, like any other seller in the market, the
CWB does not publicly disclose its prices in specific transactions.  On occasion, prices are sometimes
revealed through the publication of tender results, but this is at the discretion of the buyer, and not the
seller.
Disclosure of transaction-level information would prejudice the legitimate commercial
interests of the CWB.  This would place the CWB, as a state trading enterprise, at a competitive
disadvantage to its private sector competitors, which would not be consistent with the provisions of
Article XVII paragraph 4(d) of the GATT 1994.
Subsidies
Page 39, paragraph 138:  Could Canada please explain which provinces have stated that they did not
provide subsidies requiring notification under the SCM Agreement?WT/TPR/M/78
Page 58
No province has indicated to the federal government that it has subsidies that are subject to
the notification requirements of the SCM Agreement.  Federal officials have questioned whether theprovinces have fully reviewed their programmes, and are actively consulting with them in this regard.
Could Canada please provide the sources of the information suggesting "that assistance programmes
are being progressively restructured to focus more on technological innovation rather than
commercialisation or support to sunset industries, although there are exceptions."?
Could Canada please indicate what the "exceptio ns" to this focus of the restructuring are?
The language in the report appears to be a conclusion that the Secretariat reached on its own.
As we do not know what source(s) the Secretariat may have used, we are not in a position to respond
to the second question.  Having said this, we would observe that, at the federal government level, the
focus is the encouragement of innovation and of knowledge-based activities, and our programmes
reflect this.
Under the "Export Development Programme" of the Province of Prince Edward Island,
"eligible applicants to this sub-program are manufacturers, processors or providers of exportable
services to primary industries who clearly contri butes to import replacement.  Applicants must
have well-developed business and marketing plans with the potential to derive revenue from export
(out-of-province) sales." (emphasis added; quoted fr om the website containing a description of the
programme:  http://www.peibusinessdevelopment.com/programs/support.php3).
Could Canada please indicate how the granting author ities assess in practice the "potential to derive
revenue from export"?  How does Canada ensure that in the operation of this programme the
obligation under Article 3.1(a) of the SCM Agreement not to grant subsidies which are in "in fact tied
to actual or anticipated exportation or export earnings" is observed?
To assess “potential to derive revenue from export” the Government of Prince Edward Island
(PEI) looks at the potential of the product and its likelihood to be saleable in another country.  TheGovernment of PEI does not give a price subsidy to companies, but the Government does provide
them with more knowledge of the markets which in turn allows them to be more competitive.
Federal officials continue to work actively with the provinces to ensure that provincial
policies and programmes meet Canada's WTO obligati ons.  The latest example is an ongoing round of
consultations between federal trade officials and provincial programme officials, with the expresspurpose of clarifying WTO rules and ensuring that Canada's obligations are clearly understood.
Could Canada please specify the detailed eligib ility criteria followed by the Quebec Business
Investment Company pertaining to the objective of encouraging investment in "exporting"?  How does
Canada ensure that in the operation of this programme the obligation under Article 3.1(a) of the SCM
Agreement not to grant subsidies contingent upon export performance is observed?
Le programme d'Inverstissement-Québec de garantie d'emprunt s'adresse aux petites et
moyennes entreprises qui ont moins de 100 employés et des ventes de moins de 10,0 M$.  Ce
programme vise à combler les lacunes des banques à charte canadiennes lorsqu'il s'agit d'obtenir des
crédits temporaires afin de financer les exportations de ces entreprises.
Vous trouverez tous les détails relatifs au programme de garantie d'emprunt d'Investissement
Québec sur le site suivant:  http://www.invest-quebec.com/financial-p/smb-garantee-en.htm.WT/TPR/M/78
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Federal officials continue to work actively with the provinces to ensure that provincial
policies and programmes meet Canada's WTO obligati ons.  The latest example is an ongoing round of
consultations between federal trade officials and provincial programme officials, with the express
purpose of clarifying WTO rules and ensuring that Canada's obligations are clearly understood.
Government Procurement
On government procurement (IV(5), follow-up to  EU written question 2 in the 1998 TPR): Can
Canada give details on the conditions under which the provinces would accept to be subject to theGPA disciplines, and provide a timetable for incl usion of sub-federal procurement under the GPA?
Canada’s position remains that the provinces ar e not prepared to commit coverage of their
entities until other GPA members, particularly the U.S., are prepared to improve market access in
sectors of priority interest to Canadian suppliers.
Agreement On Internal Trade
Follow-up to EU written question 5 in the 1998 TPR:  Can Canada outline the developments since the
latest TPR concerning the harmonisation and mutual recognition of internal regulations under the
Agreement on Internal Trade, notably in the fiel ds of standards, government procurement and free
circulation of persons (with special reference to mutual recognition of professional qualifications)?
Following is an update of the current status of activity regarding Procurement, Labour
Mobility and other activities under the AIT:
Procurement
When the AIT came into effect, it required that:
- Government procurement contracts, over specified values, be equally accessible to all
suppliers across Canada and that any goods, services and suppliers of other Parties receive
treatment no less favourable than the best treatment of local goods, services and suppliers;
- Government calls for tenders be equally accessible to all Canadian suppliers, and that an
electronic tendering system be developed.
Since then, the Parties to the AIT:
• have approved the procurement provisions that apply  to the MASH sector (Municipalities,
municipal organizations, school boards and publicly-funded academic, health and social
service entities) and have incorporated these in an Annex to the Agreement which was
implemented on July 1, 1999 for all provinces except BC and the Yukon;
• have contracted with a service provider for the development and implementation of an
electronic tendering system and extended the participation of governments in that system;
• are finalizing an “Electronic Gateway” site which will list public sector electronic sites where
procurement opportunities may be listed;  and
• have continued negotiations to reduce exclusions of both government entities and services and
are currently engaged in negotiations regarding the development of procurement provisions forpublic entities of a commercial or industrial nature.WT/TPR/M/78
Page 60
Labour Mobility
The Labour Mobility Coordinating Group (LMCG) has developed a detailed plan to support
achievement of full compliance with the obligations of the Chapter by July 1, 2001. While Quebec
has not agreed to the deadline of July 1, 2001, nevertheless it expects regulatory bodies under its
jurisdiction to achieve compliance on a voluntary basis. The plan was approved by the Forum of
Labour Market Ministers when it met on September 29-30, 1999. The following is a summary of the
plan:
1) Communication Strategy: LMCG will develop a detailed communications strategy and
description of products.
2) Inform other intergovernmental forums of July 1, 2001 end date: FLMM Co-chairs advise
Health Ministers of end date for compliance with Chapter 7 and request their active support.
3) Inform regulatory bodies of July 1, 2001 end date: Each Party will inform its regulatory
bodies by letter of the end date.
4) Progress/Status Report: LMCG will produce a summary status report of progress made by all
occupations toward compliance.
5) Options Paper: LMCG will produce an analysis of implications of non-compliance by a Party
and outline possible measures to be used to ensure compliance by regulatory bodies.
6) Discussion Paper: LMCG will develop a composite paper outlining findings from each
jurisdiction re any legal implications of ensuring compliance.
7) Jurisdictional Work Plans: Each LMCG member will develop for their jurisdiction, a critical
path work plan to July 1, 2001.  Plan to include: occupation status report; summary of
required legislative changes; steps required to accomplish those legislative changes; a sign-off
procedure for verifying and monitoring compliance.
8) Review of Recognition Agreements: LMCG will continue to review Recognition Agreements
to assess compliance.
9) Interact with intergovernmental forums: LMCG will continue to work with health ministry
officials, Directors of Apprenticeship for Trades and CMEC to support their labour mobility
work plans.
10) Support to Regulatory Bodies: LMCG will cont inue to actively participate with regulatory
bodies and their consortiums as they develop MRAs and meet their Chapter 7 obligations.
In order to meet the July 1, 2001 deadline, the LMCG has significantly increased its level of
activity. It now has weekly conference calls and face to face meetings 3-4 times per year.
At this time it is estimated that a majority of the regulated professions and trades will be able
to meet the July 1, 2001 date for the completion of  their Mutual Recognition Agreements (MRA) and
that work will continue to enable the others to conclude their MRAs shortly thereafter.
Other Activities
The Parties have undertaken the following activities:
• developed an annex to the AIT (Annex 606) aimed at reconciling extra-provincial corporate
registration and reporting requirements; and have initiated development of an electronic
registration and reporting system that will facilitate implementation of the Annex;
• resolved outstanding issues with respect to differences and duplication of regulations of
upholstered and stuffed articles;
• reached agreement on standard contract content and cancellation rights for direct sales across
Canada;WT/TPR/M/78
Page 61
• agreed on standard cost of credit disclosure requirements and prepared a drafting template for
harmonized legislation;
• completed negotiation of an agreement on cooperative enforcement;
• endorsed a Memorandum of Understanding containing nine changes to national standards for
vehicle weights and dimensions;
• eliminated extra-provincial truck carrier operating authorities in some Parties, and identified
statutory and regulatory changes necessary to eliminate the operating authorities in otherParties;
• harmonized motor carrier safety rules.
TRIPS
Please describe and explain the provisions of Canada s legislation establishing a link, between the
characteristics of the product identified by an indication and its geographical origin.
In Canada’s view, under the Agreement on TRIPS, it is not necessary for a member to have
within its legislation a link between the characteristics of the product identified by an indication and
its geographical origin.  What is required is that a Member provide the protections necessary under
Article 22 and Article 23 of the Agreement to protect geographical indications as defined in
Article 22.1 (please see IP/C/W/117/Add.5).
Because of the additional protections required by Article 23 for wines and spirits Canada has
legislatively defined geographical indications in this context.  Geographical indications for wines and
spirits are defined in Section 2 of the Trade-marks Act , which reads as follows:
geographical indication" means, in respect of a wine or spirit, an indication that:
• identifies the wine or spirit as originating in the territory of a WTO Member, or a region or
locality of that territory, where a quality, reputation or other characteristic of the wine or spirit
is essentially attributable to its geographical origin; and
• except in the case of an indication identifying a wine or spirit originating in Canada, is
protected by the laws applicable to the WTO Member.
Applications for additions to the list of geographical indications are examined for compliance
with Section 11.12 and other provisions of the Trade-marks Act  based on the following criteria:
• The geographical indication must identify a wine or spirit originating in the territory of a WTO
Member (including Canada), or a region or locality of that territory.
• The geographical indication must be officially recognized and protected by the applicable laws
in that WTO member.  It is up to the applicant to provide evidence of this, including theeffective date of recognition in the country of origin.  It should be clear that the country of
origin provides the legal means to prevent th e misuse of the geographical indication in the
application being submitted.
• The responsible authority must demonstrate that, by reason of state or commercial interest, it is
sufficiently connected with and knowledgeable of the wine or spirit to be party to any
proceedings in respect of an objection filed under Subsection 11.13(1) of the Trade-marks Act.
Responsible authorities may be national bodies as well as private enterprises or regional
associations.
• There must be a demonstration that there is a "quality, reputation or other characteristic of the
wine or spirit that is essentially attributable to  its geographical origin".  This aspect of the
review considers, among other things, the following principles:WT/TPR/M/78
Page 62
• As it concerns wines, the geographical indication:
- is recognized as being linked to a quality or a characteristic of the product attributed
to its geographic milieu, including natural or human factors;  and
- is allowed to be used only if the harvesting of the grapes took place  in the country,
region, place or area defined.
• As it concerns spirits, the geographical indication:
- is recognized as being linked to a quality or a characteristic which the product
acquires at the time of a decisive phase of its production;  and
- is allowed to be used only if the decisive phase takes place in the country, region,
place or area defined.
Please explain on which basis Canada's trademark registration authority refuses a trademark
application if it contains a geographical indication.
Canada’s Registrar of Trademarks is obligated to refuse an application under Section 37 (b)
of the Trade-marks Act  should the Registrar be satisfied that the trademark is not registrable.  The
Registrar must also refuse an application should it be successfully opposed (section 38).
The ability to refuse trade-marks containing geographical indications is based on Sections 7,
11.14, 11.15, and 12.  Section 7 (d) of the Trade-marks Act  prohibits “making use, in association with
wares or services, of any description that is false in a material respect and likely to mislead the publicas to ... the geographical origin ... of the wares or services”.  There are also specific prohibitions
against the adoption of a trademark for wines consis ting of a protected geographical indication for a
wine not originating in the territory covered by the geographic indication (Article 11.14).  A similar
provision exists for spirits (Article 11.15) .   These prohibitions are reinforced in Article 12 which
states that a trademark is registrable if it is not:
− whether depicted, written or sounded, either clearly descriptive or deceptively mis-descriptive
in the English or French language of the character or quality of the wares or services inassociation with which it is used or proposed to be used or of the conditions of or the persons
employed in their production or of their place of origin;
[...]
− in whole or in part a protected geographical indication, where the trade-mark is to be
registered in association with a wine not originating in a territory indicated by the
geographical indication; and
− in whole or in part a protected geographical indication, where the trade-mark is to be
registered in association with a spirit not originating in a territory indicated by the
geographical indication.
Please explain which criteria are used in Canada to define a generic term.
In order to provide the members with useful information Canada seeks clarification as to the
exact nature of the question and additional time to answer it.  In Canada, the broad phrase “genericterm” has meaning in more than one area of intellectual property.
A recent judgement in the case Bayer Inc. v. Attorney General of Canada and the Minister of Health
(F.C.A.) (27436) appears to introduce a novel interpretation of the Canadian legislation on dataprotection (Food and Drug Regulations, C.R.C., c. 870, as amended). Could Canada please explain
the practical consequences of this ruling and its im pact on Canada's further implementation of Article
39.3 of the TRIPs Agreement?"WT/TPR/M/78
Page 63
The measure contained in Canada's Food and Drug Regulations  interpreted in this recent
ruling Bayer Inc. v. the Attorney General of Canada referred to in this question protects undisclosed
data from unfair commercial use.  This provision, so interpreted and applied, is consistent with Article
39.3 of the TRIPs Agreement.
Financial Services
Page 45, paragraph 160 on foreign bank branching: Can Canada give an outline of its new regime
and explain the scope of the “restrictions on the ability of foreign banks to take deposits (para. 160)”,which appear, to date, to have limited the effect of the new rules (only two applications for
branch-establishment accepted)?
Foreign banks have full deposit taking powers in Canada through a deposit-insured,
Canadian-incorporated bank subsidiary.
The branching regime was intended to provide a more cost-effective way for foreign banks to
operate in Canada.  The supervisory regime was designed with this in mind, and provides for lighter
regulation.  Allowing foreign bank branches to take retail deposits would require a more onerous
regulatory framework to address the added risks th at retail deposit-taking would pose.  The result
would be a less flexible foreign bank branching regime.
Chapter V (Market access in selected sectors), para. 164: This paragraph talks about a new
framework for reviewing proposed mergers betwee n large banks being implemented: When is the
implementation of this framework expected to be completed?
The government announced in June 2000, that it would be implementing a transparent review
process for merger proposals for large banks.  This review process would include a formal mechanism
for public input.  In addition to reviews by the Competition Bureau and the Office of the
Superintendent of Financial Institutions (federal regulator), merger proponents would be required to
prepare a Public Interest Impact Assessment, which the House of Commons Standing Committee on
Finance would be asked to review.  Canada plans to reintroduce the merger review guidelines at thesame time that the new legislative framework is reintroduced into Parliament.
Telecommunications Services
Page 49, paragraph 179-180:  The paragraphs of the Secretariat report on telecommunications
services could have been more complete and there is in particular little information about the
regulatory framework.
What are the main legal texts applying to the supply of those services, in particular as regards the
definition and allocation of regulatory tasks (licensing, supervising interconnection, allocation and
use of scarce resources), the definition and allocation of enforcement of competition rules?
Industry Canada has responsibility for telecommunications policy and international submarine
cable licensing under the Telecommunications Act of 1993 , and responsibility for spectrum policy
and management under the Radiocommunication Act .  The Telecommunications Act  provides for the
regulation of Canadian telecommunications common carriers.  These include, among others, the
incumbent telephone companies, the new competitive local and long distance service providers,mobile and fixed wireless service providers, as well as satellite services providers.  The Canadian
Radio-television and Telecommunications Commissi on (CRTC) is responsible for the regulation and
supervision of telecommunications and broadcasting services in Canada.  The CRTC is an
independent federal agency with quasi-judicial st atus.  Its institutional structure and powers are
outlined in the  CRTC Act , the Broadcasting Act , and the Telecommunications Act .WT/TPR/M/78
Page 64
The following is a list of key CRTC Decsions, together with their CRTC Website URL'S:
Long Distance Comp Telecom Decision CRC 92-12
http://www.crtc.gc.ca/archive/Decisions/1992/DT92-12e.htm
Regulatory Framework Telecom Decision CRTC 94-19
http://www.crtc.gc.ca/archive/Decisions/1994/DT94-19.htm
Local Competition Telecom Decision CRTC 97-8
http://www.crtc.gc.ca/archive/Decisions/1997/DT97-8.htmPrice Cap Regulation Telecom Decision CRTC 97-9
http://www.crtc.gc.ca/archive/Decisions/1997/DT97-9.htm
International Regime Telecom Decision CRTC 98-17
http://www.crtc.gc.ca/archive/Decisions/1998/DT98-17.htm
As regards licensing rules, what is the period of time normally required to reach a decision
concerning an application for a licence?
There are a number of different licensing regimes, each with different times frames associated
with them.  Does the EU have a particular license in mind?
Which operators are subject to interconnection rules?  Is the list of such operators public? How often
is it reviewed?
Interconnection with dominant carriers is subject to interconnection rules.  The CRTC
maintains up-to-date lists of a number of different types of service providers on its website
(http://www.crtc.gc.ca/lists_e.htm ).  The cited website provides a comprehensive list of all
“non-dominant” carriers.
Which body resolves disputes on interconnection procedures and within which period of time?
The CRTC is the body responsible for resolving disputes on interconnection procedures.
These and other competitive disputes are often resolved through informal and non-binding alternatedispute resolution approaches, relying on the CRTC Interconnection Steering Committee or on the
participation of individual members of CRTC staff.  When an informal resolution cannot be achieved,
a formal application may be submitted to the CRTC.  These applications are relatively infrequent and
there is no prescribed time limit within which they must be disposed.
Additional information on mandate and proce dures of the CRTC “Interconnection Steering
Committee" can be found at:  http://www.crtc.gc.ca/cisc_e.htm.
The CRTC Telecommunications Rules of Procedures may be found at:  http://www.crtc.gc.
ca/ENG/LEGAL/TELEACTE.HTM
Which rules are in place to prevent major suppliers from engaging in or continuing anti-competitive
practices, as per paragraph 1 of the reference paper (cross-subsidisation, use of information …)?
CRTC Telecom Decision CRTC 97-8 of 1997, Local Competition, deals with a number of
such issues including: Unbundling; Interconnection;  Resale; Contribution; Consumer Safeguards; Co-
location; and Local Number Portability.WT/TPR/M/78
Page 65
Refer to the following CRTC Website URL’s:
Long Distance Comp Telecom Decision CRTC 92-12
http://www.crtc.gc.ca/archive/Decisions/1992/DT92-12e.htm
Regulatory Framework Telecom Decision CRTC 94-19
http://www.crtc.gc.ca/archive/Decisions/1994/DT94-19.htm
Local Competition Telecom Decision CRTC 97-8
http://www.crtc.gc.ca/archive/Decisions/1997/DT97-8.htmPrice Cap Regulation Telecom Decision CRTC 97-9
http://www.crtc.gc.ca/archive/Decisions/1997/DT97-9.htm
International Regime Telecom Decision CRTC 98-17
http://www.crtc.gc.ca/archive/Decisions/1998/DT98-17.htm
How is a universal service defined? In particular, what is the definition of the scope and how is it
funded?
In its 1999 decision CRTC 99-16, the CRTC established the following basic service objective
for local exchange carriers:  *Individual line local service with touch-tone dialling, provided by adigital switch with capability to connect via low speed  data transmission to the Internet at local rates;
*Enhanced calling features, including access to emergency services, Voice Message Relay service,
and privacy protection features;  *Access to operator and directory assistance services;  *Access to thelong distance network;  and *A copy of a current local telephone directory.
The CRTC established, in its November 2000 decision 2000-745, a national revenue-based
contribution collection mechanism effective 1 January 2001, whereby companies would contribute apercentage of their revenues which are considered to be contribution-eligible.  This replaces the
current per-minute collection mechanism.  Recognizing the extent of procedural changes necessary to
implement the new mechanism, the Commission co nsiders 2001 a transition year.  The Commission
expects all procedures to be finalized and implemented for 2002.
See:  Telecom Decision CRTC 99-16 http://www.crtc.gc.ca/archive/Decisions/1999/DT99-16.htm ;
Decision CRTC 2000-745 http://www.crtc.gc.ca/archive/Decisions/2000/DT2000-745e.htm.
Regarding TRIPs/Geographical Indications, which criteria are used in Canada to define a generic
term?  What is the citation in the Trade-marks Act that outlines the "rights conferred" under theprotection of GIs?
A generic term is not specifically defined within the legislation.  The Trade-marks Act
contains two  lists of terms (subsections 11.18(3) and (4)) which are considered to be generic.
Generic should be understood in the ordinary meaning of the term.  These two subsections operate inconjunction with subsection 11.18 (2),  in conformity with Article 24.6 of the TRIPS Agreement.
Geographical indications for products other than wines and spirits may be protected through a
number of different means.  For goods and services in general, protection is provided in the common
law provinces through the common law of passing off; in Quebec, under Article 1457 of the Civil
Code of Quebec.  In addition, paragraph 7 d)i) of the Trade-marks Act  prohibits making use, in
association with wares or services, of any description that is false in a material respect and likely to
mislead the public as to ... the geographical origin ... of the wares or services.  Section 12, regarding
trademark registrability reinforces this prohibition in regards to trademarks.  Canada has conferred the
right to pursue legal means to prevent these activities as required by Article 22.2.WT/TPR/M/78
Page 66
In regard to article 22.3, the Trade-marks Act  provides a variety of protections.  The Registrar
shall not permit the registration of a mark that is known by the Registrar to be prohibited (section 37).The Registrar takes into account all the provisions of the Trade-marks Act  including those relating to
any geographical indication (e.g. sections 7, 12, 23-25).  There are a variety of legal procedures open
to persons wanting to contest an application for a trademark or the registration of a trademark which
they believe inappropriately contains an indication of source, including geographical indications as
defined in 22.1 of the Agreement on TRIPS.  A person may oppose an application preventing theapplication from registering if the case is proved valid (section 38).  If the trademark is registered it
can be invalidated if certain criteria are met (sections 17-18) when an interested party takes legal
action in the courts.
Canada provides further protection to that required in the TRIPS Agreement in order to
protect products other than wines and spirits.  The owner of rights in such geographical indicationsmay apply for protection, as a registered trademark, if the requirements of the Act are met.  This
includes  the ability to protect certification marks under sections 2, 23-25 of the Trade-marks Act.
Certification marks “distinguish wares or services that are of a defined standard with respect to:
• the character or quality of the wares or services;
• the working conditions under which the wares have been produced or the services performed;
• the class of persons by whom the wares have been produced or the services performed; or
• the area within which the wares have been produced or the services performed.”
Examples of certifications marks include GRANA PADANO, for cheese made in a region of
Italy; FRIEBURGER, for cheese made in a region of Switzerland; SWISS, for chocolate and related
products made in Switzerland; and FLORIDA fo r oranges and related products from Florida.
GUATEMALA
How do the federal dispositions (SPS, services, subsidies, investments) are harmonized with WTO
rules?
When drafting federal regulations, Federal Departments consult with the Department of
Justice and the Department of Foreign Affairs and International Trade to ensure the consistency of
these regulations with WTO disciplines.
In the case of Sanitary and Phytosanitary measures, the Canadian government ensures
consistency with WTO rules by developing all food, plant and animal health and safety regulations on
the basis of a rigorous and objective analysis of risks using scientific research and all pertinentinformation, including internationally recognised knowledge and standards (i.e. standards developed
by the Codex Alimentarius, the International Plant Protection Convention and the International Office
of Epizootics). Canada's adherence to WTO notification and transparency obligations also contributes
to ensure that regulations are developed and implemented in conformity with the WTO rules.
Canada's trade remedy law, the Special Import Measures Act, reflects the rules of the WTO
Anti-dumping and Subsidies Agreements. With respect to federal subsidy programs, they are
reviewed and approved by Cabinet and, in that cont ext, Canada ensures that they comply with WTO
rules.
Subsidies
Can you explain how the federal investment plans (assistance?) given to the agricultural sectors
works?WT/TPR/M/78
Page 67
Assistance to agricultural producers in Cana da is based on a "whole farm" approach that
provides risk management tools to support farm income based on all the agricultural activities of thefarm.  The risk management tools consist of the Net Income Stabilization Account (NISA), crop
insurance, the Canadian Farm Income Program (CFIP), crop insurance and a set of provincial based
initiatives or companion programs.
A three-year safety net framework agreement was signed by the federal and provincial
government in July 1999.  It will provide up to Cdn $5.5 billion over three fiscal years (2000/01,2001/02 and 2002/03-fiscal year -April 1 - March 31).  This represents $1.1 billion for basic safety net
programs (Net Income Stabilization Account (NIS A), crop insurance, and companion programs) and
up to $725 million for the Canadian Farm Income Program (CFIP) for a maximum of $1.825 billion
annually for three years.  The cost of these  programs will be cost-shared on a 60:40 basis between the
federal and provincial governments, respectively.
Net Income Stabilization Account (NISA)
NISA assists producers in stabilizing their farm income through an individual account
concept.  Governments match annual producer depo sits into an individual NISA account up to a
maximum of 3% of their eligible net sales (ENS) of agricultural commodities.  The funding of these
matching deposits are split between the federal and provincial governments, at 2% and 1% of ENS,
respectively.  Producers may also deposit up to an additional 20% of eligible net sales into their
account.  The annual eligible net sales limit for an individual is $250,000.
Producers may access funds from their accounts on an annual basis through two calculations
which determine the amount they are able to withdr aw.  The main program trigger - the Stabilization
Trigger - provides access to funds when the farm’s  operating margin (gross margin) drops below the
average operating margin for the previous five years.  In addition, the Minimum Income Trigger
allows a withdrawal from the account to bring the producer’s individual or family income up to a pre-determined threshold.  The threshold is currently set at $20,000 for an individual or $35,000 for a
family.  NISA accounts cannot go into deficit, so producers must make deposits in stable or
improving income periods to ensure that they will have sufficient funds accumulated to make up ashort to medium term income shortfall.
Crop Insurance (CI)
Crop Insurance stabilizes a farmer's income by moderating the economic effects of crop
losses caused by natural hazards such as drought, flood, hail, frost, excessive moisture and insects.
Producers and federal and provincial governments pay premiums into crop insurance accounts.
Payouts are based on a farmer's average crop yield and are triggered when a farmer suffers a yield lossdue to a covered hazard.
Companion Programs
The Companion Programs are to assist producers to adapt to increased responsibility for risk
management associated with agriculture as well as to address agricultural development.  The
province-based initiatives include research and development activities by industry groups; adaptation
initiatives to help address structural adjustments; and, initiatives to complement existing programs,such as NISA and crop insurance.
The companion programs that relate to research and development have been reported as
"green" programs consistent with Annex 2 of the WTO Agreement on Agriculture
(G/AG/N/CAN/29).  Those programs that compleme nt existing programs have been reported within
the Aggregate Measurement of Support as "amber" non-product specific support (ST DS:9).WT/TPR/M/78
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Agricultural Income Disaster Assistance (AIDA)/Canadian Farm Income Program (CFIP)
The Agricultural Income Disaster Assistance (AIDA) covered the 1998 and 1999 tax years
and provided assistance to Canadian producers who experienced a sudden and severe drop in their
farm income for reasons beyond their control.  It was carefully designed to meet the criteria of
Annex 2, paragraph 7, of the WTO Agreement on Agriculture (G/AG/N/C AN/36).  Producers were
eligible to receive a payment if their current gr oss margin dropped below 70 percent of their historic
average gross margin.  The gross margin is defined as the difference between farm revenues andallowable operating expenses.  Payments brought producers’ margins up to 70 percent of their
reference margin.
The Canadian Farm Income Program (CFIP) is a three year extension of AIDA covering the
2000, 2001 and 2002 tax years.  The total cost of CFIP may not exceed $725 million annually.  A
DS:2 notification for CFIP was recently sent to the WTO Secretariat.
Which are the agrifood sectors that benefit the most from the federal transfers?
As noted in the answer to the previous question, assistance to agricultural producers in
Canada is based on a "whole farm" approach that involves all the agricultural activities on the farm,therefore the benefits are not separable by sector.
How does Canada manage the seasonal tariffs for agricultural products?
The Canadian Tariff has both dutiable and free tariff items for specified fresh fruits and
vegetables which Canada produces.  These items are among those found in Chapters 7 and 8 of the
Harmonized System Nomenclature.  The free tariff items generally apply - but each one may be
suspended, on a regional basis, during Canada’s domestic harvest period of the particular fruit orvegetable set out in the respective tariff item – at which time the appropriate dutiable tariff item
becomes effective.  The dutiable tariff items are applied on an individual basis, that is to say
respective tariff items come into effect as the harvest of a particular fruit or vegetable takes place.
The maximum period for annual application of a respective dutiable item, ranging from 8 weeks
(e.g. strawberries) to 46 weeks (e.g. dry shallots) are stipulated in the tariff item.  With oneexception
3, the rates for these dutiable tariff items are specific rates, set out in cents per kilogram, but
have an ad valorem  minimum – the highest of which is “not less than 12.5% plus 4%”.
The government suspends the duty-free items and applies the dutiable items for these fruits
and vegetables on the basis of production and marketing information assessed by the Canadian
Horticultural Council (CHC ) (which represents Canadian horticultural producers) upon which they
make a recommendation to government.  Early suspension of the dutiable tariff may occur when
domestic supplies are inadequate to meet market demand and this usually involves a request to theCHC from importers in the region who have difficul ty sourcing domestic product.  The CHC assesses
the situation and makes a recommendation directly to the Minister of Revenue. Split period tariffs
follow the same procedure.
In should be noted that none of the dutiable tariff items set out above have been applied
since 1997, at which time they were applied only in the case of about half of the dutiable items.  Asmost fresh fruits and vegetables imported into Canada during the Canadian season are from the U.S.,
these dutiable tariff items have not been applied in recent years largely due to the phased reduction
and eventual elimination of duties on all U.S. goods under NAFTA, which was fully implemented
in 1998.
                                                     
3 The seasonal rate of duty for tariff item 0806.10.11 (“Grapes of the species Vitus labrusca , in their
natural state”) is an exception in that it is solely specific (1.41c/kg) with no ad valorem  component.WT/TPR/M/78
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Tariffs and TRQs
Under what conditions are tariffs refunded, in what percentage and over what term or period?
Tariffs may be refunded for a wide variety of reasons including the following:
− Damage to, deterioration or destruction of goods during shipment to Canada;
− Discrepancies in quantity or quality between goods on which duty was paid and goods
actually imported;
− Preferential tariff treatment claimed subsequent to importation;
− Initial payment of duty was based on a calculation resulting from a clerical, typographical or
similar error;
− Duties were overpaid as a result of an error in determination of origin, tariff classification or
value for duty;
− Goods used (before any other use after importation) in compliance with a tariff item or
regulations that provides a lower rate of duty, when specified conditions are met, than the
dutiable tariff item under which the goods were imported.
For a comprehensive list of conditions under which tariffs may be refunded, please visit Section 74(1)
of the Customs Act which can be accessed at:  http://canada.justice.gc.ca/FTP/EN/Laws/Chap/C/C-
52.6.txt.
The percentage of duty refunded and the time limits applicable vary depending on the reason
for the refund.  We would be willing to provide a more detailed response if you have specific
situations or circumstances in mind.
Which are the licence allocation mechanisms for imports of agricultural goods under TRQs?
As noted in paragraph 73, Canada’s TRQ administration methods are similar across
all 21 TRQs, while allocation methodologies vary among the products controlled, from first-comefirst-served to historical allocations. Each commodity or group of commodities has an advisory
committee which provides advice to the Canadian government on TRQ administration.  There are no
plans to alter the current allocation systems at this time, although stakeholder recommendations have
resulted in changes to the allocation systems in the past.
All agricultural TRQ commodities are governed on a broader basis by the Export and Import
Permits Act and related regulations which ensure that all TRQs are administered on a fair, transparent
and consistent basis. Detailed information on the administration of all TRQ's is available from a
website which includes access to the relevant legislation, regulations, and notices to importers. The
administration of TRQs is very transparent and upcoming improvements to the computer system used
in the administration of TRQ's should simplify the process further.
Consult:  http://www.dfai t-maeci.gc.ca/~eicb/epd_home.htm and http://www.dfait-maeci.gc.ca/~eicb/
agric/agric-e.htm.
Alcoholic Beverages
How are the volumes of alcoholic beverages allocated?
Volumes of alcoholic beverage sales are determined by market forces and the marketing
efforts undertaken by agents in support of their products.  Listings in provincial and territorial liquor
board stores are allocated based on competitive applications from suppliers to the liquor boards whichWT/TPR/M/78
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are assessed based on normal commercial considerations such as demand, the amount of marketing
support the supplier is willing to put into the product (business plan), number of competing products,reputation etc.  In Alberta, private retail store operators select products to be sold through their stores.
What rate, licence, administrative charges are applied to the storage and distribution of alcoholic
beverages by government enterprises?
Provincial liquor boards apply a mark-up to all products they handle, whether domestic or
imported.  This mark-up varies by province but is typically in the range of 120%-160% of landed coston spirits products and 60% - 120% on table wines and 30% to 100% on beer, except in Alberta
where a flat mark-up per litre applies.  (Landed cost = supplier cost, freight, insurance, federal
customs and excise duties and taxes.)  This mark-up covers all provincial charges in the normal course
of business including storage, distribution and taxes.  There are usually additional fees associated with
initial listing applications and may be additional levies for specific purposes (e.g. environment).
Nominal cost of service charges are applied by most provinces on imported products to cover
the additional costs of service necessarily associated with imported products.
What are the requirements for a retailer to be able to distribute alcoholic beverages?
Most beverage alcohol in Canada is sold through government liquor stores operated by the
provincial liquor boards.  One province, Alberta, distributes through private stores licensed by theprovince.  Most provinces also have various distribution systems which provide for sale of some
products - normally beer and domestic wines, through a limited network of private or semi-private
stores all under licensing control of the provincial government.
Export Credits
What sectors benefit from major credits, insur ances and warranties for exports from the federal
government and/or by the CFE (Corporación de Fomento a la Exportación - EDC)?
All export sectors are serviced by the EDC.  Many commodities, including metals and
minerals, forestry products and agriculture products  are supported, together with industrial
equipment, engineering and professional services, consumer goods, and transportation and
telecommunications equipment and systems.  Most export credit sales of Canadian wheat are
guaranteed by the federal government under the Credit Grains Sales Program or the Agri-Food Credit
Facility.
What is the difference between the rate applied by the CFE (EDC) and the one applied by the banking
system?
EDC operates on a self-sustaining basis and on the basis of commercial disciplines.  It does
not receive appropriations from Government.  It charges for its services on a basis to cover its costs
and to compensate for the risks taken. In addition f ees and rates are set in keeping with disciplines of
the OECD.  It is difficult to compare rates with  those in the banking community since most export
credit financing is done by EDC.
What difficulties, if any, do companies face when accessing the services of EDC or a private lending
institution?
They must meet due diligence standards of these institutions.  EDC as a public institution has
a mandate to facilitate access to service, particularly on the part of SMEs.  This does not however
change the requirement that these companies, and th eir overseas clients meet eligibility criteria forWT/TPR/M/78
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support.  Most export credit lending in Canada is done through the EDC.  Most private financial
institutions do not currently offer this support.  In some cases, EDC has partnership arrangements withthe private sector which allows the latter to operate in specific niches.
Can you give some data about the level and growth of exports ($CAN or $US) which benefited from
EDC financing?
Business facilitated by EDC in 1999 was $42billion dollars.  This volume of support has
grown substantially over the past decade.  By comparison, in 1990, EDC had facilitated $6.4 billion inCanadian sales.
HONG KONG, CHINA
Culture
It is mentioned in the Secretariat Report that Canada intends to retain its capacity to regulate in the
public interest in areas, including culture, in all future trade negotiations and that in the culturalsectors new instruments are being sought to promote Canadian culture in the face of an increasingly
rigorous application of multilateral disciplines.  We are interested to know if Canada has any specific
plan/proposal to pursue this objective in the WTO. And specifically, we would like to know the scope
of the “cultural sectors”.  Canada has in mind and what the new instruments are.
Canada is pursuing support for a new international instrument on cultural diversity that would
set out rules on the kind of measures that countries can and cannot use to enhance cultural diversity
while participating fully in the global economy.  We have been building support on the importance of
cultural diversity in a number of international fo ra, including the International Network on Cultural
Policy, UNESCO, the WTO, and the G-8.  It is hoped that these discussions would lead toward
international support for the idea of a new instrument, and will help to develop a consensus on issues
such as the forum, scope and content for such an instrument.
There are common themes that have struck a responsive chord among countries with whom
we have engaged: cultural diversity is an inclusive concept that recognizes the value of diverse
cultural influences and products; cultural goods and services play a larger role in our societies that
goes beyond their economic contribution; and many governments promote the production and
distribution of cultural content.
It will be recalled that cultural diversity is an issue which Canada raised in Seattle as we
sought language in the Ministerial Declaration that supported the right of Members to maintain their
flexibility to pursue their cultural policy objectives.  Many countries, including Canada, are
continuing to engage in discussions on the importance of cultural diversity and more specifically, how
best to ensure that countries can maintain the flexibility to pursue their cultural policy objectives.
Precautionary Approach
We note that Canada supports the Precautionary Approach.  We would like to know the views of
Canada as to the relevance of this approach on the interpretation and implementation of the WTO
Agreements bearing in mind that the notion is not expressly referred to in any of the Agreements.
Also, we are interested to know whether and to  what extent Canada has adopted this approach in
considering matters relating to GM food labelling.
Canada believes that precaution is an inherent part of any well structured and functioning
risk-based regulatory system. In Canada our science-based risk management (or risk analysis) systemsWT/TPR/M/78
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have precaution built in. Precaution is a fundamental element of all forms of risk-based decisions and
choices. In terms of the WTO Agreements we would note that the right of Members to regulate in thepublic interest is preserved through-out the system including in the GATT, the GATS, the TBT and
the SPS Agreements, as is the right of individual Members to set their own appropriate level of
protection.
It should be noted that the specific reference to Canada's support for the precautionary
approach was in the context of the conclusion of negotiations of the Biosafety Protocol. The full textof the relevant part of the statement made at that time is contained in new paragraph 30 in
WT/TPR/78/Corr.1 dated 4 December 2000.
We agree with Hong Kong, China that the term "precautionary approach" is not used
explicitly in any WTO Agreement. However, coupling our views with respect to the nature of good
regulatory practice, i.e. that it contains precaution inherently, with the reference to risk-based decisionmaking contained in, for example,  the TBT (Article 2.2) and the SPS (Article 5 especially 5.7), we
believe that the intent of allowing for precautionary measures in situations of significant scientific
uncertainty and the threat of serious or irreversible harm is adequately covered. Indeed, from Canada's
point of view, the SPS Agreement taken as a whole, and particularly the provisions of Article 5, is a
very good expression of the appropriate balance between the possible need for Members to takeprecautionary measures and appropriate disciplines to ensure that these measures are not miss-used or
abused as disguised restrictions to trade.
We would note that the Appellate body  in the " Beef Hormones" case indicated that the status
of the "precautionary principle" in international law continues to be the subject of debate among
academics, law practitioners, regulators and judges. It also stated that the "principle" must be rooted in
science  and cannot be arbitrarily imposed. Canada believes these observations are still relevant.
With respect to the labelling of GM foods, Canada has developed a labelling scheme that is
consistent with its WTO obligations. GM foods are required to bear a label if they differ significantly
from their traditional counterparts in nutritional co mposition, intended use, or if they pose a health or
safety threat. This is a requirement for all novel foods, not only those produced with modern
biotechnology.  Canada considers that labelling products based on their non-product related process or
production methods (npr PPM) could likely be problematic from a trade rules point of view. TheCanadian labelling scheme was developed in the context of the Canadian food safety regulatory
system which assesses each product against rigor ous criteria incorporating precaution throughout. In
part related to the discussion over GM foods, Canada is supporting a more thorough discussion of
labelling issues by the TBT Committee in the coming one or two years.  This discussion should, in
our view, focus heavily on issues related to npr PPM labelling.
Anti-dumping
Apart from being a frequent user of AD measur es, it is stated that Canada, as an economy highly
dependent on exports, is also a target of many AD actions.  We are interested to know more about
Canada’s position as a target of AD actions.  Currently, how many AD measures against Canada are
in force?  In the past two years,  how many AD investigations have been initiated against Canada and
who have been the major initiators?  What product sectors are particularly targeted by those AD
investigations?  How do these product secto rs respond to the AD investigations/measures?
In the past two years, Canadian exports have been involved in the following investigations:
United States - Live Cattle (AD & CVD), no injury decision 17-11-99
United States - Sodium Sulphate (AD), no injury decision at PD in August 2000
United States - Stainless Steel Round Wire ( AD), no injury decision at final in May 1999WT/TPR/M/78
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United States - Stainless Steel plate in  Coils (AD), order imposed in May 1999
China - Newsprint (AD), order imposed in June 1999
Following is the list of AD measures currently in place against Canadian exports.
USA AD Cases and their effective dates.  Where followed by an “R”, this means the order was
revoked on review and will expire on Dec 31 2000):
Brass sheet and strip 12-01-87
Corrosion resistant Carbon steel flat 19-08-93
cut-to -length Carbon steel plate 19-08-93 R
Elemental sulphur 17-12-73 R
Iron Construction Castings 05-03-86
New Steel rails 15-09-89Oil Country Tubular Goods 16-06-86 R
Pure and Alloy magnesium 31-08-92
Racing Plates 27-02-74 R
Red Raspberries 24-06-85 R
Stainless steel plate in coils 21-05-99Steel Jacks 13-09-66 R
Sugar and Syrups 09-04-80 R
Potassium Chloride (Potash) 07-01-88 R
USA Countervail cases:
Live Swine  15-08-85 R
Steel Rails  15-09-89
Magnesium  31-08-92
AD Measures in place by other countries:
Australia - Polyvinyl Chloride
Mexico - Steel plate in Coils
South Africa - Calcium propionate
China - Newsprint
As the above data indicate, the United States has taken the most actions against Canadian
exports and the sector most affected is steel.  The Canadian steel industry has reacted for the most part
by co-operating with the investigative authorities in the United States in order to maintain their
customers in that market.
With respect to the question as to how being a target of anti-dumping action has impacted on
Canada’s position;  Canada, as both a user and a target of anti-dumping measures has taken the
position that further efforts should be made to improving and clarifying anti-dumping disciplines andfacilitating their proper implementation.
Export Assistance
It is mentioned that the Gowlings Report had recommended that, inter alia, capacity of the Export
Development Corporation (EDC) for foreign project equity investment be increased, all trade-relatedinvestments and leasing powers be exercised throug h taxable subsidiaries that would operate on
commercial principles, and the EDC be further commercialized. The Canadian government had
subsequently endorsed the general direction of the Report, but clarified that EDC had a public
mandate to promote and reflect Canadian values abr oad. In this regard, we would like to know if
Canada has any plan to implement the above recomme ndations, and if not, what the reasons are.WT/TPR/M/78
Page 74
Subsequent to the Report on the Review of the Export Development Act to which the
questioner refers, (the Gowlings Report), a pa rliamentary Committee (the Standing Committee on
Foreign Affairs and International Trade - SCFAIT), considered and held public hearings on the
subject report and the Government of Canada responded to a report of that committee, expressing:
− its support for the committee's recommendation for amendments to the EDC equity regulation
to increase EDC's project equity investment capacity;
− its support for the retention of all possible flexibility to help Canadian exporters. The
Government noted that EDC has the authority to establish subsidiaries to meet specific needs.
The creation of subsidiaries would be considered by EDC and the Government as the need inrespect of either equity or leasing operations was demonstrated. EDC would retain the right to
invest directly.
− The Government's plans with respect to 1 above are that appropriate amendments to the
relevant regulation be initiated in 2001. With respect to the creation of subsidiaries (2 above),to date EDC has not exercised its power to create subsidiaries as a compelling case has not yet
been made. However, various concepts are under discussion.
For a fuller understanding the questioner can review the full text of the Government's
Response to the Standing Committee on Foreign Affairs and International Trade at:  http://www.dfait-
maeci.gc.ca/ english/news/public.htm.
Preferential Trade Initiatives
It is noted that Canada has embarked on a number of free trade initiatives. Negotiations with EFTA
and Costa Rica are underway and exploratory talks with Singapore have begun.  In a few cases, it
was mentioned that the so called "supply-managed dairy, poultry, and eggs sectors" would not be
covered. We are interested to know whether it is a policy of Canada to exclude such sectors in all of
its FTAs.  What are the reasons for the exclusion?
In free trade negotiations (such as the current negotiations with EFTA and Costa Rica), with
respect to the dairy, poultry and egg sectors, Canada's position has been that we are prepared to
negotiate the elimination of our within quota MFN tariff on these products, in the context of an
overall package on agricultural products.  Canada is committed to maintaining the integrity of our
supply managed system.
Financial Services
We appreciate Canada’s recent initiative to relax certain restrictions for foreign bank branches.
However, the initiative with regard to retail banking remains limited, especially with the restrictionson the ability of foreign banks to take deposit. Would Canada encourage further foreign participation
in the banking market by reviewing the respective re strictions with a view to relaxing/removing it?
Foreign banks have full deposit taking powers in Canada through a deposit-insured,
Canadian-incorporated bank subsidiary.
The branching regime was intended to provide a more cost-effective way for foreign banks to
operate in Canada.  The supervisory regime was designed with this in mind, and provides for lighter
regulation.  Allowing foreign bank branches to take retail deposits would require a more onerous
regulatory framework to address the added risks th at retail deposit-taking would pose.  The result
would be a less flexible foreign bank branching regime.WT/TPR/M/78
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Bank mergers in Canada are subject to review by di fferent authorities. It is also noted that the
Canadian authorities will not consider further merger proposals until the establishment of a newreview framework. Would Canada advise on the prog ress of the developmen t of the new framework
and any efforts that will be put to enhance the transparency and efficiency of the review mechanism?
The government announced in June 2000, that it would be implementing a transparent review
process for merger proposals for large banks.  This review process would include a formal mechanism
for public input.  In addition to reviews by the Competition Bureau and the Office of theSuperintendent of Financial Institutions (federal regulator), merger proponents would be required to
prepare a Public Interest Impact Assessment, which the House of Commons Standing Committee on
Finance would be asked to review.  Canada plans to reintroduce the merger review guidelines at the
same time that the new legislative framework is reintroduced into Parliament.
Air Transport Services
It is noted that Canada has passed a legislation recently to protect public interest against excessive
pricing arising from market predominance by th e single domestic supplier. Would Canada consider
reviewing the elimination of entry barriers for foreign suppliers by removing restrictions on foreign
ownership and permitting cabotage, a recommendation advocated by the Competition Bureau, to
foster competition?
On December 21, 1999, Canada's Minister of Transport and Canada’s Commissioner of
Competition announced that they were prepared to approve Air Canada’s acquisition of Canadian
Airlines.  This approval followed a lengthy and full review of the transaction by the Minister and the
Competition Bureau.  Air Canada agreed to abide by enforceable undertakings designed to enhance
the competitive climate in the airline industry in Canada.  Air Canada also made commitments to the
Minister of Transport on key public concerns.  These undertakings and commitments were
subsequently passed into legislation.
The Government of Canada is aware of the competition concerns that have arisen as a result
of the industry consolidation and is committed to ensuring that the necessary conditions are in place
for attracting competition from new and existing Canadian carriers.  It believes that such competition
can be fostered domestically by reducing barriers to entry and encouraging existing operators and new
entrants to expand into new markets, thereby mitigating the potential negative effects of the
consolidation.
Like many countries around the world Canada considers the airline industry to be
fundamental to the domestic economy and an important national symbol.  In the legislation passed in
July 2000, the Canadian Government has retained provisions requiring that the Canadian airline
industry remain owned and controlled by Canadians and that the prohibition on cabotage bemaintained.
Professional Services
The provision of professional services in Canada is generally subject to limitation on the form of
establishment as well as residency/citizenship requ irement. Provincial variation in such restrictions
poses further obstacles for foreign participation. Would Canada consider eliminating provincialdifference in those restrictions so as to facilitate foreign participation in these sectors?
Since the conclusion of the Uruguay Round of negotiations, there have been significant
changes in the regulation of the professions, particularly as concerns provincial licensing requirements
and mobility rights for licensed practitioners within Canada.WT/TPR/M/78
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As Hong Kong, China has noted, the licensing of  professional service providers in Canada is
largely the responsibility of provincial governments.  This responsibility has been devolved toself-regulatory authorities which license and  govern professionals operating in their respective
jurisdiction.
In regard to regulatory changes, Members are aware that Canada has notified the WTO
(reference Canada’s notification to Council for Trade in Services, S/C/N/86-90 of 14 December 1998)
of the removal of discriminatory measures respecting the national treatment and market accessprovisions of the GATS.  These include for example, the elimination of citizenship, permanent
residency and residency requirements in a number of provinces and professions, including legal,
accounting, engineering, land surveying, and architectural services.
As well, in the area of legal services, since the last Round, most Canadian provinces (with the
exception of Quebec) have implemented non-discriminatory regimes for the licensing of foreign legalconsultants.  Foreign legal consultants are currently in the forefront of liberalization in the legal
services sectors.
As concerns mobility rights, all professions are currently working under the auspices of the
Internal Trade Agreement to allow full portability of licenses from province to province, eliminating
the need to re-certify in each sub-national jurisdiction.
Movement of Natural Persons
It is noted that Canada has adopted on a trial basis less stringent requirements for the seeking of
employment by spouses of highly skilled forei gn workers who are admitted to Canada in high-growth
sectors for at least six months.  It is also noted that a permanent process for the above relaxed
arrangement is being designed. We would be interest ed in knowing the progress of the development of
the permanent process and whether further relaxation will be pursued.
Canada's provisions for facilitating the employment of spouses of temporary foreign high-
skilled workers are now a permanent immigration program.  This provision does not impose a
limitation on the particular sector in which the worker is employed (i.e. it need not be “high growth”).
Citizenship and Immigration Canada and Human Resources Development Canada are considering
expanding the program to include spouses of temporary workers at the next level down from the
professional and senior managerial (i.e. technical, administrative).
INDIA
What percentage of Canada's total foreign trade and imports are with/from countries with which
Canada has free trade arrangements/preferential trading arrangements?
In 1999, Canada’s merchandise trade with countries with which Canada has free trade
arrangements represented just over 87% of exports and 70% of imports.
What percentage of Canada's external trade/imports are with/from countries with which Canada is
negotiating PTA/FTAs?
In 1999, Canada’s merchandise trade with countries with which Canada is negotiating
PTA/FTAs represented just over 6.8% of exports and 16.5% of imports.WT/TPR/M/78
Page 77
Para 1 of the overview of the Secretariat's report refers to persistent barriers in a few but important
areas including agri-food industries, textiles and clothing etc. Para 7 refers to the high tariff on anumber of sensitive products including textiles, clothing, footwear, etc, many of which are of export
interest to developing countries.  It further point s out that Canada's autonomous tariff concessions in
favour of developing countries remains modest compared with preferences established under
reciprocal FTAs.  Further, Canada's increasing part icipation in RTAs has tended to restrict flow of
trade into Canada from other countries.  Does Canada have any plans for improving market access
for products of developing countries particularly in sectors such as textiles, clothing, footwear and
agriculture?
As a founding member of the GATT, Canada has participated in numerous rounds of
multilateral trade negotiations.  These multilateral negotiations have resulted in significant decreases
in Canada's MFN tariffs.  Our free trade agreements with developed and developing countries are
negotiated agreements that offer significant benefits to both/all parties of the agreement, not only by
opening Canada’s market but also allowing Canada’s FTA partners to fully enjoy the benefits of free
trade through their own market liberalization.  Like most countries, Canada views its free trade
agreements as incremental steps towards wider libe ralization to be negotiated in a multilateral/WTO
context .
Para 3 of the Secretariat's overview points out the apparent contradictions in Canada's approach in
sectors such as agriculture and services.  In agricu lture while seeking improved market access, export
subsidy elimination and trade distorting domestic support, Canada wishes to preserve its right to
operate an 'orderly marketing system' in the wheat, dairy, poultry and egg sectors.  Would Canada
comment on these observations?
Canada has a fundamental interest in further strengthening the international rules governing
agricultural trade, eliminating trade distorting subsidies and significantly improving market access
opportunities for all agricultural and food products.  Canada is also committed to preserving the
ability of Canadians to operate orderly marketing systems, such as the Canadian Wheat Board and
supply management.
The average tariff in respect of imports from developing countries seems much higher than the
average tariff on imports from developed countries.  This is evident in para. 7 of the Secretariat'sreport.  Will Canada consider reducing tariff on items of export interest to developing countries?
Canada's trade weighted average tariff for imports from developing countries was 3.3% in
1999.  If the question refers to the tariff levels applied to countries that we have negotiated free trade
agreements (FTAs) with, we would offer that our FTAs with developed and developing countries are
negotiated agreements that offer significant benefits to both/all parties of the agreement, not only by
opening Canada’s market but also allowing Canada’s FTA partners to fully enjoy the benefits of free
trade through their own market liberalization. Like most countries, Canada views its free trade
agreements as incremental steps towards wider libe ralization to be negotiated in a multilateral/WTO
context .
Para 9 of the overview has referred to Canada' s import quotas on textiles and clothing imposing
significant restrictions on certain products, some of which are of great interest to developing
countries.  Further, tariffs on some of these products are high (for e.g. bed sheets attract 18% duty).
The average tariff on textile products is 12% as against the average industrial tariff of only 4.8%.
What plans does Canada have to remedy the situation and to phase out the quotas in the textiles andclothing sector?  The Secretariat has referred to the provision of financial support to some selected
activities, with 40% of the total financial transfers going to the agri-food sector.  Canada no doubt
recognizes the trade distorting potential of such support.  Does Canada have any plan to phase out
such support?WT/TPR/M/78
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Canada has made the commitment to eliminate all Agreement on Textiles and Clothing
(ATC) quotas by January 2005, and its industry has accepted the obligation to move towards a quota-free environment. The ATC provides for a ten-year period to achieve the elimination of quotas, and
Canadian industry will need the full length of this transition period to restructure itself and adjust to a
quota-free world. The Canadian industry has undergone great changes over the past three decades,
both in terms of loss of employment and share of domestic market. Still, Canada went beyond its ATC
commitments in the two first phases.
The current levels of Canadian tariffs reflect the results of previous rounds of multilateral
trade negotiations in which Canada participated.  Canada is prepared to discuss additional tariff
reductions in the context of future plurilateral or multilateral trade negotiations.
Regarding the agricultural sector, Canada has significantly reduced the level of support since
the 1986-88 base period.  In 1997, support to the agriculture sector in Canada was about 11% of
Canada’s total AMS commitment level.  Recent incr eases in expenditures have been in conformity
with Annex 2 of the WTO Agreement on Agriculture and have no, or at most minimal,
trade-distorting effects or effects on production.
It is understood that Canada maintains an impo rt-licensing system for steel and prohibits export
below the normal values of steel, which are fixed high.  No imports can be made unless the goods are
marked in accordance with regulations of Sec.35.01 of the Customs Act.  Theses measures act as
barriers to export of steel to Canada.  Would C anada review its policy in this regard so as to
facilitate export of steel by developing countries?
Canada's import licencing system for steel performs a monitoring function only. No quotas
are set. No minimum prices are maintained.  There are no prohibitions on the import of steel into
Canada.  Steel tubes and pipes are among a short list of products for which Canada requires that the
country of origin be marked on the product.
JAPAN
OVERVIEW
Transparency
(p. vii, paragraph 1)  The Report states that “C anada’s trade and investment regime is amongst the
world’s most transparent…”.  In this regard, does Canada offer any technical assistance forimproving the transparency of governmental system s to other countries?  Is there any integrated
information center to respond to inquiries concerning the trade and investment systems of Canada?
Canada has been active in trade-related technical assistance and capacity building in countries
all over the world. This assistance has been used, inter alia, to improve and modernize trade policy
administration.  In addition to disbursements of approximately $67 million between 1996 and 2000
from the Canadian International Development Agency, we have promoted and financed the Integrated
Framework, a programme for co-ordinating and delivering technical assistance to the least developed
countries.  At the WTO, Canada has supported a proposal for an increase in the budget for Trade-
Related Technical Assistance (TRTA).
With respect to investment, Canada has actively supported the APEC initiative to enhance
transparency among Member countries through the development of enhanced Individual Action Plans,
which provide extensive information on the investment regimes of member countries.  Canada also
supported a similar comparative study of investment regimes undertaken within the FTAA.WT/TPR/M/78
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There are ways by which countries can know more about Canada's trade and investment
systems. For example, Trade Facilitation Office Canada exists to help developing countries, inparticular least developed country exporters, to understand the Canadian market. Canada recently
hosted a WTO study tour, aimed at informing devel oping country participants about Canada's trade
policy regime.  With respect to Canada’s investment policy, which is the joint responsibility of the
Department of Foreign Affairs and Internationa l Trade, Industry Canada and the Department of
Finance, information can be obtained through the government’s comprehensive investment website athttp:intinvest.ic.gc.ca.
As part of its commitment to citizen-centred se rvice delivery, the Government of Canada also
provides a toll-free integrated telephone service to all Canadians, wherever they live and work, to
provide access to information on trade, investment, and any other government programs, services, and
initiatives of interest to them.
(p. vii, paragraph 4)  The Report states that Canada’s preferential arrangements may distort trade
and investment patterns. Please provide detailed explanation of this description.  Please indicate
Canada’s statistics showing the effects (both to obstruct and to create trade) which seem to appear as
the result of its regional integration, together with its way of the calculation.
There is no empirical evidence to suggest that trade and investment patterns have been
measurably distorted by trade arrangements.  In the last decade, a number of fundamental changes in
underlying economic factors have caused substantial  shifts in market shares in Canada’s international
trade and investment.
• On the demand side, the dichotomy in income growth among Canada’s key international
trading partners in the 1990s has been a major factor behind the change in the pattern of trade.
Over the period from 1991-1999, real GDP growth in the United States expanded by more than30% cumulatively, four times that in Japan, Canada’s second largest trading partner, and twice
that of the European Union.  Such a disparity in  income growth would have dictated a growing
divergence in market share in favour of the U.S. as income elasticities are typically higher than
unity.
• Secondly, the rise in Canada’s exports to the U.S. in recent years also reflects the tight supply
situation in the U.S. where most plants have been  working at near capacity, in contrast  to the
situation in most other countries.  This demand effect more than offsets the price effect
associated with relative exchange rate movements over this period.  Canada’s exchange ratefell by more than 20% against the U.S. currency from 84.4 cents U.S. in 1989 to 67.3 cents
U.S. in 1999.  Over 1989-1999, the Canadian dollar also depreciated sharply vis-à-vis the
currencies of Canada’s other major trading partners such as Japan, Britain, and Germany.
Though the depreciation was substantially larger against the yen than against the U.S. dollar,
this currency effect was overwhelmed by the sluggish demand associated with the weakeconomic activity in Japan.  It should be noted that the decline in demand from Japan and
Korea helped trigger a recession in British Columbia, a Canadian province which is most
dependent on trade with Asia. [In 1999, about 20% of B.C.’s exports were destined for Japan
(15%), South Korea (2.6%) and China (2.0%).]
• Thirdly, the geographic orientation of Canada’s exports in recent years reflected the  product
mix of Canada’s exports.  Canada’s exports  benefited from the particular strength in U.S.
demand for lumber, motor vehicles, and hi-tech products.  This sectoral strength in areas
where Canada has a competitive advantage is due in part to the surge in demand for interest-
sensitive items such as housing and autos associated with the long series of interest rate
reductions in the U.S. in recent years.WT/TPR/M/78
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• The opportunity for diversion due to particular free trade arrangements would be minor
in any event as Canada’s trade barriers had come down to very low levels by 1999:  Canada’s
trade-weighted average tariff for total global imports was 0.87% in 1999, down sharply from3.7% in 1989, with duty-free imports representing 90.6% of total global imports in 1999, up
from 65.7% in 1989.  The reductions in both tariff and non-tariff barriers, plus the increased
publicity given to the markets of our free trade partners through the negotiation and signing of
agreements and the ensuing boom in trade promotion, have encouraged increasing numbers of
Canadian enterprises to get into the export business and to look beyond the neighbouring U.S.market.
(p.vii, paragraph 5)  The Report states that “its (Canada’s) support for a multilateral agreement on
investment appears to have become mainly limited to the related “analytical and educative” work in
the WTO”.  Please explain Canada’s view on multil ateral investment rule.  If Canada is negative to
making such a rule, what is the reason for that?  What system is desirable to attract foreigninvestment which facilitates the development as well as the improvement of their employment and
technology of receiving countries?  Does C anada implement any technical assistance to those
countries for building such a system?
There is no consensus among WTO Members to move forward on investment rules at this
time.  The issue is not under active consideration. Investment issues have been a key element of theglobalization debate as evidenced by the public controversy surrounding the MAI initiative.
Similarly, in Canada, investment rules remain a sensitive issue. Canada is committed to ongoing
consultations  with Canadians to seek their views on international investment issues, including
investment rules.  In the interim, Canada is supportive of the  current ongoing discussions in the WTO
Working Group on the Relationship between Trade and Investment.
Canada supports the adoption of transparent and non-discriminatory domestic investment
regimes by all WTO economies.  Transparency, openness and security within domestic regimes can
foster foreign direct investment and generate economic benefits through increased trade opportunities,
the introduction of new technologies and management practices, job creation, the payment of taxes
and the purchase of goods and services locally.
Canada actively supports transparency and capacity building in support of enhanced
transparency, openness and security in investment markets, including through organizations such asUNCTAD, APEC and the FTAA.
(p. viii, paragraph 11)  The Report states that “Market distortions may arise from local-content
requirements in place at federal or provincial level.”  Canada raised the local-content requirement
for automobiles to 60% after joining NAFTA, t hough its requirement was 50% before becoming a
member of NAFTA.  If a Canadian company produc es goods in a third country outside NAFTA areas
and that third country later joins another regional integrated area, would it be consistent with the
WTO agreements that the third country aforementioned raises the region’s local-content requirement
for the products of the Canadian company?  W ould Canada regard such a case WTO-consistent?
Japan's concerns regarding the rules of origin in the NAFTA have been raised and addressed
on numerous occasions, including in the examination of the NAFTA in the Committee on RegionalTrade Agreements (note, for example, WT/REG4/1, 23 June 1995, pages 19-33).  There is no basis
for comparing the rules of origin in the NAFTA, wh ich pertain to trade that takes place under the
terms of that Agreement, to the rules of origin that may prevail under a different Agreement involving
different participants.  Moreover, such a comparison is not relevant to the provision of Article
XXIV:5 of the GATT given that it does not invo lve any change in the MFN terms of access for
products from third countries.  The rules of orig in in the NAFTA apply only to trade between theWT/TPR/M/78
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NAFTA Parties under the NAFTA tariff preferences.  They do not affect MFN tariffs or other policy
instruments that apply to imports from non-NAFTA countries and therefore do not affect marketaccess for non-NAFTA countries.
RECENT ECONOMIC DEVELOPMENTS
PARTICIPATION IN THE WTO
(p. 8, paragraph 26)  The Report states that “In the context of all future trade negotiations, Canada
intends to retain its capacity to regulate in the public interest in areas such as health, education and
culture”.  What regulations and measures is Canada considering in these areas?  (Health, education
and culture are defined as services, thus, the GATS can be applied to those sectors.  However, “a
service supplied in the exercise of governmental authority” is excluded from the application of
GATS.)
The Secretariat report states that (WT/TPR/S/78, Page 8, Paragraph 26), “[i]n the context of
all future trade negotiations, Canada intends to reta in its capacity to regulate in the public interest in
areas such as health, education and culture”.  In providing this perspective to the Secretariat, Canada
intended to reassure Canadians that Canada will con tinue to safeguard its right to regulate in the
pursuit of its national policy objectives, and to inform Canadians of the basic structure of the GATS
as a ”bottom-up” agreement.
Other statements in the Secretariat Report and in other public documents provide more detail
on this position.  With respect to trade in services and electronic commerce (WT/TPR/S/78, Page 9,
Paragraph 31), “[t]he Minister for International Trade has indicated that Canada’s public health and
public education systems will not be jeopardized in these negotiations.  Further, Canada will not take
on any new obligations that will restrict the Government’s ability to achieve its cultural policy
objectives” .  Canada has also indicated, as reported in the TPR (WT/TPR/S/78, Page vii, Paragraph
6) that “in the cultural sectors, new instruments are being sought to promote Canadian culture in theface of an increasingly rigorous application of multilateral disciplines”.
(p. 10, paragraph 38, p. 31, paragraph 110, p. 32, paragraph 114 and p. 74 Table A IV.1) Please
explain the present situation of implementation of the WTO Panel recommendation concerning the
Canada’s Special Milk Class system, which was determ ined by the Panel as circumvention of export
subsidy for dairy products.
Over the past year, as described in earlier status reports, industry stakeholders have taken
steps to implement new mechanisms for the commercial export of milk. On December 7 and 8, 2000,
Canada held another set of consultations with the United States and New Zealand, in accordance with
the terms of the implementation agreement reache d between the parties pursuant to DSU Article
21.3(b). At these consultations, the parties mutually agreed to extend the reasonable period of time forimplementation to January 31, 2001.
Under the new programmes, the prices and volumes of Canadian dairy products are
determined commercially between producer and pr ocessor. The Governments do not decide the
volume of exports nor do they negotiate the export price.  In other words, the Governments have no
role in these commercial contracts.
DEVELOPMENTS IN INVESTMENT POLICIES
(p. 11, paragraph 40)  The Report states that “for eign acquisition exceeding a threshold of CAN$192
million are reviewable (the threshold is adjusted annually), as well as foreign acquisitions exceedinga CAN$5 million threshold in transport, financial services, and cultural sectors… The authorities
have noted that in 1999, of the more than 700 investments notified under the ICA, only 35 were
reviewed and none was denied.”  Are there any clear conditions in such a review?WT/TPR/M/78
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Yes, the ICA stipulates clearly the conditions under which an acquisition by a non-Canadian
of a Canadian business takes place.  The ICA defines what constitutes a Canadian business, when aCanadian business is considered to be acquired by a non-Canadian, and when a proposed transaction
is reviewable, i.e., if the asset thresholds above are exceeded.  Further detail on the Investment
Canada Act can be viewed on the web at investcan.ic.ca.
(p. 14, paragraph 45)  Regarding NAFTA investor-state dispute settlement provisions, please explain
the cases regarding the implementation of NAFTA C hapter 11 concretely focussing on the definition
of expropriation.  How does Canada relate the indirect expropriation with the environmental
protection control?  Does Canada have an intention to review the NAFTA Chapter 11 regarding the
indirect expropriation?
In the Pope and Talbot and S.D. Myers cases, the Tribunals agreed with Canada that
"tantamount" to expropriation does not expand the scope of the expropriation provisions.  TheTribunals agreed with Canada's position that tantamount simply means "equivalent".
With respect to the environmental protection, the Myers' Tribunal supported Canada's view
that NAFTA members "have a right to establish high levels of environmental protection.  They are not
obliged to compromise their standards merely to sa tisfy the political or economic interests of other
states."
Canada is currently seeking, in co-operation with our NAFTA partners, to clarify some of the
key procedural and substantive provisions of NAFTA Chapter 11, such as expropriation, to ensure
they properly reflect the original intent of the NAFTA Parties .
(p. 4, paragraph 12 and p. 14, paragraph 47)  The Report states that the United States accounts for a
large proportion of Canada’s foreign direct inve stment.  Please explai n, using examples, what
difference exists in treatment between the direct  investment from the U.S. and Mexico, compared with
those from countries outside NAFTA.  In order to be treated in the same way as the U.S. and Mexico,
which conditions should the foreign companies outside the NAFTA areas should meet?
There is no longer a distinction between NAFTA members and non-NAFTA members in the
Investment Canada Act (ICA).  NAFTA provisions  in the ICA were extended to WTO members and
the Act treats all WTO members equally.  However, non-WTO members are subject to different
review thresholds, i.e. if an investor is a non-Canadian and is not a WTO member, any investmentover $5 million for a direct acquisition and over $50 million for an indirect acquisition is reviewable.
Under the NAFTA, Mexican and U.S. investments in Canada are granted a series of
protections through NAFTA provisions dealing with items such as minimum standard of treatment,
expropriation and compensation, and transfers.  In addition to WTO like State-to-State dispute
resolution, NAFTA investors may seek compensation for any breach by Canada of NAFTA investorprotections through the use of an investor-state dispute settlement mechanism.  Non-NAFTA
investments in Canada do not receive the same type of protections as those granted to NAFTA
investments unless the investments are covered by an existing investment agreement with Canada that
contains similar provisions.
To benefit from the same level of treatment as NAFTA members, non-NAFTA investors
effectively need to either negotiate such an agreem ent with Canada or cease to be a "foreign company
outside the NAFTA area".  To do so, such investor will have to meet the definition of NAFTA
describing what is an "Investment of an investor of a Party".  NAFTA defines this concept as "an
investment owned or controlled directly or indirectly by an investor of such Party."WT/TPR/M/78
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MARKET ACCESS IN GOODS
TARIFFS AND OTHER CHARGES AND TAXES AFFECTING IMPORTSTariffs
(p. 18, paragraph 59) Since 1998, Canada has been negotiating under Article 28 of the GATT for
modification of its tariff schedule rising from the simplification of the tariff classification.  The
confirmation has not been published concerning its amendments.  Does it mean that the negotiation is
still continuing? If so, please explain the present situation (countries who has objected, the content ofthe objection etc.).
Three Members, the EU, India and the Philippines, have placed reservations on Canada's
proposed modifications to simplify its tariff schedule.  Canada has provided written responses to the
written comments and questions from the EU.  Canada has also provide additional information in
response to informal queries from the other two Me mbers.  Canada remains ready to consult further
with these three Members.
(p. 19, paragraph 64)  Canada has until February 2001 to implement the WTO Panel
recommendation concerning the import system of  Canada’s motor vehicles.  Please explain the
present situation of its implementation.  Japan thin ks that it should be implemented by promoting
liberalization (i.e. raising tariff) by the spirit of WTO.
Canada removed the Auto Pact’s production-to-sales ratio requirement on September 17,
2000, as recommended by the WTO panel.  On October 4, a WTO arbitrator determined that the
“reasonable period of time” for Canada to implement the remaining elements of the WTO ruling is
eight months from the date that the WTO adopted the panel and Appellate Body reports, i.e., by
February 19, 2001.  Canada will honour its WTO obligations and will repeal the remaining Auto Pact
measures (the Motor Vehicle Tariff Order (1998) and the Special Remission Orders) by February 19,
2001, in accordance with the arbitrator’s ruling.
The level of Canada’s MFN vehicle tariff was not  at issue in this dispute.  Moreover, as a
matter of policy, Canada does not generally reduce the tariff on finished goods unilaterally but prefers
to do so in the context of bilateral or multilateral negotiations.  In this regard, Canada is prepared to
consider reducing the tariff in the context of international trade negotiations.
(p. 19, paragraph 66)  The Report states that “Canada implemented an Order expanding duty-free
access for imports from least developed countries covering over 550 additional tariff lines,…  As a
result of this initiative, …;  the share of duty-free lines increased from 83% to 90%”.  Please indicate
its improvement on the basis of trade value.
Duty free treatment was accorded the 570 tariff items in August.  It is too early to determine
the trade impact of these changes to the tariff.  In our view, the package is sufficiently broad thatLDCs will be able to take advantage of many of the reductions to the tariff.  We should all recognize
that capacity development will also be important for LDCs to participate in international trade.
(p. 20, paragraph 68)  It seems that concerning the rule of origin of textiles, is “yarn forward”.
According to the Report, this rule seems to be MF N rule.  Please explain in concrete terms, the
content of “yarn forward” rule of origin.
The NAFTA rule of origin on textiles and apparel is "yarn forward". This rule is applied to
trade partners under the NAFTA and the Canada-Chile FTA. It determines that the only textiles andWT/TPR/M/78
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apparel items to benefit fully from the free-trade between the signatories to these FTAs are items
which were produced from inputs originating in their free trade region, starting from the yarn/fibreand including all its transformations.
The NAFTA does not raise barriers to the import of products from third countries, including
products entering under our MFN tariffs. The "yarn forward" rule is applied to signatories of the
NAFTA and of the Canada-Chile FTA; it is not an MFN rule.
TARIFF QUOTAS IN THE AGRI-FOOD INDUSTRY
(p. 20, paragraph 72, p. 21, Chart III.2 and p. 22, paragraphs75-76)  Please explain the reason for
the low rate of in-quota fill in margarine, wheat, barley and barley processed products.  Does the
country allocation or the preferential tariff rate system for some countries have some effect upon
these under-fill of tariff quotas?
The TRQs for margarine, wheat, barley, and barley-processed products remain undefiled due
to the competitiveness of Canadian producers. Imports may rise temporarily, for instance as they did
for wheat in the 1996/97 marketing year, when the quality of the Canadian wheat crop was lower than
usual. The barley products TRQ is undefiled due to market conditions (modest import demand due to
limited domestic requirements and a competitive domestic market which is relatively stable in
tonnage terms). Imports under this TRQ are primarily specialty malts and malt extracts used in beerproduction and malt extracts for food processing. There are no restrictive conditions, as the TRQ is
administered on a first-come, first-served basis at the border with no prior allocation or import permits
required. There are no country allocations applicable for these products.
STANDARDS AND TECHNICAL REGULATIONS
(p. 29, paragraph 100)  For the environmental protection, there are two approaches: market related
measures such as environmental duties and regulatory measures such as prohibiting the distribution
of products that are harmful to the environmen t.  On which approach does Canada stress more?
Regarding the environmental protection measures which have been introduced, is the national
treatment ensured for all measures?  If not, which measures and why?
Canada believes that pollution prevention is the most effective means of protecting our
environment - eliminating costly waste and promo ting sustainable development.  Pollution prevention
is the use of processes, practices, materials, produ cts or energy that avoid or minimize the creation of
pollutants and waste, and reduce overall risk to human health and the environment.
Canada is working towards it pollution prevention and environmental protection goals
through a combination of legislation, regulation, voluntary initiatives and economic instruments in
partnership with other levels of government, the private sector, and interested Canadians.  As with
many countries, many of Canada’s existing regulations date from a period when little considerationwas given to the use of market mechanisms.  Today, Canada sees the merits of a more balanced
approach and the use of "market mechanisms", and accordingly reviews the potential use of
instruments (market and regulatory) in developing new policies and programs.
Environmental policies in Canada are developed through a transparent, multi-stakeholder
process.  The objective of environmental protection measures is to protect not just the environmentbut also the health of Canadians, and not to act as a trade protectionist measure.  With respect to the
trade and environment policy interface, Canada believes its environmental policy is fully consistent
with its WTO rights and obligations.WT/TPR/M/78
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What measures is Canada taking toward the economic activities in Canada from the view point of the
sustainable development?  While Canada assesses th e impact of the various economic activities inside
the country, is Canada to assess the impacts of th e economic activities in a third country from the
perspective of the global environment?  How does Canada proceed to the environmental impact
assessment of the situation coming from the result of the WTO negotiations?
The Government of Canada is committed to sustainable development, and we have put this
commitment into practice.  In developing our trade policy and trade agreement objectives, Canadaconsistently takes economic, environmental and social factors into consideration.
In line with the 1999 Cabinet Directive on the Environmental Assessment of Policy, Plan and
Program Proposals, Canada will conduct Strategic Environmental Assessments of trade negotiations.
The Framework establishes an open process and analytical requirements for identifying and
evaluating likely and significant environmental impacts of trade policy.  This methodology is rootedfrom a variety of sources, including OECD and NAFTA work.
While many environmental issues should be examined in the global context to be most
completely understood, limited data, sovereignty issues, limited resources and practicality demandthat the primary focus of such assessments, at this time, be on assessing the most likely and significant
environmental impacts of trade negotiations in relation to the Canadian environment.  Although the
proposed framework calls for national assessments, trans-boundary, regional and global
environmental impacts will be considered if they have a direct impact on the Canadian environment.
Extensive public consultations were involved in preparing this Framework.  The final version
of the Framework will be available on the DFAIT website shortly and we look forward to workingwith other members in refining this tool as we begin implementation.
The Framework will be implemented on a case-by-case basis from the earliest stages to
ensure information is available for trade negotiators during the negotiations.
The Framework is also flexible, and generic so that it can be applied to a variety of trade
negotiations (e.g. WTO Agreements as well as regional (FTAA) and bilateral (Costa Rica).
(p. 31, paragraph. 107-109)  The Report states that “Federal government guarantees allow the
Canadian Wheat Board (CWB) to borrow money to finan ce its operation at “lower rates of interest
than any private sector company of comparable size and credit worthiness””.  This result insignificant saving for Western Canadian farmers (am ounting to over Can$60 million according to the
CWB)”.  Japan thinks such financing has some effect on promoting exports and, therefore, distorts
trade.  How does Canada think of the effect of the measures on exports?  Does Canada have any plan
to reduce the effect of promoting exports or to maintain the measure as it is?  Also, the CWB seems to
have an export credit programme under the guarantee of Canadian Government.  Please give moreinformation on this export credit programme.  To  be concrete, we request information on the
countries to which the products with this programme are exported to, total value of export under this
programme, detailed conditions of this programme (e.g. applied rate of interests, the period of
repayment, amount of down payment), as well as the mechanism of offering the guarantee by
Canadian Government (e.g. amount of subsidies by the government for this programme, the detailed
system of government’s guarantees).  Japan requests that the transparency and predictability should
be ensured in the management of the CWB, since the state-trading enterprises in exporting countries
have enormous influence to international market.
Canada believes that the federal government guarantees extended to the CWB neither
promote exports nor distort trade.  The Government of Canada does not have any plans to change
these measures which were recently amended with other changes to the Canadian Wheat Board Act
in 1998.WT/TPR/M/78
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Canada and the Canadian Wheat Board have ensured transparency and predictability in the
management of the CWB.  The CWB reports info rmation on the two Government of Canada export
credit programs extended to the CWB in its annual report.  As well, Canada has already provided the
information requested to Japan and other OECD pa rticipants in the OECD’s 1999 survey on export
credits for agricultural products.
The Government of Canada extends export cred it guarantees to the CWB through  the Credit
Grain Sales Program (CGSP) for sales of wheat and barley to sovereign buyers, and the Agri-FoodCredit Facility (ACF) for sales to private buyers.  CWB exports under credit arrangements are
published in the CWB’s annual statistical tables ava ilable from the CWB on request.  Over the last ten
years this includes exports to Algeria, Brazil, Chile, Peoples’ Republic of China, Cuba, Indonesia,
Iran, Iraq, Jamaica, South Korea, Pakistan, Per u, Russia, Uzbekistan, and Yemen.  The CWB annual
report indicates that, during the year ended July 31, 1999, sales made under CGSP totalled$95 million and sales made under ACF also totalled $95 million.  Since CGSP and ACF are guarantee
programs, the government does not have any role in  setting interest rates.  Repayment terms cannot
exceed three years and are typically one year or less.  No down payments are required by the
government.  More details on CWB credit grain sales are contained in the CWB annual reports which
can be found at:  http://www.cwb.ca/publicat/annual/ index.htm.
(p. 33, paragraph 115)  The Report states that “most export financing in Canada is provided by the
government-owned Export Development Corporation (EDC)”. Please indicate the interests rates
under the programme and compare the rate with the ones by private sectors.
As Canada's official export credit agency and, in view of the fact that Canada is a member of
the Consensus Arrangement on Guidelines for Offici ally Supported Export Credits (The Consensus),
the Export Development Corporation (EDC) operates within the Consensus guidelines. In addition,
EDC operates on commercial disciplines. EDC also undertakes "market" oriented transactions wherethe terms and conditions, including interest rates, are determined on the same basis as would be used
by a private sector lender.
OTHER POLICIES AFFECTING TRADE IN GOODS
EXPORT ASSISTANCE
Export restrictions
(p. 33, paragraph 115)  Though Japan pointed out at the last review, we would like to mention again
that the purpose of the measure on the basis of “US-Canada Soft Wood Lumber Pact” is to protect
the United States lumber industry and as such it probably constitutes an export restriction that is
prohibited under Article 11.1(b) of the Agreement of Safeguards.  Though the measure will expire at
the end of 2001, does Canada have an intention to continue this Pact after that period?
The Softwood Lumber Agreement will expire on March 31, 2001.  Canada is consulting with
stakeholders on the future of the softwood lumber trade with the United States.
(p. 30, paragraph 105 and p.35, paragraph 127)  Although Japan pointed out at the last review, we
would like to mention again that the measures taken by the Province of British Columbia for limiting
exports of logs and chips is designed to protect the domestic industry, thus, it is highly likely that theyviolate Article XI of the GATT.  Although th ese measures are implemented by a provincial
government not directly committed to obligations under the WTO agreements, Japan requests that
Canadian Government must “take such reasonable measures as may be available to it to ensure
observance of the provisions”, pursuant to Article XXIV:12 of the GATT.WT/TPR/M/78
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We believe that the relevant provisions of the British Columbia Forest Act are consistent with
Canada's WTO obligations.  As always, the Government of Canada is prepared to take such measuresas may be available to it to ensure that the WTO/GATT provisions continue to be observed."
COMPETITION POLICY
Competition
(p. 41, paragraph 144)  What does Canadian Government think of competition policy under the
circumstance that the globalization of enterprises is developing?  For example, how does it tackle
with the anti-competitive practices raised by the cross-border e-commerce transactions?  How does it
treat the exemptions from the application of the Competition Act to the companies which contribute to
the promotion of regional industries as well as the development of the culture?
What does Canadian Government think of competition policy under the circumstance that the
globalization of enterprises is developing?
Globalization is a response to progressive dismantling of government-sanctioned obstacles to
trade and investment both at the border and inside the border. However, while such obstacles are
subject to increasingly strict disciplines under the World Trade Organization, they do not affect
private anti-competitive conduct. Private anti-competitive conduct can have a significant impact on
market entry and it is the function of domestic competition law to eliminate them.
Further, globalization of economic activity can mean a greater chance that anti-competitive
conduct will cross borders. Cooperation between competition authorities appears essential to ensure
an effective and smooth enforcement of competition law and to avoid the risk of jurisdictional
conflicts.
The increased interest in multilateral rules in the competition policy field is related
to the multi-market effect of anti-competitive activ ity and the difficulties that national investigation
agencies encounter in multi-jurisdictional cases. Canada believes that globalization of economicactivity will require a framework agreement on competition policy in the World Trade Organization
that facilitates and promotes cooperation between competition authorities.
A WTO framework agreement would require the adoption of a competition law, set out
common approaches to conduct that impedes market entry and provides a mechanism for cooperation
between competition authorities. Such an agreement will complement and reinforce tradeliberalization and thereby strengthen the world trading system
How does the Canadian Government tackle anti-competitive practices raised by cross-border
e-commerce transactions?
This issue is closely related to the first, addressed above.  The jurisdiction of most
competition laws is national, meaning that national competition authorities acting alone often cannotaddress international anti-competitive activity directed at their markets.  Law enforcers have dealt
with this problem in part through cooperation agreements with other enforcement agencies,
particularly with their major trading partners. The effectiveness of Canadian enforcement has
benefited from the expansion of both the number and the substance of our cooperation agreements
with foreign enforcement agencies.
With respect to issues regarding the Internet and electronic commerce, several industry
associations and organizations have developed voluntary codes of conduct.WT/TPR/M/78
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The Competition Bureau is a participant in the International Marketing Supervision Network
(IMSN), an informal alliance of 29 OECD member countries.  Its members regularly exchangeinformation with a view to prom oting international cooperation in detecting and fighting unfair and
deceptive marketing practices.
Mutual legal assistance treaties in law enforcement will be increasingly relied upon to gather
evidence, to serve proceedings and enforce judgments as well as extradition treaties, when dealing
with cases which actually warrant prosecution.  Th e challenges and lessons learned in dealing with
cross-border illegal telemarketing are usefully applied to cross-border Internet transactions.
A number of speeches by Competition Bureau staff have addressed international cooperation
in cross-border Internet transactions.  The two most recent ones include:
• April 16 - Nicole Ladouceur, “Calibrating the Electronic Scales: Tipping the Balance in
Favour of a Vigorous and Competitive Electr onic Market for Consumers” - Cleveland, Ohio
http://strategis.ic.gc.ca/SSG/ct01524e.html;
• September 19 - Rachel Larabie-Lesieur, “Competition Law for the 21st Century
"Developments in Marketing Law For a Borderless World" - 1997 Annual Canadian BarAssociation Competition Law Conference, Aylmer, Québec http://strategis.ic.gc.ca/SSG/ct
01506e.html.
How are exemptions from the application of th e Competition Act applied to companies which
contribute to the promoti on of regional industries?
The Competition Act is a law of general application covering all unregulated business
activity. As a framework law, the Competition Act maintains a clear and targeted focus, and does not
deal with other public policy issues such as nationality of ownership, employment levels or regional
economic disparities.
How are exemptions from the application of th e Competition Act applied to the development of
culture?
The promotion of Canadian culture is addressed by a separate federal government department,
Heritage Canada.  The regulation of the broadcasting industry is carried out by a federal regulatory
agency, the Canadian Radio and Telecommunicat ions Commission (CRTC), pursuant to the
Broadcasting Act .
Under the Competition Act , the Commissioner of Competition is empowered to intervene
before regulatory authorities on matters related to competition.  Indeed the Commissioner and hispredecessors have been frequent intervenors before the  CRTC in numerous competition related to
telecommunications issues and on some broadcasting issues.
The mandate of the Competition Bureau does not include advising on, let alone administering,
Canadian cultural objectives and content policies and programs.  The Bureau did, however, raise
concerns during a CRTC’s proceeding on the convergence of the telecommunications andbroadcasting sectors as a consequence of the convergence of the computer and communications
technologies, about the existent regime of cultural support mechanisms.  Specifically, the Bureau
questioned whether monopoly rents generated by monopoly cable franchises, linkage rules and
eligibility lists, can be maintained in the face of rapidly expanding bandwidth and the introduction of
significant new competition in broadcast distribution.WT/TPR/M/78
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The role of competition as technology affects telecommunications and broadcasting industries
is outlined in a number of speeches available on the Bureau web site.  Cultural policy and competitionpolicy are specifically addressed in the following speaking notes for a submission to the Canadian
Radio and Telecommunications Commission: March 16 - George Addy The Canadian Radio-
Television and Telecommunications Commission - Hull, Québec http://strategis.ic.gc.ca/SSG/ct
01401e.html.
(p. 43, paragraph 150)  Canada has yet to fulfill its commitment under the GPA in providing the
definitive list of sub-federal entities subject to  the Agreement’s disciplines.  On the other hand,
according to the Chart IV. 4, it cannot be ignored th at the procurement by the Provincial Government
reach 48.8% of all the public procurement.  In addition, Members take the discriminatory measures
on the basis of reciprocity, for the reason that Canada does not offer Provincial Government (i.e.
Member put the sentence such as “for goods and services (including construction services) of Canadaand suppliers of such goods and services, this Agreement does not apply to procurement by the
entities listed in Annex 2”.). In the light of furt her liberalization of government procurement as well of
as the expansion of application of the Agreement by eliminating the reciprocity measures, Japan
hopes that Canada offers its Provincial Government in  the list of the Annex 2 of the GPA.  Please
explain the present situation as well as the perspectives of Canada for realizing the offer of theProvincial Governments.
Canada’s position remains that the provinces ar e not prepared to commit coverage of their
entities until other GPA members, particularly the U.S., are prepared to improve market access insectors of priority interest to Canadian suppliers.
TRIPS
(p. 44, paragraph 156)  Regarding the Panel’s decision concerning DS114 (protection of patent on
pharmaceuticals) and DS170 (patent expiry), please explain the measures which have already taken
as well as will be taken by Canadian Government for ensuring their consistencies with TRIPSAgreement.
Following the adoption of the WTO Panel decision concerning DS114 (protection of patents
on pharmaceuticals), Canada implemented the Panel’s decision by means of regulatory repeal.  On
August 5, 2000,  the Government made public a propo sed copy of the repealing regulations through
pre-publication in the Canada Gazette , Part I.  Interested stakeholders were given 30 days to provide
comments and the regulations authorizing stockpiling were repealed on October 7, 2000.
Following the adoption of the Panel’s decision concerning DS170 (term of patent protection),
on October 23, 2000, Canada informed the DSB that it intended to implement the decision of the
panel but would require a reasonable period of time to  do so.  Canadian and U.S. officials have been
discussing the length of time needed to implemen t to ruling. However, the two sides have not been
able to come to an agreement and it is likely that the issue of “reasonable period of time” for
implementation will be resolved through binding arbitration. Compliance with the ruling will require
a legislative change to Canada’s Patent Act and may also require the Canadian Intellectual Property
Office and Health Canada to take certain corrective administrative measures.
MARKET ACCESS IN SELECTED SECTORS
FINANCIAL SECTOR REFORM
Japan hears that there are some cases in which more than 110% of legal deposit is required for the
foreign insurance companies. As this measure is not reserved in the schedule of commitment, is itconsistent with GATS?  Does Canada have any intent ion to eliminate such regulation as it seems to
violate the national treatment.WT/TPR/M/78
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The Office of the Superintendent of Financ ial Institutions (OSFI) requests that Foreign
property and casualty insurance companies maintain, at all times, a 10% margin of assets availableover assets required to protect Canadian policyholders.  Simplified, the calculation of the Test of
Adequacy of Deposit (DAT) results in a requirement of 110% of vested assets over liabilities. OSFI
enforces this additional 10% margin requirement under Paragraph 609(2) of the Insurance Companies
Act (ICA) where the Superintendent may direct a foreign company to increase its assets in Canada.
OSFI is currently reviewing the Minimum Asset Test (MAT) for Canadian property and casualty
insurers and the DAT for branches of foreign insurers to better reflect the risks of individual insurers.
(p. 45, paragraphs 160 and 161) Although foreign bank branching was allowed after the new
branching regime came into force in June 1999, the limitation for lending to a single borrower, as
well as the limitation for the nationality of the board members still remain.  Should Canada proceed
to further deregulation in this respect?
Canada imposes no restrictions on the nationality of directors of a bank.  However, the boards
are subject to Canadian residency requirements.  Foreign bank subsidiaries are required to have one-
half of their board members be Canadian residents.  This is lighter than the requirement for Canadian
banks (three-quarters must be Canadian residents).
With respect to loan limits to a single borrower , foreign bank subsidiaries are subject to the
Office of the Superintendent of Financial Institutions’ prudential large exposure limit in the same way
Canadian banks are.  Branches are also subject to the large exposure guideline (which can be found on
OSFI's website:  www.osfi-bsif.gc.ca) and are expected to comply with any limits placed on them by
their home regulator.
TELECOMMUNICATIONS SERVICES
Please explain the pro-competitive measures Canada has taken in the telecommunication sector,
especially in local telecommunication, since the la st review.  Please explain Canada’s plan for
introducing LRIC (long term incremental cost) method.
As a result of Canada's long-term commitment to liberalization in the telecommunications
industry, a liberal regime now provides for resale-based competition in most basic
telecommunications services.  No foreign ownership restrictions apply to resellers.  Since 1998, the
following measures have been abolished:  Telesat's exclusive rights on satellite facilities and earthstations;  a requirement that Canadian equity holdings in mobile satellite equal Canadian usage levels;
Canadian ownership requirements on the landing of sub-marine cables;  and Teleglobe's monopoly on
overseas (non-U.S.) facilities-based services.
The Canadian version of LRIC was developed years ago by the CRTC as a method of
determining the underlying costs of new services being introduced by regulated carriers.  The CRTCrequired that an application for approval of a new service be accompanied by a study demonstrating
that, at the proposed rates, the service would have a positive Net Present Value (NPV) and thus would
not be cross-subsidized by revenues from other services.  More recently, the CRTC has used this
methodology to set cost-based rates for essential interconnection services, and as the costing
component of an imputation test used for setting floor prices for competitive services.  A discussion ofthe CRTC's approach can be found in Local Competition, Telecom Decision CRTC 97-8, 1 May
1997. This decision is available at the CRTC's web site ( http://www.crtc.gc.ca/ ) at http://www.crtc.gc.
ca/archive/Decisions/1997/DT97-8.htm .WT/TPR/M/78
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(p. 49, paragraph 180)  The Report states “The authorities have noted that competition in the
Canadian market has resulted in both business and residential telephone service prices that are lowerthan in other G7 countries.  Canada also has the lowest G7 wireless communications costs and is
outpacing its main trading partners in terms of online subscribers with a high speed internet
connection.  In part due to this, Canada is not presently planning to ease or eliminate existing
restrictions under which foreign equity in all faci lities-based suppliers is limited”.  In order to
promote more competition, should these existi ng restriction be decreased or even eliminated?
Canadian telecommunications ownership and control were important elements of the Policy
Framework for Telecommunications in Canada, announced by the Minister of Communications
in 1987.  The rules are necessary "to ensure national sovereignty over this vital sector of the Canadian
Economy and for reasons of national security and economic, social and cultural well-being".
(p. 50, paragraph 181)  The Report states that “cultural services continue to be subject to a number
of specific production, trade and investment measures designed to ensure the preservation and
promotion of Canadian culture and identity, and that some types of content distributed on the internet
are included in cultural services”.  In this regard:
Please explain which types of content on the internet are included in cultural services.
Please explain what kind of production, trade and investment measures apply to such content
distribution.
On June 8th, 1998 the Government of Canada announced the creation of the Multimedia
Fund.  Administered by Telefilm Canada, the Multimedia Fund is committed to supporting high-
quality, original, interactive Canadian multimedia works in both official languages intended for the
general public.
Financial assistance through the Fund is provided for the production of original,
entertainment, educational and “edutainment” products, published on any format or distributedthrough on-line services, and destined for the general public.  Productions must be interactive and
contain at least three of the following elements: text, sound, graphics, still images, and live-action
video or animation.  All Canadian multimedia development, production and publishing companies are
eligible.
In addition to the Multimedia Fund, two othe r programs provide financial assistance for
multimedia content.  The Cultural Industries Development Fund provides financial assistance to
entrepreneurs working in cultural industries such  as multimedia.  The Canadian Studies Program
provides financial support for the development of a variety of learning materials, including
multimedia learnware applications.
On the other hand, paragraph 182 of the Report states  that the CRTC decided not to regulate services
on the internet under the 1991 Broadcasting Act nor under the Telecommunications Act.  Please
explain in which Act such production, trade and investment measures referred to in paragraph 181
are provided for.  Please also explain how th e Canadian Authority can implement such measures
without regulating services on the internet.
The decision by the CRTC not to regulate the Internet does not preclude the provision of
subsidies by the Government to support original , Canadian multimedia works.  The regulatory
requirements apply only to CRTC licensees for broadcasting activities.  They do not apply to Internet
content, nor do they apply to any Internet activities a CRTC licensee may undertake on the Internet.WT/TPR/M/78
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(p. 50, paragraph 181)  The Report states  that “The Canadian Radio-Television and
Telecommunications Commission (CRTC), requires that for Canadian conventional, over-the-air
broadcasters, Canadian programming make up 60% of television broadcast time, and 50% during the
evening hours.  Similar requirements are also explained for pay-TV and other services.  These
measures are explained to be designed to ensure the preservation and promotion of Canadian culture
and identity”.  In this regard:
Please explain why Canada thinks necessary to maintain such Canadian programming requirements,
in addition to foreign ownership restrictions  and other measures which aim at ensuring the
preservation and promotion of Canadian culture and identity.
The primary objective of the Broadcasting Act  is to ensure that all Canadians have access to a
wide variety of high quality Canadian programming.  The Act is very clear that the Canadian
broadcasting system must be effectively owned and controlled by Canadians.  This safeguards,enriches and strengthens the cultural, political, social and economic fabric of Canada.
This mandate also explains the development of Canadian content requirements for Canadian
radio and TV.  They ensure that the work of Canadian creators, performers and producers is available
to Canadians and have led to the development of a healthy Canadian recording and program
production industry.  Like every other country in th e world, we give priority to our own broadcasting
industry.  At the same time, Canadians have a wider choice of foreign programming than most other
countries.
Does Canada have any intention to deregulate of its volume control over the television broadcasting
aiming at the preservation and promotion of Canadian culture and identity?
There is no intention to change the Canadian content policies at this time.
PROFESSIONAL SERVICES AND MOVEMENT ON NATURAL PERSONS
According to the Secretariat Report at the last r eview (paragraph 104 of Chapter IV), out of thirteen
law societies, six law societies had rules and regulations governing the recognition of foreign legal
consultants, and another five law societies were in the process of implementing theirs, while two law
societies had not decided whether to introduce such a regime in January 1998.  Please explain in
detail the present situation.
Since the last Round, all Canadian provinces (with the exception of Quebec) have
implemented non-discriminatory regimes for the licensing of foreign legal consultants.  Foreign legal
consultants are currently in the forefront of liberalization in the legal services sectors.
Regarding the Multimedia fund, what are the resources available for this initiative (what funds are
available and where do they come from)?  What are the conditions for applying for and obtaining
funds?  Will this funding increase or decrease in the future?
Announced in 1998, the Fund was mandated to provide C$ 30 million over five years.
Telefilm Canada, an arms-length funding agency, administers the Fund.  The Fund consists of three
principal components: assistance for development, production, and marketing.  Telefilm's assistance
takes the form of non interest-bearing repayable advances (for development) and non interest-bearing
loans (for production and marketing).
For the Multimedia Fund, Telefilm provides financial assistance for the production of
original, entertainment, educational and edutainment products, published on any format or distributedWT/TPR/M/78
Page 93
through on-line services, and destined for the general public.  Productions must be interactive and
contain at least three of the following elements:  text, sound, graphics, still images, and live-actionvideo or animation.
All Canadian multimedia development, production and publishing companies are eligible.
Companies must demonstrate a sound financial position and the required expertise to successfully
complete the project.  Priority will be given to small and medium-sized companies.
The Government made a commitment in 1998 to fund this program over five years.  No
decision to extend its mandate has yet been made.
For further details on the Multimedia Fund, please consult Telefilm Canada’s website at:
www.telefilm.gc.ca
KOREA, REPUBLIC OF
Foreign investment policy
Para 40 (page 11) of the Secretariat’s Report indi cates that the Investment Canada Act (ICA) of 1985
requires the review of significant acquisitions of control (in excess of a threshold Can$192 million for
the year 2000) of Canadian businesses by non-Canadians to ensure net benefit to Canada.  In
determining what constitutes "net benefit," section 20 of the ICA includes the effect on the utilization
of parts, components and services produced in Canada and on exports from Canada, in the factors to
be taken into account.
Are Canadian firms subject to similar requirem ents when making acquisitions exceeding the
threshold level?
No.  The Investment Canada Act (ICA) applies only to foreign (not domestic) acquisitions of
Canadian companies.
In Canada's view, is the ICA provision stipulating the consideration of the effect on the utilization of
parts, components and services produced in Canada and on exports from Canada, compatible with its
obligations under section 1 of the Annex to the WTO Agreement on Trade-related Investment
Measures?
Yes.  The ICA is compatible with section 1 of the Annex to the WTO agreement on
Trade-Related Investment Measures.  The Act simply considers the potential impact of the proposed
acquisition on, among other factors, the utilization of parts, components and services produced inCanada, and on exports from Canada.  It does not require that an investor undertake obligations in any
of these areas as a condition of approval.
Anti-dumping, and Countervailing Actions
According to para 82 (page 24) of the Secretariat’s Report, approximately 16% of Canadian
antidumping measures have been in place for ten years or more.  Two products of Korean concern,carbon steel welded pipes and certain oil and gas well casings, have been subject to anti-dumping
duties for 15-odd years, while the findings on self-adhesive photo album sheets expired only recently
after having been in place for 25 years. Canada has recently initiated an expiry review on certain oil
and gas well casings, even though recent Korean exports to Canada have been virtually non-existent.WT/TPR/M/78
Page 94
Maintaining anti-dumping measures for more than  15 years irrespective of import volumes, is
at variance with the duration provision of the WTO antidumping agreement which allows duties toremain in force only as long as and to the extent necessary to counteract injurious dumping.  Rather
than addressing dumping as an unfair trade practice, measures of such duration seem to focus only on
protecting the domestic industry.
Questions also arise as to whether negligible import volumes from a certain country actually
incur material injury to Canadian industries and whet her the injury, if any, is attributable to factors
other than dumping.
Furthermore, the Canadian provision on mandatory cumulation of the effect of dumping
during an expiry review, subject only to the conditions of competition among imported goods or like
domestic goods, seems to oblige authorities to construe negligible imports from a certain country as
causing material injury. The WTO antidumping agreement provision on cumulative assessmentrequires that, in addition to this condition, each country's margin of dumping be greater than the de
minimis  threshold and that the volume of imports from each country not be negligible.
The continuation of antidumping measures for more than 15 years on a certain country regardless of
the actual import volume from that country is prone to be misunderstood as an expression of
protectionism which focuses entirely on protecting the relevant domestic industry. Is Canadacurrently giving serious consideration to rescinding antidumping measures on goods imported at
negligible levels, which have been in place for more than 15 years?
While sunset reviews are a new obligation in the AD Agreement as a result of the Uruguay
Round,  Canada’s anti-dumping legislation has requ ired since 1984 that anti-dumping measures be
reviewed after 5 years to ensure that these actions are in place only as long as necessary to counteract
injurious dumping.  A review of an anti-dumping measure requires that the Canadian investigating
authorities, determine:
• whether the expiry of the measure in respect of the goods of a country or countries is likely to
result in the continuation or resumption of dumping of the goods.  This determination is madeby the Canada Customs and Revenue Agency (CCRA)); and
• whether the expiry of the measure in respect of the goods referred to in the Commissioner’s
determination is likely to result in injury to the domestic industry.  This determination is madeby the Canadian International Trade Tribunal (CITT).
In making the determinations account is taken of the likely volumes of imports of the goods
in question if the anti-dumping measure were to expire, not the volume of imports that had been
imported while the anti-dumping measure was in effe ct.  The duration of the anti-dumping measure
and the historical volumes of imports made while the anti-dumping measure was in effect, while
certainly relevant factors, may not be determinative of the likely volumes of imports absent the
measure. Low volumes of imports may indicate only that the anti-dumping measure has had itsintended effect of eliminating injurious dumping.
What is the Canadian position regarding the view th at if injury to the relevant domestic industry
persists despite prolonged antidumping remedies, such injury could be due to factors other than
dumped imports?
The issue to be examined in a review of an anti-dumping order is not whether the industry is
being injured by dumped products, but rather whether the expiry of the anti-dumping measure would
likely result in the continuation or resumption of  dumping and, if so, whether that dumping would
likely cause injury to the industry.  That is, the consideration is forward looking, not retrospective.WT/TPR/M/78
Page 95
How does Canada justify its mandatory provision to include countries with negligible import shares
in its cumulative assessment of the effe cts of dumping during expiry reviews?
Given the forward looking perspective of an ex piry review, the preconditions concerning the
dumping margins and volume of dumped goods that are necessary for a cumulative assessment in an
initial anti-dumping investigation (dumping margin more than insignificant and volume of imports
that are not negligible) are not required for an expiry review of the anti-dumping measure because
both the volume of goods and the prices of the goods would have been affected by the anti-dumpingmeasure in place.
Textiles and clothing
Para 90 (page 26) of the Secretariat’s Report  points out that, as of early 2000, Canada was
restraining imports of textiles or clothing products from 41 trading partners including Korea.
Korea has an extremely high quota utilization rate for polyester filament fabric. Canada does
not subject polyester filament fabric imported from certain other countries (i.e. U.S. and Indonesia) to
quantitative restrictions despite their substantially higher market share in Canada. Under these
circumstances, exports from non-restricted countries will increase in tandem with demand, while
those from Korea are bound by a quantitative ceiling. This places exports from Korea on an unequal
footing with exports from non-restricted countries.
With respect to polyester filament fabric, what is the rationale behind maintaining an import regime
that subjects only one out of the top four exporting countries to quantitative restrictions while
allowing imports from the other three countrie s to increase without similar limitations ?
It is critical that we understand the historical sequence of events related to the development of
the Agreement on Textiles and Clothing.
The bilateral quotas in place on December 31,1994 were effectively locked in under the
Agreement on Textiles and Clothing and provide the basis for Canada’s current quota systemincluding the restraints on Korea’s polyester filament fabric exports to Canada. The ATC regime,
however, opened up the possibility that non-restrained sources would be free to ship without
restriction unless the ATC safeguard mechanism were invoked. Canada, as a matter of policy, has not
sought to invoke the ATC safeguard mechanism so as to effectively maintain the spirit of
liberalization encouraged by the ATC and to ensure the overall success of this Agreement. In addition,
if Canada were to accept Korea' s request this would open the door to all suppliers seeking to redress
their bilateral quotas vis-à-vis the Canadian market.
Overall, Korean textile and apparel products have benefited from Canada’s liberal ATC
policies, integration program and quota growth-on-growth rates.
Korea requests Canada to pursue early liberalization of its restraints on polyester filament fabric as
per Article 2.15 of the WTO Agreement on Textiles and Clothing.
Canada is currently examining ideas for its third-phase of ATC integration and notes the
views of the Korean delegation. The Canadian textile industry has made it clear that it needs the
transition phase to adjust to a quota-free world
Government Procurement
The sub-central entities listed in Annex 2 of Canada to the WTO Agreement on Government
Procurement (GPA) have not yet b een applied to the GPA. Accordin g to para 150 (page 43) of theWT/TPR/M/78
Page 96
Secretariat’s Report, “Canada’s position remains that the provinces are not prepared to commit
coverage of their entities until other GPA members, particularly the U.S., are prepared to improvemarket access in sectors of priority interest to Canadian suppliers.”
Has there been any significant progress since the 1998 Trade Policy Review of Canada in allowing
access by foreign suppliers to procurements by sub-central entities? If not, Korea urges Canada to
accelerate its efforts to apply the GPA to procurements by its sub-central entities.
Canada’s position remains that the provinces are not prepared to commit coverage of their
entities until other GPA members, particularly the U.S., are prepared to improve market access in
sectors of priority interest to Canadian suppliers.
Foreign bank branching
According to para 160 (page 45) of the Secretariat’s Report, the new branching regime
“creates opportunities for foreign banks entering the Canadian market; however, it appears to provideonly modest additional scope for retail banking, notably because of the restrictions on the ability of
foreign bank branches to take deposits.” Specifically, the new rules state that an authorized foreign
bank can establish only one of two types of bank branches;  (i) a full service bank branch, which may
take deposits above Can$150,000 or (ii) a lending bank branch, which may not take any deposits.
Does the Canadian Government have any plan to abolish such restrictions on foreign banks replacing
them with strengthened prudential regulations or a deposit insurance system?
Foreign banks have full deposit taking powers in Canada through a deposit-insured,
Canadian-incorporated bank subsidiary.
The branching regime was intended to provide a more cost-effective way for foreign banks to
operate in Canada.  The supervisory regime was designed with this in mind, and provides for lighter
regulation.  Allowing foreign bank branches to take retail deposits would require a more onerous
regulatory framework to address the added risks th at retail deposit-taking would pose.  The result
would be a less flexible foreign bank branching regime.
Telecommunications Services
According to para 180 (page 49)of the Secretariat’s Report, Canada “is not presently planning
to ease or eliminate existing restrictions in the telecommunications industry, under which foreign
equity in all facilities-based suppliers is limited. Foreign investment in facilities-basedtelecommunications service suppliers is permitted up to a cumulative total of 46.7% of voting shares,
based on 20% direct investment and 33.3% indirect investment.  In addition, at least 80% of the
members of the board of directors must be Canadian citizens.”
Does the Canadian Government have any plan to liberalize the limitation on foreign ownership and to
abolish the restrictions on the nationality of board members?
Canada has no present plans to change existing limitations on foreign investment in
facilities-based telecommunications service suppliers, or to change existing restrictions on the
nationality of members of the board of directors of such service suppliers."
What is the rationale for not permitting both foreign subsidiaries and foreign branch banks to conduct
retail banking operations?WT/TPR/M/78
Page 97
The branching regime was intended to provide a more cost-effective way for foreign banks to
operate in Canada.  The supervisory regime was designed with this in mind, and provides for lighterregulation.  Allowing foreign bank branches to take retail deposits would require a more onerous
regulatory framework to address the added risks that retail deposits would pose.  The result would be
a less flexible foreign bank branching regime.
MALAYSIA
How does Canada reconcile a description of its trade regime as liberal (Secretariat Report Overview,
para 1), with a high average on dutiable items of 13%.
Over 47% of Canadian tariff lines are MFN "free", over 90% of Canada's imports enter duty
free either under MFN or preferential rules.  Canada's trade weighted average tariff is 0.87%.  The
level of current Canadian MFN tariffs reflects the results of previous rounds of multilateral trade
negotiations in which Canada participated.  Clearly, Canada has one of the world’s most liberal tariffregimes and Canada is certainly prepared to consider further reductions in our tariffs in the context of
future trade negotiations.
In this context, high tariffs are maintained on products of export interest to developing countries such
as vegetables, cut flowers, sugar, textiles, clothing and footwear (Secretariat Report, Overview,
para 7). Could Canada comment whether there would be a possibility of downward revision in the
near future?
Canada has since the early 1970s, accorded stable, unconditional, autonomous preferential
tariff treatment to developing countries. Our preferential market access program includes simple and
transparent rules of origin that allow an unencu mbered flow of developing country products into
Canada.  Certain products sensitive to Canadian producers have not been included in this preferential
scheme.  Canada’s unilateral tariff preferences for developing and least developed countries will be
reviewed by the Canadian Government by 2004.
In addition, the Report noted (Overview, para 9) that quantitative restrictions are also maintained for
textiles and clothing. Given also existing high tariffs, would these non-tariff measures still be needed?
Canada is a signatory of the Agreement on Textiles and Clothing, which provides a
framework for the elimination of quantitative restrictions on clothing and textile products over a
period of ten years.  Canada has fully implemented and in some cases exceeded its ATCcommitments, and will be notifying its list of products to integrate in the third phase of quota
elimination under the ATC in the coming weeks. The Canadian industry has undergone great changes
over the past three decades, both in terms of loss of employment and share of domestic market. Our
industry has accepted the obligation to move towards a quota-free environment, but needs the full
length of the transition period provided for in the ATC to restructure itself and adjust to a quota-freeworld. Canada reiterates that it will eliminate all ATC quotas on textiles and clothing products by
January 1, 2005.
The Secretariat Report (Overview, para 7) also no ted that Canada's autonomous tariff concessions in
favour of developing countries remain modest and suggested that extending preferences granted
under the FTAs on an MFN basis would enhance welfare in Canada and improve market access todeveloping and other partners.  Could Canada comme nt on this proposal and whether they have such
intentions in the near future?
As a founding member of the GATT, Canada has participated in numerous rounds of
multilateral trade negotiations.  These multilateral negotiations have resulted in significant decreasesWT/TPR/M/78
Page 98
in Canada's MFN tariffs.  Our free trade agreements with developed and developing countries are
negotiated agreements that offer significant benefits to both/all parties of the agreement, not only byopening Canada’s market but also allowing Canada’s FTA partners to fully enjoy the benefits of free
trade through their own market liberalization.  Like most countries, Canada views its free trade
agreements as incremental steps towards wider libe ralization to be negotiated in a multilateral/WTO
context .
The Secretariat Report, para 9 mentioned that Canada has not yet signed or ratified the Cartagena
Protocol on Biosafety to the CBD. Does Canada intend to ratify this Protocol in the near future?
Formal consultations were held earlier this fall with major stakeholders on the issues of
signature and ratification of the Protocol.  Both issues will be accorded a high priority for
consideration by the new government.  In the meantime, Canada is taking an active part in the
Intergovernmental Committee (ICCP) process, addressing relevant issues to be resolved prior to theProtocol's entry into force.
This refers to the Secretariat Report's table on outward stock of FDI. Could some figures be provided
for outward stock of FDI into ASEAN countries , including Malaysia, for the three years listed
(i.e. 1990, 1997 and 1999).
The stock of Canada's direct investment abroad for the ASEAN  countries for which data are
available  are Singapore, Indonesia, Malaysia and Philippines.  The  amount for these economies
totalled Cdn$2.85 billion in 1990, $4.94 billion in 1997 and $5.21 billion in 1999.
For Malaysia, data for the three years considered are:  $81 million, $163 million and
$324 million.
NEW ZEALAND
Tariffs and Other Charges Affecting Trade in Goods
New Zealand welcomes the Secretariat's observat ion (WT/TPR/S/78, paragraph 60) that the largest
MFN tariff reductions between 1998 and 2000 have occurred in agriculture with tariff protection
decreasing by 6 percent.  It is clear nevertheless from the Secretariat's Report that the average tariff
for agri-food products is vastly higher than that for other products with some tariffs - notably in dairy
- exceeding 300 percent.  What policies does Canada plan to introduce to reduce the extreme
disparity in levels of protection between agricultural products and other products?
The level of current Canadian MFN tariffs, as well as the volume of in-quota access for
products subject to tariff rate quotas (TRQs), reflects the results of previous rounds of multilateral
trade negotiations in which Canada participated.  Canada is actively participating in the current round
of agricultural negotiations and has tabled its position on a variety of issues to be addressed in the
negotiations, including market access.
Anti-dumping and Countervailing actions
Chart III.3 and paragraphs 77-83 in the Secretariat Report illustrates reliance by the Canadian steel
industry on continual protection from import comp etition through the use of anti-dumping actions.
Does Canada plan to introduce any policies that would lessen the reliance of its steel industry on this
form of protection?WT/TPR/M/78
Page 99
Canada has one of the most open steel markets in the world.  This is evident from the import
penetration figures - in 1998, 50% of Canadian apparent domestic consumption was made up ofimports, compared to 5.8% for Brazil, 7.1% for Japan, 14.9% for Korea, 16.4% for EU, and 32.6% for
the United States [Source: OECD Stee l Committee document DSTI/SU/SC(2000)2].
The Canadian steel industry has responded to import competition by improving productivity
and developing new products over the last decade.  Unfortunately, these activities cannot sufficiently
address current global overcapacity in steel production which is leading to distressed prices and thedumping of imports into Canada as export-dependent steel producing countries seek out relatively
open markets such as in Canada.  The Canadian steel industry has responded to dumping practices by
seeking relief under Canada's trade remedy laws.
Canada uses anti-dumping measures to ensure a level playing field in one of the most open
steel markets in the world and has no plans to change its policies regarding the steel industry.  Canadais interested, however, in pursuing options thr ough the OECD Steel Committee to address problems
such as the global overcapacity of steel production.
Quantitative Restrictions and Controls
The Secretariat notes at paragraph 72 that the out-of-quota tariff rates for the 21 tariff quotas that
Canada operates in the agri-food sector are "generally prohibitive and may act as ... de factoquantitative restriction[s]".  When does Canada plan to reduce the tariff peaks that create such "de
facto quantitative restrictions"?
The level of current Canadian MFN tariffs, as well as the volume of in-quota access for
products subject to tariff rate quotas (TRQs), reflects the results of previous rounds of multilateral
trade negotiations in which Canada participated.  Canada is actively participating in the current round
of agricultural negotiations and has tabled its position on a variety of issues to be addressed in the
negotiations, including market access.
State Trading, Monopolies, and Other Exclusivity Rights Affecting Trade
With the notable exception of Alberta, the structure of liquor marketing in Canada limits
market access opportunities in Canada for exporting countries.  Moreover, paragraph 111 of the
Secretariat Report suggests that domestic wine may enjoy more favourable treatment with respect to
marketing opportunities than imported wine.  How does Canada plan to address the inequities createdby its liquor marketing system?
Canada's provincial liquor boards have been in existence since before the GATT was created
and are consistent with the provisions of GATT Article XVII.  They operate as businesses whose
decisions are based on commercial considerations and market forces.  Imported products compete on
an equal footing with domestic products and enjoy a generous share of the Canadian market (imported
spirits - 31%, imported wines - 62%).
There are indeed retail facilities in some parts of Canada that sell only domestically produced
or domestically bottled products.  In all cases, however, provincially operated retail stores provide
even wider distribution outlets for imported products.  We have bilateral agreements with our major
trading partners which specifically identify these networks and provide for their continuing operation
in a transparent environment.WT/TPR/M/78
Page 100
Export Assistance
If Canada, as it states at paragraph 17 of  its Government Report (WT/TPR/G/78), seeks
"the elimination of all export subsidies as quickly as possible", why then (as set out at paragraph 114
of the Secretariat Report) does Canada plan to maintain an export subsidy system for dairy products
up to its WTO commitment level?
Canada is seeking agreement to eliminate all ex port subsidies within the context of this new
round of agriculture trade negotiations.  Until such an agreement is reached, Canada will keep withinits export subsidy reduction levels as agreed to in the Uruguay Round.
NORWAY
Canada maintains very high and unbound tariffs on many products that fall within the scope of
HS Chapter 89 on a MFN basis.  At the same time,  Canada is dependent on imports for most of its
consumption of these products.  To a large extent these imports come from the USA, which throughthe NAFTA agreement has duty free access despite being subsidized.  There is therefore no real
market threat from other countries that will change the competitive position of Canadian
shipbuilders.  Will Canada consider binding and/or reducing the tariffs on these products in order to
allow diversification of imports and thereby reduce the costs for buyers of these products and
services?
During the Uruguay Round, Canada was not prepared to make changes to the tariff applied on
vessels given the wide-spread use of subsidies for this sector by many governments.  The tariff
provisions in place in Canada are the only protection this industry receives to counter subsidized
import competition.  In view of this situation, Canada has no plans to consider the reduction or
elimination of its vessel tariffs.  While Canada imports vessels from many countries, the U.S. is not
our main supplier.  For example, in 1998 the U.S. accounted for just 12% of total vessel imports.
South Korea, China, Japan and the EU account for the bulk of vessel imports into Canada.
Can Canada give a short outline of the situation for the Canadian shipbuilding industry and whether
there are any concrete plans of initiating any sort of subsidy schemes?
This question is timely in light of the announcement by Industry Minister Tobin, on
October 20, of an industry-wide National Shipbuilding and Marine Industries Partnership Project. The
task force is scheduled to report to the Minister by February 1, 2001, with recommendations regardingrationalization and revitalization of the Canadian shipbuilding sector.  The terms of reference for the
project state that the recommendations will respect Canada’s international obligations.
Canada has so far not provided the definitive list of sub-federal entities subject to the Government
Procurement Agreement's disciplines.  Does C anada plan to take any steps towards solving
outstanding issues with other signatories, in an attempt to broaden Canada's coverage of the GPA?
Canada’s position remains that the provinces are not prepared to commit coverage of their
entities until other GPA members, particularly the U.S., are prepared to improve market access in
sectors of priority interest to Canadian suppliers.
Does Canada support adding anti-dumping to the multilateral negotiating agenda?
Canada is supportive of efforts to undertake negotiations respecting the WTO Anti-dumping
Agreement with a view to strengthening and clarif ying the rules to ensure greater international
consistency and predictability in the use of such measures.WT/TPR/M/78
Page 101
Please explain the criteria used in the review of the "net benefit" of foreign acquisitions exceeding
$192 million.
The Investment Canada Act provides for the review of significant acquisitions of Canadian
business to ensure net benefit to Canada.  A range of factors are considered but the Act does not
require that an investor undertake obligations in any of these areas as a condition of approval.  The
factors considered  for “net benefit” pursuant to the Investment Canada Act are outlined in Sections
20 and 21.  The Act can be found on the web at investcan.ic.ca.
PERU
MARKET ACCESS IN GOODS
Tariffs and other charges and taxes affecting imports
(Page 16, paragraphs 56 and 57) Despite the clear reduction or liberalization of a high proportion of
tariff items, the Secretariat Report states that the simple average tariff applied to the remaining itemsis over 13 per cent.  This reflects a high level of protection concentrated on a few "sensitive products"
(foods, metal products, alcoholic beverages, textiles and clothing, among others) which are precisely
those of interest to the developing countries.  Does the Canadian Government have any medium-term
plans to reduce these tariffs and thereby reduce the protection of these products?
The level of current Canadian MFN tariffs reflects the results of the previous rounds of
multilateral trade negotiations in which Canada participated.  Overall, Canada has one of the most
liberal tariff regimes and is certainly prepared to consider future reductions in our tariffs in the context
of future trade negotiations.  With respect to agricu lture, Canada is already participating in the current
round of agricultural negotiations and has tabled its position on a variety of issues to be addressed in
these negotiations, including market access.
(Page 19, paragraph 66) The Secretariat Report refers to various tariff measures designed to benefit
imports from the "least-developed countries" (e.g. duty-free access).  Bearing in mind that suchmeasures would have a much greater multiplier effect on prosperity in the developing countries, does
the Canadian Government intend to extend this type of benefit to the developing countries?
After extensive consultations with Canadian industry, Canada improved its market access for
products from LDCs, such that 90% of all Canadian tariff lines are duty-free.  Any further
improvements would require a new round of consultations with domestic industry.  Canada’sunilateral tariff preferences for developing and least developed countries will be reviewed by the
Canadian Government by 2004.
Anti-dumping and countervailing actions
(Pages 22-23, paragraphs 77-79) The Secretariat Repo rt states that Canada has been a long-standing
advocate in multilateral negotiations for tighter rules in order to limit unnecessary restrictions totrade and market distortions that may result from the abuse of such measures.  Despite this statement,
Canada is one of the most active users of anti -dumping actions, which suggests that industry has
increasingly sought such measures as an avenue of protection against import competition.  What is
the position of the Canadian Government regardi ng a review of the An ti-Dumping Agreement in
order to make its application more restrictive?
Canada is supportive of efforts to undertake negotiations respecting the WTO Anti-dumping
Agreement with a view to strengthening and clarif ying the rules to ensure greater internationalWT/TPR/M/78
Page 102
consistency and predictability in the use of such measures.  This position does not detract from the
fact that anti-dumping measures are legitimate instruments to address unfair trade practices.  Giventhe relative openness of the Canadian market, it is not surprising that some trade is found to be
dumped and causing injury to Canadian industries.  It must be kept in mind, however, that Canadian
anti-dumping actions affect only 0.5 percent of total imports.
Standards and technical regulations
(Page 29, paragraph 100) What measures is the Canadian Government taking to comply with and
subsequently ratify the Kyoto Protocol?  Is it coordinating with other developed countries in order to
curtail activities at variance with that document?
According to the Secretariat Report, Canada considers that the Protocol should allow countries
maximum flexibility in determining their strategies  for the reduction of greenhouse gas emissions.  In
this connection, do the Canadian authorities consider it necessary for developing countries to begiven more favourable and flexible treatment than the developed countries, since this process will be
much more difficult for them?  Does the political will exist to support the developing countries in this
process (inter alia by means of financial support and technical assistance)?
To achieve ratification of the Kyoto Protocol si gned by Canada, we have to assess what will
be the rules and modalities defining the Kyoto mechanisms.  Until we know what those rules will be,we will not be in a position to take a decision on ratification.  As well, federal, provincial, and
territorial jurisdictions in Canada will have to know exactly what measures will need to be pursued in
order to proceed with Canada’s ratification.  Finally, Canada cannot commit itself to comply by a
specific date (such as 2002 - Rio + 10) until those questions have been answered.
Canada is committed to early action on climate change and we are actively continuing
domestic efforts to address climate change.  We have unveiled the first in a series of action plans to
achieve Canada’s target.  Canadian provincial a nd territorial governments, industries, ENGOs, and
individuals are also engaged in the process of reducing GHG emissions.
Following adoption of the Kyoto Protocol, in December 1997, Canada’s First Ministers
directed federal, provincial, and territorial ministers of energy and environment to establish a national
process to examine the impact, costs, and benefits of implementing the Kyoto Protocol and the
various implementation options open to Canada.  The recently released Government of Canada  Action
Plan 2000 on Climate Change  draws extensively from the results of this work and reflects the
Government of Canada’s contribution to the First National Climate Change Business Plan,  the first in
a series of integrated federal, provincial and territorial action plans that Canada will undertake to deal
with climate change.  Action Plan 2000  targets key sectors and, when fully implemented, will take
Canada one third of the way to achieving the target established in the Kyoto Protocol.  The Plan
includes initiatives in transportation, energy (oil and gas production and electricity), industry,buildings, forestry and agriculture, international projects, technology, science and adaptation.  These
sectors account for more than 90 percent of Canada's GHG emissions.
Along with $625 million announced earlier this year in Budget 2000, the Government of
Canada has pledged an additional $500 million to implement the specific actions to reduce GHG
emissions identified in Action Plan 2000 .  These investments, result in a commitment of $1.1 billion
over the next five years.
Canada’s decision to ratify will depend on the successful outcome of the international
negotiations, the actions of our major trading partners, and the results of the national climate changeprocess where Canada’s provinces and territories will have a major role in implementation.WT/TPR/M/78
Page 103
Are you coordinating with other developed countries to diminish the activities that oppose this
document?
Yes, Canada is especially holding close consultations with the USA, Australia, and others in
the framework of the “Umbrella Group” (UG - c onsisting of USA, Canada, Japan, Australia, New
Zealand, Russia, Norway, the Ukraine, Iceland).  We have been trying to break the logjam witnessed
at CoP6 through close consultations with the EU as evidenced by Canada’s facilitation of a recent
UG-EU meeting of officials in Ottawa.
The Secretariat’s Report indicates that Canada considers that the Protocol must allow countries
maximum flexibility in establishing their strategies to reduce greenhouse gas emissions.  In this
regard, do Canadian authorities consider it necessary that the developing countries have a more
favourable and flexible treatment than developed countries, since this process will be much more
difficult for them?  Is there political will to support the developing countries in this process (by meansof financial support, technical assistance, among other methods)?
Canada remains committed to achieving the majority of its reductions through domestic
action but continues to promote flexible and accessi ble market mechanisms for a variety of reasons
such as increased cost-effectiveness, flexibility in national implementation strategies, and fostering
the introduction of new technologies and creative approaches to emissions reductions in all countries.Canada’s goal in the international arena is to ma ximize its ability to meet its commitments at the
lowest possible cost through the pursuit of the Kyoto mechanisms, securing favourable terms on
carbon sinks (i.e. maximal inclusion of sinks to take full account of land use change and forest
activities), and other measures.  This is within the scope of the Protocol as it was negotiated in 1997,
and would provide an incentive for all countries to take better care of their forests and farmlands to
ensure sustainable land use practices and to preserve biodiversity.
Finally, Canada recognizes the need for an agreement that will address the concerns of
developing countries as the UN Framework Conv ention on Climate Change and the Kyoto Protocol
are based on common but differentiated responsibilities.  In The Hague, Canada played a leading role
in proposals to increase funding for developing c ountries through the Global Environment Facility.
Discussions focussed on a proposal that could have provided approximately more than $1 billion (US)
over five years in new funds from developed count ries to support developing countries in a number of
areas, including transfer of new technologies; adaptation; capacity building; and emissions reductions,
with special attention to the least developed countries and the most vulnerable to the effects of climate
change.
OTHER POLICIES AFFECTING TRADE IN GOODS
Financial assistance to business
(Page 36, paragraph 130) The Secretariat Report states that "increased budgetary payments to
farmers in Canada have compounded the spiral of increased government outlays and falling
agricultural prices".  In other words, not only is this a trade-distorting measure which works against
the developing agricultural countries, but it also distorts Canada's pricing system (on which
economic decisions are based).  In these circumst ances, what measures is the Canadian Government
taking to reduce this type of agricultural assistance?
Canada has significantly reduced the level of support from the 1986-88 base period.  In 1997,
support to the agriculture sector in Canada was about 11% of Canada’ s total AMS commitment level.
Recent increases in expenditures have been in conformity with Annex 2 of the WTO Agreement on
Agriculture and have no, or at most minimal, trade-distorting effects or effects on production.WT/TPR/M/78
Page 104
(Page 38, paragraph 134) According to the Secretariat Report, the price support system for specific
products is expected to be eliminated by 2002.  However, in February 1999 such support wasincreased for products such as industrial milk, butter and skim milk powder.  Do the necessary
conditions (political or economic) exist for the elimination process to be implemented?  Is that
commitment maintained?
The federal dairy subsidy is paid on production of butterfat that is used domestically.  The
rate of subsidy has been decreasing since 1996.  The subsidy is currently set at $0.4222 per kilogramof butterfat ($1.52 per hectolitre) produced for the domestic dairy products market.  This rate is set to
decline to $0.2111 per kilogram of butterfat ($0.76 per hectolitre), effective February 1, 2001 and will
be completely eliminated on February 1, 2002.
The prices set on February 1, 1999 are adjustments to the existing support prices for butter
and skim milk powder.  The support prices are based on the cost of producing milk and on marketconditions.
SWITZERLAND
How have the complaints concerning government procurement contracts, lodged by foreign investors
with the CITT, fared?
In circumstances where foreign suppliers are eligible to file a complaint (i.e., where they
would have standing under one of the two applicable  international agreements), these suppliers have
the same success rate as domestic suppliers. That success rate is approximately 25%. That is, 1 out of
4 complaints are found to be valid, at least in part. It should be noted that complaints are filed on less
than 1 percent of the total volume of procurement transactions covered by the agreements.
Could Canada provide an update on the status of th e new ownership rules for banks (main concern is
if the legislation will be adopted by the end of 2000)?
It is expected that the bill detailing reforms to the Canadian financial sector will be introduced
in Parliament early in the next session, which begins at the end of January.
UNITED STATES OF AMERICA
REPORT BY THE GOVERNMENT OF CANADA
Trade Policy Developments 1999-2000
How does the Canadian market access proposal differ from the Cairns Group proposal?
Canada shares the broad objectives of the Cairns Group for real and substantial improvements
in market access for all agricultural products.  Canada has specific views on how this objective can be
achieved, and these ideas were included in the market access proposal that Canada presented at the
WTO in June.  Canada also supports a number of the ideas in the Cairns Group proposal.
Could Canada please provide more information on th e proposed bilateral free trade agreements with
Costa Rica, Singapore, and Central American countries?  What is the status of these negotiations?
Will these agreements cover all agricultural products?  Are there likely to be products not subject to
liberalization measures?WT/TPR/M/78
Page 105
Costa Rica
Free trade negotiations with Costa Rica were launched on June 30, 2000.  Since then, four
rounds of negotiations have taken place, most recently in November 2000, and two more rounds are
planned. Negotiations are proceeding at a good speed and we are optimistic that signing an agreement
as early as next spring is possible.  As these negotiations are still under way, it would be premature to
comment on the scope of the agreement.
Singapore
Canada is currently exploring  the possibility of pursuing a free trade agreement with
Singapore. A first round of exploratory talks between officials was held in the fall, and a second round
may be required before Cabinet decides whether or  not to proceed with negotiations. A cabinet
decision is expected early in 2001. We do not expect the scope of any agreement to be determined
until well into the negotiating phase.
Central America (4)
At the Canada-Central America Summit in Guatemala in September, Prime Minister Chrétien
agreed to the request of the Presidents of El Salvador, Guatemala, Honduras, and Nicaragua to initiate
negotiations towards a free trade agreement.
Officials of the five countries involved met in  early December to exchange preliminary views
on the possible scope of the negotiations. We are still in the preliminary stages of determining the
scope of these negotiations and the Government will soon embark on a broad and comprehensive
domestic consultation process with the Canadian public, the provinces and territories, businesses, and
NGOs. The next meeting of officials from the five countries is tentatively scheduled for the end of
February, 2001.
With respect to para 10, while Canada’s record of compliance with the recommendations and rulings
of the WTO Dispute Settlement Body is generally good, there are two outstanding disputes (dairy and
pharmaceutical patent terms) for which Canada is not yet fully in compliance.  Will Canada meet its
timetable for full compliance in the dairy case?
Canada will be in full compliance with the rulings and the recommendation of the DSB by the
conclusion of the implementation period on January 31, 2001.
As a result of the World Trade Organization (WTO) ruling that certain Canadian export
pricing practices for dairy products conferred export subsidies, major changes have been made to the
way milk is marketed in Canada.  At the federal level, the operation of Special Classes 5(d) and (e)
(those that were found by the WTO to confer export subsidies) have been modified such that 5(e) has
been eliminated and exports under 5(d) will be limited to our WTO export subsidy commitments.
In addition, changes to the federal dairy marketing regulations will be completed shortly per
the terms of the implementation agreement.  These changes will deregulate the sale of milk outside
the domestic supply management system where a similar deregulation has been effected at the
provincial level.
As a result, new dairy export mechanisms have been created at the provincial level.  All the
mechanisms are based on individual contracts be tween producers and processors, with no government
intervention (including by the marketing boards) on quantities, prices, products or export markets.  All
mechanisms were operational by August 1, 2000.WT/TPR/M/78
Page 106
We understand that Canadian generic pharmaceutica l companies are pressing the government for
a flat 20 year patent term as a trade-off for Canadian compliance with the panel decision onpharmaceutical patent term.  The proposal would effectively reduce patents on some foreign
pharmaceuticals by 1-2 years.  Is the proposal being seriously entertained by the Government of
Canada?  Does the government believe the flat-20 proposal is consistent with its obligations under
the various trade agreements of which Canada is a signatory?
On October 23, 2000, Canada informed the WTO Dispute Settlement Body that it intends to
implement the decision regarding Canada’s term of patent protection but will require a reasonable
period of time in which to do so.  In accordance with WTO rules, Canadian officials have discussed
the length of time needed with their US counterparts  but have not been able to reach agreement.  It is
likely that the issue of "reasonable period of time" will be resolved through binding arbitration.
Compliance with the ruling will require a legislative change to Canada’s Patent Act and may
also require the Canadian Intellectual Property Office and Health Canada to take certain corrective
administrative measures.
Future Policy Directions
The United States supports Canada’s view that price-and trade-distorting support should be
substantially reduced through the WTO agricultural negotiations.  Could Canada elaborate onspecific ways to substantially reduce trade-distorting support?  How will this reduction in support
affect Canada’s supply-managed sectors, in partic ular, dairy?  Does Canada envision reforms to its
dairy sector that will enable it to make substantial cuts in trade-distorting support?
One of Canada's key objectives in these negotiatio ns is to level the international playing field
by reducing the levels of support and ultimately eliminating the disparities among producers in
different countries.
Canada recognizes that governments have legitimate policy objectives which require them to
spend on their agricultural and rural sectors.  Canada strongly believes that any such spending should
be done in non-distorting ways so that it focuse s on solving problems within a country, rather than
exporting the problems to be dealt with by other countries.
In the area of domestic support, Canada’s initial negotiating position calls for
• the maximum possible reduction or elimination of production and trade distorting support,
including support under so called production limiting or Blue Box programmes;
• an overall limit on the amount of domestic support of all types (green, blue, amber);
• a review of the criteria of the green category to ensure that green support does not distort
production and trade;
• permanent international recognition that such support should not be countervailable; and
• the elimination of those elements of the Peace Clause that restrict Members’ rights to pursue
dispute settlement in cases where trade-distorting domestic support and export subsidies cause
nullification and impairment of access or disrupt sales in third country or import markets.
In the agricultural negotiations, Canada will seek practical, realistic solutions to reducing
inequities and distortions between members.  We l ook forward to elaborating our ideas about how this
can be achieved in the course of the agricultural negotiations.WT/TPR/M/78
Page 107
We note Canada’s increased usage of so-called “green  box” programs that are, at most, minimally 
trade-distorting.  How does Canada’s increase in farm support (ref. Chart iv.3) – both in absoluteterms and relative terms as a percentage of agricul tural GDP – correspond to their position that the
“green box” should be subject to limits at the same time trade-distorting support is significantly
reduced?
In Canada’s view, the best way to ensure that overall support levels move in the right
direction is to negotiate an overall limit on support of all types.  We envisage that this would worktogether with major reductions in trade-distorting Amber and Blue-Box support.  Countries would be
encouraged to move towards green programmes, w ithout increasing their overall levels of support to
agriculture.
REPORT BY THE SECRETARIAT
Developments in Trade and Investment Policy
The Canada-Chile Free Trade Agreement (CCFTA) has a parallel agreement on labour cooperation.
We would be interested in learning about your experience with this agreement and your plans to
continue this policy in future FTAs.
Canada's experience with the Canada-Chile Agreement on Labour Cooperation (CCALC) is
positive.  The agreement provides mechanisms for consultations and evaluation of labour practicesthrough independent experts and for dispute settlement procedures in certain areas (child labour,
minimum wages, and health and safety conditions).  Through these mechanisms, the agreement
complements the Canada-Chile Free Trade Agreement by promoting improved working conditions
and living standards in Canada and Chile.
The key objectives of Canada's approach to labour cooperation agreements in the context of
free trade agreements are to:
• improve working conditions and living standards;
• promote compliance with, and effective enforcement by each Party of, its labour law, in
particular labour principles (covering ILO core labour standards and areas such as minimum
wage and working hours, health and safety, workplace compensation, and migrant workers) as
they are reflected in domestic legislation;
• encourage cooperation to promote innovation and rising levels of productivity and quality;
and
• foster transparency in the administration of labour law.
The CCALC was signed on February 6, 1997.  Cooperative activities have included tripartite
labour relations conferences on labour standards and occupational safety, industrial relations, labour
legislation in Chile, and income security programs, as well as a seminar between Canadian and
Chilean experts on engaging civil society in trade policy consultations.
Recently initiated negotiations of bilateral free trade with Costa Rica and four Central
American countries (Nicaragua, El Salvador, Guatemala, and Honduras) include negotiations on
parallel labour and environmental cooperation.  These discussions and the negotiations themselves areat an early stage.WT/TPR/M/78
Page 108
Market Access in Goods
With respect to para 77, in administering its anti-dumping law, Canada appears to have adopted a
policy of directing anti-dumping actions against specific exporters selected by the applicant in certain
cases, rather than against all dumped imports of  the like product.  What steps will Canada take to
bring its policy into conformity with articles 5.2 (ii), 6.10 and 9.2 of the anti-dumping agreement?
The vast majority of Canadian cases are taken on a country-wide basis.  There have been,
however, circumstances where Canadian authorities have limited an anti-dumping investigation tospecific exporters from a given country where the applicant only provides evidence of dumping in
respect of particular suppliers.  In these circumstances, the final anti-dumping measure affects a lower
volume of trade since it is only applicable to the named suppliers who were found to be dumping and
causing injury to Canadian production.  In Canada’s view, this practice is in conformity with the
WTO Anti-dumping Agreement.
With respect to para 79, in the countervailing duty  investigation of corn from the United States, a
number of questions have arisen as to the procedures followed by the Canadian investigators.  It
appears that rather than analyze each alleged subsidy program and make a determination that
enough support had been provided on a program-by-p rogram basis, the investigators simply looked
at a couple of programs and then initiated an investigation of all alleged subsidy programs,regardless of whether each program was adequately supported.  Can you please explain whether this
is standard procedure for initiating countervailing duty investigations?
In order to initiate a countervailing duty investigation in Canada, the authorities must be
satisfied that there is sufficient evidence that the g oods are being subsidized and that the effects of the
subsidized imports are causing injury to domestic industry as required under Article 11 of the ASCM.
While it is recognized that complete information with regard to specific programs is not always
available to applicants,  the authorities request the applicant to identify and provide evidenceregarding all of the programs which allegedly constitute a countervailable subsidy.  However, as U.S.
authorities also recognize, it is only through a complete investigation of the alleged countervailable
programs that the authorities can make a definitive determination on these issues.
What was the difference between the interest rates the Canadian Wheat Board paid to finance its
operations in 1999 and the interest rates a private sector company would have paid on the openmarket?
The effective rates of interest at which the CWB borrows are published in the CWB’s annual
report.  (For 1998/99, see note 8 under Financial Notes).  The CWB annual report can be found at:
http://www.cwb.ca/publicat/annual/index.htm.
It is difficult to draw meaningful comparison s between those interest rates and those that a
private sector company would have paid on the open market, given the range of companies, their
credit worthiness from the investor’s perspective, a nd the nature of their borrowing needs.  The CWB
uses short term funds (rather than long term) to finance its operational needs.  In short term markets,
investors view the CWB and private sector companies of comparable size and creditworthiness asvirtually no different.
What will be the role of the Canadian Dairy Commission in relation to planned exports, (class 5d) of
dairy products?
The role of the Canadian Dairy Commission regarding milk provided under class 5(d) will
remain the same.  The CDC issues the permits and negotiates the prices on behalf of the Canadian
dairy industry. As part of the implementation of the WTO ruling, exports of dairy products under
Special Class 5(d) will be limited to Canada’s export subsidy commitments.WT/TPR/M/78
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What stresses does Canada feel the new provincial export mechanisms for dairy, (that went in to
effect August 1, 2000) will put on the operation of the supply management system?
Regulatory changes that are being made at the fe deral and provincial levels in response to the
WTO rulings deregulate the sale of milk outside the domestic supply management system, and are
specific to the new export mechanisms.  The domestic marketing regulations will not change.
To ensure greater transparency, could Canada please provide additional information regarding
provincial local-content requirements for wine production?  Such local content requirements may beconsidered inconsistent with various WTO provisions.  Could Canada please provide information
regarding which provinces apply local-content requirements to wine production and marketing?
What is the status of the Canadian Government review of such policies?
Requirements differ amongst the provincial and territorial governments and at least one,
Ontario, is currently revising its legislation and regulations in this area for implementation onJanuary 1, 2001.  In order to ensure an up-to-date response in the degree of detail requested, we will
need to contact those jurisdictions and provide a further response to the U.S.
Other Policies Affecting Trade in Goods
With respect to para 112, several provincial incentive or aid programs are mentioned in the report.
Can you please indicate the source of the funds pr ovided by the provincial governments to support
these programs?  Are these funds matched by or contributed to by the federal government?
Provincial programmes may be funded solely by the provincial government in question or
may involve some cost-sharing with the federal government.  Canada’s most recent WTO subsidies
notification contains details on these federal-provincial cost-shared programs.
If the U.S. would like further information on a specific federal-provincial programme, please
advise which programme, as none are referenced in para 112.
The report acknowledges that “federal and provincial governments have developed an array of
programs and services over the years to assist exports, reflecting the growing importance of trade as
a means of generating income and employment.”  However, though the provincial government
programs are at least somewhat discussed, very few federal programs are discussed with the
exception of general information on aid provided by the Export Development Corporation (EDC).
Will you please indicate what programs have been developed to assist exports?
Information on the different Canadian federal government programs are found in the
following website:  http:///www.exportsource.gc.ca.
Agricultural export subsidies
With respect to para 114, the Report briefly discuses a new dairy export mechanism.  Can you please
provide more details on the new mechanism?
New dairy export mechanism have been created in 9 provinces.  All the mechanisms are
based on individual contracts between producers and processors, with no government intervention
(including by the marketing boards) on quantities, prices, products or export markets.  As per the
implementation agreement, we have met with the United States and New Zealand five times and have
provided them with detailed  information about the proposed changes to Canadian policies and
regulations.WT/TPR/M/78
Page 110
Export financing
With respect to para 115, can you please explain how the EDC is “financially independent”
given that the Canadian Government provides compensation for the EDC for administering the
Canada Account and given that the government is able to request debt write-off from the Paris Club
for non-performing loans administered under the Corporate Account?
EDC is "financially independent" in that:  a) it is governed by a board of directors dominated
by persons from the private sector;  b) it borrows in the international capital markets to fund itsoperations; c) it is expected to be and is financially self-sustaining;  d) debt written on its Corporate
Account (the large majority of its business) that is rescheduled through the Paris Club is carried on the
balance sheet of the Corporation;  e) debts written on its Corporate Account for private sector
borrowers, which must be written off, are charged against the Corporation's own reserves.
It is Canada that is a member of the Paris Club, not EDC.  If Canada makes a decision to
forgive certain debts as part of a Paris Club Agreed Minute, Canada assumes the financial
consequences of that decision.  Please note that Canada never "... request(s) debt write-offs ..."; the
debtor does.
In respect of Canada Account transactions, EDC acts only as the Government of Canada's
administrative arm. The "compensation" that the Government provides EDC is an administration feefor performing this service.
Does the government provide debt-write-off to pr ivate financial institutions? If the EDC has these
advantages, then how does it compete with the private sector on an equal basis?
The Government of Canada does not provide debt-write-off to private financial institutions.
The protection that the Government provides to EDC against certain debt write-offs is in respect of
decisions made by the Government as indicated in previous response. EDC competes with the private
sector in providing financial services (loans and insurance) on terms that must be acceptable tocommercial clients and competitive with other private sources of those services.
If the government provides compensation for th e EDC for administering the Canada Account, does
the government also direct the lending activities of the EDC?
The Government of Canada makes the decision with respect to Canada Account transactions.
Subsequent decisions with respect to those transactions that are not strictly administrative in naturemust be approved by the Government of Canada. The majority of EDC's business is done on the
Corporate Account and is directed by the Corporation's Board of Directors.
Are there specific industries which are favoured by the government for lending by the EDC? If the
EDC lends to specific industries, does it receive more favourable compensation by the Canadian
Government?
No, there are no specific industries favoured by  the government for lending by EDC.  If EDC
lends to specific industries, it does not receive more favourable compensation.
The Canada Account
With reference to para 123, could you provide us with a copy of the Gowlings Report mentioned in the
Secretariat ’s Report? Would it be possible to receive a copy of the report the government tabled inParliament about the EDC in response to the recommendations in the Gowlings Report?WT/TPR/M/78
Page 111
The website for the "Government Response to the Standing Committee on Foreign Affairs
and International Trade (SCFAIT)” is http://www.dfait-maeci.gc.ca/english/news/public.htm.
The Gowlings Report can be found on EDC's website at http://www.edc-see.ca .
The report also notes that the EDC had a public mandate to promote and reflect Canadian values
abroad. Was this an indication that the EDC will not be privatized, but rather will remain under
government control in contrast to the recommendation in the Gowlings Report that the EDC be
commercialized?
Privatization of EDC is not under active consideration at this time.
Financial assistance to business
With reference to para 129, the Report states that “recently introduced agri-food income support
programs may help to explain increases in 1999 and 2000 financial assistance to business.” Can you
please provide information on the recently introdu ced agri-food income support programs?  Will
these programs be notified to the WTO?
The Agricultural Income Disaster Assistance (AIDA) program provides assistance to
Canadian agricultural producers to cushion extreme income reductions beyond their control.  It covers
the 1998 and 1999 taxation years.  AIDA was recently extended, under the Canadian Farm Income
Program (CFIP), to cover the 2000, 2001 and 2002 taxation years.  AIDA has been notified as a“green” program to the WTO Committee on Agriculture (G/AG/N/CAN/36).  A notification on CFIP
was recently forwarded to the WTO Secretariat.
AIDA/CFIP is a voluntary program available to all producers who file a Canadian income tax
return reporting farming business income or losses, and whose gross margin has dropped below
70 percent of their historic average gross margin.  The gross margin is defined as the difference
between farm revenues and operating expenses.  Payments will bring a producer’s margin up to
70 percent of their historic three year margin.
The total cost of AIDA may not exceed Cdn $1.78 billion, while payments under CFIP may
not exceed Cdn $725 million annually.
The Report states that the federal dairy subsidy is on track for elimination in 2002.  Can you please
provide more information on the planned elimina tion of this program? Is there another program
scheduled to replace it? Is it planned that the provincial governments will replace the federalprogram with ones offered at the provincial level?
The federal dairy subsidy is paid on production of butterfat that is used domestically.  The
rate of subsidy has been decreasing since 1996.  The subsidy is currently set at $0.4222 per kilogram
of butterfat ($1.52 per hectolitre) produced for the domestic dairy products market.  This rate is set to
decline to $0.2111 per kilogram of butterfat ($0.76 per hectolitre), effective February 1, 2001 and willbe completely eliminated on February 1, 2002.  There have been no plans for replacement programs.
In the same section, you state that price support programs for butter and skim milk powder were
increased in February 1999. Are these new price support programs?
No, these are not new price support programs.  The prices set on February 1, 1999 are
adjustments to the existing support prices for butter and skim milk powder.  The support prices arebased on the cost of producing milk and on market conditions.WT/TPR/M/78
Page 112
Other
There is widespread concern that certain types of fishery subsidies can contribute to overcapacity and
overfishing. Could Canada please describe the subsidies it provides to the fishery sector?
Canadian support related to the fisheries sector, as described in Canada's 1999 New
and Full Notification, provides structural assistance (e.g. grants/contributions/loans) for
projects/activities leading to fisheries sector rationalisation, through the diversification of fishery-
dependent communities and alternative employment opportunities for displaced fishery workers.
Assistance in other areas
With respect to para 139, the report briefly discus ses the "Buy BC" program. Though the information
provided on the concurrent website is useful, it does not provide complete information about the
program. Can you please provide more  information on the Buy BC program?
Are funds from the program provided only through the province or are there matching contributions
or other funds provided by the federal governm ent? How is it determined how much assistance
companies will receive under the program?
Extensive information on the Buy BC program can be found at: http://www.buybc.gov.bc.
ca/program.htm.
This website has much greater detail on the Buy BC program than the website noted in the
Secretariat’s report.  It provides clear information on program eligibility, available funding, objectives
and strategies, and the evaluation process.  To respond to the first part of your second question, there
are no matching contributions or other funds provided by the federal government.
The report also discusses the Prince Edward Island "Export Development Program." However, we
found the website listed for the program inaccessible. Can you provide more information on this
program which "provides marketing assistance and capital contribution of up to C$40,000 to eligible
industries that clearly contribute to import re placement"? For example, how is an industry
determined to be eligible? Under what guidelines is it determined that industries "clearly contribute
to import replacement?"
The programs are the capital assistance and  marketing assistance programs and are available
through P.E.I. Business Development. The Assistance is available to small businesses with sales
under $1,000,000 (CND).  The assistance is available to companies that export. For purposes of theseprograms this means export from Prince Edward Island and not necessarily outside Canada.
Assistance is limited to $16,000 under each program.
With a population base of 150,000 it is easy to determine what is exported and what
companies would thus be eligible for assistance.
With respect to para 140, the report discusses research and development programs in Quebec. Is the
research information developed widely available to the public? Are other companies, including both
domestic and foreign, able to have access to the information?
Le programme garantie-pme d'Investissement Québec d'aide à la R&D ne constitue pas une
subvention ou une prise en charge d'intérêts. Des honoraires et une commission d'engagment sont
perçus par Investissement Québec en échange de sa garantie d'emprunt.WT/TPR/M/78
Page 113
La mesure n'est pas spécifique et n'est aucunement liée à des prescriptions d'exportation. Les
modalités d'apllication de la mesure sont décrites sur le site:  http://www.invest-quebec.com/
financial-p/smb-garantee-en.htm.
Les résultats des activités de R&D dont le financement est facilité par garantie-pme, ne sont
pas disponibles publiquement mais toutes les entreprises ayany des ventes de moins de 10 M$ et des
effectifs de moins de 100 employés peuvent bénéficier de la garantie d'emprunt d'Investissement
Québec.
To assess “potential to derive revenue from export” we look at the potential of the product
and its likelihood to be saleable in another country.  We don’t give a price subsidy to any companies,
but we do provide them with more knowledge of the markets which in turn allows them to be more
competitive.
Competition Policy
With respect to para 144, the Report states that as of April 1999, the Competition Bureau had
48 enquiries in progress.  Can you please provide us with up-to-date information on those enquiries?
How many enquiries is the Bureau presently performing? How many of these enquiries extend across
international borders?
The most current information regarding the Bureau’s enquiries can be found in the Bureau’s
Annual Report for the year ending March 31, 2000 (see www.competition.ic.gc.ca).
According to the report, eleven inquires were discontinued during the year, which are outlined
in Appendix 1.  In addition, the report outlines twenty-two enquires that the Bureau is currently
involved in, though there are other enquires that are not reported.  Of the 22 reported, one extends
across international borders.  It involves a conspiracy.
With respect to para 145, on enforcement activities regarding cases with an international dimension,
what was effect of enforcement action/reme dy on foreign access to Canada’s markets?
The result of enforcement action/remedy (w hether with an international or domestic
dimension) is to maintain competitive and effici ent markets.  This involves ensuring effective
competition, from foreign and domestic firms, in order to maintain competitive pricing and product
choice for consumers.  The effect of enforcement action/remedies with an international dimension is
the same, and thus any enforcement remedy/action would contribute to opening or maintainingforeign access to Canadian markets.  An example of a recent case with an international dimension
would be the vitamins cartel, which involved companies from various jurisdictions (including Canada,
Japan, and European countries).  The result of enforcement action/remedy was to introduce
competition in these markets by eliminating price fixing.
Regarding deregulation activities, what key sectors were reviewed? What was the  effect of the
Competition Bureau’s opinions and guidelines on foreign access to Canada’s markets.
During the fiscal year 1998-1999, sixteen interventions were made in the following sectors:
Transportation (3); Telecommunications (7); Resources (4); International (1); and Other (1).  During
the fiscal year 1999-2000, eight interventions were made in the following sectors: Transportation (1);
Telecommunications (3); Resources (2); and Agriculture (1).  The key sectors in which interventionswere made were telecommunications, resources, and transportation.WT/TPR/M/78
Page 114
Access to Canadian markets by foreign companies fall under sectoral laws, which are under
the jurisdiction of various industry regulators.  For example, in air transportation access into the
domestic market (carriage of passengers or cargo) is not permitted.  In water, access into the domestic
market is also not permitted; however, a foreign vessel may apply to provide services in domestic
waters and the matter is considered by Transport Canada.  Generally, if  services cannot be provided
by a Canadian vessel, a licence may be granted to a foreign vessel.
The Competition Bureau generally has advocated the removal of barriers that deny access to
foreign carriers to enhance competition so as to benefit passengers and shippers through lower prices
or costs, as well as increased and more innovative services that could result from increased efficiency
and productivity.
With respect to para 146, the Report states that the Competition Bureau recommended a number of
measures to lower market entry barriers in the domestic airline market, as well as other measures toincrease foreign competition. Were the recommendations accepted? What was the effect on entry
barriers and the extent of foreign competition in the domestic airline market?
As outlined in the Commissioner’s letter date d October 22, 1999 to the Minister of Transport,
David Collenette, (see http://strategis.ic.gc.ca/SSG/ct01638e.html ), the Bureau made the following
three recommendations:
• that the limit on foreign ownership of voting shares of Canadian air carriers be raised by
regulation to 49%, from the current 25 percent;
• that the government of Canada immediately attempt to negotiate reciprocal modified Sixth
Freedom rights with the U.S. for passenger service. This would allow U.S. carriers to market –
as a single ticket – travel from one Canadian city to another, via a U.S. destination; and
• that the Canada Transportation Act be amended to allow for the licensing of Canada-only
carriers, and that these carriers should be free of any Canadian ownership or control
restrictions. Under this system, carriers would be restricted to serving points within Canadaand would not be allowed to fly to a foreign destination
None of these recommendations were accepted.  As a result, there has been little effect on
entry barriers and the extent of foreign competition in the domestic airline market.  Some barriers
have been lowered, however, with the commitments made by Air Canada as a result of the merger
review (see the Annual Report), and amendments to the regulations (see information about Bill C-26
on the Bureau’s website).
Government Procurement
With respect to para 150, we share the concern expressed in the Report that Canada has not yet
covered any portion of its provincial procurem ent market under the GPA. Canada is the only GPA
party that has not done so. We would appreciate your comments on this.
With respect to para 153, we also note that the provinces continue to apply a number of highly
restrictive procurement policies and practices. For example, documents published by the Governmentof British Columbia state that “if it is known that there are several qualified competing B.C.
companies, purchasers should restrict the competition to B.C. companies only.”  We understand that
the provinces of Ontario and Quebec maintain acro ss the board “buy Canada” price preferences. Is
it Canada’s position that, notwithstanding these existing policies, the provinces are prepared to
provide non-discriminatory treatment if the other parties agree to further expand the coverage thatwe and Canada agreed upon during the Uruguay Round?WT/TPR/M/78
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Thirty-seven US states provide non-discrimina tory treatment to the other GPA parties, on a
reciprocal basis, for contracts that are covered by the agreement. Are the Canadian provincesprepared to do the same?
Canada's position of linking the tabling of its schedule at the sub-central level to achieving
increased market access in sectors of priority interest to Canadian suppliers and improving security of
market access through circumscribing the use of small business and other set-aside exceptions under
the Agreement, remains unchanged.
The discriminatory and restrictive nature of Small Business Set-Asides and Buy American
stem from U.S. procurement policies at the national level.  They are applied by States and
municipalities in their procurement when federal funding is provided, particularly in the transportation
and highways sectors.  Therefore, U.S. federal government policies must be addressed to assure
market access and non-discriminatory treatment for Canadian suppliers to U.S. State and municipalgovernments.
Canada did not undertake obligations regarding Annexes 2 and 3, and coverage was to be
based on commitments received from the Provinces.  As no commitments have been received, Canada
is under no obligation to put forward an offer under these Annexes.
Financial Sector Reform
With respect to para 159, the Report notes that the government introduced legislation in June 2000 to
implement financial services reform . Due to parliamentary elections in late November, this proposed
legislation will have to be reintroduced some time in 2001.  Can the government give us some idea of
the timetable for introduction and entry into force of the legislation?
It is expected that the bill detailing reforms to the Canadian financial sector will be introduced
in Parliament early in the next session, which begins at the end of January.
Foreign bank branching
While the Government of Canada has amended the bank act to permit foreign banks to establish
full-service branches or lending branches, the tax pr ovisions needed to make the amendment effective
have not yet been completed.  When may we expect the tax legislation to be approved by parliament?
Draft legislation to implement the income tax measures relating to foreign bank branches was
released for public comment on August 8, 2000.  It is expected that these measures will be included ina bill to be introduced in Parliament early in the next session, which begins at the end of January.  As
indicated in the draft legislation, it is proposed that the tax measures, once enacted, will have
retroactive effect to June 28, 1999, when the regulatory amendments came into force.
Insurance Services
Canada’s current GATS commitments for cross-border services generally require a commercial
presence in order to supply cross-border. In contrast, many countries recognize the benefits of
allowing the supply of certain cross-border servi ces to consumers in the business community without
requiring a commercial presence.  Is Canada giving thought to such improvements to its
commitments?
This question relates to a matter of negotiation (assessing commitments in various
agreements) in the GATS and will be dealt within that forum.WT/TPR/M/78
Page 116
URUGUAY
Overview (page viii, paragraph 9)
Could Canada comment on paragraph 9 of the Secretariat Report overview, which states that "Tariffs
on products subject to tariff quotas (TQs) ranging to over 300 per cent in the dairy and poultry
industries continue to amount to de facto quantitative restrictions.  By shielding those industries from
market opening, TQs are perpetuating inefficiencies at the cost of Canadian consumers, and denying
trade opportunities to more efficient foreign producers"?
The level of current Canadian MFN tariffs as well as the volume of in-quota access for
products subject to tariff rate quotas (TRQs), including in the dairy and poultry industries, reflects the
results of previous rounds of multilateral trade negotiations in which Canada participated.  Fill rates
for these TRQs are very high. Canada has one of the most transparent TRQ administration systems.
Canada is actively participating in the current round of agricultural negotiations and has tabled itsposition on a variety of issues to be addressed in the negotiations, including market access.
OTHER POLICIES AFFECTING TRADE IN GOODS
Assistance to agriculture and food processing (page 38, paragraph 134)
Could Canada comment on paragraph 134 which states  that "The supply-managed sectors (dairy,
poultry, and egg production), which account for one fifth, in value terms, of Canadian agri-foodproduction, continue to rely mostly on price support" and that, in this connection, "in 1999 the
OECD's Producer Support Estimate for milk reached 58 per cent …, suggesting that over half of milk
farm income is provided by budgetary transfers and price support"?
The figure of 58% of the value of production, calculated by the OECD for market price
support to the dairy sector in Canada, is about the same as the OECD average.  This means that
Canada’s support to its dairy sector is similar to  other OECD members, and several OECD members
support their milk producers more heavily than Canada.
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