WORLD TRADE
ORGANIZATIONWT/TPR/M/112
12 May 2003
(03-2502)
Trade Policy Review Body
12 & 14 March 2003
TRADE POLICY REVIEW
CANADA
Minutes of Meeting
Chairperson:  H.E. Mrs. Mary Whelan (Ireland)
Page
I. INTRODUCTORY REMARKS BY THE CHAIRPERSON 3II. OPENING STATEMENT BY THE REPRESENTATIVE OF CANADA 4III. STATEMENT BY THE DISCUSSANT 8
IV. STATEMENTS BY MEMBERS OF THE TRADE POLICY REVIEW BODY 11
V. REPLIES BY THE REPRESENTATIVE OF CANADA AND ADDITIONAL COMMENTS 21VI. CONCLUDING REMARKS BY THE CHAIRPERSON 32WT/TPR/M/112
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I. INTRODUCTORY REMARKS BY THE CHAIRPERSON
1. The seventh Trade Policy Review of Canada was held on 12 and 14 March 2003.  The
Chairperson, H.E. Ambassador Amina Mohamed, welcomed the delegation of Canada, led by
Mr. Randle Wilson, and proposed that the Trade Policy Review Body formally elect
H.E. Mary Whelan, Permanent Representative of Ireland to the WTO, as Chairperson.Ambassador Whelan thanked the delegates for electing her to this Chair and also thanked the previous
Chairperson for the professional manner in which she had chaired the TPRB over the past 12 months.
She welcomed the Canadian delegation as well as the discussant, Ambassador Stefán H. Jóhannesson
(Iceland).  As usual, the discussant would speak in his personal capacity and not as representative of
his country.  In accordance with the established procedures, the discussant had made available, in
advance, outlines of the main issues he intended to raise (document WT/TPR/D/91).
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/112 and that of the WTO Secretariat in document WT/TPR/S/112.  Copies of advanced
questions, submitted by Switzerland;  New Zealand;  Australia;  Taiwan, Penghu, Kinmen and Matsu;
Brazil;  Japan;  the People's Republic of China;  Hong Kong, China;  Argentina;  Norway;
Bangladesh;  Chile;  El Salvador;  Republic of Korea;  Hungary;  Malaysia;  India;  the United States;and the European Union had been transmitted to the delegation of Canada.  These questions and the
replies provided by the delegation of Canada are reproduced in document WT/TPR/M/112/Add.1.
3. The Chairperson noted with interest that Canada's sound economic policies and its outward-
looking trade regime had allowed the country to maintain growth in the face of the global economic
slowdown.  She looked forward to hearing more about Canada's successful policy mix and howCanada had continued to expand its network of preferential agreements, both to achieve trade
diversification and for reasons of political cooperation.  She suggested an interesting debate would
take place regarding this issue, notably in the cu rrent context of multilateral trade negotiations, and
pointed out that Members would wish to discuss the few areas where trade and investment barriers
remained.WT/TPR/M/112
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II. OPENING STATEMENT BY THE REPRESENTATIVE OF CANADA
4. The representative of Canada (Mr. Randle Wilson, Director, Strategic Trade Policy)
underlined the two key principles, or guiding concepts, of Canada’s international trade policy.  The
first was multilateralism.  The second was openness.  Together they had delivered a high standard of
living to Canadian citizens.
5. Canada’s commitment to a multilateral approach to trade policy had been demonstrated by its
dedication to maintaining the WTO as the cornerstone of its trade policy.  Canada had continued to
devote itself to strengthening the WTO as an institution.  Canada had proposed, during the early phase
of the Uruguay Round, to enlarge the scope of the GATT, which had led to the founding of the WTO
in 1995; proposals  also included enhanced dispute settlement procedures, and more rigorous
examination of the policy aspects of regional trading arrangements, as well as the review of specific
agreements.  Canada continued to provide contributions to further its objective of maintaining theWTO as an effective and responsive organization, whose underlying objectives, rules and practices
were a fitting basis for its trade policy.  Canada used WTO rules as the standard by which it measured
all of its other institutional relationships with trading partners.
6. Canada's second key principle of openness meant a liberal trade policy that complemented its
comparative advantages.  Openness was not an abstract philosophy:  it was a practical economicpolicy that contributed to growth, competitiveness, innovation, adaptation, and productivity.  As a
result, Canada's exports of goods and services were  equivalent to some 41% of its GDP, with imports
equivalent to approximately 37%, and – more pertinently – Canada's economy had strengthened to
such an extent that domestic demand could, when it had to, make up for passing weaknesses on the
international side.
7. A ready indicator of Canada's openness was the average tariff rate.  Since 1989, Canada had
decreased an already low average rate on all imports to its current rate of just under 1%.  This
reflected the rise in the percentage of duty-free imports, from 67% to approximately 90% of total
imports.
8. Imports were important to Canada's economy and openness meant accessibility for Canada's
trading partners and integration with other economies.  Canada maintained clear and understandable
rules that permitted foreign goods and services to enter its markets, compete for the business of
Canadians, and deliver the best quality and most affordable products to consumers in Canada.
9. With respect to Canada's trade structure, the United States was Canada's main supplier and its
main customer.  Canada traded more than Can$1.25 million a minute in goods and services with or
through the United States, more than any other two nations.  Canada also had healthy exports to other
parts of the world.  Since the signing of the Canada-U.S. FTA every other part of the world haddoubled its exports to Canada.
10. The increasing degree of integration within Canada's region showed in the respective shares
of resource and non-resource trade.  While the import picture was one of stability, exports of non-
resource-based products such as machinery, equipment, and consumer products had constituted the
bulk of Canada's exports in the last ten years.  The value-added component of Canada's trade was
growing even in strong resource-based export sectors such as agri-food and forestry, to say nothing of
its service industries’ exports.
11. The forces of geography, history, and economics had militated against the least developed
countries being major trade partners for Canada.  Their performance on both the import and export
side had been below potential for a number of reasons but, thanks to improved market access andeconomic growth on both sides, a clear upward trend was seen in both indicators from 1999-00.  As ofWT/TPR/M/112
Page 5
1 January 2003, Canada had increased the openness of its market to the least developed countries still
further.  With duty- and quota-free market access now available in sectors of comparative advantage
to them, such as textiles and clothing, the upward trend should continue; the 16% increase in their
textile and clothing exports to Canada in the first two months of 2003 compared to the same period in
2002 suggested this was a reasonable expectation.
12. Canada was open to investment as a necessary complement to a liberal trade policy and a key
component of its economy.  Canada had moved, in recent years, into a net creditor position, and this
had, in general, strengthened its trade ties rather than substituting for them.
13. Openness in the context of Canadian trade policy was also a governance principle, and
Canada was committed to a high level of transparency in developing and implementing trade policy.
The practice of transparency ensured that federal government departments and agencies involved in
trade discussions had open and effective channels of communication with each other and withprovincial and territorial governments;  that interested stakeholders had opportunities to provide input
into the aims of Canada's policies;  that the public was kept informed of its policies;  and that the
information provided was timely and enabled debate and discussion of its policies.  This way, policies
put forward were in the interest of Canadians, and had their understanding.
14. Canada encouraged the Members of the WTO, individually and collectively, to engage
citizens, business, non-governmental organizations, an d other stakeholders in their activities. These
international efforts were an important complement to the work done at home, and were necessary to
increase understanding, participation, and support for the benefits of international trade.
15. Sound economic and fiscal policies had fostered economic expansion in Canada in recent
years. The reduction of Canada’s government debt  as a percentage of GDP had continued in every
fiscal year since 1997, reducing its federal debt-to-GDP ratio from a high of 67.5% in 1995-96 to
44.5% in 2002-03.  Canada had recorded a budgetary surplus in each of the six fiscal years since
1997-98.  While annual inflation had generally remained within a 1% to 3% target range over the past
few years, the Bank of Canada had raised its overnight rate recently to contain inflationary pressures
brought about by the impact of higher-than-expect ed prices, notably for energy products, but also for
auto insurance premiums and price pressures in ce rtain sectors, combined with near-full production
capacity and strong domestic demand, particularly household expenditures.
16. Together with a competitive exchange rate, the whole policy mix had delivered the strongest
record of real GDP growth in th e G8, with forecasts going as high as 3.2% in 2003, rising to 3.5% in
2004;  an employment rate at a 13-year high, w ith labour market participation of 67.5%, and the
creation of 335,000 new jobs in 2002;  and a rising average income level for Canadians.
17. The international events that had occurred si nce Canada's last Review in 2000, showed no
clearer proof of the benefits and adaptability of Canadian trade policy.  Canada's largest and most
significant partner, the United States, was subject to a terrorist attack of proportions that had not been
previously witnessed on Canada's continent.  This epochal event could have meant a significant and
lasting downturn in their economic relations, and specifically in cross-border trade.  The movement of
nearly $2 billion worth of goods and services across the Canadian-U.S. border each day had torespond to the clear need for secure and safe transit in and out of the United States.  This was as clear
to the Government of the United States as it was to the Government of Canada.
18. Canada and the United States signed the Smart Border Declaration and immediately began
implementing a 30-point action plan to build a border for the 21st century.  The initiative, built upon
previous cooperative efforts between the two count ries, including the Canada-U.S. Partnership, had
enhanced the security of its shared border while facilitating the legitimate flow of people and
commerce.  This had been accomplished without reallocating resources away from other entry pointsWT/TPR/M/112
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into Canada.  Border agencies continued to work towards the full implementation of the action plan,
and its further elaboration.
19. One of the key lessons to emerge from 11 September for Canada was that economic
integration and trust were mutually reinforcing;  trade relationships were built on partnership.  The
aftermath of the tragedy was a reminder that trade and trade policy alike must be able to adapt andrespond to non-economic needs that include, top among them, security.
20. The other key development since Canada's last Review had been its engagement with an
increasing number of trading partners through a variety of trade relationships.  How Canada
reconciled its active regional policy with its avowed attachment to the WTO’s system of rules lay in
the coherent design of Canada's trade policy.  These relationships were intended to complement
multilateral liberalization by generating political momentum, by developing and refining elements of
the trade regime, and by preparing domestic industries for the further opening of markets.
21. While some of Canada's partners pursued competitive liberalization, Canada's strategy might
be better described as “reinforced liberalization”.  Bilateral and regional initiatives were pursued in
instances where it was hoped that commitments were  even deeper than those contained in the WTO,
not just in the obvious sense of moving to duty-free access but also creating innovative rules for issues
not covered by WTO agreements.  Canada not only reinforced WTO rules but also blazed a trail forthem, encouraging liberalization in new areas that built more open, transparent, and secure markets
accessible to the best and most efficient producers.
22. For example, NAFTA, and Canada's FTA, with Chile contained rules regarding government
procurement and investment, which were also under negotiation for the Free Trade Area of the
Americas. The Canada-Costa Rica FTA contained a trade facilitation chapter.  All three of thesebilateral FTAs were complemented by side agr eements on labour and environmental cooperation.
23. Canada and the European Union were setting out the steps to achieve a wide-ranging bilateral
trade and investment enhancement agreement that aimed to go well beyond a classic free-trade
agreement to address, inter alia , regulatory barriers to their bilateral trade.  This would be designed by
both parties to complement their shared WTO commitments.
24. The full range of regional and bilateral initiatives undertaken by Canada had been detailed in
its Government Report and in the Secretariat Report.  Canada's bilateral and regional free-trade
agreements were mutually reinforcing, and reinforced the goal of market access.
25. The representative reiterated Canada's continued commitment to orderly marketing systems in
the agriculture sector, namely supply management systems and the Canadian Wheat Board.  The
Government and Parliament of Canada established domestic policies and law on the basis of the will
of Canadians.  Ample evidence showed that Canadians supported the results of this approach, and thatCanadian farmers must be able to choose how to organize the marketing of their products.  The choice
of a marketing organization remained a domestic policy choice and the Government was committed to
this approach.
26. The principles of Canadian trade policy – multilateralism and openness – marked Canada as a
committed globalist in the current context of the Doha Development Agenda (DDA).  The same level
of engagement, concern, interest, and dedication that had always marked Canada’s participation in
earlier rounds of trade negotiations would be given to this round.  The DDA held the promise of
benefits for all countries.  Active participation in the global trading system played a positive role in
improving the quality of life for people around the world, and results were needed to enable this
participation.WT/TPR/M/112
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27. Canada's priorities in this Round were:  to eliminate export subsidies to agriculture;  to
substantially reduce trade-distorting domestic support to agriculture;  and to substantially improve
market access for all agricultural and food products, services, and other goods.  Improving and
clarifying the rules governing the use of trade remedies and subsidies and strengthening the WTO
dispute settlement mechanism were also key goals for Canada.
28. He underlined a range of other market opening efforts and partnerships to improve trade
opportunities for developing countries including:  Canada’s LDC market access initiative;  regional
funding such as the Joint Integrated Technical Assistance Programme (JITAP) announced at the 2002
G8 Summit in Kananaskis;  the broader package of the New Partnership for Africa’s Development, to
which Canada had committed Can$500 million;  and efforts at the international level to improve the
coherence of trade and development policies, such as via the Integrated Framework.  The Kananaskis
announcements represented a comprehensive approach aimed at increasing the ability of Africancountries to participate in the multilateral trading system, increasing private sector capacity, and
increasing trade policy expertise.
29. Canada’s own experience demonstrated that a liberal, open, accessible, and transparent policy
of international trade, firmly based on a flexible and functional multilateral system of rules, enabled
citizens to engage their productive abilities, a nd built a stable and wealthy nation that was able to
adapt and lead in the global economic arena.
30. Canada was always ready to engage with its partners to ensure the constructive and constant
improvement of the global trading system.  Canada’s goals in the engagement were to build on the
solid foundation already achieved within the WTO, and to extend this foundation to include the
expanding agenda of trade issues, so that the WTO remained relevant to the needs and expectations ofCanada's traders, investors, and citizens in general.WT/TPR/M/112
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III. STATEMENT BY THE DISCUSSANT
31. The discussant (H.E. Ambassador Stefán H. Jóhannesson) welcomed the Canadian
delegation, congratulated H.E. Ambassador Mary Whelan on her appointment to the chairmanship of
the TPR Body, and expressed his satisfaction in being able to participate in Canada's Review.
32. Canada had been subject to the scrutiny of the TPRB more often than any other Member.
This, together with the high degree of transparency of Canada's trade policies, offered an opportunity
for an interesting and in-depth discussion.  The three major topics of his presentation were
macroeconomic environment;  trade policy regime;  and sectoral policies.
33. With respect to the macroeconomic environment, he commended Canada for the strong
results posted almost without interruption during the last decade.  The period under review, from mid
2000 to mid 2002, had not been an easy one for many countries.  Referring to the Government and the
Secretariat reports, he suggested that the Canadian economy had successfully weathered the recentslowdown in the world economy, showing satisfact ory growth rates at a time of reduced global
growth.  The key for Canada's success might be found in the process of economic reform undertaken
years before.  In particular, Canada had pursued a policy of fiscal discipline that had resulted in
surpluses both at the federal level and in most provinces.  Those surpluses had provided Canada with
room to manoeuvre, and allowed it to use a counter-cyclical fiscal policy to respond to the slowdownin the world economy.  Similarly, Canada was able to use an active monetary stance to stimulate
growth while keeping inflation within a targeted range of between 1% and 3%.
34. The discussant expressed interest in hearing the Canadian delegation's views concerning
Canada's economic reform process, as Canada's e xperience would provide a useful insight for other
WTO Members.  Canada's economic achievements were in no small part due to the very open natureof its economy.  This openness and resulting exposure to global markets had not only fostered sound
macroeconomic policies but also encouraged reform at the microeconomic level and productivity
growth.
35. Trade in Canada was equivalent to some 80% of GDP.  Most trade was with the United
States, which accounted for over 80% of Canada's exports, and about two-thirds of its imports.  Thismade the Canadian economy potentially vulnerable to economic developments in the United States,
but he was pleased to note that Canada had successfully weathered the current U.S. slowdown.  He
discussed the desirability for Canada to diversify the geographic composition of its trade, which he
presumed was currently being sought in part through the expanding number of preferential trade
agreements and arrangements.  He wondered to what extent the Canadian authorities would consider
it desirable to extend this to other WTO Members, for example, through tariff reductions on an MFN
basis in the context of the Doha Development Agenda.
36. Canada welcomed foreign direct investment, and about 50% of manufacturing production was
carried out by foreign companies.  Canada participated actively in the WTO Working Group on the
Relationship between Trade and Investment.  He questioned whether the Investment Canada Act of
1985 would be renewed together with the existing restrictions on foreign direct investment.
37. Canada's trade and investment regime was one of the world's most transparent.  Canada had
been fully engaged in the current round of WTO negotiations, and had recently enhanced market
access for most products from least developed countries, granting them duty and quota-free access to
the Canadian market from 1 January 2003.
38. The Secretariat report highlighted the reforms introduced to streamline and facilitate the
import process, based on risk management, advance information, pre-approval, and self-assessment inborder management.  However, those reforms seemed to have facilitated trade mostly with the UnitedWT/TPR/M/112
Page 9
States, since all carriers pre-approved by late 2002 were involved in Canada-U.S. trade transported by
road.  He suggested that, in the interest of preventing any discrimination, it would be helpful if the
new trade facilitation provisions applied to trade with non-U.S. partners.
39. Although MFN tariffs had been reduced slightly during the period under review, with the
average MFN tariff rate falling from 7.2% in 2000 to 6.8% in 2002, much higher tariffs continued toapply to dairy and poultry products, textiles and clothing, and boats and ships.  The discussant asked
if Canada intended to reduce these high tariff peaks and, if so, when.
40. Although the pace seemed to have slowed down, Canada continued to use anti-dumping
actions actively, affecting mostly steel products.  The exclusion of some Members with which Canada
had bilateral agreements, such as Chile, from anti-dumping investigations was an interesting
development of Canadian trade policy.  This might, in principle, discriminate in favour of Chilean
firms, which could not be investigated even if there were reasons to believe that such firms may beengaged in dumping.  He asked for further details regarding this mechanism, and whether Canada was
considering including this type of exclusion in future free-trade agreements.
41. He noted that new legislation adopted in Canada since its last Review included provisions to
facilitate international cooperation on competition issues.  Canada had also sought to further
international cooperation on competition policy through its participation in a growing number ofbilateral agreements.  He asked about the interaction between those agreements and ongoing
multilateral efforts in this area.
42. Local-content requirements, performance or purchasing requirements, continued to be
maintained on a number of products, including unprocessed fish and roe herring, logs and pulpwood,
and wine products, to encourage local production and employment.  He asked whether the Canadian
authorities were considering phasing out these requirements, which could constitute a source of
market distortion.
43. He then referred to another potential source of market distortion described in the Secretariat
Report, federal and provincial financial assistance to businesses.  He asked for the delegation's views
as to the circumstances that warranted the granting of government assistance, and whether this mightnot impair efficiency in an economy otherwis e largely free of policy-induced distortions.
44. The Secretariat Report stated that Canada maintained a transparent government procurement
regime, granting national treatment for procurement covered by the GPA and other international
agreements.  However, procurement not covered by these agreements was based on reciprocity.  He
also mentioned that Canada had yet to table an offer at the sub-federal level under the GPA, an issue
that had been repeatedly mentioned in the GPA Committee.  He asked if and when the authorities
intended to include provincial procurement in the GPA.  Given the size of the procurement, which,according to the Secretariat Report, might amount to as much as 70% of federal procurement,  he
believed this inclusion would be a most welcome development.  He also asked whether the authorities
had plans to extend the procurement disciplines in  the Agreement on Internal Trade to provincial
crown corporations.
45. With respect to intellectual property rights, an important step had been taken by Canada to
bring its patent legislation into conformity with a WTO Appellate Body decision concerning patent
terms.  Canada had also signed the Patent Law Treaty, which facilitated the harmonization of
administrative practices for processing fees.  He asked when the Treaty would be ratified.
46. He was interested in two other issues in the area of intellectual property protection.  The first
related to the implementation of the WTO Panel ruling with respect to stockpiling by genericmanufacturers of patented medicines, resulting in the passing of new regulations.  He requested theWT/TPR/M/112
Page 10
authorities' views on the effects of these new regulations.  The second issue concerned the ruling by
the Supreme Court, in December 2002, that higher life forms cannot be patented.  Again, he would
welcome the authorities' assessment of the implications of this ruling.
47. The discussant began the topic of sectoral policies with agriculture.  He requested more
information on Canada's new Agricultural Policy Fr amework.  He was particularly keen to learn how
the framework would be implemented to achieve its goals of improving the responsiveness of the
agriculture sector to market signals and global competition.  The Government Report mentioned that,
within the Agricultural Policy Framework, Canada sought the integration of all international
agricultural activities, including enhancing cooperation with developing countries.  He requested the
Canadian authorities to further elaborate on this point.
48. The discussant referred to the groundfish resource collapse in the early 1990s and, in
particular, the collapse of the cod stock mainly adjacent to the coast of Newfoundland.  The collapseof this important fishery had sounded a warning bell to governments throughout the world.  He
enquired about the current state of regeneration of the fish stocks.  He also asked what the outlook
was and what lessons could possibly be drawn from the near depletion of these fish stocks and the
crisis the fishing industry faced in the affected regions.
49. Trade in manufactured products seemed to be relatively free of constraints, with some
exceptions, such as textiles and clothing.  As the deadline was approaching for the elimination of all
import quotas in textiles and clothing, he asked what types of measures the Government was taking to
facilitate the adjustment of the Canadian industry.
50. With regard to both air and maritime transport, gradual reforms appeared to focus on
improving competition and reducing costs for users.  He asked whether these reforms were likely toresult in new proposals by Canada for liberalization in the WTO.
51. In financial services, market access had been further improved in banking services, with the
extension of operations permitted for foreign bank branches.  Ownership restrictions in banks had also
been liberalized.  In this context, he wondered how these changes were likely to affect the market
structure of the banking sector.
52. With respect to telecommunications, where competition appeared to have increased and the
cost of certain services dropped, he expressed interest in knowing whether Canada intended to relax
the remaining market access restrictions, such as Canadian domestic ownership requirements for
facilities-based carriers.
53. He congratulated Canada for the openness and transparency of its policies, as well as for its
commitment to the multilateral trading system and it s initiatives in favour of developing countries,
especially towards LDCs.  He had little doubt that all such policies had played an important role inconstantly improving the high living standards enjoyed by the Canadian population.WT/TPR/M/112
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IV. STATEMENT BY MEMBERS OF THE TRADE POLICY REVIEW BODY
54. Members welcomed the delegation of Canada and expressed appreciation for the
comprehensive introductory remarks.  Members thanked the discussant for his valuable contribution,
and the Secretariat for its report.  A number of Members referred to the questions they had submitted
in writing;  they looked forward to receiving the replies from Canada.
55. Members also offered congratulations to Ambassador Sergio Marchi for his dynamic
leadership as Chairperson of the General Council over the past 12 months, and to
Ambassador Mary Whelan on her election to the Chair of the TPRB.
(i) Economic and institutional environment
Macroeconomic performance
56. Members were unanimous in commending Canada for its sound macroeconomic policies and
outward-looking trade regime.  They noted that the Canadian economy had performed remarkably
well, outstripping all other G8 countries in GDP growth in 2002, despite the global economic
contraction that was also occurring in the United States, on which Canada depended heavily.  The
ratio of public debt in GDP had been reduced from 71% in 1995 to 45% in 2002.  Impressive job
growth, with half a million jobs created in 2002, was an important indicator of the success of Canada'seconomic and trade policy approach, whilst a balanced budget was maintained and inflation was kept
in check.  Prudent macroeconomic policies in the past had allowed the recent use of monetary policy
to encourage growth.
57. The representatives of Costa Rica, New Zealand
, and Norway  suggested that Canada's strong
economic performance was, in many ways, attributable to the degree of openness in the Canadian
economy.  This liberalization had encouraged productivity gains and improved competitiveness,
permitting Canadian enterprises to pursue new opportunities in the marketplace.  The representative
of Kenya noted that Canada's strong economic performance had been propelled by a sharp increase in
investment and strong exports, which signified the important role international trade could play in
economic development efforts.
Agreement on Internal Trade, provincial measures, and competition policy
58. The representatives of the European Union and Costa Rica  noted the important differences
that existed between trade and investment policies and practices at the provincial and federal levels.
These differences could translate into market access difficulties for exporters, including, in particular,
small producers and those from developing countries.  They also referred to the lack of notifications
to the WTO by Canadian provinces.
59. The European Union welcomed Canada's recent initiative in favour of increased bilateral
dialogue regarding "intelligent regulation".  He hoped this dialogue would be extended to third
countries and would give priority to international harmonization, whilst also involving sub-federal
entities in Canada.
Foreign investment regime
60. The representatives of Japan and Singapore  wondered about the need for the prior
examination by the Canadian authorities, under the Investment Canada Act, of significant investments
in Canada by non-Canadians.  The limitation on the board members of Canadian companies had been
relaxed by the amendment of the Canada Business Corporation Act in 2001, but the requirementremained for 25% or more of the board members to be Canadians.WT/TPR/M/112
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61. On the other hand, the representative of Costa Rica noted, with satisfaction, the importance
granted by Canada to foreign direct investment and to the need for a multilateral framework to protect
it.  The Canadian experience showed that it was possible to have a legal framework providing stability
to trade flows linked to trade, whilst retaining the flexibility needed to apply domestic policies.
Canada in the WTO
62. Members complimented Canada for the transparency of its trade regime.  The representative
of Colombia found that the high degree of public (including academic) participation in trade policy
formulation and preparation of negotiating positions, was evidence of the high degree of transparencyin the Canadian Government's actions.  Other Members, including the representative of Poland,
recognized Canada's significant support for the rules-based multilateral trading system, demonstratedby its active contribution to WTO activities, and for its strong commitment towards liberalizing trade
and investment.  The representative of Norway regretted that Canada had not insisted on having its
Review webcast, as had been the case in 2000.
63. The representative of Australia stated that Australia and Canada had shared interest in
bringing the Doha Round negotiations to a successful conclusion.  In particular, they were working
together to seek fundamental agricultural trade reform, and substantial improvements in market accessfor services and non-agricultural goods.  The representative of Costa Rica shared Canada's interest in
clarifying and strengthening the Dispute Settlement Understanding.  Canada's will to foster tradefacilitation had been confirmed in the Council for Trade in Goods, where Canada had presented a
document on the possible relationship between trade facilitation and technical assistance, and the
creation of trade-related capacity.  This document reinforced Costa Rica's view that better multilateraldisciplines in this area provided a win-win situation.
64. Many representatives, including Japan and the Czech Republic
, shared the Canadian view that
the Doha Development Agenda (DDA) held the promise of providing benefits for both developed and
developing countries.  The representative of Morocco saw an engagement in favour of developing
countries as the "Gordian Knot" of the Doha negotiations.  The representative of  India asked Canada
to take a leading role in the negotiations on the resolution of implementation-related concerns,
including the special and differential (S&D) issue.
65. The representatives of Hong Kong, China and Mexico  welcomed Canada's support for
enhanced participation by developing countries in WTO programmes and activities.  The
representatives of Kenya and Mauritius  complimented Canada for its contribution to technical
assistance and capacity building programmes for developing and least developed countries, for itssupport of the New Partnership for Africa's Development (NEPAD), and for its commitment ofUS$500 million towards the G8 African Action Plan.  The representative of Venezuela agreed that
technical cooperation could play an important role in reducing asymmetries between the capacity ofdeveloped and developing Members to implement existing agreements and new rules.
66. Hong Kong, China noted Canada's initiative of providing duty-free and quota-free treatment
for products imported from least developed countries.  The representative of the European Union
regretted that this initiative excluded certain sensitive sectors, such as supply managed agricultural
commodities, some of which were of direct export interest for the beneficiary countries.  The
representatives of Malaysia and Kenya  invited Canada to consider enhancing tariff preferences for
developing countries by broadening the product coverage of the General Preferential Tariff (GPT).Such preferential access, according to the representative of  Venezuela, would be a key factor in
promoting increased developing country participation in world trade.WT/TPR/M/112
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67. The representative of Nigeria encouraged Canada to increase its focus and attention on
Africa, whose enormous natural resources, once developed would ginger trade.  Mauritius invited
Canada to re-think its economic strategy in Africa and to come forward with a bold initiative
embracing the whole of Sub-Saharan Africa.  The representative of Jamaica appreciated Canada's
consideration of the special problems faced by small, disadvantaged and vulnerable trading partners.
Preferential/bilateral relations
68. Members noted that Canada was particularly active in expanding its network of preferential
trade agreements, and welcomed Canada's assurance that its multilateral and bilateral initiatives were
designed to be mutually supportive.  The representative of the European Union asked about Canada's
plans to prevent possible trade distortion.
69. The representative of the Slovak Republic concurred with Canada that the large number of
bilateral free-trade agreements concluded by Canada could also contribute to further trade
liberalization, while several participants described the positive outcomes of their bilateral trading
arrangements with Canada.  The representative of Chile stated that, following the 1997 FTA between
Chile and Canada, Chilean exports had nearly doubled, and value added embodied in those exportshad also increased.  The FTA had resulted in new foreign direct investment, and Canada was now thethird largest investor in Chile, notably in the minera l sector, but also in water, electricity, and gas.  He
also noted the good bilateral cooperation regarding labour and environmental issues.
70. The representative of Costa Rica considered that the November 2002 Canada-Costa Rica Free
Trade Agreement was innovative in many aspects, taking into account the size and development level
differences between the two countries, notably in the areas of competition policy and tradefacilitation.  The goals of more efficient trade procedures and reduced transaction costs, made trade
facilitation one of the most interesting aspects of this FTA.  He hoped that the cooperation
programmes would favour the insertion of small and medium-size enterprises into the world
economy.
71. The representative of Venezuela remarked that  the signing of an Investment Promotion and
Protection Treaty in 1998, and the imminent sign ing of a Double Taxation Agreement on Income Tax,
had enhanced bilateral cooperation.  Venezuela also hoped that the FTA currently under negotiation at
the Andean Community level would reinforce the bilateral relations.
72. The representative of El Salvador was convinced that the forthcoming FTA with Canada
would bring benefits to both countries and be supportive of multilateral liberalization.  The
representative of Singapore announced full confidence that their forthcoming FTA, when concluded
by the end of 2003, would supplement efforts at the multilateral level.  He welcomed Canada's
statement that a number of outcomes in its FTAs, in areas like government procurement and trade
facilitation, were innovative and could serve as trailblazers for the WTO.
73. The representative of Colombia considered that efforts displayed by both countries towards
the creation of a FTAA, and towards the conclusion of an Andean Community – Canada FTA, would
result in increased and more diversified trade.
74. The representative of the European Union stated that the EU and Canada had agreed, at their
last bilateral summit in Ottawa, to explore the reinforcement of the bilateral trade and investment
legal framework.  New areas warranted particular attention such as regulatory barriers to trade and
investment, that went beyond traditional market access issues, which he believed would be best
addressed in the WTO/DDA negotiations.WT/TPR/M/112
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75. The representative of India remarked that some of Canada's RTAs contained simpler and
more favourable provisions on trade remedial measures than the corresponding provisions in the
multilateral WTO agreement.  For example, under NAFTA, injury determination standards applied to
NAFTA partners in a safeguard investigation were different from the rules in the WTO Agreement on
Safeguards.  This acted as a double disadvantage for non-preferential trading partners.  Therefore, heurged the Canadian Government to objectively assess the effect of its regional trade initiatives on its
non-preferential trading partners, especially the developing countries.  The representative of Brazil
referred to the free-trade agreement between Canada and Chile establishing a bilateral exemptionfrom the mutual use of anti-dumping measures, and asked for Canada's views on the extent to which
this model could be applied in other negotiations, such as the FTAA.  The representative of Indonesia
asked how Canada could justify the exclusion, under the FTA, of Chilean suppliers from the use ofanti-dumping provisions.
76. The representative of Malaysia expressed hope that Canada would continue efforts to
diversify trade with other trading partners, and not necessarily through the FTA route.  The
representative of the People's Republic of China attributed the dynamism of the Canada-China
bilateral trade relationship to the well-established mechanism of annual meetings of trade ministersand a series of trade promoting activities between the two countries, including the visit to China inFebruary 2001 by Team Canada, a trade delegation of more than 600 government officials andentrepreneurs headed by the Canadian Prime Minister.
77. The representative of Mauritius hoped that the bilateral and regional trade arrangements,
including FTAs, that Canada had concluded and was about to conclude with other countries would not
impact negatively on the preferential acquis .
(ii) Trade policies by measure
Customs procedures including CSA, Sm art Border Regime, Customs Action Plan
78. The representatives of Mexico and Switzerland  noted that customs procedures had been
simplified so as to facilitate trade.  The representative of the United States described the Canada-U.S.
Smart  Border Declaration, signed in December 2001, as an impressive example of recent mutual
efforts to reinforce public and economic security.  The action plan had four pillars:  the free flow of
people, the free flow of goods, secure infrastructur e, and coordination and information-sharing in the
pursuit of these objectives.  The representative of the European Union was keen to ensure that new
security measures did not unduly restrict trade flows.
Rules of origin
79. The representatives of Thailand and India  found that Canada's regional trade agreements
embodied an elaborate and complex system of preferential tariffs and preferential rules of origin.  The
preferential rules of origin such as the 'yarn forward rule' in NAFTA effectively discouraged Canadianexporters from procuring inputs from non-party trading partners.
80. The representative of Chile regretted that rules of origin in Canada's dairy and poultry sector
were not amongst the world's most liberal.
81. The representative of Romania remarked that Romanian products were considered to
originate from a developing country for application of GSP, but not when safeguard or anti-dumping
actions were taken.WT/TPR/M/112
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Tariffs
82. Members welcomed the reduction in average MFN duties from 7.2% to 6.8%, together with
an increase in the number of items imported duty-fr ee.  The representative of  Hong Kong, China also
welcomed the automatic elimination of tariffs below 2%.  However, along with several other
Members, he expressed concern that tariffs remained high in a number of sectors, including boats
(25%), textiles and clothing (exceed 15%), and footwear (exceed 15%), and suggested that tariff
escalation remained a feature in products such as textiles and clothing, and food and beverages.
Canada was urged to make further efforts to reduce these peak tariffs and tariff escalation.  The
representatives of Indonesia and Thailand  pointed out that products subject to the highest tariffs, such
as clothing, were frequently exported by developing countries.
83. The representative of the Slovak Republic noted that the production of some agricultural
products (dairy products, margarine, chicken, turkey, eggs, and broiler hatching eggs) were protected
by out-of-quota tariffs, sometimes at the level of 200%, and in-quota access was in some cases verysmall or reserved only for imports under preferential regime.  The representative of the European
Union suggested that the very limited import volumes in the dairy sector did not appear to match
trends in domestic demand, notably for cheese.  It was suggested that the management of tariff quotaswas, in some cases, open to abuse.
Anti-dumping, countervailing and safeguard measures84. Many participants were concerned about the general increase in the use of trade remedial
measures.  The representative of Malaysia suggested the high number of anti-dumping and
countervailing actions did not reflect Canada's transparent, liberal and outward-looking trade regime.
The representative of Indonesia wondered whether Canada used the WTO provisions on anti-dumping
to protect domestic industries from import competitio n, rather than to provide remedy to offset injury
from unfair competition.  The representative of Korea declared that unilateral import restrictions, such
as safeguard measures, imposed by a major trading power like Canada might mislead others into
following suit, thus opening a door to proliferation of protectionism across the globe.
85. The representative of India remarked that even the rumour of initiation of an investigation
could affect the behaviour of prospective importers in the investigating country and incite them to
switch towards other exporters.  Further, for a developing country like India, defending an anti-
dumping/countervailing investigation involved a heavy drain on limited resources.  The representativeof New Zealand welcomed Canada's proactive co ntribution to current WTO negotiations on these
issues.  Meanwhile, New Zealand was also awaiting  a decision by the Government of Canada in its
ongoing consideration of the safeguard investigation on steel products initiated in 2002.  He noted that
New Zealand was a small, unsubsidized steel exporter, selling regular quantities of steel at reliable
prices to longstanding customers.
86. New Zealand exporters had been cleared of any wrong-doing in an anti-dumping case on steel
in 2001, but were required to pay provisional duties for four months on imports amounting to less
than one-third of 1% of domestic consumption.  Korean suppliers of cold-rolled steel sheets and hot-
rolled steel sheets suffered from high provisional duties (respectively up to 68.6% and 34.2%) duringthe period of anti-dumping investigations, even though the investigations ultimately ended in negative
injury determination.  Czech exporters, in particular, small and medium-sized enterprises, had been
negatively affected by anti-dumping actions initiated by the Canadian International Trade Tribunal,although most of these actions had not resulted in any anti-dumping measures.WT/TPR/M/112
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87. The representative of the People's Republic of China said that his country was the third largest
target of anti-dumping measures by Canada at the end of 2001, which affected a trade volume of
US$100 million and could distort trade.  He invited Canada to streamline and simplify the relevant
procedures, and take into account the efforts and achievements made by China in market economy
reform in the process of anti-dumping investigations.
88. The representative of Indonesia noted that Canada had initiated its first safeguard
investigation with regard to nine imported steel products.  Most importantly, the safeguard petition
was not filed by domestic producers but rather by the Government of Canada.
89. The representative of Norway invited Canada to  help improve the disciplines in the current
WTO negotiations, and curtail the abuses.
TBTs (including provincial), SPS measures90. The representative of the Separate Customs Territory of Taiwan, Penghu, Kinmen and Matsu
noted that cases of Chronic Wasting Disease (CWD - a type of transmissible spongiform
encephalopathy) had occurred in Canada.  As Canada was one of the major suppliers of bovine meats
and other animal products, he asked how Canada treated CWD infected materials in order to preventthe spread of contamination by TSE agents into the food chain.
91. The representative of the People's Republic of China noted that Chinese casing processors
licensed by the Canadian Government could export to Canada only casings made of materials
originating from certain members, while casings using materials from other members, including
China, were denied access to the Canadian market.  He asked Canada for the scientific bases for these
practices, and for the reasons for suspending imports of poultry and rabbit meat from China.  Therepresentative of Argentina hoped that the Canadian market for beef and poultry would also be
opened soon.
92. The representative of the United States remarked that Health Canada restricted the marketing
of breakfast cereals and other products, such as orange juice, that are fortified with vitamins and/or
minerals at certain levels in the United States.
93. The representative of Hungary acknowledged that Canada had created a very complex and
well refined SPS regulatory framework.  In the course of the implementation, however, exporters of
meat and meat products might find that some of the procedures constituted barriers to trade.  For
example, the Canadian market remained closed for Hungarian live bovine and swine as well as forfresh, chilled or frozen meat.
State-trading enterprises outside agriculture, and the marketing of alcoholic beverages94. The representative of Chile noted that, with respect to Canada's trade policies, Chile's main
concern consisted of provincial regulations, notably those affecting alcoholic beverages.  The
representative of Hungary noted that sale and distribution of alcoholic beverages was a state
monopoly in most provinces, and that this strongly questioned the prevalence of the principle of
commercial considerations, as required by GATT Article XVII.  He believed that the number of
registered liquors rose from 3,300 to 18,800 after the state monopoly was abolished in Alberta;  this
provided clear evidence of the real nature of this regulation, and demonstrated how severely the
access to the market was restricted during the lifetime of the monopoly.  The Czech Republic
considered that restrictions applied on alcoholic beverages posed tremendous difficulties forexporters, and asked whether Canada had any intention of changing the existing system.
95. The representative of New Zealand found that the conditions imposed on the import and sales
of wines also departed from Canada's liberal economic policy, and remained concerned at the
potential scope for discrimination between domestic and imported products.  However, Canada andWT/TPR/M/112
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New Zealand were both members of the Worl d Wine Trade Group (WWTG), within which New
Zealand had signed and Canada had ratified the Mutual Acceptance Agreement (MAA) on
Oenological Practices.  The objectives of this agreement were to facilitate wine trade among the
Parties and to avoid the application of obstacles to  wine trade.  He welcomed the steps Canada had
taken in relation to this agreement, and encouraged Canada to ensure that the conditions applied onimported wines met the spirit of the WWTG's open market philosophy.
Local-content and processing requirements
96. The representative of Japan pointed out that some provinces in Canada were limiting exports
of logs, apparently to encourage further processing in Canada;  in his view, this lacked consistency
with Article XI of the GATT, and called for approp riate action towards such provinces to be taken.
97. The representative of Norway remarked that Canada was using local-content requirements in
oil and gas production;  this, in practice, discriminated against foreign companies and sub-contractors.
The representative of the Slovak Republic considered that trade distortions might arise from these
local-content, performance or purchasing requirements maintained by certain provinces, which
affected mainly alcoholic beverages and the mining sector.
Government procurement, including provincial and territorial
98. The representative of Switzerland recognized  Canada's leading role in the government
procurement negotiations, but also pointed out that a number of preferences persisted in favour of
regional or local entitities.  The representative of Korea believed that procurement from foreign
suppliers needed to be granted access conditions similar to those applied to domestic suppliers.  He
asked why Canada objected to the withdrawal of Korea Telecom from the GPA coverage, despite the
fact that it was completely privatized in May 2002.
99. Many participants noted that the application of the WTO Agreement on Government
Procurement at sub-federal level was rather controversial, and that Canada had not made any offer onaccess to sub-federal government procurement under the GPA.
Subsidies, including provincial
100. The representative of the United States noted that the United States and Canada were engaged
in discussions within the WTO on softwood lumber trade, and expressed interest in Canada’s
requirements for commercial fisheries;  she asked how factors such as oversupply were regarded in
support given to commercial fishers.   The representative of Colombia called for changes and more
transparency with respect to the programmes of federal and provincial aid, which were trade-distorting.
Intellectual property rights
101. The representative of Mexico valued the recent changes introduced by Canada to its industrial
property legislation.  The representative of the Separate Customs Territory of Taiwan, Penghu,
Kinmen and Matsu recognized the Canadian Government's determination to protect intellectual
property rights.  He expressed concern, however, about Chinese language intellectual property
infringement, especially in music and pop songs.  He asked how Canada intended to ensure the same
protection for intellectual property in other languages as that granted for French and English languageworks.WT/TPR/M/112
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102. The representative of Hungary, joined by the representative of Romania , stated that
geographical indications represented significant values based on historic traditions, and rightfully
required protection.  He regretted that, in Canada, products proven to be non-Hungarian origin were
being sold bearing Hungarian geographical indications.
(iii) Sectoral policies
Agriculture
103. The representative of New Zealand regretted that the benefits of an open and competitive
trading environment had not been extended to all sectors of the Canadian economy.  He commented
on the supply-managed commodities, including dairy, poultry, and eggs, which were heavily
protected.  The average applied tariff for dairy products in 2002 was 237.3%, compared with around
20% for agricultural products overall, and just 4.2% for non-agricultural products.  He stated thataccess was also further compromised by administrative restrictions, such as the import monopoly on
butter given to the Canadian Dairy Commission.
104. On the other hand, the representative of Norw ay, knowing Canada's sensitivities regarding
tariff reductions for poultry, eggs and dairy products, called for ways to take into account the different
production conditions and the non-trade concerns of Members.
105. Illegal export subsidies for dairy products caused New Zealand considerable damage by
depressing prices in some international markets.  The representative thus called upon Canada to
implement the Appellate Body findings fully and quickly.
106. The representative of Japan was of the view that the activities of the Canadian Wheat Board
(CWB), a single-desk exporting state-trading enterp rise, should not be a way of circumventing the
reduction commitment on export subsidies contained in the Agreement on Agriculture.  He asked how
the CWB determined the producer’s price, the wholesale and retail prices, and the export prices of
wheat and barley for respective exporting destinations.  The representative of the United States
expressed concern that the CWB continued to enjoy government-sanctioned monopoly status as wellas other privileges that restricted competition.  Both Members asked for further details on the contentsof the support provided to the CWB by the Federal Government, as well as the amount of such
support.
107. New Zealand referred to the Government of Canada's assertion that its proposed Agricultural
Policy Framework would allow producers to respo nd better to the global marketplace and compete on
the basis of their competitive advantage, and hoped that Canada would push for an ambitious result on
market access for all agricultural products in the current round of negotiations.  The representatives of
Colombia, Nigeria,  and Uruguay  congratulated Canada for its efforts, as a member of the Cairns
Group, to align agriculture with other sectors of world trade, to the benefit of all countries, in
particular, developing countries.  The representative of the Slovak Republic called for such trade
distortions as out-of-quota tariffs of 200% and small in-quota access to be part of ongoingnegotiations in agriculture.
Textiles and clothing
108. The representative of India, echoed by others, including the representative of Thailand,
expressed concern that Canada had not, in practice, removed quotas in all the categories and left most
of the integration to the final stage.  He asked Canada to take more aggressive steps to further
liberalize and integrate its textiles and clothing sector in the run-up to the January 2005 fullintegration of the WTO Agreement on Textiles and Clothing (ATC).WT/TPR/M/112
Page 19
109. The representative of Indonesia regretted that high tariffs were still in place on clothing
products of export interest to developing countries.  The presence of tariff escalation in the textiles
sector further inhibited exports of downstream/final  products from non-preferential producers.  The
representative of the Czech Republic expressed confidence that high tariffs would be substantially
reduced in the context of the ongoing negotiations on market access for non-agricultural products.
110. The representative of Mauritius noted that when all import quotas had been removed by 2005
under the ATC, Mauritian suppliers would face a real risk of displacement by suppliers from other
countries.
Steel
111. Several Members, including the representative of Mexico, referred to protectionist measures
in the steel sector.  The representative of Korea expressed concern that the spread of such import
restrictive measures among major steel-producing countries would negatively affect the ongoing
WTO/DDA negotiations, as well as the multilateral efforts to reduce global excess production
capacity of steel.  The problems of the steel industry could not be adequately solved through unilateral
anti-dumping or safeguard measures.  The representative of  New Zealand said that the bane in the
steel sector was well recognized, and welcomed Canada's proactive contribution to current rules
negotiations.
Services
112. Members were appreciative of the further enhancement of Canada's market access in services
since its last Review in 2000, and hoped to see further liberalization in Canada's initial offer onservices.
(a) Banking and insurance
113. The representative of Hong Kong, China was glad to see the relaxation of the limitations on
the scope of services provided by foreign bank branches.  The representative of Norway also
welcomed improved foreign access.
(b) Telecommunications and audio-visual services
114. Norway noted that certain domestic ownership requirements and monopolies had been
abolished in the telecommunications industry.  The representative of Singapore asked if Canada had
any plans to further liberalize the remaining limitations.
115. The representative of Japan referred to the number of regulations in audio-visual services that
were designed to sustain Canadian cultural integrity and diversity.  He considered it unacceptable for
a particular services sector to be exempt, as a whole, from the liberalization commitment and fromnegotiations.  The representative of Hong Kong, China was disappointed that Canada would not make
any commitments in the upcoming negotiations in cu ltural-related sectors, pending the development
of a New International Instrument for Cultural Diversity (NIICD).  The guidelines and procedures for
the Negotiations on Trade in Services, adopted by all WTO Members in March 2001, stipulated that
there should be no a priori  exclusion of any service sector or mode of supply.  He recognized that the
preamble and Article XIX of the GATS already provided a safety net for Members to pursue their
national policy objectives and believed that a blanket carve-out of certain sectors was unnecessary.
The representative of Mexico said that market access restrictions on audio-visual services could cause
distortions in trade.WT/TPR/M/112
Page 20
116. The representative of Mauritius looked forward to working closely with Canada on the
proposal for a new, international instrument for cult ural diversity that would be compatible with the
international trading system.
(c) Air transport
117. The representative of Norway thought that Canada's recent bilateral agreements with the
United States, the United Kingdom, and Germany indicated a positive development and asked for
more information about the future Canadian air transport policy in this respect.  He wondered about
prospects for an open skies agreement between the two countries.  The representative of Singapore
also asked about plans to liberalize the air transport sector.
(d) Maritime transport
118. The representative of Norway, referring to the Secretariat Report, noted that cabotage was
reserved for Canadian-flagged ships.  This law required the carriage of goods and passengers, as well
as any other marine activities of a commercial nature in Canadian waters, to be by Canadian
registered, duty-paid vessels.  He stressed that it would be in Canada’s interest to allow foreign-
flagged ships access to coastal trade.
(e) Professional services and movement of natural persons
119. The representative of India, joined by Nigeria,  pointed out that his country had a pool of
highly competitive and skilled manpower resources in sectors such as software, accountancy, and
health services.  However, due to tedious and cumbersome procedures for obtaining visas and work
permits, India had not been able to take advantage of this comparative advantage.  He claimed Indian
software companies had experienced much delay in obtaining business visas or short-term work
permits, which, in turn, caused them immense difficulty in meeting contractual obligations.  Hedescribed how a visa was often denied to persons belonging to the professional categories of
managers, executives, and specialists, despite market access commitments by Canada under GATS.
One requirement by Canada for giving visas to intra-company transferees was that they should be
employed by the transferring employer for at least one year prior to the application of the visa;  this
acted as an effective barrier for Indian professionals.  He urged Canada to look into these concernsand to take steps to streamline and smoothen the visa procedure for natural service providers.
120. The representative of Chile mentioned that provincial regulations affected the delivery of
professional and other services.WT/TPR/M/112
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V. REPLIES FROM THE REPRESENTATIVE OF CANADA AND ADDITIONAL
COMMENTS
121. The Chairperson invited the representative of Canada to focus his responses on three main
themes:  (i) economic and institutional environment;  (ii) trade policies by measure;  and (iii) sectoral
policies.
(i) Economic and institutional environment
Macroeconomic performance
122. The representative of Canada said that the reasons for Canada's good macroeconomic
performance could be traced back to a consensus developed among OECD nations during the 1980s
on the combination of policies most likely to deliver sound economic performance.  It was built
around four key principles:  trade liberalization, structural reform, fiscal prudence, and low and stableinflation.  Canada had followed a policy framework based on these four key principles over the past
decade.
123. A key accomplishment was the signing of the Canada-U.S. Free Trade Agreement in 1989
and the North American Free Trade Agreement in 1994.  Successive governments had also taken
steps to reduce distortions in the personal income tax system;  implemented a goods and services taxto replace the outdated tax on manufacturers;  introduced a significant tax cut package in 2000, which
was working its way through the economy now;  streng thened the incentive to work through changes
to the unemployment insurance programme, and made important changes to the public pension
system.
124. Fiscal policy was guided by the principle of putting the ratio of public debt to GDP on a
sustainable, downward track.  Since 1991, monetary policy had operated with a system of inflation-
control targets, creating a climate of low, stable, and predictable inflation to help smooth out
fluctuations in the economy and create the be st possible environment for longer-term economic
growth.  The success on the fiscal front, together with low and stable inflation, allowed the Bank of
Canada to lower interests rates when it was necessary, and provided the Government with sufficientfinancial resources to reduce the tax burden and invest in key areas such as debt reduction,
infrastructure, social programmes and health care, and foreign aid.
Economic integration with the United States, trade patterns, diversification
125. Given the geographical proximity of the United States, the free-trade agreement was a way to
remove artificial obstacles to the natural evolution of the continental economy and the integration of
production.  That said, the Government was consciou sly broadening the choices available to Canadian
business, considering that an open, export-oriented economy should sustain healthy trade relationships
with partners all around the globe.  Progress in the Doha Development Agenda was key to creating
such opportunities.
126. At the same time, the trading relationship with  the United States dominated Canada's foreign
trade, and steps had been taken to foster the flow of goods and services to the United States.  TheSmart Border Action Plan and efforts to improve border infrastructure were aimed at securing the
flow of goods and people across the Canada-U.S. bor der. As the United States was Canada's largest
trading partner, increased bilateral regulatory  cooperation, when appropriate, would enhance
economic potential for both Canada and the US.WT/TPR/M/112
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Agreement on Internal Trade (AIT)
127. All provinces and territories of Canada, except Nunavut, were signatories to the Agreement
on Internal Trade (AIT).  Nunavut, the newest territory, was created after the Agreement was signed,
and was considering becoming a party to it.  Since the AIT entered into effect in 1995, governments,with the exception of the Yukon, had agreed to extend the non-discrimination commitment to
procurement undertaken by their municipalities, academic institutions, social service agencies, and
hospitals.  The AIT Secretariat estimated that this expansion covered an additional Can$30 billion of
annual purchasing.
128. The implementation of AIT requirements for transparency in procurement and corporate
registration and reporting through Internet-based systems has made it easier for firms to operate
across provinces.
129. The requirements of the labour mobility chapter had largely been met, as 97% of workers in
regulated professions had either met, or were well on their way to meeting, the requirements of the
Agreement.  Trades were regulated directly by all provincial/territorial governments, and all
jurisdictions had taken steps or committed to offer further recognition of qualified trades persons.
130. The investment provisions of the AIT provided for non-discriminatory treatment of Canadian
businesses regardless of where the head office was located, where the firm was incorporated or where
the owners lived.  The AIT also prohibited the use of local-content and purchasing requirements
except in limited cases for regional development programmes.  Governments had agreed not to give
incentives to an enterprise located in another province that would directly result in the relocation of
that operation to its own territory.
131. The AIT provides individuals, businesses, and governments with a dispute settlement process
to resolve complaints that a government's practices were inconsistent with its obligations.  The AIT
also provided provinces and territories with an ongoing means of addressing remaining barriers to
internal trade.
Competition policy
132. The 2002 amendments to the Competition Act introduced provisions that allowed Canada to
enter into mutual, legal assistance treaties with foreign jurisdictions in non-criminal matters.  Parties
to these agreements would be able to formally request the other jurisdiction to assist in obtaining or
gathering evidence pursuant to an evidence-gathering order, a search and seizure order, an order for
statement by video link, or an order for the loan of  exhibits.  The new provisions in the Competition
Act set out the basic requirements to be incorporated in any mutual legal assistance agreementnegotiated for this purpose.
133. Currently, Canada's bilateral cooperation agreements provided for:  notifications, cooperation
and coordination, positive comity, communications, avoidance of conflict, and confidentiality.  In
response to questions from Members, the representative confirmed that this experience did underlie
Canada's desire to expand the WTO agenda to competition policy;  this reflected the positiveexperience of both policy dialogues and working-level cooperation with competition authorities.
Foreign investment regime
134. He reiterated that Canada was open to foreign direct investment.  Investment Partnerships
Canada existed to promote investment.  The Inve stment Canada Act was intended to encourage
investment in Canada so as to contribute to economic growth.  Canada was not ready to relinquish all
control over inward investment; in fact, under th e Act, significant investments, such as foreignWT/TPR/M/112
Page 23
acquisitions of Canadian companies worth over $223 million, were subject to review in order to
ensure 'net benefit' to Canadians.  In practice, however, most transactions reviewed under the
Investment Canada Act did proceed.  The review process was relatively quick and the Investment
Canada Act set out strict time limits within which the reviewing authority must respond.  There was
no plan to overhaul the Investment Canada Act.
Environmental assessment of the WTO/Doha Development Agenda
135. Canada was an active supporter of the Doha Development Agenda, and one of several
Members carrying out an environmental assessment of the Doha negotiations.  Canada recently
presented its Initial Environmental Assessment of the WTO negotiations at the WTO Committee on
Trade and Environment.  The document was available online.
Regional trading arrangements (RTAs)
136. The representative of Canada gave examples of the ways in which bilateral and regional free-
trade initiatives could complement and reinforce multilateral liberalization, for example, through
additional experience in negotiations, including on new issues such as competition or trade
facilitation.  Business communities got the benefit of new protection, for example, in investment.Economies adapted to international competition, as w itnesses by the stimulating effect of competition
on the Canadian economy under NAFTA.  Regional agreements could also borrow from
multilateralism:  NAFTA's intellectual property provisions were drawn from the draft Uruguay Round
texts.  From another angle, Canada believed that the multilateral rules on technical barriers to trade
and on sanitary and phytosanitary measures should guide all trade agreements, although leaving roomfor consultation and cooperation at a regional level.  Similarly, Canada's trade agreements explicitly
addressed the choice of forum issue.  He pointed out that, by and large, the same government officials
worked on regional and WTO negotiations;  therefore, as a practical matter, coherence and
coordination between the different tracks of Canada's trade policy was easily assured.
GPT
137. Canada's General Preferential Tariff (GPT) treatment was a unilateral instrument to enhance
access to Canada's markets by developing count ries.  Canada extended GPT treatment to 184
countries.  Pursuant to section 36 of the Customs Tariff, Canada's GPT would terminate on
30 June 2004, unless extended.  A review of extending the GPT would commence later in 2003.  Like
other GSP schemes, the GPT was the subject of a WTO waiver.
138. There were relatively few exclusions, and although many of these fell in the important areas
of textiles and clothing and agriculture, it was not obvious that the absence of a preference had been a
major barrier to penetration of the Canadian market.  In textiles and clothing, for instance, developing
country suppliers were highly competitive.  In the case of agriculture, Canada's GPT product coverage
was taken into consideration in the context of the current WTO agriculture negotiations, as well as
other initiatives and negotiations.  Significant portions of agricultural tariff lines were already coveredby GPT (65%), and of those lines over 70% were duty free.  This did not include the large number of
products (almost 40% of all agricultural tariff lines) that were already duty free on an MFN basis.
This coverage largely responded to developing c ountries' export interests.  For example, Canada
provided duty-free quota-free access for essentially all tropical products.
139. The discussant asked Canada for its views on the emergence of China as the world's fourth
largest trading entity.  He asked what Canada saw as the main challenges currently facing the MTS;
and sought further details regarding the new trade and investment agreement being negotiated with
the European Union.  He touched upon the issue of  immigration and Canada's public pension system.WT/TPR/M/112
Page 24
140. With reference to the discussant's questions regarding Canada dropping down the list of
largest traders, the representative of Canada stated that this was not a surprise;  it was a welcome
development that rising world trade and the greater participation of large developing economies inworld trade would logically result in Canada dropping still further.
141. In his view the greatest challenge facing the multilateral trading system was that of relevance,
both to the needs of the members, and to the real world.  Within that the biggest challenge was clearly
bridging the global divide between developed and developing countries.  Another issue, which was
pertinent to the WTO, was keeping itself relevant to  the members so that the regional and multilateral
systems did not get out of synchronisation, and did no t end up competing with each other.  That was a
challenge that the WTO and all its Members must take up collectively.
142. The mandate had been given in December 2002 for a Canada-EU trade and investment
enhancement agreement.  This initiative would complement the WTO, and views were beingexchanged as to its precise content, in order to make a preliminary report for the May 2003 summit
and subsequently for a decision by the December 2003 Summit.
143. Regarding public pension reform, the public pension system would be in surplus until 2020
through the contributions of Canadians.  The replenishment of the Canadian population was referred
to as the five-year plan – the time it took a landin g immigrant to gain citizenship.  The five-year plan
was a major source of young talent for a young and skilled workforce in Canada.  The longer term
projections were that thanks to immigration, there would not be a long-term problem adjusting to the
rising proportion of the workforce at retirement age.
(ii) Trade policies by measure
Customs procedures
144. The representative of Canada explained that Canadian customs reforms had been designed to
streamline and facilitate the import process (see WT/TPR/M/112/Add.1 for useful websites).  The
principles behind these reforms include risk management, advance information, pre-approval, and
self-assessment.  The Customs Action Plan was in place prior to the events of 11 September 2001.One of its central commitments was to promote certainty and consistency for exporters, not limited to
the United States, and for Canadians travelling abroad.
145. Many of the new initiatives being introduced by the Canada Customs and Revenue Agency
applied to non-US partners, such as, for example, the G7/Electronic One Step Import and G7
Electronic Export projects, slated for implementation in the summer of 2003, and the Customs Self-
Assessment (CSA) programme, which was expanded  in 2002 to include automotive goods shipped
directly from Mexico.  While there were no plans to further expand the Customs Self-Assessmentprogramme at present, an External Advisory Committee on Smart Regulation would provide an
external perspective and expert advice to the Government of Canada on regulatory issues spanning
economic and social policy objectives.  The Prime Minister had recently appointed the Chair for the
Committee, and members would soon be appointed from various sectors, including business, non-
governmental, and academic communities.
146. Bilateral meetings of trade officials and business leaders, and regional fora such as APEC,
also presented opportunities for dialogues on regulatory issues and to hear from trade partners about
areas of concern and interest.WT/TPR/M/112
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Tariffs
147. With respect to ship-building and marine construction, he called Members' attention to the
distortions that characterized international markets for these products as well as for maritime transport
services.  These included, but were not limited to, the subsidies that some foreign governmentsprovided to their shipbuilding sectors.  He hoped that these subsidies would be addressed during the
Doha Round, which would allow for a more balanced approach to the challenges faced by this sector.
148. More generally, Canada's tariff policy, including the elimination of so-called nuisance tariffs,
did not depend on the outcome of the Doha negotiations.  These negotiations could and should yield
additional benefits for all Members, such as increased bindings, and tariff reductions according to a
range of modalities.  He looked forward to seeing an increase in the proportion of Canada's total
imports that entered duty free from the current 90%.
Contingency measures
149. The anti-dumping exemption negotiated in the Canada-Chile Free Trade Agreement would
not be pursued in other regional trade agreements.  Anti-dumping reform would be addressed in the
current WTO negotiations on rules, under the Doha Development Agenda.
150. Canada was well aware that any initiation of an anti-dumping investigation could have a
significant impact on the exporters concerned and their customers alike.  The high number of
investigations where provisional measures were applied reflected the high proportion of complaints
that never made it to the initiation stage because they were rejected by the Canada Customs and
Revenue Agency;  those that made it through that screen tended to be well-founded.
151. Canada recognized that defending oneself in an anti-dumping or countervailing duty
investigation could involve the expenditure of consid erable resources.  Canada therefore maintained a
high standard for the proper documentation of complaints from Canadian industries before initiating
an investigation.
152. Canada considered that price undertakings were a constructive measure, as all exporters were
informed of the possibility of price undertakings at the time the investigation was initiated.
153. In accordance with sub-paragraph 9.3.2 of the Anti-Dumping Agreement, the re-
determination provisions in the Special Import Measures Act (SIMA) allowed importers to request a
review of the normal value or the export price, or to determine whether the goods were in fact subject
goods.  This provided a mechanism for refunding any anti-dumping duties that may have been
imposed in excess of the margin of dumping.
154. Secure access to other Members' markets was important to all WTO Members.  For that
reason, Canada had proposed that initiation standards for anti-dumping and subsidy-countervail
investigations be examined in the context of the current WTO rules negotiations.
TBTs, non-agricultural state-owned enterprises, local-content and processing requirements,
government procurement, and subsidies
155. The representative of Canada focussed his comments on provincial measures that Members
had highlighted for attention.  With regard to TBTs, Canada continued to notify its new technical
regulations as required by WTO rules, including technical regulations issued by Canadian provinces
that were notified as such to the Secretariat.  While there was no catalogue of all technical regulations
issued by the provinces, some had robust transparency mechanisms in place, in particular, Quebec andOntario (see WT/TPR/M/112/Add.1 for useful websites).WT/TPR/M/112
Page 26
156. With reference to wine products, the relevant Canadian provinces were not considering
phasing out any of the province-specific local-content requirements currently in place.
157. Performance and purchasing requirements were established by the Provincial Liquor Boards
in Canada, except in Alberta.  These Provincial Liquor Boards were established before the GATT was
created, and their existence and activity was consistent with the provisions of GATT Article XVII.  Inaccordance with that Article, they were notified to the WTO as STEs.  The Provincial Liquor Boards
operated as businesses whose decisions were based solely on commercial considerations and market
forces.  In Alberta, responsibility for the selection, retailing, warehousing, and distribution of liquor
rested with the private sector, a change introduced since Canada's last Trade Policy Review.
158. Major exporters of wines and spirits had accepted the policies of Provincial Liquor Boards
through various bilateral agreements.  Canada's commitments under these agreements were
implemented on an MFN basis.
159. Imported products competed with domestic products in the Provincial Liquor Board retail
stores, and enjoyed a large share of the Canadian market.  By volume, imported spirits accounted for
32.4% of the market in 2001;  imported wines accounted for 67% of the market in 2001.  Both the
value and market share of wine and spirit imports continued to increase.  For the further interest of
Members, sales of wine through stores selling ex clusively Canadian wines was approximately 10% of
total wine sales in Ontario and British Columbia;  this figure had not increased since 1995.
160. These figures demonstrated clearly that Canadians, many of whose families had emigrated
from the very Member States who had asked these important questions, continued to demand and
receive high quality alcohol from around the world, even though they might live in remote parts of
Canada.
161. On the matter of government procurement , discussions were under way to include the
coverage of federal, provincial, and territorial Crown corporations under the Agreement on Internal
Trade.  Provinces had already begun to increase access to government procurement.  Since November
2001, the Province of Quebec had had a government procurement agreement with New York State.
This agreement covered goods, services, and construction contracts.  The Alberta Government'sCentral Procurement Agency maintained no differentia l treatment policy with respect to the suppliers
of goods from inside or outside of Canada, and ha d received bids from foreign suppliers of goods as
well as information technology service providers, which it had treated on a national treatment basis.
More information on federal government procurement legislation was available online (see
WT/TPR/M/112/Add.1 for useful websites).
162. Canada's last subsidy notification, which covered 1998-99 and 1999-00, was submitted in
June 2002.  It was contained in document G/SC M/N/60/CAN.  The Federal Government remained
engaged in ongoing consultations with Canadian provincial governments regarding notification
requirements under Article XVI:1 of the GATT 1994 and Article 25 of the Agreement on Subsidies
and Countervailing Measures.  The provinces had not advised the federal government of any
programmes that met the criteria for the purposes of notification.
Sanitary and phytosanitary (SPS) measures
163. There has been a ruminant to ruminant feed ban in place in Canada to address the main means
of propagation of transmissible spongiform encephalopathies (TSEs), for over ten years.  Canada
strongly espoused a science-based approach to food, plant, and animal health and safety.  By adhering
to this approach, Canada was able to objectively review facts as they arose.  An application of thispractice could be seen in the case of beef, where the authorities had been able to expand the number
of countries that could export beef to Canada.WT/TPR/M/112
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Intellectual property rights
164. Canada signed the Patent Law Treaty (PLT) in 2001.  Canada had reviewed its patent
legislation to identify the changes required in order to comply with the Patent Law Treaty.  Canada
intended to ratify the PLT once these required changes were implemented.  The regulatory stepsnecessary to comply with the WTO panel ruling with respect to stockpiling by generic manufacturers
of patented medicines had also been taken.
165. Regarding the decision by the Supreme Court of Canada, in December 2002, that higher life
forms cannot be patented, an innovation was patentable only if it came within the term "invention" as
defined in the Patent Act , and fulfilled the patentability criteria of novelty, non-obviousness, and
utility.  In the recent Supreme Court of Canada decision on the Harvard Onco-mouse  case, it was held
that a higher life form, such as a genetically modified mouse, was not an invention within the meaningof the current Patent Act .  The practice of the Canadian Intellectual Property Office had not changed
as a consequence of this decision.  Based on the current definition of invention within the Patent Act ,
CIPO did not allow patent claims for higher life forms .
166. The discussant enquired about the criteria used to determine to which forum Canada should
bring trade disputes, and how the choice was made between the WTO and NAFTA to settle trade
disputes.  He also asked what was meant by a "flexible and functional" multilateral trading system in
the Canadian delegation's opening statement.  Regarding the activities of Export Development
Canada, he wondered about the reasons behind the increased exposure to the United States.  He
expressed surprise that only six countries could export bovine meat to Canada.
167. In response, the representative of Canada stated that there was a choice of forum only where
the disciplines overlapped.  NAFTA, had elements, such as Chapter 11 on investment, that were not
replicated at the multilateral level.  The greater th e systemic significance of an issue, the more likely
was the choice of the multilateral forum, on the grounds that other Members would be interested in
the issue.  However, in general, Canada chose the forum in which it had the greatest chance of
winning.
168. The issue of flexibility of the multilateral trading system was the same as that of relevance:  a
system that remained routed in the problems of the past and could not adapt to the problems of the
future was likely to become irrelevant.  It would continue to exist but novel solutions would be sought
elsewhere.
169. The exposure of the Export Development Corporation in the United States was driven by the
demand for coverage by the private sector.  There were two main problems for bovine meat, namely
foot and mouth disease and BSE.  Some countries could lose the certification because of an outbreakof FMD, but they could, and did, reapply and were recertified once the outbreak had been controlled.
In principal, the number of exporters of beef to Canada was limited only by the control regimes put in
place in the exporting countries.
(iii) Sectoral policies
Agriculture:  market access, domestic support, export subsidies, general policy
170. The representative of Canada described the Agricultural Policy Framework (APF) as an
action plan agreed to by federal, provincial and territorial governments, whose goal was to achieve a
stronger, sustainable agricultural sector.  In Canada , agriculture was a shared jurisdiction between the
federal and provincial governments.  All domestic support to agriculture, including support by the
federal and provincial governments, as well as support provided through joint federal and provincial
programmes, was reported in Canada's annual notification of domestic support to the WTOWT/TPR/M/112
Page 28
Committee on Agriculture.  Accordingly, any support offered under the APF would be notified; most
would be designed to fit within the green box.
171. The APF covered five elements:  food safety and food quality;  environment;  science and
innovation;  renewal;  and business risk manageme nt.  One of the key commitments of the APF was
making Canada a world leader in supplying high quality and safe food produced in anenvironmentally responsible manner;  and to be positioned to meet the changing demands of a highly
segmented world market.  Greater detail on the APF was available online (see WT/TPR/M/112/Add.1
for useful websites).
172. The level of current Canadian MFN tariffs applicable outside tariff rate quotas for supply-
managed products, namely dairy products, chicken, turkey, eggs, and broiler hatching eggs and chicks
reflected the results of previous rounds of multilateral trade negotiations in which Canada
participated, including the Uruguay Round exercise of tariffication.  The tariff levels and the size ofthe tariff rate quotas for these products established in Canada's schedules provided a predictable
market in Canada.  For most of the products covered, imports actually exceed 5% of consumption,
with fill rates for the tariff quotas generally very  high except where Canada was highly competitive
internationally and a significant exporter, as for wheat, barley, and margarine.
173. In the WTO negotiations on agriculture, Canada proposed real and substantial improvements
in market access for all agriculture and food products through a comprehensive approach addressing
tariffs, tariff quotas, and tariff-quota administration.  Canada's objective was to achieve a uniform and
equitable expansion of trade opportunities by addressing all the elements of effective access:  real
trade possibilities through tariff quota volumes of at least 5% of current consumption in a recent
period (or more, as current volumes should not be reduced).  This access should be established on aproduct basis, it should be duty free within tariff quota, and clear rules should be developed to ensure
that administration did not impede access.  These, together with Canada's ambitious positions on the
other elements of the Doha Development Agenda mandate, namely export subsidies and domestic
support, showed Canada's commitment to fundamental agricultural reform.
174. Some Members had enquired about policies that might be adopted to facilitate adjustments in
the dairy sector in particular.  Canada's policy for the dairy sector, as for the poultry and egg sectors,
was supply management.  Canada's dairy sector continued to adapt to changes in Canadian domestic
dairy markets within the existing supply-management framework that applied to production for that
market.  Production for export outside of that framework had recently been discontinued in response
to a dispute settlement finding by the WTO.  The Canadian dairy sector would thus have less
involvement in future international dairy market s and would focus its efforts on maintaining its
competitiveness in domestic dairy markets.
175. Information on the operations of the Canadian Dairy Commission (CDC), as the monopoly
importer of butter, had been communicated to Memb ers in Canada's last new and full notification
pursuant to Article XVII of the GATT and the related Understanding.
176. The CWB (Canadian Wheat Board) operated in an international market dominated by an
oligopolistic set of traders, many of them family-owned and completely non-transparent.  Hereminded Members that orderly marketing systems existed in Canada because Canadian producers
wanted them.  Recent elections to the Board of Directors of the CWB saw supporters of the CWB's
current mandate win four out of the five seats that were contested, which was firm evidence of the
continuing support of western grain producers for this form of market organization.WT/TPR/M/112
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Cod
177. The state of the northern cod stock, which had declined considerably in recent years, was
currently under review.  The scientific advice used in the assessment was based on an open and
transparent peer review process involving Canadian Government, international fisheries scientists,and provincial representatives, as well technical experts from the industry and other organizations.
Forestry
178. Canada and the United States were engaged in a longstanding and well-publicized dispute
over bilateral trade in softwood lumber.  Aspects of this dispute had been brought to the WTO,
providing further evidence that bilateral and regional regimes complemented, but did not replace,
multilateral rules.  At this stage, respective softwood lumber negotiators were taking a break toconsult and reflect on options, but both sides were focussed on a long-term, policy-based solution to
this issue.  A significant element of this was in the hands of the provinces, who managed the forestry
resource.
179. Certification for sustainable forest management, in Canada, was pursued as a voluntary,
market-based initiative.  A significant and rapidly increasing area of forest land was certified:  as ofDecember 2002, 28 million hectares were certified under one of three major certification schemes in
operation;  another 113.8 million hectares of forest lands were certified under the generic ISO 14001
environmental management system.
Textiles and clothing
180. Canada was fully committed to the full integration of the textile and clothing sector into
GATT 1994 disciplines by 1 January 2005 under the Agreement on Textiles and Clothing (ATC).  All
remaining quotas would be eliminated by that da te, in keeping with the promises made both to
Members and to Canada's industry, which has counted on this transition period to adjust.  In the
meantime, tariffs had been cut:  by January 2004, textiles tariffs would be in the 12-14% range andapparel tariffs would drop to 18%.  Quotas had been progressively liberalized, and had been abolished
for imports from LDCs, along with the duties.  A pparel imports from restrained suppliers were up
over 80% from 1994 to 2001, raising their share of the domestic market from 31% to 45%.
181. The Canadian textile manufacturing sector, having transformed itself in the last two decades
through substantial and sustained capital investment, provided quality jobs for thousands of
Canadians.  The Canadian apparel sector was dominat ed by small firms;  approximately three quarters
of firms had fewer than 50 employees.  It was also an important employer in certain cities.  A numberof developments were affecting these sectors:  the ATC, Uruguay Round tariff reductions, the LDC
initiative, bilateral trade agreements, and initiatives by Canada's major trading partners.
182. Against this backdrop, the Government of Canada recently introduced the Canadian Apparel
and Textile Industries Program (CATIP).  This programme would focus on projects to help textile and
apparel companies and their industry associations by strengthening marketing strategies, identifying
high-potential niche markets, developing e-business capabilities, diversifying products, and applying
new technologies to improve productivity.  In addition, the Government had established a joint
government-industry Working Group on Textiles and Apparel to help identify high-risk issues
affecting the long-term competitiveness of the textile and apparel industries and to recommend, on an
ongoing basis, measures that the Government might take to assist these industries in addressing theseissues.WT/TPR/M/112
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Steel
183. The steel sector received the highest share of anti-dumping investigations.  Since the conduct
of trade remedy investigations in Canada was triggered by a properly documented complaint from the
domestic industry, the Government could not control the number of investigations that were initiated.However, conditions prevailing in the international market for certain products often explain the
frequency of anti-dumping investigations on those products.  In steel, there had been a growing global
overcapacity, collapsing, or still recovering demand in some markets, and the continuing emergence
of new participants in international trade, all of wh ich had led to a significant surge in low priced steel
imports into many countries, including Canada.  These circumstances had led to an increase in trade
remedy and safeguard actions.  Canada was not alone in experiencing a trend toward more trade
investigations.  According to a recent WTO report, over 30 countries had anti-dumping duty orders inplace against steel from 47 different countries.  For this reason, Canada and many other steel
producing countries supported recent efforts within the OECD to discipline trade-distorting
subsidization to the steel sector.  Canada ha d and would continue to conduct anti-dumping
investigations on steel, as it would on any other product, in full accordance with its international trade
obligations and its own domestic law, when its domestic industry made a properly substantiatedrequest.
184. With respect to the steel safeguard investigation, the Government had the Canadian
International Trade Tribunal recommendations under consideration and had not yet come to a
conclusion.  The Government had to balance any protection given to Canadian steelmakers with the
needs of steel users and consumers.  Any decision would be made in accordance with Canada'sinternational obligations, most importantly those under the NAFTA and the WTO.  Even with the rise
in anti-dumping investigations, the annual import volume of steel for 2002 was 6.3 million tonnes, the
third highest level on record following the levels achieved in 2000 and in 1998.  In 2002, domestic
steel consumption in Canada rose 4.2% above the levels in 2001 but imports increased by 13.5% over
the same period.
Services
185. Canada's Telecommunications Act requires that telecommunications common carriers be
Canadian controlled and limits direct investment to 20% of the voting shares.  The limit on the voting
shares for holding companies was set at 33.3%, and the maximum investment by foreign entities in an
operating company at 46.7%.  In this regard, the House of Commons Standing Committee on
Industry, Science and Technology announced on 11 December 2002 that it would review federal lawsthat restrict foreign participation in Canada's telecommunications sector.  The Committee concluded
hearings in February 2003, and a report from the Committee to the Government was expected in the
spring of 2003.  The Government would then decide on what action, if any, it might wish to take (see
WT/TPR/M/112/Add.1 for useful websites).
186. In a separate process, the Standing Committee on Canadian Heritage was examining foreign
ownership of broadcasting undertakings as part of its comprehensive review of broadcasting in
Canada.
187. With respect to air transport services, Canada was achieving extensive liberalization under the
existing system of bilateral agreements.  While ther e may be some merit in considering alternatives to
the bilateral process for negotiating air traffic rights, Canada believed that the bilateral processworked efficiently and effectively, offering much fl exibility in terms of further air liberalization.  The
bilateral process would likely remain the key method for dealing with internati onal air services for the
foreseeable future.WT/TPR/M/112
Page 31
188. The Coasting Trade Act allowed for the temporary importation of a non-Canadian-registered
or non-duty-paid Canadian registered vessel, when no Canadian registered duty-paid vessel was
available or suitable to carry out the activity.  When the carriage of passengers was involved, a
determination was also based on the availability of identical or adequate similar marine service from
persons operating one or more Canadian vessels.
189. The discussant queried a possible inconsistency between federal policy and that of certain
provinces regarding financial assistance to fishing (paragraphs 177 and 179 of Chapter III of the
Secretariat Report).
190. The representative of India reiterated his request for an answer to India's questions on the
discrimination embodied in preferential rules of origin and on the visa regime applied in the
information technology sector.
191. In response, the representative of Canada stat ed that responses regarding fishing would be
provided in writing.  Responses to India's first qu estion, regarding the tariff differential, the rules of
origin, and the tariff escalation differences between regional agreements and the multilateral treatment
that India faced, were based on the actual trade levels, where the authorities had not seen any
noticeable effects.  However, he would refer the question back to the appropriate authorities.  He also
undertook to encourage appropriate authorities in Citizenship and Immigration Canada to think aboutthe realities of certain sectors like the IT sector in interpreting or changing the rules on employment.WT/TPR/M/112
Page 32
VI. CONCLUDING REMARKS BY THE CHAIRPERSON
192. This Trade Policy Review has proved to be a very open and productive dialogue between
Canada and its trading partners, in the true spirit of the Trade Policy Review Mechanism.  This was
made possible by the full engagement and good humour of the Canadian delegation, led by
Mr. Randle Wilson and Ambassador Sergio Marchi, the insightful comments by our discussant,Ambassador Stefán H. Jóhannesson, and the active involvement of a great many Members.  I would
also like to commend the Canadian delegation for providing written answers to advance questions at
the start of our first session on Wednesday, and for the additional documentation made available
today.
193. Canada was commended for its strong economic performance since its previous Review, in
spite of a world economic slowdown.  Canada's efforts in implementing economic reforms, and the
openness and transparency of its trade regime were credited for this result.  Noting that its trade wasconcentrated on a few preferential trading partners, and in particular on the United States, Members
invited Canada to seek trade diversification.
194. Canada's strong commitment to the work of the WTO was acknowledged.  Members praised
Canada's involvement in the DDA and its initiative to enhance access to its market for exports from
LDCs.  Canada's contribution to technical assistance programmes for developing countries was alsohighly commended.  Some Members asked Canada to consider expanding the coverage of its GPT
treatment.  Canada was also urged to ensure that its growing number of preferential trade agreements
was supportive of multilateral liberalization.
195. Access to the Canadian market is generally liberal, but a number of barriers remain.  While
Canada's average MFN tariff has decreased slightly, Members expressed concern about tariff peaksand tariff escalation.  Concerning non-tariff measures, Members noted the strict use of sanitary and
phytosanitary measures by Canada, which could result in barriers or increased costs for exporters
from other countries.
196. The number and duration of anti-dumping investigations and measures in Canada were of
concern to a number of Members.  It was noted that the mere threat of an investigation or theimposition of provisional duties can act as a deterrent to trade.  Members showed interest in the
exclusion of anti-dumping in the Canada-Chile free- trade agreement, with some considering that the
application of different rules to imports from preferential partners could lead to discrimination among
suppliers.  Members also expressed concern with respect to Canada's safeguard investigation on some
steel products.
197. While commending Canada for the transparency of its government procurement regime and
its active role in the GPA Committee, some Member s invited Canada to table an offer at the sub-
federal level.  The use of regional and local preferences for procurement not covered by the GPA was
queried.
198. Many Members considered that Canada's restrictive marketing arrangements and local-
content requirements could affect access for foreign wines and other alcoholic beverages.  The issue
of provincial assistance programmes was also raise d, notably in primary sectors, and of various export
programmes, including those of Export Development Canada.  Also noted were aspects of intellectual
property rights, including enforcement, ratification of treaties, compulsory licensing, patenting of life
forms, copyright reform, and geographical indications.
199. On sectoral policies, Members noted the protection granted to the steel industry through
contingency measures.  In the textiles and clothing industry, some participants observed that marketaccess remains restricted by high tariffs and quotas, while rules of origin favour particular tradingWT/TPR/M/112
Page 33
partners.  Information was exchanged about measures  to help the industry prepare for the removal of
quotas by the end of 2004.
200. Canada's objectives to reduce market distortions to agricultural trade in the WTO were
appreciated.  However, foreign access restrictions in the supply-managed dairy, poultry and egg
sectors persist, including through high out-of-quota tariff rates and low volume commitments.  TheCanadian Dairy Commission's de facto  import monopoly on butter, and the export privileges of the
Canadian Wheat Board were also discussed.
201. Canada's trade regime in services was described as generally liberal, and participants
welcomed recent reforms, notably in banking.  The provincial and federal regulation for insurance
services was the subject of several interventions.  Members also sought Canada's views on developing
GATS rules regarding air transport, and expressed hope that Canada would expand its commitments
in maritime transport.  Calls were made for the removal of remaining restrictions on foreigninvestment in the telecommunications sector, wh ich we know are under review.  Some Members
considered that Canada's audio-visual sectors should not be, as a whole, exempt from WTO
disciplines.
202. Members also made comments and sought further clarification on a number of specific areas
including:
• harmonization under the Agreement on Internal Trade;
• competition policy;
• foreign investment restrictions and review provisions;
• customs procedures;
• local-content or processing requirements in forestry and mining;
• restrictions on trade in bulk horticultural products;  and
• barriers to entry of natural persons in services.
203. The replies provided by the delegation of Canada have made a major contribution to this
Review.  Members clearly appreciated these replies.
204. This brings us to the conclusion of the seventh Review of Canada.  We can all attest to
Canada's long-standing commitment to transparency and to the multilateral trading system.  A liberaltrade regime and sound economic policies have allowed Canada to improve its living standards
continuously, even in the face of a global econom ic slowdown.  However, significant policy-induced
distortions still affect a few domestic activities, not only imposing costs on Canadians at large but also
undermining Canada's otherwise firm efforts to elimin ate inefficiencies in global markets.  I believe
that Canada's ongoing efforts to move forward its domestic reform programme will be buttressed byour joint multilateral endeavours, to the benefit of all.
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