WORLD TRADE  
ORGANIZATION  WT/COMTD/W/159 
25 May 2007 
 
 (07-2145) 
Committee on Trade and Development Original:   English 
  
 
CANADA'S LEAST-DEVELOPED COUNTRIES'  
MARKET ACCESS INITIATIVE 
 
Communication from Canada
 
 
 
 The following communication, dated 24 May 2007, is being circulated at the request of the delegation of Canada.   
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I. INTRODUCTION 
1. This paper provides an overview of Cana da's existing market access initiative for 
Least-Developed Countries (LDCs).  This informa tion is intended to facilitate discussion on the 
decision contained in the Hong Kong Ministerial Declaration (WT/MIN(05)/DEC) on duty-free, 
quota-free market access (DFQF) and to enhance the transparency of Canada's Least-Developed 
Country market access initiative.  Canada encourag es other Members to also provide information on 
the domestic processes required to implement DFQF and/or to provide helpful information about 
existing DFQF programs.    II. BACKGROUND 
1. Origins of the LDCT 
2. Canada's Least-Developed Countries' Tariff  (LDCT) program has been in place since 1983 
and forms part of Canada's commitment to encourag e economic growth in the developing world, and 
to help raise the standard of livin g of those in need.  The LDCT pr ovides preferential market access to 
49 of the world's LDCs, as defined by the United Nations.   
3. At the June 2002 G8 summit in Kananaskis, Albe rta, Canada announced steps to liberalize the 
LDCT to help reduce poverty in the world's poor est countries.  Specifically, Canada committed to 
eliminating tariffs and quotas on 99 per cent of Canada 's tariffs lines.  An important change was the 
inclusion of formerly-excluded tex tile and apparel products within the ambit of the LDCT.  As a result 
of this initiative, Canada added over 900 tariff lines to the list of duty-free tariff items including a 
wide range of agricultural, tex tile, apparel and footwear products.  The LDCT provides duty-free and 
quota-free access for all products from LDCs provided they meet the rules of origin with the exception of over-quota access for supply-managed produc ts in the dairy, poultry and eggs sectors.  
These changes came into effect on 1 January 2003 (see notification WT/COMTD/N/15/Add.1 dated 13 February 2003).  New, more liberal rules of orig in were established at the same time the changes 
came into effect.  In 2004, Canada renewed its LCDT program for a ten-year period to 2014 (see 
notification WT/COMTD/N/15/Add.2 dated 11 May 2004).  WT/COMTD/W/159 
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  III. OPERATION AND IMPLEMENTATION OF THE INITIATIVE 
1. Operation and Application of the LDCT 
4. The LDCT is currently applied to all Canadian imports of the products of LDCs, giving them 
duty-free and quota-free access to the Canadian ma rket except for the excluded supply-managed 
agricultural goods.  Importantly, LDC governments w hose exporters or producers wish to benefit 
from the textile and apparel aspects of the LD CT need only sign a Memo randum of Understanding 
(MOU) with the Government of Canada on the certifi cation and verification of the rules of origin of 
these textile and apparel products.  Once a MOU ha s been signed, these tex tile and apparel products 
benefit from the LDCT.  Twenty-one forei gn governments have signe d MOUs with Canada
1, under 
Canada's LDC Market Access Initiative, giving thei r products access to the approximately 99 per cent 
of tariff lines that are duty-free and quota-free under this initiative.  
2. Canada's Rules of Origin (see Annex A for details) 
5. Canada's rules of origin, which define what is required for a good to qualify for the LDCT, 
are considered to be liberal.  These rules of orig in make it easier for products of LDCs to access the 
Canadian market.  In addition, the rules of origin  are designed to promote not  only exports to Canada, 
but also trade between LDCs and other developing  countries (South-South trade).  Under the LDCT, 
apparel products produced in a LDC can use textile  inputs from any developing country and still be 
accorded duty-free access to Canada.  Canada's rules of origin provisi ons have been cited by some 
LDCs as a model for other preference-providing countries to follow.2  Canada encourages other 
Members to adopt similar rules of origin schemes.  
3. Increased trade resulting from the LDCT 
6. The two-way trade relationship between Canada and LDCs was quite stable and fairly equal 
up until about 2001.  Imports from the LDCs began to  rise significantly beginning in 2003 concurrent 
with the introduction of the LDC tariff market acc ess initiative.  Specifically, since 2003, merchandise 
imports into Canada from LDCs have almost tripled, from $632 m illion (US$403 million) in 2002 to 
$1.8 billion (US$1.6 billion) in 2006.  Almost half  our imports from LDCs are comprised of mineral 
fuels and oils, with the next largest category being apparel, followed by precious stones and minerals.  
Growth in finished apparel products has been pa rticularly notable.  Canada's import volumes from 
African LDCs are not large compared to LDC's expor ts to the United States and Europe, but Canadian 
imports have almost tripled since the LDC ta riff was introduced at the beginning of 2003.  
4. Support for exporters from LDCs 
7. Developing country exporters wishing to expand into the Canadian market can contact the 
Trade Facilitation Office Canada (www.tfoc.ca ) for market information and practical advice, either 
directly or through the Trade Promotion Agency in their country.  The Trade Facilitation Office 
Canada (TFOC) was created to assist developing co untries to export to the Canadian market.  This 
office provides trade and investment-related tec hnical assistance to exporters from developing 
countries through the provision of information on exporting to Canada, providing practical exporting 
advice, market information and reports on specifi c sectors of the Canadian market.  TFOC also 
organises seminars and helps with trade missions for LDC exporters.  
                                                      
1 List of signed MOUs can be viewed at:  http://www.international.gc .ca/tna-nac/DS/mou-en.asp   
2 For example, Bangladesh recognized Canada's ru les of origin at the July 2005 meeting of the 
CTD Sub-Committee on Least-Developed Countries.   See meeting note WT/COMTD/LDC/M/41.    WT/COMTD/W/159 
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  8. In addition, information for LDC exporters regarding tariff treatment (e.g. shipping 
requirements), specific rules of orig in for textiles and apparel goods a nd the certificate of origin can 
be found at: www.cbsa-asfc. gc.ca/E/pub/cp/rc4322/rc4322-e.pdf ;  
http://www.intracen.org/pact/p rogramme/AAGuide_En.pdf ;  http://www.tfoc.ca  
 IV. CONCLUSION  
9. Canada is fully committed to making progress in  the Doha negotiations.  We look to other 
WTO Members to join us in working toward a successful outcome of the DDA, to lock in the 
important decisions made in Hong Kong, including in  regard to duty-free, quota-free market access 
for products from the LDCs, and to promote the reduction of poverty in LDCs through the promotion 
of South-South trade and exports to the developed world.  
 WT/COMTD/W/159 
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  ANNEX A 
  RULES OF ORIGIN 
  Under Canada's Least-Devel oped Country Tariff program (LDCT), the rules of origin are 
more liberal than Canada's Genera l Preferential Tariff (GPT).  Most  goods fall under one of two rules, 
either a Wholly Produced Rule or a General 40 per cent LDC Cumulative Qualifying Content rule, 
while specified process rules of origin are applied fo r certain yarns, fabrics, made-up textile goods and 
apparel products of HS chapters 50 to 63.  
 
 All goods that are entitled to the LDCT must be certified as originating in an LDC under one of the following rules:  
1. Wholly Produced in One or More LDCs 
 A good originates in a least-developed country if the good is a mineral extracted from the soil 
or the sea-bed of the country, a vegetable good harvested in the country,  a live animal born and raised 
in the country,  a good obtained from hunting or fishing in the country, a good produced in the country 
exclusively from goods that themselves were products  of the country, and waste and scrap derived 
from manufacturing operations of the country.   
 Example :  Consider cotton harvested in Ethiopia.  Th e cotton is processed into yarn or thread 
in Ethiopia and manufactured into blankets in Ethi opia, and exported from Ethiopia to Canada.  The 
goods are wholly obtained, produced and manufactu red in Ethiopia and qualify for LDCT benefits. 
 
2. General 40 per cent LDC Cumulative Qualifying Content 
 Goods entitled to the benefits of the LDCT do not  have to be wholly produced in the LDCT 
beneficiary country but can be produced with i nputs from any other LDC or Canada.  To qualify for 
LDCT treatment, 40 per cent of the ex-factory price of the goods must originate in one or more LDCs 
or Canada.    In addition, within the 40 per cent qualifying co ntent, the ex-factory price of goods may also 
include a value of up to 20 per cent of the ex-factory price from a GPT beneficiary. 
  Example :  Copper of Zambia is combined w ith rubber from Malaysia to manufacture 
insulated wire in Tanzania.  To qualify for LDCT  treatment on export to Canada, a good may contain 
parts and materials of LDC or Canadian origin that  represent no less than 40 per cent of the ex-factory 
price of the good as it is packed for shipment to Canada – and of the LDC qualifying content up to 
one-half may originate in one or more GPT benefi ciary countries.  The copper of Zambia origin 
represents 25 per cent of the ex-factory price.  The rubber of Malaysia represents an additional 
18 per cent, as it originates in a country that is a GPT beneficiary.  Under the cumulative rule of origin, inputs from Malaysia, a GPT beneficiar y, may be included in the 40 per cent content 
requirement.  The 25 per cent input of copper from Zambia combined with the 18 per cent rubber 
from a GPT beneficiary country results in the cont ent requirement being met, and the wire qualifies 
under the LDCT rules of origin.  Thus, the wire qua lifies for the duty-free market access (subject to 
meeting the applicable certification and shipping co nditions) to Canada, even before counting the cost 
of labour and the manufacturing process in Tanzania.   WT/COMTD/W/159 
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   Note:  Ex-factory price means the total value of :  (a) materials;  (b) parts;  (c) factory 
overhead;  (d) labour;  (e) any other reasonabl e costs incurred during the normal manufacturing 
process, e.g. duties and taxes paid on materials im ported into a beneficiary country and not refunded 
when the goods were exported;  and (f) a reasonabl e profit.  Any costs incurred subsequent to the 
goods leaving the factory, such as freight, loading, temporary storage, are not included in the 
ex-factory price calculation. 
 
3. Rules of Origin for Textile and Apparel Goods 
 Specific rules of origin apply for textile a nd apparel goods of HS 50 to 63 including yarns and 
sewing threads, fabrics, articles of apparel, and other made-up textile goods.  The complete rules, 
contained in Canada Border Services Agency Cu stoms Memorandum D11-4-4, may be accessed at: 
http://cbsa-asfc.gc.ca/E/pub/cm/d11-4-4/d11-4-4-e.pdf  
  Under the LDCT, apparel that is cut and sewn in an LDC from yarns and fabric produced in 
any LDCT or GPT beneficiary country or Canada, is eligible for duty-free access to Canada provided 
that the yarns and fabric do not undergo further pr ocessing outside these countries.  If the fabric is 
produced in a GPT beneficiary country, at least 25 pe r cent of the ex-factory price of the apparel must 
originate in the LDC.  For purposes of this calculation, materials originating in Canada are considered 
to originate in the LDC.   Textile products can use yarn inputs from any LDCT or GPT beneficiary country, provided 
that the yarn input has been processed wholly in LDCT or GPT beneficiary countries or Canada, and 
be accorded duty-free access to Canada.   
 
 Example :  Wool yarn is produced in Afghanistan  and exported directly to Bangladesh and 
further processed into wool fabric.  The wool fabr ic is shipped directly to Laos and sewn with 
polyester thread from Germany and decorated pi eces of wood from Cambodia for further production 
into a good classified as "Other Made-up Textile Artic les".  As long as the finished good has been cut 
or knit to shape and sewn or otherwise assemble d in Laos, from fabric produced in any LDC or 
Canada from yarns originating in a LDC, a GPT be neficiary country or Canada, the finished good 
qualifies for LDCT duty-free access to the Canadian market.  
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