WORLD TRADE  
ORGANIZATION  WT/REG270/2 
20 September 2010 
 (10-4746) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN CANADA AND PERU 
 
Questions and Replies
 
  
 The following communication, dated 16 September 2010, is being circulated at the request of 
the delegations of Canada and Peru.   This document reproduces the questions addressed to the Parties and the responses submitted.  
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  Questions from the Delegation of Japan
 
 1. Japan would like to ask the Parties to expl ain the difference between "air services and 
related services in support of air services (Note:  For greater certainty, the term "air services 
include but is not limited to traffic rights.) " in this FTA and "air transport services and 
ancillary services" in GATS. 
 Canada and Peru, like many WTO Members, believe that the GATS Annex on Air Transport 
Services limits the coverage of the Agreement in  the air transport sector to measures affecting the 
following 3 services: aircraft repair and maintenanc e, computer reservation systems, and selling and 
marketing.   Nevertheless, we note that para graphs 2 and 3 of the Air Anne x have led to numerous debates 
during sessions of the Air Annex Reviews regard ing the scope of coverage in the sector. 
 
 The text in the Canada-Peru FTA is, therefore,  intended to bring legal certainty regarding the 
scope of coverage of the Services Chapter in the ai r transport sector, i.e. only measures affecting the 
same 3 services.   Japan should also note that the Services Ch apter in the Canada-Peru FTA covers only 
GATS modes 1, 2 and 4, while the Investment Chap ter covers GATS mode 3 a nd air transport is not 
carved out as it is in the GATS.  
2. This FTA stipulates Market Access (Article 906) as well as Local Presence (Article 907) 
at the same time.  The Article 906 prohibits to rest rict or to require "specific types" of legal 
entity or joint venture in line with GATS Articl e XVI.  On the other hand, the Article 907 has a 
similar provision that prohibits requiring a service supplier of the other Party to establish or maintain "any form of enterprise".  Please pr ovide explanation on the scope, difference and 
interpretation of these two provisions. 
 WT/REG270/2 
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   The Market Access and Local Presence provisions should be interpreted as being 
complementary to one another, ensuring that cro ss-border trade in services is not inhibited by 
requirements for domestic presence and specific form s of legal entity, subject only to listed and 
clearly-described reservations.  3. According to Annex 1203 Section C of this FTA, it is regulated that neither Party may 
require labour certification tests or other proce dures of similar effect.  Please provide some 
information on the reason and/or background why the Parties decide to include this provision, 
and also please indicate precisely whether the re is the same commitment in other respective 
EPA/FTA s between the Parties and other countries.  It would be also appreciated if Peru and 
Canada could provide the specific number of entry within this scheme.  
 Facilitated temporary entry for business persons  is an important complement to trade in 
goods, services and the conduct of investment activities.  Accordingly, the chapter on temporary entry for business persons includes substantial commitmen ts to facilitate temporary entry for business 
persons of the Parties, not only by increasing transp arency, but also by eliminating impediments to 
entry, such as economic needs tests and numerical restrictions.  This provision was included to 
provide facilitated treatment for qualifying Intra- Company Transferees (ICTs) by exempting them 
from economic needs tests which may otherwise be re quired for entry.  In the case of Canada, this 
same commitment is in other international agreem ents and reflects Canada's preferred approach to 
facilitating temporary entry for business persons. In the case of Peru, the Canada-Peru FTA is the only 
FTA including this provision. As the Canada-Peru FTA came into force in August 2009, the number 
of ICTs utilizing the provision remains small.  For example, in 2010, to the end of June, 65 Peruvian 
workers, including less than 10 Peruvians ICTs entere d Canada.  On the other side, to the beginning 
of September, a total number of 55 Canadians en tered Peru for work purposes, within which are 
included the Canadian ICTs.  4. With regard to the Section D – Professionals and Technicians of the Annex of the 
Chapter 12, the Appendix 1203.D.1 adopts negativ e list approach for professionals, meanwhile 
it adopts positive list approach for technici ans.  Please indicate the differences between 
Professionals and Technicians as well as their respective definitions.  
Under the Agreement, Professional means a nationa l of a Party who is engaged in a specialty 
occupation requiring: 
(a) theoretical and practical application of  a body of specialized knowledge, and who 
is eligible to obtain the certification or license to practice, if required;  and 
(b) attainment of a post-secondary degree in the specialty requiring four, or more 
years of study as a minimum for entry into the occupation. 
 Technician means a national of a Party who is  engaged in a specialty occupation requiring: 
 
(a) theoretical and practical application of  a body of specialized knowledge, and who 
is eligible to obtain the certification/license to practice, if required; and 
(b) attainment of a post-secondary or technical  degree requiring one, or more years of 
study, or the equivalent of such a degree, as a minimum for entry into the occupation.  
 
  WT/REG270/2 
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   As detailed above, the difference between prof essionals and technicians is mainly related to 
the number of years of study for the attainment of the respective post-secondary degree.  
5. Regarding Chapter 10, while the chapter includes measures on the supply of value-
added services in its scope, the chapter does not i ndicate any specific definition of value-added 
services.  How do the Parties consider their de finition?  Please provide information regarding 
whether it has been considered the possibility to in clude their definition in the text of the FTA. 
Japan also would like to ask the Parties whether "major supplier" also exists in the field of 
"value-added services" in Canada and Peru.  
 The definition of "value added services" is not  included in the Peru-Canada FTA. Thus, for 
purposes of determining the meaning of the mentioned concept, Parties must consider their respective 
domestic legislation. 
 As to the provision on "major supplier", it does not apply in the field of "value-added 
services", since "major supplier", by definition, onl y applies to "public telecommunication transport 
services." 
 In Canada's regulatory framework, only pr oviders of public telecommunication transport 
services would be treated as a "major supplier" due to their control over essential telecommunications facilities.  As the provision of value added services is not limited by control of the network, these 
services are widely available in Canada and would not be considered to be provided by a "major supplier."  
 Under current Peruvian domestic law, "major supplier" does not apply in the field of "value 
added services." 
6. The Annex 910.4 stipulates "Guidelines" fo r Mutual Recognition Agreements (MRAs) 
for the Professional Services Sector.  Please ex plain the current status of mutual recognition 
negotiations on specific professional services so far, if any.  
 The Article 904 paragraph 4 of the Canada-Per u FTA states that Parties shall endeavour to 
ensure that the relevant professional bodies in their respective territories of professional service 
sectors to be determined by the Working Group within  six months following entry into force of this 
Agreement: 
(a) exchange information on existing standa rds and criteria for the authorization, 
licensing and certification of professional service providers; 
(b) meet within 12 months to discuss th e development of any agreement or 
arrangement; 
(c) are guided by Annex 910.4 for the negotiations  of such agreement or arrangement; 
and 
(d) provide notification following the conclusion of an agreement or arrangement to 
the Commission. 
 It is important to note that the engineering profession has been identified as a priority. 
Currently, efforts are underway to assess substantiv e equivalencies between university engineering 
programs of the two countries, which is an important  preliminary step toward a potential MRA in the 
sector. WT/REG270/2 
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  Question from the Delegation of the United States
 
 7. According to Table III.4 on page 15 of th e Factual Presentation, 108 out of Canada's 
110 tariff lines that remain dutiable are agricultura l lines with average final dutiable tariffs of 
228.8% for live animals and animal products, 218%  for animal or vegetable fats and oils, and 
228.9% for prepared foods.  Could Canada plea se explain the disproportionately high final 
dutiable tariff averages for these agricultural products? 
 The elimination of duties in the Canada-Per u FTA is a result of negotiations between the 
Parties.  The tariff treatment, including lines excluded from tariff elimination, reflects what the parties 
consider to be a balanced and appropriate resu lt of our negotiations.  The tariff lines excluded by 
Canada from tariff elimination are, for the most part, over-access tariffs associated with Canada's WTO tariff rate quotas for products under supply manage ment (dairy, poultry and eggs).  They also 
include certain refined sugar tariff lines, for which Pe ru was provided with a bilateral tariff rate quota. 
The level of the tariffs of those lines excluded fro m tariff elimination reflects Canada's MFN tariff 
rates for these lines. 
 
 
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