WORLD TRADE  
ORGANIZATION  WT/REG271/M/1 
13 October 2010 
 (10-5257) 
Committee on Regional Trade Agreements 
Fifty-eighth Session  
 
 
 
CONSIDERATION OF THE FREE TRADE AGREEMENT BETWEEN  
CANADA AND THE EFTA STATES, GOODS  
 
Note on the Meeting of 27-28 September 2010  
 
Chairman:  Mr A. Suescum (Panama) 
 
 1. The meeting was convened in document WT O/AIR/3598/Rev.1, dated 17 September 2010. 
2. Under Agenda Item C.V of its 58
th Session, the Committee on Regional Trade Agreements 
(hereinafter CRTA or the Committee) considered the Free Trade Agreement between Canada and the 
EFTA States (hereinafter the 'Agreement'), goods.  
3. The Chairman  noted that the Agreement had entered into force on 1 July 2009 and had been 
notified by the Parties to the WTO on 4 August 2009 under Article XXIV:7(a) of the GATT 1994 and 
the Understanding on the Interpretation of Article XXIV of GATT 1994 as an Agreement establishing 
a free trade area (document WT/REG271/N/1).  The te xt of the Agreement was available, together 
with its Annexes, on the Parties' official webs ites.  The Factual Presentation on the goods aspects 
(document WT/REG271/1, dated 25 J une 2010) had been prepared by the Secretariat on its own 
responsibility in full consultation with the Parti es, in accordance with paragraph 7(b) of the 
Transparency Mechanism (TM) fo r Regional Trade Agreements (doc ument WT/L/671).  In addition, 
written questions and replies on the Agreement had been recently distributed in document 
WT/REG271/2, dated 27 August 2010.   He proposed to organize the consideration of the Agreement 
by first asking the Parties and then other Member s for general comments.  The Committee would then 
turn to the specifics of the Agreement using th e Factual Presentation to guide the debate.  He 
proposed to go through the Factual Presentation secti on by section, and then look at the questions and 
replies document.  
4. The representative of Norway , on behalf of the EFTA States, thanked the Secretariat for the 
excellent Factual Presentation and its support in th e process, as well as Canada for the excellent 
collaboration in preparation for the meeting.  Sh e said that the Agreement held a special place in 
EFTA's free trade network.  When it was initiate d in 1997, it was the first time EFTA had embarked 
on negotiating an FTA with a partner outside Europe .  One could have said that the road had been 
long and winding, but the Parties had never let it be.  The relentless efforts of the Parties to bring their 
joint endeavour to a fruitful closure had been rewa rded on 1 July 2009 - on Ca nada's national day and 
142nd anniversary - when the Agreement had come in to force.  Outside Europe, Canada was the 
largest economy with which EFTA had to date si gned an agreement, and the Agreement thus 
represented an important addition to EFTA's free tr ade network.  The trade relations between the 
Parties were close and important.  Canada had been  EFTA's fifth largest trading partner globally in 
recent years.  According to EFTA's statistics, total bilateral merchandise trade amounted to 
US$9.8 billion in 2008;  in 2009, trade had falle n back to US$7.2 billion as a result of the global 
financial crisis and the resulting decline in intern ational trade generally.  Her delegation considered 
the Agreement as an important economic instrument that promoted and deepened economic relations WT/REG271/M/1 
Page 2  
 
  and cooperation between the Partie s' economic operators.  It provi ded new links between European 
and North American supply and value chains and it was expected to contribute to further growth and 
diversification.  Key exports from Canada into EFTA included:  nickel;  pharmaceutical products;  
aircraft;  machinery;  and agricultural products, su ch as cereals and meat.  Main exports from EFTA to 
Canada comprised:  mineral fuels;  pharmaceutical products;  organic chemicals;  machinery;  and 
optical/medical instruments.  The Agreement pr ovided for duty-free access for most non-agricultural 
products, including fish and other marine products.  For ships, boats and floating structures imported 
into Canada, customs duties would be eliminated following a transition period.  Specific concessions had been granted on selected basic and processed agri cultural products.  Rules of origin and customs 
verification procedures were dealt with in a hybr id of the Canadian and EFTA approaches, which 
married two quite different approaches to find a mutually beneficial solution which was itself a 
novelty and an achievement and that had required a lot of hard work, dedication and cooperation.  
Rights and obligations in respect of public pr ocurement were governed by the WTO Agreement on 
Government Procurement and would be reviewed in the Joint Committee no later than three years 
after the entry into force of the Agreement.  The Parties had also agreed to review the Agreement 
within three years from its entry in to force, with the aim to furt her liberalize trade in services and 
investment.  The Parties foresaw holding their first Joint Committee meeting in November 2010 where these issues would be discussed for the first tim e.  She thanked Members for their interest and 
questions that had been answered ahead of the Committee meeting and looked forward to a fruitful 
discussion.  
5. The representative of Canada
 thanked the Secretariat for its support and the Factual 
Presentation.  She said that the Parties had a long  standing and important  relationship.  Taken 
together, the EFTA countries represented Canada's eight largest merchandise export destination and 
bilateral investment stocks were over Can$28.4 bi llion in 2007.  Thus, the Agreement built on a 
significant relationship.  In Canada's view, the Ag reement's objectives were:  i) to promote, through 
the expansion of trade, the further development of  economic relations between the Parties;  ii) to 
provide fair conditions of competition;  iii) to  establish a framework for future strengthened 
cooperation, in particular with the aim of liber alizing trade in services and increasing investment 
opportunities;  and iv) to contribute, by the removal of barriers to trade, to the expansion of world 
trade.  The Agreement was Canada’s first with Eu ropean countries and this demonstrated Canada's 
continuing commitment to free and open trade.  The Parties had eliminated tariffs on all non-agricultural products immediately upon entry in to force of the Agreement, with the only 
exception of certain Canadian tariffs on sensitive shipbuilding products which would be phased out 
over ten or 15 years, beginning three years after the Agreement's entry into  force.  The Agreement 
also obliged the Parties to eliminate or redu ce tariffs below the MFN applied rate on selected 
processed agricultural products.  The bilateral agricu ltural agreements between Canada and Iceland, 
Norway, Switzerland and Lichtenste in, granted duty-free access to selected agricultural products and 
tariff reductions on other products, as specified in th e annexes to each agricultural agreement.  In 
addition, each bilateral agricultural agreement obliged  the Parties not to subsidize export of products 
included in the Agreement to the other Party’s ma rket.  She remarked that trade liberalization 
undertaken in the Agreement was the result of negotia tions between the Parties that struck a balance 
between their interests and sensitivities.  The Agre ement and the bilateral agreements on agriculture 
covered substantially all trade;  the latter also incl uded a review clause that enabled Parties to review 
their concessions on a regular basis.  Canada looke d forward to a constructive exchange of views on 
all aspects of the Agreement. 
6. The representative of the United States
 recognized the hard work of the Secretariat and the 
Parties to put together the Factual Presentation.  As in past CRTA meetings, she was compelled to note the highly disproportionate liberalization betw een the agricultural and non-agricultural sectors, 
including the low level of agricultural tariff lines elimination by EFTA States.  In her delegation's 
view, Canada's decision to go along with its EFTA partners by choosi ng to afford extensive protection 
to its agricultural sector only underscored the United States' concern with the disturbing "à la carte"  WT/REG271/M/1 
 Page 3 
 
 
  approach to FTAs that many were adopting.  This had implications for other Members, the 
multilateral trading system itself and made efforts at multilateral trade liberalization all the more 
difficult.  She said that the Parties appeared to rely heavily on the fact that duties had been eliminated 
on 95% of products actually traded in the past to claim that their Agreement satisfied GATT Article XXIV.  She agreed with the Parties' written responses that "substantially all trade" was 
not the same as "all trade";  however, it would be  far-fetched to interpret GATT Article XXIV to 
permit some of the countries to simply perpetuate years of significant protection of their agricultural sector by excluding potential trade between them.  In  addition, no reasonable interpretation of either 
the words "substantially" or "all" could describe, for example in the case of Switzerland and Norway, 
the elimination of duties on only 24% and 44%, resp ectively, of their agricultural products under the 
Agreement and she concluded this was regrettable.   
7. The representative of Canada
 stressed that the Agreem ent represented the result of 
negotiations which had taken place over a very leng thy period of time with benefits and concessions 
that represented a balanced and appropriate resu lt of such negotiations.  All countries had some 
domestic sensitivities and, although 100 % was something that all Members strived for, there were few 
things in life that were actually so.  She did not  believe that GATT Article XXIV required speculation 
on trade that for potentially many different reasons di d not exist:  it did not say substantially all trade 
that existed or might exist in future.  The Parti es had addressed the trade that they had and believed 
they had reached a very high level of liberaliza tion and looked forward to further building on that 
liberalization in future as the Agreement was evolvi ng over time.  She said that even the United States 
did not achieve 100% in terms of coverage or tari ff elimination in certain sensitive areas, so they 
should consider the Agreement in that light. 
8. The representative of the European Union  picked up on the United States' comment regarding 
the disproportionate liberalization under the Agreemen t.  She said that this was clear from Tables II.3 
to II.8 of the Factual Presentation, where there were  an important number of tariff lines that remained 
subject to duties for all Parties and that corresponde d in most cases to the ag ricultural sector.  Such 
exclusions constituted the substantive part of each Pa rty's agricultural schedule.  Most importantly, in 
the Questions and Reply document (WT/REG271/2), in response to question 2, the Parties had 
stressed that the criterion of "substantially all trade"  did not entail obligations related to the coverage 
of a specific sector or products, such as agricultural products.  However, in he r delegation's view, this 
seemed not to have taken into consideration the Understanding on the Interpretation of Article XXIV 
of the GATT 1994 (hereinafter "the 1994 Understandi ng"), and notably the provision related to the 
non-exclusion of any major sector of the economy a nd she asked the Parties to comment on this.  She 
then asked Canada - which had eliminated duties on 96.3%, 93.3% and 93.4% of its tariff lines for 
imports from Iceland, Norway and Switzerland, respectively, after 14 years – what were the reasons for having applied such a long transition period.  Lastly, she asked the Parties to provide further 
clarification on the exceptions set out by Annex B of the Agreement, and particularly with respect to 
exclusions to Articles III and XI of GATT 1994.   
9. In response to the EU's question on the t ype of measures included in Annex B of the 
Agreement, the representative of Canada
 said that such measures were the same as those mentioned 
with respect to the Canada-Peru Agreement and that Articles III and XI of GATT 1994 continued to 
apply between the Parties.  The Agreement essentiall y established that, with respect to measures listed 
in Annex B, any issue arising between the Partie s would be addressed in the WTO and not under the 
Agreement.  She then passed the floor to one of he r colleagues, who said that, with respect to the EU's 
question on Canada's reasons for applying such a long transition period, Tables II.2.D to F of the 
Factual Presentation outlined Canada's tariff elimination commitments vis-à-vis  Iceland, Norway, 
Switzerland and Liechtenstein, respectively.  As clear ly noted in the Tables, the vast majority of 
Canada's tariffs on imports from EFTA States had be en eliminated immediately upon entry into force 
of the Agreement.  For only a handful of ta riff lines listed in Annex E - 11 tariff lines of 
HS Chapter 89 (ships, boats and floating structures)  - tariffs would be eliminated over a period of WT/REG271/M/1 
Page 4  
 
  either nine or 14 years.  These represented a very small fraction of tariff lines covered by the 
Agreement.  He pointed out that paragraph 3 of the 1994 Understanding made it clear that periods in 
excess of ten years might be used in exceptional ci rcumstances and Canada considered that this would 
apply in this instance.  The treatment of these lines , as a negotiated outcome, was an integral part of 
the overall balance of concessions agreed between the Parties.   
10. The representative of Norway
 said that the Preamble of the 1994 Understanding recognized 
the "contribution to the expansion of world trade that  may be made by closer integration between the 
economies of the parties to such agreements" an d that "such contribution is increased if the 
elimination between the constituent territories of du ties and other restrictive regulations of commerce 
extends to all trade, and diminished if any major se ctor of trade is excluded".  In her view, the EU's 
question seemed to imply that agriculture was exclude d from the scope of the Agreement, but this was 
not the case:  trade in agriculture was very mu ch included in the scope of the Agreement and 
agricultural products were dealt with in two sets of  provisions, the bilateral agreements for basic 
agricultural products and Annex G of the main Ag reement for processed agricultural products, which 
formed an integral part of the Agreement.  As a result, the Agreement was comprehensive in scope 
and covered substantially all trade, including th e agricultural sector.  In addition, the bilateral 
agricultural agreements included a review clause that  enabled the Parties to review their concessions.  
She concluded that the Parties had responded as faith fully as possible to the questions within the short 
time-frame available and would have appreciated receiving them as part of the normal process ahead 
of the meeting.   
11. The representative of the European Union  thanked Canada and EFTA for their replies.  She 
recognized that the questions had been received at the meeting and appreciated the efforts made to 
respond, but in her view this had made the debate in Committee more active.  She agreed to receive 
the replies in writing within the timeframe set out by the Transparency Mechanism.  
12. The Chairman  noted that the consideration of the goods aspects of the Free Trade Agreement 
between Canada and the EFTA States had allowed the Committee to clarify a number of questions 
and oral discussion of the Agreement could be co ncluded in accordance with paragraph 11 of the 
Transparency Mechanism.  If any delegations wished  to ask follow-up questions they were invited to 
forward submissions in writing to the Secretariat by 5 October 2010  and the Parties were asked to 
submit replies  in writing by no later than 19 October 201 0.  In accordance with paragraph 13 of the 
Transparency Mechanism all written submissions , as well as minutes of this meeting would be 
circulated promptly, in all WTO official la nguages, and would be made available on the 
WTO website. 
13. The Committee took note  of the comments made. 
__________