RESTRICTED
WORLD TRADE WT/REG31/4
5June1997
ORGANIZATION(97-2353)
Original: English Committee onRegional Trade Agreements
FREE TRADE AGREEMENT BETWEEN CANADA AND ISRAEL
Communication from theParties
Thefollowing texthasbeenreceived from theParties totheAgreement.
______________________
I. Background Information ontheAgreement
1. Membership, dates ofsignature, ratification andentry intoforce
TheParties totheAgreement aretheGovernment oftheState ofIsrael andtheGovernment
ofCanada. TheAgreement applies inrespect oftheterritory towhich thecustoms lawsofCanada
andIsrael areapplicable respectively.
TheAgreement wassigned on31July1996. Canada andIsrael made ajointcommunication
totheCommitteeonRegionalTradeAgreementson7October1996,informingMembersofthesignature
oftheAgreement andoutlining itscontent.
TheAgreement wasratified inCanada andIsrael respective legislatures inlateDecember 1996.
TheAgreement entered intoforce on1January 1997, andwasnotified totheCouncil onTrade in
Goods on13January 1997, inaccordance withArticle XXIV:7(a) ofGATT 1994.
2. Type ofAgreement
TheAgreement creates afree-trade areainconformity with thedefinition setoutin
Article XXIV:8(b) ofGATT 1994.
3. Scope
TheAgreement covers alltrade inindustrial products (HSChapter 25-97), andsubstantially
alltrade inagriculture products (HSChapter 1-24). Theproducts covered areproducts originating
inCanada orIsrael according torules oforigin laidoutintheAgreement.
Theproducts ofHSChapter 1-24thatareexcluded arethose notlisted inAnnex 2.1.2A for
Canada andAnnex 2.1.2B forIsrael.
Article 11.5oftheAgreement provides that,within twoyears ofentry intoforce ofthe
Agreement, Parties willenterintofurther discussions toseekadditional means ofexpanding thescope
ofliberalized trade inthefreetrade areathrough thefurther removal oftariffs andother barriers to
trade between theParties.WT/REG31/4
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Total trade coverage oftheAgreement isasfollows:
Canada
Trade covered Total Trade %oftrade covered
1994: CA$172 million CA$180.9 million 95%
1995: CA$227.3 million CA$236.4 million 96%
1996: CA$254.2 million CA$262.9 million 96%
Israel
Imports from Canada
Total Covered bytheFTA
1994: US$188,196,596 US$186,577,816
1995: US$228,324,980 US$225,846,145
1996: US$246,530,184 US$241,154,712
4. Trade data
Trade datawillfollow shortly.
II. Trade Provisions
1. Import restrictions
(a) Duties andcharges
Asprescribed inArticle 2.1oftheAgreement, customs duties onalloriginating goods listed
inHSChapter 25to97willbeeliminated on1January 1997, withtheexception oftwoproducts where
theduties aretobephased-out overthree years, andproducts under HS3501and3502which arenot
subject toliberalization commitment. Inthecaseofagriculture products (HSChapter 1-24), specific
concessions, intheform ofpreferential dutyand/or tariff-rate quotas, forabroad range ofproducts
arelisted inAnnex 2.1.2A (Canada) andAnnex 2.1.2B (Israel) oftheAgreement.
(b) Quantitative restrictions
Article 4.4oftheAgreement prohibits anyquantitative restrictions ontheimportation ofany
goodfromtheotherParty, except inaccordance withtheParties 'rights andobligations under Article XI
ofGATT 1994. Fewexceptions arelisted inAnnex 4.1oftheAgreement.
2. Export restrictions
(a) Duties andcharges
Article 4.7oftheAgreement prohibits theimposition ofanyduty, taxorother charge onthe
export ofanygoodoftheother Party, unless applied equally when suchgoodisdestined fordomestic
consumption. Fewexceptions arelisted inAnnex 4.1oftheAgreement.WT/REG31/4
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(b) Quantitative Restrictions
Article 4.4oftheAgreement prohibits anyrestrictions ontheexportation ofanygood from
theother Party, except inaccordance withtheParties 'rights andobligations under Article XIof
GATT 1994. Fewexceptions arelisted inAnnex 4.1oftheAgreement.
3. Rules oforigin
Detailed rules oforigin aredefined inChapter Three oftheAgreement. Ingeneral, origin
isconferred when:
- thegood iswholly obtained orproduced intheterritory ofaParty;
- eachofthenon-originating materials usedintheproduction ofthegood undergoes
anapplicable change intariff classification setoutinthespecific ruleforthatgood
(detailed inAnnex 3.1), andthegood satisfies anyother applicable requirement set
outinthatrule,asaresult ofproduction occurring entirely intheterritory ofoneor
bothoftheParties;
- thegoodisproduced entirely intheterritory ofoneorbothoftheParties exclusively
from originating materials; or,
- other particular circumstances assetoutinChapter Three.
Inorder totakeintoaccount thesituation where bothParties haveentered intoafreetrade
agreement withaThird-Country -inthepresent case, theUnited States -theAgreement provides for
specific rules: (i)toconfer origin toinputs from thatThird-Country where suchinputs areusedto
produce goods inCanada forexport toIsrael andtoproduce goods inIsrael forexport toCanada;
and(ii)toallow forminor processing ofotherwise originating goods while theyareintransit insuch
aThird-Country.Theminorprocessingprovisionswillbeenactedoncecertainadministrativeprocedures
areputinplace bybothParties.
Ingeneral, thedetailed rulesoforigin contained inChapter Three oftheAgreement havebeen
designed toreflect asclosely aspossible current patterns oftrade andthestructure andopenness of
theCanadian andIsraeli economies. Chapter FiveoftheAgreement alsocontains aseries ofprovisions
tofacilitate customs procedures, including thecertification oforigin, andtheadministration and
enforcement oforigin determination. TheAgreement alsoestablishes aWorking Group onRules of
OriginandOtherCustoms-RelatedMarketAccessIssuestomonitortheimplementationoftheprovisions
oftheAgreement andtocooperate inensuring theeffective administration ofcustoms-related provisions
oftheAgreement. Therulesoforigin shallalsobereviewed within twoyears toseewhere theycan
beimproved withaviewtofurther liberalize bilateral trade.
4. Standards
4.1 Technical barriers totrade
Article 4.2oftheAgreement stipulates thatthisareaintheParties 'relations shallbe
governed bytheAgreement onTechnical Barriers toTrade.
AstheParties arecommitted tostrengthen theirmutual obligation inthisarea, they
shallseekanagreement onmutual recognition respecting conformity assessment.WT/REG31/4
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4.2 Sanitary andphytosanitary measures
Article 4.3oftheAgreement stipulates thatthisareaintheParties 'relations shallbe
governed bytheAgreement onSanitary andPhytosanitary Measures.
5. Safeguards
(a) Bilateral emergency actions
Article 4.5oftheAgreement provides fortheapplication ofsafeguard measures byaParty,
until1July1999, ontheimport ofaproduct from theother Party ifitsimport ledtoserious injury
tothedomestic industry.
(b) Global emergency actions
TheParties would onlyinclude eachother inanyglobal safeguard action under stringent
conditions. Where imports fromtheotherParty account forasubstantial shareoftotalimports (normally
among thetopfivesuppliers during therecent three yearperiod) andwhere imports contribute
importantly totheserious injury orthreat thereof caused bytheimports (based upon thefindings of
thecompetent investigating authority).
There areneither safeguards foragriculture norforbalance ofpayments.
6. Anti-dumping andcountervailing measures
Thisareaisgoverned bytheWTO rights andobligations. AParty mayapply anti-dumping
andcountervailing duties against goods imported fromtheotherParty inaccordance withtheAgreement
onSubsidies andCountervailing Measures andtheAgreement onImplementation ofArticle VIofthe
General Agreement onTariffs andTrade 1994.
7. Subsidies
Thisareaisgoverned byWTO rights andobligations.
8. Sector-specific provisions
TheAgreement doesnotcontain sector-specific provisions.
9. Competition policy, monopolies andstateenterprises
Article 7.1oftheAgreement requires thatParties adopt acompetition lawandcooperate to
further effective competition lawenforcement inthefreetrade area.
Articles 7.2and7.3oftheAgreement impose disciplines onthebehaviour ofmonopolies -
whether privately orpublicly-owned -andstateenterprises todealwithanti-competitive actions and
discriminatory treatment.WT/REG31/4
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III. General Provisions oftheAgreement
1. Exceptions andreservations
Exceptions provided forinArticle XXofGATT 1994 areincorporated byreference inthe
Agreement.
TheAgreement alsoincludes aprovision onnational security.
Measures affecting cultural industries areexempt fromtheprovisions oftheAgreement, except
fortheelimination ofcustoms duties.
2. Accession
TheAgreement doesnotcontain provision regarding accession.
3. Dispute settlement provisions
TheAgreement provides forabinding dispute settlement process todealwithanymatter alleged
tobeinconsistent withtheobligations oftheAgreement ortocause nullification orimpairment. If
adispute relates toobligations under theWTO Agreements andthisAgreement, thecomplaining Party
mustelecttopursue thematter inoneforum totheexclusion ofanyother. TheAgreement provides
fora30daysconsultation period before aParty canrequest ameeting oftheCommission tolookinto
thematter. Ifthedispute isnotresolved within 30daysaftertheCommission wasconvened, apanel
ofexperts shallbesetuponrequest ofthecomplaining Party. ThePanel shallreport itsfinding within
3months ofitsconstitution. Thecomplaining Party canretaliate incaseofnon-implementation of
afinding, orifthere wasnoagreed compensation.
4. Relationship withother trade agreements
TheAgreement incorporates byreference certain provision ofGATT 1994, namely Articles III,
XIandXX.
TheAgreement stipulates thatrights andobligations relating tosome matters shallbegoverned
bytherelevantWTOAgreement,namelystandard-relatedmeasuresbytheWTOAgreementonTechnical
Barriers toTrade, sanitary andphytosanitary measures bytheWTO Agreement ontheApplication
ofSanitary andPhytosanitary Measures, government procurement bytheWTO Agreement on
Government Procurement, subsidies andcountervailing measures bytheWTO Agreement onSubsidies
andCountervailingMeasures,anti-dumpingmeasuresbytheAgreementonImplementationofArticleVI
oftheGATT 1994, andbalance ofpayments issues bytheUnderstanding onBalance-of-Payments
Provisions oftheGATT 1994.
Asmentioned insection II.3above, certain rules oforigin havebeendesigned totakeinto
accountthecircumstanceswherebothPartieshaveenteredintoafreetradeagreementwithaThird-Party.
Also, asmentioned insection III.3above, where adispute relates toobligations under theWTO
Agreements andthisAgreement, thecomplaining Party mustchoose inwhich forum itwillseekredress.WT/REG31/4
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5. Institutional framework
TheAgreement establishes aCanada-Israel Trade Commission which shallmeetatleastonce
ayeartomonitor theimplementation oftheAgreement. TheCommission iscomposed ofpersons
withministerial rankorpersons designated bytheMinister.
Article 8.4alsorequires each Party todesignate acentral contact point tofacilitate
communication.
IV. Other
Ongovernment procurement, under Article 6.2oftheAgreement, theParties willendeavour
tonegotiate further liberalization ofaccess bysuppliers oftheother Party totheir government
procurement.
TheAgreement doesnotcontain specific disciplines intheareaoftradeinservices. However,
Article 4.8oftheAgreement provides thatParties willfacilitate temporary entry onareciprocal basis
forbusiness persons. Therights andobligations inthisregard continue tobegoverned bytheWTO
Agreement onTrade inServices andtheAnnex onMovement ofNatural Persons Supplying Services
under theAgreement.
Onintellectual property, Article 9.1oftheAgreement stipulates thatrights ofobligations in
thisareaaregoverned bytheWTO Agreement onTrade-Related Aspects ofIntellectual Property Rights.