WORLD TRADE
ORGANIZATIONWT/TPR/M/53
16 February 1999
(99-0590)
Trade Policy Review Body
15 and 17 December 1998
TRADE POLICY REVIEW
CANADA
Minutes of Meeting
Chairperson:  H.E. Ms. Anne Anderson (Ireland)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON  3
II. OPENING STATEMENT BY THE REPRESENTATIVE OF CANADA  4
III. STATEMENT BY THE FIRST DISCUSSANT  7
IV. STATEMENT BY THE SECOND DISCUSSANT  8
V. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY  9
VI. REPLIES BY THE REPRESENTATIVE OF CANADA AND ADDITIONAL
COMMENTS 16
VII. CONCLUDING REMARKS BY THE CHAIRPERSON 26
ANNEX I 29
ANNEX II 48WT/TPR/M/53
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The fifth Trade Policy Review of Canada was held on 15 and 17 December 1998.  The
Chairperson (H.E. Ms. Anne Anderson), welcomed the delegation of Canada, led by
Mr. Brian Morrisey, Director General, Department of  Foreign Affairs and International Trade, in the
Department of Foreign Affairs and International Trade, Ambassador John Weekes, and thediscussants, H.E. Mr. Anthony Hill (Jamaica) and H. E. Mr. Pekka Huhtaniemi (Finland).  As usual ,
both discussants would speak in their personal capacities and not as representatives of their countries.
In accordance with the established procedures, the discussants had made available, an outline of the
main issues they intended to raise.
2. The Chairperson recalled the purpose of the Trade Policy Reviews and the main elements of
the procedures for the meeting.  The report by the Government of Canada was contained in document
WT/TPR/G/53 and that of the WTO Secretariat in document WT/TPR/S/53;  the main issues to beraised by the discussants were contained in document WT/TPR/D/31.  Copies of advance written
questions, submitted by:  Argentina;  Australia;  Chile;  the European Union;  Hong Kong, China;
Japan;  the Republic of Korea;  New Zealand;  Norway;  the Philippines;  Switzerland and the
United States had been transmitted to the delegation of Canada (Annex I).  Replies to the written
questions and to questions raised on the first day of the meeting are contained in Annex II.WT/TPR/M/53
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF CANADA
3. The representative of Canada noted that this was Canada's fifth Trade Policy Review (TPR).
The Canadian Government was committed to the TPR process, which was designed to provide
transparency and to improve understanding of the multilateral trading system.  It was also through this
periodic exchange that he hoped to enhance the understanding of Canada's trade policy framework,
priorities, and future direction.
4. The Review had focused on developments in Canada's trade policy regime since the last full
review in November 1996.  In September 1998, a team from the WTO Secretariat, led byMr Peter Tulloch, had met with officials from the Departments of Foreign Affairs and International
Trade, Finance, Industry, Agriculture and Agri-F ood, other government departments and the Bank of
Canada.  The Secretariat team had also benefited enormously from the availability of information
contained in the websites of the federal and provincial government departments.  With the
Secretariat's Report, Canada's trade policy regime was placed at the fingertips of WTO Members.  Helooked forward to the publication of the report, so that the general public could also benefit from a
thorough description and analysis of Canada's trade policy, and invited all Members to be similarly
transparent.
5. The Report was, on the whole, accurate and provided a solid analysis of Canada's trade policy
regime and practices.  The Secretariat had been advised of some factual inaccuracies and he requestedthat the final version incorporate the appropriate changes.  He suggested that the Secretariat's
comments on those few sectors of the economy that were subject to intervention be taken in the
context of an overwhelmingly open, transparent and facilitative trade and investment policy regime.
(i) Canada's Economic Situation and Recent Developments in Trade
6. The Secretariat's comprehensive examination of Canada's economic structure and trade
policies and administration delivered two clear messages: Canada's trade and investment policy
regimes were, on the whole, remarkably open and Canada's economy was strong and increasinglyglobally integrated.  The difficult steps taken earlier in the decade to address economic fundamentals
had built a solid foundation for continued growth in Canada.  The Government of Canada had not
only reduced the debt-to-GDP ratio and set it on a downward track in 1996/97 but had also, for the
first time in almost thirty years, recorded a budget surplus in 1997/98.
7. The aggregate federal-provincial budgetary balance swung from a record deficit of
Can$66 billion in 1992-93, or about 11% of GDP, to a small surplus of Can$0.1 billion in 1997-98,
including a federal surplus of Can$3.5 billion.  The federal debt-to-GDP ratio had fallen to 68% in
1997-98, from a peak of 72% in 1995-96, and was on track to continue its decline.
8. Canada's commitment to inflation targets had created a clear framework for domestic price
stability.  In addition, forward-looking microeconomic and trade measures had re-shaped theeconomy, building the knowledge-based sectors, diversifying the export base and creating more and
higher-skill jobs.  In 1998, the unemployment rate, which had remained stubbornly high through
much of this decade, had fallen steadily, reaching 8% in November.  Reflecting these gains, GDP
grew by 3.8% in 1997 and, despite recent worldwide economic uncertainty, expanded by 3.2%, on an
annualized basis, through the first three quarters of 1998.  This was led by business investment whichwas up 8.4% during this period.
9. The international crisis had cut deeply into Canada's exports to Asia, which had fallen by one
third in the first nine months of 1998, and export s to Latin America, which were down by over 7%,
notwithstanding double-digit growth in exports to Mexico.  However, overall growth of exports ofWT/TPR/M/53
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goods and services had remained robust at 5.5% through the first nine months of 1998.  Canada had
helped mitigate the crisis by keeping markets open.  This was reflected in continued strong growth in
imports from the crisis-affected regions, including a 15% increase in imports from East Asia and an
8% increase in imports from Latin America through the first nine months of 1998.
10. Canada’s economy was increasingly integrated into the world economy:  trade had grown
over the last twenty years from 18% of GDP to 40% .  Over the same period, exports of services had
grown over seven fold and now exceeded Can$40 billion annually.  In addition, Canada was moving
from a commodity-based to a more technology-based economy - the share of resource-based
commodities in total exports had fallen from 60% in 1980 to about 35% in 1998.  These changes had
attracted attention and increasing amounts of invest ment.  Net FDI inflows in the first three quarters
of 1998 amounted to Can$19 billion, exceeding the total for all of 1997.  One in three jobs was tied
directly to trade and each Can$1 billion in FDI was estimated to create as many as 45,000 jobs.Increased outward direct investment, which now exceeded inward FDI, provided an impetus to
increased trade.
11. Since the last Review in 1996, efforts had continued to improve and expand the rules
governing international trade and investment.  As a nation with a relatively small domestic economy
that was dependent on trade, Canada believed that a world trade system based on a universal,transparent, rules-based framework was far superior to one conducted behind closed doors and based
on the unilateral exercise of economic power.  The cornerstone of Canadian trade policy was clearly
the WTO and its framework of rules.  Canada had also pursued trade liberalization efforts bilaterally,
signing a free-trade agreement with Chile, elimin ated tariffs on most products between Canada and
the United States, and further reduced tariffs between Canada and Mexico.  Trade liberalization andfacilitation initiatives were moving ahead in APEC;  Canada was chairing negotiations aimed at
achieving a Free Trade Area of the Americas (FTAA), and had launched free-trade negotiations with
the countries of the European Free Trade Association (EFTA).  Canada had also signed agreements in
the WTO on telecommunications, financial services, pharmaceuticals and information technology
products.
12. Canada's commitment to freer trade was demonstrated further by important unilateral
initiatives to increase Canada's market access.  The Tariff Simplification Initiative unilaterally
reduced or eliminated a broad range of tariffs, r ounded rates down, eliminated rates of less than 2%,
harmonized certain rates, and combined tariff it ems.  Uruguay Round tariff reduction commitments
had been advanced by one year.  Import duties now amounted to about 1% of import value.  Canada
had also completed a review of the Special Import Measures Act and had introduced a bill that
improved procedures and further enhanced transparency.
(ii) Future Trade Policy Priorities
13. The recent economic unrest and the difficulties being faced by several WTO Members had
led some to question continued efforts to liberalize and facilitate trade and investment.  In the
representative's view, globalization and technologica l development would continue to grow, and the
best way forward was to ensure that the intern ational framework of trade and investment rules
continued to keep pace with changes in business practices, technological developments, economic
situations and social systems.
14. The trade agenda and trade agreements were not ends in themselves but rather tools for
advancing trade and economic interests and the public interest more generally.  In many respects, the
trade agenda was as much about market strengthening as market opening.  Put simply, Canada wasworking to achieve a predictable and transparent set of rules that promoted good governance, created
a stable environment for traders and investors, and provided consumers with greater choice and lower
prices.  Developed and developing countries alike benefited from the jobs and growth that resultedWT/TPR/M/53
Page 6
from exports and outward investment, and from the increased efficiencies and technology
development that resulted from inward investment and the stimulus of increased import competition.
15. Canada would continue to explore ways to improve market access for the least developed
members of the WTO and would continue supporting, through trade and technical assistance, more
effective participation of developing and least developed countries in the WTO.  While firmlysupporting full adherence to the standards of WTO Agreements, Canada advocated the universality of
the WTO by actively working to facilitate new accessions.
16. Canada would continue to promote an open, transparent and rules-based international trading
system, and pursue further reductions in traditional barriers to trade and the elimination of
unwarranted non-tariff barriers.  The Canadian Government would be actively advancing work on
trade and competition, investment, and government procurement and would continue work to develop
further a transparent and strengthened dispute settlement regime.  The international trade agendacontinued to evolve and expand to include issues formerly considered purely domestic such as
regulatory policy, environmental policy, social policy, cultural policy, competition policy and
investment policy.  This imposed a new responsibility to consult and educate the public on the
challenges and opportunities of greater liberalization.  Trade negotiations led to internationally-agreed
rules that guided the behaviour of Governments and supported more transparent, democratic andinclusive decision-making in all WTO Member coun tries, while fully respecting domestic sovereign
choices.
17. The Government of Canada was committed to working with all Canadians, including
provincial governments, the business community, and interest groups  to explain the trade agenda, to
seek views and to establish Canada’s trade objectives.  Concerted, open, and full consultations were asine qua non  for preparing for trade negotiations.  Consultations were key not only to determining
negotiating objectives but to building a strong domestic consensus on issues that affected people so
directly.
18. In conclusion, the representative recalled that in Canada's opening statement at the 1996
Review it had been noted that the decision to negotiate a free trade agreement with the United Stateshad been described as a "leap of faith".  The experience from that leap and from the subsequent leaps
(North American Free Trade Agreement (NAFTA), Canada-Chile and Canada-Israel trade
agreements, the FTAA and trade negotiations with EFTA, as well as autonomous actions) had
confirmed the value of trade and investment liberalization and the value of a strong rules-based world
trading system, to be expanded and strengthened to the benefit of all its Members.WT/TPR/M/53
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III. STATEMENT BY THE FIRST DISCUSSANT
19. The first discussant, H.E. Mr Anthony Hill, noted the importance of Canada in international
trade and asked about the causes of the persistent high unemployment rate and its effect on aggregate
demand and imports. He asked whether the long-term depreciation of the Canadian dollar had
increased competitiveness.
20. He recalled the conclusions of previous TPR Reviews about the persistence of high protection
in certain sectors and inquired about the benefits of  TPR reviews to Canada.  In particular, he asked
in which ways these Reviews had influenced the formulation of trade and economic policy, and whatdegree of complementarity Canada saw between these and the reviews carried out by the OECD and
IMF.
21. Regarding shared federal and provincial responsibilities in policy-making, and the related
issues of marketing boards and other provincial state interventions, the first discussant considered that
the current ongoing efforts towards non-discrimina tion, transparency and harmonization of standards
and technical regulations under the Agreement on Internal Trade would be particularly instructive for
developing countries.
22. On the issue of economic openness, several studies and indices showed the link between an
open trade regime and trade growth.  He suggested the establishment of a WTO openness index and
asked how Canada could reconcile government intervention in such areas as government procurementand other administrative arrangements and its stance as an open economy. He also asked Canada's
view on the contribution of the Plurilateral Agreement on Government Procurement on Canada's
openness.
23. Turning to Canada's trade relations with deve loping countries, he noted that the value of
imports from Caribbean countries had doubled between 1988 and 1997, to Can$536 million;  of this
amount however, a large amount entered MFN duty-free whilst only Can$22.5 million entered under
the Caribbean duty-free waiver.  This compared with substantial advantages granted to Chileanexporters under the recent free-trade agreement, including tariff preferences within tariff quotas.
Further, trade preferences applied to only 5% of dutiable imports from least developed countries.  In
this light, he asked whether free-trade agreements may not provide considerably more trade
preferences than GSP and preferential schemes requiring WTO-waivers.
24. He noted that Canada was one of the few industrialised countries to have liberalized certain
previously restricted textile and clothing items, although import duties on these products averaged
17%, and Canada had not resorted to the special safeguard mechanism provided by the Agreement on
Textiles and Clothing.WT/TPR/M/53
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IV. STATEMENT BY THE SECOND DISCUSSANT
25. The second discussant, H.E. Mr. Pekka Huhtan iemi, noted Canada's high and constructive
profile in the WTO and GATT over many decades, and said Canada was a pillar of the multilateral
trading system.  Following the recent autonomous tariff review and the introduction of a new Custom
Tariff, Canada's import regime had been greatly simplified and rationalized.  Yet, tariff protection
remained significant in some sectors, some of particular interest to developing countries.  At the same
time, tariffs had been virtually eliminated in Canada's trade with the United States, and a system of
several, partly overlapping preferential tariff regimes with other regions and individual tradingpartners seemed to have led to a rather complex system of origin rules.  Noting that Canada's reliance
on the U.S. economy seemed to have further increased in recent years, he asked whether Canada was
losing its long-standing battle with geographic tr ade diversification, and whether trade diversion was
occurring.
26. There had been a reduction in defence measures over the past two years, although Canada
remained one of the major users of anti-dumping measures, and actions seemed to concentrate on a
limited number of partners (mainly the United States) and products (mainly steel).  He worried, that
Canada may again be tempted to become a more active user of anti-dumping in a situation where
cheaper imports, particularly from Asia, might grow significantly while the domestic and international
growth prospects were weakening.  He asked how the Canadian authorities dealt with suchpreoccupations and whether Ottawa was determined to pursue the trend of lesser recourse to anti-
dumping in the future.
27. Canada was actively participating in international standardization activities, including the
negotiation of mutual recognition agreements (MRAs) , a process that could, in the long term, exclude
those trading partners not in a position to negotiate MRAs.  He asked how Canada intended to
alleviate and cope with this worry.  He also enquired whether the Canadian Government favoured a
deepening or an extension to other Members of the WTO Plurilateral Agreement on GovernmentProcurement (GPA).  Public procurement practices  at the Canadian sub-federal level had been a
source of considerable concern for Canada's WT O partners.  He asked whether the Agreement on
Internal Trade (AIT) had actually increased access by foreign and out-of-province companies to
public contracts at the sub-federal level.
28. The second discussant then mentioned a few sectors in Canada's trade regime which stood out
as exceptions to the generally liberal and even generous picture, including supply-managed
agricultural products, the U.S.-Canada Auto Pact and the Canadian import regime for textiles and
clothing.  He sought information about Canada's overall approach to further liberalization of trade in
services, and asked about the impact of Canada's Uruguay Round commitments to date.  Had
Canada's NAFTA experiences in this particular field provided some useful guidance for futuremultilateral efforts, for example, regarding the sector of professional services?
29. He asked how Canada was taking advantage of the relevant WTO Agreements to become an
advanced information society, and how the Agreements and future negotiations on information
technology, telecommunications or electronic commerce could be used to this end.  He sought the
authorities' views on the scope and level of ambition of the foreshadowed negotiations on audiovisualand cultural services, including those exceptions that should be allowed to safeguard cultural identity.
How effective were, in Canada's view, trade and investment measures such as broadcasting quotas,
investment reviews and production subsidies in achieving this goal?WT/TPR/M/53
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V. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY
30. Members commended Canada for its continued efforts to liberalize its economy and trade
since the fourth Review of Canada's trade policies in 1996, and emphasized that Canada had
contributed to a freer global trade and investment framework through its active participation in
regional and multilateral fora.
31. The representative of Australia welcomed Canada's tariff simplification  The continued trend
to reduce financial support for agriculture, particularly the elimination of export subsidies in 1997,
was also welcomed and should be followed by a broad agricultural reform programme that would
include the domestically sensitive supply-managed industries (dairy, poultry and eggs).  While
recognizing the impact of low world prices in key agricultural industries, Australia urged Canada to
exercise considerable discretion in responding to domestic pressures for further agricultural
assistance.  He expressed the hope that the new package of farm assistance announced on10 December 1998 would be WTO consistent and asked for more details of the new package.
32. Australia recognized Canada's commitment to mu ltilateral negotiations aimed at liberalizing
international trade in services as well as the gradual deregulation of the services sector in Canada.  In
the financial sector, the Task Force on the Future of the Canadian Financial Sector called for the
removal of barriers to entry for new domestic competitors and the facilitation of the operation offoreign financial institutions in Canada.  He urged Canada to move purposefully to the conclusion of
the new banking regime in line with its GATS co mmitments.  He noted Canada's commitment to end
the effective operation of telecommunications monopolies, the recent elimination of restrictions in a
number of telecommunications services and the commitment to further reforms in 2000.  Canada was
encouraged to expand its liberalization agenda to professional services.  Australia cooperated withCanada in international fora such as the OECD Maritime Transport Committee and the APEC
Transportation Working Group to promote the liberalization of maritime transport services.  He hoped
this cooperation would be taken forward in the next WTO services round.
33. Australia was concerned about the potential of preferential arrangements to distort trade,
disadvantage other trading partners and weaken the multilateral trading system.  Noting theannounced plan to increase such agreements in the future, he encouraged Canada to liberalize all
trade, including sensitive sectors such as agriculture, and to ensure that third parties did not lose out
from such agreements.  He also encouraged Canada to  consider further reform of its tariff regime in
areas where a substantial volume of trade already enjoyed preferential access, i.e. for Canada to begin
to multilateralize its preferential arrangements.  A new round of comprehensive trade negotiations
could best address Canada's interests in areas such as agriculture, services and industrial tariffs.
34. The representative of New Zealand congratulated Canada for the solid economic growth
achieved over recent years as a result of sound economic fundamentals and for efforts to minimise
distortions in the domestic economy by reducing barriers to trade and investment.  He expressed
concern over the unevenness of Canada's tariff reform amongst different sectors of the economy.
Further, the operation of tariff quotas, which constituted one of the cornerstones of Canada's
agricultural trade policy, had remained unchanged under the new Customs Tariff.  Low tariffs in themining and manufacturing sectors contrasted starkl y with some of the out-of-quota tariffs commonly
found amongst agricultural products, as in the cas e of dairy products that attracted maximum tariff
rates of over 200%.  The high level of protection in the dairy sector resulted in considerable
restrictions, especially for butter.  The administration of the butter tariff quota - which was allocated
to the Canadian Dairy Commission - precluded access to the retail market other than at a prohibitive325% tariff.
35. New Zealand acknowledged the Secretariat's finding that Canada had managed to achieve
increased transparency in various parts of its economy in recent years, including some agriculturalWT/TPR/M/53
Page 10
sectors such as grain and major livestock sectors which now experienced greater exposure to market
signals.  This in turn had enabled producers to adjust to new challenges and opportunities.  He hoped
that a similar approach might be reflected in the Canadian Government's future policies with respect
to the protected agricultural sectors.
36. The representative of the European Union remarked that several agreements between the EU
and Canada had been signed in order to simplify and facilitate trade and to enhance bilateral
cooperation, including an Agreement on Customs Cooperation and Mutual Assistance, an Agreement
on International Humane Trapping Standards, and a Mutual Recognition Agreement.  Furthermore,
new issues such as cooperation between small and medium size enterprises, were being explored with
a view to creating a stronger relationship between both the two partners.  Among areas of concern, he
mentioned the Canadian regime for automotive products which was in his view discriminatory.  The
EU was also following attentively the Canadian implementation of the panel ruling on certainmeasures concerning periodicals between Canada and the United States.  In his opinion, the new
legislation was still discriminatory and constituted an impediment for publishers not yet established in
Canada.  The cost of service mark-ups applied to imported spirits by some of the Provincial Liquor
Boards continued to be an issue on which several questions had been presented in writing.
37. Efforts had been made over the last two ye ars to prevent technical and other regulatory
barriers from hampering international trade, notabl y a Mutual Recognition Agreement of certification
and standards procedures, which would facilitate bilateral trade.  The agreement had entered into
force on 1 November 1998.  However, other trade barriers existed at provincial level, due to the
variety of locally imposed technical requirements, such as different standards and labelling
regulations, local inspection procedures or complex packaging rules, despite the Agreement onInternal Trade.  Thus, no reconciliation appeared to had taken place in such areas as standards-related
measures regarding alcoholic beverages;  natural resources processing measures;  transportation,
regulatory and standards-related measures;  and environmental measures.
38. Referring to sub-federal procurement, he noted that Canada still had to fulfill its commitments
under the GPA in providing the definitive list of sub-federal entities subject to the Agreement'sdisciplines.  The EU and Canada had agreed to work together to improve access to each other's
procurement market, but Canada had not responded positively to several EU proposals to achieve this
improvement.
39. He joined previous speakers in remarking about both the decline in anti-dumping actions and
their concentration in the steel sector.  Given the large current instability of the market for steel
products, he drew attention to the potential negative effects of any increased recourse to trade defence
mechanisms in the sector.  He noted no significant improvement with respect to import regimes foragricultural products since the last Review, notably those for bovine meat.  He expressed concern
about Canada's implementation of the TRIPS Agreement, in particular regarding the Canadian list of
wine names.  He joined others in seeking conf irmation that GATS commitments regarding foreign
bank branching would be met before the end of 1999.
40. The representative of Norway commended Canada for its active and constructive participation
in all aspects of WTO work and contribution, to the smooth functioning of the multilateral trading
system.  Noting that the Federal Government had th e mandate to negotiate international agreements,
while their implementation was in certain cases under provincial mandate, he asked for an overview
of the competence of the respective levels of government in economic, trade and investment issues.
He enquired, in particular, whether the Federal Government was in a position to promote marketliberalization in provincial public procurement.  He also commended Canada for its constructive role
in the negotiations on maritime transport services, despite high tariffs on ships, and expressed the
hope for further liberalization in this sector.WT/TPR/M/53
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41. The representative of Chile considered the Canadian economy to be a model of openness and
outward-orientation in the wake of globalization.  Th is was witnessed by Canada's participation in a
number of regional and bilateral initiatives, including the  Chile-Canada Free Trade Agreement,
which was an opportunity to strengthen bilateral trade relations and to phase out the use of anti-
dumping measures that disrupted rather than promoted fair trade.  In his view, regional and bilateraltrade liberalization initiatives strengthened the multilateral trading system.  He had also raised
questions in writing regarding minimum amounts foreign suppliers of wine had to spend to market
their product in Canada in order to obtain a listing by provincial liquor boards.
42. The representative of Hong Kong, China also stressed Canada's very constructive and positive
role in the WTO.  He was very aware of the importance Canada placed on its cultural identity, but
considered that this should be pursued in the least trade-restrictive way.  Noting Canada's strong
desire to eliminate anti-dumping laws in the context of its free trade agreements, he expressed thehope for equal enthusiasm in the WTO context.  He then asked about Canada's perspectives on
regional and multilateral trade liberalization.  He was somehow puzzled by Canada's slightly reticent
stance about a broad-based new round of multilateral trade negotiations.
43. Secondly, remarking that a very high percentage of Canada's total imports – possibly as high
as 85% - enter duty-free under various preferential trade arrangements, he urged complete duty freeaccess on an MFN basis as the additional "costs" would not appear to be so high.  The present
situation gave a misleading impression that Canada wished to pursue a deliberate policy of favouring
certain suppliers over others.  He noted in this connection that Canada was pursuing a number of new
preferential initiatives which appeared to have no particular regional logic.  However, he also
commended Canada for its strong emphasis on developing the rule-based multilateral trading systemand applauded Canada's active and constructive ro le in APEC.  Canada's stewardship of APEC in
1997 had seen considerable progress on the broad APEC agenda, including trade and investment
liberalization and facilitation, and economic and technical cooperation.
44. The representative of the United States  recalled that Canada was the United States' foremost
export market and single largest trading and investment partner.  On the foundation of their
multilateral trade relationship in the WTO, the two countries had built a broad and extensive system
of additional commitments:  first the U.S.-Canada Free Trade Agreement and then the NAFTA.  She
highlighted three areas of concerns and problems:  intellectual property rights;  agriculture, where
there was a range of issues between the two countries;  and finally, implementation of the WTO
dispute settlement case on magazines.
45. With regard to intellectual property, on 25 April 1997, Royal Assent had been given to
Bill C-32, a legislation containing extensive amendments to Canada's Copyright Act intended tofurther modernize Canadian copyright law and harmonize it with certain international copyright
conventions.  Bill C-32 denied U.S. copyright holders certain broadcast rights and blank tape levy
payments, collected and distributed to Canadian copyright holders and to other copyright holders who
are members of the Rome Convention.  U.S. perfor mers and producers were denied proceeds, which
was a denial of national treatment to U.S. copyright holders.
46. Under the NAFTA, agricultural export subsidies were prohibited between Canada and the
United States.  Nevertheless, in her view, there continued to be a lack of transparency in the
operations of the Canadian Wheat Board (CWB);  some provincial subsidies had not been notified,
and she expressed concerns about Canada's recent modifications to its dairy export programme.  Some
of the export practices carried out by Canadian state-trading enterprises included price discriminationand a system of multiple pricing with heavy government involvement.  Additionally, Canada had not
removed technical barriers to internal trade in potatoes, onions, pumpkins and other commodities
affecting trade with the United States.WT/TPR/M/53
Page 12
47. Finally, with respect to magazines, the Government of Canada had removed four measures
that were found under WTO dispute-settlement procedures to be inconsistent with Canada's
international trade obligations.  However, in October 1998, legislation was introduced in Parliament
that would accomplish the same result as the meas ures that had been removed.  Furthermore, the
Government of Canada proposed to continue in a slightly modified form its postal subsidy forCanadian produced magazines.  This raised questions with respect to the dispute settlement
mechanism.  In conclusion, she noted that both Canada and the United States had established internal
systems ensuring that all voices were heard in trade and related policy formulation.  In preparation for
the 1999 Ministerial Conference, both countries had put in place domestic procedures that would
build a supportive consensus for a forward-looking multilateral trade agenda in the WTO.
48. The representative of the Republic of Korea expressed his appreciation for Canada's solid
commitment to active participation in the field of  multilateral trade liberalization.  He hoped that
Canada would continue to play an essential role in further strengthening the multilateral trading
system.  He then highlighted some concerns over current Canadian trade practices relating to the Auto
Pact, anti-dumping, government procurement and trade statistics.  He questioned consistency of the
Auto Pact with Canada's obligations under the WTO, such as MFN treatment and TRIPS, and
wondered how the Auto Pact could be reconciled with Canada's intention to pursue further tradeliberalization through the WTO, APEC and the Free Trade Area of the Americas.  In particular, would
Canada consider abolishing tariffs on all imported cars or would it enlarge the benefit of the Auto Pact
members to other specific countries?  He questioned the MFN compatibility of the import restriction
on recycled automobile tyres except those manufactured in the United States.
49. Duration of anti-dumping actions under Canada's le gislation had been a subject of concern for
trading partners.  For example, anti-dumping measures concerning Korea included carbon steel
welded pipe since 1984, oil and gas well casings since 1986 and self-adhesive leaves for photo albums
since 1975 even though the portion of Korean products in the total imports of these merchandises into
Canada was negligible.  Further, he asked whether the provision that the anti-dumping determination
should take into account that the amount of import of the item in question was less than 3% of totalimports of the item was applied in practice during reviews.  Was there a link between the apparent
absence of a role for the 3% criterion during the reviews and the long duration of actions?  What were
the reasons for maintaining the duties on the aforementioned products?
50. Noting that conditions of foreign access to Canada's procurement market had not changed
markedly since the last Review in 1996, he asked how many provinces had thus far expressed their
intention to join the GPA, and what was the schedule and timeframe adopted by the Canadian
authorities to conclude this matter.  He enquired about the reasons for the underestimation of Canada'sexports to Mexico, and asked about the calculating methods and base of trade data used by Canada
and the countries with which it held regular meetings on trade data coordination.
51. The representative of Japan joined others in welcoming Canada's liberal trade policy and
participation in various trade liberalization initiatives, and noted Canada's active role in the
preparation for the next negotiations starting in the year 2000.  He drew attention to a few issues ofconcern.  He expected Canada to play an active role in ensuring that RTAs, such as NAFTA, would
evolve in a way that strengthen the multilateral trading system in full conformity with the WTO
Agreement.  Unlike the previous U.S.-Canada FTA, in which textile products satisfied the origin rule
if the fabrics originated in the region, under the NAFTA, products must be produced from yarns
originating in the region in order to qualify for North American origin.  Such NAFTA rules weremore restrictive than the U.S.-Canada FTA rules and thus created difficulties for third-parties'
industries.  This substantial strengthening of rules of origin was likely in his view to violate
Article XXIV:5 of the GATT.  He also questione d the WTO consistency of Section 59.2 of Canada's
Customs Tariff Act which provided for procedures in regard to trade retaliations.WT/TPR/M/53
Page 13
52. He remarked that the Agreement on Internal Trade of 1995 prohibited provincial governments
from discriminating against the products and suppliers from other provinces in the course of
procurement.  However, it did not apply to foreign products and suppliers;  thus provinces could
maintain discriminatory treatment through "Buy Canadian" legislations.  He urged Canada to rapidly
submit a broad offer on sub-central government entities and eliminate the discriminatory system ingovernment procurement at provincial level.
53. With respect to services, the representative of  Japan joined others in calling for a rapid
adoption of the legislation to allow foreign banks to directly establish branches in Canada by
June 1999.  In addition, even under the new regime, he noted that foreign bank branches would not be
allowed to receive retail deposits.  Such restrictions seemed to diminish the value of the reform in
improving market access.  Finally, Canada's various regulations for the purpose of culture protection,
in his view, hindered the free distribution of audiovisual or published products.  He asked howCanada considered liberalizing this sector in the next round starting in the year 2000.
54. The representative of Switzerland complimented Canada for its autonomous trade
liberalization measures, including the tariff reform, harmonization of technical regulations and the
extension of procurement disciplines to new entities under the Agreement on Internal Trade, although
he noted the persistence of provincial "buy Canadian" procurement practices.  In services, he hopedthat the new legislation on foreign bank branching would be put into place by June 1999.  In general,
the strong performance of the Canadian economy confirmed, in his view, that the expansion of trade
was an essential cornerstone of sustainable economic growth.  He stressed the need for regional trade
initiatives to respect the primacy of the WTO framework and to contribute to the objective of world
trade liberalization.
55. The representative of Philippines, speaking on behalf of ASEAN, pointed out that several
sectors of utmost importance to developing countries, such as agriculture, textiles, clothing and
footwear remained protected by high trade barriers, and urged Canada to further reduce tariffs.
Secondly, he expressed concern over Canada's increasing tendency towards preferential trading
arrangements, and their possible distortionary impact on international trade given the size andsignificance of Canadian trade.  He agreed with the urgent need to help LDC partners to become more
integrated into the multilateral trading system, but did not believe that recourse to preferential trading
arrangements was the answer, as other developing countries would face discriminatory trading
regimes.  Instead, the collective priority should be to help build capacity in the LDCs to produce, to
attract investments and to trade.  He concurred wi th the suggestion by Australia that Canada should
multilateralize its preferential trading arrangements.
56. The representative of Hungary joined other delegations in welcoming the largely positive
developments in Canada's economic performance and macroeconomic policies since the last review in
1996.  He especially commended the Government of Canada for the prudent fiscal policies pursued
which – in combination with the strong performance of the economy – resulted in a budget surplus at
the federal level for the first time since fiscal year 1969/70.  He noted that the Asian crisis so far had
had a limited impact on Canada's overall economic growth.  The strong economic fundamentals hadplaced Canada in a good position to weather the economic and financial turbulences sweeping
through the world.  However, in the light of the increasing outward orientation of the economy and
the strong reliance of Canada on the U.S. market, which absorbed more than 80% of total
merchandise exports, he sought information about any governments plans to counter the effects of a
potential economic slow-down in the United States.
57. Despite the geographic distance, Canada was a very important economic partner for Hungary,
and two-way trade had been growing at a healthy pace, reflecting the favourable market access
conditions in the two countries.  Canada was a si gnificant investor in Hungary with an investment
stock exceeding US$600 million at the end of 1997.  Canadian firms had located in Hungary to serveWT/TPR/M/53
Page 14
not only the local market but also in order to use Hungary as a marketing, and manufacturing base
from which to supply other Central and Eastern European markets.  In recent years, in order to
promote a favourable business environment betwee n the two countries, Canada and Hungary had
concluded an agreement on foreign investment promotion and protection and an agreement on the
avoidance of double taxation.  He expressed hope that the cited positive tendencies were going tocontinue in the coming future for both trade and investment.
58. He welcomed that, by following a multi-track policy approach, Canada had continued the
liberalization of its trade regime on both regional and multilateral basis.  He emphasized that Hungary
shared the view of Canada that regional integration and multilateral liberalization could be mutually
supportive and that RTAs did not necessarily r un counter to the common goals and endeavours to
achieve freer and less distorted world trade He sought information as to why all Canada's 10
preferential regimes had different sets of rules of origin and different margins of preference.  Hejoined other in complimenting the Government of Cana da for the significant simplification of its tariff
system.  Also, he noted the significant efforts to reduce federal subsidies to all sectors of the
economy, especially the fact that support for Canadian agriculture had continued to contract and
export subsidies had been virtually eliminated.  He asked for further information on what other types
of export assistance were available for Canadian agricultural exporters, and sought detailedinformation on trends in the use of agricultural export credits in the review period.
59. He noted that for dairy products, poultry and eggs, Canada retained its supply management
regime with in-quota access, in some instances, reserved for imports covered by certain preferential
arrangements.  The out-of-quota duty rate frequently prohibited exports.  He enquired about the legal
basis of these reservations and asked what methods and representative periods were used whenCanada calculated the reserved quota shares in each case.  He also requested more information on the
legal basis of the preferential tariff treatment accorded to Australia, New Zealand, the United States,
Mexico, Israel and Chile within the tariff rate quotas in general and within their country reserves, if
any, in particular.  He asked whether Canada could indicate what provisions in their respective free-
trade agreements required that this preferential treatment should be granted within the tariff quotasestablished as a result of Uruguay Round tariffication of agricultural non-tariff measures?  He was
also interested to know what obligations required Canada to give such preferences to non-FTA
partners within the TRQs.
60. In the case of chicken and turkey, a large share of the tariff quota volume was reserved for
processors on the basis of import-competing production of chicken based products, and similar
systems applied to beef, veal and butter.  In addition, the import permits for butter were granted
exclusively to the Canadian Dairy Commission.  He as ked for the justification and objectives of these
measures and why Canada could not use any alte rnative measure to the in-quota import monopoly in
order to achieve the Government's objectives.  Finally, he asked Canada whether the previously
applied import ban on non-heat treated processed meat products, which had prevented Hungary and
others from exporting salami, for example, was still in force and, if so, what was the specific
Canadian legislation providing for the ban, whether the measure was based on relevant internationalstandards, guidelines or recommendations or not, and whether a procedure for exempting imports
from the prohibition existed in accordance with the obligation of Members under the SPS Agreement
to accept equivalent measures applied by exporting Members.
61. The representative of India shared previously expressed views about Canada's strong
domestic economic and trade performance and its role in promoting trade liberalization;  about the
persistence of a few areas relatively impervious to change;  about the possible distortion of trade
patterns from preferential arrangements and the exposure to changes in the U.S. economy through
geographical trade concentration.  He expressed worry that tariffs on dutiable items continued to
average 14%, with high tariffs on products where developing countries had a comparative advantage.
This constituted a real impediment to trade, made worse by the preferential rules of origin system thatWT/TPR/M/53
Page 15
further excluded developing countries from Canada's market.  He welcomed the lower incidence of
trade defence actions and Canada's efforts towards regulatory harmonization with major trading
partners, but urged the process to be non-discriminatory.
62. He expressed concern at the maintenance of highly restrictive measures in certain agricultural
sectors, and encouraged the Government of Canada to eliminate opaque provincial subsidyprogrammes.  He concluded by questioning how Canada reconciles its significant export controls on
ITA products and technology with its approach of ignoring India's request for deletion of certain
dual-use products from ITAII coverage on security grounds.
63. The representative of Brazil  noted the important benefits brought to Brazil by the Canadian
GSP scheme, and the numerous trade ties between th e two countries, including the Cairns Group and
a recent foreign investment protection and promotion agreement.  He expressed concern about tariff
escalation in footwear, about stringent import restrictions on poultry imports, and sought informationabout Canada's cluster approach to future trade negotiations.
64. The representative of the Czech Republic joined others in commending the Government of
Canada for its strong commitment to a rules-based open multilateral trading system and its active day-
to-day participation in all aspects of the WTO work.  He appreciated Canada's effort to develop
synergies between multilateral and regional integration, in particular through maintaining theliberalization momentum in the WTO, and at the same time, enlarging and deepening preferential
relations.  Noting that in 1997, automotive product shipments to the United States alone represented
more than Canada's total exports to the rest of the world, he asked whether the Government of Canada
saw any problem in such a concentration of the commodity export pattern.  Some local-content,
performance or purchase agreements reportedly remained in place at the federal level, such as theAuto Pact.  He asked for confirmation that this was the only goods-related local-content requirement
in place at the federal level.  He also asked fo r the justification for the prohibition on commercial
imports of used vehicles except on those imported from the United States.
65. The representative of Argentina welcomed Canada's reduction in government support to
agriculture, particularly with respect to exports.  She joined previous speakers in seeking information
on Canada's trade diversification plans, given that the share of the United States had now risen to 83%
of exports and 67% of imports.  She stressed the need to improve market access for developing
countries so as to assist their integration into  the multilateral trading system.  With regard to
agricultural trade, she enquired whether the import mechanism for meat favoured domestic
processors, and asked for clarification on the mechanism used by the Canadian Wheat Board to set
both domestic and export prices.WT/TPR/M/53
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VI. REPLIES BY THE REPRESESENTATIVE OF CANADA AND ADDITIONAL
COMMENTS
66. Replies by the representative of Canada and comments by participants were divided into three
main themes: (i) economic and industrial environment, (ii) trade measures, and (iii) sectoral issues.
The representative of Canada also provided detailed written replies (Annex II) and undertook tosupply further written replies within one month.
(i) Economic and institutional environment
67. The representative of Canada was gratified and encouraged by widespread comments about
Canada's macroeconomic achievements and its strong support for the multilateral system.  Mutually
supportive fiscal and monetary policy over several years had resulted in relatively good economic
performance during the current international economic disruption, thus contributing to the
stabilization of the world economic situation.  The WTO Review constituted the third review ofCanada's economic policy in 1998, following those of the OECD Economic and Development Review
Committee and the IMF under Article IV.  All three had noted the success of Canada's
macroeconomic and structural policies, and the open and outward orientation of its trade policy.
68. Canada had been a strong supporter of the TPR, recognizing that through its transparency it
contributed to better public understanding of, and support for, Canada's trade policy.  In any exercisewhere there was voluntary surveillance, there was an inevitable desire to show improvement.  He
therefore welcomed the opportunity to be reviewed because Canada, and others, benefited from this
activity.  For example, in Canada's first Review in 1990, the complexity of the Canadian tariff had
been the matter of some attention, and contributed to its subsequent simplification.
69. He agreed that Canada relied heavily on its neighbour, but where some saw vulnerability, he
saw opportunity.  Canada's ability to trade in this very competitive market spoke well for the quality
of its goods and services, and ability to compete globally.  In the interest of expanding global
competitiveness, "Team Canada Inc." was a government wide approach to create partnerships with the
provinces and private sector.  The objective was to harness the collective strengths of all participants,
reduce overlap, set priorities, improve market intelligence and simplify programmes and servicedelivery.  Team Canada Missions, led by the Prime Minister, enhanced Canada's trading relationships
and contributed to markets beyond the United States.
(a) Federal-provincial relations
70. There were both exclusive and concurrent jurisdictions for the Federal Government and the
provinces.  For example, the Federal Government had exclusive power to sign treaties and regulate
trade and commerce.  The provinces had exclusive jurisdiction over certain direct taxation within the
province, hospitals, education, natural resources and local or private matters within the province.Concurrent jurisdiction existed in such areas as agriculture and environment.  The broader
international agenda was of increasing interest to provinces, especially trade.  The Federal
Government had acknowledged that the provinces had legitimate international interests and had
undertaken to consult them when appropriate.  To avoid complications in implementation of treaties,
the Federal Government had developed and reinforced the systematic practice of advanceconsultations with the provinces.  In all cases, it had maintained federal leadership in negotiations
with foreign governments and the final decision-making authority.
71. Both levels of government had responsibilities in the implementation of new international
agreements, for example in the NAFTA accords on environment and labour.  Implementation and
enforcement of Canada's international undertakings often required provincial cooperation, agreement,and even legislative changes;  examples included the areas of trade, fisheries, agriculture and theWT/TPR/M/53
Page 17
environment.  Provinces might be reluctant to take on new obligations, and often sought involvement
in the development of policy and negotiating positions.
72. The Federal Government was but one of thirteen parties to the Agreement on Internal Trade
(AIT).  The Committee on Internal Trade was responsible for the Agreement and functioned under the
leadership of two co-chairs, federal and provincial and a vice-provincial chair.  An independentsecretariat located in Winnipeg provided administrative support for the Agreement.  The Agreement
did not pertain to Canada's international trade or to its international obligations.  Its current status did
not affect Canada's ability to meet its obligations under the WTO.  He would be responding in writing
to questions related to the AIT.
73. With respect to government procurement, Canada considered that it had fully met all
obligations under the 1994 WTO Agreement on Government Procurement (GPA).  Canada had made
no commitments with respect to sub-central governme nt entities under the GPA, outlined in the text
of the relevant annex and in the Canadian schedule, which was to be based upon commitments
received by the provinces.  No such commitments had been received.  In 1997, an electronic tendering
service had been introduced in Canada to provide a single window of opportunity to suppliers
interested in bidding on government contracts – federal, provincial and municipal.  The Federal
Government and seven provinces had contracted with this system.  One of the major advantages ofthis system for vendors was enhanced access to business opportunities.  The system could be accessed
via the Internet or through its telephone call centre.  Through the Internet anyone could search the
database free of charge and view procurement notices.  Additional services were also available to
subscribers.  The Federal Government used this system for all its procurement subject to trade
agreements.  Development and use of this system reflected Canada's strategy to be a world leader inelectronic commerce.
(b) Multilateralism/regionalism
74. He confirmed the Government's commitment to a broad-based new multilateral negotiation,
but remarked that non-state actors were playing an increasing role in international affairs, including
non-governmental organizations, multinational cor porations, indigenous populations, and the media.
This was a by-product of the information technology revolution where citizens and corporate players
were better informed and linked to foreign partners.  The legitimacy of a monopoly on international
relations for national governments was challenged on many fronts, as globalization and the Internet
had made the linkages among trade and other issues more apparent.  Accordingly, the Government
had embarked on an extensive consultative process regarding forthcoming negotiations.
Consultations were key not only to determine negotiating objectives but also to building a strong
domestic consensus on issues that affected citizens so directly.
75. He then elaborated on the notion of "clusters" as an approach to the forthcoming negotiations.
One possible option might be to group issues together with the objective of achieving interim results
and avoid having negotiations held back by the slowest issue.  All results would be brought together
at the conclusion, as in the current Agreement.
76. Canada considered regional approaches to be complementary and consistent with multilateral
objectives.  He continued to believe that the trade creation benefits of Canada's regional agreements
continued to benefit all WTO members.  Multilateralism was as much a frame of mind as it was a
framework of rules.  The NAFTA was in his view compatible with WTO undertakings.  For example,
when the Fifth Protocol on Financial Services would come into force, NAFTA partners would no
longer benefit from preferences, that were specific to financial services and that were not available toall WTO members.  Thus the approach may achieve an  objective earlier than another, but move in the
same direction toward the same ultimate end.WT/TPR/M/53
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(c) Developing countries
77. The representative said that he had taken particular note of the interests and concerns
expressed regarding developing country issues.  Since the last Review, Canada's tariffs had been
reduced and streamlined, an initiative of interest to developing countries.  Further, obligations under
the WTO Agreement on Textiles and Clothing had been met without recourse to safeguards;  andfurther improvements to duty-free preferential access for least developed countries were being
explored.
78. Regarding capacity building, Canada's share of the World Bank's interest subsidy fund had
been pledged to the World Bank's Highly Indebted  Poor Countries (HIPC) trust fund (approximately
Can$32 million, of which US$14 million was dedicated to the African Development Bank to meet its
HIPC obligations).  Canada's share of the IMF SC A2 interest refund had also been pledged towards
the World Bank's HIPC trust fund (approximately Can$20 million), and the Government had provideddirect bilateral funding to Mozambique to help its financing gap and qualify for HIPC.  Canada's
Official Development Assistance promoted capacity building for trade in the private sector in
developing countries.  Approximately, Can$288 million was being spent over several years in
entrepreneurial capacity development, and approximately Can$62 million in the area of export
development.  A wide range of developing countries benefited from this assistance.
79. In response to the 1997 High-level Meeting on LDCs, areas of support were being identified
within CIDA bilateral programmes;  Canada had recently contributed to both the Commonwealth
trade and investment facility and to the WTO/UNCTAD/ITC Common Trust Fund for African
countries.  Government support was given to centres in Canada, which trained developing countries
trade policy officers, as well as to the Trade Facilitation Office Canada, which promoted linkages withdeveloping country exporters, and the Canadian business community in order to develop market
opportunities for developing countries.
80. Imports from developing countries into the Canadian market had continued to grow during
the l990s, and the balance of trade was in favour of developing countries .  The value of imports had
grown from almost Can$l9 billion in l992 to Can$ 37 billion in l997, approximately 13.6% of total
imports.  In contrast Canadian exports to developing countries totalled Can$23 billion in l997 or 7.9%
of total exports. Regrettably least developed country exports to Canada contributed only 0.13% of
total exports to Canada.
81. Total Canada-Commonwealth Caribbean trade (exports and imports) had grown from
Can$622 million in l988 to Can$880 million in l997 of which Can$536 million in l997 were imports
from Caribbean producers. The value of Canadian exports to the Commonwealth Caribbean by
contrast had remained relatively flat over the same period.  The FTAA would provide a useful testingground for discerning the relative merits of a waiver as compared to a regional agreement.
82. The first discussant asked whether five TPR Reviews of Canada could be used as a
benchmark to define an index of openness fo r trade and economic liberalization, and wondered
whether the waiver for CARIBCAN was really meeting its objective, given the small amount of duty-
free imports under the waiver.
83. The second discussant considered that government procurement policy in Canada was a
matter of theory versus practice, and looked forwar d to written answers as to whether out-of-province
and foreign suppliers indeed had better access to sub-federal procurement.  He asked about Canada's
import policy towards economies in transition.WT/TPR/M/53
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84. The representative of the United States pointed out that Canada's position on government
procurement was not shared by other members of the GPA, and asked in what form any future
provincial commitments might be translated into law and implemented.
85. The representative of Japan asked whether Canada envisaged the multilateralization of its
trade preferences.  He also sought Canada's view on bringing APEC's results to the WTO as well as
on the desirability of broad-based market access negotiations versus a sectoral approach.
86. The representative of Hong Kong, China welcomed the commitment by Canada to a broad-
based negotiations and fully understood Canada's need for full consultation with civil society on the
matters at stake.
87. In response, the representative of Canada considered that the support and observations
contained in the various TPR reports of the Canadian economy were very useful, and had helped to
address several structural problems.  There was still a productivity gap in the Canadian economy, asnoted by one recent report, and it was indeed a government priority to enhance Canada's long term
productivity.  This implied continued fiscal discipline, further investment in knowledge and people.
The Government also wished to make Canada the most "electronically connected" country in the
world, and was actively pursuing an electronic commerce agenda.  The four key objectives of this
agenda were to ensure trust in the digital economy;  to clarify electronic business transaction rules;  tostrengthen the information infrastructure;  and to  develop skills and awareness.  Most government
regulations were readily available on the Internet.
88. Although automotive products constituted the largest economic sector, machinery and
equipment had become Canada's largest  export and import sector, the latter indicating that Canada
was investing in recapitalizing its economy.
89. Imports from CARIBCAN were to a large extent MFN duty-free, reflecting the fact that 53%
of Canada's total imports entered MFN duty-free.
90. He also confirmed that a foreign supplier that had a presence in Canada could engage in both
federal and sub-federal government procurement.  In particular, anybody could consult the MERX
website to examine federal procurement tenders as well as those of seven provinces.  The provinces'position continued to reflect the persistence of the set-aside programmes in the United States.
91. Available statistics showed that the share of NAFTA partners in total imports had increased
by 3.5% over 1989-97, considerably less than ASEAN, Eastern European and Middle-Eastern
countries.  Export growth to the United States remained below domestic  GDP growth in that country,
suggesting that exports to that market could expand faster.  Canada's General Preferential Tariff
applied to most economies in transition.  The extent of the multilateralization of preferential
concessions would have to be negotiated in the WTO.  The Information Technology Agreement,developed within APEC, had been an example of successful multilateralization.
92. The second discussant enquired about the concrete follow-up to this Review in Canada's
capital and provinces, and noted the importance of imports in building capital in the Canadian
economy.
93. In response, the representative of Canada said that the message from this Review would be
reported to the press throughout the country im mediately.  The TPR documents would be used
extensively, both in the consultative process and in exchanges with private business.WT/TPR/M/53
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(ii) Trade measures
94. The representative of Canada stressed that Canada continued to actively seek opportunities
for trade liberalization, because of its contributio n to economic growth and development.  This was
being pursued both through the WTO and through free trade agreements with trading partners equally
eager to move ahead more quickly than possible multilaterally, consistent with Article XXIV of theGATT (1994).  Canada has consistently participated  in MFN trade liberalization and the use of FTAs
would never diminish the support for the multilateral option.  For example, Canada had participated in
all the Uruguay Round zero-for-zero agreements, and just recently joined in the agreement to add 639
more products to the coverage of the WTO Pharmaceuticals Agreement ("Pharma III").  Canada was
also an original participant in the WTO Informa tion Technology Agreement, and had actively taken
part in the effort to expand product coverage in the "ITA II" process.  Canada would continue to
pursue actively the reduction of MFN tariffs through future broad-based WTO negotiations.  In thisconnection, Canada supported recent efforts within APEC to advance a broad range of sectors for
multilateral liberalization.  Eight of these had recently been referred to the WTO.  Canada had also
been active in the WTO on developing the Integrated  Data Base and Electronic Loose-Leaf schedules.
95. As noted, Canada had also reduced unilaterally tariffs under the Government's Tariff
Simplification Initiative.  Canada had not increased tariffs or other regulations of commerce vis-à-visthird countries as a result of FTAs and had, in fact, reduced or eliminated the MFN tariff in recent
years on a wide range of products in such areas as IT products and auto parts.  The rules of origin
associated with each of the preferential tariff regimes were used to determine whether goods were
eligible in trade between countries party to a particular regional trade agreement and had no effect on
the MFN tariff or other policy instruments that applied to imports from other countries.
(a) Trade Remedies
96. Bill C-35 to amend the Special Import Measures Act (SIMA) had passed through the
Canadian House of Commons and was now before the Senate.  It was expected to be enacted into law
in 1999.  Changes to SIMA included, inter alia :  that the Canadian International Trade Tribunal
(CITT) be given responsibility for preliminary dete rminations of injury (Revenue Canada currently
has this responsibility;  legal counsel be provided with increased access to confidential information
gathered in Revenue Canada investigations;  SIMA be reformed regarding the conduct of interim and
expiry reviews, including a bifurcation of administrative responsibilities for the conduct of such
reviews;  a non-exclusive list of factors be included in Section 45 of SIMA to guide the CITT on
whether and how to conduct a public interest inquiry;  and that the lesser duty concept be incorporated
into public interest.  The Bill and its progress could be tracked on the Canadian Parliamentary
web-site at www.parl.gc.ca
97. The Federal Government had consulted the provincial governments on the notification
obligations of the Agreement on Subsidies and Countervailing Measures (Art. 25) and GATT 1994
(Art. XVI:1).  To date the provincial governments had not advised that they maintained any
programmes that would meet those notification requirements.  Appropriate follow-up would take
place with the relevant provincial authorities.
(b) Investment
98. The investment screening mechanism had been designed to encourage investment by
non-Canadians and to ensure that such investment would be of net benefit to Canada.  This
mechanism was functioning smoothly and achieving its established objectives.  In addition to the
specific information provided in the written responses (Annex II), more information on theInvestment Canada Act could be found in the website address www.investcan.ic.gc.ca.WT/TPR/M/53
Page 21
(c) Intellectual property
99. The specific questions on intellectual property had been answered in writing (Annex II),
except for the questions relating to amendments  introduced by Bill C-91 to the Patent Act in
February 1993, as these questions touched on issues currently on the agenda of the Disp ute Settlement
Body.
100. The first discussant asked whether differential rule s of origin were justified in an open trading
regime that treated all partners as equal, and whether rules of origin were not abused as an instrument
of protection.  Was there a good theoretical trade justification for anti-dumping actions?  On Pharma
II, he noted that Jamaica and other producers of spirits were negatively affected and asked whether
sectoral zero-for-zero negotiations were, in Canada's view, a good thing.
101. The second discussant wondered about the general thrust of Canada's anti-dumping policy,
and asked whether there was a clear will to moderate the recourse to anti-dumping actions.  He asked
whether the proliferation of MRAs had any draw backs as many countries might not be able to
negotiate such agreements.
102. The representative of Japan remarked that those Japanese companies that had invested in
Canada under the FTA rules of origin had found themselves not in compliance with the new more
restrictive NAFTA rules of origin.  Such a change of rule had distorting effects on trade and was notconsistent with Article XXIV of the GATT.
103. The representative of the European Union sought  further details on the introduction of a lesser
duty rule in Canada's anti-dumping legislation;  how , in particular, would injury margins be justified,
and how would such operate in practice?
104. In response the representative of Canada saw anti-dumping measures as a means of providing
protection to the domestic industry that suffered from injurious, under-priced imports.  Noting that
solid growth had probably contributed to the lesser use of these measures, he stressed that anti-
dumping actions were industry-driven.  Canada continued to seek the reduced access to anti-dumping
in the integrated North-American market where comp etition rules were in place.  Large increases in
imports were a clear sign that Canada was contributing to the stabilization of the world economy.  Hewould respond to the question on Pharma II and sect oral negotiations in writing.  MRA's facilitated
trade, and Canadian procedures in this area were non-discriminatory.  Lesser duty rules were
necessary to alleviate injury, so as to avoid hurting the Canadian consumer, without having recourse
to a public interest review.
105. The second discussant suggested that MRAs could also be multilateralized.
(iii) Sectoral issues
106. The representative of Canada stressed that the focus on particular instruments in particular
sectors reflected the view, expressed by many, that Canada generally had an open, outward looking
trade policy regime.  The common element in the specific sectoral questions was apparently to probe
further what Canada was doing within the framework of rights and obligations of the WTO.  Indeed,
there had been suggestions that some measures might in fact, if not in intent, go beyond that
framework, but that was the purpose of dispute settlement.  Neither could he speculate on the futureevolution of various policies, especially where negotiations were foreseen.WT/TPR/M/53
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(a) Agriculture
107. Canadian agriculture, and therefore Canadian agricultural trade policy, was not static.  Like
agriculture everywhere, it had to respond to a number of variables - economic, environmental, and
political.  The current state of commodity markets had largely made necessary the recent emergency
assistance to farmers hardest hit..  He could no t confirm that the full Can$1.5 billion of federal and
provincial money to be made available to farmers over the next two years would fit within the Green
Box, but that was Canada's plan.  Ways were sought  to helping farmers without distorting world trade,
even though all that spending and more could, in principle, be fit within Canada's AMS commitment,
so low were support levels.  The progressive implementation of the Uruguay Round Agreement on
Agriculture was just part of a liberalization process that would resume when the new negotiations on
agriculture were launched.  Canada would pursue its interests across the full range of agricultural
trade issues, including market access overall, in a coherent fashion.  He had nonetheless tried toanswer all questions in writing (Annex II).
(b) Textiles and Apparel
108. Canada remained committed to the full implemen tation of the rights and obligations under the
WTO Agreement on Textiles and Clothing (ATC), including the full integration of the textile and
apparel sector in GATT 1994.  Canada had fulfilled the requirements of the ATC in its productintegration programme for the first two stages of the ATC.  In addition, Canada had included
restrained products in its first two stages of integration, removing quotas affecting over 20 developing
countries on tailor-collared shirts.  Moreover, on 1 January 1998, Canada eliminated its quota
restrictions, involving over 50 quotas on a range of women's and children's blouses, shirts and
ensembles, babies' snowsuits and jackets, and rainwear.  This benefited directly over 20 developingcountries.  Further, Canada had raised unilaterally its quota level on winter outerwear by 10% over
and above the annual growth rate requirement set out in the ATC.
109. The provisions of ATC Article 2.18 for small-exporters were also extended to 15 countries on
the basis of 1994 imports.  In effect, five more countries benefited from this provision than would
otherwise have been the case had Canada applied this provision on the basis of 1990 imports asspecified in the ATC.  In addition, as a result of the Uruguay Round tariff commitments, Canada's
average ad valorem MFN tariff had declined for textiles from 15.6% in 1996 to 11% in 1998 and from
20.5% to 17% during the same period for clothing.  These MFN tariffs would continue to decline over
the 10-year phase-out period for these products under Canada's Uruguay Round tariff commitments.
Canada, however, retained its rights under the ATC during the transition period, including with regard
to its remaining bilateral restraints and other tran sitional instruments under the ATC that provided an
umbrella under which the Canadian industry could continue to adjust during the transition period.  Insum, Canada had not only met fully, but had gone beyond its transitional ATC obligations.
(c) Automobiles
110. The motor vehicle sector was Canada's largest single manufacturing sector and exporter and
importer of manufactured products.  Canada's Auto Pact was consistent with WTO obligations.  He
did not agree that certain Japanese-owned companies operating in Canada faced disadvantages inselling or importing into the Canadian market, and noted that the TPR was not to be used for dispute
settlement procedures.  The two main Japanese-owned companies operating in Canada held 11% of
the Canadian market.  Further, sales of imports from countries which did not have free trade
agreements with Canada's were up in 1997 and 1998, the period under review.  For example, sales of
imports of light vehicles (i.e. cars and light trucks) from Japan increased 67.5% between 1996 and1997.  Canada was prepared to pursue further trade liberalization through mutually beneficial
negotiations under the WTO or other appropriate fora.WT/TPR/M/53
Page 23
(d) Financial Services
111. Canada had been an active participant in both the 1995 and 1997 financial services
negotiations.  The Government had, early on in the negotiations, offered to bind its existing regime,
which was one of the most open in the world.  In addition, Canada had committed to waiving the
application of the reciprocity provisions found in fe deral legislation relating to banks, insurance and
trust and loans.  Later in the negotiations, Canada tabled a revised offer that allowed foreign banks to
branch directly in Canada by 30 June 1999.  By this prospective measure, Canada was one of the few
countries that went beyond binding measures already in place in the marketplace.  He confirmed that
on 14 December 1998 the Minister of Finance had publicly stated that legislation on foreign bank
branching would be introduced soon.  Further, Canada's internal ratification procedure had been
nearly completed and the Financial Services Agreement would be ratified before the end of
January 1999.
(e) Basic Telecom Services
112. Canada had also been an active participan t in the negotiations establishing the GATS
Agreement on Basic Telecommunications, making far-reaching commitments to eliminate all
monopolies and all restrictions on international communications.  Canada agreed to bind the foreign
investment restrictions that applied to facilities-based Canadian telecoms operators, while eliminatingall restrictions on investment in resale providers, international submarine cables and in the provision
of satellite telecommunications services by foreign suppliers.  Canada had implemented all of its
commitments on or ahead of time, and had announced steps to implement the end of the Telesat
monopoly on fixed satellite in March 2000.  In eliminating routing restrictions on Canadian
telecommunications traffic fifteen months earlie r than required under GATS commitments, the
Canadian regulator had stated that this "would assist in the rendering of reliable and affordable
telecommunications services of high quality, enhance the efficiency and competitiveness of Canadian
telecommunications on the national and international levels, foster increased reliance on market
forces, and respond to the economic and social requirements of users".  He encouraged other
Members to participate in future talks aimed at opening telecommunicat ions markets worldwide.
(f) Professional Services
113. The Canadian commitments in the area of professional services were transparent and very
liberal.  Canada had eliminated a number of discriminatory measures in the professional services
sector listed in its GATS Schedule of commitments, as outlined in recent notifications to the Council
for Trade in Services.  While a position had not yet been developed in regard to additional
commitments in the area of professional services, the Government intended to pursue broader market
access results in the next negotiations on all four modes of supply, and viewed the continuation andintegration of the work of the Working Party on Professional Services into the next negotiations as an
important element in providing required disciplines in this sector.
(g) Wine and alcoholic beverages
114. Alcoholic beverage marketing policies and practices in Canada were determined by provincial
liquor boards on the basis of market considerations.  He stated that they were transparent andavailable to all suppliers, foreign and domestic suppliers who wished to sell their products in outlets
that were run by either the private sector or by the provincial liquor boards themselves.  Listing or de-
listing criteria used by provincial liquor boards applied equally to foreign and domestic products, and
were reviewed periodically as part of a normal commercial process.  The volume of sales greatly
influenced the maintenance of listings, therefore market promotion was important.  The promotion ofspecific foreign products was the responsibility of the foreign suppliers and their Canadian agents,
rather than of the provincial liquor boards, through the usual promotional tools.WT/TPR/M/53
Page 24
115. The same commercial-based approach was used with regards to mark-up differentials on
imported and domestic products.  The provincial liquor authorities needed to cover their costs.  The
higher mark-ups on imported products, such as whisky, reflected the higher handling and
administrative costs associated with imported products, and were based on audited costs of services.
For example, the Liquor Control Board of Ontario mark-up levels were based on a 1989 audit whichhad been undertaken as part of the 1988 Canada-EU Agreement concerning Trade and Commerce in
Alcoholic Beverages.  Its results had been updated using various economic factors such as the
inflation rate and the consumer price index.  The Government of Canada had consulted, and remained
ready to consult, with the provincial authorities whenever any WTO Member raised specific points
about provincial liquor boards' policies and practices, and provincial responses were forwarded as
soon as they were received.
116. The representative of Australia asked when details of the recently-announced package for
farmers would be announced.
117. The representative of Japan agreed that TPRs should not be used for dispute settlement but
disagreed with Canada's view that the Auto Pact was consistent with the WTO Agreement.  Regarding
financial services, he expressed concerns on remaining restrictions on retail deposits, and noted that
the best way to open-up a market was not to restrict the activities of a bank branch, but rather to letconsumers choose from the various sources available in the knowledge that such foreign branches
were not insured by the Canadian Deposit Insurance Corporation.
118. The representative of the United States asked what would prevent the Canadian Wheat Board
from "padding" initial payments in the knowledge that, under the new regime, government guarantees
would only be available for initial payments.
119. The delegation of Hungary complimented Canada for putting together such voluminous
answers (Annex II) in such a short time.  As to the Canadian response to question No. 2 of Hungary,
the representative enquired what the reference to "same conditions" meant in respect of the country
reserves under the recent free-trade agreements, that had entered into force after the establishment of
the TRQs.  On the issue of butter, he reiterated Hungary's general reservations about the operations ofstate trading enterprises, in particular, with resp ect to the lack of transparency which made it very
difficult to verify that they really operate under commercial considerations, as required by
Article XVII of the GATT.  He stated that Hungary was not aware of any compelling reasons,
legitimate under the relevant WTO rules, for heavily interfering with the orderly functioning of
market forces by granting monopoly import rights.  He expressed satisfaction about the absence of a
ban on non-heat treated meat in Canada.  The representative stated that Hungary was free from all the
diseases mentioned in the Canadian response to que stion No. 6 of Hungary (p. 45 of Annex II) which
had been recognized by all its major trading partners , including the United States.  He looked forward
to contacts with the Canadian Food Inspection Agency on this matter.
120. The representative of New Zealand looked forward to information on the new farm package.
He welcomed Canada's willingness to enter into broad-based negotiations, and fully supported the
concept of unilateral trade liberalization.
121. In response, the representative of Canada reiter ated that the total expected value of the two-
year farm programme was Can$1.5 billion, with the Federal Government contributing
Can$900 billion, and that assistance would remain within the framework of the WTO Agreement on
Agriculture.  The submission of farmers' 1998 in come tax returns would enable the Government to
discern income levels and determine eligibility for assistance.  The programme would not apply toany specific sector, although grains and hog producers were most affected by the current crisis.  In the
past, anticipated returns had an effect on the calculation of initial CWB payments, but this tended to
depress initial payments so as to avoid the possibility of a deficit.  This had happened in 1998 andWT/TPR/M/53
Page 25
contributed to the current farm income situation.  CWB pool deficits had for the last time occurred in
conditions of unforeseen price plummeting.  Treatment of preferences under the post-Uruguay Round
free trade agreements, in particular that with Chile, was directly analogous to treatment under
previous agreements.  The import regime for butter was an annually-reviewed ministerial decision.
He confirmed that non-heat treated meat was allowed to enter Canada subject to SPS compliancerules.
122. The representative of the Philippines reiterated his concern about new preferential trade
arrangements and hoped that these would comply with GATT Article XXIV.
123. The representative of Japan reiterated his concern regarding Canada's regulation of certain
services sectors such as audiovisual services and asked for information on the issue of cultural identity
protection in relation to the next WTO services negotiations.
124. The representative of Canada noted that a task force on cultural industries would soon be
issuing its report on future directions for these industries.WT/TPR/M/53
Page 26
VII. CONCLUDING REMARKS BY THE CHAIRPERSON
125. The fifth Trade Policy Review of Canada was conducted by the TPR Body on 15 and
17 December 1998.  These remarks, prepared on my own responsibility, are intended to summarize
the main points of the discussion;  they are not intended as a full report.  Further details of thediscussion will be fully reflected in the minutes.
126. The discussion developed under three main themes:  (i) economic and institutional
environment;  (ii) trade measures;  and (iii) sectoral issues.
(i) Economic and institutional environment
127. Members praised Canada's strong economic performance since the last Review, an outcome
due to Canada's macroeconomic discipline and continued efforts towards trade liberalization and
domestic deregulation.  Unemployment had fallen steadily, although it remained relatively high.Members noted, however, the vulnerability inherent in the level of economic integration with the
United States, with the U.S. share of Canada's merchandise exports now at 83%.
128. Participants recognized Canada's efforts to fu rther increase transparency in policy-making,
and asked about the role of the TPR in helping Canada formulate domestic policies.  Members noted
the progress made in removing inter-provincial trade barriers under the Agreement on Internal Trade,but expressed concerns about remaining provincial measures in areas such as standards, alcoholic
beverage marketing, government procurement and subsidies.
129. Canada's continued commitment to strengthenin g the multilateral trading system was fully
acknowledged, but Members were concerned that the growing number of preferential arrangements
might cause trade diversion.  Some Members suggested that Canada consider extending on a MFNbasis the bilateral and regional preferences already covering most of its imports.  Questions were
raised about Canada's market access for exports from developing countries.
130. In response, the representative of Canada confirmed that the TPR had contributed to better
public understanding of, and had helped build support  for, Canada's trade policy.  The recent tariff
simplification exercise was a concrete example of the positive influence of TPR discussions.
131. Canada did have a heavy reliance on the U.S. market but this was seen as representing
opportunity rather than vulnerability.  On the multilateral/regional relationship, Canada considered
regional and multilateral liberalization as complementary and sharing the same ultimate end;  regional
initiatives could allow moving ahead more quickly.  On developing countries issues, the
representative described several Canadian initiatives which had resulted in a growth of imports from
developing countries into the Canadian market, with the trade balance in their favour.
132. The representative drew attention to a number of general points concerning federal-provincial
relationships, including the legitimate and increasing provincial interest on the broader international
agenda, especially trade.  The status of the Agreement on Internal Trade, of which the Federal
Government was but one of 13 parties, did not affect Canada's ability to meet its WTO obligations.
Further answers to questions on the AIT would be provided in writing after the appropriate
consultations were undertaken.  Canada was of the view that it had met its obligations under the WTOGovernment Procurement Agreement.WT/TPR/M/53
Page 27
(ii) Trade policies and measures
133. Members welcomed the autonomous liberalization and rationalization of Canada's tariff, but
noted that the tariff structure remained uneven, with tariff peaks still affecting items such as food
products, textiles and clothing, footwear, and shipbuilding.  Certain import regulations could favour
selected trading partners, for example rules of origin or mutual recognition agreements on standards.The number of anti-dumping measures in force had fallen, but certain concerns remained both about
their concentration in the steel sector and the duration of orders.
134. Information was also requested on recent amendments to the Patent Act , and on Canada's
regulations covering parallel imports, particularly of books, levies on blank tapes, and trademarks.
Questions were also asked regarding Canada's foreign direct investment rules.
135. In response, the delegate from Canada stressed that Canada had actively pursued the
reduction of MFN tariffs, notably on pharmaceutical and information technology products.  Rules oforigin had no effect on the MFN import regime.  Details were given of proposed amendments to the
legislation on trade remedies, including with respect to transparency of procedures, public interest
inquiries, and lesser-duty provisions;  these are expected to enter into law in the new year.  To date,
provincial governments had not advised that they maintained any notifiable subsidy programmes.
The investment screening mechanism was fulfilling its established objectives.  Answers in writing hadbeen provided to questions regarding intellectual prop erty rights, except on those associated with the
Patents Act which touch on matters currently on the agenda of the Dispute Settlement Body.
(iii) Sectoral issues
136. On agriculture, Members welcomed reductions in public financial support, including to
exports, but were concerned that the supply management regimes for dairy, poultry and egg productsstill restricted foreign access.  Members also questioned the high out-of-quota rates, and the
administration of quotas including the reserved access for preferential suppliers.  It was recognized
that Canada had gone beyond the requirements of the WTO Agreement on Textiles and Clothing but
several Members noted that high tariffs and tariff escalation continued to restrict market access in this
area of interest to developing countries.  Members also noted the differential tariff on assembled carsapplied to imports by Auto Pact and non-Auto Pact car companies.
137. On services, participants commended Canada for making commitments during the 1997
Financial Services negotiations to allow foreign bank branching, and enquired about the timeframe for
implementation.  The recent liberalization of telecommunications was also welcomed and Members
asked whether restrictions on foreign investment might be lifted in this area.  A number also asked
about the prospects for harmonizing provincial regulations on professional services, and for providing
greater market access to foreign suppliers.  Members took note of the importance Canada attached toprotecting its cultural identity, emphasizing however that this should be done in the least trade
restrictive manner.
138. In response, the delegate from Canada noted that since 1995 Canada had eliminated
agricultural export subsidies and significantly reduced trade-distorting domestic support to
agriculture.  Current commodity markets had made the recent emergency assistance necessary, butCanada was seeking ways to assist farmers without distorting world trade;  support levels, however,
were low and could even fit within Canada's AMS commitment.  Detailed written replies had been
provided to questions regarding agricultural measures, including tariff quota administration, domestic
support, specific food safety and plant and animal health issues.
139. Canada had gone beyond its obligations under the Agreement on Textiles and Clothing, and
reduced MFN tariffs on these products;  it remains fully committed to the integration of the sector intoWT/TPR/M/53
Page 28
GATT by January 2005.  The Auto Pact was consistent with Canada's WTO obligations and Canada
was prepared to consider further liberalization through mutually beneficial negotiations in this sector.
Policies and practices on marketing of alcoholic beverages were determined by provincial liquor
boards, were based on market considerations and did not discriminate against foreign products.
140. On financial services, the representative indicated that legislation on foreign bank branching
would be introduced soon, and that the Financial Services Agreement would be ratified before the end
of January 1999.  He noted that Canada was implementing its commitments under the Basic
Telecommunications Agreement on or ahead of time, and had announced steps to end the last
telecoms monopoly on schedule in March 2000.  In professional services, Canada had eliminated a
number of discriminatory measures, and intended to pursue broader market access results in the next
round of negotiations.
*******
Conclusions
In conclusion, it is clear that this Body appreciates Canada's commitment to a strong rules-based
multilateral trading system, demonstrated through its active and constructive participation in all
aspects of the WTO work.  They welcome Canada's commitment to contribute to international
economic stabilization by keeping its markets open.  Delegations fully acknowledge Canada's effortsduring the past two years to move forward internal deregulation, enhance transparency, rationalize its
import regime and generally further its integration into the global economy.
It is also clear, however, that a number of concerns evident in earlier Reviews remain.  These include
high dependence on a single market, complexities arising from the federal-provincial division of
responsibilities and the possible trade diversion inherent in Canada's preferential arrangements.Concerns also persist on market access for developing countries as well as trade and investment
barriers in sensitive sectors, particularly in certain areas of agriculture and textiles and clothing.
Welcoming what has been achieved, delegations continue to signal the scope for further
improvements commensurate with Canada's leadership role in the multilateral system.
_______________WT/TPR/M/53
Page 29
ANNEX I
ADVANCE WRITTEN QUESTIONS
QUESTIONS BY ARGENTINA
In its Report, the Secretariat points out that the United States is the market of destination for
83% of Canadian exports and the market of origin for 67% of Canadian imports.  We would like toknow if Canada intends to diversify its trade structure, as regards both markets and products.
We would like to know the philosophy on which the Canadian Government bases its
approach to integration in the framework of the Free Trade Area of the Americas.
According to Section II(3)(ii), paragraph 26 of the Secretariat's Report, Canada believes that
more needs to be done to ensure the actual participation of developing countries in the multilateraltrading system, notwithstanding the fact that the Uruguay Round made it possible for them to gain
better access to world markets.  We would like to know if Canada considers that it has contributed to
improving access to its market for developing countries, and what its Government's policy is in that
respect.
We would be grateful if the delegation of Canada could provide us with further information
on the import mechanism for processed meat products, since we understand that it favours local
processors.
As regards the activities of the Canadian Wheat Board, we understand that certain changes
were introduced to the Canadian Wheat Board Act in June 1998.  We would be grateful for further
details concerning the way in which the Canadian Wheat Board sets prices, in particular, the criteria
used to set domestic and export prices.
QUESTIONS BY AUSTRALIA
There have been reports that the Canadian Government is considering providing a special
assistance package to farmers.  Can Canada confirm these reports and identify the likely beneficiaries
of any such assistance package, and the types of assistance measures being considered?  Is Canada
intending to maximize the use of measures which meet the criteria for green box domestic support?
Australia welcomes the overall reduction in support for agriculture.  However, we remain
concerned over the high level of protection still afforded to dairy products and eggs.
- Does Canada have plans to reduce the amount of support provided to these two sectors?- Does Canada intend any changes to the supply management regime for dairy, poultry and
eggs?
We note that Canada continues to apply tariff quotas on 21 product groups (p. 85, para. 10),
and that there has been no significant changes in the operation of these quotas since the last TPR.  We
further note that as reflected in Canada's notifications to the Committee on Agriculture, the fill ratesare generally high, and higher than the average fo r agricultural products in any other WTO member.
We are concerned, however, that for some products the fill rate is very low, e.g. barley, wheat,
margarine.  If these fill rates are due to market forces, does Canada intend to liberalize access
arrangements in the future?WT/TPR/M/53
Page 30
Australia acknowledges the changes that have been made to the Canadian Wheat Board.
Does Canada have any further plans for reform in this area?
Australia welcomes Canada's efforts to reform, liberalize and increase competition in its
service industries, especially in transport, financial services and communications, including postal
services and telecommunications.
- Does Canada have any plant to remove or reduce foreign ownership restrictions in the area of
telecommunications, or to remove routing preferences in that industry sector?
Australia notes that Canada maintains a policy of building preferential trade agreements.
- The Secretariat notes that Canada maintains an elaborate system of preferential tariffs and
rules of origin which give rise to concerns about trade diversion (p. (xii)).  Noting that Canada
continues to pursue an aggressive bilateral and regional trade policy, to what extent does
Canada take account of the impact of trade diversion when making decisions on its regionaland bilateral trade policy approach?
- Has Canada considered further reductions to its MFN tariff regime in areas where a
substantial volume of trade in specific items already enjoys preferential access?
- Is it Canada's policy in negotiating free trade agreements to liberalize trade overall, including
sensitive sectors?
QUESTIONS BY CHILE
Could you please explain how the wine market functions in Canada, and in particular what
the market access conditions are?  We understand that the marketing of wine is in the hands of
monopolies in all of the provinces.
The system apparently contains restrictions such as listings in which the product must be
entered before it can be marketed.
- Is it true that one of the requirements for inclusion in the listings is a minimum investment in
the promotion of the product?
QUESTIONS BY THE EUROPEAN UNION
The issue of Provincial Liquor Boards
One of the EU's longstanding trade concerns is the excessive cost of service mark-ups applied
to imported spirits, especially Scotch Whisky, by some of the Provincial Liquor Boards – most
notably Ontario.  The EC/Canada Agreement of December 1988 requires the same overall treatment
in the application of Provincial Liquor Board mark-ups for imported spirits as national spirits, exceptfor a mark-up differential on cost of service (COS) basis.  The majority of the Liquor Boards comply
reasonably with the "national treatment" requirem ent of the Agreement.  However, the mark-up
differential between domestic and imported spirits continues to be excessive in certain Provinces,
especially Ontario where it is + 7% ad valorem .  Canadian Government officials have recognized for
some time that this is a contentious issue but have pointed out that they have little influence overmatters that fall within provincial jurisdiction.WT/TPR/M/53
Page 31
Does Canada recognize that the Liquor Control Board of Ontario's mark-up differential on
imported spirits exceeds any reasonable additional cost of service associated with handling
imported products in comparison with their domestic counterparts?
How will Canada ensure the cooperation by the province(s) concerned which is indispensable
for securing the proper implementation of the EC/Canada Agreement of December 1988?
Government procurement
Canada offered to cover sub-federal entities in all ten provinces, on the basis of commitments
received  by the provinces, with a final listing to  be provided within 18 months after the conclusion of
the GPA.  Canada's current position is that provinces continue not to be willing to allow the federal
government to make an offer in this area because of problems of access to the U.S. market.  We
continue to have difficulties in understanding the Canadian position of refusing access to EU suppliers
into its sub-federal market on the basis of problems encountered in the U.S. market.
Could Canada indicate the prospects for inclusion of its sub-federal procurement under the
GPA?
Canada's implementation in the TRIPs Agreement
The EU has serious concerns regarding several aspects of Canada's implementation of TRIPs.
Canada's list of customary names for wines does not seem to be in compliance with the
standstill provision of TRIPs Agreement (Article 24.3), since it appears that most of the names listed
would not have been in use in Canada prior to the entry into force of the Agreement.  In addition to
that, the inclusion of the names "Chianti" and "Port" in the list, seems particularly questionable since,
in the case of "Chianti", it had been protected under the Canadian Trademark Act and, in the case of
"Port", Canada had undertaken to protect this indication in its 1954 Agreement with Portugal.
Could Canada indicate how these names could be generic names for wines while they are
protected under the Canadian Trademark Act, in the case of "Chianti" and under the 1954
Agreement with Portugal, in the case of "Port"?
Financial services – banking
In 1998, the Task Force on the future of the Canadian Financial Services Sector has
concluded its works.  Could Canada inform us whether they intend to reform the foreign bank
branches entry regime following the recommendation of the Task Force?
In general, could Canada inform us of the conditions according to which foreign banks
branches will be allowed to operate?
Domestic reforms under the Agreement on Internal Trade
Canada has taken initiatives in the ongoing regulatory reform process and the conclusion and
expansion of the Agreement on Internal Trade.  In the 11 areas covered by the Agreement on InternalTrade, the federal and provincial governments undertook to reconcile their standards and standards-
related measures by harmonization, mutual recognition or other means.  There is not yet reconciliation
in areas such as alcoholic beverages as regards standards-related measures, natural resources
processing measures, transportation regulatory and standards-related measures and environmental
measures.  Apparently, distinct progress has taken place concerning the harmonization of standards inthe areas of alcoholic beverages and transportation.WT/TPR/M/53
Page 32
Could Canada give an idea about when this harmonization will be finished?
Safeguards
In a safeguards investigation, how does Canada determine the existence or "unforeseen
developments" as required by Article XIX, GATT 1994?
What conditions (e.g. price undercutting) are considered by Canada when making a
determination under Article 2(1) of the Agreement on Safeguards on the existence of increased
imports "under such conditions" as to cause or threaten to cause serious injury?
Please explain in detail the contents of th e "softwood lumber arrangement" between Canada
and the United States and provide the precise legal and publication reference.  How does Canada
justify this arrangement under Article 11 of the Agreement on Safeguards.
Anti-dumping
Article 11(1) of the Anti-Dumping Agreement requires the authorities responsible for anti-
dumping investigations to review the need for the continued imposition of anti-dumping duty "where
warranted" and "provided that a reasonable period of time has elapsed since the imposition of the
definitive anti-dumping duty".  Which circumstances do, in Canada's view, warrant such reviews,
particularly in the case of reviews initiated ex officio ?  What is, in Canada's view, a "reasonable period
of time" after the imposition of definitive anti-dumping duties?
Article 5(8) of the Anti-Dumping Agreement required immediate termination of the
investigation in cases where the dumping of margin is de minimis.  How does Canada determine the
existence of de minimis dumping margins (i.e. less than 2% of the export price)?  How does Canada
proceed in the case of enterprises which has cooperated during the investigation of an anti-dumping
case and whose dumping margin is de minimis ?
Article 5(10) of the Anti-Dumping Agreement requires that investigations shall in no case be
concluded more than 18 months after initiation.  Are there, in Canada's anti-dumping legislation and
procedures, any exceptions to this rule?
Is there, under Canada's anti-dumping legisl ation and procedures, any possibility not to
terminate a case within 18 months from initiation without the imposition of measures (includingundertakings)?
Is it possible to suspend an anti-dumping investigation?  If so, in which circumstances and for
how long (maximum period of time)?
Please provide further detailed information on the content and state of play of the
amendments to Canada's anti-dumping legislation which were put to the Parliament in 1998.
Subsidies
The EU has obtained information to suggest th at the Government of British Columbia has
granted substantial subsidies to the pulp mill of Skeena Cellulose Inc. at Prince Rupert.  In particular,
the EU understands that British Columbia has so far provided Can$329 million in aid to Skeena
Cellulose since March 1997, when the company filed for bankruptcy.  British Columbia has now
become the majority shareholder in Skeena Cellulose Inc.WT/TPR/M/53
Page 33
Could Canada provide further information on the nature of the subsidies in accordance with
Article 25.8 of the WTO Subsidies Agreement?
QUESTIONS BY HONG KONG, CHINA
Secretariat Report (WT/TPR/S/53)
Foreign investment regime
As stated in the Secretariat Report, the Canadian Government maintains some review
requirements which will apply if the asset value of the Canadian business acquired by non-Canadian
exceed a certain limit.  In our view, such a sc reening mechanism is not conducive to investment
liberalization and attracting FDI into Canada.  Given that, as set out in the Report, no investment
proposals have been formally disallowed since the Act came into effect, will the Canadian
Government take progressive steps to relax or remove these requirements and if so, what are the
details of these plans? (pp. 15-16, para. 10).
As indicated in Canada's horizontal commitments, direct acquisition by WTO Members of a
Canadian business whose assets exceed a certain monetary amount (Can$153 million in 1994) is
subject to approval and must satisfy the "net benefit to Canada" requirement.  We would like to know
whether Canada has any plan to review and to relax this limitation (pp. 15-17, paras. 9-13).
Export subsidies
It is mentioned that at the sub-federal level, Government assistance to the non-agricultural
sector may take the form of export subsidies.  We should be grateful if Canada would provide more
information on such subsidy programmes.  What ar e the view of the Canadian Government on these
programmes in the light of its obligations under the WTO Agreement on Subsidies and
Countervailing Measures?  Is there any plan to eliminate these programmes? (p. 56, paras. 71-73).
Technical standards and regulations
It is mentioned that one of the major aspects of SCC's international activity over the past two
years has been to establish mutual recognition agreements with the EU, Mexico and the United States
on a range of products and services.  Given that bilateral and plurilateral MRAs are essentially
conditioned upon reciprocity, would Canada cons ider similar arrangements on a unilateral or
multilateral basis?  Are there any steps taken to ensure that they will not become indirect barriers to
trade for third parties? (p. 60, para. 88).
Sanitary and phytosanitary actions
We note that after the consolidation of all federally mandated food inspection and quarantine
services into Canadian Food Inspection Agency (CFIA), the responsibility for food safety policy and
risk assessment for SPS purposes, among others, re mains with Health Canada rather than CFIA.
Would like to know the reasons for such a division of responsibilities?  Is Health Canada a centralgovernment body?  In conducting risk assessments, will relevant parties outside Health Canada
including the stake holders be consulted?  Are there any mechanisms in place in the CFIA or Health
Canada to ensure that Canada's obligations under the SPS Agreement would be fully met in every
individual case? (p. 63, para. 95).WT/TPR/M/53
Page 34
Financial services
We note from Canada's Schedule of Commitments that public monopoly exists in the
provision of motor vehicle insurance in several provinces.  Would like to know whether Canada has
any plan to liberalize this sector (pp. 97-100, paras. 56-70).
It is mentioned that the Canadian Government has introduced a new regime that would allow
foreign banks to branch directly into the country.  While this decision has already been incorporated
in its Schedule of Commitments, the enabling legislation to introduce this new branching regime has
been delayed.  What is the expected time-frame for the adoption of legislation and the implementation
of the new regime? (p. 99, para. 65).
Professional services
It is stated that in order to address some of the trade barriers created by Canada's
decentralized regulatory system on professional services, the Agreement on Internal Trade is seekingmutual recognition and reconciliation of occupational standards across provinces.  Would like to
know more details about the plan, in particular whether differences that may exist among provinces in
the mutual recognition mechanism for foreign qualifications, experience, expertise, licence etc. would
also be reconciled (p. 108, para. 94).
We note that the most common restrictions in professional services include limitation in
foreign participation, national requirement of directors, residency requirements and restriction on
legal form.  Is there any plan to relax these limitations (pp. 108-109, paras. 96-97).
We note that foreign law firms may establish in Canada only in the form of proprietorship or
partnership except in a few provinces where incorporation is permitted.  Would like to know whether
local law firms are also subject to the same requirement (p. 111, para. 105).
It is mentioned that incorporation is permitted in Alberta, British Columbia, New Brunswick
and Nova Scotia for the provision of public accounting services.  Besides, in Alberta and New
Brunswick, only locally qualified professionals are allowed to incorporate.  However, Canada's
schedule of commitments on accounting, auditing and bookkeeping services only states that
commercial presence must take the form of sole proprietorship or partnership.  Would Canadaconsider reflecting the above provisions on incorporation in its schedule of commitments? (p. 112,
para. 109).
QUESTIONS BY JAPAN
Secretariat Report (WT/TPR/S/53)
Regional and bilateral arrangements
The FTAA is a regional trade agreement which includes members of developing countries.
Japan understands some of the agreements within Latin American countries, which are all developingcountries, are established under the enabling clause.  However, the FTAA includes members of
developing countries such as Canada, so that the FTAA should be established in full conformity with
Article XXIV of the GATT.  Could Canada confirm that the FTAA be established in full conformity
with the WTO Agreements, such as the duties and other restrictive regulations of commerce be
eliminated on substantially all the trade within 10 years? (para. 34, p. 23).WT/TPR/M/53
Page 35
Investment
It is reported that significant investments are reviewed by Industry Canada if the asset value
of the Canadian business being acquired exceeds Can$179 million and that they are judged by criteria
such as their impact on competition, productivity, co mpatibility with national and provincial policies,
and the participation of Canadians (para. 10, p. 15).
- Please explain the details of the criteria.
- What action is taken by the authority when investments do not meet the criteria;  for example,
if the authority decides that a certain investment does not meet the criterion of productivity?
It is reported that various investment restrictions maintained at provincial level affect foreign
participation and details are explained in Box III.4 of the Secretariat Report for the Trade Policy
Review 1996 (para. 13, p. 17).
- Please explain if there has been any lift or deregulation on restrictions listed in Box III.4 of
the 1996 Secretariat Report.
- Please explain further plan for lifting or deregulating these restrictions.
Softwood lumber arrangement with the United States
It is reported that in the latest arrangem ent with the United States on softwood lumber,
concluded in April 1996 for a five-year period, Canada undertook to introduce a tariff quota on itssoftwood lumber exports to the United States (par a. 2 (p. 35), para. 35 (p. 44), para. 50 (p. 49)).
- The purpose of this measure is clearly to pr otect the United States' lumber industry and, as
such, this measure seems to constitute export restrictions that are prohibited under
Article XI:1(b) of the Agreement on Safeguards.  However, it is reported in para. 50, p. 49, of
the Secretariat Report that, in the view of the Canadian authorities, the softwood lumber
arrangement does not infringe the WTO Agreement on Safeguards, nor is it covered by any
notification requirements under the WTO.  Please explain why Canada is of the view which is
reported above.
- The tariff quota on softwood lumber exports is applied to trade between Canada and the
United States which are both members of the NAFTA.  Please explain the conformity of themeasure with Article XXIV of the GATT, which stipulates that a free-trade area shall be
understood to mean a group of two or more customs territories in which the duties and other
restrictive regulations of commerce are eliminated on substantially all the trade between the
constituent territories in products originating in such territories.
Tariffs
As reported in para. 7, p. 36, a new Customs tariff was introduced in 1998.  This was done
without modification of the Schedules and, thus, although only for a few tariff lines, applied tariffrates on some products are beyond the bound tariff rates.
- Has Canada entered into negotiations under Article XXVIII of the GATT with any Member?
- When will Canada submit its draft Schedule for verification by Members?WT/TPR/M/53
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According to Table III.1, p. 39, most of the tariff lines under Chapter 89 are unbound and
applied tariff rates are at a high of 25%.  Japan is of the view that applied tariff rates on industrial
products of Canada, as one of the developed countries, should be as low as possible.  Does Canada
have any intention to lower the applied tariff rates on these products?
Import prohibitions
It is reported that a prohibition on commercial imports of used vehicles remains in place,
except on those imported from the United States as well as from Mexico to be liberalized.  Please
explain why Canada prohibits imports of used vehicles (para. 41, p. 46).
Anti-dumping
In injury findings, Sections 38 and 42(3) of the Special Import Measures Act (SIMA) allows
cross-cumulation of the effects of dumping and subsidies imports.  Please explain the basis of this
provision in light of the Anti-Dumping Agreement (paras. 52-57, p. 51).
Section 16(1) of the SIMA also allows the selling prices of other sellers in the domestic
market to be used to determine the normal value.  Please explain the conformity of this provision with
Article 2.2 of the Anti-Dumping Agreement.
Local-content, performance and purchase requirements
It is reported that the British Columbia Forestry Act requires a ministerial permit to export
unprocessed wood or woodchips out of the province and that issuance of the permit is conditional on
sufficient supplies for the provincial processing industry.  Please explain the conformity if this
measure with the WTO Agreements (para. 69, p. 56).
Competition policy
It is reported that recent Canadian-U.S. cooperation includes the establishment of a task force
in 1996 on cross-border deceptive marketing practices (paras. 113-115, pp. 68-69).
- Please explain the competence of the task force.
- Please also explain examples of actions which were already taken by the task force against
deceptive market practices.
It is reported that a cooperation agreement was finalized between the Competition Bureau of
Canada and the European Commission in June 1998 and that it was expected to come into force in
early 1999 following approval by both parties.  Please outline the content of the cooperation
agreement, particularly the difference from the Canada-U.S. Agreement.
Regarding the cooperation agreements both with the United States and with the European
Commission, please explain the detailed schemes of cooperation on the extra-territorial application of
competition law.  Please also provide information on actions taken with regard to extra-territorial
application on the basis of the Canada-U.S. Agreement.
Intellectual property rights
It is reported that a review of the amendments introduced by Bill C-91 to the Patent Act in
February 1993 introduced two exceptions to patent infringements, allowing (i) the use or sale of a
patented invention for the development and submission of information required by law;  and (ii) theWT/TPR/M/53
Page 37
manufacture of inventions during the applicable period provided for by the regulations for the
manufacture and storage of articles intended for sale after the patent term expires (para. 138, p. 77).
- Are these exceptions general clauses applicable in all sectors including pharmaceuticals
sectors?  If so, please explain in which sectors these exceptions were actually applied to or are
expected to be applied to.
- Please explain which act falls to 'sale of a patented invention for the development and
submission of information required by law'?
- Please explain how the above-mentioned exception conform to the TRIPS Agreement?
- Para. 138 states that the amendments allows the manufacture of inventions  during "the
applicable period provided for by the regulations" for the manufacture and storage of articles
intended for sale after the patent term expires.  On the other hand, it is reported in the 4th
paragraph of Box III.4 that a Notice of Compliance (NOC), which enables a company to
proceed with manufacture and marketing of a drug, will not be issued until the expiry of all
patents relevant to the particular generic drug.  Please explain the relationship between these
two descriptions.  When is a company allowed to manufacture the generic drug practically?
Are there any distinction in applying patent legislation between manufacture of articles for
'storage ' and manufacture of the drug for  'marketing '?
Agriculture and agri-food industries
Do the import amounts of the tariffied products reach their minimum access levels?  If not,
please explain:
- on which products minimum access levels are not filled;
- what are the fill rates for these products;  and- why minimum access levels are not filled (para. 16, p. 86).
Please explain why tariff quotas on some products are not filled?  (Table IV.5, p. 87).
Japan understands that Canada plans to phase-out the Federal Dairy Subsidy by
February 2002 while maintaining the price support scheme.  However, in February 1998, there was a
rise in target price of milk for processed products and support price of dairy products.  This seems toindicate that it is difficult to carry out the plan to phase-out the Federal Dairy Subsidy by
February 2002.  Please explain how Canada is going to phase-out the Federal Dairy Subsidy (para. 25,
p. 89).
Regarding the Net Income Stabilization Account (NISA), Japan understands there are
problems such as insufficiency for guaranteeing the income, particularly for young farmers, because
the NISA is based on a reserve fund.  Japan also understands the NISA falls in the category of amber
subsidies in the Agriculture Agreement.
- Does Canada intend to review this measure?  If so, please explain how Canada is to review it.
Textiles and clothing
Japan understands that Canada met the requirements of the ATC in its product integration
programme for the first two stages.  However, Canada still maintains a number of MFA tradeWT/TPR/M/53
Page 38
restrictive measures which makes its integration not substantial.  Japan is of the view that it is
important for Canada to integrate its MFA measures and to reduce quantitative restrictions in a
substantial manner in order to ensure an equal and fair condition for competition between the WTO
Members.  Japan is concerned about the maintaining of the MFA which does not conform with the
spirit of the WTO Agreement aimed at ultimately liberalizing trade without exception and whichcauses barriers to improving market access.  Japan would like to encourage countries, including
Canada, that maintain MFA trade restrictive measures to make further efforts in liberalizing their
markets in a substantial manner.  Please explain Canada's view on this point (para. 55, p. 97).
Banking Services
Canada committed in the Financial Services negotiations to allow foreign banks to branch
directly into the country by June 1999. The recommendations of the Task Force on financial services,
which called for the rapid adoption of legislation for foreign bank branching, was released inSeptember 1998. However, no specific timetable fo r adopting new branching legislation had been
defined. Japan would like to have information on timetable and prospect for the necessary legislation
(para. 65, p. 99).
Telecommunications
As part of the WTO Basic Telecommunications negotiations, Canada committed to eliminate
restrictions on foreign ownership in some areas starting from 1 October 1998. It is reported that, on
1 October 1998, Canada liberalized its regulations including allowing 100% foreign ownership for
mobile satellite services (paras. 82 and 83, pp.103 and 104).
- Please explain on details of the deregulation on 1 October 1998.
- Please explain Canada's plan for further liberalizing the telecommunications market, to meet
Canada's Commitment on basic telecommunications.
Professional services
(a) It is reported that all professionals who wish to practice in Canada must be licensed or
accredited by provincial professional bodies and that each professional body sets its own
rules, regulations, and standards for profession al practice. Although umbrella organizations at
the national level oversee these provincial bodies to minimize regulatory gaps, such
procedures that require to apply for license or accreditation are very complicated. Does
Canada have any plan to simplify and even unify the procedures to obtain license or
accreditation? (para. 97, p.108).
(b) It is reported that a mutual recognition agreement for temporary and permanent licensing of
engineers was signed in June 1995 between the professional representatives of the NAFTA
parties and that professional associations from the NAFTA countries signed a Foreign LegalConsultant Accord in July 1998, allowing lawy ers from any NAFTA countr y to act as foreign
legal consultant in the region. It is also reported that, on accountancy services, a bilateral
agreement on the mutual recognition of qualifications was reached in the context of the
Canada-U.S. Free Trade Agreement (para. 99 of p.109, para. 111 of p.112).
Does Canada have any plan or intention to conclude a mutual recognition agreement in the
professional services sector with any other Member?WT/TPR/M/53
Page 39
Legal services
According to the Secretariat Report, foreign lawyers may have their licenses or qualifications
as lawyers in Canada, and not as foreign legal consultants, evaluated by the National Committee on
Accreditation or equivalent provincial accreditat ion bodies in Alberta and Quebec (para. 103, p.110).
- Please outline the above mentioned scheme.- Please explain the actual results of such licensing or qualification.  How many foreign
lawyers were licensed or qualified in which province under the above mentioned scheme so
far?
Accountancy
It is reported that Canada has indicated that in  principle it is prepared to commit itself to the
disciplines established in the guidelines for mutual  recognition agreements adopted by the Council for
Trade in Services in May 1997 (para. 110, p.112).
- Did Canada concluded a mutual recognition agreement with any Member based on the
guidelines?
- Does Canada have any plan to conclude a mutual recognition agreement with any Member
based on the guidelines?
QUESTIONS BY THE REPUBLIC OF KOREA
Auto pact
According to para. 41 of p. 93 of the Secretariat Report, Canada's auto regime, the Auto pact,
is said to be inconsistent with its obligations under the WTO, such as MFN treatment and TRIPS.
- What is the Canadian position on this issue?
Para. 41 of p. 93 mentions that the Government of Canada will continue to pursue further
trade liberalization through the WTO, APEC and the Free Trade Agreement of the Americas.
- How do the Canadian authorities plan to reconcile such liberalization with the provisions of
the Auto pact?  Will Canada consider abolishing tariffs on all imported cars or will it enlarge
the benefit of the Auto pact members to other specific countries?
Para. 36 of p. 92 of the Secretariat Report says  that "imports of second-hand vehicles are only
permitted from the United States.(…)  According to the authorities the prohibition of imports of
second-hand vehicles from all countries except the United States is being maintained as an instrument
for any future trade negotiations".
In Canada, the import of recycled automobile tyres is allowed only for recycled American-
made tyres – a provision in line with the Canadian Vehicle Safety Act and Motor Vehicle Tyre Safety
Regulations.  This limitation seems questionable given the new tyres imported by Canada from other
countries than the United States are being recycled inside Canada.
- What is the basic policy concerns in this area?  Is this policy, in Canada's view in conformity
with MFN treatment?WT/TPR/M/53
Page 40
Anti-dumping issues
Para. 61 of p. 53 in the Secretariat Report reads that "Under the Special Import Measures Act
(SIMA), all measures are rescinded at the end of a five-year period unless a request for a review is
made to the Canadian International Trade Tribunal (CITT).  Nevertheless, duration of actions under
Canada's legislation has been a subject of concern for trading partners.  For example, (…) the anti-dumping measure on photo albums from the Republic of Korea, rescinded in 1998, dated from
January 1975.  In general, 20% of measures have been in place for ten years or more."  For example,
anti-dumping measures concerning the Republic of Korea, in particular, Carbon Steel Welded Pipe
(since 1984), Oil and Gas Well Casings (since 1986) and Self-Adhesive Leaves for Photo Albums
(since 1975), have been applied by Canada for a long time even though the portion of Korean
products in the total imports of these merchandises into Canada is negligible.
According to the Canadian Special Import Meas ures Act, the anti-dumping determination
shall take into account whether the amount of import of the item in question is negligible – e.g., less
than 3% of total imports of the item.  However, the 3% criterion does not seem to apply in practice
during reviews.
- Is this minimum market share provision referred to when reviewing decisions?  Is there a link
between the absence of the 3% criterion duri ng the reviews and the longer duration of AD
action?  What are the reasons for maintaining the AD duties on the aforementioned products?
Government procurement
According to para. 127 of p. 73 of the Secretariat Report, conditions of foreign access to
Canada's procurement market have not changed markedly since the last Trade Policy Review in 1996.
Although Canadian authorities made commitments at the Marrakesh Conference that the GovernmentProcurement Agreement shall be applicable to the pr ovincial level, such commitments have yet to be
fully implemented.
- How many provinces have expressed their intention to join the GPA so far?  What is the
schedule and timeframe adopted by the Canadian authorities to conclude this matter?
Trade statistics
Para. 16 of p. 8 of the Secretariat Report suggests that the recorded value of Canada's exports
to Mexico may be underestimated, perhaps by as much as 50% due, for example, to goods from
Canada being re-exported through the United States and not measured as exports to Mexico.  To
remedy the problem, the statistical agencies of the three NAFTA countries are currently working at
reconciling their trade data.
- What would be the main reason, in Canada's view, for this difference?  What are the
calculating methods and base of trade data used?  With how many countries does Canadahave regular meetings on trade data coordination?  What are the criteria referred to when
selecting counterparts?
QUESTIONS BY NEW ZEALAND
Trade policy by sectors (WT/TPR/G/53, para. 12, p. 8;  WT/TPR/S/53, Pt. IV, para. 3, p. 81)
Canada's report notes that "Canada will contin ue to pursue further reduction of traditional
barriers to trade – industrial tariffs, quotas, and import restrictions – and the elimination of
unwarranted non-tariff trade barriers".WT/TPR/M/53
Page 41
The Secretariat observes, however, that agriculture and other sectors have escaped
international reforms and that domestic industries including dairy, poultry and eggs, remain subject to
supply-management regimes and prohibitive out-of-quota customs duties.
How does Canada plan to incorporate the agriculture sector into its programme of further
liberalization and reduction of trade barriers?
Could Canada please explain the Canadian Dairy Commission's right to import butter in bulk
form only against the need to eliminate non-tariff trade barriers?
Tariffs (WT/TPR/S/53, Summary Observations, paras. 6-7, p. x;  Chart III.1, p. 38)
The Secretariat notes that in spite of the simplification and rationalization of the Canadian
Customs Tariff in 1998 and the early implementation of tariff reductions originally planned for
January 1999, tariff protection remains significant for a number of imported products including food
products.
How does Canada intend to address the uneven pattern of tariff reduction which has resulted
in a relatively low simple average tariff of 7.8% compared with its high out-of-quota tariff peaks, for
example over 300% for butter?
Trade policies and practices by measure (WT/TPR/S/53, Pt. III(1), para. 2, p. 35)
While Canada's use of anti-dumping measures have declined in the past two years, it is noted
that anti-dumping remains a potentially significant sectoral trade barriers with the measures currently
in force with regard to steel imports.
Does Canada have any plans to review its use of anti-dumping in the steel sector?
The Secretariat Report notes that some export promotion and support initiatives are being
carried out at the provincial level.  Could Canada please provide further information on the proposedbeef check-off scheme and its relation to export promotion? (Pt. III(3)(iv), para. 84, p. 60).
QUESTIONS BY NORWAY
As a member of the NAFTA, which covers a substantial part of the economic relations
between the three members, how does Canada as a federal state ensure provincial compliance with the
NAFTA provisions?
Is any comprehensive overview with respect to provincial legislation which is still not
brought in compliance with NAFTA provisions provided for?  If not, when does the Canadian
Government foresee the conclusion of such an exercise?
With respect to standardization, could the Canadian Delegation please elaborate on the
following:
- The extent of influence by national, provincial and local Government on what to standardize
as well as the contents of new standards.
- On what level and by which bodies are decisions made with respect to initiating new
standardization projects as well as their final outcome?
- To what extent does Canada cooperate with the EU in the field of standardization?WT/TPR/M/53
Page 42
In the field of pricing policies in medicines, involving the Patented Medicine Prices Review
Board, please provide some information on price-levels with respect to much-traded medicines in
Canada as compared to relevant price-levels in EU countries, e.g. in Sweden, Germany and the United
Kingdom.
Canada has, on a voluntary basis, chosen to include maritime transport in its GATS
Schedules.  On this background, it would be appreciated to obtain some information as to the reasons
for not having maritime transport included as an integral part of the Secretariat Report.
It is recognized that Canada, during the last couple of years, has not initiated countervailing
duty investigations, and that there has been a decline in the numbers of anti-dumping measures in
force.  Could Canada confirm that all anti-dumping measures automatically will be rescinded after
five years of application unless "sunset" reviews are requested?
QUESTIONS BY PHILIPPINES
The Philippines submits to Canada the following questions concerning the proposed
regulation on "Good Manufacturing Practices".  This is a matter which, in our understanding, was not
discussed in either the Secretariat or the Canadian Government Report but which is of interest to a
developing countries like the Philippines, in particular in respect of trade in processed food.
- What are the institutions in charge of developing the proposal (e.g. Health Ministry, Canadian
Food Inspection Agency)?
- What are the objectives and modalities of the proposal?  What specific sectors or industries
are likely to be affected?
(a) Will "Good Manufacturing Practices" relate to process and production methods?
(b) Will it also related to conformity assessment procedures?
- How can Canada ensure that the proposal will be consistent with key principles such as non-
discrimination and transparency?
- How does Canada envisage giving effect to Articles 11 and 12 of the Agreement on Technical
Barriers to Trade in the proposal?
QUESTIONS BY SWITZERLAND
Government procurement
Please explain in what instances opportunities for improved market access which result from
the extension of procurement disciplines to "MASH" entities under the Agreement on Internal Trade
(AIT) may benefit foreign suppliers (para. 127, p. 73).
Copyright
Please specify the exceptions under the new Copyright Act, which allow the parallel
importation of works in general and of books in particular (para. 144, p. 79).WT/TPR/M/53
Page 43
Financial services
Para. 63-67 Branching, (p.p. 99-100):  It seems that legislative reforms aimed at allowing
foreign banks to establish branches directly in Canada are somewhat delayed (pp. 97-101).
- Could Canada indicate the status of the reform?
- Will Canada be able to take commitments under WTO for direct branching by the foreseen
deadline of June 1999?
- Are the criteria for the branching regime already known?
- In particular, is Canada foreseeing a capital requirement for foreign branches?
When are decisions on the two bank mergers from the relevant authorities expected?
(para. 63, p. 99):
Will Canada lift restrictions on cross-border supply of reinsurance services in the near future?
(para. 69-70 Insurance, p. 100):
Telecommunications
Could Canada describe the progress and content of the recent liberalization measures (as
per 1 October 98) in the telecommunication market? (pp. 101-104).
Professional services
Does Canada see any particular professional services sector which could further be opened
within the coming GATS negotiations? (pp. 107-114).
QUESTIONS BY THE UNITED STATES
Agriculture (Section III(21, 72, 98-102, 121-125) and Section IV)
Although most Canadian tariff lines in the U.S.-Canada Free Trade Agreement are zero,
technical barriers for U.S. products remain s significant non-tariff barrier to Canadian markets.  Inaddition, out-of-quota tariffs for dairy and poultry are inconsistent with the spirit of NAFTA and the
U.S.-Canada Free Trade Agreement.  Non-tariff barriers, such as Canada's inter-provincial agreement
that does not cover agriculture, and the excessive and/or unnecessary, sanitary and phytosanitary
requirements for livestock, grain and horticultural products are examples of Canada placing limits on
the opportunities provided by the low or zero duty.
Under the NAFTA, agricultural export subsidies are prohibited between Canada and the
United States.  However, the lack of transparency of operations of the Canadian Wheat Board (CWB),
provincial subsidies that are not notified, and the modification of Canada's dairy export programme
make it difficult to determine whether Canadian exports to the United States or third countries are
unsubsidized.  For example, the United States remains extremely concerned about export practices
carried out by Canadian state trading enterprises.  Some of these practices include price discrimination
and a system of cross-subsidization and multiple pricing with significant government involvement.
As Canada admitted, removing barriers to economic expansion by eliminating distortions in
internal trade have not taken place in agriculture.  Despite reviews and reports, Canada has notWT/TPR/M/53
Page 44
removed internal technical barriers affecting trade with the United States in potatoes, onions,
pumpkins and other commodities.
- Could Canada clearly state when it will implement its Federal requirements for agricultural
products under its inter-provincial trade agreement?
- Could Canada discuss all the provincial programmes affecting agriculture that are not notified
to the Committee on Agriculture?  Could Canada explain how it can assert that its subsidies
have decreased, given that it does not notify all its provincial programmes (Section IV(ii)).
Specifically, its notification of potatoes, which is de minimis , does not contain several direct
and indirect provincial subsidies to producers and processors.
- What statistical evidence does Canada have with  respect to the filling of its TRQ in fluid
milk?  What evidence can Canada present to show that the TRQ was filled?
(Section IV(iii)(7)).
Canada is calling its new legislative amendment, that removes the CWB's status as a Crown
Corporation, as market oriented or market-based.  However, the CWB continues to be a single desk
seller and buyer (Section IV(iv)(a)).
- Could Canada explain how minor legislative changes in the administration of the CWB make
it market-based or oriented?
- Does the C-4 legislation effect any changes with respect to the CWB's status as a single desk
seller, or the Canadian Government's ability to underwrite CWB operations, including pool
deficits and export credit guarantees?
- Could Canada explain why and what type of export licences non-CWB regions require?
With respect to dairy we remain extremely concerned by Canada's apparent circumvention of
its WTO commitments (Section IV(iv)(b)).
- Could Canada explain how it can justify characterizing its export programmes as non-
subsidized after making only minor changes?
Subsidies
Page 35, Section 3 states that efforts have been made to reduce federal subsidies to all sectors
of the economy, however, producers and exporters continue to be supported through grants, financing
and tax exemptions at the provincial level.  Page 74, Section 116 further states that local subsidies
have increased in relative terms from 8% of total government assistance in 1991 to 15% in 1996.
- What efforts have been made to encourage the elimination or reduction of provincial-level
subsidy programmes?
Page 80, Section 121 states that Canada's recent notifications did not include specific
subsidies extended at provincial level or subsidies granted by Crown corporations.  However,provincial programmes funded in combination with federal contributions were included.
- It is the U.S. position that sub-federal level programmes that meet the definition of a subsidy
are notifiable under the SCM Agreement.  We recently submitted an extensive notification of
our own sub-federal programme.  We understand the difficulties of coordinating such a
process, but it is important that there be better compliance with this obligation.  Please explainWT/TPR/M/53
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why the provincial-level subsidy programmes have not been in Canada's notifications.  Does
Canada have intentions to include provincial-level subsidies in future notifications?
Page 65, Section 84 states that export promotion and support initiatives are taken at the
provincial level.  Detailed information about individual initiatives is highly dispersed and not
available on a consistent basis, although it appears most programmes generally focus on tradefacilitation rather than direct financial support.  The example cited is the export development activities
of Quebec's Ministre de l'Industrie, du commerce, de la science et de la technologie (MICST), which
provides project financing, contract negotiation, risk assessment and legal work.
- Have any efforts been made to make information about provincial-level initiatives more
transparent or accessible?
Films and video (Goods and services)
According to Canadian statistics, Canada's exports of cultural goods, including films and
video products, soared 83% between 1990 and 1995.  The United States continued to be Canada's
most important market, having received 84% of cultural goods exported in 1995.  Nevertheless, we
are concerned to learn that there is consideration being given in Canada to a new proposal to increase
discrimination against imported film products.
- In light of Canada's soaring film exports, would it not be more productive for Canadian film
makers to join with the U.S. in a common undertaking to open third country markets to film
exports rather than in considering the imposition of further restrictions on American filmed
entertainment product?
- In what other ways have measures to protect Canadian cultural industries been reinforced
since the last report?
- Please update us on the CRTC's review of Canadian content requirements for television and
radio.  What changes to the current policies are under consideration?
- Please update us on the National Film Board review of the Canadian film sector.  What
changes to the current policies are under consideration?
Other services
Canadian provinces impose residency requirements for some professions, e.g., nurses.
- When do the provinces contemplate removing these requirements?
Intellectual property rights
Canada has enacted legislation to modernize its copyright law in several respects, including
by extending a neighbouring rights regime to authors, performers and producers of sound recordings.
Under this new system, royalty payments generated from the public performance of sound recordings
will not be distributed on the basis of national treatment, but will only be allocated to other signatoriesof the Rome Convention, to which the United States is not a party.  As the principal producer of sound
recordings that are broadcast in Canada today, the United States is concerned about what, if any,
benefits U.S. rights owners will enjoy under the new legislation.
The United States would like to call attention to the fact that the legislation would also
impose a levy on the sale of blank tape audio cassettes and equipment to compensate creators forWT/TPR/M/53
Page 46
unauthorized home-copying.  The United States is concerned, particularly in light of the fact that U.S.
artists drive the market for unauthorized recordings, that U.S. rights holders will not be remunerated
from the blank tape levy on a national treatment basis.
- Does Canada intend to allocate royalties generated from the blank tape levy to U.S. authors,
performers and producers on a national treatment basis?  If not, how would Canada reconcilethis practice with its obligations under Article 3 of the TRIPS Agreement to provide national
treatment to nationals of all WTO Members?
- What is the status of Canada's efforts to simplify and speed up the opposition procedure for
trademarks?
Investment
Investment screening:  We continue to urge Canada to end the screening of foreign
investment.  We also would like to know if Canada is reviewing the current threshold level forscreening under the Investment Canada Act.
- What is the current threshold and are there any plans for raising the amount?
- Canada, has on several occasions, required foreign investors to rework their proposals to meet
the "net benefit" test.  What changes has Canada required of investors?
- Foreign ownership can be limited only on a case-by-case basis .  What is Canada's record on
allowing foreign ownership of privatized assets?  Could Canada provide information on the
current effort to privatize or franchise certain assets in the passenger rail sector?  Under what
conditions may foreign investors participate in those efforts?
Telecommunications
Canada has limited its WTO commitments with respect to free and subscription television and
radio broadcast services, the 46.7% limitation on foreign investment in the rest of the
telecommunications sector appears unnecessary to Canada's efforts to promote its cultural identity.
- Insofar that Canada's WTO commitments to al low foreign investment in the telecom sector
are arguably the weakest among OECD countries, and weaker than those of many countries
outside the OECD, what is Canada's outlook with respect to the removal of this restriction inthe services negotiations that begin in 2000?
To some extent, it may be true that Canada's previous unwillingness to make better foreign
investment commitments in the GATS has been driven by the desire of its cable television and
broadcast industries to have access to foreign investment equal to that of telephone companies and
other firms in the telecommunications sector.
- How does Canada plan to encourage the convergence of these industries, which technological
developments seem to make inevitable, without putting itself at a permanent disadvantage inraising investment capital compared to other countries.
Procurement
Para. 120 of WT/TPR/S/53 indicates that 35% of contracts exceeding Can$25,000 that are
awarded by federal entities are awarded through non-competitive tendering procedures.  This
percentage seems extremely high.  Available statistics indicate that the most frequent justification forWT/TPR/M/53
Page 47
federal entities' recourse to non-competitive procedures is that "the products or services can be
supplied only by a particular supplier and no reasonable alternative or substitute exists".  A large
percentage of such procurements are for "general purpose automatic data processing equipment" and
"information processing and related telecommunications services".
- Can Canada explain in more detail why its federal entities have such difficulty identifying
qualified suppliers in these highly competitive sectors?
- Could Canada provide additional information relating to the review process mentioned in
para. 129 of WT/TPR/S/53, which states that purchases worth more than Can$2 million are
reviewed to assess "the opportunities for achieving socio-economic benefits in Canada"?
- In particular, what types of "socio-economic benefits" are addressed in this review?  Are
specific socio-economic objectives identified and published?  What types of measures are
normally used to achieve those benefits?
- Are related requirements normally included in  the evaluation criteria listed in tendering
documentation?  Does this review result in the imposition of mandatory conditions related to
the awarding of contracts?
Labor standards
The Canada-Chile Free Trade Agreement (CCFTA) and its two parallel agreements on the
environment and labour cooperation entered into force in July 1977.  We understand that these
agreements are almost identical to the NAFTA Agreements.
- We would be interested in learning about any differences in your experiences under the two
agreements on labour cooperation.  Have the agreements had any positive results regarding
labour matters and in developing public support for trade agreements?WT/TPR/M/53
Page 48
ANNEX II
RESPONSES SUPPLIED IN WRITING BY THE CANADIAN AUTHORITIES
QUESTIONS FROM THE FIRST DISCUSSANT
(H.E. Ambassador K.G  Anthony Hill)
Canada's unemployment rate fell to 8.0% in November 1998, which is close to the previous
cyclical peak of 7.5% in 1989.  Employment growth averaged 1.7% per annum over the 1993-1997
period, the second highest in the G-7.  Dynamic export performance has been an important
contributing factor to this strong employment  record.  The level of unemployment rates in different
countries cannot be compared directly as these are influenced by a wide range of domestic
institutional factors,  including regional, structural, and frictional factors.  The very significant
restructuring within Canada's economy and public sector restraint contributed to the rise of Canada's
unemployment rate in the early 1990s.  These short-term adjustment costs, however, are now beingrecouped in the form of robust employment growth  in the context of a dynamic and internationally
competitive economy.
The depreciation of the Canadian dollar over the past year demonstrates the benefits of a
flexible exchange rate.  The depreciation has played  an important "shock absorber" role in spreading
the burden of the adjustment of the Canadian economy to the declines in commodity prices and theAsian crisis.  Although the depreciation has helped support incomes in the resource sector and
supported Canadian production and exports during these tumultuous financial times, it is certainly not
the only reason for Canada's global competitiveness.  Instead, Canada's international competitiveness
can also be attributed to such factors as a highly  educated work force, a sophisticated communications
and infrastructure base, and solid economic fundamentals like a low inflation environment and fiscaldiscipline.
The TPR process provides an opportunity for the various Ministries and Agencies involved to
look at their own issues in the context of Canada's broader policy making.  There is a factor of  the
need to 'justify' policies or practices in such asse ssments that indicates a value added in the process.
The examinations can indicate areas where there may be gaps or the appearance of inconsistenciesthat can later be addressed by policy makers.  The heightened appreciation of the desirability of
transparency is one aspect where there has been a real impact.  There is no question that the
investment of time to prepare a proper policy review is extraordinary both in capitals and within the
WTO Secretariat.  In the context of the coming review of the TPR mechanism, we are prepared to
explore ways of streamlining the process while delivering on the real objectives.
The OECD reviews are focussed on economic policy and performance and have a trade
policy element as part of that to provide the full context.  The focus is on the results from applicationof a given policy approach and the purpose is for all to learn from that.  IMF Article Four reviews are
much the same but tend to be more technical and are not ordinarily published although we have just
done so.  The WTO TPR mechanism focuses on the trade policy regime and practices of the country
under examination, with an economic policy background for the sake of context.  As such, there is
room for each of these processes as the focus is somewhat different but largely complementary.
Given the complex institutional and regional economic differences across economies, any
"benchmark" of openness would be subject to question. For example, considerable north-south
inter-regional trade within Europe is internationa l trade because it crosses borders; in the US, it is
internal trade.  As a matter of fact, Canada has one of the most open and trade-oriented economies in
the world and has been one of the strongest supporters of an open rules-based international tradingsystem. As has been acknowledged by the OECD in  its 1998 Review of  Canada, trade opening has
been the centrepiece of Canada's growth strategy.  This speaks for itself.WT/TPR/M/53
Page 49
As a member of the WTO, and other international trade agreements, Canada has continued to
demonstrate its commitment to trade liberalization.  These international agreements contain
predictable and transparent rules which provide for the enhancement and maintenance of economic
growth. Canada's objective in the negotiation of such agreements is to work with other members to
achieve balanced and secure market access.  As a member of the WTO agreement on governmentprocurement, WTO working group on transparency, the working group on state trading enterprises,
the working party on GATS rules, as well as other WTO committees, Canada will continue to work to
develop rules and mechanisms to enhance our collective economic growth.
The plurilateral agreement has been instrumental in providing open, secure and transparent
procurement opportunities to the members of the WTO Agreement on Government Procurement. As a
plurilateral accord, the potential "openness" of the agreement has been limited. The Agreement has
opened up procurement markets of interest to Cana da but significant opportunities remain.  Canada
would encourage additional WTO members join the agreement and make their contribution to
liberalization and openness.
Canada's procurement notice system is very transparent as the result of the requirement to
advertise notices for procurement in the WTO-AGP, and its predecessor, the GATT code. Canada has
developed a cost effective electronic system for the advertising of government procurementopportunities.  Since October 1997, the federal government and seven provinces are using an Internet-
based electronic system for their procurement notices. This system has put Canada at the forefront of
the development of such technology. Canada was also instrumental in ensuring that the trade
agreements were negotiated so as to permit the use of an electronic tendering system, as well as the
more traditional paper-based approach.
The value of imports into Canada which receive duty-free treatment solely due to
CARIBCAN provisions necessarily reflects the fact  that a substantial amount of imports from the
beneficiary countries are already duty-free under Canada's MFN and GSP ("GPT") rates.  With
reference to free trade agreements, these contain provisions and concessions which have been
bilaterally negotiated on a reciprocal basis; their imp act is not, therefore, directly comparable to that
of certain unilateral tariff treatments which Canada grants to developing countries on a non-reciprocal
basis.
QUESTIONS FROM THE SECOND DISCUSSANT (H.E. Ambassador Pekka Huhtaniemi)
With respect to trade diversion, Canada has not increased tariffs or other regulations of
commerce vis-à-vis third countries as a result of FTAs and has, in fact, reduced or eliminated the
MFN tariff in recent years on a wide range of products -- for example, computer parts and original
equipment auto parts.  Looking at the actual trade flows, we note that the NAFTA partners' share oftotal Canadian imports has increased by approximately 3.5% in the period 1989 to 1997.  This
increase appears to have been a one-time jump, however, rather than a gradual increase.  Over that
period, the U.S.'s share expanded by 2-2.5% a nd Mexico's by 1-1.5%; however, since 1993, the
NAFTA partners' share has remained fairly constant. Looking still at the period 1989 to 1997, we see
that the shares of total Canadian imports actually increased from a number of other sources:  LatinAmerica rose from 3.9% to 4.4%, ASEAN from 1.2% to 2.2%, the Middle East from 0.6% to 0.7%,
and the developing countries as a whole from 11.8% to 13.6%.  In addition, the exports to Canada
from those groups have increased dramatically in  absolute terms--Latin America by 129%, ASEAN
by 258%, the Middle East by 147% and developing countries by 132%.  Eastern Europe, which saw
its share of total Canadian imports remain fairly constant over this period, nevertheless experienced anincrease in its exports to Canada of 130% in absolute terms.  By way of comparison, Canada's total
imports during this period increased by 101%.WT/TPR/M/53
Page 50
Canada would encourage other members of the WTO to join the WTO agreement on
government procurement.  The current review of the GPA is striving to simplify the provisions of the
existing agreement, limit exceptions and extend coverage. The results of this review may provide an
opportunity for some WTO-members to re-examine their position regarding their accession to the
WTO procurement agreement.  In addition, the WTO working group on transparency is alsoexamining a multilateral approach to transparency  provisions for government procurement.  The
WTO-working party on GATS rules is also examining the extension of procurement provisions under
that multilateral agreement. Canada would see benefits in moving discussions ahead in all of these
fora.
The Procurement Chapter in the AIT has provisions aimed at openness and transparency.  For
procurement covered by the agreement, procurement opportunities are to be known to suppliers
through the use of electronic tendering system, advertising in daily newspapers, or the use of sourcelists.  With respect to enhanced market access, there is no guarantee of access for foreign suppliers
though some provinces are open in practice.  Paragraph 136 correctly outlines that a foreign supplier
could in principle be eligible to tender for purchases covered by the AIT provided it qualifies as a
"Canadian supplier" and that other conditions of the procurement are met.  Paragraph 136 correctly
outlines the definition of a "Canadian supplier".
Canada as a significant exporter and importer of services understands the benefits of broad
liberalization of trade in services. Our experience with NAFTA has shown Canadian trade policy
officials the importance of transparency. Transparency is a key element in terms of assisting service
providers in determining their rights under a trade agreement. We also learned the benefits of a broad
domestic consultative process with both industry and larger society.
Canada's goal is to become the most connected nation on earth.  Canada's aggressive
implementation of commitments under the Agreement on Basic Telecommunications is an important
step to achieving that goal.  In eliminating routin g restrictions on Canadian telecoms traffic fifteen
months earlier than required under our GATS commitments, the Canadian regulator (CRTC) stated
that this "would assist in the rendering of reliable and affordable telecommunications services of highquality, enhance the efficiency and competitiveness of Canadian telecommunications on the national
and international levels, foster increased reliance on market forces, and respond to the economic and
social requirements of users."
Canada has also taken a leading role in the development of global electronic commerce.
Canada and the OECD hosted a Ministerial Meeting in Ottawa in Fall 1998, and Canada has been an
active participant in the WTO's Work Program on Electronic Commerce.  We believe that the latter
exercise should focus on the question of current coverage of electronic commerce by existingdisciplines of the WTO; this will allow WTO members to determine whether any further action is
necessary in the context of the WTO.
In order to determine our approach to these issues, the Government will undertake extensive
consultations with our stakeholders and the Canadian public.  The results of these consultations will
help define Canada’s interests in several areas, including audiovisual services, prior to the next roundof WTO negotiations.  Canada remains committed to the preservation of its cultural identity,
consistent with its international trade obligations.WT/TPR/M/53
Page 51
QUESTIONS FROM ARGENTINA
Macroeconomic Situation, including Pattern of Trade
Canada is very active in promoting commercial relations with other partners and has mounted
major Team Canada trade missions to Asia, Eastern Europe and Latin America to this end.
Multilateral/Regional
Canada is committed to the negotiations to achieve a Free Trade Area of the Americas
(FTAA) and is pleased to have been selected as the chair for the initial 18-month phase of the
negotiations. Canada is therefore chairing the Trade Negotiations Committee of chief negotiators, and
will host the next Trade Ministerial Meeting in Toronto, November 1-2, 1999. The FTAA from our
perspective represents an historical opportunity to unite the countries of the western hemisphere in a
comprehensive free trade area that will promote regional prosperity and generate jobs and growth for
all of its economies.  By stimulating growth and demand, such an agreement would also create
enhanced opportunities for traders and investors in other parts of the world. Meanwhile the
negotiations themselves should help generate additional momentum for further multilateral trade
liberalization. Our approach in the FTAA is to seek an Agreement that is balanced, comprehensive
and WTO-consistent. It should constitute a single undertaking and co-exist with existing sub-regional
arrangements. Negotiations commenced in September and are off to a strong start in all areas. We aredoing everything we can as the chair to lay a solid foundation for the FTAA so we can achieve
concrete progress by 2000 and complete our work by 2005, as mandated by Leaders and Ministers.
Developing Countries
Canada concluded its most recent review of the GPT following the Uruguay Round of
multilateral trade negotiations.  Expanded coverage (200 additional items) and reduced tariff rates (on3,000 products) were implemented on January 1, 1996.  It is too early to draw any conclusion on the
long term impact of these tariff reductions (especially in view of simultaneous MFN reductions), but
preliminary data based on 1996 establishes that 56% of LDCs increased their share of exports covered
by the GPT.
Canada continues to explore ways in which it can improve market access for developing
countries. We are currently in the final stage of domestic consultations on a proposal for market
access improvement (product coverage and rules of origin) for least developed countries.
Agriculture
As mentioned in Canada's MA:1 notification G/AG/N/CAN/19,  allocations of the beef and
veal TRQ are made to two groups.  57,307 tonnes are allocated to processors on the basis of the
amount of non-United States, Mexico or Chile beef pr ocessed in their own facilities in the previous
12-month period, and the balance of 19,102 tonnes is allocated to distributors on the basis of sales ofnon-United States, Mexico or Chile beef and veal  in the previous 12-month period. The TRQ only
applies to beef products classified under Chapter 2 of the Harmonized System. That includes products
such as carcasses, cuts and meat either fresh or frozen. Further processed meat products found in
chapter 16 of the Harmonized System such as sausages, patés and prepared meals are not subject to
the TRQ and can enter Canada with a low duty.
The Canadian Wheat Board is responsible for making its own day-to-day pricing decisions in
the best interest of producers.  In practice, the Board offers grain for sale at prices based on its
assessment of the world supply and demand situation.  Domestically, the CWB offers a
North American competitive price at all locations across Canada.WT/TPR/M/53
Page 52
QUESTIONS FROM AUSTRALIA
Agriculture
On December 10, 1998, the Minister of Agriculture announced an income-based national
disaster program.  To be based largely on pa ragraph 7 of Annex 2 of the WTO Agreement on
Agriculture (the Green Box), the program will be designed to be in line with Canada’s internationalobligations.  The program will cover a proportion of each farmer’s net income and will not be tied to
any specific commodity.  In any given year, therefore, beneficiaries will vary according to each
individual’s net income.  The program is to be cost-shared with provinces; negotiations are ongoing,
with respect to respective roles in funding, design and delivery.
For the dairy sector, Canada has already scheduled a phase-out of the dairy subsidy paid to
producers on their industrial milk production required for domestic consumption.  This subsidy will
be completely eliminated on February 1, 2002.
Subsidy Rate Schedule
Feb.1 1997 Feb.1, 1998 Feb.1, 1999 Feb.1, 2000 Feb.1, 2001 Feb.1, 2002
3.80 $/hl 3.04 $/hl 2.28 $/hl 1.52 $/hl 0.76 $/hl 0.00 $/hl
There are no domestic support measures specifically for the egg sector.
Supply management is a marketing system which is implemented through multi-party
agreements. It is essentially a producer based system, operating through producer marketing boards at
the provincial and national levels.  It is not a static regime, since changes are made in response to
evolving circumstances, with the agreement of al l signatories to the specific commodity agreement.
Therefore, any changes to the supply management regimes for dairy, poultry and egg products will be
industry driven.
The wheat, barley, barley products and margarine tariff rate quotas (TRQs) are administered
on a first-come, first-served basis. Fill rates for these TRQs have been very low over the past three
years due to competitive domestic industries. The further liberalization of access for agricultural
products will be looked at in the context of the next round of WTO agricultural trade negotiations.
The legislation which was recently passed is enabling in that it provides the CWB's Board of
Directors with the authority to implement a number of flexibility tools.  Examples of these toolsinclude cash purchases, early pool cash-outs and tradeable producer certificates.  The flexibility tools
have the potential to significantly change the way in which the CWB does business, depending on
how and whether they are implemented.  No additio nal legislation regarding the powers of the CWB
is currently before Parliament.
Telecommunications
Although Canada had not in the Agreement on Basic Telecommunication made any
commitments with respect to routing restrictions on domestic long distance services , it undertook to
eliminate all international routing restrictions for domestic long distance services as of
October 1, 1998. Furthermore routing restrictions on all international long distance services have also
been eliminated as of October 1, 1998, i.e., 15 months ahead of Canada's commitments under theABT.WT/TPR/M/53
Page 53
Canada's commitments in the ABT on foreign ownership are as follows:  foreign ownership in
facility based carriers may total a maximum of 46.7% voting shares, based on 20% direct investment
and 33 1/3 indirect investment.  Furthermore as  of October 1 1998 Canada undertook the following:
- removal of all limitations and all foreign investment restrictions on the right to obtain a
licence to land a submarine cable;
- removal of all restrictions on the use of foreign owned and controlled global mobile satellites
providing services to Canadians;
- removal of all restrictions on the use of foreign owned and controlled global mobile satellites
providing service to Canadians.
Canada has eliminated Teleglobe's monopoly on overseas facilities-based telecommunication
services on October 1, 1998.
Preferential Trade Agreements
Canada continues to actively seek opportunities for trade liberalization, because of the
contribution it can make to economic growth and development.  This is indeed being pursued both
through the WTO and through free trade agreements, where trading partners are equally eager to
move ahead more quickly than is possible multilaterally, consistent with Article XXIV of the GATT
(1994).  We believe that regional trade agreements can serve as a useful impetus to furtherliberalization on a multilateral level.
The Secretariat has noted that Canada maintains an "elaborated" system of preferential tariffs
and rules of origin.  The rules of origin associated with each of the preferential tariff regimes are, of
course, used to determine whether goods are eligible for preferences in trade between countries that
are party to a particular regional trade agreement, and have no effect on the MFN tariff or other policyinstruments that apply to imports from other countrie s.  The different characteristics of the regimes
depend partly on the type of tariff treatment involved.  Rules of origin will be somewhat different
depending on whether they apply to one of three different types of trade: Preferential/reciprocal (eg:
FTAs); MFN; and preferential/unilateral (eg: GSP,  LLDC).  Each of Canada's preferential regimes
takes into consideration the relevant timing, economic circumstances and objectives of the Parties tothat particular Agreement.
With respect to trade diversion, Canada has not increased tariffs or other regulations of
commerce vis-à-vis third countries as a result of FTAs and has, in fact, reduced or eliminated the
MFN tariff in recent years on a wide range of products -- for example, computer parts and original
equipment auto parts.  Looking at the actual trade flows, we note that the NAFTA partners' share of
total Canadian imports has increased by approximately 3.5% in the period 1989 to 1997.  This
increase appears to have been a one-time jump, however, rather than a gradual increase.  Over thatperiod, the U.S.'s share expanded by 2-2.5% a nd Mexico's by 1-1.5%; however, since 1993, the
NAFTA partners' share has remained fairly constant. Looking still at the period 1989 to 1997, we see
that the shares of total Canadian imports actually increased from a number of other sources:  Latin
America rose from 3.9% to 4.4%, ASEAN from 1.2% to 2.2%, the Middle East from 0.6% to 0.7%,
and the developing countries as a whole from 11.8% to 13.6%.  In addition, the exports to Canadafrom those groups have increased dramatically in  absolute terms--Latin America by 129%, ASEAN
by 258%, the Middle East by 147% and developing countries by 132%.  Eastern Europe, which saw
its share of total Canadian imports remain fairly constant over this period, nevertheless experienced an
increase in its exports to Canada of 130% in absolute terms.  By way of comparison, Canada's total
imports during this period increased by 101%.WT/TPR/M/53
Page 54
Canada's new customs tariff has resulted in the acceleration to January 1, 1998 of most of the
final Uruguay Round reductions previously scheduled for implementation on Jan 1, 1999.  In addition,
the Government's tariff simplification initiative:
- unilaterally reduced or eliminated a broad range of tariffs;
- rounded rates down;- eliminated rates of duty of less than 2 %;
- harmonized certain rates and combined tariff items related to similar products.
Canada has consistently participated in MFN trade liberalization, and has stated that the use of
FTAs will never diminish our support for the multilateral option.  For example, we participated in all
the Uruguay Round zero-for-zero agreements, and just recently joined in the agreement to add 639
more products to the coverage of the WTO Pharmaceuticals Agreement ("Pharma III").  We were also
an original participant in the WTO Information Technology Agreement, and have actively taken partin the effort to expand product coverage in the "ITA  II" process.  In the APEC context, we supported
efforts to achieve MFN tariff reduction and elimination in fourteen product sectors.  The work which
was done on eight of these has now been transfer red from APEC to the WTO, as a contribution to
possible future multilateral liberalization.
It is Canada's policy in negotiating free trade agreements to liberalize trade overall, including
sensitive sectors.
Financial Services
The Minister of Finance publicly stated on December 14 that legislation on foreign bank
branching will be introduced soon.  We expect the legislation to be in place in time to meet the
commitment we have made in the 1997 GATS Agreement on Financial Services.  Regarding ourratification of the said agreement, our internal ratification procedure is nearly completed and we
intend to ratify the agreement before the end of January.
Professional Services
While Canada has not yet developed a position in regard to additional commitments in the
area of professional services, we fully intend to pursue broader market continuation and integration ofthe work of the WPPS into the next round as an important element in providing required disciplines in
this sector.
Multilateral/Regional
Canada’s preferential regional trade arrangements cover substantially all trade, including
agriculture, and are in conformity with WTO Article XXIV.  Any margin of tariff preference granted
to Canada’s preferential trading partners is relativ ely modest due to the low and declining level of in-
quota MFN tariffs.WT/TPR/M/53
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QUESTIONS FROM BRAZIL
Tariffs and Tariff Escalation in Footwear
Tariffs on footwear have been reduced in past rounds of multilateral trade negotiations.
Canada has no plans to unilaterally reduce its tariff on footwear.  Further reductions would be
considered only in the context of trade negotiations.
Out-of-quota Tariffs for Poultry Products
During the Uruguay Round, Canada made efforts to achieve less distorted world markets for
agricultural products.  Nonetheless, as was the case for most of its major trading partners, the process
of tariffying non-tariff measures left Canada with high out-of-quota tariffs on a limited number of
agricultural products.  Canada has eliminated all export subsidies in agriculture and has made
important reductions in domestic agricultural subsidies as indicated in notifications to the Committee
for Agriculture of its domestic support at both federal and provincial levels.  During the negotiationsmandated under Article 20 of the Agreement on Agriculture, Canada expects market access for
agricultural products in all markets to be an issue for discussion.
Cluster Approach for Multilateral Trade Negotiations
Canada is of the view that there is merit in exploring options to avoid, if possible, another
multi-year marathon of trade negotiations.  Our constituents want to obtain more quickly the benefitsthat further trade and investment liberalization can bring.  We also believe the WTO must seek ways
to keep pace with the rapid pace of change in technology and business practices.  The concept that has
been advanced by Canada is to package or cluster areas as and when they are ready for agreement and
implementation.  This is not an exercise that is carried out in the beginning of the process but rather
when Members are nearing agreement in a particular sector or sectors.  This approach provides theopportunity for our constituents to take advantage of a stream of benefits resulting from a series of
agreements, rather than having any and all benefits withheld until agreement is finally reached in all
areas after several years of negotiation.
QUESTIONS FROM CHILE
Wine marketing policies and practices in Canada are determined by provincial liquor boards.
Listing procedures are one of those aspects, and decisions by provincial liquor boards are based on
market and commercial considerations. Those policies and practices are transparent and are made
available to all suppliers, foreign and domestic, that wish to sell their products in outlets that are run
by either the private sector or by the provincial liquor boards themselves. Listing or de-listing criteria
used by provincial liquor boards apply equally to foreign and domestic products, and are reviewed
periodically as part of a normal commercial process. Volumes of sales over time will, of course,
influence greatly the maintenance of listings. The promotion of specific foreign products is theresponsibility of the foreign suppliers and their Canadian agents, rather than of the provincial liquor
boards, through the usual promotional tools such as trade or wine fairs, media publicity and the like.
QUESTIONS FROM CZECH REPUBLIC
Canada-USA Trade
Given the unique relationship between Canada and the United States with a free trade
agreement and respective WTO obligations, and the fact that almost all Canadian economic activity
takes place within a few hundred miles of the U.S. border, virtually every aspect of Canada'sWT/TPR/M/53
Page 56
economic life features a very strong and close relationship with the U.S.  The significant share of auto
trade within this relationship is but one reflection of the integrated North American market.
Goods-related Local Content Requirements
As of January 1, 1998, as a result of Canada's international commitments, all performance
based remission programs were eliminated.  Canada has made a commitment not to introduce anynew performance based remission programs.  The Auto Pact continues to be in force.
Prohibition of Used Car Imports
Canada notes that other countries also maintain a prohibition on the importation of used
vehicles. We would welcome the opportunity to discuss the importation of used vehicles in the
context of future multilateral negotiations.  Canada does not prohibit importations for economic
reasons.
QUESTIONS FROM THE EUROPEAN UNION
From the Provincial Liquor Boards:
Canada does not believe that mark-up differentials on imported and domestic products are
unreasonable.  The current LCBO mark-up rate on whisky is 138.1% for U.S. imports, 138.0% for
other imported whiskies and 131.0% for domestic whiskies; the mark-up rates for other spirits are
146.1% for U.S. imports, 145.0% for other imports and 138.0% for domestic spirits. The LCBOmark-up levels are based on a 1989 audit which was undertaken as part of the 1988 Canada-EU
Agreement concerning Trade and Commerce in Alcoholic Beverages; its results have been updated
using various economic factors like the inflation rate and the consumer price index.  Canada has
consulted with the Ontario provincial authorities on many occasions in the recent past, whenever the
EU Commission submitted questions of clarification on the methodology used to establish mark-uplevels on imported and domestic products. The replies from the Ontario Government have been duly
communicated to the EU Representatives in Canada.
As stated above, the Government of Canada follows up with provincial governments
whenever the EU or any WTO Member raises specific points about provincial liquor boards' policies
and practices, and provincial responses are forwarded as soon as they are received.
Government Procurement:
Provincial governments must assess the relative market potential for coverage under the
agreement. We are conducting an extensive consultation with provincial governments and industry
over the next number of months in order to determine supplier interests.
Canada's Implementation the TRIPS Agreement :
Canada disagrees that "Port" was protected as a geographical indication "immediately prior to
the date of entry into force of the WTO Agreement" within the meaning of TRIPS Article 24.3.  TheCanada-Portugal Trade Agreement, of 1954, in Article IV(2), provided that Canada undertook to
make available in respect of "Port" (and  "Madeira") only the protection provided by its national
legislation concerning false, misleading and deceptive labeling and advertising.  Of course, Canadian
laws concerning false, misleading and deceptive labeling and advertising continue in force.  With
respect to "Chianti", EU officials have brought the issue to our attention.  We are currently reviewing
the situation.WT/TPR/M/53
Page 57
Financial Services - Banking
Canada outlined the regime that was under consideration in a September 1997 Department of
Finance Policy Consultation Paper on Foreign Bank En try.  No significant review of that proposed
regime is required following the report of the Task Force.  While the exact criteria of the regime will
be made public when the legislation is introduced, the Minister of Finance publicly stated onDecember 14, 1998 that legislation on foreign bank branching will be introduced soon.
While the exact criteria of the regime will be made public when the legislation is introduced,
Members could refer to the September 1997 Department of Finance Policy Consultation Paper on
Foreign Bank Entry.
Domestic Reforms under the Agreement on Internal Trade
With respect to alcoholic beverages, progress has been made to reconcile standards and
standards-related measures.  However, harmonization is an ongoing process, which depends onvoluntary action by all parties.  Under Article 1007 of the Agreement on Internal Trade, parties agreed
to endeavour, where practicable, to undertake to reconcile their standards-related measures, such as
labelling, packaging and oenological practices.  Canadian Wine Standards have been developed and
approved as voluntary national standards by the Canadian General Standards Board.  These standards
are currently undergoing some clarification.  In addition, a national standard for "VQA" (Vintners'
Quality Alliance) wines is under development.  The Canadian Association of Liquor Jurisdictions has
been examining a number of packaging/case marking issues so as to determine possible
harmonization implications.  The Association has also established a National Quality Assurance
Committee which meets regularly to harmonize technical standards for alcoholic beverages in
Canada.
For the Natural Resources Processing Chapter of the AIT, under Article 1105, parties agreed
to make every effort to reconcile measures that have  an impact on trade in the processing of natural
resources.  While no such measures have been identified at the present time, parties continue to
monitor the situation.
For transportation services, considerable progress has been made in reconciling standards as
specified in Annex 1408.1 of the AIT.  The commitments and the progress to date are described
below:
Commitment Progress
Establish uniform rules for the size and weight
of commercial motor vehicles.Continuing changes in technology, commercial
motor vehicles, as well as related equipment,
including trailers, make this an ongoing issue.  In
June 1997, all parties agreed to harmonize nine of
their regulations in this area, while discussioncontinues on several others.  This latest move to
harmonization builds on previous amendments in
1993, which, in turn, follows a memorandum ofunderstanding in 1998.
Safeguards
In conducting a safeguards inquiry under the Canadian International Trade Tribunal Act , the
Canadian International Trade Tribunal must determine whether the goods in question are beingimported in such increased quantities and under such conditions as to cause or threaten serious injuryWT/TPR/M/53
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to domestic producers of like or directly competitive goods.  Among the matters that could be
considered is the existence of the "unforeseen developments" referred to in Article XIX of GATT
1994.  The factors considered by the Tribunal are detailed in subsections 5(1) to (4) of the  Canadian
International Trade Tribunal Regulations , which have been  notified to the WTO.
In the view of Canada,  the softwood lumber agreement, affecting certain Canadian lumber
exports to the United States, does not infringe the WTO Agreement on Safeguards, nor is it covered
by any notification requirements under the WTO.
Anti-dumping
In accordance with Article 11 of the WTO Anti-Dumping Agreement, subsections 76(2) of
the Special Import Measures Act provides that the Canadian International Trade Tribunal can, at any
time, review an anti-dumping duty order/finding on it s own initiative, or at the request of the Deputy
Minister of National Revenue or any other person or government on the basis of changedcircumstances.  What constitutes the elapse of “a reasonable period of time”, will of course depend
upon the facts of each case.  Under subsection 76(3) of the Special Import Measures Act, a review
must be warranted.  In this regard, the Tribunal’s gu idelines provide that a review would be warranted
where a condition relating to one of the essential elements of the finding under review, (e.g.,
definition of the goods, material injury or causality), has changed so fundamentally as to render theorder/finding no longer valid.
Canada has implemented Article 5.8 of the Anti-dumping Agreement by applying the
de minimis  test at the country level in respect of the margin of dumping. Therefore, if the overall
trade-weighted margin of dumping found for a particular country in an investigation is less than two
percent of the export price of the goods, the investigation will be terminated in respect of that countryregardless of the individual margins of dumping found at the firm level, including individual firms
which may have a margin of dumping which exceeds the de minimis  amounts.  Likewise, when the
margin of dumping in respect of a country is not de minimis , a firm with a de minimis  margin of
dumping remains in the investigation.   This appr oach is consistent with the test for negligible
volumes of dumped imports since Article 5.8 of the Agreement refers to the volume of dumpedimports from a particular country.
Under the timeframes specified in the Special Import Measures Act, investigations are always
completed well within the 18-month period specified in the Anti-Dumping Agreement.  In accordance
with Article 13 of the Anti-Dumping Agreement, definitive decisions taken under Special Import
Measures Act are subject to judicial review in our  Federal Court of Appeal.  In this regard it was
understood by Uruguay Round negotiators that judicial review would necessarily have some effect on
specified timeframes.
If we understand the question correctly, there are various points in the Canadian investigative
process where an investigation can be terminated without the imposition of measures. For example,
under subsection 35(1) of the Special Import Measures Act, the Deputy Minister of National Revenue
can terminate an investigation in the preliminary de termination phase because of insufficient evidence
of dumping, insignificant ( de minimis ) margins of dumping, negligible ( de minimis ) volumes of
dumped goods, or failure of the evidence to disclose a reasonable indication of material injury,
retardation or threat of material injury.  The De puty Minister must also terminate an investigation
under section 36 of the Act where there has been a referral to the Canadian International Trade
Tribunal under paragraph 34(1)(b) and the Tribunal subsequently finds that the evidence does not
disclose a reasonable indication of injury.  Furthermore, pursuant to subsection 41(1) of the Act, aninvestigation can be terminated in the final determination phase if, on the evidence, the Deputy
Minister is not satisfied that: i) the goods were dumped, ii) the margin of dumping is not insignificant,
and iii) the volume of dumped goods is not negligible.  The Tribunal can, in a section 42 inquiryWT/TPR/M/53
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under the Special Import Measures Act, terminate where the evidence does not establish that the
dumping of the goods has caused material injury, retardation or threat of material injury.   Finally,
section 14 of the Special Import Measures Act provides authority for the exemption of any goods or
class of goods from the application of the Act and for the immediate termination of dumping
investigations in respect of goods of Chile, as required by our bilateral trade agreement with thatcountry.
Pursuant to subparagraph 50(a)(iii) of the Special Import Measures Act, an anti-dumping
investigation is suspended for the period of time that an undertaking is in effect.  Undertakings are, of
course, subject to the review/sunset provisions in subsection 53(1) of the Act.
Bill C-35 was passed by the House of Commons and has received first reading in the
Canadian Senate.  The Bill and its progress can be tracked on the Canadian Parliamentary web-site.
Should the Bill become law, it will be notified in accordance with Canada’s WTO obligations. In themeantime Canada would be pleased to provide any further clarification.
Subsidies
We have been working very closely with the Government of British Columbia on the
response to the request from the EC.  We are pleased to advise that the response has now been
completed and has been submitted to the Committee on Subsidies and Countervailing Measures.
Canada would be pleased to also provide this same detailed response to the Trade Policy
Review Body.
Magazines
Canada takes its international trade obligations very seriously.  We do not have protectionist
laws.  Our proposed new law on advertising services is consistent with our international tradeobligations.  Canada implemented the DSB ruling in the Periodicals case by the October 30, 1998
deadline by bringing the four measures impugned by the Appellate Body into compliance.
Market Access
The EU-Canada Action Plan outlines the areas in which Canada and the EU have agreed to
cooperate.  These areas of cooperation are clearly identified and both parties have agreed to cooperate.
Agriculture
The administration of the beef and veal TRQ is designed to ensure that permits are allocated
to active industry participants so they are more likely to be used.  The TRQ was overfilled in 1995
and 1997.  In 1996, the TRQ was slightly underfilled due to market conditions.  The TRQ will be
overfilled this year.
Fisheries: Extraterritoriality of Canadian Legislation
Firstly, we understand the reference to Act C-69 to be to draft Act C-29 which, in 1994,
amended the Canadian Coastal Fisheries Protection Act.  The aforementioned Act, as amended by
draft Act C-29, together with draft Act C-27, do in fact contain extraterritorial elements because they
concern regions of the high seas beyond the 200 nautical miles zone.  These provisions are to allow
Canada to apply international law applicable to the high seas in its domestic legislation, especially the
provisions of international treaties on fisheries such as the United Nations Agreement on StraddlingFish Stocks and Highly Migratory Fish Stocks.  The nature and purpose of this Agreement gives itWT/TPR/M/53
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extraterritorial scope.  As these international measures on the high seas, i.e. concerning zones beyond
national jurisdiction, are being incorporated into Canadian law, the Canadian provisions must also
have extraterritorial scope.
It is not therefore appropriate to consider repealing such measures.  The effect would be to
prevent Canada from implementing international agreements and consequently from becoming partyto such agreements.  When implementing the Canadian provisions, it is our firm intention to respect
the tenor of the international agreements whic h the Canadian Acts incorporate into domestic
legislation.
Trade in Alcoholic Beverages
Canada would like to receive further details on what is meant by these statements and
requests Spain to provide specific examples of discrimination in favour of Canadian wine on the part
of one or more state trading enterprises (State Monopolies).  Any cases raised by Spain will becommunicated to the state trading enterprise or enterprises and their replies will be transmitted to
Spain as soon as possible.
Mark-ups are fixed by state trading enterprises on the basis of external audited accounts.  In
view of the high cost of undertaking these audits, state trading enterprises, on an individual basis,
decide when it is appropriate to carry out further audits or they may decide to fix the mark-up on the
basis of the most recent audit updated by a number of econometric factors such as the annual
consumer price index and the rate of inflation.
The criteria governing the inclusion of new products by state trading enterprises are
transmitted upon request to all foreign suppliers wishing to sell their products to state trading
enterprises for sale in the latters' shops.  The same applies to decisions to eliminate products that arenot selling well in these shops.  In the case of inclusion in and removal from the list, decisions are
taken by each state trading enterprise on the basis of normal commercial considerations without
discriminating between imported or local products or the origin of imports.  Decisions by state trading
enterprises are directly transmitted to suppliers.
The Canadian regime for the protection of appellations of origin is consistent with the
requirements of the Agreement on Trade-Related  Aspects of Intellectual Property Rights.  Moreover,
under Article VIII of the 1954 Trade Agreement between Canada and Spain, Canada did not
undertake to protect sherry as a geographical indication but to protect it under its domestic legislation
against any false or misleading labelling or advertising.  Canada has begun discussions with the
European Commission on the question of appellations of origin in order to reach an understanding
which should, inter alia , eliminate the European discriminatory practices restricting access to the
European market for Canadian wine.
Canada would like to receive further details on what is meant by this question and requests
Spain to provide specific examples of failure to give national treatment on the part of one or more
state trading enterprises.  Any cases raised by Spain will be communicated to the state trading
enterprise or enterprises concerned and their replies will be transmitted to Spain as soon as possible.
Any decision to privatize the import and retail sale of alcoholic beverages can only be taken
by the competent provincial authorities.  Any decision by the provinces on privatization will of course
be communicated to Canada's trading partners in accordance with the customary rules of transparency
and the obligation to notify.WT/TPR/M/53
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Maximum Residues of Pesticides in Foodstuffs
The question appears to refer to Division 15 Table II of the Food and Drug Regulations.
Pesticides not included in Division 15 Table II list [i.e., the 0.1 ppm general Regulation - B.15.002(1)]
are evaluated based on the same scientific data/criteria requirement used to establish MRLs in
Division 15 Table II.  PMRA is currently establishing MRLs for all pesticides in Division 15 Table II.Re-evaluation programmes also result in general Regulation MRLs ( □0.1 ppm) being established at
specific MRLs in Division 15 Table II (often at LOQ).
Government Procurement at the Sub-Central Level
Canada has not made any commitment under the Agreement on Government Procurement
with respect to sub-central bodies.  This is indicated in the text of each annex and in General Note 6 of
the Canadian Annex.  As far as Canada is concerned, the scope of the Agreement has clearly been
defined as being restricted to the commitments received from the provinces.  No commitment hasbeen received.  Consequently, we are under no obligation concerning application to the provinces.
QUESTIONS FROM HONG KONG, CHINA
Foreign Investment Regime
The Government of Canada investment screening mechanism has been designed to encourage
investment by non-Canadians and to ensure that such investment will be of net benefit to Canada.  Tothat end, Canadian government officials work with potential non-Canadian investors to help them
develop investment plans and undertakings that will  comply with relevant policies and fully satisfy
the net benefit criterion.  This mechanism is functioning smoothly and achieving its established
objectives.  Consequently, there are no plans to remove it.
The financial threshold for the application of the screening mechanism in terms of the value of
a Canadian business' assets is adjusted annually to reflect inflation.  The 1998 general threshold is
$179 million. The 1999 threshold value will be announced in January.  The thresholds are adjusted
annually.  Beyond that, there are no plans to further increase the thresholds.
Export Subsidies
Paragraph 73 states that assistance to the non-agricultural sector “ may in some cases support
export sales.”   Canada’s assistance programmes are provided in conformity with Canada’s WTO
obligations.  Canada has notified its subsidy programmes in accordance with Article 25 of the
Agreement on Subsidies and Countervailing Measures  and Article XVI:1 of GATT  1994.  Regarding
subsidies at the sub-central level, Canada has held extensive consultations with provincial
governments on this matter.  To date the provincial  governments have not advised that they maintain
any programs that would meet the notification criteria pursuant to Article 25 of the Agreement on
Subsidies and Countervailing Measures  and Article XVI:1 of the GATT 1994.
Technical Standards and Regulations
Canada submits that it is necessary to distinguish between mutual recognition agreements
involving voluntary standards and mandatory technical regulations.  The nature of these agreements
can be distinguished on the basis of their legal status under public international law.
The Standards Council of Canada has entered into voluntary bilateral mutual recognition
agreements with their counterparts in the United States and Mexico. These agreements relate
exclusively to voluntary standards.  In contrast, the Canada-EU Mutual Recognition Agreement onWT/TPR/M/53
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Conformity Assessment and its sectoral annexe s, including that on Electrical Safety, is an
international treaty between the Government of Ca nada and the European Union, covering products in
the regulated sector.
Canada successfully argued against the inclusion of a "rules of origin" provision in the
Canada-EU MRA so that products of third countries might be tested in Canada to EU technicalrequirements.
The Government of Canada has concluded a bilateral Mutual Recognition Agreement on
Conformity Assessment (MRA) with Switzerland and is in the process of negotiating a bilateral MRA
with EFTA, modelled after the Canada-EU MRA.
To date, MRA's are a relatively new trade policy instrument,  limited to bilateral agreements.
In the development and implementation of MRA's, Canada is fully consistent with the provisions of
the TBT Agreement.  Experience, gained through the implementation of these agreements, couldadvance future discussions on the merits of multilateral MRA's in the context of the TBT Agreement.
Sanitary and Phytosanitary Actions
The question from Hong Kong covers four issues:
What were the reasons for division of responsibilities between Health Canada (HC) and the
Canadian Food Inspection Agency (CFIA)?  Consolidation of the delivery of federally mandated foodinspection and quarantine services previously pr ovided by Agriculture and Agri-Food Canada, Health
Canada, and Fisheries and Oceans Canada into the Canadian Food Inspection Agency (CFIA) is
intended to reduce costs, enhance efficiency and improve the effectiveness of these services.  In
addition, it is intended to speed up and simplify work already underway on harmonizing standards
among federal, provincial and municipal governments.  Although the Minister of Agriculture isresponsible for and has the overall direction of the CFIA, the use of the agency format improves the
provision of services by shifting to a more flexible program delivery arrangement and decentralizes
authority so that government operations become more client-oriented and innovative.
The overall mandate for health and safety of Canadians rests with the Minister of Health.  The
duties, powers and functions of the Minister of Health are set out in the Canadian Department of
Health Act .  This responsibility with respect to food was reaffirmed during the process to establish the
CFIA; the Minister of Health retains the responsibility for food safety policy, standard setting, risk
assessment, analytical testing research and assessment of the CFIA’s activities related to food safety.
Is Health Canada (and CFIA) a central government body?  It is assumed that the source of the
question is Article 13 of the SPS Agreement.  For the purposes of the SPS Agreements in general and
Article 13 of the SPS in particular both HC and CFIA can be considered central government bodies.
HC was established through the  Department of Health Act .  The CFIA was established through the
enactment of the Canadian Food Inspection Agency Act .  The CFIA may exercise powers only as an
agent of Her Majesty in right of Canada.
Will relevant parties outside of HC be consulted on risk assessments conducted by HC?  The
conduct of risk assessment is a key activity in Health Canada’s role of setting public health policy
related to the safety and nutritional quality of foods.  Health Canada has established a policyframework which describes the process for any major new policy or regulatory change.  Consultation
is essential throughout the process.  All stakeholders’ input must be considered.
Are there any mechanisms in place in the CFIA and HC to ensure that Canada’s SPS
obligations would be fully met in every individual case?  Both HC and CFIA are well aware ofWT/TPR/M/53
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Canada’s obligations under international trade agreements.  Regulatory processes in both
organizations contain internal steps whereby any new regulatory initiative is reviewed for its
consistency with international agreements.  Whenever possible regulatory initiatives are based on
international standards established by  international standards-setting organizations recognized by the
SPS Agreement.  Moreover, there are a number of formal and informal interdepartmental mechanismswhich serve as an additional mechanism to ensure Canada’s compliance with SPS obligations.
Financial Services
The matter of further liberalization is up to the individual provinces involved.  To our
knowledge, these provinces currently have no such plans.
The Minister of Finance publicly stated on December 14 that legislation on foreign bank
branching will be introduced soon.  We expect the legislation to be in place in time to meet the
commitment we have made in the 1997 GATS Agreement on Financial Services.  Regarding ourratification of the said agreement, our internal ratification procedure is nearly completed and we
intend to ratify the agreement before the end of January.
Professional Services
The Canadian commitments in the area of professional services are transparent, and very
liberal in comparison with many other Members of the WTO. Since the entry into force of the FinalAct of the Uruguay Round, Canada has eliminated a  number of discriminatory measures in the
professional services sector listed in its GATS schedule of commitments. The changes to regulatory
measures are outlined in notifications submitted recently to the Council for Trade in Services.
There is no difference between the treatment affo rded to local and foreign law firms in respect
to forms of association. All law firms in Canada are subject to the same requirements.  Fortransparency purposes pursuant to Article III:3, Canada has indicated in recent notifications to the
Council for Trade in Services changes to measures affecting accounting services which allowed for
incorporation. The notifications are with respect to changes in the permitted forms of association,
which in turn allows for those entities to incorporate.
Culture
Canada remains committed to the preservation of its cultural identity while maintaining
consistency with our international trade obligations.   Canada is one of the most open cultural markets
in the world.  In 1996, non-Canadian products accounted for:  63.7% of television programming; 98%
of box office receipts in theatres; and 85% of sound recording sales.
Anti-Dumping Measures
Given the high level of economic integration between the Canadian and U.S. markets, Canada
has consistently sought the reform and eventual elimination of the use of trade remedy measures inthe context of the Canada/U.S. FTA, and later the NAFTA.   Unfortunately, working groups on
dumping and subsidies that were established under the NAFTA to seek solutions to trade remedy
concerns, made little progress on this issue.
In the context of its free trade agreement with Chile, which was considered to be a prelude to
Chile’s accession to NAFTA , Canada and Chile agreed to the phase-out of the use of anti-dumpingmeasures between the two countries.WT/TPR/M/53
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New Negotiations
No.  It is not the case.  We believe that broad-based new negotiations at the WTO are needed
to further expand and strengthen the world trade system.  We outlined, in our opening statement the
areas in which we will be seeking to advance, expand and improve.  Canada remains committed to the
WTO, the cornerstone of our trade policy.
Canada continues to actively seek opportunities for trade liberalization, both through the
WTO and through free trade agreements, where trading partners are equally eager to move ahead
more quickly than is possible multilaterally, consistent with Article XXIV of the GATT (1994).  We
believe that regional trade agreements can serve as a useful impetus to further liberalization on a
multilateral level.  Canada has consistently partic ipated in MFN trade liberalization, and has stated
that the use of FTAs will never diminish our support for the multilateral option.  In this connection,
we will contribute fully to preparations for any further WTO negotiations to liberalize trade on anMFN basis.
QUESTIONS FROM HUNGARY
Agriculture
The Government provides advice and information to agri-food companies preparing to export
or expand export operations.  These services includ e export counselling and the provision of market
information on products and countries.  Export credit for wheat and barley can be offered to sovereign
buyers through the Credit Grain Sales Program, and to non-sovereign buyers through the Agri-Food
Credit Facility.  Both of these programs are used to provide commercial export credit with payment
guarantees from the Government.  Exporters of other grains and oilseeds, and exporters of food
products and non-grain crops, may seek to obtain commercial credit insurance or export financingsupport through the Export Development Corporation, a federal Crown corporation.  The Government
also provides partial funding to the Canadian Inte rnational Grains Institute which runs international
programs aimed at promoting the use of Canadian grains and oilseeds.
In conformity with the WTO Agreement on Agriculture, Canada converted its import
restrictions into tariffied measures.  The same conditions, including country reserves and preferentialtreatment under bilateral and regional trade agreements which applied to the previous import quotas,
also apply to the TRQs.  Preferential tariff treatment and country reserves were established in
accordance with the agreements that Canada signed with these countries. Canada established TRQs at
lower rates of duty as a result of the Uruguay Round and we apply the tariff treatment established for
each country for imports within access commitment.
Canada has longstanding preferential agreements with Australia and New Zealand which
continue to be reflected in its tariff schedule. Other tariff preferences are given in the context of theGeneral Preferential Tariff, the Least Devel oped Country Tariff, the Commonwealth Caribbean
Countries Tariff as well as FTAs.
Import arrangements have been done in a way to encourage maximum use of the TRQs. In the
case of butter, the allocation of import licenses under the butter tariff rate quota (TRQ) to the
Canadian Dairy Commission for the benefit of further processors who use butter as an ingredient is apolicy decision of the Government of Canada reflecting the historical practice that any imports of
butter prior to the Uruguay Round were made by the CDC. The butter TRQ has been completely filled
in the past three marketing years.  Canada met its WTO obligations with respect to butter access.WT/TPR/M/53
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SPS
Canada has not approved imports of salami from Hungary on grounds that Canada has not
officially recognized Hungary free of the following major swine diseases: foot and mouth disease
(FMD); swine vesicular disease (SVD); African swine fever (ASF); and classical swine fever (CSF).
The Canadian Food Inspection Agency (CFIA) is prepared to consider a formal request for diseasefreedom recognition from Hungary.  Hungarian author ities are encouraged to contact the CFIA should
they wish to make such a request.
The different characteristics of the regimes depend partly on the type of tariff treatment
involved.  Rules of origin will be somewhat different depending on whether they apply to one of three
different types of trade: Preferential/reciprocal (eg: FTAs); MFN; and preferential/unilateral (eg: GSP,
LLDC).  Each of Canada's preferential regimes takes into consideration the relevant timing, economic
circumstances and objectives of the Parties to that particular Agreement.
The U.S. economy is forecast by the IMF to slow to the 2% range in 1999, more or less in line
with U.S. medium-term potential gr owth, from the 3 1/2% range in 1998, which is generally regarded
as well above potential.  This is an important f actor in the forecast slowdow n in Canada's growth to
the 2.5% range; however, there are many factors bearing on the outlook for 1999 and there are
positive "risks" as well as downside risks.  Canada's fiscal and monetary authorities monitor economictrends and developments closely and take appropriate action as necessary.  Moreover, Canada works
closely with G-7 partners to promote stable growth conditions globally.
INDIA
Market Access for Developing Countries
We take note of India's views.  We look forward to working mutually to achieve further
broadly-based trade liberalization in any future multilateral negotiations, during which India's views
would be taken into account.
Agriculture
During the Uruguay Round Canada made efforts to achieve less distorted world markets for
agricultural products.  Nonetheless, as was the case for most of its major trading partners, the processof tariffying non-tariff measures left Canada with high out-of-quota tariffs on a limited number of
agricultural products.  Canada has eliminated all export subsidies in agriculture and has made
important reductions in domestic agricultural subsidies as indicated in notifications to the Committee
for Agriculture of its domestic support at both federal and provincial levels.  During the negotiations
mandated under Article 20 of the Agreement on Agriculture, Canada expects market access for
agricultural products in all markets to be an issue for discussion.
ITA II Negotiations
Canada's export controls for radar and radio navigational aids apply only to those products
destined for military use.  The proposed products for inclusion in ITA II have been carefully selected
to address India's national security concerns and limit their possible military uses.  The radar must be
either ground-based, of a kind for incorporation in civil aircraft, or of a kind used solely on sea-going
vessels.  These radar have a wide range of civilian uses, including: air traffic control, search andrescue, pollution control, remote sensing of ocean currents and winds, and ship traffic control in
support of resource extraction, and disaster management.  With the exception of cryptographic
equipment to be used in a military context, the parts of telecommunications satellites are not subject to
Canadian export controls.  Canada looks forward to meeting with India to further discuss this matter.WT/TPR/M/53
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QUESTIONS FROM JAPAN
Regional and Bilateral Arrangements
The Leaders of the 34 democratic countries of the Western Hemisphere officially launched
the negotiations towards a Free Trade Area of the Americas in April 1998, which are to be concluded
no later than 2005. The Joint Declaration of the FT AA Trade Ministers, which was issued in March
1998, sets out, inter alia , the principles and objectives that guide the negotiations. One of the General
Principles included is the following: "The FTAA Agreement will be consistent with the rules and
disciplines of the WTO. With this purpose, the participating countries reiterate their commitment to
multilateral rules and disciplines, in particular Article XXIV of the General Agreement on Tariffs and
Trade (GATT) 1994 and the Uruguay Round."
Investment
Investments by non-Canadians are assessed in terms of the factors that are relevant to the
individual investment proposal.  Not all factors are relevant in all reviews.  It is the net result of the
assessment of the factors that determines the outcome;  negative impacts can be offset by positive
impacts and result in an overall positive assessment.  Each review is conducted on a case-by-case
basis by examining the merits of the individual investment proposal.  The factors of assessment are set
out in Section 20 of the ICA and are as follows:  the effect on the level economic activity in Canada,on employment; on resource processing; on the utilization of parts and services produced in Canada
and on exports from Canada;  the degree and significance of participation by Canadians in the
Canadian business or new Canadian business and in any industry or industries in Canada;  the effect
of the investment on productivity, industrial efficiency, technological development, product
innovation and product variety in Canada;  the eff ect of the investment on competition within any
industry in Canada;  the compatibility of the investment with national industrial, economic and
cultural policies;  and  the contribution of the in vestment to Canada's ability to compete in world
markets.
No information is maintained on a regular basis with respect to the provinces.  If there are
investments that affect provinces, and provinces have concerns, consultations are undertaken. It is upto the provinces to identify which laws and regulations are affected by foreign investment and reviews
are undertaken on a case to case basis.
Softwood Lumber Arrangement with the United States
Canada maintains that the Softwood Lumber Agreement, affecting certain Canadian lumber
exports to the United States, does not infringe the WTO Agreement on Safeguards. Canada further
considers that the Agreement is not covered by any notification requirements under the WTO and it is
consistent with Article XXIV of the GATT.
Tariffs
Canada informed the WTO in December 1997 of its intention to implement its simplified
tariff.  Canada submitted its formal notification of its modifications in June 1998.  To further enhance
transparency and provide more information, Canada submitted on December 10 an Addendum,
providing Members with a complete picture of the impact of the changes resulting from the
introduction of the new simplified Canadian Customs Tariff.  It is recognized that there is a
considerable amount of information to be reviewed and with the Addendum to the original June
notification, Canada has extended to June 30, 1999, the date for parties to indicate their interests.
Although Canada has not entered into any formal negotiations, some parties have asked bilaterally for
clarifications and these have been provided.  Canada remains prepared to respond to questions andWT/TPR/M/53
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discuss the notification with interested parties at any time.  Many Members, including Japan, are
benefitting from the tariff simplification measures.
The tariff on ships reflects the fact that Canada, unlike most other shipbuilding nations, does
not provide direct financial assistance to its shipbuilding industry.  Consequently, Canada does not
intend to reduce these tariffs at this time.
Import Prohibitions
Canada notes that other countries also maintain a prohibition on the importation of used
vehicles.  We would welcome the opportunity to discuss the importation of used vehicles in the
context of future multilateral negotiations.
Anti-Dumping
While Articles 3.3 of the AD Agreement and 15.3 of the SCM Agreement, address
cumulation within Agreements, they are silent on the issue of cumulation between Agreements, (i.e.,cross-cumulation).  In determining whether silence should be construed as permissive or prohibitive
of cross-cumulation, regard should be had to the general rule of interpretation set out in Article 31 of
the Vienna Convention on the Law of Treaties, which prescribes an “object and purpose”  test.
The object and purpose of the AD and SCM Agreements is to provide a remedy against unfair
trade practices causing injury to a domestic industry.  To deny a remedy where the cumulative effectof dumping and subsidy practices is injury to a domestic industry would frustrate the purpose of the
Agreements.  Accordingly, it is Canada’s view that silence on the issue of cumulation between
agreements can be interpreted as permissive of cross-cumulation.
Quite apart from the general principle of that which is not expressly prohibited is permitted,
this view is supported by a number of practical considerations, e.g.: whether caused by dumping,subsidizing or both, there is a single price effect in the domestic market that is the cause of injury to
the domestic industry.  In most cases, it would be virtually impossible to allocate the total quantum of
injury between dumping and subsidising with any degree of precision; and the prohibition of cross-
cumulation would lend itself to circumvention invo lving the combined use of dumping and subsidies.
The Special Import Measures Act  makes every effort to base normal values on prices in the
home market, since these tend to better reflect actual normal values.  The use of sales of another
vendor in the home market, in circumstances set out in the Act, is not inconsistent with Article 2.1 of
the AD Agreement, which only refers to the price of  the like product when destined for consumption
in the exporting country and which does not indicate that such sales necessarily have to be made by
the exporter of the goods to Canada.  As such, the use of other vendors does not contradict the
provision in Article 2.2, since the "other vendors"  concept is within the purview of Article 2.1.  That
being said, the Special Import Measures Act  does provide for the third country and constructed value
methods described in Article 2.2 of the AD Agreem ent where normal values cannot be determined on
the bases of sales in the home market.
The relevant provisions of the British Columbia  Forest Act are consistent with Canada's WTO
obligations.  In particular, the legislation does not violate obligations under either GATT Article III or
the Agreement on Trade-Related Investment Measures , because it does not favour use of Canadian
goods by affected enterprises.WT/TPR/M/53
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Competition Policy
On September 10, 1996, the Competition Bureau and the United States Federal Trade
Commission signed an agreement establishing a Canada - U.S. Task Force on Cross Border Deceptive
Marketing Practices.
The primary purpose of the Task Force is to provide a framework to promote cooperation
between law enforcement agencies in Canada and the United States with respect to deceptive
marketing practices with a transborder component.  The Task Force operates within the confines of
the laws, policies and practices of each country.
The Task Force focuses on operations based in either country which target the residents of the
other country.  The two countries cooperate in exchange of non-confidential information with respect
to deceptive telemarketing operations.  Case specific information on investigations cannot be provided
due to the requirements of confidentiality.
The Competition Bureau and the U.S. Federal Trade Commission have participated in the
joint organization and carrying out of intensive searches on the Internet to identify deceptive
promotions.  These international sweeps have also provided an opportunity to inform promoters of
these types of representations of the applicable laws.
The Canada/EC Agreement is part of an ongoing effort to ensure that the Competition Bureau
has the proper tools to deal with cross-border anti-competitive activity.  The Agreement sets in place a
regime for notification, consultation, cooperation, coordination and confidentiality.
The Canada/EC Agreement closely resembles the Canada/U.S. Agreement.  The Canada/U.S.
Agreement, however, includes an article dedicated to deceptive marketing practice laws which is not
found in the agreement with the EC as deceptive marketing practices are not considered part of
competition law in the EC.  The comity elements of  the Canada - U.S. agreement, particularly the
notification and consultation obligations, ensure that competition law enforcement by one party takes
into account the important interests of the other party, thus minimizing  extra-territorial application
between the parties.  The terms of the Canada - EU Agreement are similar to that of the Canada - U.S.
Agreement. While the Agreement with the EU is not yet in place, it is anticipated that a similarobjective will be achieved.
Intellectual Property Rights
Canada's patent regime, and the exceptions provided therein, are fully compliant with its
TRIPs obligations.  Furthermore, Article 30 of TRIPs allows such exceptions; therefore, they are fully
justified within that framework.  We would prefer not to answer any further, as it may be
inappropriate vis-à-vis dispute settlement procedures, and therefore contrary to Trade Policy Review
Mechanism objectives.
Agriculture and Agri-Food Industries
Out of its 21 tariff rate quotas (TRQs), Canada overfilled or completely filled 13 of its TRQs
during the calendar year 1997 and the marketing year 1997-98.
For the 7 TRQs which were not filled:
- The margarine TRQ was 2% filled during the calendar year 1997. The wheat, barley and
barley products TRQs were 27%, 12% and 58% filled respectively during the marketing yearWT/TPR/M/53
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1997-98. These TRQs were not filled because of competitive domestic industries. These
TRQs are administered on a first-come, first-served basis.
- The dry whey and cream TRQs were respectively 83% and 63% filled during the marketing
year 1997-98. These TRQs were not filled because of a relatively weak domestic demand. In
the past years, all requests for permits for these TRQs were granted. In addition, most importsof whey ingredients and products enter under other tariff classifications which are not subject
to TRQ limits.
- The yogurt TRQ was 88% filled during the calendar year 1997. It is not completely filled
because of competitively priced domestic supplies.
Imports of fluid milk are not counted. Canada provides unrestricted access for the fluid milk
TRQ subject to the terms and conditions noted in our Schedule V.
The dairy subsidy currently being phased out by Canada is a Federal Government
expenditure: a direct payment made to milk producers for their industrial milk and cream production
required for the domestic market.  The phase-out of the subsidy is as follows:
Subsidy Rate Schedule
Feb.1 1997 Feb.1, 1998 Feb.1, 1999 Feb.1, 2000 Feb.1, 2001 Feb.1, 2002
3.80 $/hl 3.04 $/hl 2.28 $/hl 1.52 $/hl 0.76 $/hl 0.00 $/hl
At the request of the dairy industry, the dairy subsidy phase-out schedule coincides with the
revision of the dairy support prices.  As a result, every February 1 until 2002, as the dairy subsidy will
go down, the returns to milk and cream producers will increasingly depend on their market returns.
The Canadian Dairy Commission, a federal public company accountable to Parliament
through the Minister of Agriculture and Agri-Food, establishes support prices for butter and skim milk
powder.  In its decision, the Commission takes account of various factors such as: the cost of
producing milk, the market conditions, the general economy, as well as the advice of dairy
stakeholders.
The adequacy of the NISA  program is being reviewed as part of the post-1999 safety net
review currently in progress.  The review will also consider how the program works for beginning
farmers.
Textiles and Clothing
Canada remains committed to the full implementation of the rights and obligations under the
ATC, including the full integration of the textile and apparel sector into GATT 1994 on
January 1, 2005.  Canada has also met fully its obligations under the transition period of the ATC.  As
indicated in the Report by the Secretariat, Canada has fulfilled the requirements of the ATC in itsproduct integration program for the first two stages of the ATC.  On top of meeting this obligation,
Canada has included restrained products in its first two stages of integration, including removing its
quotas against over 20 developing countries on tailor-collared shirts, an important finished apparel
product.WT/TPR/M/53
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In addition, on January 1, 1998, Canada took action under ATC Article 2.15 by eliminating its
quota restrictions, involving over 50 quotas, on a range of womens' and childrens' blouses, shirts and
ensembles, babies' snowsuits and jackets, and rainwear.  This benefited directly over 20 developing
countries.  These adjustments were made by removing specific products from quota. Canada did not
seek to adjust downward the affected quota to reflect the reduce coverage and thus increased theavailable quota for those products remaining under quota.  Further, Canada raised unilaterally its
quota level on winter outerwear by 10% over and above the annual growth rate requirement set out in
the ATC.
Canada has also extended the provisions of ATC Article 2.18 for small-exporters to 15
countries by applying this provision on the basis of 1994 imports.  In effect 5 more countries benefit
from this provision than would othe rwise have been the case had Canada applied this provision on the
basis of 1990 as specified in the ATC.  In addition, as noted in paragraph 45 of the Secretariat'sReport, as a result of the Uruguay Round tariff commitments, Canada's average ad valorem  MFN
tariff has declined for textiles from 15.6% in 1996 to 11.1% in 1998 and from 20.5% to 17.2% during
the same period for clothing.  These MFN tariffs wi ll continue over the 10-year phase-out period for
these products under Canada's Uruguay Round tariff commitments.
Canada, however, in addition to its obligations, retains it rights under the ATC during the
transition period, including with regard to its remaining bilateral restraints and other transitional
instruments under the ATC that provide an umbrella under which the Canadian industry can continue
to adjust during the transition period.
In summary, Canada has not only met fully, but has gone beyond meeting its transitional ATC
obligations, thereby providing significant improved market access to foreign producers in developingcountries.  Canada has also demonstrated by its actions its commitment to the full implementation of
the ATC, both during its the remaining years and the subsequent integration of this sector into GATT
1994.
Banking Services
The Minister of Finance publicly stated on December 14 that legislation on foreign bank
branching will be introduced soon.  We expect the legislation to be in place in time to meet the
commitment we have made in the 1997 GATS Agreement on Financial Services.  Regarding our
ratification of the said agreement, our internal ratification procedure is nearly completed and we
intend to ratify the agreement before the end of January.
Telecommunications
Although Canada had not in the Agreement on Basic Telecommunication made any
commitments with respect to routing restrictions on domestic long distance services, it undertook to
eliminate all international routing restrictions for domestic long distance services as of
October 1, 1998. Furthermore routing restrictions on all international long distance services have also
been eliminated as of 1 October, 1998, i.e. 15 months ahead of Canada's commitments under the
ABT.
Canada's commitments in the ABT on foreign ownership are as follows: Foreign ownership in
facility based carriers may total a maximum of 46.7% voting shares, based on 20% direct investment
and 33 1/3 indirect investment. Furthermore as of  October 1 1998 Canada undertook the following:
- removal of all limitations and all foreign investment restrictions on the right to obtain
a licence to land a submarine cable;WT/TPR/M/53
Page 71
- removal of all restrictions on the use of foreign owned and controlled global mobile
satellites providing services to Canadians;
- removal of all restrictions on the use of foreign owned and controlled global mobile
satellites providing service to Canadians;
- Canada has eliminated Teleglobe's monopoly on overseas facilities-based
telecommunication services on 1 October, 1998.
Professional Services
Within Canada, authority for the licensing/certification of professionals is regulated at the
sub-national level, either by provincial government  entities or through self-regulated professional
bodies.  While procedures for licensing/certification within the same profession may vary from
province to province they are quite uniform. Common review procedures are in place for both foreign
and domestic professional service providers. Canada would be pleased to obtain further clarificationregarding Japans' assertion that licensing procedures are complex.
Pursuant to GATS Article VII: 4(b) Canada will notify the Council for Trade in Services of
the opening of negotiations on an agreement or arrangement on mutual recognition in the area of
professional services with any other GATS Member.  Canada, would be pleased to transmit to its
relevant professional bodies, any expression of interest from other Members in regards to thedevelopment of mutual recognition undertakings.
Legal Services
Responsibility for the evaluation of legal credentials for accreditation is undertaken by the
National Committee on Accreditation (NCA). The NCA is a standing Committee of the Federation of
Law Societies of Canada and is made up of representatives from the Committee of Canadian LawDeans, members of the practicing bar, and members involved with the administration of provincial
law societies. The NCA evaluates the legal training and professional experience of persons with
foreign or non-common law legal credentials (including Quebec) who wish to be admitted to a
common law bar in Canada. Upon completion of its review, the NCA issues a recommendation
describing the scope and extent of any further legal education that in its opinion the applicant needs tocomplete to equal the standard of those who have earned a Canadian LL.B. degree. Most law societies
and law schools in Canada use the NCA's recommendations in setting their requirements for call to
the bar.
Applicants, whether Canadians with foreign legal education, foreign nationals with foreign
legal education and applicants with Quebec civil law degrees, are evaluated on the basis of their
academic and professional profile. The NCA applies a uniform standard on a national basis so that
applicants with foreign law qualifications can apply to the Committee regardless of the common lawprovince (except Alberta) in which they wish to practise in Canada. Thus, applicants do not need to
satisfy disparate entrance standards to practice law in Canada.
Information on the method of evaluation, guidelines and application form can be obtained
from Canada`s GATS enquiry point or directly from the Federation of Law Societies of Canada`s
Internet site: http://www.flcs.ca/english/cm-nca.htm.
Accountancy
Canada has fully supported the development of the guidelines for mutual recognition for the
accountancy sector adopted by the Council for Trade in Services in May 1997.  While recognizingWT/TPR/M/53
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that the guidelines are non-binding and voluntary, Canada has encouraged its accountancy bodies
including all the engineering, architectural and lega l professional bodies to consider the guidelines in
negotiating mutual recognition agreements w ith their respective foreign counterparts.
Canada is not aware of any professional bodies that have initiated in MRA negotiations
following the adoption of the guidelines nor of any intentions by our professional bodies to engage infuture MRA negotiations. In this regard,  Canada  will notify the Council for Trade in Services,
pursuant to GATS Article VII:4(b) of the opening of negotiations on an agreement or arrangement on
mutual recognition with any other GATS Member.
Multilateral/Regional
Canada's participation in a number of regional trade agreements, including the North
American Free Trade Agreement (1994), the Canada-Chile Free Trade Agreement (1997) and the
Canada-Israel Free Trade Agreement (1997), in no way detracts from our continued commitment tothe open, rules-based multilateral trading system under the WTO.  These free trade agreements are not
only fully consistent with the provisions of the WTO Agreements, including Article XXIV of the
GATT, but have complimented Canada's efforts to promote further trade liberalization on a
multilateral basis.  Indeed, the NAFTA, which was concluded prior to the completion of the Uruguay
Round, provided additional impetus to the then-ongoing multilateral negotiations as well as importantanalytical support for policy development in emerging trade policy areas.  From Canada's perspective,
multilateral trade liberalization and WTO-consistent regional initiatives are two sides of the same coin
-- the progressive reduction in global trade barriers.
Japan's concerns regarding the rules of origin in the NAFTA have been raised and addressed
on numerous occasions in the examination of the NAFTA in the Committee on Regional TradeAgreements (note, for example, WT/REG4/1, 23 Ju ne 1995, pages 19-33).  There is no basis for
comparing the rules of origin in the NAFTA, which pertain to trade that takes place under the terms of
that Agreement, to those that may have prevailed under a different Agreement involving different
participants.  Moreover, such a comparison is not relevant to the provisions of Article XXIV:5 of the
GATT given that it does not involve any change in the MFN terms of access for products from thirdcountries.  The rules of origin in the NAFTA apply only to trade between the 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 market access for non-NAFTA
countries.  The NAFTA is fully consistent with all provisions of the GATT including Article XXIV:5.
Unilateral Measures
Section 59(2), now Section 53(2) in the 1998 Canadian Customs Tariff, provides a basis in
domestic law to allow Canada to enforce its rights under trade agreements.  Of course, any recourse tothis provision would need to be consistent with Canada's international obligations.
Government Procurement
The agreement on internal trade is an agreement aimed at liberalizing trade in goods, services,
investment and the movement of people in Canada.  Canada has made no commitments with respect
to provincial government procurement in the agp. Provincial governments must assess the relativemarket potential in an agreement.WT/TPR/M/53
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Services
The Minister of Finance publicly stated on December 14 that legislation on foreign bank
branching will be introduced soon.  The legislation will be in place in time to meet the commitment
we made in the 1997 GATS Agreement on Financial Services.
QUESTIONS FROM THE REPUBLIC OF KOREA
Auto Pact
The question mischaracterizes paragraph 41 of the Secretariat's report.  Canada maintains that
the Auto Pact is consistent with its WTO obligations and will vigorously defend itself against this
challenge.
Canada's actions in further trade liberalization initiatives in the WTO, APEC, FTAA or
elsewhere will be the result of negotiations with our trading partners after thorough consultation with
our domestic constituents.  Canada has no plans to unilaterally reduce tariffs on all imported cars or tochange the Auto Pact.
The basic policy concern is safety.  Canada has no plans to change the Canadian Vehicle
Safety Act or the Motor Vehicle Tire Safety Regulations at this time.
Anti-Dumping Issues
Korea is correct that under subsection 76(5) of the Special Import Measures Act , a measure is
deemed to be rescinded at the end of five-years unless a request for a review is made to the Canadian
International Trade Tribunal before the expiration of the five-year period.
Regarding Korea’s concern about the duration of certain anti-dumping duty orders, such
measures are only continued (renewed) if the Tribunal determines, on the basis of evidence provided
by interested parties on review, that expiration of the order is likely to result in a resumption ofdumping and injury to Canadian producers of like goods.   In this regard, the Tribunal will, in
accordance with its published guidelines, consider a ll relevant information, including import volumes.
Government Procurement
None of the provinces have expressed an intention to join the WTO-AGP at this time.
Canada's coverage under the WTO-AGP was clearly identified as to be based upon commitmentsreceived by the provinces. No commitments have been received and therefore Canada has no
obligation for coverage. No timeframe or schedule have been adopted.
The discrepancies between what Mexico shows as Canadian imports and what Canada's
numbers show for exports to Mexico can be attributed to transhipment of goods from the
United States to Mexico.  These discrepancies can be explained by the fact that Canadian exporters
are not required to fill an export declaration if the goods are exported to the US.  Therefore, the final
destination is not always accounted for.  The results is that Canadian exports to Mexico through theUS are often recorded as exports to the US or not declared (in the case of in-transit goods).
Trade data is based on customs documents.
Canada reconciles data routinely with Japan and the U.S. and has started discussions on this
matter with the EU, and with Korea.  A trade data reconciliation exercise with Mexico is underway.WT/TPR/M/53
Page 74
The criteria for selecting counterparts are: 1) the vo lume of bilateral trade  2) interest to reconcile on
both sides, and 3) resources (primarily financial but also human).
QUESTIONS FROM NEW ZEALAND
Trade Policy by Sectors
At the conclusion of the Uruguay Round, Canada agreed to a subsequent round of multilateral
trade negotiations on agriculture and to the continuation of the reform process that would move
countries toward fairer trade in agricultural products.  Canada is committed to building on the
successes of the Uruguay Round, the achievement of improved market access, greater disciplines on
trade-distorting subsidies, and a more level international playing field.
In the past, butter imports were prohibited with certain exceptions and this non-tariff measure
was tariffied in the Uruguay Round. The allocation of import licenses under the butter tariff rate quota
(TRQ) to the Canadian Dairy Commission for the benefit of further processors who use butter as aningredient, is a policy decision of the Government of Canada. The butter TRQ has been completely
filled in the past three marketing years (r eference G/AG/CAN/9, G/ AG/CAN/16, G/ AG/CAN/23).
Canada met its WTO obligations with respect to butter access.
Tariffs
Canada maintains a small number (21) of tariff-rate quotas , which are a result of the
tariffication process resulting from the Uruguay Round. In-quota MFN rates on these products are
relatively low (for instance 18.9 cents per kilogram on butter) . Over-quota rates were calculated,
consistent with the Agreement on Agriculture, to give the equivalent price effect of Canada’s previous
quota system. These rates will be reduced by an average of 36%, with minimum reductions of 15%
for each tariff line, over six years ending in 2000.
Trade Policies and Practices by Measure
The Canadian Government is not considering, nor has it been asked to consider any special
measures of protection for the steel industry.  Further, it should be noted that the Canadian steel
industry was prominent among the many interested parties who in 1996, made representations before
the Parliamentary Sub-Committees established to review Canada's Special Import Measures Act(SIMA).  The Committees reported that the general view of interested parties was that the Canadian
system was functioning well and that the SIMA legislation and process be continued, subject to a
number of modifications.  The amendments are contained in a bill which is now before the Canadian
Senate.
Agriculture
The Canadian Cattlemen’s Association is facilitating a proposal to develop a beef check-off
under the terms of the Farm Agencies Act. The proposal is currently in its formative stages with adraft of a national program having been developed for discussion purposes. Their plan is to first have
compatible check-off legislation in each province. Four provinces have implemented the required
legislation. Once all provinces have compatible check-offs, a national program for research and
promotion for beef will be developed.
QUESTIONS FROM NORWAY
Article 105 of NAFTA provides that the NAFTA Parties shall ensure that all necessary
measures are taken in order to give effect to the provisions of NAFTA,  including their observance,WT/TPR/M/53
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except as otherwise provided in the NAFTA, by state and provincial governments.  The Government
of Canada works closely with the provinces to ensure full compliance with Canada's international
trade obligations.  For example, a Committee of senior trade officials of the federal government and
the provinces meets every three or four m onths to discuss broad trade policy issues.
The premise of the second written question is erroneous.  Canada is in full compliance with
its NAFTA obligations.
The Standards Council of Canada (SCC) oversees Canada's National Standards System which
consists of almost 15,000 volunteers and over 2 50 public and private organizations. Four standards
development organizations (SDO's) have been accredited by the SCC to develop standards.  Standards
development in Canada is guided primarily by two SCC documents:(1) CAN-P-2, for developing
National Standards of Canada, and; (2) CAN-P-1, which lays out the criteria and requirements for
Standards Development Organizations in Canada. These criteria reflect the standards community'sbroad commitment to consensus and due process.
Any concerned person (often from industry) may request an SDO to develop a standard.
When deciding whether to develop a standard, the SDO first determines if an international standard
exists or is being developed that can satisfy the domestic need. The SDO then ensures that there is
necessary funding from stakeholders. It may also weigh other factors, including the practicality of theproposal, the likelihood that the standard will generate a supporting product certification program, the
availability of the necessary expertise, and the societal benefit to be achieved.
If an SDO decides to develop a standard, it will establish and administer a Canadian Advisory
Committee (CAC), whose members have relevant expertise and represent a national balance of
interests and perspectives.  The composition of each CAC is based on the nature of the standard to bedeveloped.  Generally, CAC's include consumer and general interest representatives (i.e. producers,
academics, safety associations, and federal and provincial regulators).
While provincial government representatives participate as stakeholders in CAC's, in 1996,
the SCC established the Provincial-Territorial Advisory Committee (PTAC) to ensure more coherent
provincial participation in standards work.  The PT AC ensures that provincial (including municipal)
and territorial positions on standardization and conformity assessment issues are brought forward so
that the National Standards System and the activities of the Council have the widest possible
acceptance both domestically and internationally.  The PTAC, which has two of the fifteen seats on
Council, consists of a representative of each province and territory appointed by that province or
territory.
Canada cooperates with the EU at the level of ISO/IEC and through international conformity
assessment bodies (e.g. IAF, ILAC and CASCO). The recent Canada-EU Mutual RecognitionAgreement on Conformity Assessment signals the start of a 18 month confidence-building phase.
Until the MRA becomes operational, regulatory authorities in Canada and the EU will be involved in
information exchanges, workshops and other cooperative efforts to enhance their understanding of
each other's conformity assessment requirements for each MRA Sectoral Annex (i.e.
telecommunications, EMC, medical devices, pharmaceuticals, recreational craft and electrical safety).
For price levels of medicines, see Tenth Annual Report of Patented Medicine Prices Review
Board (Ottawa: Government of Canada, 1998).
Canada cannot comment as to why the Secretariat chose not to include the maritime transport
sector in its report.WT/TPR/M/53
Page 76
Pursuant to subsection 76(5) of Canada’s Special Import Measures Act , where the Canadian
International Trade Tribunal has not initiated a review of an  order/finding, which provides the legal
basis for the application of anti-dumping duties, before the expiration of five years from the date of
the order/finding, the order/finding is deemed to be rescinded as of the expiration of the five years.
Ship Tariffs
The tariff on ships reflects the fact that Canada, unlike most other shipbuilding nations, does
not provide subsidies to its shipbuilding industry.  Consequently, Canada does not intend to reduce
these tariffs, on either  temporary or permanent importations at this time.
Government Procurement
Canada has made no commitments with respect to provincial government procurement in the
AGP. Provincial governments must assess the relative market potential in an agreement.
QUESTIONS FROM THE PHILIPPINES
SPS
The Good Manufacturing Practices (GMP) re gulations for foods are in the informal
consultation and developmental stage only.  They have not yet been pre- published in Canada Gazette
Part I (pre-notification) and have not been formally notified.  There was one informal international
consultation (mail out) in 1995; very few comments were received.  The GMP regulations, therefore,are not a policy instrument presently in use in Canada.  The whole federal food legislative framework
is under review due to the significant structural changes that have been put in place.  The GMP
regulations will continue to be developed within th e context of the legislative renewal initiative being
carried out concurrently by Health Canada (HC) and the Canadian Food Inspection Agency (CFIA).
The institution in charge of developing the Good Manufacturing Practices (GMP) regulationsproposal is HC.  Once in place (promulgated) the CFIA would be responsible for their enforcement.
The purpose of the GMP regulations is to put in place the minimum health and safety
requirements for manufactured food in Canada.  Specifically, the GMP is aimed at the food
processing and food import sector.  The GMP regulations are based on and are consistent with the
Codex Alimentarius’ Revised Recommended International Code of Practice - General Principles ofFood Hygiene.  The GMP regulations are “outcomes” based.  They outline the minimum food health
and safety requirements that have to be met, but not how those should be achieved, that is left to the
industry.  Process and Producti on Methods (PPMs)  is a concept from the TBT agreement these
regulations would be notified under SPS.  They will not relate to conformity assessment, a TBT
concept, as these regulations are strictly SPS.
Canada believes and practices transparency and non-discrimination in its SPS regulatory
initiatives. The GMP regulations have been in development for a long time and have been widelyinformally consulted on domestically and internationally.  Prior to adoption Canada would formally
pre-publish the proposed regulations in Canada Gazette Part I and consider comments received and
make appropriate changes prior to formal adoption and publication in Canada Gazette Part II.  The
GMP regulations, as currently drafted would apply equally to domestically processed and imported
processed foods.
Canada does not feel that Articles 11 and 12 of the TBT Agreement need to be considered
with respect to the GMP regulations for the reasons already outlined above, namely, they would not
be covered by the TBT Agreement, but rather by the SPS Agreement and they are based on and are
consistent with an internationally accepted standard, specifically, the Codex Alimentarius’ RevisedWT/TPR/M/53
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Recommended International Code of Practice - Ge neral Principles of Food Hygiene.  Under SPS,
regulations based on standards developed and accepted by recognized international organizations, of
which Codex Alimentarius is one, are presumed to be consistent with the SPS Agreement and GATT
1994.
Market Access for Developing Countries
Canada agrees that enhanced market access for the Least Developed countries is not a
panacea and that promoting the capacity of developing countries to trade and attracting more
investment is at least equally important.  This being said, we consider it useful also to improve access
to our market as an additional incentive for those developing countries that are building their capacity
to export.
According to our records, the Philippines a nd many other Middle Income Countries (DAC
classification) are taking full advantage of Canada's GPT. They are actually among the ones that mostbenefited from the 1996 review of the GPT (75.5% of the LDCs that registered an increase in their
GPT share in 1996 were MICs).
Since its creation, Canada's GPT has been praised by the UN as a model.
With respect to "multilateralization" of trad e agreements,  Canada is currently investing
efforts in trade negotiations with its hemispheric partners (both developed and developing) for a FreeTrade Area of the Americas (FTAA) that, we hope, w ill lead to liberalizing significant trade in the
region. We are also participating in sectoral trade negotiations in APEC. We view these efforts at a
regional level as "stepping stones" in promoting a global liberalized trading system.
Canada concluded its most recent review of the GPT following the Uruguay Round of
multilateral trade negotiations.  Expanded coverage (200 additional items) and reduced tariff rates (on3,000 products) were implemented on January 1, 1996, many of these in sectors of importance to
developing countries. Limited progress was achieved in other sectors (textile, apparel, footwear,
agriculture), reflecting concerns voiced by domestic stakeholders during consultations.
QUESTIONS FROM SWITZERLAND
Copyright
Section 45 of the new Copyright Act clearly lists exceptions to Canadian provisions on
parallel importation.  They are also listed indivi dually in the TPR Secretariat document, paragraph
144.
Financial Services
It was in recognition of a changing environment that the government launched a Task Force
on the Future of the Financial Services Sector in December 1996.  The Task Force was asked to
conduct a major review of the future of the industry and delivered its report to the government onSeptember 15.  The government has since received a response to the recommendations of the Task
Force from a Senate Committee on December 2.  A similar, but interim response was delivered by a
House of Commons Committee on December 10.  The House of Commons Committee will hold
further hearings on the issue in February and the government expects to deliver its response to the
Task Force recommendations in the Spring. However, the Minister of Finance publicly stated onDecember 14 that legislation on foreign bank branching will be introduced soon.WT/TPR/M/53
Page 78
Canada has outlined the regime that was under consideration in a September 1997
Department of Finance Policy Consultation Paper on Foreign Bank Entry.  The exact criteria of the
regime will be made public when the legislation is introduced.  The September 1997 Consultation
Paper referred to above had indicated that a minimum capital equivalency requirement was under
consideration.  Again, the exact requirements will be made public when the legislation is introduced.The Minister of Finance announced on December 14 that the bank mergers proposed by the Royal
Bank of Canada and the Bank of Montreal, a nd by the Toronto-Dominion Bank and the Canadian
Imperial Bank of Commerce will not be allowed. The Minister said the mergers were not in the best
interests of Canadians and will not be allowed to proceed because they would lead to:
- an unacceptable concentration of economic power in the hands of fewer, very large
banks;
- a significant reduction of competition; and- reduced policy flexibility for the government to address potential future prudential
concerns.
Looking forward, our immediate pr iority is now to focus on establishing an appropriate policy
framework for the financial sector for the 21
st century.  This is why we will be moving quickly to
respond to the recommendations set forth by the financial sector task force and the two parliamentarycommittees.  This will include putting in place a new review process to assess major bank merger
proposals.
There is currently no consideration being given at the present time to lifting the existing
restrictions on the purchase of reinsurance services.
Telecommunications
Although Canada had not in the Agreement on Basic Telecommunication made any
commitments with respect to routing restrictions on domestic long distance services , it undertook to
eliminate all international routing restrictions for domestic long distance services as of
October 1, 1998. Furthermore routing restrictions on all international long distance services have also
been eliminated as of October 1, 1998, i.e. 15 months ahead of Canada's commitments under theABT.
Canada's commitments in the ABT on foreign ownership are as follows: Foreign ownership in
facility based carriers may total a maximum of 46.7% voting shares, based on 20% direct investment
and 33 1/3 indirect investment.  Furthermore as  of October 1 1998 Canada undertook the following:
removal of all limitations and all foreign investment restrictions on the right to obtain a
licence to land a submarine cable;
removal of all restrictions on the use of foreign owned and controlled global mobile satellites
providing services to Canadians;  and
removal of all restrictions on the use of foreign owned and controlled global mobile satellites
providing service to Canadians.
Canada has eliminated Teleglobe's monopoly on overseas facilities-based telecommunication
services on 1 October, 1998.WT/TPR/M/53
Page 79
Professional Services
While Canada has not yet developed a position in regard to additional commitments in the
area of professional services, we fully intend to pursue broader market access results in the next round
on all four modes of supply. As well, we view the continuation and integration of the work of the
WPPS into the next round as an important element in providing required disciplines in this sector.
QUESTIONS FROM THE UNITED STATES
Agriculture
The Federal Government has implemented all its obligations with respect to agricultural
products under the Agreement on Internal Trade.
Canada’s domestic support notifications to the Committee on Agriculture reflect all support
provided to agriculture at both federal and provincial levels. These support levels have shown a
significant decline over the recent past.  The WTO Secretariat notes in Section IV(ii) paragraph 8, thatthe OECD estimates of Producer Subsidy Equivalents also show a substantial decline in support levels
to Canadian agriculture.  Canada has previously answered questions from the United States about
product-specific support to potato producers in the Committee on Agriculture.  Canada can confirm
that its domestic support notification identifies all product-specific support for potatoes .
Imports of fluid milk are not counted. Canada administers this quota so as to provide
unrestricted access for fluid milk, subject to the terms and conditions existing in the base period and
noted in our Schedule V.
It is inaccurate to describe what has occurred as “minor legislative changes”.  The CWB’s
Commissioners, who are currently accountable only to the government, are being replaced with a
Board of Directors, two-thirds which has been elected by producers.  The new Board of Directors willassume office December 31, 1998.  Aside from its new accountability to the farmers of Western
Canada, the Board of Directors has been given broad powers to change the way in which the CWB
does business.  Under the new legislation, the CWB will be given the legal tools to engage in types of
transactions which it was not previously allowed to undertake.  For example, it will be permitted to
make cash purchases of wheat and/or barley, to make adjustments to initial payments on its own, toclose and pay out pool accounts at any time and to allow producers to cash out of the pool accounts
before they have been closed for the year.  Thes e tools, assuming they are implemented by the new
Board of Directors, would be supported by a contingency fund built up from producer, not
government, funds.
The flexibility tools will allow the CWB to react more quickly to changing market conditions.
Since the contingency fund, rather than the Government of Canada would bear the risk of those
decisions, the CWB and its directors will have ample incentive to manage the pool account in amarket-oriented fashion.
The CWB’s status as a single desk seller is not changed by the legislation.  With respect to
pool accounts, the Government of Canada will continue to back the CWB’s initial payments as
established at the beginning of each crop year.  Should the new Board of Directors wish to make
adjustment payments on its own, then the Minister responsible for the CWB would examine the levelof the contingency fund and make a one-time determination as to whether it was sufficient to
guarantee these adjustments.  Once a positive determination had been made, the Government of
Canada would only guarantee the initial payment established at the beginning of the crop year and not
any subsequent adjustments.  Export credit guar antees are not affected by the new legislation.WT/TPR/M/53
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The CWB has certain public powers which include export licencing authority for all of
Canada.  The existence of an export licence authority is essential to the maintenance of single desk
selling.  Parties outside the designated area do not need to operate through the CWB pooling system
in order to obtain an export licence but they still require an export licence in order to export wheat or
barley from Canada.
Canada has eliminated the program which formerly provided export subsidies on dairy
products. It has surpassed what its required in its WTO commitments. The concerns of the
United States regarding the way Canadian milk producers market their production are currently being
addressed in a dispute settlement process.  Canada suggests that the process be allowed to take its
course.  We do not think it is appropriate to attempt to use the forum of a Trade Policy Review to
argue the case before the Panel.
Subsidies
Both the federal and provincial governments have improved their financial management in
the face of tightening fiscal pressures which has resulted in significant changes in the approach
governments’ have taken in providing assistance to industry.  The federal government has had several
consultations with the provinces respecting Canada’s WTO obligations under the Subsidies
Agreement and GATT 1994 to notify subsidies.  To date the provincial governments have not advisedthat they maintain any programs that would meet the notification criteria pursuant to Article 25 of the
Agreement on Subsidies and Countervailing Measures  and Article XVI:1 of the GATT 1994.  The
federal government will continue to consult with the provinces on this matter.
Canada agrees that sub-federal programs that meet the notification criteria pursuant to Article
25 of the Agreement on Subsidies and Countervailing Measures and Article XVI:1 of the GATT 1994require notification to the WTO.  As indicated in the response to the previous question from the
United States, provincial governments have been fully consulted on the WTO notification
requirements, but to date have not advised they maintain any programs that meet the notification
requirements.  The federal government will contin ue to consult with the provinces on this matter.
Film and Video
This question is preceded by a statement which seems to pre-judge the outcome of the current
Feature Film Policy Review.  The Review is looking at a wide range of options and considerations
and the process has not yet concluded.  The Trade Policy Review states that foreign films accounted
for 98% of box office receipts in Canadian theatres in 1996.
The National Film Board is not reviewing the Canadian film sector.  The Government of
Canada, in consultations with its stakeholders, is conducting a review of Canada's Feature Film
Policy.  Please refer to the response above.
Canada remains committed to the promotion of its cultural identity, consistent with its
international trade obligations.  It was the WTO Secretariat’s decision to focus this TPR on
audiovisual services.  All of the changes to Canada’s policies regarding audiovisual services are
included in the 1998 Review.
The CRTC conducted public consultations on Canada’s television policy, which were
completed this Fall.  All testimony made before th e CRTC during the hearings is available to the
public. Since the CRTC is an independent, arms-length agency, the Government has no knowledge of
what will be the final outcome of this review .WT/TPR/M/53
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Other Services
Canada did not undertake GATS commitments in the Health-related and social services
sector. We have no indication of an intent by the provinces to alter existing residency requirements for
nurses.
Intellectual Property Rights
Canada's private copying measures are fully consistent with international obligations.
Canada's Copyright Act states that authors of musical works embodied in sound recordings whose
copyright in their musical works subsists in Canada will receive national treatment.  With respect to
performers and producers of sound recordings, the Act gives the Minister of Industry the discretion to
grant to performers and producers of another country either (i) benefits as conferred by the Copyright
Act; or (ii) benefits to the extent that a country grants them to Canadian producers and performers.
The regime has just come into force earlier this year and the liability for payment only begins as ofJanuary, 1999.  It will take some time before a decisi on is made with respect to the beneficiaries.  A
tariff has not yet been set.  Before a tariff can be set, proceedings must be undertaken by the
Copyright Board.
Canada's efforts regarding its opposition procedure for trademarks are ongoing, and are
included in Canada's response at paragraph 145.  After an initial consultation period, regulatoryauthorities are analysing feedback obtained from stakeholders, in order to determine what  changes (if
any) will be proposed.
Canada's private copying measures are fully consistent with international obligations.
Canada's Copyright Act states that authors of musical works embodied in sound recordings whose
copyright in their musical works subsists in Canada  will receive national treatment.  With respect to
performers and producers of sound recordings, the Act gives the Minister of Industry the discretion to
grant to performers and producers of another country either (i) benefits as conferred by the Copyright
Act; or (ii) benefits to the extent that a country grants them to Canadian producers and performers.
The regime has just come into force earlier this year and the liability for payment only begins as of
January, 1999.  It will take some time before a decisi on is made with respect to the beneficiaries.  A
tariff has not yet been set.  Before a tariff can be set, proceedings must be undertaken by the
Copyright Board.
Investment
The financial threshold for the application of the screening mechanism in terms of the value
of a Canadian business' assets is adjusted annually to reflect inflation.  The 1998 threshold is
$179 million.  The 1999 threshold value will be announced in January.  The thresholds are adjusted
annually.  Beyond that, there are no plans to further increase the thresholds.
In the administration of the ICA, Canadian officials work with non-Canadian investors to
highlight the positive elements of their investment proposals in order to unambiguously demonstrate
their net benefit to Canada.  This reflects the purpose of the ICA  set out in section 2, namely, "to
encourage investment in Canada by Canadians and non-Canadians.
Limits on non-resident investment in Canada fall within two broad categories.  Firstly, there
are 'Sectoral' restrictions imposed on non-resident investment in certain key sectors of the economy.
Specifically, there are restrictions on investment in certain aspects of the nuclear industry, television
and radio broadcasting, and scheduled domestic airline services.  These restrictions seldom totally
exclude non-resident investment, but typically limit the overall non-resident investment in any single
business entity to some "non-controlling" level.  Secondly, in cases where Canada has privatized aWT/TPR/M/53
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state-owned entity (Crown Corporation) through th e issuance of shares to the public, the legislation
required to authorize the sale, may or may not have imposed "entity specific" restrictions on
non-resident investment.  Over the past 10 years, there have been only 5 privatizations in Canada
through issuance of shares to the public.  Two of these, Air Canada and Cameco, involved the sale of
shares in companies that were subject to "sectoral" restrictions (a scheduled domestic airline service,and uranium mining).  The sectoral restrictions on non-resident investment were replicated in
company-specific restrictions.  Two other cases involved oil and gas companies (Petro-Canada and
Co-enerco).  The restrictions imposed on non-resident investment in these entities reflected a
moderately different type of sectoral restriction that was in effect at that time, but which is no longer
government policy.  At that time, foreign companies controlled more than half of the Canadian oil and
gas industry (as they continue to do), and the government of the day had a policy of promoting an
increase in the level of Canadian ownership in the industry to 50%.  In advancement of that policy
objective, specific limits were placed on the ownership of these oil and gas companies.  The last
example of Canadian privatization through a publ ic share distribution is the Canadian National
Railway, which was privatized with no restrictions on non-resident investment.
On the current effort to privatise or franchise certain assets in the passenger rail sector, in its
21 October, 1998 reply to SCOT's report on the renaissance of passenger rail in Canada, MinisterCollenette indicated that:
- The government agrees to allow for and encourage innovative public and /or private
partnerships on segments of the rail network so that all services might be delivered in
a cost-effective and efficient manner.
- The government is prepared to test franchising of certain VIA routes to the private
sector within two years.
At this given time, this process is still a work in progress as details on the services to be
franchised, the contractual terms, the bidding process and other aspects of the franchising are not yet
determined.
As to what conditions foreign investors may participate in those efforts, it is still premature to
answer such a question since the details of the proposals are not yet determined.
Canada has fully respected the commitments it made in the Agreement on Basic
Telecommunications i.e. binding of the Canadian legi slation that allows foreign ownership in facility
based carriers may  total a maximum of 46.7% voting shares, based on 20% direct investment and
33 1/3 indirect investment. Furthermore as of October 1, 1998 Canada implemented the following:
- the end of Teleglobe Canada's monopoly on the provision of facilities for overseas
telecommunications services and the removal of foreign investment  restrictions onthe right to obtain a licence to land a submarine cable
- removal of restrictions on the use of foreign owned and controlled global mobile
satellites providing services to Canadians.
- In addition, Canada has no foreign ownership, restrictions on resellers and has
initiated steps to remove foreign ownership restrictions on the licensing of fixedsatellite earth stations
To some extent it may be true that Canada’s previous unwillingness to make better foreign
investment commitments in the GATS has been driven by the desire of its cable television andWT/TPR/M/53
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broadcast industries to have access to foreign investment equal to that of telephone companies and
other firms in the telecommunications sector.
Foreign investment restrictions on broadcast industries vary from one country  to another.  In
fact, Canada's restrictions on foreign investment in the broadcasting industry are less restrictive than
those of the United States. With respect to the issue of convergence, the CRTC is currentlyconducting a  public consultation, on new media industry. The independent agency has not yet
concluded these processes.
Procurement
Competition is the fundamental principle of Canadian government procurement.  There are,
however, legitimate reasons for non-competitive contracting which are identified in Article XV of the
WTO Agreement on Government Procurement.  In every case of information technology
procurement, appropriate justification, consistent with Article XV of the AGP is necessary.
The objective of the government's review process is to enhance the use of procurement in
support of industrial and regional development and other national objectives in a manner that is fully
consistent with Canada's international trade obli gations and the government's approved procurement
objectives.  Additional information on the procurement review process ($2 million to $100 million)
can be found on the Canadian government - treas ury board secretariat web site: www.tbs-sct.gc.ca.
Detailed information on the industrial and regional benefit policy (project over $100 million) can be
obtained from Industry Canada- aerospace and defence branch - space, electronics and defence
systems directorate, Ottawa, Canada.
Consistent with Canada's international trade obligations, the socio-economic objectives
usually addressed in this review are long-term industrial and regional development opportunities, andsupport of aboriginal business. The objectives sought are stated in a large context and are published
together with the request for proposals. Am ong others, measures normally proposed are:
- technology transfers
- joint ventures and strategic alliances
- product mandates, licences, marketing agreements- regional and small business development
- licensing arrangements, and
- access to international markets.
The application of the industrial regional benefits (IRB) policy is consistent with Canada's
international trade obligations. IRBs are not applied to procurements covered by the WTO-AGP and
other international trade agreements.  Where requested, irb requirements are tailored to the specific
procurement and are fully transparent.
Labor Standards
The Canada-Chile Labour Cooperation Agreement (CCALC) is patterned after the North
American Agreement on Labour Cooperation (NAALC).  The common goal of these two agreements
is to promote the improvement of working conditions and living standards by each Party in their own
country,  and to protect, enhance and enforce basic workers' rights.  An important dimension of both
agreements is the establishment of joint cooperative programs on key labour questions.  This is the
area with which Canada has had the most experience.  Our experience to date with both agreements
has been positive, particularly in building understanding of domestic labour legislation and
experience among the parties.  We are at a very early stage in implementing the Canada-ChileWT/TPR/M/53
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agreement; for example, only two joint activities have taken place since the agreement was signed -- a
seminar on Chilean labour legislation and another on industrial relations and new forms of work.
Magazines
Canada implemented the DSB ruling in the Periodicals case by the October 30, 1998 deadline
by bringing the four measures impugned by th e Appellate Body into compliance.  Canada is
committed to pursuing its cultural policy objectives in a manner consistent with its international trade
obligations.
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