WORLD TRADE  
ORGANIZATION  WT/REG271/2 
27 August 2010 
 (10-4474) 
Committee on Regional Trade Agreements Original:   English 
  
 
FREE TRADE AGREEMENT BETWEEN THE EFTA STATES AND CANADA 
 
Questions and Replies
 
  
 The following communication, dated 25 August 2010,  is being circulated at the request of the 
delegations of the EFTA States and Canada.   This document reproduces the questions addressed to the Parties and the responses submitted.  
_______________ 
 
 
Questions from the Delegation of the United States
 
 1. According to Tables II.A-F and Annex 1 of th e Factual Presentation, Tables AI.1-AI.4:  
 Norway
 eliminates duties on 89.33% of all tariff lines covering 99.5% of imports from 
Canada under the agreement.  However, though 99. 9% of industrial tariffs are duty-free, only 
44.2% of agricultural tariff lines are duty-free under the agreement. 
 Switzerland  eliminates tariffs on only 81.2% of all tariff lines covering 99.2% of imports 
from Canada under the agreement.   However, though 99.9% of industrial goods are duty-free, 
only 24.1% of agricultural lines are duty-free under the agreement. 
 Iceland  eliminates duties on 94.9% of all tariff lines and 95.2% of imports from Canada 
under the agreement.  However, though 100% of industrial goods tariffs are duty-free, only 77.4% of agricultural tariffs are duty-free under the agreement. 
 Canada
 provides duty-free access by the end of the implementation period on 96.3%, 
93.5%, and 93.4% of its tariff lines accounting for 100%, 100% and 98.7% of the value of 
imports from Iceland, Norway and Switzerland, respectively.  However, though 99.8% of 
industrial products are duty-free for Icela nd and 100% are duty free for Switzerland and 
Norway, Canada provides duty free access on its agr icultural goods for only 56.1% of its tariff 
lines for Norway, 56.2% of its tariff lines for Switzerland and 75.1% of its tariff lines for 
Iceland.  
(a) How do the Parties explain the highly disproportionate liberalization between 
the industrial and agricultural sectors?  
 The trade liberalization undertaken in the Agre ement is the result of negotiations between the 
Parties with the aim to strike a balance between th eir specific interests and sensitivities.  Agricultural 
products in the EFTA-Canada FTA are considered  under two sets of provisions, the bilateral 
agricultural agreements for basic agricultural pr oducts, and Annex G to the Main Agreement for 
processed agricultural products. The Main Agreement and the bilateral agricultural agreements form WT/REG271/2 
Page 2  
 
  part of the instruments establishing the free tr ade area between the Parties.  The Free Trade 
Agreement and bilateral agreements on agriculture  between Canada and the EFTA States are quite 
comprehensive and cover substantially all trade. In addition, the bilateral agre ements include a review 
clause that enables Parties to review  their concessions on a regular basis. 
 
 In the case of comments on Canada, it should be noted that the report shows that 56.6% of 
agricultural tariff lines for Norway (vs 56.1%) ar e provided with duty-free access and that 100% of 
industrial tariff lines are duty-free for each EFTA State (vs only 99.8% for Iceland as suggested in the question).  
(b) What criteria were used by the Parties to exclude agricultural products from 
tariff elimination? 
 Products excluded from tariff elimination refl ect a negotiated outcome which respected the 
Parties' respective sensitivities and export inter ests, while also ensuri ng conformity with the 
requirements of Article XXIV. 
 
2. The fact that the term "substantially all tr ade" has not been further clarified does not 
change the fact that Members are under an obligat ion to cover "substantially all trade" if they 
want the cover of GATT Article XXIV.  The Unit ed States assumes that the Parties have their 
own understanding of what "substantially all trade"  is because they are required to make sure 
they meet this standard of coverage.   
(a) In this light, we ask that the Parties please explain their understanding of the 
term "substantially all trade."  How do the Parties view the term with regard to 
agricultural products, specifically? 
 The WTO membership has not defined the term "substantially all the trade".  The Parties to 
the Agreement believe that the coverage of the EFT A Canada FTA fulfils the "substantially all trade" 
requirement under GATT Article XXIV. 
  "Substantially all trade" does not amount to all trade.  The criterion refers to overall trade 
rather than to either imports or exports, and does not entail obligations relating to the coverage of 
specific sectors or products, such as agricultural products.  
 The depth and coverage of the commitments in  the final agreement are a consequence of the 
negotiations between the parties.  While we have no  precise definition of substantially all the trade, 
we consider the commitments in this agreement to be well within our WTO obligations contained in 
GATT Article XXIV.  3. It appears that the Parties consider their agree ment to meet the "substantially all trade" 
requirement of GATT Article XXIV based solely on  the fact that duties are eliminated on 95% 
or greater of products actually traded between th e Parties.  In so believing, the Parties appear 
to simply ignore the percentages of tariff lines – particularly in agriculture – on which duties 
remain.  Can the Parties please explain why they have chosen not to eliminate duties on these 
tariff lines, and why such a choice should be countenanced by GATT Article XXIV? 
 The elimination of duties is the result of negotiations between the Parties.  The tariff 
treatment reflects what the Parties consider to be a balanced and appropriate result of our negotiations. 
As the liberalization undertaken by the Parties in the Agreement covers substantially all the trade 
carried out between the Parties, we are of the vi ew that the coverage of the Agreement is fully 
consistent with our WTO obligations. 
  WT/REG271/2 
 Page 3 
 
 
  4. According to paragraph 21 of the Factual Presentation, "the Parties agree to 
periodically review the development of trade in  agricultural products covered by Annex G and 
may amend product coverage and cu stoms duties."  How often do th e Parties plan to hold this 
review?  Is one scheduled for the future? 
 Article 5 of Annex G provides that the Parties "shall review periodically the development of 
their trade in products covered by [Annex G]".  Th e provision further states that "the evolution of 
agreements between the Parties and the European Community or of the WTO Agreement" shall be 
taken into account.  According to Article 38 of the Main Agreement, the Parties may amend the 
Agreement on the basis of a draft decision proposed  by the Joint Committee whereas Article 26 states 
that the Joint Committee shall normally convene on ce a year in a regular meeting.  The first 
Joint Committee meeting is scheduled  to be held in November 2010. 
  
__________