Canada WT/TPR/S/112/Rev.1 
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III. TRADE POLICIES AND PRACTICES BY MEASURE 
(1) INTRODUCTION  
1. Since its last Trade Policy Review in 2000, Canada has continued to  liberalize its trade 
regime on unilateral, multilateral, and preferential bases.  This has included the introduction of 
simplified customs procedures both to facilitate trad e and reinforce border security.  In addition, MFN 
tariffs have been slightly reduced on an array of products.  As a result, the average MFN tariff has 
declined from 7.2% to 6.8% and the number of dut y-free items has increased.  However, considerably 
higher tariffs continue to apply to agri-food, clothing, and boats and ships.  Tariff concessions 
previously provided under the Auto Pact were elim inated in February 2001 in consequence of a 
finding by a WTO dispute settlement panel. 
2. Among preferential partners, tariffs applicable to  imports from Chile and Mexico were further 
reduced. As of November 2002, tariffs on imports from Costa Rica also benefited from preferences 
under an  FTA concluded in 2001.  Each  FTA negotiated by Canada contains specific origin rules, 
which adds complexity to its trade regime (see also Chapter II(5)).  Duty-free and quota-free 
treatment for least developed countries wa s announced, effective in January 2003.  
3. Through anti-dumping (AD) actions, Canadian producers have continued to seek protection 
from imports considered to be dumped.  In 2000 and 2001, 32 new final measures and one 
undertaking were imposed, mostly on steel products.  In December 2001, 91 AD measures plus three 
price undertakings were in force, but the number went down to 87 by June 2002.  Canada applies its 
AD legislation on a non-discriminatory basis, except on imports from Chile, which has been excluded from the application of the legisl ation since the entry into force of the Canada-Chile Free Trade 
Agreement.  Since Canada's last Review, the duration of AD actions has declined, but some 9% of 
measures have been in place for ten years or more .  Canada's first safeguard investigation since the 
establishment of the WTO, concerning st eel products, was initiated in March 2002. 
4. Quantitative restrictions maintained under the WTO Agreement on Textiles and Clothing to 
protect domestic producers against foreign competition, are being removed gradually.  These quotas 
affect several non-preferentia l partners, mostly in Asia, and are due to be eliminated at the end of 
2004.  Other import controls are in place for health an d sanitary reasons.  Although a large number of 
technical regulations are in place, Canada's Stan dards Strategy is aimed at promoting the use of 
(voluntary) adopted or adapted internationally accep ted standards to the greatest extent possible. 
5. Local-content, performance or purchasing re quirements are still maintained by certain 
provinces.  They mainly affect al coholic beverages and the mining sect or.   Canada limits exports of a 
number of items to ensure sufficie nt supplies for domestic industries.  Products affected include logs, 
and fish from certain provinces. 
6. Canada has gone a long way towards setting up a transparent government procurement 
regime.  However, access conditions to its procur ement market at the federal level are based on 
reciprocity;  Canada grants MFN and national treatme nt only as required by the WTO Agreement on 
Government Procurement.  Canada has yet to table an offer at the sub-federal level under this Agreement.  Provinces have their own procurement agencies, and some grant regional preferences to procurement not falling within the scope of the domestic Agreement on Internal Trade.  For other 
procurement, provinces grant similar access conditions to suppliers from the rest of Canada, but do 
not extend this automatically to foreign suppliers. 
7. Federal and provincial assistance is extended to  selected economic activities (assistance to 
agriculture is discussed in Chapter IV(2)).  In particular, support to the aircraft sector remains a source WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 28 
 
 
of friction with trading partners .  Federal and provincial governme nt-owned enterprises with special 
or exclusive privileges are involved in dairy, alcoholic beverages and wheat trade.  Since 2000, 
Canadian competition law has been amended to put in  place a special regime for domestic airlines, 
and to add further provisions regarding predatory behaviour in the airline industry (Chapter IV(7)).  A bill was passed by Parliament in  2002, giving the Canadian Comp etition Tribunal significant new 
powers. 
8. Canada has shown an active interest in intelle ctual property-related work at the WTO, where 
its own legislation has faced a number of legal chal lenges. Canadian patent law was amended in 2001 
to bring its legislation into conformity with an Appellate Body decision.  Canada signed the Patent 
Cooperation Treaty in May 2001, which required amendments to Canadian patent rules.  In December 
2002, the Supreme Court ruled th at higher life forms cannot be patented.  A bill to amend the 
compulsory licence provisions of the Copyright Act is under consideration. 
(2) M
EASURES DIRECTLY AFFECTING IMPORTS  
(i) Customs procedures 
9. The Canada Customs and Revenue Agency (CCRA) is in charge of customs operations.  
Carriers must report shipments using an approved cargo control document or "electronic data 
interchange" (EDI)1  Any shipment may be examined.  The frequency of examinations depend on the 
importer's past compliance record, as well as the type of goods that are being imported.  Goods  
examined more systematically include food products that may carry disease (e.g. foot and mouth), 
hazardous products or waste, explosives, chemical s, nuclear or atomic or biological goods. Supply-
managed goods (mainly dairy and poultry, see Chapter IV(2)) may also be examined more 
systematically, to ensure compliance with tariff quotas. 
10. Since 1999, the CCRA has undertaken a number of reforms to streamli ne and facilitate the 
import process.  The Customs Action Plan 2000-2004 is designed to ease the movement of legitimate 
trade and, at the same time, stop the entry of illega l goods.  It is based on the principles of risk 
management, advance information, pre-approval , and self-assessment in border management.2  Part of 
the Action Plan is a new system for traders known as Customs Self-Assessment (CSA).  The system's 
main elements were brought into law by Bill–23, which received Royal Assent in October 2001. 
11. CSA is designed to ensure the smooth flow of trade and avoid delays at the border, for 
example through dedicated lanes at major border crossings, while preserving security.  CSA involves 
screening, risk-assessing, and pre-approving importer s, carriers, and drivers that are deemed to be 
low-risk.  Under CSA, shipments entering Canada w ill be cleared immediately at the border, upon the 
identification of the importer, the carrier, and the driver who will all have been pre-approved.  In 
mid-2002, CSA was at the pilot stage;  in May 2002,  four importers were participating in CSA, and 
15% of total imports into Canada were expected to be covered at year-end.  The qualification 
procedure is explained in detail in CCRA's online information.3  All pre-approved carriers (by late 
2002) are involved in trade with the United States carried by road.   
12. An array of risk-management techniques will be used to process traders who are not approved 
under the CSA and to target shipments of higher and unknown risk.  These include electronic 
                                                      
1 Details on how to participate in the various electronic data interchange procedures for customs release 
are contained in the CCRA's online information.  Available at:  http://www.ccra-adrc.gc.ca/customs/business/ importing/ecommerce-e.html. 
2 The Customs Action Plan has been described in a communication from Canada on trade facilitation 
(WTO document G/C/W/238, 31 October 2000). 
3 For documents and procedures required for the Customs Self Assessment Program see 
http://www.ccra-adrc.gc.ca/customs/business/importing/csa/menu-e.html. Canada WT/TPR/S/112/Rev.1 
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targeting, increased exchanges of information and intelligence with other law enforcement and 
customs agencies, analysis of compliance records and pre-arrival information, as well as pre-
registration of drivers;  greater use of technology , such as ion scanners and x-ray equipment;  and 
modernized cargo control for goods requiring more da ta before they arrive at the border.  According 
to the authorities, these measures will not prejudice legitimate trade that is not pre-approved under the CSA;  they have noted that the more information provided in advance of the shipment, the better the 
assessment of shipments and the lower their risk.   
13. In October 2001, the Minister of National Re venue announced additional border security 
measures to fight the threat of terrorism.
4  The December 2001 budget also contained a commitment 
to ensuring the safety and security of Canadians, and allocated resources to the CCRA as part of a 
five-year security package.  These commitments have entailed investment by the CCRA in new 
technology at borders, including inspection of whole containers and other large masses of cargo quickly and safely.  In addition, Canada and the Unite d States have stationed officers in each other's 
high volume ports to target containers that are in-trans it to the other.  No deta ils were available on the 
impact, if any, of Canada's additional border secu rity measures on its trade with other countries. 
14. To revise the penalty structure applied for in fractions of the Customs Act or the Customs 
Tariff, the CCRA introduced a new Administrative Mo netary Penalty System (AMPS) in late 2001.  
The enforcement starts with warnings, which, if un heeded, may lead to increasingly large fines.  The 
AMPS entered into force on 1 October 2002.  
(ii) Rules of origin 
15. Canada maintains both preferential and non-preferential rules of origin.  MFN (non-
preferential) rules of origin are in place to di stinguish MFN imports from those under the General 
Tariff (see below (iii)).  At least 50% of the cost of production of the goods must have been incurred 
in one or more MFN partners for them to be considered of MFN origin.  In addition, a separate rule, 
which applies to only a limited number of imported goods, exists for marking purposes. Other MFN 
rules apply for textiles and clothing:  for textiles, the origin is deemed to be where the fabric was 
woven;  clothing originates where the parts of the garment are first sewn together, or where a knitted garment is first fitted to shape. 
16. Preferential rules of origin ensure that pr eferential trading conditions are reserved for 
products originating in countries that are member s of Canada's respective agreements.  Preferential 
rules of origin are based on a certain percentage of the price or cost of production of the goods 
originating in beneficiary countries or Canada.  Si nce its last Review, in December 2000, Canada has 
notified the WTO of the rules of origin under the Canada-Chile Free Trade Agreement (CCFTA), as 
well as the regulations amending the General Prefer ential Tariff and Least-De veloped Country Tariff 
(section(iii) below).
5  Canada's rules of origin have been described in earlier reviews.6 
17. Origin under the NAFTA is determined accord ing to the rules of origin specified in 
Chapter IV of the agreement.  In general, a good incorporating non-originating materials originates in 
the NAFTA territory if each of these components  undergoes an applicable change in tariff 
classification, specified for each good in an annex of 168 pages (Annex 401).  For textiles and 
clothing the "yarn forward" rule is applied to trade partners under the NAFTA, and under the FTAs 
with Chile and Costa Rica.  In most cases, it determ ines that the only textiles and clothing items to 
fully benefit from the free trade be tween the signatories are items produced from inputs originating in 
the respective FTA partner, st arting with yarn/fibre and including all transformations. 
                                                      
4 Canada Customs and Revenue Agency, News Room, 11 October 2001. 
5 WTO document G/RO/N/31, 13 March 2001.   
6 See WTO (1998) Chapter III;  and GATT (1995), Chapter IV. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 30 
 
 
18. The NAFTA also introduced stricter rules of or igin in the automotive sector.  While under the 
Auto Pact and the former Canada-U.S. FTA, duty-free trade between participants was contingent on a 
50% Canadian or U.S. content;  the threshold increased to 56% on 1 January 1998 and to 62.5% on 
1 January 2002 for passenger cars, light trucks, small buses (transport of 15 or fewer persons), their 
engines and transmissions.  The corresponding level for heavy-duty vehicles, large buses and all other parts is 60% since 1 January 2002.  Thus, companie s operating in Canada are required to meet these 
increased regional content levels in order to export to the Mexico and United States at preferential 
rates of duty. 
19. Given the large proportion of Canadian trade that is subject to NAFTA rules of origin 
(Canada trades over 86% of its exports and 70% of its imports with NAFTA partners), these have come under close scrutiny by third countries.  As no ted in Canada's previous Reviews, the rules may 
have increased trade diversion in favour of NAFTA partners, notably in the clothing sector (the yarn 
forward rule) and the motor vehicle component sector;  they may have also penalized Canadian 
clothing manufacturers using inputs from MFN sources, thus leading to the establishment of "Tariff 
Preference Levels" to allow preferential access to other NAFTA partners (see section (3)(i) for a 
description of this mechanism). 
20. The number of preferential rules of origin expand ed in 2002 as a result of the entry into force 
of the Canada-Costa Rica Free Tr ade Agreement  (CCRFTA).  Rules of origin under the CCRFTA are  
largely modelled on those of the NAFTA and the FTA with Chile.  In general, origin under the 
CCRFTA is conferred when goods are produced in the free-trade area entirely  from materials wholly 
obtained or produced in the area or, for goods incorporating non-originating materials, if these 
materials undergo a change in tariff classification under the Harmonized System (HS) as set out in a 
detailed annex.  Where no change in tariff classification occurs (and except for goods of Chapters 39 (plastics) and 50 through 63 (textile s and clothing)), a good may still be  considered as originating if 
its regional content value is not less than 35% or 25%, depending on the method of calculation used 
(transaction value or net cost.)  The authorities co nsider that the CCRFTA origin conferring rules are 
more liberal than those in other FTAs).
7  
21. Rules of origin for Least Developed Country Tariff (LDCT) treatment were amended in 
September 2000.  As a result, 40% of the ex-factory price of the goods packed for shipment to Canada 
may include up to 20% of the ex-factory price of  the goods from other developing countries.  
According to the authorities, this measure allowed for an expansion of the products imported from countries benefiting from the LDCT. 
(iii) Tariffs 
22. Responsibility for tariff matters continues to be shared between the Canada Customs and 
Revenue Agency (CCRA-tariff collection)
8, Finance Canada (tariff determination)9, and the 
Department of Foreign Affairs and Internat ional Trade (international tariff matters).10 
(a) Most favoured nation (MFN) tariffs 
23. Canada grants at least MFN treatment to all its trading partners except the Democratic 
People's Republic of Korea, and Libya.  Imports fr om these two countries are subject to the General 
Tariff, levied at 35% on most products.  In Ma rch 2001, MFN tariff treatment was extended to 
Albania and the Sultanate of Oman. 
                                                      
7 Rules of origin are contained in Chapter 4 of the Agreement (see the website of DFAIT at 
http://www.dfait-maeci.gc.ca/tna-nac/Costa_Rica_toc-en.asp). 
8 Available online at:  http://www.ccra-adrc.gc.ca. 
9 Available online at:  http://www.fin.gc.ca/access/taxe.html. 
10 Available online at:  http://www.dfait-maeci.gc.ca. Canada WT/TPR/S/112/Rev.1 
 Page 31 
 
 
24. After seven years of progressive MFN tariff re ductions, which followed the conclusion of the 
Uruguay Round, one half of Canada's MFN tariff sc hedule is duty-free.  Remaining tariffs fulfil 
mainly a trade protection function;  tariff revenue in 2000/01 accounted for only 1.5% of total federal 
budgetary revenue.  The average MFN tariff was 6.8% in 2002 (Table III.1), down from 7.2% in 
2000.  The average of non-zero rates was 13.1% in 2002, down from 13.4% in 2000. 
Table III.1 
Summary analysis of Canada's applied tariff, 2002  
Applied tariffs a 
Analysis No. of Lines Avg. applied 
tariff (%) Range 
(%) Std-dev 
(%) CV  
Total 8,364 6.8 0-314 24.7 3.6 
By WTO category      
 Agriculture 1,263 21.7 0-314 62.0 2.9 
 Live animals and products thereof 155 52.7 0-253 88.6 1.7 
 Dairy products 37 237.3 3-314 60.9 0.3 
 Fruit and vegetables 298 4.8 0-19 5.2 1.1 
 Beverages and spirits 111 8.3 0-256 27.4 3.3 
 WTO Non-agriculture (exc. petroleum) 7,086 4.2 0-25 5.5 1.3 
 Textiles and clothing 1,467 9.9 0-20 7.4 0.7 
By ISIC sector b      
 Agriculture and fisheries 443 6.4 0-292 30.2 4.7 
 Mining 110 0.7 0-12 2.1 3.0 
 Manufacturing 7,810 6.9 0-314 24.2 3.5 
By HS section      
 01 Live animals and products 274 55.6 0-314 98.3 1.8 
 02 Vegetable products 438 4.5 0-95 9.7 2.2 
 03 Fats and oils 62 9.3 0-218 28.1 3.0 
 04 Prepared foods, etc. 498 18.3 0-277 52.1 2.8 
 05 Minerals 174 1.1 0-13 2.6 2.4 
 06 Chemicals and products 1,102 3.2 0-195 8.3 2.6 
 07 Plastics and rubber 370 4.2 0-16 3.8 0.9 
 08 Hides and skins 227 3.2 0-16 3.4 1.1 
 09 Wood and articles 113 2.6 0-11 3.2 1.2 
 10 Pulp, paper, etc. 194 0.6 0-6 1.0 1.7 
 11 Textile and articles 1,421 9.8 0-20 7.5 0.8 
 12 Footwear, headgear 104 11.6 0-20 7.9 0.7 
 13 Articles of stone 185 3.4 0-16 4.0 1.2 
 14 Precious stones, etc. 65 2.3 0-9 3.2 1.4 
 15 Base metals and products 893 2.2 0-11 2.8 1.3 
 16 Machinery 1,423 2.0 0-11 2.8 1.4 
 17 Transport equipment 238 5.2 0-25 6.1 1.2 
 18 Precision equipment 345 1.9 0-14 3.0 1.6 
 19 Arms and munitions 32 3.9 0-8 2.8 0.7 
 20 Miscellaneous manufactures 197 5.2 0-18 4.6 0.9 
 21 Works of art, etc. 9 1.4 0-7 2.8 2.0 
a Excluding in-quota tariffs. 
b ISIC Classification (Rev.2), excluding electricity (1 line). 
Source :  WTO Secretariat estimates, based on data provided by the Canadian Government. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 32 
 
 
25. Average tariffs continue to be considerably higher for agricultural products (WTO definition) 
than for other products, with the highest rates pr otecting the food, beverage s and tobacco processing 
activities (Chart III.1).  Some 4.2%  of all MFN tariff lines are non- ad valorem ;  concentrated in the 
agri-food sector;  in some cases they mask particularly  high levels of protection.  To take into account 
their incidence on border protection, ad valorem  equivalents are included in the tariff summary 
statistics presented in this section.11 
0510152025303540
Agriculture
(WTO definition)Agriculture Food, bev erages
and tobaccoMining Manufacturing
(excl. food,
bev erages and
tobacco)TotalChart III.1
MFN tariff averages 1996-02 (selected years),  and final bound tariff ( 2004)
Per cent
a
Note:
Source:ISIC classification.
Data for 1996-02 exclude in-quota tariffs. Final bound rate (2004) includes  ad valorem  rates only.
WTO S ecretariat calculations, based on data provided by the Government of Canada.a
aa
a199619982000Bound
2002
 
26. Applied tariff rates in 2002 were slightly be low bound rates (Chart III.1).  Applied rates do 
not exceed bound rates for any tariff line.  For one line (HS code 23099020 - animal food containing cereals), the bound tariff is expressed as a sp ecific rate while the current applied rate is ad valorem .  
There are 26 unbound lines:  13 cover mineral oils and mineral fuels (HS 27), 12 cover cruise ships, tankers, tugs, drilling and platform  ships (HS 89), and one tariff  line (97040000) is for postage 
stamps.  
                                                     
 
11 In Canada, non- ad valorem  tariffs take the form of specific rates, applied on 154 items, compound 
rates on 50 items, and mixed rates on 183. Canada WT/TPR/S/112/Rev.1 
 Page 33 
 
 
27. Chart III.2 indicates the frequency distributi on of tariffs, and illust rates the differences 
between the agri-food and other sectors.  Reflecting sizeable tariff barriers in a few sensitive sectors, 
MFN tariffs exceed 15% on 657 tariff lines, not ta king into account the 183 tariff lines covered by 
out-of-quota tariffs (Chapter IV(2)).  The 657 lines consist mostly of textiles, footwear and clothing 
products, together with wine and cider, sugar, vegetables during the domestic production season, and cut flowers.  Tariffs on  boats (certain dredgers and most fishing vessels) are set at 25%.  In the 
fabricated metal products industry, tariffs exceed  12% for stamped, pressed, and coated metal 
products as well as most structural metal goods, wire  gauze, iron fittings for coffins, knives, scissors, 
secateurs, pottery, and china. 
28. Tariff escalation, i.e. tariffs that rise with the stage of processing, continues to be a feature of 
the Canadian MFN tariff, inhibiting exports of dow nstream products to Cana da by non-preferential 
foreign producers.  Tariff escalati on affects particularly food and beverages, textiles and clothing, 
wood products, chemicals, and non-metallic mineral products (Chart III.3). 
29. Since its last Review, Canada has amended its Cu stoms Tariff to implement the results of the 
second major review of the Harmonized Commodity Description and Coding System (HS) adopted by 
the World Customs Organization in June 1999 with effect from 1 January 2002.
12  As a result, some 
441 HS codes were deleted, corresponding to ta riffs averaging 4.7%.  About 780 new lines were 
added, with tariffs averaging 4.3%.  In line with the procedure agreed to by WTO Members for 
HS2002 changes13, Canada submitted its revised tariff to  the WTO for preliminary verification. 
30. In addition to the changes in HS nomenclature, tariffs have been reduced on 1,300 lines, or 
16% of all tariff lines, which explains the decrease in the average tariff.  These reductions reflected a number of policy measures, includin g the reduction of Canada's tariffs on textiles and clothing over a 
ten-year period ending in January 2004, as part  of its WTO commitments, and unilateral tariff 
reductions to lower production costs for Canadian bu siness.  Reviews of requests for tariff relief of 
this nature are conducted by the Department of Finance, or, since 1994 for textile manufacturing 
inputs, by the Canadian International Trade Tribunal.  Relief in both instances is implemented by Executive Order, on the recommendation of the Finance Minister, and the Orders amend the statutory provisions of the Customs Tariff, thus adding to the transparency of the tariff regime. 
31. Half of the reductions concern textiles, clot hing, and footwear produc ts, where tariffs have 
declined by an average 4-6%.  Tariffs on several iron and steel products have been reduced by about 
half or made duty free.  Similar tariff reductions have taken place on several paper products.  Tariffs 
have been reduced by 15-25% on several plastic products, and on some inorganic chemicals.  Of the 125 lines recording tariff changes in the agri-food se ctor, 75 concerned preparations of cereals, where 
reductions have reached 20% in some cases.  Tariffs  have also been reduced on several products of 
the milling industry, and on a few dairy products (Chapter IV(2)).  
32. Canada's Customs Tariff contains legislative provisions that automatically round down both 
MFN and preferential tariffs to the closest half percentage point, and el iminate all tariff rates of less 
than 2%, both on an annual basis.    
 
                                                     
 
12 For more information see Canada Customs and Revenue Agency online information.  Available at:  
http://www.ccra-adrc.gc.ca. 
13 WTO document WT/L/407, 26 July 2001. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 34 
 
 
(0.2%)(1.7%)(9.3%)(20.1%)
(15.6%)(43.6%)
(9.5%)
0110220330440550
Duty free > 0 -5 >5 - 10 >10 - 15 >15 - 20 >20 - 25 > 25020406080100Chart III.2
Distribution of MFN tariff rates , 2002a
Cumulative percentage
Right hand scaleNumber of tariff lines (% of total)Left hand scale
The total number of lines is 1,263 for agriculture and 7,086 for industry.  Excludes all in-quota lines. 
WTO Secretariat estimates, based on data provided b y the Government of Canada. a
Source : Agriculture
(0%)(50.2%)
(13.5%)(23.8%)
(2.9%)(9.5%)
(0.2%)
06001,2001,8002,4003,0003,600
Duty free > 0 -5 >5 - 10 >10 - 15 >15 - 20 >20 - 25 > 25020406080100IndustryPer cent Number of tariff lines
Number of tariff lines Per cent
 Canada WT/TPR/S/112/Rev.1 
 Page 35 
 
 
0714212835Chart III.3
Tariff escalation for selected manufactured productsa, 2002
Per cent
Raw materials
Semi p r oc essed
Fully processe d
Manufacture 
of food, 
bevera ges and 
tobaccoTe x t i l e ,  
wearing 
apparel and 
leather 
industriesWood and 
wood products, 
including 
furniturePaper, paper 
products, 
printing and 
publishingChemicals, 
petroleum, 
coal, rubber, 
plasticsBasic metal 
industriesNon-metallic 
mineral 
products 
By 2-digit ISIC category.  E xcluding in-quota rates. 
WTO  Secretariat estimates, based on data provided by the Canadian government.a
Source:
 
(b) Preferential tariffs under free-trade agreements 
33. In general, preferential access under free-trade agreements entails a significant advantage in 
areas protected by high MFN tariffs (Table III.2).  As stated in the Secretariat reports for Canada's 
previous Reviews, preferential agreements have co ntributed to above-average growth in trade flows 
with preferential partners, amplifying in particular Canadian-U.S. interdependence. 
34. Under the North American Free Trade Agreement (NAFTA), imports from the United States 
benefit from the largest share of duty-free tariffs (98.8% of tariff lines in 2002, up from 98.5% in 
2000).  The average tariff on the 98 remaining dutia ble items is substantial, as this group includes 
products that are most protected from import competition, mainly in the poultry and dairy sectors;  tariffs on the items were as high as 224% in 2002, as out-of-quota tariffs on these products have been 
exempted from NAFTA tariff-reduction commitments. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 36 
 
 
Table III.2 
Import duties by tariff regime, 2000a 
 MFN UST MT CT CIAT GPT LDCT CCCT AUT NZT CRT
Number of non- ad valorem  lines 387 94 173 161 288 328 158 162 364 350 121.0
Share of duty-free lines 48.4 98.8 93.8 94.2 92.3 64.0 89.8 86.0 51.6 51.9 83.7
Average of dutiable ratesb 13.1 224.8 44.3 48.0 38.0 15.1 39.8 31.9 13.3 13.3 26.0
Average tariff (%) 6.8 2.6 2.7 2.7 3.1 5.4 4.1 4.5 6.4 6.4 4.2
Of which:   
Agriculture and livestock (ISIC 11)c 7.7 4.4 4.9 5.0 6.7 6.9 5.2 5.0 7.3 7.3 4.5
Crude petroleum and gas (ISIC 22) 6.3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 6.3 6.3 0.0
Food products (ISIC 311)c 24.2 20.1 20.3 20.4 23.1 23.5 20.9 20.9 23.9 23.8 20.3
Animal feeds and other food products 
(ISIC 312)c 31.8 26.2 28.0 26.6 28.9 30.7 27.2 27.2 31.6 31.6 27.5
Beverages (ISIC 313)c 11.5 2.7 2.7 2.8 10.8 10.6 4.7 4.7 10.8 10.8 2.7
Tobacco products (ISIC 314) 8.3 0.0 0.0 0.0 5.9 5.9 1.0 0.0 8.3 8.3 0.0
Textiles (ISIC 321) 9.2 0.0 0.2 0.2 0.0 8.2 6.5 9.1 8.7 8.7 7.7
Clothing (ISIC 322) 15.1 0.0 1.5 1.5 0.0 14.2 12.5 14.3 12.9 12.9 13.2
Footwear (ISIC 324) 12.1 0.0 0.9 1.0 0.0 11.5 9.8 12.1 9.9 9.9 10.6
Furniture (ISIC 332) 6.3 0.0 0.1 0.0 0.0 4.1 0.0 0.0 6.3 6.3 9.0
Rubber products (ISIC 355) 6.7 0.0 0.2 0.2 0.0 4.4 1.9 2.7 5.2 5.2 9.2
Plastic products (ISIC 356) 5.3 0.0 0.0 0.0 0.0 2.3 0.0 0.0 5.3 5.3 2.2
Glass and glass products (ISIC 362) 2.3 0.0 0.1 0.0 0.0 1.6 0.0 0.0 2.1 2.1 0.1
Other non-metallic products (ISIC 369) 3.6 0.0 0.0 0.0 0.0 1.2 0.0 0.0 3.4 3.4 0.2
Fabricated metal products (ISIC 381) 4.1 0.0 0.0 0.0 0.0 2.2 0.0 0.0 3.6 3.6 0.0
Shipbuilding and repairing (ISIC 3841) 11.5 0.0 0.8 0.0 0.0 10.0 0.0 0.0 11.5 11.5 0.0
a Duties consist of ad valorem  tariff, available ad valorem  equivalents of non- ad valorem  lines, and/or ad valorem  components.  
The total number of lines including in-quota is 8,516. 
b Average of non-duty-free lines. 
c Includes both in-quota and out-of-quota tariffs. 
MFN Most favoured nation. 
UST United States Tariff under NAFTA. 
MT Mexico Tariff under NAFTA. CT Chile Tariff under the Canada-Chile Free Trade Agreement. 
CIAT Canada-Israel Agreement Tariff. 
GPT Generalized Preferential Tariff. LDCT Least Developed Country Tariff. CCCT Commonwealth Caribbean Countries Tariff. 
AUT Australia Tariff. 
NZT New Zealand Tariff. CRT Costa Rica Tariff. 
Source: WTO Secretariat calculations, based on data provided by the Government of Canada. 
35. Imports from Mexico, Canada's other NAFTA partner, are duty free for 93.8% of all lines, up 
from 83.5% in 2000.  The reductions have been widespread, including in food products, textiles, 
clothing, footwear, furniture, and shipbuilding.  In January 2002, Canada, Mexico, and the 
United States agreed to accelerate the elimination of NAFTA tariffs on a number of products.14  The 
remaining duties, on some 531 items, average 44.3%;  they mostly affect dairy and poultry products. 
36. Imports from Chile have benefited from sizeable tariff reductions since 2000.  The share of 
duty-free lines has increased from 88.3% to 94.2% of all lines.  The average tariff has decreased from 
                                                      
14 Products concerned by tariff cuts in Canada consist mainly of motor vehicles.  Online information.  
Available at:  http://www.dfait-maeci.gc.ca/nafta-alena/canada2-e.asp. Canada WT/TPR/S/112/Rev.1 
 Page 37 
 
 
3.2% to 2.7%.  Main reductions have occurred in textiles, clothing, footwear, and plastic products.  
The dutiable average was 48% in 2002.  Products whose tariffs are not scheduled to be eliminated are 
roughly the same as under the NAFTA. 
37. Tariffs under the FTA with Costa Rica came force in November 2002 (Table III.2).15 
(c) Tariff quotas 
38. Tariff quotas, whereby higher tariffs are applie d to imports exceeding a specified volume, are 
used mainly in the agri-food industry (Chapter IV(2 )).  Tariff quotas are also used under free-trade 
agreements, to allow certain volumes of trade in specified textiles and clothing products that do not 
meet the rules of origin required for preferential treatment. 
39. Under the NAFTA, specific prod ucts that do not meet NAFTA ru les of origin can still qualify 
for preferential treatment up to a fixed import vol ume or "tariff preference level" (TPL) negotiated 
among the three NAFTA countries. Access is provided up to certain annual quantities for cotton, wool 
and man-made fibre clothing that is manufactured  (i.e. substantially transformed) in a NAFTA 
country from non-originating components.  Data on actual use of the TPLs suggest that they are not 
restricting imports into Canada from Mexico or the United States (this is not, however the case with 
exports – section (3)(i)).16 
40. Similar mechanisms have been negotiated in the FTAs with Chile and Costa Rica:  imports of 
specific products that do not meet the rules of  origin are provided access up to specified TPLs.17.   
(d) Unilateral tariff  preferences 
41. Tariff preferences are grante d unilaterally to developing and least developed countries;  
Caribbean countries also benefit from specific preferences.  Canada’s unilateral tariff preferences for 
developing and least developed countri es are to be reviewed by 2004.18  The average tariff under these 
preferences is higher than that under reciprocal free-trade agreements (Table III.2).  However, the 
tariff regime for imports from LDCs (see below) will allow duty-free imports as of January 2003 
(except for out-of-quota volumes of supply manage d products), and thus match conditions granted to 
free-trade partners.  
42. The General Preferential Tariff (GPT) provide s tariff preferences for most developing 
countries.  Most textiles, clothing, and footwear, a few industrial goods, re fined sugar, and certain 
agricultural products are not eligible for the GPT.19  The average GPT tariff was 5.4% in 2002, down 
from 5.8% in 2000.  The extension or removal of GP T preferences is at the discretion of the Minister 
of Finance.  No change has taken place in the list of countries and products benefiting from 
GPT preferences since 2000.   
                                                      
15 The full text of the agreement, together with Canada's tariff schedule, are available online at:  
http://www.dfait-maeci.gc.ca/tna-nac/Costa_Rica-e.asp. 
16 DFAIT online information.  Available at:  http://www.dfait-maeci.gc.ca/~eicb/textile/ntpl-imp-
dec01-e.htm. 
17 These are described in DFAIT's online information. 
18 WTO document WT/TPR/M/78, 5 February 2001. 
19 See Canada Customs and Revenue Agency online information.  Available at:  http://www.ccra-
adrc.gc.ca/E/pub/cm/cn361em/cn361-e.pdf. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 38 
 
 
43. Canada's Least Developed Country Tariff (LDCT) provides duty-free access for close to 90% 
of all tariff items.  Products fr om LDCT beneficiary countries20 are eligible for duty-free entry only 
when eligible for the GPT.  Senegal was made eligible under the LDCT in May 2002.  The average 
duty for LDC eligible countries wa s 4.1% in 2002, down from 4.3% in 2000.  Dutiable rates averaged 
39.8% in 2002 and applied to about 870 lines;  several of these lines included products that might be of special interest to LDC exporters, such as food , beverages, textiles, clot hing, and footwear.  Most 
exports from LDC countries to Canada in 1999 were  clothing products, highlighting the importance of 
this sector for these countries. 
44. In June 2002, Canada announced that it will exte nd duty-free and quota-free access to imports 
from 48 of the world’s least developed count ries (LDCs), except on out-of-quota imports on 
supply-managed products (dairy, poultry and eggs), effective 1 January, 2003.  An Order amending 
the Customs Tariff to effect this change has extended  duty-free treatment to 905 additional tariff items 
under the LDCT, including textiles and clothing products that are of major importance to these 
countries.  
45. No major changes have taken place under the Commonwealth Caribbean Countries Tariff 
(CARIBCAN), which provides tariff reductions  to countries from the Caribbean region.
21  Some 86% 
of lines were duty free in 2002, with an average tariff of 33% on the remaining tariff lines.   
(e) Tariff remissions and drawbacks 
46. Several drawback and remission measures are used to offset the cost-increasing effect of 
tariffs.  In general, these measures provide tariff relief when imported goods are used for certain purposes or pursuant to certain conditions, while maintaining the general applicability of tariffs.
22  
The vast majority of the remission/drawback orders  related to measures implementing the Auto Pact 
but these were all repealed in February 2001 (see below).  One new order was introduced in the 
reporting period.  This order provides eligible Canadian fashion designers duty-free access to a range 
of fabrics priced at Can$14 or more per square me tre for use in the manufacture of apparel.  This 
order is intended to benefit accredited fashion design ers who create unique apparel that they present to 
the market under their own name or label.  Data on the share of total imports that enters into Canada 
under these mechanisms were not available.  Accordi ng to the authorities, it varies significantly from 
year to year and is thus not a good indicator of the significance of such measures. 
47. The MFN tariff on certain motor vehicles was just over 6% in 2001.  Companies established 
under the Auto Pact with the United States, however, were allowed to import those vehicles duty free 
from any MFN source, under various remission Orde rs, subject to certain performance requirements 
for domestic production-to-sales and Canadian value added.  This was the subject of a WTO Panel 
established in 1999 (Table AII.1).  The Panel fou nd that the import duty exemption was not consistent 
with the MFN principle;  and that the import duty conditional upon production-to-sales requirements 
constituted a subsidy conditional upon export performance (see also section (4)(iii) below).23  Canada 
eliminated this duty-free treatment in February 2001 .  As a result, vehicles imported by Auto Pact 
companies now face the same duty (6.1% in 2002) as other MFN imports.    
                                                      
20 Countries eligible for least developed country benefits in Canada are the least developed countries as 
defined by the United Nations excluding Myanmar (Burma). 
21 Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, 
Cayman Islands, Dominica, Grenada, Guyana, Jamaica, Montserrat, Saint Christopher and Nevis, Saint Lucia, 
Saint Vincent and the Grenadines, Suriname, Trinidad and Tobago, Turks and Cayman Islands. 
22 See also CCRA online information.  Available at:  http://www.ccra-adrc.gc.ca/E/pub/cm/d1181ed/ 
d1181ed.html. 
23 WTO document WT/DS/139/12, 4 October 2000. Canada WT/TPR/S/112/Rev.1 
 Page 39 
 
 
(iv) Other charges and taxes  
(a) The GST and provincial sales taxes 
48. The Goods and Services Tax (GST) is Canada's largest indirect tax by revenue, generating 
nearly Can$25 billion in 2001-02 (14% of total federa l budgetary revenue).  It applies to virtually all 
goods and services at a rate of 7%.  In th ree provinces (Nova Scotia, New Brunswick, and 
Newfoundland ) the GST has been harmonized with th e provincial sales tax;  the harmonized sales tax 
(HST) is 15%.  Some supplies, including residential rents and financial services, are exempt, others 
are zero-rated (e.g. certain basic groceries, medical devices, agricultural goods, and exported goods 
and services). 
49. The GST/HST is payable on the duty-paid value of imported goods under the Customs Act, 
plus customs duties and taxes imposed under the Customs Tariff, the Special Import Measures Act, 
the Excise Tax Act, or under any other law relating to customs.24  The authorities have confirmed that 
the application of the GST/HST does not discrimina te between domestic a nd foreign suppliers.  A 
number of changes took place to the GST in 2001-02.25  
50. Sales taxes are levied by six provinces that do not apply HST;  Alberta does not have a sales 
tax. The rates of sales taxes in each province are pres ented in Table III.3.  In general the basis of the 
provincial tax is the customs duty-paid value of imported products.  Quebec and Prince Edward Island 
apply provincial sales taxes to the value including GST. 
Table III.3 
Provincial sales taxes, June 2002 
Province/territory Rate generally applicable to 
imported products Source and notes 
Alberta  No sales tax  
British Columbia 7% Exemptions 
(http://www.rev.gov.bc.ca/ctb/publications/brochures/bcsales.htm) 
Manitoba 7% http://www.gov.mb.ca/finance/taxation/taxes/retail.html 
New Brunswick 8% HST 
Newfoundland 8% HST 
Northwest Territories No sales tax http://www.gov.nt.ca/RWED/nwtfilm/film4.htm 
Nova Scotia 8% HST 
Nunavut No sales tax  
Ontario 8% 10-12% on alcoholic beverages 
http://www.rev.gov.on.ca/tare/html/trierst.htm 
Prince Edward Island 10% http://www.gov.pe.ca/infopei/onelisting.php3?number=43629 
Quebec 7.5% http://www.revenu.gouv.qc.ca/eng/taxes/tvq_tps/index.asp 
Saskatchewan 6% http://www.gov.sk.ca/answers/?_0500-0599/0544 
Yukon No sales tax http://www.gov.yk.ca/depts/finance/budget02-03/budgetaddress 
Source:  Government of Canada. 
                                                      
24 See CCRA online information.  Available at:  http://www.ccra-adrc.gc.ca/E/pub/cm/d13-2-5eq/d13-
2-5-e.html. 
25 See the Department of Finance, News Releases, 20 February 2001, 12 April 2001, 
13 September 2001, 21 December 2001, 28 December 2001, 8 February 2002, and 20 December 2002 [Online].  
Available at:  http://www.fin.gc.ca/. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 40 
 
 
51. The GST and the provincial sa les taxes are refunded on inputs  purchased to produce goods 
that are subsequently exported.  As noted, e xported items are zero-rated under the GST/HST and 
under the provincial sales taxes. 
(b) Taxation of electronic commerce26  
52. As noted in the Secretariat report for its previous Review, Canada supports a free-trade 
environment for electronic commerce consistent with Canada's economic and other domestic policy 
objectives, including consumer and privacy protectio n.  Imports of electronically supplied goods and 
services (e.g. music downloaded on an MP3 file) are free of customs duty in Canada. GST/HST 
applies to electronic commerce transactions whet her they are imported digitally or physically. 
53. Canada supports the principles on the taxation of e-commerce agreed at a 1998 conference of 
the Organisation for Economic Co-operation and Deve lopment (OECD) in Ottawa.  These principles 
are known as the Taxation Framework Conditions, and establish that the rules for consumption taxes (such as VAT) should result in taxation in the jurisdiction where consumption takes place and that an 
international consensus should be sought on the ci rcumstances under which supplies are held to be 
consumed in a jurisdiction.  In 1998, an advisory committee on electronic commerce and taxation in 
Canada stressed the importance of international cooperation and of tax neutrality.
27  The authorities 
have noted that taxation of e-commerce transactions is no different than the application of sales taxes on other types of transactions. 
(c) Excise taxes and duties 
54. Federal excise duties are imposed under the Excise  Act as production levies on spirits, beer, 
and tobacco.
28  They are complemented by excise taxes imposed under the Excise Tax Act as sales 
levies.  The following products carry federal excise ta xes:  gasoline, diesel and aviation fuels, wines, 
jewellery and watches, tobacco products, automotive air conditioners, and heavy automobiles.29  The 
authorities have stated  that excise taxation does not discriminate between domestically manufactured 
products and imports.   
55. The Government initiated a review of the legislative and administrative framework for the 
federal taxation of alcohol and tobacco products in 1993.  The culmination of this review is the new 
Excise Act, 2001, which implements the Government ’s Excise Act Review pr oposals with respect to 
the taxation of spirits, wine, and tobacco products.  The new Act received Royal Assent in June 2002 
but was not expected to come into force until July 2003 to allow affected industry members and the 
Canada Customs and Revenue Agency time to prep are for the implementation of the new excise 
framework.  Key features of the Act include the co ntinued imposition of a pr oduction levy on spirits 
and tobacco, the replacement of the sales levy on wine with a production levy at an equivalent rate, 
modern administrative provisions, and a strength ened enforcement structure.  According to the 
authorities, consumers will not be affected by the changes under the Excise Act Review. 
                                                      
26 Electronic commerce is the buying and selling of goods and services, and the transfer of funds, 
through digital communications.  It also includes buying and selling over the Internet, electronic fund transfers, smart cards, digital cash and all other ways of doing business over digital networks. 
27 "Electronic Commerce and Canada's Tax Administration", A Report to the Minister of National 
Revenue from the Minister's Advisory Committee on Electronic Commerce , April 1998 (see CCRA online 
information.  Available at:  http://www.ccra-adrc.gc. ca). 
28 See CCRA online information.  Available at:  http://www.ccra-adrc.gc .ca/E/pub/ed/edrateseq/ 
edrates-e.html. 
29 Excise tax rates (November 2001) are available in CCRA online information.  Available at:  
http://www.ccra-adrc.gc.ca/E/pub/et/currateeq/currate-e.pdf. Canada WT/TPR/S/112/Rev.1 
 Page 41 
 
 
56. The new federal legislation and dr aft regulations are expected to allow the authorities to deal 
more effectively with smuggling, which particularly relates to tobacco (see also section (3)(i) below).  
As excise taxation is higher in Cana da than in the United States, there was a strong incentive to export 
these products tax-free (hence the introduction of an  export tax on tobacco products in 1994) and re-
import them illegally for sale in Canada.  In Dece mber 1999, the Government of Canada launched an 
action against several U.S. tobacc o companies in the United States Federal Court, alleging that, 
beginning in 1991, there was a conspiracy to defraud Canada through smuggling, in violation of U.S. 
racketeering laws.  According to Canada, massive cross-border smuggling frustrated Canada's 
national strategy to reduce tobacco consumption,  especially among young people, and in 1994, the 
Government significantly reduced excise taxes.  In June 2000, the United States District Court 
dismissed Canada's case;  in November 2002, the U.S. Supreme Court also dismissed Canada's 
appeal. 
57. Some provinces also impose excise taxes on spec ific products, generally on fuel and tobacco 
with different tax rates applicable for each province.  Accordin g to the authorities, these taxes are 
levied equally on domestic production and imports.   
(v) Contingency measures 
(a) Safeguards 
58. Safeguard remedies may be imposed under the Customs Tariff and the Export and Import 
Permits Act.  These Acts implement the provisi ons of the WTO Agreement on Safeguards, the 
NAFTA, the Canada-Israel Free Trade Agreement, the Canada-Chile Free Trade Agreement, and the 
Canada-Costa Rica Free Trade Agreement. 
59. Safeguard investigations are conducted by the Canadian International Trade Tribunal (CITT) 
under the Canadian International Trade Tribunal Act.   The CITT is an independent quasi-judicial 
body that carries out its statutory responsibilities in an autonomous manner and reports to Parliament 
through the Minister of Finance.  As part of its procedures for conducting inquiries, the Tribunal 
normally holds hearings that are open to the public.  The recommendations made by the CITT to the 
Minister of Finance are not binding, and may be modified. 
60. Canada's first safeguard investigation since the establishment of the WTO was initiated in 
March 2002 by the CITT, at the request of the Government of Canada.  The investigation, under 
section 20(a) of the Canadian International Trade Tr ibunal Act, sought to determine whether there had 
been serious injury to the domestic industry from nine imported steel products, including flat rolled 
products, long products, and tubular products.30  Imports from all sources since the beginning of 1996 
were subject to the inquiry.31  In July 2002, the CITT made determinations of serious injury on five of 
the nine goods (Chapter IV(4)).32  Imports from the United States were found to have contributed 
importantly to the serious injury, but not imports from Chile, Israel or Mexico, which under the 
respective FTAs should then be excluded from any safeguard measure.  In August 2002, the Tribunal 
provided recommendations to the Government regard ing measures to be taken for each product.  As 
of late 2002, the Government was examining the report and was expected to respond to the 
recommendations soon. 
                                                      
30 Notified to the WTO Committee on Safeguards, WTO document  G/SG/N/6/CAN/1, 2 April 2002. 
31 More information may be found in CITT online information, Reference No. GC-2001-001, Notice of 
Commencement of Safeguard Inquiry, Importation of Certain Steel Goods, av ailable at:  http ://www.citt.gc.ca. 
32 See also CITT online information.   Available at:  http://www.citt. ga-ca/Safeguard/index_e.htm., in 
particular Safeguard Inquiry into the Importation of Certain Steel Goods,  Reference No. GC-2001-01, August 
2002.  See also:  ftp://ftp.citt.gc.ca/doc/english/safeguar/reports/gc2b001e.pdf.  WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 42 
 
 
61. In its details of the remedies proposed, the CITT explained that its recommendations were 
made taking into account both the needs of domestic producers that had been injured by increased 
imports and the interests of the downstream users.  For four of the products, the CITT recommended 
tariff rate quotas, with no surtax to be applied on in-quota imports.  The surtax proposed by the Tribunal for above-quota imports corresponds to the increase in the price of above-quota imports that the CITT believes is necessary to ensure that any above-quota imports enter Canada at non-injurious 
price levels.  The CITT also decided that a share of the in-quota volume should be allocated to the 
United States, as a supplying country with a substantia l interest in supplying the product (Table III.4).  
In-quota volumes are to be administered in Cana da, on a quarterly first-come first-served basis on 
presentation of a firm order.  With respect to  reinforcing bars, the Tribunal recommended the 
imposition of a tariff. 
Table III.4 
Recommendation on remedies steel safeguard investigation 
Product In-quota volume U.S. allocation volume Rest of the world volume Above-quota Surtax 
 (000 tonnes) Per cent 
Cold-rolled sheet and coil 
First Year 360 229 131 15 
Second Year 366 233 133 11 
Third Year 371 237 134 7 
Discrete plate 
First Year 334 213 121 25 
Second Year 343 219 124 18 
Third Year 352 225 127 12 
Angles, shapes and sections 
First Year 300 216 84 20 
Second Year 323 233 90 15 
Third Year 349 251 98 10 
Standard pipe 
First Year 231 168 63 15 
Second Year 243 177 66 11 
Third Year 256 186 70 7 
Reinforcing bars 
 Surtax 
First Year 15 
Second Year 11 
Third Year 7 
Source : Canadian International Trade Tribunal. 
62. Canada has never imposed special safeguards, as allowed under the WTO Agreement on 
Agriculture for imports of products for which tariff quotas are administered.  Nor has it imposed 
transitional safeguards on imports of textiles and clothing under Article 6 of the WTO Agreement on 
Textiles and Clothing. 
63. Under NAFTA rules, during the ten-year transition period ending on 31 December 2003, 
safeguard (emergency) measures may be imposed on the imports of another party, if, as a result of the reduction or elimination of a duty provided for in the NAFTA, a good is being imported in such 
increased quantities, in absolute te rms, and under such conditions that the imports of the good from 
that party alone constitute a substantial cause of se rious injury, or threat thereof, to a domestic 
industry producing a like or directly competitive good.  The safeguard measure consists in the 
suspension of the further reduction of any rate of duty for the good, and an increase of the rate of duty 
to the MFN level for a maximum of three years (wit h some exceptions).  With respect to safeguard 
investigations under the WTO, under Article 802 of the NAFTA, imports of a good from another 
party must be excluded from the action unless, considered individually, they account for a substantial 
share of total imports and contribute importantly to the serious injury, or threat thereof, caused by 
imports.
33  Under Article 703.3 of the NAFTA, specia l safeguard measures may be applied in the 
                                                      
33 The text of the agreement is available online at:  http://www.dfait-maeci.gc.ca/nafta-alena/chap8-
e.asp. Canada WT/TPR/S/112/Rev.1 
 Page 43 
 
 
form of a tariff rate quota on certain agricultural products.34  The out-of-quota tariff rate may not 
exceed the MFN rate.  Canada has used this provis ion in the past against some imports from Mexico, 
but not during the period under review. 
64. Under the Bilateral Free Trade Agreement with Chile, Canada may impose safeguard 
measures, during the transition period only, if, as a result of the reduction or elimination of a duty, a 
good is imported in such increased quantities that  the imports from Chile alone cause or may cause 
serious injury to a domestic industry.  The measure may take the form of a suspension of the further 
reduction or the increase of a rate of duty on the good to a level not to exceed the MFN applied rate of 
duty.  No measure may be maintained for a period exceeding three years.  Under the agreement any 
party taking an emergency action under Article XIX of the GATT 1994 and the Agreement on Safeguards must exclude imports of a good from the other party from the action unless imports from 
the other party account for a substantial share of total imports and contribute importantly to injury.
35  
Under the FTAs with Costa Rica and Israel, similar disciplines govern the application of bilateral 
emergency actions, but each party retains all its ri ghts and obligations u nder the WTO Agreement on 
Safeguards. 
(b) Anti-dumping and countervailing measures 
Anti-dumping and countervailing duty legislation and administration 
65. The Special Import Measures Act R.S.C., 1985,  ch. S-15 (SIMA) is Canada's main legal 
instrument governing the use of anti-dumping and countervailing measures.  The Department of Finance is responsible for the elaboration of SIMA  policy and legislation.  The Canada Customs and 
Revenue Agency (CCRA-formerl y Revenue Canada) and the CITT are responsible for the 
administration of the SIMA.
36  The Commissioner of Customs and Revenue is responsible for 
initiating investigations and making preliminary and final determinations with respect to margins of 
dumping and amounts of subsidy.  The CITT is resp onsible for preliminary and final injury (or threat 
thereof) determinations.  Anti-dumping legislatio n and regulations are posted in CCRA's online 
information.37 
66. Canada applies anti-dumping and countervailing le gislation in a non-discriminatory manner, 
except on Chile.  Imports from Chile are excluded fr om anti-dumping measures if the tariff rate for 
the goods is zero.  As of 1 January 2003, all goods from Chile are exempt from the imposition of new anti-dumping duties and any existing anti-dumping or ders concerning imports from Chile will be 
eliminated. 
67. After a preliminary determination, foreign ex porters or governments can offer undertakings 
aimed at eliminating the dumping/subsidizing or injury to the Canadian industry.  Exporters are 
informed of this option at the time of the in itiation of an investigation and can examine the 
undertaking template on the CCRA's website.  Undertakings are accepted only if they are given by exporters or governments of foreign countries represen ting all or substantially all of the trade in the 
product under investigation, which the CCRA interp rets as those accounting normally for at least 85% 
of the volume of dumped or subsidized imports into Canada.  Two of the three undertakings in place 
                                                     
 
34 The Canadian products for which this special safeguard may be used are:  fresh cut flowers and 
flower buds (HS 0603.10.90);  tomatoes (0702.00.91);  onions (0703.10.31);  cucumb ers (0707.00.91);  broccoli 
and cauliflower (0710.80.20),  strawberries (0811.10.10 and 0811.10.90),  and prepared tomatoes (2002.90.00). 
35 The text of the agreement is available online at:  http://www.dfait-maeci.gc.ca/tna-nac/cda-
chile/chap-f26.asp. 
36 See Anti-dumping and Countervailing Directorate online information.  Available at:  http://www. 
ccra-adrc.gc.ca. 
37 Available at:  http://www.ccra-adrc.gc.ca/customs/business/sima/act-regs-e-html. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 44 
 
 
at the end of 2001 were with the United States, the third was with France;  only one (bingo paper from 
the United States) was entered into during the period under review.   
68. The authorities have noted that Canada operates a prospective system in which exporters are 
informed of the normal values for the products that they export to Canada.  If future sales are made at price levels equal to or higher than the normal value of the product, no duties are assessed.  The authorities consider that Canada’s prospective enforcement system operates in a manner that is very 
similar to, and has the same effect as, price undertakings at a level sufficient to remove the dumping. 
69. Procedural amendments to both the SIMA and to  the CITT Act were brought into effect in 
April 2000.
38  These amendments shifted responsibility for conducting preliminary determination 
investigations of injury from the Commissioner of Customs and Revenue to the CITT.  There was a 
corresponding shift of dumping a nd subsidization responsibilities for expiry reviews, which until 
April 2000 were conducted entirel y by the CITT.  Starting from this date, responsibility for  
determining the likelihood of continued or resumed dumping or subsidization and for expiry reviews 
was passed to the CCRA.  The amendments also contain provisions governing the review and 
termination of undertakings by the CCRA, the initia tion and conduct of public  interest inquiries in 
respect of CITT findings, and the conduct of interim and expiry reviews of existing orders.39   
70. In the context of the new Administrative Monetary Penalty System (AMPS) implemented by 
the CCRA as part of a Customs Plan to streamli ne customs procedures and rely more on self-
assessment, measures to strengthen customs enforcem ent of self-assessment were introduced.  As a 
result, for products subject to measures under th e SIMA, penalties will be imposed for not providing a 
proper product description, not using the correc t SIMA code or not keeping proper records of 
shipments subject to the SIMA.  The new syst em was fully implemented in October 2002. 
71. Bill S-23, an Act to amend the Customs Act and to make related amendments to other Acts, 
which received Royal Assent on 25 October 2001, amended the SIMA with respect to the payment, 
collection or refund of any duty or interest on duty le vied or returned under the Act.  The amendments 
to the SIMA came into effect on 1 July 2002.  The Act also introduced provisions introducing 
procedural changes with respect to the imposition of provisional duties.40  As a result, where an 
importer does not pay provisional duties within the required time, interest will be charged from the 
date on which the dutie s were to be paid.  
Anti-dumping investigations 
72. As of December 2001, 91 Canadian anti-dumping measures plus three price undertakings 
remained in force (Chart III.4 and Table AIII.1).  Th is is an increase relative to the 85 measures in 
place at the time of Canada's last Review, and 73 at  the time of its 1998 Review.  Some 37 countries 
or customs territories are affected by these measures ;  EU and U.S. suppliers are the subject of most 
actions.  Some 64 duties (70% of the total) cover steel products.  During 2000 and 2001, 32 new final 
measures were imposed, including mostly steel products such as stainless steel round bars and hot-
rolled carbon steel sheet.  In the first half of 2002,  four anti-dumping measures were revoked, all of 
                                                      
38 Act to Amend the Special Import Measures Act and Canadian International Trade Tribunal Act, 
1999, Statutes of Canada, chapter 12;  the Regulations Amending the Special Import Measures regulations, 
SOR/2000-138;  and the Rules Amending the Canadian International Trade Tribunal Rules, SOR/2000-139. 
39 WTO document G/ADP/N/1/CAN/3/Add.1, G/SCM/N/1/CAN/3/Add.1, 2 October 2000. 
40 Available at:  http://www.parl.gc.ca/37/1/parlbus/chambus/house/bills/government/S-23/S-23_4/S-
23TOCE.html. Canada WT/TPR/S/112/Rev.1 
 Page 45 
 
 
which applied to the United States, bringing th e number of anti-dumping definitive duties in place 
down to 87.41 
0246810121416
United
StatesEU1 5 C h i n a Ko re a ,  
Rep. ofChinese
Ta i pe iOther  A sia L atin
AmericaCentral
Eu ro pe a n
Tra n s i t i o n
CountriesOther s
Source:  WTO Secretariat. Chart III.4
Anti-dumping duties in force, by partner, 31 December 2001
 Steel
Other products
 
73. In the period January 2000 to December 2001, there were 46 anti-dumping investigation 
initiations, of which 37 concerned products  of the steel industry (Table III.5).42  This compares with 
28 new actions initiated in the period covered in Canada's previous Review, and 20 between 
January 1996 and June 1998.  Four new investigations were initiated in the first half of 2002, dealing with waterproof footwear from Hong Kong, Chin a;  Macao, China;  and Viet Nam; and with 
xanthates from China.  
74. Provisional duties were applied in 43 of the i nvestigations (93.5% of  the total) in the 
investigations initiated in 2000 and 2001, and in all but one of the investigations dealing with steel 
products.  Three inve stigations were terminated at the preliminary determination.  In 16 of the cases 
(14 dealing with steel products), a final determinatio n of no injury was made and no final measures 
were applied.  Four cases involving steel products  were terminated due to negligible volumes of 
dumped imports.  In the case of the steel industry , in 39% of the cases prov isional duties were applied 
in investigations that resulted in a no injury dete rmination, and in some cases the provisional duties 
were high (up to 69%).  This provided protection to the domestic industry for a period of about four 
months at the expense of the foreign supplier (Table III.5).  Moreover, in cases where final duties 
were applied, provisional duties have been historically, on average, as high or higher than final duties. 
                                                     
 
41 WTO document G/ADP/N/92/CAN, 25 July 2002.  The orders revoked related to:  polyiso insulation 
board:  machine tufted carpeting;  Iceberg lettuce;  and concrete panels. 
42 For information on all active cases see CCRA online information.  Available at:  http://www.ccra-
adrc.gc.ca/customs/business/sima/monthly-e.html. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 46 
 
 
Table III.5 
Anti-dumping investigation initiations, 1 January 2000-31 December 2001 
Country/customs 
territory Product Initiation 
date Provisional measures 
date, dumping 
margin Definitive duty, date, 
dumping margin No  injury 
date Trade volume Dumped 
imports/ 
domestic 
consumpt. 
Brazil Stainless steel round bar 31.03.00 29.06.00, 24.3%  27.10.00, 37.3% 965 tons CF 
 Hot-rolled steel sheet 19.01.01 19.04.01, 35.7% 17.08.01 24,189 m.t. 0.4% 
 Cold-rolled steel sheet 12.03.01 11.06.01, 10.71% 09.10.01 74,710 tons 4.1% 
Bulgaria Hot-rolled steel sheet 19.01.01 19.04.01, 49% 17.08.01 22,178 m.t. 0.4% 
China Waterproof footwear 12.05.00 10.08.00, 33% 08.12.00, 33% 4,108,000 pairs 14% 
 Garlic 31.10.00 02.01.01, 68.1% 02.05.01 7,533,369 kg. 52.1% 
 Corrosion-resistant steel sheet 04.12.00 05.03.01, 37.2% 03.07.01 7, 806 m.t. CF 
 Hot-rolled steel sheet 19.01.01 19.04.01, 25.4% 17.08.01 137,224 m.t. 1.8% 
 Cold-rolled steel sheet 12.03.01 11.06.01, 17.99% 09.10.01 46,117 tons 2.9% 
 Leath. footwear met. toecaps 15.06.01 29.08.01, 39.4% 27.12.01 1,317,887 pairs 43% 
 Automotive windshields 18.12.01     
Chinese Taipei Corrosion-resistant steel shee t 04.12.00 05.03.01, 8% 03.07.01 32,904 m.t. CF 
 Reinforcing bar (steel) 03.11.00 01.02.01, 40.9% 01.06.01 12,095 m.t. CF 
 Hot-rolled steel sheet 19.01.01 19.04.01, 46.3% 17.08.01 153,917 m.t. 2.7% 
 Cold-rolled steel sheet 12.03.01 11.06.01, 28.71% 09.10.01 41,640 tons 2.66% 
FYR of Macedonia Hot-rolled steel sheet 19.01.01 19.04.01, 49% 17.08.01 10,899 m.t. 0.2% 
 Cold-rolled steel sheet 12.03.01 11.06.01, 69.14% 11.09.01, terminate d 
(negligible imports)2,902 tons 0.1% 
India Corrosion-resistant steel sheet 04.12.00 05.03.01, 22.7% 03.07.01 15,981 m.t. CF 
 Hot-rolled steel sheet 19.01.01 19.04.01, 26.3% 17.08.01 243,471 m.t. 4.4% 
Indonesia Reinforcing steel bar 03.11.00 01.02.01, 40.9% 01.06.01 20,282 m.t. CF 
Italy Cold-rolled steel sheet 12.03.01 11.06.01, 69.14% 11.09.01, terminate d 
(negligible imports)6,031 tons 0.4% 
Japan Reinforcing steel bar 03.11.0001.02.01, 37.3-40.9% 01.06.01 33,594 m.t. CF 
Korea, Republic of Hot-rolled steel sheet 19 .01.01 19.04.01, 34.2% 17.08.01 66,429 m.t. 1.2% 
 Cold-rolled steel sheet 12.03.01 11.06.01, 68.64% 09.10.01 61,505 tons 4.1% 
Latvia Reinforcing steel bar 03.11.00 01.02.01, 3.9% 01.06.01 27,228 m.t. CF 
Luxembourg Cold-rolled steel sheet 12.03.01 11.06.01, 2.47% 11.09.01, terminate d 
(negligible imports)4,082 tons 0.1% 
Malaysia Corrosion-resistant steel sheet 04.12.00 05.03.01, 4.1% 03.07.01 13,605 m.t. CF 
 Cold-rolled steel sheet 12.03.01 11.06.01, 14.67% 11.09.01, terminate d 
(negligible imports)2,153 tons 0.2% 
Moldova Reinforcing steel bar 03.11.00 01.02.01, 40.9% 01.06.01 20,064 m.t. CF 
New Zealand Hot-rolled steel sheet 19.01.01 19.04.01, 28.6% 17.08.01 20,839 m.t. 0.3% 
Norway Pulp-dewatering screw press 27.11.00 19.01.01 
(no dumping) 
Poland Reinforcing steel bar 03.11.00 01.02.01, 40.9% 01.06.01 9,658 m.t. CF 
Portugal Corrosion-resistant steel sheet 04.12.00 05.03.01
(no dumping) 
Russian Federation Corrosion-resistant steel shee t 04.12.00 05.03.01, 16.7% 03.07.01 29,452 m.t. CF 
Saudi Arabia Hot-rolled steel sheet 19.01.01 19.04.01, 49% 17.08.01 35,300 m.t. 0.6% 
South Africa Corrosion-resistant steel sheet 04.12.00 05.03.01, 22.4% 03.07.01 5,442 m.t. CF 
 Hot-rolled steel sheet 19.01.01 19.04.01, 26.4% 17.08.01 37,631 m.t. 0.7% 
 Cold-rolled steel sheet 12.03.01 11.06.01, 33.97% 09.10.01 10,302 tons 0.7% 
Thailand Hot-rolled steel sheet 19.01.01 19.04.01 
(no dumping) 
Ukraine Hot-rolled steel sheet 19.01.01 19.04.01, 49% 17.08.01 22,111 m.t. 0.4% 
 Reinforcing steel bar 03.11.00 01.02.01, 13-22% 01.06.01 70,290 m.t. CF 
United States Bingo paper 20.03.00 05.07.00, 43.5% 27.09.00 CF CF 
 Fresh tomatoes 09.11.01 25.03.02, 1.71% 26.06.02 141,041 m.t. 47% 
 Grain corn 09.08.00 07.11.00, 
US$0.67/bushel07.03.01 14 millio n 
bushels50% 
Viet Nam Garlic 31.10.00 02.01.01 , 55.7% 02.05.01 389,291 kg 5.2% 
Yugoslavia, F.R.  Hot-rolled steel sheet 19.01.01 19.04.01, 49% 17.08.01 30,455 m.t. 0.6% 
m.t.: Metric tonnes. 
CF: Confidential. 
Source:  WTO documents G/ADP/N/65/CAN, 30 August 2000;  G/ADP/N/72/CAN, 2 March 2001, G/ADP/N/78/CAN, 
29 August 2001;  and G/ADP/N/85/CAN 18 February 2002.  Canada WT/TPR/S/112/Rev.1 
 Page 47 
 
 
75. A recent study conducted by the CI TT, shows that, on balance, the difference in the margin of 
dumping between provisional and definitive determina tions is relatively small.  However, the study 
also noted that provisional margins of dumping tend to be somewhat higher than final margins, and 
that although far from conspicuous, there was a slightly increasing trend in recent years.43  I n  t h e  
context of Canada's last Review, the authorities noted that the high number of investigations where 
provisional measures were applied reflected the hi gh proportion of complaints rejected prior to 
initiation. 
76. The CITT estimates that anti-dumping actions aff ect only a minor fraction (less than 1%) of 
Canada's imports  In some cases, duties are applied on imports that account for a fairly small share of 
the domestic market (Table III.5).  Moreover, cumula tion is used in most multi-country investigations 
to determine injury, particularly those dealing with  steel products.  Also, and despite cumulation, in 
some cases dumped imports from all the investig ated countries put together have represented a 
relatively small share of the Canadian market.  In  this respect, the authorities have noted that the 
volume of dumped imports is only one factor examined when determining injury, and that the prices 
of dumped imports and their effect on the domestic market are also examined.  The authorities consider that small volumes of low-priced imports, or even low-price offerings, can have a significant effect on prices in the domestic market, which in their view is competitive enough that a single offer 
to sell goods at a certain price is sufficient to redu ce prices.  This suggests, however, that injury is 
narrowly focused on percentage changes even in cases where the absolute market shares and the 
margin of dumping remain low.  
77. Since Canada's last Review, as a result of sunset reviews, progress has been made with 
respect to the duration of actions under Canada's legislation.  In May 2002, 9% of the measures had 
been in place for ten years or more, compared with 16 % at the time of the last Review (WTO (2000)).  
A total of 17 anti-dumping orders were revoked in 2000 and 2001, most were expiries due to absence 
of request for a review.
44 
78. In the period January 2000-June 2002, the CITT and the CCRA completed 12 expiry reviews, 
including an undertaking, affecting some 26 anti- dumping duty orders. Some 19 review orders were 
continued, and seven were rescinded (three of them in 2002), including one concerning an 
undertaking.45 
79. In the January 2000-December 2001 period, the CI TT received four requests for interim 
reviews;  in three cases (two requests regarding fresh garlic and one regarding machine tufted carpeting), the CITT decided that an interim review was not warranted, and in one case (fresh lettuce 
from the United States), the order was rescinded.  In  the same period, the CITT received two requests 
for public interest inquiries.  In the first case, concerning a finding of injury in an iodinated contrast 
media investigation, the CITT was of the opinion th at the imposition of the anti-dumping duties in the 
full amount was not in the public interest, and r ecommended a reduction of the duties, which were 
subsequently lowered by up to 80%.  In the second cas e, a public interest request referred to injury 
findings in an investigation concerning certain refr igerators, dishwashers, and dryers, the CITT was 
not convinced that there was public intere st that warranted fu rther investigation. 
                                                     
 
43 CITT (2000), Analysis of Changes in Margins of Dumping. 
44 These concerned:  caps, lids, and jars suitable for home canning, from the United States;  refill paper, 
from Brazil;  certain stainless steel welded pipe from Chinese Taipei;  and photo albums with self-adhesive leaves, imported together or separately, and self-adhesive leaves, from China;  Chinese Taipei; Hong Kong, 
China;  Indonesia;  Korea;  Malaysia;  the Philippines;  Singapore;  and Thailand. 
45 Some of the orders continued by the CITT include:  women's boots from China;  certain carbon steel 
welded pipe from Korea;  whole potatoes imported into British Columbia from the United States;  and refined 
sugar from Denmark, Germany, the Netherlands, the United Kingdom, and the United States. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 48 
 
 
(c) Countervailing measures 
80. Although Canada has initiated relatively few c ountervailing investigations in the past, there 
has been a substantial increase in initiations in the period under review.  Between January 2000 and 
December 2001 five new investigations were initiated, four related to the steel industry.  In three of 
these cases definitive duties had been  applied by end 2001.  In two cases - corrosion-resistant steel 
sheet from India and grain corn from the United States - no injury was found, and no final duties were 
applied, but provisional duties had been levied.46  The authorities noted that these duties were 
refunded.  In the first six months of 2002, no new investigations were started.47 
81. By the end of June 2002, there were ten counterv ailing duty orders in place, compared with 
six at the time of Canada's previous Review (Table III.6). 
Table III.6 
Countervailing duty measures in force, 30 June 2002 
Country Product Date of finding 
Brazil Stainless steel round bar 27.10.00 
Denmark Canned ham 07.08.84 (16.03.90) (21.03.95) (20.03.00) 
European Union Refined sugar 06.11.95 (03.11.00) 
India Black granite memorials 20.07.94 (19.07.99) 
India Hot-rolled carbon steel plate 27.06.00 
India Hot-rolled steel sheet 17.08.01 
India Stainless steel round bar 27.10.00 
Indonesia Hot-rolled carbon steel plate 27.06.00 
Netherlands Canned ham 07.08.84 (16.03.90) (21.03.95) (20.03.00) 
Thailand Hot-rolled carbon steel plate 27.06.00 
Note: A subsequent date is shown in brackets if the injury finding was reviewed and re-affirmed. 
Source:  WTO documents G/SCM/N/81/CAN, 22 February 2002, and G/SCM/N/87/CAN, 29 July 2002. 
(vi) Quantitative restrictions and controls 
82. Canada's quantitative import controls and restrictions are mostly in place to ensure national 
security, safeguard consumer health and morality, to implement inter-governmental arrangements, or 
to preserve domestic plant and animal life and the environment (see also (3)(i) for the case of 
exports).  Quantitative restricti ons and controls are implemented through a system of licences.48  
Table III.7 summarizes the products subject to impor t licences.  The remainder of this section focuses 
on import restrictions mainta ined for economic purposes. 
83. Products subject to quantitative restrictions or import licensing to protect domestic industries 
from import competition are listed on the Import Cont rol List established under the Export and Import 
Permits Act.  Items may be added to the Import Control List by the Governor-in-Council for various 
purposes, as cited in section 5 of the EIPA, including when it appears that they are being imported or 
are likely to be imported into Canada at such prices , in such quantities and u nder such conditions as to 
cause or threaten serious injury to the production in Canada of like or directly competitive goods. 
                                                      
46 CITT Inquiry No:  NQ-2000-005 [O nline] Available at:  http:// www.citt.gc.ca./dum ping/Inquirie/ 
Findings/nq2a005e/nq2a005e.htm. 
47 Canada's latest notifications on countervailing duty measures is contained in WTO documents 
G/SCM/N/81/CAN, 22 February 2002, and G/SCM/N/87/CAN, 29 July 2002. 
48 These are handled by the Export and Import Bureau (DFAIT);  online information is available at:  
http://www.dfait-maeci.gc.ca/"eicb/epd_ home.htm.  Canada  last notified its import licensing procedures in 
WTO document G/LIC/N/3/CAN/4, 18 January 2002. Canada WT/TPR/S/112/Rev.1 
 Page 49 
 
 
Table III.7  
Controlled or licensed importations, June 2002 
Legislation Products Purpose 
Controlled Drugs and Substances 
Act Food and Drug Act Controlled drugs (e.g. amphetamine, methamphetamine, 
barbituric acids), narcotics (e.g. codeine, morphine), and restricted drugs (used only for research, not commercial sale) To ensure that the quantity of drugs 
imported does not exceed medical needs 
 Industrial hemp To permit the legal production and 
processing of hemp for commercial 
purposes while providing 
compliance and enforcement 
mechanisms to prevent diversion of 
Cannabis to the illicit drug market 
 Medical devices Safety and effectiveness 
Explosives Act Blasting explosives, detonators, propellants, cartridges, and 
all types of fireworks and pyrotechnic devices Safety 
Nuclear Safety and Control Act Nuclear equipment and information, radio-active devices, 
and nuclear substances (e.g. deuterium, thorium, uranium, 
their respective derivatives or compounds;  radioactive nuclides;  substances capable of releasing nuclear energy;  
radioactive by-products of the development, production or 
use of nuclear energy;  and radioactive substances used for the development, production or use of nuclear energy) Safety, security, health, 
environment 
Plant Protection Act Plants and products Protection against pests 
Canadian Environmental Protection Act Hazardous waste;  ozone-depleting substances Environment;  health 
Wild Animal and Plant Protection 
and Regulation of International and 
Interprovincial Trade Act Endangered species Conservation, environment 
Firearms Act Firearms, weapons and devices Security, safety 
Health of Animals Act Animals, birds and products Protection against foreign animal 
diseases 
National Energy Board Act Natural gas Equitable distribution of natural gas
Export and Import Permits Act Broiler hatching eggs and chicks;  eggs and egg products;  
turkey and turkey products;  chicken and chicken products;  
beef and veal;  margarine;  wheat and barley and their 
products;  cheese, yoghurt, butter, milk and cream, buttermilk, ice cream and other dairy products To implement tariff quotas 
maintained under the WTO 
Agreement on Agriculture 
 Cut roses and rose buds from Israel Implementation of Canada-Israel 
Free Trade Agreement 
 Yarns i.e. polyester, acrylic and nylon yarns Implementation of restraints under 
the WTO Agreement on Textiles and Clothing 
 Fabrics, i.e. polyester or polyester-cotton, cotton, wool, 
nylon, cellulose acetate broadwoven fabrics  
 Made-up, i.e. cotton terry towels and washcloths; work 
gloves; bedsheets and pillowcases;  and handbags. 
Apparel, i.e. winter outerwear;  hosiery;  pants, slacks, jeans, 
overalls, coveralls and outershirts;  blouses and shirts,  T-shirts and sweatshirts;  sleepwear and bathrobes;  rainwear; sportswear, dresses, skirts, coordinates or matching 
sets;  foundation garments;  swimwear;  underwear, jackets, 
overcoats, topcoats, professional coats and shopcoats;  fine suits, sportscoats and blazers;  shirts with tailored collars; 
sweaters, pullovers and cardigans.  
 Carbon and speciality steel Import monitoring 
Motor Vehicle Safety Act Motor vehicles and tyres Respect of safety regulations and 
emission standards 
Source:  WTO document G/LIC/N/3/CAN/4, 18 January 2002;  and Government of Canada. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 50 
 
 
(a) Agri-food products 
84. In 1995, as part of its WTO commitments Canada converted its quantitative restrictions on 
imports of agri-food products to a system of ta riff quotas;  imports within the access commitment 
require a permit issued through the Export and Import  Controls Bureau in order to benefit from the 
lower rate of duty.  These tariff quotas are described in Chapter IV(2). 
85. Other restrictions on agri-food trade, described in Canada's previous Review, include the 
prohibition of consignment selling.  Consignment selling means that fresh fruits and vegetables are 
shipped interprovincially or imported into Canada  without a firm purchase price or agreement to 
purchase at a fixed price.  Since February 2000, Canadian and foreign sellers of these products can 
join the Fruit and Vegetable Dispute Resolution Corporation (DRC), and thus be exempt from this prohibition.  Approximately 80% of sellers were DR C members in late 2002;  the authorities expect 
that percentage to rise further once the DRC is fully established.
49  Imports (and interprovincial 
movement) of bulk horticultural products that do not meet standardized quality, labelling, and 
packaging requirements are also restricted.  The Fresh Fruit and Vegetable Regulations (Regulations) 
prescribe safety, quality, packag ing and labelling standards for 30 fr esh fruits and vegetables moving 
interprovincially or internationally.   Importers or dealers moving prod uce interprovincially, must meet 
all the requirements of the Regulations.  Exemptio ns are granted from the quality, packaging and 
labelling standards only where there is a shortage of domestic supply. 
(b) Other products 
86. Since the 1960s, tariffs on textiles and clothing have been complemented by import quotas;  
these are being progressively dismantled over a te n-year period until January 2005 under the WTO 
Agreement on Textiles and Clothing.  In late 2002,  about one half of the value of clothing imports 
entered the Canadian market under quota (Chapter IV(3)). 
87. Carbon steel and specialty steel products have been on the Import Control List since 1987.50  
The monitoring system applies to imports from all countries.  The authoritie s have stated that the 
programme is not intended to restrict the quantity or value of imports, but rather monitors the volume 
and the origin of carbon and specialty steel products (see also Chapter IV(4)).51 
88. The following imports are prohibited under the Customs Tariff:  second-hand motor vehicles 
less than 15 years old, except if manufactured in the United States;  used or second-hand aircraft, 
except if imported from the United States;  and re prints of Canadian and British works copyrighted in 
Canada. 
                                                      
49 Import licensing requirements for fresh fruit and vegetables are described in the Canadian Food 
Inspection Agency online information. 
50 Carbon steel products are defined as semi-finished steel (ingots, blooms, billets, slabs and sheet 
bars), plate, sheet and strip, wire rods, wire and wire pr oducts, railway-type products, bars, structural shapes and 
units, and pipe and tube.  Specialty steel products are defined as stainless flat-rolled products (sheet, strip and 
plate), stainless steel bar, stainless steel pipe and tube, stainless steel wire and wire products, alloy tool steel, mold steel, and high speed steel. 
51 WTO document G/LIC/N/3/CAN/4, 18 January 2002. Canada WT/TPR/S/112/Rev.1 
 Page 51 
 
 
(vii) Standards, technical regulations, and sanitary and phytosanitary measures 
(a) Standards and technical regulations 
89. The Standards Council of Canada (SCC) is the focal point for standardization and conformity 
assessment in Canada, and opera tes the Enquiry Point under the TBT and SPS Agreements.  The SCC 
approves national standards and represents Ca nada in international standards forums.52  The SCC 
heads and oversees the work of the National Standards System (NSS), a network of approximately 
15,000 individuals and over 400 accredited organi zations and partners involved in standards 
development, promotion, and implementation in Canada.  The SCC participates in numerous 
international standardization activitie s with the ultimate goal of enabling Canadian exporters to use a 
single test, certification or registration to gain  market acceptance anywhere in the world. 
90. Standards policy is devised by the SCC with the collaboration of advisory committees;  the 
Advisory Committee on Trade advises and makes reco mmendations to the SCC on international and 
internal trade-related matters.  The SCC assists th e Department of Foreign Affairs and International 
Trade (DFAIT) in formulating Canadian policy positio ns on standards-related issues in the WTO.  
The SCC accepted the TBT Code of Good Practice for the Preparation, Adoption and Application of Standards, in 1999, has adopted ISO/IEC Guide 59, the code of good practice for standardization, and 
is considering the adoption of ISO/IEC Guide 60, the code-of-good-practice for conformity 
assessment, currently under revision. 
91. The Government of Canada Regulatory Policy, a Cabinet directive, governs the development 
and implementation of compulsory federal regulations.  The Policy is designed to ensure that the use 
of the Government's regulatory powers results in th e greatest net benefit to Canadian society.  In 
accordance with the Policy, a specific directive must  be followed when regulating.  The Privy Council 
Office (the Government of Canada 's central agency, reporting to the Prime Minister) has general 
responsibility for assessing the ef fectiveness of the Policy, its implementation and its elaboration.
53 
92. Various federal and provincial authorities devel op and implement technical regulations as part 
of their mandate, and also revise and review existing regulations.  In developing regulations, 
regulatory authorities are encouraged  to follow the Guide to the Regulatory Process.  This guide 
outlines a multi-step process to regulating as well as key participants in the regulatory process.54  
Standards can form the basis of an entire regulation or can be partially referenced in a regulatory 
measure and supplemented with policies,  guidelines, and operating procedures. 
93. The authorities noted that, starting in the late  1980s, there has been a general downward trend 
in the annual rate of increase of federal regulations (Chart III.5).  In comparing the total number of 
federal regulations (including new, amended, repealed , revised) added to the stock during the 1980s to 
the 1990s, a drop in the total number of regulations was observed.  However, since regulations are not 
classified according to their nature, but under which statute they were enacted, the authorities stated 
that it was difficult to estimate the precise number of technical regulations in force. 
                                                      
52 More information on the activities of the SCC may be found online at:  http://www.scc. 
ca/home_e.html. 
53 The full text of the Government of Canada Regulatory Policy is available online at:  www.pco-
bcp.gc.ca/raoics-rdc/default.asp?Language=E&Page=AboutRegs&Sub=Policy. 
54 The full text of the Guide to the Regulatory Process is available online at:  www.pco-
bcp.gc.ca/raoics-srdc/default.asp?Language=E&Page=AboutRegs&Sub=Process. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 52 
 
 
02004006008001,0001,2001,400
1972 1974 1976 1978 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000Chart III.5                                            
Technical regulations enacted by the Government of Canada, 1972-01
Number
Source:  Data provided by the Canadian authorities.
 
94. Canada maintains technical regulations in areas such as construction, chemicals, 
pharmaceuticals, energy, food, transport equipment, telecommunications, the environment, and others 
(Table III.8).  It is not possible, however, to esti mate the product-categories more often affected by 
technical regulations as the authorities do not clas sify its regulations using product classifications, 
such as the Harmonized System (HS), as regulatio ns often have an impact across numerous product-
categories. 
95. The SCC has accredited four standards deve lopment organizations, which administer 
technical committees responsible for determining the content of standards. Accredited standards-
development organizations may submit standards to the SCC for approval as National Standards of 
Canada (NSC).  The four organizations are:  the Canadian General Standards Board  (CGSB);  the  
Canadian Standards Association;  Underwriters' Labo ratories of Canada (UL Canada), which provides 
the North American Mark of Safety;  and the Bu reau de normalisation du Québec (BNQ). When 
developing standards, standards are developed on a consensus basis by the four standard-development organizations, with the participat ion and cooperation of all parties concerned in a sector.  When 
developing standards, standards developers must fi rst determine whether an international standard 
could be adopted or adapted to meet the required outcome.  Standard developers are not involved in 
the development of technical regulations.  However,  standards developed by these organizations may 
become referenced in legislation. 
96. The SCC operates a variety of accreditation programmes.  There are currently 22 accredited 
certification bodies;  more than half are located in the United States.  As of December 2002, there 
were 331 accredited laboratories and 28 accredited  registrars fo r quality management systems and 
environmental management systems.  The Nationa l Research Council of Canada's Institute for 
National Measurement Standards (INM S) is responsible for metrology activity in Canada.  The SCC 
and INMS Calibration Laboratory Assessment Serv ice (CLAS) operates an accreditation programme 
for secondary calibration laboratories.  This programme has accredited 25 laboratories. Canada WT/TPR/S/112/Rev.1 
 Page 53 
 
 
Table III.8 
Technical and sanitary and phytosanitary regulations, main agencies and legislation 
Area Main responsible agency Main legislation 
Chemicals Health Canada (Product Safety Bureau, Health 
Protection Branch), Environment Canada, Pest Management Regulatory Agency (relating to 
pesticides) Hazardous Products Act unless covered by the 
Explosives Act, Food and Drugs Act, Pest Control Products Act or Atomic Energy Control Act, Canadian 
Environmental Protection Act 
Building Provincial/territorial agencies Provincial/territorial legislation based on national 
codes (National Building Code, National Fire Code, 
National Plumbing Code, National Energy Codes) 
Consumer products 
other than food Industry Canada, Health Canada Consumer Packaging and Labelling Act and 
Regulations, Hazardous Products Act, Precious Metals 
Marking Act and Regulations, Textile Labelling Act and Textile Labelling and Advertising Regulations 
Energy Natural Resources Canada (Office of Energy 
Efficiency)  and provincial agencies Energy Efficiency Act and regulations, and provincial 
regulations based on national standards 
Environment Environment Canada, Health Canada, Canadian 
Food Inspection Agency,  and provincial/territorial 
agencies Federal and provincial acts and regulations dealing 
with environmental protection, pollution, preservation 
of wildlife and environmental assessment 
Food Canadian Food Inspection Agency, Health Canada Food and Drugs Act and regulations and other statutes 
(e.g., Canada Agricultural Products Act, Consumer Packaging and Labelling Act, Feeds Act, the Fertilizer Act, Fish Inspection Act, Food and Drug Act, Meat 
Inspection Act, Seeds Act) complemented by 
provincial legislation 
Measuring devices Industry Canada  Electricity and Gas Inspection Act, Weights and 
Measures Act 
Medical devices Health Canada Food and Drugs Act, Medical Devices Regulations 
Pharmaceuticals Health Canada Food and Drugs Act and Regulations, National 
Narcotic Control Act and regulations 
Telecommunications Equipment Industry Canada (Director General, Spectrum 
Engineering Branch) Telecommunications Act, Radio Communications Act 
and interference-causing equipment regulations 
Transport equipment Transport Canada and provincial/territorial 
agencies Motor Vehicle Safety Act and regulations, 
complemented by provincial legislation 
Source:  Information provided by the Canadian authorities. 
97. Technical regulations and standards continue to differ among provinces.  The SCC's 
Intergovernmental Affairs and Trade (IGAT) Branch  has begun to work more closely with the 
Agreement on Internal Trade Secretariat to reduce the effect of these differences.  The SCC promotes standards and conformity assessment as solutions to interprovincial trade and regulatory obstacles.  In this respect, for example, the SCC considers that the introduction of the standard ISO/IEC 17024, 
General Requirements for Bodies Operating Certi ﬁcation Systems of Persons, could improve the 
interprovincial acceptance of professional quali ﬁcations by providing a common basis for their 
recognition. 
98. A Canadian Standards Strategy was launched in March 2000, and has since then been the 
guiding framework for the work of the SCC and the NSS.  The Strategy aims, on the international 
front, to promote the use of adopted or adapted internationally accepted standards to the greatest 
extent possible.  The Strategy seeks to prioritize st andardization efforts and re sources within three key 
areas:  where Canadians have a major interest in health, safety, the environment or social issues;  trade 
sectors in which there are existing or potential bene ﬁts to Canadians;  and the harmonization of 
standards where appropriate, especially within Nort h American markets.  The Strategy calls for the 
SCC to become more formally involved in governme nt-led international and regional trade initiatives 
such as the NAFTA, the FTAA and APEC.  The SCC is also to actively pursue new international 
arrangements of anticipated bene ﬁt to Canada with respect to c onformity assessment practices. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
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99. Canada considers the international harmonization of standards as an important element to 
enhance trade.  To increase harmonization, Canadi an standard development organizations are working 
closely with their U.S. counterparts.  In 2001, Canada and the United States created a bi-national 
committee for IEC’s technical co mmittee on electromagnetic ﬁeld exposure, to discuss positions and 
agree on joint strategies, while continuing to  issue individual positions.  The IEC National 
Committees of Canada, Mexico, and the United Stat es have met annually ove r the past 20 years to 
discuss issues before IEC, to encourage greater elec trotechnical cooperation and to be better prepared 
as a region to contribute to international standard ization at IEC.  To strengthen regional ties in 
electrotechnical standardization, the tri-national  group decided to include other countries of the 
Americas, under an initiative known as the Electrote chnical Cooperation of the Americas launched in 
September 2001. 
100. Another tool considered useful by Canada to  harmonize standards and simplify conformity 
requirements is the signing of mutual recognition arrangements (MRAs).  At government level, 
Canada has MRAs on conformity assessment with the European Union, Switzerland, and the other 
EFTA countries.  Canada has endorsed th e APEC Mutual Recognition Arrangement on 
telecommunications, and the MRA for Conformity A ssessment of Telecommunications Equipment of 
the Americas.  The SCC participates in voluntar y MRAs with accreditation bodies at both the 
international and the regional levels .  To ensure that MRAs do not contradict Canadian trade interests 
and regulatory objectives, DFAIT and the SCC have developed criteria for undertaking new 
negotiations and enhancing existing agreements.  The goal is to ensure coordination between trade, 
regulatory, and standards initiatives.  The authorities have noted that mutual recognition agreements 
can deal with issues where provincial governments have regulatory responsibility and hence, 
provinces play a role in the determination of the regulatory objectives to be achieved through MRAs. 
101. In the period 2000 to mid 2002, Canada made 64 notifications of new technical regulations to 
the WTO Committee on TBT (26 in 2000, 25 in 2001, and 13 in the first half of 2002).  Most 
measures had health, safety or environmental grou nds, and concerned largely food, drugs, tobacco, 
chemical substances, motor vehicles, tele communications equipment, or services.55  As of 
October 2002, 18 of the 64 proposed changes had not yet been adopted, generally because the process 
of actioning comments had not been concluded or  because insufficient time had passed for the 
regulation to be enacted.  
102. In the period under review, Canada presented a number of communications and proposals to 
the TBT Committee, including with respect to labelling.56  Canada's position is that the TBT 
Agreement provisions are balanced  and adequate as regards labe lling, and it sees no compelling 
rationale to renegotiate existing rules, or to begin negotiations of new rules. 
103. Since the beginning of the WTO, Canada has been involved in six disputes involving the TBT 
Agreement, all as a complainant;  it has been involved in no such disputes since 2000.  Five of these 
disputes involved also the SPS Agreement;  in four  of them SPS issues were the major concern (see 
also section (c) below).  The disputes regarded certain measures by the United States affecting the 
import of cattle, swine, and grain;  m easures by the EU affecting imports of  wood of conifers from 
Canada;  measures by the EU affecting asbestos and products containing asbestos;  measures by 
Korea concerning bottled water;  me asures by the EU affecting livestock and meat (hormones);  and 
measures by the EU with respect to the trade description of scallops.57  In the scallop case, a mutually 
agreed solution was reached.  
                                                      
55 WTO document series G/TBT/N/CAN/. 
56 WTO document G/TBT/W/174/Rev.1, 31 May 2002. 
57 WTO documents WT/DS144/1, G/L/260, G/SPS/W/90, G/TBT/D/18, G/AG/GEN/27, 29 September 1998; 
WT/DS137/1, G/SPS/GEN/84, G/TBT/D/17, 24 June 1998;  WT/DS135/1,  G/SPS/GEN/72, G/TBT/D/15, 3 June 
1998;  WT/DS20/1, G/SPS/W/35, G/TBT/D/4, 22 November  1995;  WT/DS48/1, G/SPS/W/71, G/TBT/D/7, 8 July 
1996;  and WT/DS7/12, G/TBT/D/8, 19 July 1996.  Canada WT/TPR/S/112/Rev.1 
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(b) Environmental regulations and trade 
104. Environmental policy is designed and mo nitored jointly by the federal and 
provincial/territorial authorities.  At  the federal level, it is the resp onsibility of the Minister of the 
Environment, through Environment Canada.  The ma in legislation is the Canadian Environmental 
Protection Act (CEPA), as amended in 1999, and e ffective since 31 March 2000.  The amendments 
created a framework for cooperation and coordinatio n between federal, provincial, and territorial 
governments;  they also established a public regist ry, and gave citizens the right to sue where a CEPA 
violation results in significant harm to the envir onment, and the federal go vernment fails to take 
action.  Other legislation dealing with environmenta l and trade issues include the Department of the 
Environment Act, the Canada Wate r Act, the Canada Wildlife Act, the National Wildlife Act, the 
Wild Animal and Plant Protection and Regulation of  International and Inter-p rovincial Trade Act, and 
the Canadian Environmental Assessment Act, among others. 
105. The Canadian Environmental Assessment Act is administered by the Canadian Environmental 
Assessment Agency.  The Act requires federal departments, including Environment Canada and 
agencies to conduct environmental assessments for proposed projects where the federal government is 
the proponent, provides funding, grants an interest in land to enable a project, or issues a permit or 
licence.  Departments maintain public registries of the environmental assessments carried out under 
the Act for which they are responsible. 
106. Canada also conducts strategic environmen tal assessments of trade negotiations, in 
accordance with the non-legislated 1999 Cabinet Directive on the Environmental Assessment of Policy, Plan and Program Proposals.  The Framew ork for Conducting Environmental Assessments of 
Trade Negotiations (2001) establishes the proce ss and analytical requirements for conducting such 
assessments.  The Framework's twin objectives are to assist Canadian negotiators integrate 
environmental considerations into the negotiating process;  and to address public concerns by 
documenting how environmental factors are being co nsidered in the course of trade negotiations. 
107. The CEPA requires that the importation or manufacture of any new substance is subject to a 
notification and assessment procedure specified in the New Substances Notification Regulations 
(NSN).
58  The NSN Regulations apply to chemicals, polymers, and inanimate and animate products of 
biotechnology.  The notification packages include te st data relating to physiochemical properties, 
environmental behaviour and/or toxicity.  NSN Regulations Multi-stakehol der Consultations were 
held between November 1999 and August 2001;  re presentatives from Environment Canada, Health 
Canada, industry and public advocacy groups participated, and a report was produced with recommendations to improve the NSN regulatory framework and enhance its transparency.
59 
108. All environmental measures no tified by Canada to the WTO under the different agreements 
are contained in the WTO Environmental Data Base.60  These include six notifications under the TBT 
Agreement, several under the Agreement on Agriculture, and one under the SCM Agreement.  
109. As discussed above, where there are no health and /or safety concerns, Canada favours the use 
of voluntary labelling schemes to provide consumer s with information about a particular product or 
service.  Canada's main environmental labelling programme is Environmental Choice, a voluntary 
programme established by the federal government and currently operated under licence by a private 
                                                      
58 See Environment Canada online information.  Available at:  http://www.ec.gc.ca. 
59 http://www.ec.gc.ca/Ceparegistry/documents/regulations/nsnr_nsp_e.pdf. 
60 WTO documents WT/CTE/W/118, 28 June 1999;  WT/CTE/W/143, 22 June 2000;  
WT/CTE/W/195, 20 June 2001;  WT/CTE/W/195/Corr.1, 12 October 2001;  WT/CTE/EDB/1, 31 May 2002;  
and WT/CTE/EDB/1/Corr.13, 13 June 2002. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 56 
 
 
company, Terra Choice Inc.  Just under 32,000 products and services have been  certified to carry an 
EcoLogo label.  Two key features of the programme are that it looks at the total impact of a product 
across its life cycle and the use of third party audits to verify the labelling claims. 
(c) Sanitary and phytosanitary measures 
110. The Food and Drug Act and Regulations are th e main legal and regulatory instruments 
governing SPS food safety issues in Canada.  The Health of Animals Act and the Plant Protection Act 
with their associated Regulations are the main le gal and regulatory instruments governing animal and 
plant health SPS issues in Canada. 
111. Health Canada is responsible for policy development and standard-setting with respect to 
food safety and nutrition.  It also engages in food safety risk assessment, research, pre-market review 
and evaluation, surveillance of food-borne, water-b orne and enteric illnesses, and assessment of the 
effectiveness of the Cana dian Food Inspection Agency (CFIA) activ ities with respect to food safety.  
The CFIA centralizes all federally mandated food in spection services related to food safety, economic 
fraud, trade-related requirements, and animal and plant health programmes including quarantine 
services.  The CFIA is responsible for preventing the introduction into the Canadian market of food 
products deemed unsafe, diseased animals or plants that pose a risk to public, animal or plant health.  
The CFIA may apply to a court for an interim inj unction to prevent a contravention of the Food and 
Drug Act, or any other Act for which it is responsible .  It has three regional Import Service Centers, 
which process documents and respond to information requests from importers across Canada for all 
goods regulated by the CFIA. 
112. Canada is an active participant in the wo rk of the WTO Sanitary and Phytosanitary 
Committee, the Codex Alimentarius Commission, the  Office international de s epizooties (OIE) and 
the International Plant Protection Convention of 1991.   A total of 62 notifications were submitted to 
the SPS Committee between 2000 and mid 2002, a high er number than reported in the 2000 Review 
(40).  Most of the notifications refer to propos ed amendments to the Food and Drug Regulations;  
many of these amendments establish new maximu m residue levels (MRLs) for various chemicals 
contained in edible fruit, vegetables, beans, and cere als.  Other notifications refer to the approval of 
the use of certain enzymes for food production, or of certain pesticides or herbicides. 
113. A few of the measures notified were emergency measures with a restrictive effect on imports 
from determined sources, for example the suspension  of the importation of live animals and animal 
products from Argentina, European Union, and Ur uguay following an outbreak of foot-and-mouth 
disease.61  At the end of 2002, this suspension had been lifted for the EU and Uruguay, but was still in 
place for Argentina.  Another measure prohibits the importation of propagative or non-propagative 
material from nursery stock of host species, forest products with bark (logs) of host species, and soil 
from Germany, the Netherlands , the United Kingdom, Spain, twelve  counties of the U.S. state of 
California, and one county in the U.S. state of Oreg on to prevent the entry the of the sudden oak death 
pest.62  This plant health restriction was still in place in late 2002.  
114. Canada has applied import controls on live an imals (ruminants), and their meat and meat 
products from countries that have confirmed ca ses of Transmissible Spongiform Encephalopathies 
(TSE), including BSE, in native animals, since the early 1990s.  In 1990, Canada stopped importation 
of ruminants from the United Kingdom and Ireland.  In 1994, it stopped the importation of cattle from 
                                                      
61 WTO documents G/SPS/N/CAN/98, 26 March 2001 (Argentina);  G/SPS/N/CAN/96, 
19 March 2001 (United Kingdom);  G/SPS/N/CAN/99, 26 March 2001 (all EU countries);  G/SPS/N/CAN/102, 4 May 2001 (Uruguay). 
62 WTO documents G/SPS/N/CAN/97, 19 March 2001, and G/SPS/N/CAN/141, 26 July 2002. Canada WT/TPR/S/112/Rev.1 
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all countries where BSE had been diagnosed.  In 1996, Canada implemented a new BSE policy that 
allowed for importation of live animals (initially just  cattle; extended to sheep and goats in 1998;  then 
extended to all ruminants in February 2000), and their meat and meat products from countries 
assessed to be free from BSE.  Other animal products (e.g. semen, hides and skins, dairy products) considered exempt from BSE restrictions by the OIE can be imported, subject to meeting other SPS 
import requirements. 
115. Importation of live ruminants, their meat and meat products from any country requires a full 
risk assessment, taking advantage, where possible, of the work done by other NAFTA countries.  
Imports of permitted meat products from Brazil were  temporarily suspended in February 2001, but 
resumed a few weeks later under new conditions.  As  of January 2003, Canada allowed commercial 
imports of meat and meat products from ruminants born, raised or processed in Argentina, Australia, 
Brazil, New Zealand, the United States, and Uruguay.   Processed ruminant meat products may be 
imported from other countries with a recognized meat inspection system (e.g. UK, Italy, Poland); 
however, the ruminant meat must have been obtained from the above six countries only.
  
116. The CFIA currently manages a number of produc t-specific bilateral agreements and protocols 
with other countries on a wide range of food sa fety and animal and plant health issues.  The 
authorities have noted that the purpose of this networ k of agreements is to ensure that Canada’s food 
safety and animal and plant health standards, as well as other countries , are science-based and 
effectively adhered to in a manner that avoids unnecessarily disrupting trade. 
117. Canada has been involved in six disputes in volving the SPS Agreement since the beginning of 
the WTO;  all were as a complainant and before th e period under review, and five involved also the 
TBT Agreement.63  
(3) MEASURES DIRECTLY AFFECTING EXPORTS  
(i) Export controls, restrictions and charges 
(a) Main provisions 
118. Most Canadian export controls are in place under the Export and Import Permits Act, 
administered by the Export and Import Control Bureau.64  Section 3 of the Act, the Export Control 
List (ECL) contains articles controlled for any of the following purposes: 
− to control the export of arms, ammunition, implements or munitions of war or articles of a 
strategic nature or value the use of which migh t be detrimental to th e security of Canada; 
− to encourage the further processing of certain natural resources in Canada; 
− to ensure that there is an adequate supply and distribution of the article in Canada for defence 
or other needs; 
− to limit the export of goods in circumstances of surplus supply and depressed prices;  or 
− to implement an intergovernmental arrangement or commitment. 
                                                      
63 WTO documents WT/DS144/1, G/TBT/D/18, G/ L/260, G/SPS/W/90, G/TB T/D/18, G/AG/GEN/27, 
29 September 1998;  WT/DS137/1, G/SPS/GEN/84, G/TBT/D/17, 24 June 1998;  WT/DS135/1, G/SPS/GEN/72, G/TBT/D/15, 3 June 1998;  WT/DS20/1, G/SPS/W/ 35, G/TBT/D/4, 22 November 1995;  
WT/DS48/1, G/SPS/W/71, G/TBT/D/7, 8 July 1996; 7/ 12, G/TBT/D/8, 19 July 1996.WT/DS18/1, G/L/28, 
G/SPS/W/29, 11 October 1995. 
64 The text of the Act is available in the Department of Justice online information.  Available at:  
http://laws.justice.gc.ca/en/E-19/51506.html. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
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119. An export permit is required before an item included in the ECL may be exported 
(Table III.9). 
Table III.9 
Export control list 
 Products 
Group 1 – Dual Use List  Advanced materials;  materials processing;  electronics;  computers;  
telecommunications;  information security;  sensors and lasers;  navigation and avionics;  
marine;  propulsion 
Group 2 – Munitions List  All munitions 
Group 3 – Nuclear Non-Proliferation List  All supplies and technology for nuclear production 
Group 4 – Nuclear-Related Dual Use List  All supplies and technology for nuclear production 
Group 5 - Miscellaneous Goods  Pancreas glands of cattle and calves (all destinations);  human serum albumin (all 
destinations);  logs of all species of wood (all destinations);  pulpwood of all species of 
wood (all destinations);  blocks, bolts, blanks, boards and any other material or product 
of red cedar that is suitable for use in the manufacture of shakes or shingles (all 
destinations);  softwood lumber products (United States);  peanut butter that is classified under tariff item No. 2008.11.10 of Schedule I to the Customs Tariff (all destinations);  
roe herring (all destinations);  sugar-containing products (United States);  sugars, syrups 
and molasses (United States);  U.S. origin goods (all non-U.S. destinations);  goods in transit;  prohibited weapons 
Group 6 - Missile Technology Control Regime List  All missile systems 
Group 7 – Chemical and Biological 
Weapons Non-Proliferation List  Chemicals, precursors, biological agents, and related equipment 
Group 8 – Chemicals for the Production 
of Illicit Drugs  All related chemicals 
Source:  Government of Canada online information.  Avai lable at:  http://www.dfait-maeci.gc.ca/~eicb/export/ 
contente.htm. 
(b) Export controls for security purposes 
120. Controls may be placed on exports of strategically controlled goods and technologies 
(Table III.9) and on exports to particular c ountries listed on the Area Control List (Angola and 
Myanmar as at mid-2002).  In addition, the Act covers re-exports of goods originating in the 
United States, in order to enforce U.S. restrictions  on exports of controlled goods as well as U.S. 
embargoes to certain countries.  In 2001, both the Act and the Export Control List were amended to 
add certain U.S. origin goods on the ECL.65 
(c) Export restrictions for environmental purposes 
121. Export restrictions for environmental purposes are generally maintained either pursuant to 
multilateral environmental agreements (MEAs), or to national environmental and resource 
conservation programmes.  For example the exportation of species of wild fauna and flora from 
Canada can be restricted under the Convention on International Trade in Endangered Species of Wild 
Fauna and Flora (CITES).66  CITES provisions are implemented under Canada's Wild Animal and Plant 
Protection Act.  The Basel Convention is implemen ted through hazardous wa ste trade regulations. 
122. Under the Canadian Environmental Protection Act (CEPA), exports of certain substances are 
controlled because their manufacture, import or use in Canada is prohibited or severely restricted, or 
                                                      
65 See Canada Gazette , Vol. 135 No. 2., p. 116 [Online].  Available at:  http://canada.gc.ca/gazette/ 
part2/pdf/g2-13502.pdf.  Specifically, the changes relate to the addition of an item 5504 on the ECL, containing 
export of U.S. origin goods such as payloads for spacecraft, ground control stations, chemiluminescent 
compounds, microelectronic circuits, and nuclear weapons design and test equipment. 
66 The Canadian CITES Control List is available online at:  http://www.cites.ec.gc.ca/control_12/ 
index.html. Canada WT/TPR/S/112/Rev.1 
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because Canada has accepted, through an internatio nal agreement, to control their export.  These 
chemical substances are included in the Export Control List.67  An amendment to the CEPA in 1999, 
among other things gave increased power to the Federal Government to control the transboundary 
movement of hazardous wastes and hazardous recycl able material, as well as new power to control 
the import, export, and transit of non-hazardous wastes for final disposal.68  In January 2002, 
Environment Canada announced that it intended to re vise the Export and Import of Hazardous Wastes 
Regulations to implement the 1999 amendments to the CEPA.69  The authorities expected the new 
regulations to be published in the spring of 2003.   
(d) Export restrictions for commercial purposes 
123. Canada has traditionally imported a share of inputs for its clothing industry from MFN 
sources.  Under the NAFTA "yarn forward" rule of origin, however, exports to the United States of 
clothing using these non-NAFTA originating inputs would not qualify as originating in Canada.  
Therefore, the NAFTA allows specified quota am ounts (the Tariff Preference Level) of non-
originating clothing and textiles products to be traded among partners duty free.  In certain cases, 
notably woollen and cotton or man-made apparel, th ese tariff quotas are just about filled, suggesting 
that exports of such products to the United States are restrained.70  The quotas have hardly been used 
for exports to Mexico.71 
124. Under the Softwood Lumber Agreement with the United States, Canada applied until 2001 
fees on exports of softwood lumber, over certain amounts, to the United States.72  A fee of US$50 per 
thousand board feet was applied to exports of between 14.7 and 15.35 billion board feet, while a fee of US$100 per thousand board feet was levied on exports above 15.35 billion board feet.  Exports below 14.7 billion board feet were not subject to a fee.  In exchange, the United States agreed not to 
initiate any anti-dumping, countervailing duty or safe guard investigation against these imports.  The 
Agreement was in force between 1 April 1996 and 31 March 2001.
73  After its expiration, the United 
States initiated anti-dumping and countervailing dut y investigations on Canadian softwood lumber 
exports.74  In May 2002, the United States imposed countervailing and anti-dumping duties on imports 
of softwood lumber from Canada. In late 2002 Ca nada was challenging the U.S. measures in the 
NAFTA and the WTO (see Table AII.1).  In the context of this review, the Canadian authorities stated 
that Canada remains open to pursuing a negotiated solution.   
                                                      
67 For more information, see Environment Canada online information.  Available at:  http://www.ec. 
gc.ca/CEPARegistry/subs_list/Export.cfm 
68 For details, see CEPA regulations online information.  Available at:  http://canada. justice.gc.ca/ 
FTP/EN/Regs/Chap/C/C-15.3/index.html;  and Environment Canada online information.  Available at:  
http://www.ec.gc.ca/cepa. 
69 For more information, see Environment Canada online information.  Available at:  http://www.ec. 
gc.ca/EPARegistry/documents/participation/eihwrdisc.cfm#sect10.4.1. 
70 For information on utilization levels see Department of Foreign Affairs and International Trade 
online information.  Available at:  http://www.dfait-maeci.gc.ca/~eicb/textile/ntpl-exe-dec01-e.htm. 
71 See http://www.dfait-maeci.gc.ca/~eicb/textile/ntpl-exe-dec01-e.htm. 
72Article 11(1)(b) of the WTO Agreement on Safeguards stipulates that Members "shall not seek, take 
or maintain any voluntary export restraints, orderly marketing arrangements or any other similar measures on 
the export or import side.  These include actions taken by a single Member as well as actions under agreements, arrangements and understandings entered into by two or more Members".  
73 For the text of the agreement see NAFTA online information.  Available at:  http://www.nafta-sec-
alena.org/images/pdf/softwoodagreement.pdf. 
74 See also Chapter II(4)(iv) as the preliminary countervailing duty actions were the subject of a request 
by Canada for the establishment of  a panel (WTO document WT/DS236/3, 8 February 2002). WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 60 
 
 
125. Other products whose exportation requires a permit include the following, to ensure adequate 
supply in Canada: 
− unprocessed fish from Quebec (see (4)(iii) below). 
− logs and pulpwood of all species of wood.  In addition, British Columbia, Ontario, and 
Quebec restrict out-of-province exports of logs .  In Alberta, exports of logs out of the 
province require a permit which, according to the authorities, was granted in all cases in 
2000-01. 
− pancreas glands of cattle and calves (all destinations). 
− human serum albumin (all destinations). 
− blocks, bolts, blanks, boards, and any other material or product of red cedar that is suitable for 
use in the manufacture of shakes or shingles (all destinations). 
− unprocessed roe herring75, to ensure access to a "reasonable" supply for processors. 
126. In a WTO Panel established in September 2000 , Canada challenged various U.S. laws and 
practice, considering that an export restraint was not a "financial contribution" and, therefore, could 
not be considered to be a subsidy within the meaning of the WTO Agreement on  Countervailing 
Measures (SCM).  The Panel agreed with Canada th at an export restraint as defined by Canada was 
not a "financial contribution", but concluded that the various laws and practice in question in the dispute did not require the United States to treat export restrictions as financial contributions and thus 
were not inconsistent with the Agreement.
76 
(e) Export duties and taxes 
127. In late 2002, export duties were imposed only  on Canadian-manufactured tobacco products.  
Export duties may, however, be imposed under the Export Act on logs and pulpwood as well as on 
certain ores.77  
128. In 1994, Canada imposed an export tax to reduce the risk that Canadian-manufactured 
tobacco products that had been exported tax-free to the United States would be smuggled back into 
Canada and sold illegally without payment of tax.  In April 2001, Canada announced a comprehensive 
new tobacco strategy designed to discourage both smoking and contraband, including a revised export 
tax (see also section 2(iv) above).  Under the Excise Tax Act, exports of Canadian-produced 
cigarettes, tobacco sticks, and other manufactured tobacco are subject to a two-tiered tax, with different rates for exports up to a threshold of  1.5% of a manufacturer’s annual production 
(Can$0.075 per cigarette) and for exports above the threshold (Can$0.1475 per cigarette).  The tax on 
exports up to the 1.5% threshold is refundable to the foreign importer and Canadian manufacturer 
upon proof of payment of foreign taxes.  The tax on exports over the 1.5% threshold is not refundable 
and approximates the total federal and provincial  taxes otherwise applicable in the lowest-tax 
jurisdiction in Canada.  The new export tax regime and rebate mechanism seeks to ensure that exported Canadian products bear either Canadian federal excise ta x or U.S. federal excise tax.  
According to the authorities, as a result, the supply  of tax-free Canadian tobacco products that could 
be smuggled back into Canada has been greatly reduced.  
(ii) Export financing and other assistance 
129. Since Canada's last Review in 2000, two of th e main statutes governing export assistance and 
promotion have been amended (see below).  Both the federal and provincial governments encourage a 
                                                     
 
75 DFAIT online information.  Available at:  http ://www.dfait-maeci.gc.ca/~e icb/notices/ser52-e.htm 
76 WTO document WT/DS194/R, 29 June 2001. 
77 The text of the Export Act is available online at:  http://laws.justice.gc.ca. Canada WT/TPR/S/112/Rev.1 
 Page 61 
 
 
partnership between companies and government to  generate exports, and may assist exporting 
companies by providing information, marketing assistance, grants, financing and guarantees, 
insurance or other services.  Institutions that focu s essentially on the agri-food sector, such as the 
Canadian Wheat Board, as well as Canada's agricult ural export subsidy notifications are described in 
Chapter IV(2)). 
130. The main institutions involved in export support to industrial and services companies are 
Industry Canada, the Canadian Commercial Corpor ation, and Export Development Canada (EDC).  
These provide a range of support measures rangi ng from technology and marketing support to 
financial support.  WTO panels have found some EDC financing to constitute export subsidies.  The 
Department of Foreign Affairs and International Trade (DFAIT) makes available to exporters advice from geographical desks, funds for the promotion of  cooperative linkages such as Going Global, and 
export programmes such as the Program fo r Export Market Development (PEMD), Canada. 
(b) Export Development Canada  
131. The government-owned EDC is Canada's official  export credit agency.  In December 2001, 
amendments to the Export Development Act of 1993 made it a legal requirement for EDC to review the environmental effects of projects, and replace d the name Export Development Corporation with 
Export Development Canada.  The amendment require s EDC, before entering into a project-related 
transaction, to determine whether the project is likely to have adverse environmental effects and if so, 
whether EDC is justified in entering into the trans action;  and exempting EDC from the application of 
the Canadian Environmental Assessment Act.   
132. More broadly, the legislative review focused on social responsibility issues which, in addition 
to environmental review, included public accountability/disclosure, anti-corruption, and human rights 
considerations.  EDC has or is in the process of developing methodologies for incorporating these 
concepts into its operating procedures.  The review otherwise endorsed EDC's mandate, role, strategic 
direction, and its commercial principles.  The am endments have no effect on EDC's commercial 
activity as such, although environmental review procedures are expected to have business impacts. 
133. As Canada's official export credit agency, EDC is authorized to borrow, lend, guarantee loans, 
provide export credits insurance, insure foreign investment against political risks, and to issue 
guarantees regarding export transactions.  Its mandate also includes the power to incorporate 
subsidiaries, make equity investments, enter into joint ventures, engage in leasing to users abroad, as 
well as provide export-related domestic financing and credit insurance.  EDC fi nances its activities by 
borrowing under a government guarantee, whereb y the Government of Canada is ultimately 
responsible if  EDC fails to repay.  The EDC does not pay income or corporate taxes, does not 
normally pay dividends, and benefits from a sovereign credit rating that reduces borrowing costs.  An 
arrangement between EDC and the Canadian Government  provides for a sharing of the cost of debt 
forgiveness provided  ex gratia  under Paris Club Agreements.  
134. The EDC maintains two accounts, the Corpor ate Account and the Canada Account.  The 
Corporate Account is in principle financially inde pendent and operates on commercial principles.  
The Corporate Account in some cases competes with the private sector;  it also supplements private 
sector financing, adds capacity and/or provides se rvices that are not available from the private sector. 
135. The Canada Account has been used to support transactions that the Federal Government 
deems to be in the "national interest" but that the EDC cannot support under the Corporate Account for reasons of exceptional risk.  The national interest involves considerations such as the employment generated or sustained by the transaction;  the impor tance of the transaction to the exporter;  foreign WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 62 
 
 
policy considerations, including Canada's bilateral re lationship with the country in question;  and the 
importance of the market to Canada.  Each Ca nada Account transaction requires ministerial 
authorization. 
136. Table III.10 reflects the major concentrations of EDC's total commercial and sovereign 
exposure by country for all operations at the end of 2001.  The most striking change since 1999 is the increased exposure to the United States;  gross loans receivable with U.S. risks increased by 110% to 
Can$10.3 billion;  short-term insurance policies and guarantees increased by 51%;  and medium-term 
insurance policies and guarantees increased by 86%. 
Table III.10 
EDC's total financial exposure by country, 2001 
(Can$ million) 
 
Loans portfolio Insurance policies and 
guarantees outstanding  Investments 
and derivative 
financial 
instrumentsa Total 
 2001 
exposure 
(%) 1999 
exposure 
(%) 
Country Gross 
loans 
receivable Undisbursed 
commit-
ments Short-term Medium-
term  
   
United States 10,270 1,863 4,272 2,542 1,171 20,118 41 27 
Canada 2,203b 532b 203 2,518c 1,172 6,628 14 19 
Mexico 1,322 464 178 328 - 2,292 5 3 
China 1,090 789 167 238 - 2,284 5 5 
Brazil 884 160 301 324 - 1,669 3 4 
U.K. 908 - 199 103 24 1,234 3 4 
Indonesia 964 34 45 9 - 1,052 2 3 
Peru 934 - 10 107 - 1,051 2 3 
Venezuela 675 156 43 15 - 889 2 2 
Germany 243 - 223 32 214 712 1 2 
Otherd 5,733 940 1,948 2,040 67 10,728 22 28 
Total 25,226 4,938 7,589 8,256 2,648 48,657 100 100 
a Investments include amounts represented by cash, marketable securities, and investments. b Includes the impact of one transaction signed in 1997 for Can$1,497 million with recourse to the Consolidated Revenue Fund of  
 Canada in the event of a loan default. c Includes Can$2,366 million of surety bond insurance where risk rests with the exporter.  A total of 54% of the exports insure d in 
the surety bond programme are to the United States.  The balance represents exports to other countries. 
d Includes 162 countries with total exposure ranging from Can$0.001 million to Can$609 million. 
Source:  Export Development Corporation (2001) Annual Report  [Online].  Available at:  http://www.edc.ca. 
137. Over 1997-01, gross loans receivable increased considerably.  This increase came mostly 
from the continued growth in commercial financing, while the share of sovereign loans continued to decline.  In 1997, the ratio of commercial to total loans was 43%, while by 2001 it had increased to 
70%.  In 2001, new signing volume to commercial borrowers accounted for 99% of total signing 
volume.  During 2001, 252 customers were supported through loans financing (up from 204 
customers in 2000).
78 
138. The commercial exposure by sector has shifted toward air transportation and resource 
industries, while information technologies and surface transportation have declined since 2000 
(Chart III.6).  Exposure to air transport and to  resource industries each amounted to over 
Can$6.6 billion, and over one third of the total.  Five counterparties comprising the EDC's largest 
commercial exposure balances collectively represen t Can$5.3 billion, or 25%, of the total performing 
                                                      
78 Export Development Corporation (2001), p. 41. Canada WT/TPR/S/112/Rev.1 
 Page 63 
 
 
commercial exposure.  Of these fi ve, two are within the surface transportation sector, comprising 
Can$2.7 billion, or 13% of the total.  The re maining three counterparties are within the air 
transportation sector, comprising Can$2.6 billion, or 12% of exposure. 
05101520253035
Air transportation Resource industries Information
technologiesSurface
transportationF inancial institutions
Note:     The number abov e the bar represents total exposure in billion U S$.
Source:  EDC Annual Report , v arious issues.Chart III.6
Commercial loans exposure, by sector, 1998-01
2000 20011998 1999%  of total exposure
6.9
3.13.9
4.66.6
2.53.44.9
3.83.2
3.4 4.4
3.72.8 3.3
3.5
0.00.00.4
0.3
 
139. The ratio of below-investment-grade loans to total commercial exposure increased 
significantly for loans in the air transportation sector in 2001.  This was the result of numerous credit 
downgrades in the fourth quarter of 2001 reflecting the financial difficulty the sector has been 
experiencing.  Commercial exposure in the information technologies sector declined 12% from 2000, 
reflecting impairments and contraction in this sector.79 
140. Canada's support to the regional aircraft industry  continued to be the subject of frictions with 
Brazil.  As noted in the Secretariat Report for Ca nada's previous Review, a WTO panel concluded in 
1999 that certain financing transactions supporting the export of Canadian regional aircraft under the 
Canada Account constituted a prohibited export subsidy.80  As a result of the WTO Panel, Ministerial 
guidelines now state that all Canada Account tran sactions must comply with the OECD Arrangement 
on Guidelines for Officially Supported Export Credits (the OECD Arrangement).81 
                                                      
79 Loans are classified as impaired when EDC no longer has assurance that the full amount of principal 
and interest will be collected in accordance with the terms of the loan agreement. 
80 WTO document WT/DS70/R, 14 April 1999. 
81 WTO document WT/DS70/8, 26 November 1999. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 64 
 
 
141. Considering that the measures taken to comply with the Panel's recommendation were not 
consistent with the WTO Agreement on Subsidie s and Countervailing Measures (SCM), Brazil 
requested that the matter be referred to the origin al panel.  The subsequent Panel Report concluded 
that Canada had failed to withdraw the Canada Acc ount assistance to the Canadian regional aircraft 
industry within 90 days.82  According to the authorities, no further steps are required of Canada by 
way of implementation. 
142. In January 2001, a new related dispute began when Brazil, inter alia , claimed that other 
subsidized export credits and loan guarantees were  being extended to Canada's regional aircraft 
industry by both the Corporate Account and the Cana da Account, notably in the case of a sale of 
Bombardier aircraft to Air Wisconsin Airlines Corporation of the United States.83  These claims 
resulted in a new panel established in May 2001 (Table AII.1).  The Panel found that the Canada 
Account and the Corporate Account were as such compliant with Canada's WTO obligations, and that 
financing offered by EDC at market rates does not c onfer a benefit and theref ore does not constitute a 
prohibited export subsidy.  However, the Panel also found that five of 13 specific transactions 
challenged by Brazil, including Canada Account financing to Air Wisconsin and Air Nostrum and 
three Corporate Account transactions with Comair, constituted prohibited export subsidies.84  
(c) The Canadian Commercial Corporation 
143. The Canadian Commercial Corporation (CCC) is Canada's export contracting agency,  
specializing in sales to foreign governments and in ternational institutions.  By selling through CCC, 
Canadian companies gain direct access to U.S. defence and aerospace markets under the Canada-U.S. Defence Production Sharing Agreement (DPSA).  In  general, CCC's government status enables it to 
structure commercial sales on a government-to-govern ment basis.  This facilitates transactions with 
government agencies in many countries, and thus improves exporters' prospects in public-sector 
procurement markets around the world.  The CCC also helps Canadian exporters win sales in private-
sector markets.
85 
144. The Canadian Commercial Corporation Act prov ides the CCC with a broad range of powers 
including, in particular, "exporting goods and co mmodities from Canada either  as principal or as 
agent, in such manner and to such extent as it cons iders advisable."  In particular, CCC offers foreign 
buyers a government-backed guarantee of contract pe rformance.  This guarantee raises the credibility 
of Canadian companies, particularly  small and medium-sized firms.  It increases their ability to win 
export contracts on improved terms and to obtain  working capital from commercial sources.  The 
CCC Act was amended in March 2002  to allow the CCC to borrow funds on capital markets, and to 
charge fees for its services. 
145. CCC also facilitates access to commercial sour ces of preshipment export financing through 
arrangements with 19 partner banks and financ ial institutions.  CCC's Progress Payment Program 
assists small Canadian exporters that have insuff icient working capital to undertake specific export 
contracts.  A project line of credit up to Can$2 million may be set up to cover a company's  production 
costs for any particular export sale.  This project line of credit is repaid w ith funds rece ived from the 
buyer once the goods have been sh ipped from Canada.  According to the authorities, the project line 
of credit's interest rates are offered at market rates.  The authorities have explained that in case of 
default by the company the financial institution woul d sell the security to the Canadian Commercial 
                                                      
82 WTO document WT/DS70/AB/RW, 21 July 2000. 
83 See Industry Canada (2001), "Canada Ready to Match Brazilian Financing Terms to Preserve 
Aerospace Jobs", News Release 10 January 2001  [Online].  Available at http://www.ic.gc.ca.  
84 WTO document WT/DS222/R, 28 January 2002. 
85 See CCC online information.  Available at:  http://www.ccc.ca/eng lish/tnh_default.cfm. Canada WT/TPR/S/112/Rev.1 
 Page 65 
 
 
Corporation for a value equivalent to the project line of credit.  CCC would then dispose of the 
acquired work-in-progress and evaluate availabl e recourse against the defaulting company. 
146. Total CCC export sales reached nearly Can$1. 34 billion in 2001-01.  Some 273 exporters 
exported to 31 countries through CCC, with about ha lf of total sales directed to the U.S. Department 
of Defence and NASA.  Vehicle and rail equipment recorded the highest percentage (45%) of export contracts through the CCC in 2000-01, followed by aerospace (18%) and armament.
86 
(4) MEASURES AFFECTING PRODUCTION AND TRADE  
(i) Competition policy 
(a) Institutional and legal framework 
147. The Competition Act of 1986, as amended in 1999, 2000, and 2002 is the main legislation 
governing competition issues in Canada.  The Commissioner of Competition heads the Competition 
Bureau, which reports to the Government.  In addition  to applying the Competition Act, the Bureau is 
responsible, formally since 1999, for the administ ration and enforcement of the Consumer Packaging 
and Labelling Act, the Textile Labelling Ac t, and the Precious Metals Marking Act.87  The 
Commissioner is responsible for the administration, application, and enforcement of the provisions of 
these Acts.  Since Canada's last Review, in 2000, the scope of activities and enforcement power of the 
Commissioner of Competition have been widely increased. 
148. With respect to enforcement, in non-criminal matters the Commissioner may file an 
application with the Competition Tribunal, a specializ ed quasi-judicial body, that hears and decides all 
applications made under relevant parts of the Competition Act.88  Alleged violations of the 
Competition Act's criminal provisions are genera lly referred to the At torney General.  The  Bureau 
also has the statutory right to intervene before fe deral regulatory boards and tribunals such as the 
Canadian Radio-Television and Telecommunications Commission and the Canadian International 
Trade Tribunal, or make representations to provincial boards, upon invitation or with the consent of 
the board in question. 
149. Canadian competition law was amended in July 2000 by Bill C-26:  An Act to amend the 
Canada Transportation Act, the Competition Act, the Competition Tribunal Act and the Air Canada Public Participation Act and to amend another Ac t in consequence (ACTA).  The ACTA put in place 
a special regime for domestic airlin es in the Competition Act, as a result of the acquisition by Air 
Canada of Canadian Airlines (see Chapter IV(7)). 
150. The Competition Act was also amended by the entr y into force, on 24 October 2001, of An 
Act to establish the Financial Consumer Agency of Canada and to amend certain Acts in relation to 
financial institutions (see Chapter IV(8)). 
151. Bill C-23:  An Act to amend the Competition Act and the Competition Tribunal Act 
(2002 Act) entered into force on 21 June 2002 a nd introduced substantive changes to Canadian 
competition policy legislation.  The 2002 Act gi ves the Canadian Competition Tribunal significant 
                                                     
 
86 Canadian Commercial Corporation (2001). 
87 More information on the activities of the Competition Bureau is available online at:  
http://strategis.ic.gc.ca/SSG/ct01254e.html.  The complete text of the Competition Act, including recent 
amendments, is available at: http://canada.justice.gc.ca/STABLE/EN/Laws/Chap/C/C-34.html. 
88 Competition Tribunal online information is available at:  http://www.ct-tc.gc.ca.  The Competition 
Tribunal Act is available at:  http://canada.justice.gc.ca.  WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 66 
 
 
new powers, including the authority to award cost s in respect of reviewable matters, to make 
summary dispositions when it finds no merit to the case  or no genuine defence, and to hear references 
(questions involving a specific aspect of a case or in terpretation of the law).  The 2002 Act also allows 
private parties to apply directly to the Competition Tribunal to address matters regarding refusal to 
deal, tied selling, exclusive dealing, and market restrictions.   
(b) International cooperation 
152. Canada considers international cooperation in competition policy as an important element to 
accompany trade liberalization, and has addressed th e issue at bilateral, regional, and multilateral 
levels.  Canada also considers that cooperation on cross-border competition matters is a key element 
in maintaining and encouraging competition in Canada. 
153. The 2002 Act (Bill C-23) introduced a new fram ework to facilitate cooperation between 
foreign competition authorities (Mutual Legal Assistan ce with Foreign States ), in cases where the 
laws of the foreign State that address the conduct are substantially similar to Canadian law.  The 
authorities noted that this will a llow the gathering of evidence for and from foreign jurisdictions with 
respect to non-criminal competition matters.  The fr amework contains a sectio n that extends evidence 
gathering to orders for the virtual presence (i.e. video link) of a person in the foreign State.  The 
person who is compelled to provide evidence or a statement will attend at a fixed place and by means 
of technology will be virtually present in the ju dicial proceedings taking place in the State that 
requested the evidence by video link. 
154. At the bilateral level, Canada has signed a number of cooperation arrangements on 
competition policy issues in the period under review:  in 2000 an arrangement with the competition authorities of Australia and New Zealand, and in 2001, a Memorandum of Understanding with Chile, 
and a cooperation agreement with Mexico, as well a Chapter on Competition Policy in the Canada-
Costa Rica Free Trade Agreement.  These comple mented the agreements signed with the United 
States in 1995 and with the European Union in  1999.  In general terms, competition policy 
cooperation agreements have notification requirements with respect to enforcement measures that may affect the interests of the other party, in cluding:  anti-competitive activities;  mergers and 
acquisitions;  remedies by a competition authority that would require or prohibit conduct in the 
territory of the other party;  or involve one of the parties seeking information lo cated in the territory of 
the other party.   
155. The Cooperation Arrangemen t Between the Commissioner of  Competition (Canada), the 
Australian Competition and Cons umer Commission and the Ne w Zealand Commerce Commission 
Regarding the Application of their Competition  and Consumer Laws, entered into force in 
October 2000.  The cooperation and coordination pr ovisions are limited to sharing information where 
appropriate and practicable, and coordination of enforcement activities when pursuing enforcement 
activities with regard to the same or related matters.  Meetings of the officials of  the parties are to take 
place periodically. 
156. Chapter XI on Competition Policy of the Cana da-Costa Rica Free Trade Agreement includes 
mechanisms for cooperation on a nd information of anti-competitive ac tivities in the territory of the 
one party that may affect the other party's interests.   Issues arising from the Chapter's application may 
be addressed either in bilateral consultations to be he ld at least once every two years, or pursuant to a 
written request from either Canada or Costa Rica.  Where a mutually satisfactory resolution cannot be 
reached through consultations, issues are to be re ferred to the Free Trade Commission, comprising Canada WT/TPR/S/112/Rev.1 
 Page 67 
 
 
cabinet-level representatives of the parties or thei r designees.  The Chapter was the subject of a joint 
communication by the two countries to the WTO.89 
157. The Memorandum of Understanding between the Commissioner of Competition (Canada) 
and the Fiscal Nacional Económico (Chile) Regardi ng the Application of their Competition Laws was 
signed and entered into force on 17 December 2001.  The purpose of the Memorandum is to promote cooperation and coordination betw een the two countries and to reduce the effect of potential 
differences in the applic ation of competition law in Canada and Chile.  The pa rties agreed to 
cooperate and share information and, when pursuing enforcement activities with regard to the same or 
related matters, coordinate their enforcemen t activities where appropriate and practicable. 
158. The Agreement between the Government of Canada and the Government of Mexico 
regarding the Application of their Competition Laws  was signed in November  2001.  The agreement 
is similar to the 1995 agreement between Canada and the United States, as well as the 2000 agreement 
between Mexico and the United States.  The signing of the agreement completes the cooperative 
framework for competition law enforcement in the NAFTA region, illustrating that competition 
authorities from all three NAFTA countries want to ensure that anti-competiti ve business practices do 
not detract from the benefits of free trade.  In November 2002, the agreement had not yet come into 
force pending Senate approval in Mexico. 
159. The authorities have noted that, during 2000-02 , the Competition Bureau worked closely with 
its counterparts around the world, primarily in the European Union and the United States, but also in 
other jurisdictions.  This cooperation, which encompassed work on both specific cases and general policy issues, included the exchange of documents, meetings and other contacts.  Case-related cooperation dealt primarily with merger review , and cartel and deceptive marketing practices 
enforcement, and included notifications of enfo rcement actions, exchange of information on the 
parties and markets, the economic analysis of part icular cases, and the coordination of enforcement 
actions, including remedies.  Merger cases included  those involving Lafarge and Blue Circle, GE and 
Honeywell, Nestlé and Ralston Purina, and Seagram/Di ageo and Pernod Ricard.  Cartel investigations 
included those relating to graphite and carbon pr oducts, bulk vitamins an d related products, and 
methylglucamine. 
160. In June 2002, Canada and Japan launched nego tiations for a cooperation agreement regarding 
competition law enforcement.  The proposed agreement is expected to provide a framework for 
coordination and cooperation to de al effectively with cross-border  anti-competitive business activities 
affecting both countries.  
161. Canada also seeks to promote c ooperation on competition issues at  the regional level, through 
the NAFTA Working Group on Trade and Competiti on, the Working Group on Competition Policy in 
the FTAA negotiations, and the APEC workshop on Competition Policy and Deregulation.  Canada 
observes the revised 1995 OECD Recommendatio n concerning Cooperation between Member 
countries on Restrictive Business Practices and International Trade, which provides for notification, 
exchange of information, mutual assistance in inve stigations, coordination of investigations positive 
comity, consultations, and a conciliation mechanism in the field of competition law enforcement, as 
well as the OECD Recommendatio n on Hard Core Cartels. 
162. Multilaterally, Canada has been active in the WTO Working Group on the Interaction 
between Trade and Competition Policy, to which it has submitted several communications.  Canada's 
general position in the WTO has been that, "a s governmental trade barriers fall, competition 
authorities need to assume a greater role in the market liberalization process to ensure that the 
                                                     
 
89 WTO document WT/WGTCP/W/173, 2 July 2001. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 68 
 
 
expected benefits of the market economy are not  undermined by the anti-competitive behaviour of 
private actors."90  Canada also considers that, since the rise in world trade and investment flows has 
also increased the possibility for concurrent jurisd iction of two or more competition authorities over 
the same international economic activity, it is ne cessary for competition authorities to cooperate 
internationally.91  In Canada's view, a multilateral agre ement on competition policy would provide a 
flexible framework for cooperation, which could in clude a variety of activitie s related to developing 
institutional capacity, sharing non-confidential information among competition authorities and 
administering the agreement.92  The WTO, in Canada's view, is in a position to furnish all the essential 
elements of a multilateral agreement on competition, but should not become a supra -national 
competition authority. 
163. With regard to multilateral cooperation, Ca nada actively participates in International 
Competition Network (ICN), which br ings together agency representa tives and competition experts to 
develop best practice recommendations and to fost er convergence in enforcement policy approaches.  
The Commissioner of Competition recently led the ICN's Interim Steering Group to establish a new 
forum to discuss practical policy issues of common  concern.  Canada also maintains a technical 
assistance programme with developing countries, through which Canadian officials assist in the 
conceptualization and drafting of a national competition statutes in countries without such legislation.  
Assistance is also provided on the design of  enforcement programmes and capacity building. 
(c) Enforcement and other activities 
164. A review of competition cases is published annually by the Competition Bureau.  In the fiscal 
year 2000/01, the Bureau received 16,570 complaints  and information requests, up from 1,424 in the 
fiscal year 1995/96 (Table III.11).  Misleading a dvertising and deceptive marketing practices made up 
for most of the cases.  In fiscal year 2000/01, prosecutions have led to companies being fined 
approximately Can$18.7 million. 
165. Merger examination activity has continued to in crease.  In 2000-01, the Competition Tribunal 
delivered judgements on two litigated merger ca ses involving propane and waste, which were 
appealed, and several merger examinations.  The Bu reau also looked at vertical issues concerning 
media convergence.  Other industries with transactions that raised competition concerns included pulp 
and paper, food services, food processing, and broadcasting.93  Since 2000, the Competition Bureau 
has also received and examined complaints that Ai r Canada has abused its dominant market position 
(see Chapter IV(7)).  Salient criminal cases analysed during the period under review included misleading advertising, false telemarketing, dece ptive marketing practices, false or misleading 
representation. 
166. With respect to the activities of international cart els, in fiscal year 2000-01 fines totalled more 
than Can$16 million.  Firms fined in exce ss of Can$1 million included SGL Carbon 
Aktiengesellschaft for its particip ation in a conspiracy concerning graphite electrodes;  Daicel 
Chemical Industries Ltd for a conspiracy involving sorbates;  Ueno Fine Chemicals Industry Ltd. for 
participating in a conspiracy related to preservatives used in the food industry;  and Pfizer Inc for its involvement in a conspiracy concerning a food preservative agent. 
                                                     
 
90 WTO document WT/WGTCP/W/155, 19 December 2000.  See also document WT/WGTCP/W/183, 
19 April 2002. 
91 WTO document WT/WGTCP/W/146, 12 September 2000. 
92 WTO document WT/WGTCP/W/202, 12 August 2002.  Additional information on Canada's views 
on competition  policy may be found in WTO document  WT/WGTCP/W/174, 2 July 2001. 
93 For a complete description of the mergers reviewed by the Bureau in 2000-01 and 1999-00, refer to 
Strategies online information.  Available at:  http://www.strategis.ic.gc.ca/pics/ct/perform2_e.pdf. Canada WT/TPR/S/112/Rev.1 
 Page 69 
 
 
Table III.11 
Selected activities of the Competition Bureau, 1997-01 
 1997/98 1998/99 1999/00 2000/01 
Number of complaints, examinations, inquiries and advisory opinions  
Total complaints/information requests 6,939 11,087 13,803 16,570 
of which Civil matters  503 819 613 618 
Criminal matters  1,285 937 1,945 966 
Fair Business Practices Branch activities 5,600 8,730 11,240 14,986 
Examinations (two or more days of review) 870 601 655 711 
Disposition of inquiries 
Inquiries formally discontinued 29 21 18 11 
Matters referred to the Attorney General of Canada 8 8 12 14 
Matters referred where further action is not warranted 2 0 1 0 
Prosecutions or other proceedings commenced  6 8 9 14 
Applications to the competition tribunal 8 5 4 6 
Merger examinations 
Examinations commenced 320 309 361 373 
Examinations concluded 340 302 338 389 
Posing no issue under the Act 406 346 392 381 
With pre-closing restructuring 0 0 2 0 
With post-closing restructuring and undertakings 3 1 6 5 
With consent orders 1 2 1 1 
Through contested proceedings 0 2 0 0 
Parties abandoned proposed mergers  0 3 1 2 
Advance ruling certificates issued 123 186 128 215 
Advisory opinions issued (included in total examinations concluded) 3 7 3 2 
Examinations ongoing at year-end 37 44 67 54 
Total examinations during the year 377 346 405 443 
Source:  Competition Bureau. 
(ii) Financial and other assistance to business 
167. Canada maintains a number of financial assistance programmes for businesses including 
programmes run by Crown corporations, such as th e Business Development Bank, or provided in the 
context of alliances between a Crown Corporation and a private sector bank.94  Regional programmes 
include the Atlantic Canada Opportunities Agen cy (ACOA), the Canada Economic Development for 
Quebec Regions Agency, and Western Economic Di versification.  Some programmes are run by 
provincial governments.  Assistance may take the fo rm of financial contributions, loans, tax breaks or 
specific services (information, marketing, audit, and analysis).  The main recipients of assistance 
include the agri-food sector, and the aircraft indus try.  This section focuses on non-agri-food sectors 
(for agri-food, see Chapter IV(2)). 
(a) WTO participation 
168. Information on certain subsidy programmes is provided in Canada's notifications under the 
Agreement on Subsidies and Countervailing Measures (SCM).  Canada’s latest notification, for the 
period 1999/00, describes agricultural, cultural (book and magazine publishing), and industrial goods 
                                                      
94 For example, see Strategis, "Sources of Assistance" [Online].  Available at: http://strategis.ic.gc.ca/ 
SSG/sc01562e.html. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 70 
 
 
programmes, regional development assistance exte nded by the Federal Government, and shared-cost 
federal/provincial assistance.95  Expenditure under notifiable industrial subsidy programmes totalled 
about Can$1 billion in 1999/00, up from Can$850 million in 1997/98.96  No province has indicated to 
the federal government that it has subsidies that are subject to the notification requirements of the 
SCM Agreement.97 
169. Over the past two years, Cana da has participated actively in  WTO negotiations to reduce 
trade-distorting subsidies in the goods sector, describing effective rules and disciplines on the use of 
government subsidies as critical to the reduction of distortions to trade and investment and to the 
promotion of global competition.  In this context, Canada has called for clarification of a number of 
provisions contained in the SCM Agreement.98  Regarding the issue of fisheries subsidies specifically 
referred to in the Doha Ministerial Declaration,  Canada’s preference has been to support generic 
subsidy disciplines rather than a sectoral approach. 
(b) Indicators of assistance 
170. Statistics Canada's Provincial Economic Accounts  provide one of the few available indicators 
of the value of subsidies and cap ital transfers to business, both by the Federal Government and by 
provincial and territorial governments.  Data suggest s a modest overall increase  in current and capital 
assistance extended by the provinces to businesses in 1999 and 2000 and a larger increase in 2001 
(Chart III.7).  The latter mostly reflected Alberta's electricity auction rebate and natural gas rebate.  At 
Can$18 billion, total financial assistance that year amounted to 1.7% of GDP at factor cost, up from 
1.3% in 1998.  Chart III.8 excludes tax expenditu res, which also constitute an important form of 
assistance or incentives to business. Finance Ca nada provides an annual  overview of federal tax 
expenditure.99  
(c) Selected federal measures and programmes 
Technology Partnerships Canada (TPC) 
171. Established in 1996, TPC is a technology investment fund that invests in private sector 
companies, and shares in both the risks and rewards of their projects;  the rewards to the Government 
consist of both financial returns and economic bene fits to Canada.  In 1999, TPC was found by a 
WTO panel to provide subsidies to the Canadian regi onal aircraft industry that were contingent upon 
export performance;  it has since been amended.100  TPC investments are typically conditionally 
repayable, with terms negotiated on a case-by-case basis.  TPC's sharing ratio will normally range 
between 25% and 33% of eligible costs of the project, except in exceptional cases where the sharing ratio may reach 50%.  Examples of investments since Canada's last Review include fuel cell 
technology, aircraft data communications system s, motor-vehicle-powering ethanol, aerospace 
systems, aircraft landing gear, and manage ment system for aircraft fault resolution.
101 
                                                      
95 WTO document G/SCM/N/60/CAN, 10 June 2002. 
96 WTO document G/SCM/N/48/CAN, 9 May 2000. 
97 WTO document WT/TPR/M/78, 5 February 2001. 
98 WTO document TN/RL/W/1, 15 April 2002. 
99 See "Tax Expenditures and Evaluations 2002", Finance Canada online information.  Available at:  
http://www.fin.gc.ca/toce/2002/taxexp02_e.html.  A discussion of the theoretical underpinnings to tax expenditures is provided at:  http://www.fin.gc.ca/toce/2000/taxexp_e.html.  Detailed information on the various 
tax expenditure is available at:  http://www.fin.gc.ca/toce/2000/taxexpnot_e.html. 
100 WTO documents WT/DS70/R, 14 April 1999 and WT/DS70/AB/R, 2 August 1999.  See also 
Industry Canada online information.  Available at:  http://stategis.ic.gc.ca/SSG/tp00245e.html. 
101 TPC News Room, available online at:  http://strategis.ic.gc.ca/SSG/tp00179e.html. Canada WT/TPR/S/112/Rev.1 
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03,0006,0009,00012,00015,00018,000
1991 92 93 94 95 96 97 98 99 00 010.00.51.01.52.02.5Can$ millionChart III.7                                            
Current and capital  assist ance to business, 1991-01
Provinces
Federal GovernmentLocal authorities % of GDP
Share of GDP
(right  axis )
Subsidies and capital transfers to business and persons, national accounts definition (excluding tax breaks).  Federal 
transfers include agricultural subsidies, business subsidies and payments to government-owned enterprises, such as the Canada Mortgage and Housing Corporation. Capital transfers to persons exclude transfers from the personal 
sector regarding the actuarial surplus of the government employee pension accounts.Note:
Source: WTO Secretariat calculations, based on Statistics Canada, National Economic and Financial Accounts (13-001) ;  and 
data provided by the authorities.
 
172. Following the WTO ruling, Canada was required to make adjustments to the administration of 
TPC' support for the Canadian regional aircraft industry.  Thus, TPC's contribution agreements for the 
industry were amended to terminate all obligations to disburse funds effective November 1999;  as a 
result, some Can$16.4 million of funding pursuant to those agreements was cancelled.  New terms and conditions have been issued, as well as a new operating framework and a new investment 
application guide.  Reflecting the WTO ruling, export  performance is not a consideration of TPC, and 
eligible activities have been redefined based on th e WTO definitions for industrial research and pre-
competitive development.
102 
Regional assistance  
173. As described in Canada's subsidy notifications, the Federal Department of Western Economic 
Diversification was established in 1987 to prom ote the development and diversification of the 
economy of Western Canada.  It disbursed both non-repayable grants and conditionally repayable 
contributions, mostly to small and medium-sized business organizations in Western Canada.  The 
authorities have explained that after 1995 the Department virtually eliminated direct assistance to 
businesses.  In 2000-01, assistance under the programme included non-profit research, and partnerships with universities, communities, busin ess service delivery organizations, and industry-
wide "systemic" projects.  The latter are intended  to benefit an entire industry or sector and not, 
                                                     
 
102 Further details may be found in TPC online information.  Available at:  http://strategis.ic.gc.ca/SSG/ 
tp00212e.html. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 72 
 
 
according to the authorities, to provide direct support to any one company.  The Department's total 
programme expenditure was  close to Can$200 million in 2000-01.103   
174. The Federal Government, through Industry Canada's Federal Economic Development 
Initiative (CFDC) in Northern Ontario (FedNor, also described in Canada's latest subsidy notification) 
provides operational funding, support, and advice to a network of 54 Community Futures 
Development Corporations located throughout Onta rio.  In turn, these non-profit organizations 
provide repayable financing of up to Can$125,000 as well as loan guarantees and equity investments 
to small businesses located in Ontario.  Accordi ng to Industry Canada, all loans are on commercial 
terms.  Available data on the operation of th e CFDC programme, indicate that between 1986 and 
March 1999, 11,900 loans exceeding Can$300 million were distributed to clients.  Total leveraged 
loans and owner equity amounted to Can$500 million.104 
175. In order to assist the development of the small and medium-sized business (SME) sector, in 
2001 FedNor and the Credit Unions of Northern  Ontario formed a strategic alliance that, inter alia , 
will supply capital to small and medium-sized busine sses in Northern Ontario.  Eligible companies 
must have less than 250 employees and annual total sales of less than Can$20 million.  Credit Unions 
can grant these companies loans of Can$25,000-500,000.  Interest rates charged under this 
programme will not be less than the prime rate availa ble to Credit Union members, plus 3%.  Projects 
that involve refinancing or do not result in new or increased economic activity are not eligible.  
FedNor assumes a share of the risk associated with the establishment of the associated Can$15 million 
commercial loan fund. 
176. FedNor and the Business Development Ba nk of Canada (BDC) have created a 
Can$25 million fund for viable projects initiated by small businesses in Northern Ontario.  New and 
existing businesses qualify for this fund. 
177. The Federal Department of Fisheries and Oceans has in the past run an array of programmes 
to support the fisheries sector, sometimes in coordination with provincial authorities (see below).  The 
authorities explained in the context of this Revi ew that the Federal Government has phased out all 
contributions aimed at price and vessel support.  In recent years, federal assistance has focused largely 
on advancing fisheries conservation objectives through efforts to reduce fishing capacity and 
dependence on the fishery (e.g. licence buyback and other adjustment programmes).  In the 
fish-processing industry, there has been a moratori um since 1994 on federal public expenditures for 
primary and most secondary processing activities;  there are no plans to remove this moratorium. 
(d) Selected provincial assistance measures and programmes 
178. Provinces also extend financial and other assistan ce to business in support of employment or 
other objectives.  For example, as noted in the S ecretariat Report for Canada's previous Review, the 
pulp mill of Skeena Cellulose at Prince Rupert r eceived financial assistance from the Province of 
British Columbia.  As a result, the British Colu mbia Government had become the majority 
shareholder in Skeena Cellulose Inc.  In total, since 1997 the total debt owed by Skeena Cellulose to 
the Province surpassed Can$400 million, including more than Can$270 million in public loans, loan 
guarantees, and contributions.  The company was sold in April 2002.105 
179. The New Brunswick Fisheries Development Boar d provides financial assistance to aid and 
encourage the establishment or development of fisher ies in the Province;  amounts are payable out of 
                                                      
103 See the Department's online information.  Available at:  http://www.wd.gc.ca/eng/rpts/plans/rpp00-
01/5.htm. 
104 See "Task Force on Rural Economic Renewal", Ontario Ministry of Agriculture and Food online 
information.  Available at:  http://www.gov.on.ca/OMAFRA/english/about /galttaskforce/e ndnotes.html#1. 
105 British Columbia Ministry of Competition, Science and Enterprise,  News Release, 30 April 2002.  Canada WT/TPR/S/112/Rev.1 
 Page 73 
 
 
the Provinces Consolidated Fund.106  According to the most recent annual report of the Department of 
Business New Brunswick, commercial fishers are provided loans for:  the purchase or construction of 
vessels and for major retrofits and repairs to encour age the development of fisheries in the Province;  
loans for capital expenditures;  and loan guarantees for working capital purposes, to encourage development of the New Brunswick aquaculture industry.
107  During 2000-01, the Board reviewed 
68 submissions;  51 were approved, involving assi stance totalling about Can$7 million.  According to 
information provided by New Brunswick in the context of this Review, direct loans (repayable at provincial lending rates) are provided only if  the funds are not commercially available. 
180. The Ontario Sound Recording Tax Credit is a 20% refundable tax credit for certain 
expenditures incurred by a qualifying corporation in the production of "eligible Canadian sound 
recordings" by "emerging Canadian artists or groups".
108 
181. Investissement Québec provides companies lo cated in Quebec with interest-bearing or 
interest-free loans, and loan guarantees (Table  III.12).  For 2000-01, Investissement Québec 
contributed to 929 projects totalling over Can$5. 4 billion.  Several related programmes provide 
incentives for local investment, including the Small and Medium Size Business Guarantee (Garantie 
Québec, loan guarantees for specific ac tivities, notably exports or innovation)109;  the FAIRE 
Programme, which provides refundab le or non-refundable contributions;  or the Quebec Business 
Investment Company (Société de placem ents dans l'entreprise québécoise).110  
Table III.12 
Selected support measures by Investissement Québec 
Date of 
announcement Beneficiary company/sector Amount/type of measure 
06/11/00 Mometal (metal frameworks and fabricated metals) Can$750,000 in financial assistance for capital investment 
and guaranteed export line of credit 
07/11/00 Venmar Aston Inc. (commercial ventilation units) Can$729,000 financial contribution for job creation 
10/11/00 Scott Paper Limited Can$650,000 financial contribution for acquisition of two 
new processing machines 
10/11/00 Technologies Globales ICP (solar panels) Can$490,000 financial contribution for capital expenditure 
22/11/00 Ced-Or (cedar laminboard plant) Can$15 million financial contribution under the FAIRE 
programme 
01/12/00 RCM Modulaire (home manufacturing) Can$450,000 interest-free loan 
01/12/00 Commonwealth Plywood Co. Ltd Can$900,000 repayable contribution 
11/12/00 Stryker Bertec (furniture and beds for hospitals) Can$1,275,000 financial support 
11/12/01 Groupe Teknion (office furniture and systems) Can$2.3 million non-repayable financial contribution 
17/12/01 Bridgestone/Firestone Can$2.5 million financial support 
17/12/01 Gaspesia (pulp and paper) Can$89 million interest-free and interesting bearing loans 
11/03/02 Mecachrome (precision machining) .. 
12/03/02 Harfan technologies (infrastructure management 
software) Can$250,000 financial assistance 
12/04/02 Fibro Concept Inc. (sports equipment) Can$100,000 from Investissement Quebec 
16/04/02 Steris Canada (biomedical sector) Can$1,250,000 non-repayable financial contribution 
through FAIRE 
.. Not available. 
Source: Investissement Québec Press Releases. 
                                                      
106 See Fisheries Development Act [Online].  Available at:  http ://www.gnb.ca/acts/acts/F-15-1.htm. 
107 Business New Brunswick Annual Report  2000-2001 [Online].  Available at:  http://www.gnb.ca/ 
0398/index-e.asp (imbedded file). 
108 Department of Finance online information.  Available at:  http://www.fin.gc.ca/taxexp/2001/ 
taxexp01_e.pdf 
109 Investissement Québec online information.  Available at:  http//invest-quebec.com. 
110 For more details, see Invest Québec online information.  Available at:  http://invest-quebec.com/p-
financiers/societe-speq-htm.  WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 74 
 
 
(iii) Local-content requirements 
182. A number of local-content requirements are in pl ace at the provincial level.  Under the Wine 
Content and Labelling Act of 2000 and implementing regulations, licensed wine manufacturers in 
Ontario may sell wine containing imported grapes through private retail outlets only if the wine 
contains a minimum of 30% per bottle of Ontario grapes111;  if this minimum content is not met, the 
wine has to be sold by the Liquor Control Board (see section (iv) below). Farm wineries in Nova 
Scotia selling wines from their own farm outlets (r ather than through the provincial liquor board) are 
required to sell products containing not less than 50% N ova Scotia grapes.  This requirement is set to 
increase yearly until it reaches 75% in 2006.  Only wines that are bottled in Quebec may be 
distributed through Quebec grocery stores; others must be sold through the Société des Alcools du Québec.  In British Columbia, private retail operations  are authorized for domestic wines only, not for 
imported products. 
183. Newfoundland and Labrador have reserved the right under the Agreement on Internal Trade 
to deny out-of-province beer and beer products acce ss to brewers' agents (convenience stores).  This 
policy was under review in late 2002. 
184. In New Brunswick, under the Mining Act th e Minister may require an economic impact 
analysis from companies in regard to the feasibility of in-province processing.  However, according to 
the authorities the New Brunswick's Department of Justice has declared this power as ultra vires  
because of the Agreement on Internal Trade, and the Minister has never denied a company application 
to export concentrates for further processing elsewhere.  
185. In Newfoundland and Labrador, petroleum and gas projects are approved only if they result in 
sufficient local employment and purchases of goods and services produced.  For instance in the 
Voisey's Bay nickel project, the Newfoundland gover nment required that the mining company Inco 
locally process concentrate produced from the proposed mine and mill rather than shipping it to 
existing processing plants in Manitoba and Ontario.
112  In Nova Scotia, petroleum exploration rights 
are conditional on an attempt to use local labour, goods, and services.113   
186. In Quebec, under the Loi sur la transformation des produits marins (T 11.01) and 
implementing regulations, a variety of fish (including cod and mackerel) and seafood (including shrimp and crab) must be processed by companies located in Quebec, so as to preserve local 
employment opportunities.  
187. At federal level, local-value- added requirements in motor vehi cle production under the Auto 
Pact were the subject of a WTO Panel established in 1999, which concluded, inter alia , that this 
resulted in less favourable treat ment for imports relative to domestic parts and materials and non-
permanent equipment.  The Canadian value-added requirements (the CVA requirements) related to 
the tariff exemption on cars imported from the United States under the Auto Pact were contained in 
the Motor Vehicles Tariff Order, 1998 (the MVTO 1998) and the Special Remission Orders 
(the SROs, see also (2)(iii) above).
114  
                                                      
111  The text of the Wine Content and Labelling Act, 2000, is available online at:  http://www.e-
laws.gov.on.ca/DBLaws/Statutes/ English/00w26_e.htm. 
112 See the statement by Lloyd Matthews, Minister of Mines and Energy, 19 November 2001 [Online].  
Available at:  the website of the Government of Newfoundland at http://www.gov.nf.ca/releases/2001/ 
mines&en/ 1119n08.htm. 
113 Petroleum Resources Regulations of Nova Scotia, Section 27 of the Petroleum Resources Act, 
available online at:  http://www.gov.ns.ca. 
114 The MVTO and SROs are regulations promulgated by the Governor-General-in-Council.  See WTO 
document WT/DS139/R, 11 February 2000, as modified by the Appellate Body Report, WTO document 
WT/DS139/ABR, 31 May 2000. Canada WT/TPR/S/112/Rev.1 
 Page 75 
 
 
188. On 15 February 2001, the Order Repealing th e Motor Vehicles Tariff Order, 1998 and 
amending the Schedule to the Customs Tariff, and the Order Repealing Certain Remission Orders 
made under the Financial Administration Act 2 000-2 were introduced to revoke the Orders 
implementing the Auto Pact in Canada and to ther eby complete Canada's implementation of the WTO 
Auto Pact ruling. 
(iv) State-owned enterprises 
189. Canada's state-trading enterprises (STEs), as  notified to the WTO Working Party on State 
Trading Enterprises in 2002, are:  the Canadian Wheat Board (CWB), the Canadian Dairy 
Commission (CDC), the Canadian Freshwater Fish Marketing Corporation, the twelve provincial and territorial liquor boards, and the Ontario Bean Pr oducers Marketing Board;  the same STEs were 
included in Canada's previous notification, in 1997).
115  
190. The CWB has exclusive authority to export Western Canadian wheat, durum wheat, and 
barley.  The CDC has a de facto monopoly on the im portation of butter under the tariff quota system;  
although it is active in export markets, it has no excl usive authority for the export of any product.  The 
activities of the CWB and CDC are described in Chapter IV (2)). 
191. Under the 1928 Importation of Intoxicating Liquors Act (IILA), each province and two 
territories have monopolies on the introduction of a ll alcoholic beverages into their territories both 
from abroad and from other provinces.  Under the IILA, liquor, including wine, considered 
intoxicating by provincial law may be imported only by a board, commission, officer, or 
governmental agency legally authorized to sell intoxicating liquor.  Distribution and warehousing services for importers are generally also reserved for the provincial liquor boards. 
192. The new Excise Act 2001 includes amendments to the IILA so as to en sure consistency with 
the new terminology and concepts relating to spir its and wine under the new Act.  The authorities 
have stated that amendments will not affect market access conditions for foreign suppliers, and 
maintain the existing import restrictions and trade-related exemptions on bulk spirits.
116  There are no 
plans to overhaul the IILA. 
193. The IILA has been sche duled as a quantitative restriction ma intained as an exception to the 
free-trade provisions of both th e NAFTA and the FTA with Chile.117  Such an exception has also been 
scheduled in the FTA with Costa Rica, and is contemplated by the Government for inclusion in other 
ongoing FTA negotiations (Chapter II).  Conditions for the sale of alcoholic beverages in Canada are 
a source of concern for some of Canada's trading partners.118   
194. Eight of the twelve provincial liquor jurisdiction s in Canada apply a higher services charge to 
imported products.  According to th e authorities, the differ ence reflects higher carrying costs (e.g. the 
interest cost of holding product in inventory) as well as higher operational costs associated with 
imported products. 
195. Among the exceptions to Canada's monopoly system, Alberta privatized both warehousing 
and retail distribution in 1993.  In 2001, there were more than 18,800 liquor products registered for 
                                                      
115 WTO documents G/STR/N/3/CAN, 5 September 1997, and G/STR/N/4/CAN, 5 November 2002. 
116 Department of Finance online information.  Available at:  http://www.fin.gc.ca/news01/data/01-113-
1e.pdf, and information provided by the authorities. 
117 See DFAIT online information.  Available at:  http://www.dfait-maeci.gc.ca/tna-nac/cda-chile/4-
cda26.asp, Annex IV. 
118 See for example WTO document WT/TPR/M/78, 5 February 2001. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 76 
 
 
potential importation in Alberta compared with approximately 3,300 prior to privatization.119 The 
retail network also expanded si gnificantly (Chart III.8). 
 
196. The Liquor Control Board of Ontario (LCBO) continues to have a monopoly over wholesale 
trade.  Private retail operations are authorized for domestic wine (see section (iii) above), but not for 
imported products.  A private company also sells dome stic and foreign beer.  In fiscal year 2000/01, 
wholesale sales to these private outlets accounted for just under 20% of total LCBO sales;  the 
remainder were through LCBO's and other govern ment-controlled retail outlets.  All spirits are 
marketed by the LCBO;  together with other govern ment-owned outlets it controls 45% of the outlets 
in Ontario. 
197. Available statistics do not suggest a significant di fference in the evolution of imports between 
Alberta and Ontario.  Between 1997-98 and 2000-01, sales of imported alcoholic beverages in Alberta 
advanced by an average 8.7% annually, to reach Can$341 million, and sales of domestically produced 
beverages increased by 3.7%.  In 2001, imports accounted for 27% of total sales value in Alberta, up 
from 24% in 1997-98.  In comparison, sales of im ported alcoholic beverages by LCBO increased by 
10.6% annually on average between 1997 and 2001, to reach Can$1.4 billion;  domestic sales 
                                                      
119 Alberta Gaming and Liquor Commission, Annual Report 2000-01  [Online].  Available at:  
http://www.aglc.gov.ab.ca/pd f/annual_reports/2001_agl c_annual_report.pdf. 02004006008001,000Chart III.8
Retail outlets and products for sale, in Alberta, 1993 and 2001 
Number of retail outlets
Government of Alberta. Source: 04,0008,00012,00016,00020,000Number of  products
1993 2001 2001 1993Canada WT/TPR/S/112/Rev.1 
 Page 77 
 
 
increased by 5.4%, to reach Can$1.3 billion.120  In 2001, imports accounted for 52% of LCBO's total 
sales value, up from 47% in 1997-98. 
198. Nationwide data on sales of dome stic and imported products suggest that import penetration 
has increased in all three product groups (Table III.13). 
Table III.13 
Domestic and imported sales of beer, wine and spirits, 1995-01 
('000 hectoliters)  
 1995 1996 1997 1998 1999 2000 2001
Beer        
Domestic 19,242 18,913 18,826 19,276 19,333 19,215 19,536
Imported 659 867 1,018 1,167 1,415 1,495 1,678
Total 19,902 19,780 19,844 20,443 20,748 20,710 21,213
% Share   
Domestic 96.7 95.6 94.9 94.3 93.2 92.8 92.1
Imported 3.3 4.4 5.1 5.7 6.8 7.2 7.9
Wine   
Domestic 704 731 749 769 816 827 849
Imported 1,283 1,337 1,363 1,444 1,545 1,622 1,727
Total 1,987 2,068 2,112 2,213 2,362 2,449 2,576
% Share   
Domestic 35.4 35.4 35.5 34.7 34.6 33.8 33.0
Imported 64.6 64.6 64.5 65.3 65.4 66.2 67.0
Spirits   
Domestic 850 858 849 858 859 877 885
Imported 321 335 342 359 390 405 425
Total 1,171 1,193 1,191 1,218 1,249 1,281 1,310
% Share   
Domestic 72.6 72.0 71.3 70.5 68.8 68.4 67.6
Imported 27.4 28.0 28.7 29.5 31.2 31.6 32.4
Source: Brewers Association of Canada, Annual Statistical Bulletin 2001  [Online].  Available at: http://www.brewers.ca; 
and data provided by the authorities. 
(v) Government procurement 
199. The estimated annual value of government procur ement at the federal level is approximately 
Can$10 billion annually, or less than 1% of GDP.121  Reported procurement at the provincial and 
territorial level is estimated at some Can$7 billion.122  In 2000, contracts representing 89.8% of the 
total value were allocated through competitive methods, while 10.2% was allocated in a non-
competitive fashion.  Canada last notified annua l statistics under Article XIX:5 of the WTO 
Agreement on Government Procurement in October 1998.123  Procurement by municipalities, 
municipal organizations, publicly funded academic institutions, and health and social services entities 
(MASH entities) is estimated at some Can$20 bi llion a year.  Procurement for all levels of 
government and governmental institutions represents some 3.5% of GDP. 
                                                      
120 LCBO Annual Report 2000 , available online at:  http://legacy.lcbo.com/images/pdfs/lcbo_an_ 
report.pdf. 
121 Information provided by the authorities, based on Treasury Board Secretariat reports for federal 
procurement for departments and agencies for the years 1997 to 2000.  Purchases totalled Can$9.9 billion in 1999 and Can$9.4 billion in 2000.  More detailed information is available online at:  http://www.tbs-
sct.gc.ca/pubs_pol/dcgpubs/con_data/siglist_e.html. 
122 The latest available complete information is for fiscal year 1999-00 and can be found on the Internal 
Trade Secretariat's online information.  Available at:  http://www.intrasec.mb.ca/index_he.htm. 
123 WTO document GPA/21/Add.1, 16 October 1998. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 78 
 
 
(a) Institutional and legal framework 
200. The Treasury Board of Canada establishes th e rules for contracting in the Government 
Contract Regulations (GCRs), which also provide th e overall policy directio n through the Treasury 
Board Contracting Policy.  The Fi nancial Administration Act outlines  the financial responsibilities 
and authorities for contracting, and forms the basis of the GCRs.  The Department of Public Works 
and Government Services Act gives the Minister of Public Works and Government Services exclusive 
authority to buy goods and services for other Departme nts and Agencies and to delegate this authority 
to other Ministers.  Public Works and Government  Services Canada (PWGSC) is the Government's 
principal purchasing arm. 
201. Federal procurement policies, procedures, notices and circulars are available online.124  They 
apply to all federal government contracting activitie s, and require procurement to be conducted in a 
manner that will meet operational requirements in  the most cost-effective manner and provide equal 
opportunity to tender, while being consistent  with Canada's international obligations.125  Procurement 
policy is evaluated and updated on a regular basis.  Industry Canada is responsible for the evaluation 
of the effectiveness of procurement in support of industrial and regional development. 
202. Canada is party to a number of trade agreemen ts all of which are reflected in Canadian law 
and function concurrently.  Canada has been a party to the WTO Agreement on Government 
Procurement (GPA) since 1 January 1996. Government procurement in Canada is also affected by 
provisions contained in national and international arrangements such as the Agreement on Internal 
Trade (AIT), the North American Free Trade Agreement (NAFTA) and the Canada-Korea Telecommunications Equipment Procurement Agr eement (CKTEA).  The other FTAs signed by 
Canada do not have provisions on procurement (see also Chapter II). 
203. For procurements not subject to NAFTA Chapter 10 and to the GPA, the Federal Government 
is of the view that its procurement activities should be consistent with and supportive of such national 
objectives as industrial and regional development, aboriginal economic development, the 
environment, and other socioeconomic objectives.  To this end, the Government requires that all 
federal procurements in excess of Can$2 million are reviewed for potential regional and industrial 
benefits.  For the most part, this review is achieved administratively by an interdepartmental 
Procurement Review Committee. 
204. Information on procurement matters is accessible online.
126  Annual reports on contracting at 
the federal level and reports by the provinces are available online.127  Most federal procurement 
notices for goods and services, including cons truction, above Can$25,000 are posted on the 
Government Electronic Tendering Service (GETS).  The service currently operates under the name 
MERX and is provided by contract to the Federal Government.128  GETS is the designated publication 
for opportunity notices, information on permanent lists of qualified suppliers, and administrative 
rulings and procedures under the GPA, the NAFTA, AIT, and CKTEA.  Sole sourcing may be used in 
a pressing emergency;  when the estimated expenditure is less than Can$25,000 for goods and 
services, or Can$100,000 for architectural and engin eering services or for the Canadian International 
Development Agency (CIDA) service contracts rela ted to international development programmes or 
                                                      
124 Treasury Board online information.  Available at:  http://www.tbs-sct.gc.ca. 
125 Treasury Board of Canada Secretariat, "Procurement Policy Review", January 2002 [Online].  
Available at:  http://www.tbs-sct. gc.ca/pubs_pol/dcgpubs/Contractin g/dwnld/contract ingpol_e.rtf. 
126 Contracts Canada online information.  Available at:  www.contractscanada.gc.ca. 
127 Treasury Board online information.  Available at:  www.tbs-sct.gc.ca;  and Internal Trade 
Secretariat online information.  Available at:  www.intrasec.mb.ca/index_he.htm, respectively. 
128 Available at:  www.merx.cebra.com. Canada WT/TPR/S/112/Rev.1 
 Page 79 
 
 
projects;  a competition is not in the public interes t;  or only one supplier is capable of performing the 
work, as in the case of a supplier wh o owns a copyright or software licence.129 
205. The Contract Claims Resolution Board (CCRB) provides dispute resolution services and is 
one of five directorates in the Audit and Ethics Branch of PWGSC.  With the exception of bid challenges, CCRB acts as an appea l/review agency in PWGSC for a ll procurement-related disputes 
and claims arising from commercial, construction, and consulting contracts.  CCRB administers the 
Contracts Settlement Board (CSB), and the Contract  Disputes Advisory Board (CDAB).  CSB is an 
independent review body that resolves disputes c oncerning extra cost claims, which are referred to it 
by contractors providing goods and services to PWGSC.  CDAB is an independent review board that 
provides non-binding advisory arbitration for contract-r elated disputes that are referred to the Minister 
by contractors or consultants under contract with PWGSC for construction, leasing, and building 
maintenance.  CCRB also settles contractors’ claims arising under PWGSC and Canadian 
Commercial Corporation (CCC) contracts that are terminated for convenience of the Canadian and 
U.S. governments, and arranges for Assist Audits for terminated contracts on behalf of the U.S. 
Government. In 2001, PWGSC announced the launc h of the Dispute Resolution Pilot Project in 
Construction, a two-year pilot project covering  all construction requir ements valued between 
Can$100,000 and Can$5 million, applicable to tender documents since 12 November 2001, where the 
work is carried out in Canada. 
(b) Access conditions to procurement at the federal level 
206. Canada grants national treatment to foreign s uppliers in respect of procurement covered by  
the GPA and other international agre ements.  For transactions covere d by the GPA, national treatment 
conditions apply to most federal procurement, subj ect to the agreed thresholds of SDR130,000 for 
goods and services and SDR5 million for construction contracts.  In addition to general exceptions, a 
number of specific goods and services are excluded from the scope of the GPA.
130 
207. As required by the GPA, the thresholds for procurement contracts in Canadian dollars 
are revised and notified to the WTO every two y ears.  For the period 2002-03, the relevant 
thresholds are Can$255,800 for supplies of goods and services and Can$9.8 million for construction 
contracts.  These thresholds are some 2% lower in Canadian dollar nominal terms than those applied in 2000-01.
131 
208. The NAFTA grants national treatment to Cana dian, Mexican and U.S. goods and services.  
Goods and services exclusions are similar to those in the GPA.  As required by NAFTA, the 
thresholds for procurement contracts in Canadian dollars are revised every two years.  The current 
thresholds for federal departments and agencies  are Can$37,500 (Canada-United States), Can$84,400 
(Canada-Mexico) for goods, Can$84,400 for services, and Can$10.9 million for construction.  The thresholds for crown corporations are Can$422,200 for goods and services, and Can$13.5 million for 
construction. 
                                                     
 
129 Contracts Canada online information.  Available at:  http://contractscanada.gc.ca/en/chap1-e.htm. 
130 These include shipbuilding and repair;  urban rail and transportation components;  transportation 
services;  some communications, detection, and coherent radiation equipment;  oil purchases related to any 
strategic reserve requirement;  purchases made in support of the safeguarding of nuclear materials;  dredging work; and some office equipment and special industry machinery for the Departments of Transport, 
Communications, and Fisheries and Oceans;  research and development;  utilities;  and health and social, 
financial, communications, photographic, mapping, printing, and publications services. 
131 WTO documents WT/GPA/W/168/Add.2, 14 January 2002, and WT/GPA/W/101/Add.1, 
9 February 2000. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 80 
 
 
209. Chapter 5 of the AIT, the Procurement Chapte r, attempts to ensure equal market access 
conditions to procurement for "Canadian" suppliers , meaning those that have a place of business in 
Canada.  The AIT covers procurement by the signatories of the agreement, namely the Federal 
Government, 10 provincial governments, and two te rritories.  The AIT also covers procurement by 
municipalities, municipal organizations, publicly funded  academic institutions, and health and social 
services entities (MASH).  The AIT applies to all Government procurement of goods valued at 
Can$25,000 or more and of services and construction valued at Can$100,000 and up.  For MASH 
entities the thresholds are Can$100,000 for goods and services, and Can$250,000 for construction.  
The AIT does not cover MASH entities in the Y ukon, and includes only seven of the 43 crown 
corporations (public utilities).  Some servic es are excluded altogether from the AIT.132  The AIT does 
not apply to procurement related to cultu ral industries, or aboriginal culture.133 
210. For procurement not covered by the GPA or NAFTA, entities covered by the AIT may accord 
a preference for Canadian value-added, provided that the preference margin is no greater than 10%.  
They may also limit its tender to Canadian goods  or suppliers, provided the procuring entity is 
satisfied that there is sufficient comp etition among Canadian suppliers.   
211. The CKTEA, which came into effect on 1 September 2001, applies to most federal 
government departments and agencies and covers purchases of telecommunications equipment and 
materials plus any services included in goods contracts covered by the agreement valued at 
Can$255,800 or more.  Exceptions to its coverage include purchases for commercial resale or use in 
the production of goods for commercial resale;  for Canada, purchases under set-asides for small and 
minority businesses;  purchases for the Departments of Transport, Fisheries and Oceans, and certain 
types of communications equipment. 
212. Complaints involving alleged federal government  breaches of the AIT, the GPA, the NAFTA, 
and the CKTEA may be brought to the Canadian In ternational Trade Tribunal (CITT) by potential 
suppliers in respect of procurement by the federal government.  When a complaint is found to be 
valid, the CITT determination may contain recomm endations to the government institution, such as 
re-tendering, re-evaluation or providing compensation.  The CITT may also award reasonable costs to 
a complainant to cover expenses for participati on proceedings related to a complaint or in bid 
preparation..  The review process generally takes 90 days, with an express option of 45 days;  a 
requested extension of up to 135 days may be granted.  The CITT reviews only complaints involving 
procurement by the federal government, not by pr ovinces and the MASH sector.  The bid protest 
procedures contained in Chapter 5 of the AIT apply in the case of provincial procurement practices. 
213. In the period 1999-01, a total of 145 complain ts with respect to procurement were under 
review by the CITT.  Of these, ten complaints were  resolved by the parties or were abandoned, 59 did 
not lead to the initiation of an investigation, 55 we re investigated on merit, and the rest were still in 
progress at the end of the period.  Of the 55 compla ints that were investigated, the CITT determined 
27 complaints to be valid, and 28 not valid.  A few of the complaints were made by foreign suppliers, 
and many of them came from foreign-owned companies based in Canada.  Most of the determinations 
with respect to the validity of a complaint were wi th respect to breaches of the AIT, followed by 
breaches of the NAFTA, and the GPA.   
214. Federal regional development agencies main tain a number of schemes to promote the 
participation of small or regional businesses in th e procurement process.  Under the Atlantic Canada 
Opportunities Agency's (ACOA) Bu siness Development Program, A tlantic-based small or medium-
                                                      
132 These include some professional services;  services for sporting events;  services of financial 
analysts or the management of investments or of governm ent financial assets and liabilities;  health and social 
services;  and advertising and public relations services. 
133 AIT Secretariat online information.  Available at:  http://www.intrasec.mb.ca/pdf/consol_e1.pdf. Canada WT/TPR/S/112/Rev.1 
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sized businesses may receive up to Can$250,000 over a period of two years to help cover the cost of 
preparing bids and other procurement activities.134  Incentives of this type are also provided by 
Canada Economic Development for Quebec Regions.135  One of the purposes of Western Economic 
Diversification Canada is to increase access to procurement opportunities for companies in Manitoba, 
Saskatchewan, Alberta, and British Columbia. 
(c) Procurement by provincial governments 
215. Procurement at the sub-federal level, is ruled by provincial or other sub-federal government 
laws and procurement regulations.  Canada did not ta ble an offer in the GPA at the sub-federal level. 
Canada's position in this respect has not changed since its last Review:  it is prepared to table an offer 
at the sub-central level only if other parties are prep ared to include sectors of priority to Canadian 
suppliers, such as steel and transportation, and to agree to circumscribe the use of small business and 
other set asides.  In particular, Canada consider s that U.S. federal government policies must be 
addressed to assure market access and non-discrimina tory treatment for suppliers to U.S. state and 
municipal governments before tabling a schedule at the sub-federal level.136 
216. Provinces may have their own procurement agen cies and thresholds, as well as their own 
procurement policies, under the general framework of  the AIT (Annex III.1).  For procurement falling 
within the scope of the AIT, the provinces grant similar access conditions to procurement from the 
rest of Canada, but do not extend this automatically  to procurement from foreign suppliers.  In the 
framework of the AIT, the provinces are currentl y negotiating the extension of the scope of the 
agreement to entities of an industrial or comme rcial nature (e.g., crown corporations). 
217. Some provinces grant provincial or regional pr eferences to procurement not falling within the 
scope of the AIT or other internal procurement ag reements, since such practices are not covered by 
the GPA or NAFTA.  Under British Columbia's Pu rchasing Commission Act, British Columbia's 
Purchasing Commission has power to give a preference in favour of goods or services produced, 
manufactured or sold in British Columbia, or in a lo cal area.  Although in practice no price preference 
is granted to British Columbia suppliers, the Commission may decide to limit the opportunity to bid to 
British Columbia suppliers, subject to the AIT.  Th e authorities have noted that British Columbia was 
engaged in a comprehensive process to cut the red tape and regulatory burden by one-third within 
three years.  This would include a review, and po ssible repeal of the Purchasing Commission Act.  
218. In New Brunswick, for procurement below the thresholds defined in the interprovincial 
procurement agreements, the province may (but is not obliged to) apply a preference for 
New Brunswick products, services or suppliers. When determining if a preference will be given, the 
New Brunswick's Central Purchasing Branch applies a policy of reciprocal treatment to bidders from 
other provinces.  The authorities ha ve noted that the magnitude of the preference margin, by policy, 
does not exceed 5%, and that the actual percentage of the preference depends on factors such as local content.  They have also noted that the preference is used rarely:  some 10 to 12 times per year out of 4,400 tenders.  New Brunswick, by policy, will not apply a preference against vendors from Nova 
Scotia since they do not use one against New Brunswick suppliers.  The authorities of 
New Brunswick look at the preference policy for other provinces, and at the access New Brunswick 
vendors have. 
219. In Nova Scotia, the Procurement Branch may consider and evaluate bids from other 
jurisdictions on the same basis that the purchasi ng authorities in those jurisdictions would treat a 
similar bid from a Nova Scotia supplier. 
                                                     
 
134 More online inform ation on the Atlantic Procurement Agre ement is available at:  http://www.gnb. 
ca/0337/01-e/3-e.htm, and http://www.gov.nf.ca/tenders/APA.stm. 
135 More information about this programme is available online at:  http://www.dec-ced.gc.ca. 
136 WTO document WT/GPA/51, 18 June 2001.  WT/TPR/S/112/Rev.1 Tr ade Policy Review 
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220. Ontario applies a Canadian Steel Preference Policy, using  a 10% price preference for 
Canadian structural steel products.  The preferen ce is applied by deducting 10% of the value of 
products identified in a construction bid of Can$ 100,000 or more, as Canadian structural steel 
products.137  Under the Environmental Choice Program,  environmental factors are given special 
consideration in purchasing decisions for all contracts worth more than Can$10,000. 
221. In Quebec, contracts for goods and auxiliary services valued at or above Can$25,000 and 
services and construction projects of or over Ca n$100,000 must be tendered publicly.  Purchases of 
goods and auxiliary services under Can$25,000 are ma de by the different departments, and suppliers 
are generally chosen from a list, or are invited to  tender;  in the latter case, only suppliers from 
Quebec receive an invitation.  Procurement of se rvices is subject in many cases to meeting ISO 
requirements.  In the case of auxiliary services co mpliance with ISO 9003 standards is rewarded with 
a 10% reduction in  the offer price.138  Apart from the AIT, Quebec has government procurement 
market access liberalization agreements with New Br unswick and Ontario, and with the U.S. State of 
New York.  The Quebec-Ontario Bilateral Agreement,  signed in 1994, applies to procurement above 
Can$25,000 for goods, Can$200,000 for services, and Can$100,000 for construction.  The agreement 
with New Brunswick and Quebec establishes some basic principles governing public procurement of 
goods, services, and construction by the governments of the two provinces.  The authorities have 
noted that, in practice, this agreement is inactive, because the AIT is more trade liberalizing and 
therefore prevails in most cases.  The agreement with New York, which entered into force in 
November 2001, has thresholds of Can$25,000 for goods and Can$100,000 for services and 
construction, and grants reciprocal non-discriminatory treatment. 
222. In Alberta, British Columbia, Ma nitoba, and Saskatchewan, there is a regional preference for 
goods tenders valued between Can$2,500 and Can$25,000, which are restricted where possible to 
firms located in the four western provinces.  The authorities have noted that this preference is in 
keeping with the Western Accord, a Memorandum of  Agreement signed in 1989 for the reduction of 
Interprovincial Trade Barriers in Western Cana da.  The Western Accord calls for equal non-
discriminatory access to government procurement to  all vendors in Western Canada (Alberta, British 
Columbia, Manitoba, and Saskatchewan).  Although the Accord stipulates no minimum thresholds, 
for operational reasons, the procurement of good s has a threshold of Can$2,500 and services and 
construction Can$100,000.  The authorities have note d that the preference clause is used sparingly. 
223. In Yukon the provincial procurement agency maintains a source list, which identifies 
businesses that qualify as Yukon businesses.139  In addition, local-content requirements may be 
applied for contracts under Can$50,000. 
(vi) Intellectual property rights 
(a) WTO activity 
224. Canada notified its IPR legislation to the C ouncil for Trade-Related Aspects of Intellectual 
Property Rights (TRIPS), which reviewed it in 1998.140  Canada has also notified its contact point for 
TRIPS, including for technical cooperation.141 
                                                      
137 Canadian steel content is defined as the total value of the supplier's structural steel product minus 
the dutiable value of any imported goods or services applied to that product.  See.  "Tips on how to do Business with the Government of Ontario" [Online].  Available at:  http://www.ppitpb.gov.on.ca/mbs/psb/psb.nsf/ 
feca7955f260027587256738007faf3e/3439ac3dc008760a85256a79006605d3/$FILE/tips_eng.pdf. 
138 Further information is available online at:  http://www.tresor.gouv.qc.ca/marche/accords/ 
textes.htm#. 
139 This requires meeting at least two of the following criteria:  the business employs Yukon residents;  
the business owns, for purposes directly related to the operation of the business, real property in the Yukon;  the business operates a permanently staffed office, year-round in the Yukon;  or the business is owned, or is a 
corporation that is owned 50% or more by Yukon residents. Canada WT/TPR/S/112/Rev.1 
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225. Canada has continued to participate actively in  the review by the TRIPS Council of the IPR 
legislation of other WTO Members.  In the context of Council work since 2000, Canada, alone or with 
other Members, has made proposals in relation to non-violation, nullification or impairment under the 
TRIPS Agreement142;  geographical indications143;  and the Doha Ministerial Declaration on the 
TRIPS Agreement and public health.144 
226. Canada's legislation on patents has been challe nged twice in the WTO.  The first case was 
initiated by the European Union and its members;  it related to the two exceptions to the otherwise 
exclusive rights of the patentee to make, construc t, use or sell a patented invention.  The first 
exception allowed producers of gene ric pharmaceuticals to work a patented product for the purpose of 
completing the regulatory approval pr ocess applicable to that product (early working provisions).  The 
second exception allowed manufacturers to manufac ture and stockpile patented drugs for the 
six months before the patent expiry (the stockpiling provision).  A WTO Panel found that early working provisions were consistent , and that the stockpiling provisi on was inconsistent with the 
TRIPS Agreement;  the Panel recommended that Cana da bring the Patent Act into conformity with 
the TRIPS Agreement.
145  Canada agreed to implement this recommendation;  the "reasonable period 
of time" for implementation was determined, through  binding arbitration, to end in October 2000.146 
227. A second WTO Panel examined the U.S. claim that Canada had failed to grant a full 20-year 
patent term to patents applied for prior to Oct ober 1989;  the Panel agreed with the U.S. claim.147  The 
panel decision was subsequently upheld by the WTO Appellate Body, which recommended that 
Canada bring the Patent Act into co nformity with the TRIPS Agreement.148  Canada agreed to do so;  
through binding arbitration the "reasonable period of time" was determined to expire in 
August 2001.149 
(b) Legislative developments 
Patents 
228. To comply with the WTO Panel concerning the stockpiling provision, as of 7 October 2000 
the Regulations Repealing the Manufacturing an d Storage of Patented Medicines Regulations 
rescinded the Manufacturing and Storage of Patented Medicines Regulations of 1993.150  T h e  
regulations of 1993 had been adopted as part of th e reforms to the Patent Act, which included the 
phasing-out of the compulsory licensing regime whereby generic drug companies could, on the 
payment of royalties to patent-holders, obtain licences to sell generic versions of  patented drugs.  The 
reforms introduced instead the two provisions challe nged by the EU.  In particular, the regulations 
                                                                                                                                                                     
140 Canada's notified IPR statutes may be found in WTO document series IP/N/1/CAN/;  its replies to 
Members' questions concerning those notifications may be found in document series IP/Q3/CAN/ and 
IP/Q4/CAN/. 
141 WTO document IP/N/3/Rev.6, Add.2, 14 October 2002, contains the latest notification.  
142 WTO documents IP/C/W/191, 22 June 2000, and IP/C/W/249, 29 March 2001.  The issue concerns 
measures that do not violate the TRIPS Agreement but may nonetheless nullify or impair benefits that can be 
expected to be derived from it. 
143 WTO documents IP/C/W/133/Rev.1, 26 July 1999, IP/C/W/289, 29 June 2001, and IP/C/W/360, 
26 July 2002. 
144 WTO document IP/C/W/313, 4 October 2001. 
145 WTO document WT/DS114/R, 17 March 2000. 
146 WTO document WT/DS114/13, 18 August 2000. 
147 WTO document WT/DS170/R, 5 May 2000. 
148 WTO document WT/DS170/AB/R, 18 September 2000. 
149 WTO document WT/DS170/10, 28 February 2001. 
150 Canada Gazette , Part II, Volume 134, Number 21, 11 October, 2000. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 84 
 
 
of 1993 gave effect to the stockpiling exception, and by repealing such regulations the authorities 
sought to render the exception of no practical force. 
229. On issuing the Regulations Repealing the Manufacturing and Storage of Patented Medicines 
Regulations, the authorities noted that even withou t the stockpiling exception generic manufacturers 
typically have a number of months to manufactur e and store product in the period between the 
regulatory approval date and the date a drug becomes listed on provincial formularies (upon which market penetration of generic drug s largely depends).  The authorities thus consider that, given that 
generic drug manufacturers have e xpressed confidence in their ability to generate industrial-scale 
production levels in a very short time, the loss of  the ability to stockpile patented drugs within the 
six months preceding patent expiry would not have significant economic consequences on the generic 
drug industry, nor on consumers' access to generic drugs.
151  However, the Canadian Drug 
Manufacturers Association, an industry association representing generic drug manufacturers, was of 
the view that the loss of stockpiling could, in certain  circumstances, lead to the delay onto the market 
of generic drugs.152 
230. To bring the Patent Act into conformity with the Appellate Body's decision concerning patent 
terms, An Act to Amend the Patent Act came into force on 12 July 2001.153  Previously, the Patent 
Act provided for two different terms of protection for patents, depending on the date the application 
was filed.  "Old Act" patents bene fited from a term of 17 years from the date the patent was granted 
for applications filed before 1 October 1989;  "N ew Act" patents benefited from a term of 20 years 
from the date the patent application was file d in Canada when this occurred on or after 
1 October 1989.  As of 12 July 2001, non-expired "Old Act" patents with terms less than 20 years 
from the date of filing in Canada, are automatically extended to the 20-year term required by the TRIPS Agreement. 
231. The authorities noted that appr oximately 129,000 "Old Act" pa tents were in force in 2001.
154 
About 45,000 patents had a term of protection of less than 20 years from the date of filing.  In 2000, 
patented drugs in Canada were, on average, priced  8% below international median prices and about 
40% below those in the United States. 
232. In May 2001, Canada signed the Patent Law Treaty (PLT), which is designed to simplify and 
harmonize administrative practices for processing patents among national and regional intellectual 
property offices (IPOs).  As of late 2002, the PLT has not yet been ratified by Canada.  The 
authorities noted that, by signing the Treaty, Canada is agreeing in principle with the Treaty and its 
Rules, committing to launch the ratification process a nd to subsequently amend its national patent law 
so that Canada’s patent administrative formalities conform with the Treaty.  The authorities consider 
that joining the PLT will benefit inventors throug h a streamlined process for filing and processing 
patent applications, encourage th e use of intellectual property systems, stimulate innovation, and 
facilitate access by Canadians to foreign IPOs.155   
 
233. Canada has amended its Patent rules, effectiv e 1 April 2002, to extend the time limit for 
transmitting a Patent Cooperation Treaty (PCT) ap plication to the Canadian Intellectual Property 
Office from 20 to 30 months, irrespective of whet her the applicant has requested an International 
                                                      
151 Available online at:  http://www.canada.gc.ca/gazette/part1/ascII/g1-13432_e.txt. 
152 Available online at:  http://www.canada.gc.ca/gazette/part2/ascII/g2-13421_e.txt. 
153 Canada Gazette , Part III, Volume 24, Number 3, 7 September 2001. 
154 Strategis online information.  Available at:  http://strategis.ic.gc.ca/sc_mrksv/cipo/new/bill_s17-
e.html. 
155 Strategis online information.  Available at:  http://strategis.ic.gc.ca/sc_mrksv/cipo/new/newpatent 
law-e.html. Canada WT/TPR/S/112/Rev.1 
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Preliminary Examination.156  The amendments are a result of a unanimous decision taken by the PCT 
Assembly at WIPO in September 2001. 
234. In December 2002, the Supreme Co urt of Canada ruled that higher life forms such as mice 
and chimpanzees cannot be patented  unless Parliament modifies the Patent Act.  As it stands, the 
Patent Act states that patents can be issued for "a ny new and useful manufacture, or composition of 
matter".  The Court deemed that "manufacture" deno ted a non-living, mechanistic product or process, 
and that "composition of matter" could apply to less er life forms such as yeast, but not to higher life 
forms.  The ruling was in connection with Harvard Un iversity's request for a patent for its genetically 
engineered "oncomouse", a breed that develops cancer swiftly because of a cancer-promoting gene introduced into it by researchers. 
Copyright 
235. In June 2001, the Government of Canada pu blished “A Framework for Copyright Reform”, 
which outlines the context and process for reform an d sets out its intention to consider possible 
amendments that may be necessary to keep pace wi th technological and international developments.
157  
At the same time the Government published two policy papers.  The "Consultation Paper on Digital 
Copyright Issues” explored potential solutions to key digital copyright issues, and the “Consultation 
Paper on the Application of the Copyright Act's Co mpulsory Retransmission Licence to the Internet” 
raised the issue of the scope of the compulsory licence.  Do mestic consultations followed.   
236. A bill to amend Section 31 of the Copyright Act was tabled in the House of Commons in 
December 2001.158  In December 2002, the bill was still in  Parliament.  Section 31 sets out the 
compulsory licence applicable to the retransmission of copyright protected works in signals broadcast 
over the air by television and radio stations.  The new bill aims to clarify that distribution systems 
such as cable and satellite may continue to rebroa dcast over-the-air radio and television signals by 
paying royalties and respecting other provisions in the Copyright Act.  The bill excludes Internet-
based retransmission of broadcast signals from co mpulsory licensing regulations unless the Canadian 
Radio-television and Communications Commission  (CRTC) specifically adapts its regulatory 
framework to accommodate such transmissions.  On 30 October 2002, the Government tabled the 
report that initiates the Parliamentary Review of  the Copyright Act, which is required under 
section 92 of the Act. 
237. The Canadian Intellectual Property Office (CIPO)  has plans to improve other IPR legislation, 
and has requested feedback from stakeholders for a possible second Intellectual Property Law 
Improvement Bill.159  This bill would continue the process of modernization begun by the first IP Law 
Improvement Bill enacted in 1993, the last provision s of which came into force in October 1996.  
Some preliminary consultations on the new bill were held in early 1997;  the authorities propose to 
carry out further consultations with a view to tabling legislative amendments by December 2003.160 
                                                      
156 Canada Gazette , Part II, Volume 136, Number 7, 27 March 2002. 
157 Details on A Framework for Copyright Reform are available online at:  http://strategis.ic.gc.ca/SSG/ 
rp01100e.html. 
158 The text of the bill, C-48, is available online at:  http://www.parl.gc.ca/common /Bills_ls.asp?lang= 
E&Parl=37&Ses=1&ls=C48&source=Bills_House_Government. 
159 Text of the letters inviting comments are available online at:  www.cipo.gc.ca.  CIPO is responsible 
for the granting or registration of ownership for patents, trade marks, copyrights, industrial designs, and 
integrated circuit topographies.  Further details on CIPO's mandate and activities are available in its online 
information. 
160 Strategis online information.  Available at:  http://www.strategis.ic.gc.ca/sc_mrksv/cipo/tm/ 
tm_ip_letter-e.html. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 86 
 
 
(c) Market competition and related issues 
238. Provisions for IPR-related compulsory licensing exist under the Patent Act, the Integrated 
Circuit Topography Act and the Competition Act.  Un der Section 65 of the Patent Act, following a 
period of three years after the patent is granted, any person interested may request relief, including 
(but not limited to) a compulsory licence alleging abuse of exclusive rights.  Under Section 66 of the 
Patent Act, if the patentee has been found to have abused the exclusive rights, a licence may be 
granted on terms and conditions deemed  fit for the particular case.  Only one such compulsory licence 
has been granted since the entry into force of th e TRIPS Agreement in 1996, concerning a gadget for 
hockey sticks.  Under Section 19 of the Patent Act,  the federal and provincial governments may also 
apply for non-exclusive use of patented inventions, subject to certain conditions.  There have been no 
such cases since the entry into force of the TRIPS Agreement.   
239. Under Section 7.1 of the Integrated Circuit Topography Act, the public non-commercial use 
of a registered topography by the federal or a prov incial government may be authorized;  if so, the 
user must pay "adequate remuneration", and the us e must be non-exclusive and predominantly to 
supply the domestic market, subject to certain conditions.  The authorities indicated that these 
provisions had not been used to date.  
240. Section 32 of the Competition Act grants the Fe deral Court powers to limit certain rights used 
to restrain trade (those concerning patents, trade marks, copyrights, and registered topographies) when 
those rights lead to unjustifiable anti-competitive activities.  In such cases the Federal Court may, 
among other things, order the granting of licences on such terms as it deems proper or the revocation 
of the IPR in question provided such actions are not at variance with Canada's international 
commitments.  The authorities indicated that there have been no such orders.  
241. In September 2000, the Competition Bureau re leased its Intellectual Property Enforcement 
Guidelines seeking to promote transparency in th e enforcement of the Competition Act in regard to 
issues involving IPRs.161  The guidelines explain how the Bureau determines whether conduct 
involving IPRs raises an issue under the Competition Act, and describe how the Bureau distinguishes 
between circumstances that warrant a referral to the Attorney General for an examination under 
section 32 of the Competition Act (i.e. cases in volving the mere exercise of an IPR), and 
circumstances that warrant an examination under the general provisions (i.e. going beyond the mere 
exercise of an IPR). 
242. Although parallel imports for commercial purposes are not allowed, the authorities have noted 
that prevailing legal interp retation makes it generally difficult for a Canadian right holder to prevent 
the importation of products that have been lawfully manufactured and marketed in a foreign country.  The Copyright Act allows exclusive distributors to prevent the parallel importation of books covered by exclusive distribution contracts, subject to conditi ons set by regulation.  There are exceptions listed 
in Section 45 of the Act, which allow, under certa in conditions, the parallel importation of works in 
general and of books in particular.  Although a statutory provision preventing the parallel importation 
of used textbooks remains in place, the authorities have noted that section 8 of the Book Importation 
Regulations SOR/99-324 effectively overrides the statutory exclusion in most cases.  Booksellers are 
able to bring into Canada parallel imports of used textbooks if they meet the requirements of section 8 
of the Regulations.   
243. Canadian patent jurisprudence permits a right hol der to apply for a court order to prevent the 
importation, distribution or sale of goods infrin ging any person's rights under the Patent Act.  
Canada's Trade Marks Act allows "a ny interested person" to apply fo r a court order to prevent import, 
                                                     
 
161 The guidelines are available online at:  http://strategis.ic.gc.ca /SSG/ct01992e.html. Canada WT/TPR/S/112/Rev.1 
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distribution or sale of goods infringing any person's rights under the Act.  Parallel imports cannot be 
barred under the Integrated Circuit Topography Act,  which provides complete exhaustion of property 
rights.   
244. Canada is the only country that explicitly issues  regulations on drug pr ices through its patent 
legislation.  Those prices are reviewed by the Patented Medicine Prices Review Board (PMPRB), an independent, quasi-judicial body under Industry Canada, created in 1987 as a result of revisions to the 
Patent Act.  The PMPRB's res ponsibilities are to protect consumer interests by regulating the 
maximum prices charged by manufacturers for pate nted medicines to ensure that they are not 
excessive, and to report to Parliame nt on its price review activities, th e price trends of medicines, and 
on the ratio of research and development in Canada's patented pharmaceutical industry.  If the PMPRB determines in its review pro cess that the price of a drug is to o high, the patentee can request a 
hearing with the PMPRB Arbitration Board or can vol untarily agree to reduce the price and return the 
excess revenue earned through the higher price, wh ile it applied, to the Federal Government through a 
voluntary compliance undertaking (VCU).  The Patent Act was amended to enable the Minister of 
Health to enter into negotiations with the provinces to reach agreement on how best to distribute the money that has been paid back through this system.  Some 23 VCUs have been taken since 1993.
162 
245. The work of the PMPRB was examined by the Auditor General of Canada in 1998, which 
made a number of recommendations.163  In its 2001 Annual Report, the Auditor General concluded 
that the PMPRB had made good progress in impl ementing those recommendati ons, particularly those 
within its control.  One recomme ndation led to the amendment of the Patent Act allowing the Minister 
of Health to enter into agreements with provinces respecting distribution of funds collected through voluntary compliance undertakings by patentees.  However, the Auditor General noted that no action 
had been taken to clarify the PMPRB's jurisdiction over patented medicines whose patents are 
dedicated for public use. 
246. As a result of its consultations with stakeholde rs, the PMPRB took steps to review its pricing 
guidelines.  In 2000, it implemented the recommendations of the Working Group on Price Review Issues to use the prices charged to the U.S. Govern ment (Federal Supply Schedule) in calculating U.S. 
prices for the purpose of international price comparison.
164  
247. Under the Copyright Act, a private copying regime imposes levies on blank audio recording 
media such as blank cassettes and CDs sold in Canada (both domestically manufactured and 
imported).  Manufacturers and importers of blank audio recording media are required to pay these 
levies to the Canadian Private Copying Collective (C PCC).  These levies are then distributed by the 
CPCC to eligible authors (composers and lyri cists), performers, and makers of music sound 
recordings (including all foreign authors whose copyright in musical works subsists in Canada).  The 
levies are set by the Copyright Board, an econo mic regulatory body whose responsibilities include to 
establish royalties for the use of works protected by  copyrights administered by a collective society.165   
                                                      
162 Online information is available at:  http://www.pmprb-cepmb.gc.ca/. 
163 The recommendations are part of the Auditor General's 1998 Annual Report.  The Auditor General's 
annual reports are available online at:  http://www.oag-bvg.gc.ca/. 
164 The Working Group report on the Appropriate Use of U.S. Department of Veteran Affairs Prices is 
available online at:  http://www.pmprb-cepmb.gc.ca/PDF/wg/dvae-pri.pdf . 
165 Further information on the Copyright Board is available online at:  http://www.cb-cda.gc.ca/. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
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248. From 1 January 2001, the Copyright Board increased private copying levies to Can$0.29 on 
audio cassette tapes of 40 minutes or longer, to Can$0.21 on CD-Rs and CD-RWs, and to Can$0.77 
on CD-Rs Audio and CD-RWs Audio and Mini-Discs.166  The rationale for the rise in the levies was 
mostly related to an increased usage of digital me dia for copying pre-recorded music.  The Copyright 
Board estimated that private copying levies would raise some Can$27 million in 2001 and 
Can$32 million in 2002.  The Board also noted that while prices for blank audio recording media have 
generally been declining, consumer prices for such media could likely be higher as a result of the new 
levy rates.167  In late 2002, the Copyright Board was examining proposed levies for 2003 and 2004. 
                                                      
166 The private copying levies for 2001 and 2002 were published in Canada Gazette , Part I, Volume 
134, Number 51, 16 December 2000. 
167 Copyright Board's Backgrounder, 15 December 2000 [Online].  Available at:  http://www.cb-cda.gc. 
ca /news/c20012002fs-e.html. Canada WT/TPR/S/112/Rev.1 
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Annex III.1 Provincial and Territ orial Government Procurement 
Province:  Alberta 
Main procurement agency:  the Supply Management Branch (SMB) Procurement conditions:  The SMB of Government  Services is responsib le for the centralized 
purchasing on behalf of Government of Alberta depa rtments of their materials, equipment, supplies 
and information technology systems development a nd outsourcing services.  Contract awards are 
based either on the lowest compliant or the most cost-effective bid.  Services and construction are 
procured directly by the different departments.  All purchases for goods, services, and construction are 
subject to the AIT procurement provisions of Chapter 5.  Departments may purchase goods valued at up to Can$10,000 per transaction directly from suppl iers using a Purchase Order, or the Government 
Procurement Card.  If an emergency exists, purchas es over Can$10,000 may also be made directly by 
departments.  Standing offers, supply arrangements that enable departments to order goods directly 
from suppliers over a specific period of time at prescribed prices and terms and conditions, are 
established by the Procurement Section as required .  Purchases made on behalf of departments are 
generally exempt from the Goods and Services Tax (GST) and the Harmonized Sales Tax (HST).  There is no dollar limit on departmental purchases of Standing Offers established by the Procurement 
Section.
1 
Transparency:  The SMB advertises procurement opportunities for goods valued at Can$10,000 or 
greater and development of information technology application software valued at Can$100,000 or 
greater on the national electronic tendering system (MERX).  Where the procurement value for services and construction is Can$100,000 or greater it is advertised on MERX.  Construction is also 
advertised online.
2 
Province:  British Columbia Main procurement agency:  Purchasing Commission (PC)
3 
Procurement conditions:  The PC is responsible for procurement of goods above a Can$5,000.  
Services are generally procured dire ctly by the different ministries. 
Transparency:  Procurement opportunities tendered are posted online.4 
Province:  Manitoba 
Main procurement agency:  Procurement Service Branch (PSB) Procurement conditions:  The PSB is in charge of the procurement of goods but departments also 
engage in procurement directly.  Departments have been delegated the authority to purchase goods up 
to Can$2,500, including taxes, with some rest rictions.  Some goods over Can$2,500 (e.g. highway 
construction contracting and IT requirements) may al so be bought by the departments, however they 
have to advertise them on MERX.  Departments have  also been delegated the authority to purchase 
their own services.   
                                                     
 
1 http://www.infras.gov.ab.ca/. 
2 http://www.coolnet.ca. 
3 http://www.pc.gov.bc.ca/. 
4 http://www.bcbid.ca/. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
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Transparency:  The Manitoba Government tenders on MERX goods with a value greater than 
Can$2,500, and services and construction contr acts greater than Can$100,000.  Departments are 
required to tender in an approved format, and for contracts over Can$100,000 have to advertise on 
MERX.  Actual purchases made by departments are available online.5 
Province:  New Brunswick 
Main procurement agency:  Ce ntral Purchasing Branch (CPB) 
Procurement conditions:  The CPB is responsible for purchases of goods valued at Can$1,500 or 
more.  Below this threshold, Government departme nts are entitled to purchase goods, directly from a 
vendor.  For purchases between Can$1,501-4,999, Ce ntral Purchasing may solicit price quotations 
from registered vendors;  for purchases of Can$5, 000 or above, tenders may either be invited from 
registered vendors or publicly advertised.  For services, departments may purchase up to Can$9,999 
directly without tender;  from Can$10,000 to Can $49,999 the CPB may invite or advertise tenders. 
Transparency:  Tenders of Can$25,000 and up, (g oods) and of Can$50,000 and up (services) must be 
publicly advertised.  The authorities have noted that , although they are allowe d to invite tenders for 
goods purchases between Can$5,000 and Can$24,999 and services between Can$10,000 and Can$49,999, in practice those tenders are advert ised.  All tenders are advertised on the New 
Brunswick's Government internally run web site (NBON) as well as on the BIDS and MERX private 
sector services.  The version of the Standard Term s and Conditions effective 25 June 2001 applies to 
all tender invitations for goods and services issued by the CPB.
6  The authorities have noted that the 
Standard Terms and Conditions are periodically updated, and subject to change as required. 
Province:  Newfoundland and Labrador 
Main procurement agency:  Government Purchasing Agency (GPA) 
Procurement conditions:  Tendering takes place gene rally in a competitive manner, under the AIT;  
there are no price preferences or provincial set-asides.  The GPA endeavours to obtain a minimum of 
three price quotations for all acquisitions under Can$10,000. 
Transparency:  Tenders that exceed Can$10,000 ar e publicly advertised, and the Agency endeavours 
to obtain a minimum of three price quotations for all acquisitions under Can$10,000. 
Territory:  Northwest Territories (NWT) 
Main procurement agency:  The Department of Public Works and Services (PW&S) Procurement conditions:  Tendering takes place ge nerally in a competitive manner, for thresholds 
covered by the AIT.  Sole source contracts are allowed for goods urgently needed;  when only one 
supplier is available and capable of performing the co ntract;  or when the contract is valued at less 
than Can$1,000.
7  Negotiated contracts, where a specific firm is targeted may be used, but must be 
approved by the Government of the Northwest Terr itories;  there is no sp ecific policy for these 
contracts.  Standing Offer Agreements (price ag reements with suppliers) may be entered.  The 
Cabinet directed that PW&S extend this kind of agreement for key commodities on a centralized basis 
starting FY 2001/2002.  Preferences are granted for NW T suppliers.  For contracts valued at less than 
Can$1,000, sourcing is restricted to approved nort hern businesses.  For contracts valued between 
                                                      
5 http://www.manitobamarketplace.com/open_update.html. 
6 The Terms and Conditions are available online at:  http://www.gnb.ca/0337/01-e/28-e.htm. 
7 See online information.  Ava ilable at:  http://www.gov.nt.ca/. Canada WT/TPR/S/112/Rev.1 
 Page 91 
 
 
Can$1,000 and Can$5,000 a 20% preference margin is granted to approved NWT suppliers.  In the 
case of contracts valued over Can$50,000, a NWT preference margin of 15% and a local preference 
margin of 5% are granted.  
Transparency:  Tenders that exceed Can$30,000 for goods and Can$100,000 for construction are 
publicly advertised on a local newspaper and on PW&S's website.  Invitational tendering is 
recommended for contracts under Can$30,000.  
Province:  Nova Scotia Agency:  Procurement Branch (PC) of the Depart ment of Transportation and Public Works (DTPW) 
Procurement conditions:  All purchasing is through the Corporate Financial Management System 
(CFMS).  Departments have been delegated purchasing authority for goods up to Can$5,000, and for 
services and construction contracts up to Can$10,000.
8  All other procurement is done centrally, or 
with the approval of the PC. 
Transparency:  All tender opportunities are shown on the Department of Finance online information. 
Province:  Ontario 
Main procurement agency:  Procurement Policy and Information Technology Procurement Branch 
(PPITPB) 
Procurement conditions:  PPITPB is responsible fo r all procurement of goods above Can$25,000 and 
services above Can$100,000. 
Transparency:  Tenders by PPITPB ar e subject to competitive tendering,  either through advertising in 
the MERX, or through newspaper advertising. 
Province:  Prince Edward Island 
Agency:  Procurement Services Section, Office of  the Comptroller, Department of the Provincial 
Treasury, established under the P ublic Purchasing Act of Prince Edward Island to purchase all goods 
and supplies required by government departments lo cated throughout the province.  Other than Local 
Purchase Orders (LPO's) for emergency goods to a value of Can$250, or certain exemptions provided for in the Public Purchasing Act, the Procurement Se rvices Section is the sole body authorized to 
purchase supplies for the Provincial Government. 
Procurement conditions:  Purchases are generally made  on the basis of the lowest overall total price 
that meets the specifications of the competition and subject to guidelines established in the Public 
Purchasing Act and Regulations.  Standing Offer Te nders, through which departments order supplies 
at pre-arranged prices and delivery conditions, may be issued for items to be purchased over a 
specified period of time on an "as and when requir ed" basis, for tenders below the AIT thresholds.  
Also for the latter, the Government reserves the ri ght to give preference to tenders received from 
suppliers based In Prince Edward Island or other Atlantic provinces. 
Transparency:  All tenders for goods abov e Can$25,000, services above Can$50,000, and 
construction above Can$100,000 are advertised on the MERX.  Tenders for goods below Can$25,000 
are generally also advertised and distributed via the MERX, although where competition exists, these 
                                                     
 
8 See also Government of Nova Scotia online information.  Available at:  http://gov.ns.ca/fina/tour/. WT/TPR/S/112/Rev.1 Tr ade Policy Review 
Page 92 
 
 
tenders may be restricted to suppliers based on Prince Edward Island or Atlantic Canada.  In 
emergency or urgent situations, tenders may be called by telephone or facsimile. 
Province:  Quebec Main procurement agency:  Direction générale des acquisitions  (DGA) 
Procurement conditions:  Contracts for goods valued at or above Can$25,000 and construction 
projects of or over Can$100,000 must be tendered pu blicly, subject to the AIT, and must go through 
the DGA.  Purchases of goods and services unde r Can$25,000 are usually made by the different 
departments;  suppliers are generally chosen from a list or are invited to tender. 
Transparency:  DGA procurement is advertised on MERX, in the case of goods and services, and on 
CIEC (electronic database for construction contracts) in the case of construction. 
Province:  Saskatchewan 
Main procurement agency:  Purchasing Branch  (PB) of Saskatchewan Property Management 
Corporation (SPMC)
9 
Procurement conditions:  The PB coordinates the purchase of goods and some services for 
government departments, boards, agencies, and commissions, and some crown corporations.  Source lists are normally used for goods tenders valued at less than Can$5,000 and services tenders valued at less than Can$100,000.  The authorities have noted th at competitive bidding is the norm for most of 
Saskatchewan's procurement and that invitational or known-supplier lists are used in few cases and 
comprise a small proportion of the total goods purchased by the PB. 
Transparency:  Goods tenders valued at Can$5, 000 or more, and services tenders valued at 
Can$100,000 or more, are advertised and distributed through MERX. 
Territory:  Yukon 
Main procurement agency:  Procurement Services  (PS), a dependency of the Department of 
Infrastructure 
Procurement conditions:  The PS buys goods and relate d services for all government departments.  
The office maintains a source list, which is a direct ory of contractors, consultants, and suppliers of 
goods and services.  Service are publicly advertised, as noted below, or the bid must invite everyone 
registered on the source list.  For contracts under Can$50,000, only three bidders on the list have to be 
invited.
10 
Transparency:  Service contracts with an estimate d value of Can$50,000, and goods contracts valued 
at Can$25,000 or more, must be publicly advertised. 
 
                                                      
9 See also SPMC online information.  Avai lable at:  http://www.spmc.gov.sk.ca/spmc/. 
10 See also Government of Yukon Department of Infrastructure online information.  Available at:  
http://www.gov.yk.ca/source/.