Canada WT/TPR/S/179 
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II. TRADE POLICY REGIME:  FRAMEWORK AND OBJECTIVES 
(1) OVERVIEW  
1. Canada's framework for trade and investment po licy has not changed significantly since 2003.  
This framework is based on shared federal-pr ovincial competencies, and involves regular 
consultations between the Federa l Government, provinces, indust ry, non-governmental and public 
interest groups, and the public at large.  It al so includes an agreemen t to identify and reduce 
interprovincial barriers to trade and investment.  Ca nada has stated that its growth prospects depend 
on open world markets and a stable, predicta ble, and transparent trading environment. 
2. Canada participates actively in the WTO, which it considers as the central element of its trade 
policy and the best forum for broad-ranging market access improvements in many areas of interest to 
Canada.  Canada has made numerous proposals in the context of the current round of WTO 
negotiations.  In addition to the multilateral track,  Canada pursues regional and bilateral preferential 
trade and investment initiatives.  Canada exempt ed from preferential liberalization commitments 
certain supply-managed tariff lines and cultural activ ities.  Canada gives paramount importance to 
managing its trade relationship with the United Stat es, and achieves this largely through the NAFTA 
and the WTO.  Negotiations towards free-trade ag reements have been under way with several 
countries, but no new agreements have been concluded since 2003. 
3. Canada maintains a policy of national treatment  for foreign direct investment, subject to 
sector-specific restrictions related to fishing, mining and energy, air transport, telecommunications, and cultural activities.  Moreover, a foreign acquisition above a given threshold is  subject to review to 
ensure that it results in a "net benefit" to Canada. 
(2) G
ENERAL LEGAL FRAMEWORK  
4. No changes have occurred in the constitutiona l regime since Canada's last Trade Policy 
Review, in 2003.  Canada is a constitutional mona rchy with a federal system of parliamentary 
government.  Executive power is vested formally  in the Queen, who is the head of State.1  The Queen 
is represented in Canada by the Governor Genera l.  In practice, executive power is exercised by 
Cabinet, led by the Prime Minister, who is the head of government. 
5. Legislative power is vested in the Parliament , which consists of the Queen, the Senate, and 
the House of Commons.2  The House of Commons consists of 308 members, last elected in 
January 2006.  The Senate comprises 105 non-elected  members, appointed by the Governor General 
on the recommendation of the Prime Minister.  Bills providing for the expenditure of public money or 
imposing taxes can only be initiated in the House of Commons;  other bills may be initiated either in 
the House of Commons or in the Senate.  To b ecome law, a bill must be passed by the House of 
Commons and the Senate.  In practice, the Senate has rarely rejected a b ill passed by the House of 
Commons, or introduced amendments opposed by the House.3 
6. The judiciary is organized in a four-tiered struct ure, with the Supreme Court at the apex.  The 
next tier consists of the Federal Court of Appeal a nd the various provincial/territo rial courts of appeal;  
this is followed by the Federal Court, the Tax C ourt of Canada, and the provincial and territorial 
superior courts of general jurisdic tion.  At the bottom of the hierarch y are the "provincial courts".  The 
Governor General in Council appoints the judges fo r the Supreme Court, the federal courts, and the 
                                                      
1 Section 9, The Constitution Act, 1867. 
2 Section 17, The Constitution Act, 1867. 
3 Forsey (2005). WT/TPR/S/179 Trade Policy Review 
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upper-level courts in the provinces/territories .  The provincial and territorial governments appoint the 
judges for the other provincial/territorial courts.  The Supreme Court hears appeals from both the federal and the provincial/territorial court systems. 
7. Canada consists of ten provinces and three te rritories.  Provincial governments operate under 
a parliamentary system largely similar to that of the Federal Government.  The scope of federal and 
provincial legislative powers is defined in Part IV  of The Constitution Act, 1867.  The legislative 
powers of Parliament are set out in sections 91, 94, and 94A of this Act, and those of provincial 
legislatures in sections 92, 92A, and 93.  Parliament  enjoys exclusive jurisdiction over the regulation 
of international and inter-provi ncial trade, including tariffs.
4  Agriculture and immigration are 
recognized as being under shared fe deral and provincial jurisdiction.5  The authorities indicated that 
any provincial legislation in these areas is subject to federal legislation. 
8. The power to negotiate and enter into interna tional treaties rests solely with the federal 
executive.6  Neither Parliament nor the provinces have a legal role in this respect.  International 
treaties are not self-executing under Canadian law:  implementing legislation may be necessary to the 
extent that provisions of domestic law are inconsis tent with Canada's international obligations.  
Responsibility to implement the provisions of in ternational treaties may rest with the Federal 
Government or with the provincial governments depending on the division of powers set out in the 
Constitution.  As a result, cooperation by the provi nces is often required to implement international 
treaties. 
(3) TRADE POLICY FORMULATION AND OBJECTIVES  
9. Executive authority for the conduct of internationa l trade policy is vested in Cabinet.  To 
obtain Cabinet approval for proposed internationa l trade policy initiatives, the Minister for 
International Trade submits a memorandum to Cabi net outlining the proposed initiative, its costs and 
benefits, and an assessment of the various issues and risks involved.  The preliminary work to 
facilitate Cabinet approval is led by Foreign Affairs and International Trade Canada (DFAIT), in 
coordination with other government department s and agencies, depending on the initiative.  
Traditionally, consultations involve the Department of Finance, which is responsible fo r tariff matters, 
Industry Canada, which is responsib le for structural economic policy,  and Agriculture and Agri-Food 
Canada, which is responsible for agricultural policy.7 
10. Parliamentary committees are a prominent part of the consultative process in the formulation 
of trade policy.  A number of these committees have  held public hearings on Canada's trade policies 
and positions.8 
11. DFAIT regularly consults provinces and territo ries, industry, non-governmental and public 
interest groups, and Canadians at large about trade policy.  DFAIT has a government-to-government consultation programme with provinces and territori es.  The Annual Meeting of Federal-Provincial-
Territorial Trade Ministers is a consultative mechan ism that addresses international trade issues.  It 
can be complemented by annual meetings of deputy ministers.  Additionally, the so-called "C-Trade" 
process brings together representatives at the federal,  provincial, and territori al levels on a quarterly 
basis. 
                                                     
 
4 Section 91 (2), The Constitution Act, 1867. 
5 Section 95, The Constitution Act, 1867. 
6 Steger (1997). 
7 Ciuriak (2004). 
8 For a discussion of parliamentary involvement in  international trade policies and negotiations see 
Berg and Schmitz (2006). Canada WT/TPR/S/179 
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12. DFAIT has also established a broad cons ultative framework for dealing with non-
governmental stakeholders.  Various expert advi sory groups have been put in place to provide 
strategic and technical advice on trade issues.  These groups replaced previous consultative mechanisms, including the Sectoral Advisory Gr oups on International Trade and the Academic 
Advisory Council.  Additionally, DFAIT mainta ins a public outreach programme and a web-based 
consultative process for the general public.
9  DFAIT also uses the Canada Gazette , the official 
newspaper of the Government of Canada, as a means of informing and soliciting views on its 
initiatives. 
13. Canada considers trade a key engine for its econo my, and has stated that its current and future 
growth and prosperity depend on open world markets and a stable, predictable, and transparent 
trading environment.10  To that end, the Government pursues improved market access for trade in 
goods through negotiations at the bila teral, regional, and multilateral leve ls.  In this context, the WTO 
is considered as the central element of Canada's trade policy and an important avenue to achieving 
Canada's market access goals.  According to Canada , "only the WTO has the critical mass of countries 
needed to reach a deal that addresses the most harm ful distortions in the international trading system, 
particularly trade-distorting agricultural subsidies".11 
14. Canada is seeking an ambitious outcome to the Doha Development Agenda.  In the WTO 
agriculture negotiations, it is seeking to "level the international playing field" through the elimination 
of export subsidies, the substantial reduction of  trade-distorting domestic support, and "real and 
significant" market access for all agri-food products.12  In the context of the non-agricultural market 
access negotiations, Canada is seeking reduced cust oms tariffs for all non-agricultural goods, and 
tariff elimination in some sectors.  Canada has supported sector-wide agreements in fish products, 
environmental goods, forest products , chemicals, and raw materials. 
15. Canada supports improving anti-dumping and count ervailing duty disciplines to "reduce the 
scope for abuse", strengthening subsidy disciplines, and clarifying rules on regional trade agreements.
13  It also seeks improved rules on trade f acilitation to maximize transparency in, and 
streamline, customs procedures.  With regard to services, Canada is seeking increased and more 
secure access to professional, business, financial,  telecommunications, computer, and environmental 
services markets abroad, and more transparent and pred ictable foreign regulatory environments.  It is 
seeking an outcome to the Doha Development Agenda  that responds to Canada's commercial interests 
and to developing country concerns. 
16. Recognizing the existence of significant differe nces in trade and investment policies and 
practices between the federal and provincial gove rnments, and across provinces, the Agreement on 
Internal Trade (AIT) aims to "reduce and eliminat e, to the extent possible, barriers to the free 
movement of persons, goods, services and investme nt within Canada, and to establish an open, 
efficient and stable domestic market".14  The AIT entered into effect in 1995.  All provinces and 
territories except Nunavut are signatories.  The AIT Secretariat provides administrative and 
operational support to the functioning of the agreement. 
                                                      
9 DFAIT online information, "It's Your Turn".  Vi ewed at:  http://www.inter national.gc.ca/tna-nac/ 
consult-en.asp. 
10 DFAIT online information,  "Opening Doors to the World: Ca nada's International Market Access 
Priorities - 2006".  Viewed at:  http://www.maeci-dfait.gc.c a/tna-nac/cimap2006-en.asp. 
11 DFAIT online information.  Vi ewed at:  http://www.maeci-dfait.gc .ca/tna-nac/cimap2006-en.asp. 
12 DFAIT online information.  Vi ewed at:  http://www.maeci-dfait.gc .ca/tna-nac/cimap2006-en.asp. 
13 DFAIT online information.  Vi ewed at:  http://www.maeci-dfait.gc .ca/tna-nac/cimap2006-en.asp. 
14 Article 100, Agreement on Internal Trade. WT/TPR/S/179 Trade Policy Review 
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17. Under the AIT, the federal, provincial, a nd territorial governments agreed to focus on 
11 sectors or policy instruments that offer the great est potential for the reduction of barriers.  These 
are:  government procurement;  e nvironmental protection;  consume r-related measures and standards;  
labour mobility;  investment;  agricultural and food products;  alcoholic beverages;  communications;  
transport;  natural resource processing;  and energy. 
18. Since Canada's last Review, the federal, provi ncial and territorial ministers responsible for 
internal trade have agreed to extend the procurem ent disciplines of the AIT to Crown corporations 
from 2005.  Ministers also agreed on "an ambitious action plan to make major progress on internal trade".
15  One component of the action plan is a strategy  to remove remaining restrictions on internal 
labour mobility by 2009.  This action plan builds on an "internal trade workplan" approved in 2004 by 
the Council of the Federation, which is composed of the premiers of all provinces and territories.  In 
addition to labour mobility, priority areas include improving the AIT's dispute settlement disciplines, 
harmonizing regulations and st andards, and completing an energy chapter under the AIT.16 
19. The AIT contains a formal dispute settleme nt mechanism accessible to governments and 
private parties (Table AII.1).  There have been 202 disputes since 1995.  Of these, 78% were related 
to Federal Government procurement and were hear d by the Canadian International Trade Tribunal. 
(4) FOREIGN INVESTMENT REGIME  
20. Although Canada is among the OECD countries th at have liberalized foreign investment 
significantly since 1998, it also belongs to the group with the highest levels of overall restrictiveness to FDI, as measured by the OECD's FDI regulatory restrictiveness index.
17 
21. The Investment Canada Act governs the estab lishment of new foreign businesses and the 
acquisition of control of Canadian businesses.  Th ere are also federal and provincial statutes that 
govern investment in particular sectors. 
22. Foreign investment to establish a new business in Canada, or to acquire control of an existing 
one, is subject to notification, unless the ac quisition is subject to review (see below).18  Notifications 
must be filed no later than 30 days after the inv estment takes place.  They must be submitted to 
Industry Canada, except for investments in cultura l businesses, in which case notifications must be 
sent to Canadian Heritage.19  Industry Canada received an average of 386 notifications annually 
between 2003 and 200520;  Canadian Heritage received an annual average of 35 during the same 
period.21 
23. In general, foreign investment is not subject to  review.  For 2006, only direct acquisitions by 
investors from WTO Members of existing businesses in excess of Can$265 million are subject to 
                                                      
15 AIT online information, "Federal-Provincial/Terr itorial Conference of Mi nisters Responsible for 
Internal Trade:  Progress achi eved on an action plan to improve internal trade", 7 Se ptember 2006.  Viewed at:  
http://www.ait-aci.ca/index_en/news.htm. 
16 Council of the Federation (2006). 
17 OECD (2006c). 
18 Section 11, Investment Canada Act. 
19 The term "cultural business" covers publication, distribution, and sale of books, magazines, 
periodicals, newspapers, and music;  and production, distribution, sales, and exhibition of film, video 
recordings, and audio and video music recordings.  Section 14.1(5), Investment Canada Act. 
20 Industry Canada online information.  Viewed at:  http://strategis.ic.gc.ca/epic/internet/inica-
lic.nsf/en/h_lk00015e.html. 
21 Canadian Heritage online information.  View ed at:  http://www.canadianheritage.gc.ca/progs/ac-
ca/progs/eiic-csir/notif_e.cfm. Canada WT/TPR/S/179 
 Page 15 
 
 
review.22  For non-WTO investors, the threshold is Can$5 million, unless the existing business is 
controlled by a WTO-Member investor, in which case the higher threshold applies.23  T h e  
Can$5 million threshold also applies to direct acq uisitions in uranium production, transportation 
services, financial services, and cultural businesses, irrespective of the origin of the investor.24  
Indirect acquisitions by investors from WTO Me mbers are not reviewable, except for those in 
transportation services, financial services, a nd cultural businesses exceeding Can$50 million.25  
However, if the assets in Canada of the business be ing acquired indirectly are 50% or more of the 
total global assets of the business, the review thr eshold for indirect acquisitions is reduced to 
Can$5 million.  Industry Canada reviewed 25 acq uisitions per year on average between 2003 and 
2005;  none was denied.26  Canadian Heritage reviewed an annual average of 13 during the same 
period;  one was denied.27  The Canadian authorities indicate that all investment-related information 
obtained in the course of the administration of the Investment Canada Act is  privileged and cannot be 
disclosed by officers or employees of the Crown. 
24. Investments in certain cultural sectors that fall below the review thresholds may nonetheless 
be reviewed if the Governor-in-Council considers th at a review would be in the "public interest" and 
issues an Order-in-Council to that effect on the recommendation of the Minister of Canadian 
Heritage.28  The investor concerned must be informed th at a review will take place within 21 days of 
the notification.  The cultural sectors subject to th is provision are listed in Schedule IV of the 
Investment Canada Regulations. 
25. As a general rule, for investments subject to  review, a foreign investor may not acquire 
control of an existing business unless the Minister of  Industry or the Minister of Canadian Heritage 
(for investments in cultural businesses) is satisfied that "the investment is likely to be of net benefit to 
Canada".29  Under the Investment Canada Act, a review able investment is deemed approved if the 
Minister does not notify the investor about the outcome of the review within 45 days of receiving a completed application.
30  The Minister may extend this period by an additional 30 days, provided that 
the investor is notified in advance of the expiry of  the initial period.  Further extensions are permitted 
with the agreement of the investor.  The averag e completion period for a review is 43 days for 
Industry Canada and 75 days  for Canadian Heritage. 
26. The Investment Canada Act specifies the factors that must be taken into account in assessing 
the "net benefit" criterion.31  These include the investment's effect on:  economic activity, 
employment, resource processing, exports, the use of Canadian products, productivity, efficiency, 
technological development, product in novation and variety, and competition.  They also comprise the 
investment's compatibility with national industrial, economic, and, where applicable, cultural policies, 
                                                      
22 Section 14.1(1) et seq., Investment Canada Act. 
23 Sections 14(3) and 14.1(1), Investment Canada Act. 
24 Section 14.1(5), Investment Canada Act.  "Transpo rtation services" are defined in section 2.2 of the 
Regulations as "a Canadian business directly or indirectly engaged in the carriage of passengers or goods from one place to another by any means, including, without li miting the generality of the foregoing, carriage by air, 
by rail, by water, by land and by pipeline." 
25 Under the Investment Canada Act, an indirect acquisition is a transaction that involves the 
acquisition of the shares of a company incorporated outside Canada that owns subsidiaries in Canada. 
26 Industry Canada online information.  Viewed at:  http://strategis.ic.gc.ca/epic/internet/inica-
lic.nsf/en/h_lk00015e.html. 
27 Canadian Heritage online information.  View ed at:  http://www.canadianheritage.gc.ca/progs/ac-
ca/progs/eiic-csir/notif_e.cfm. 
28 Section 15, Investment Canada Act. 
29 Section 16(1), Investment Canada Act. 
30 Section 21(1). 
31 Section 20. WT/TPR/S/179 Trade Policy Review 
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and "the degree and significance" of participation by Canadians in the business resulting from the 
investment. 
27. Several statutes and policy guidelines limit fore ign ownership in specific sectors, including 
energy, broadcasting, film, transport, and telecommunications (Table II.1). 
Table II.1 
Selected foreign ownership restrictions by sector, 2006  
Sector Level of government (legal base) Limitation 
Fishing Federal (Fisheries Act) Only Cana dians or Canadian-controlled corporations 
are permitted to obtain fishing licences.  Canadian 
fish-processing companies that have more than 49% foreign ownership are not permitted to hold 
commercial fishing licences. 
Mining Federal (Non Resident Ownership Policy 
in the Uranium Mining Sector) Foreign ownership of a uranium mining property is 
limited to 49%;  it may be higher if the property is 
controlled by Canadians (thi s restriction applies at 
the production stage, and not at the exploration and 
development stages). 
Air transport Federal (Canada Transportation Act) Fo reign ownership of an airline is limited to 25%. 
Book publishing and distribution Fe deral (Investment Canada Act and 
supplementary policy guidelines) Foreign investment in new businesses is limited to 
Canadian-controlled joint ventures. 
Foreign acquisition of ex isting Canadian-controlled 
businesses is allowed only if: (a) the business is in clear financial distress;  and 
(b) Canadians have had full and fair opportunity to 
 purchase. 
Periodical publishing Federal (I nvestment Canada Act and 
supplementary policy guidelines) Foreign acquisitions of Canadian-owned and 
Canadian-controlled periodical publishing 
businesses are not permitted.  Foreign investments in 
the periodical publishing sector, including 
investments to establish or, directly or indirectly, acquire foreign businesses to produce and sell 
periodicals in Canada and to access the Canadian 
advertising services market are allowed if a commitment to the production of majority Canadian editorial content is taken. 
Broadcasting Federal (Broadcasting Act,  Direction to 
the CRTC (Ineligibility of Non-
Canadians)) Foreign ownership of a broadcasting programming 
and distribution undertaking is limited to 20% of 
voting shares (maximum 33.3% in the case of a 
parent corporation). 
Film distribution Federal (I nvestment Canada Act and 
supplementary policy guidelines) Foreign acquisition of a Canadian-controlled 
distributor is not allowed.  Foreign investment in new distribution businesses is permissible only for 
importation and distribution of proprietary products 
(the importer owns world rights or is a major investor).  Direct or indi rect acquisition of foreign 
distribution businesses in Canada by foreign-owned 
companies is permissible only if the investor undertakes to reinvest a portion of its Canadian 
earnings "in accordance with national and cultural 
policies". 
Telecommunications Federal (Telecommunications Act) Foreign ownership of Canadian common carriers is 
limited to 20% direct, and 331/3 % indirect (46.7% 
combined direct and indirect).  There are no restrictions on foreign ownership of non-voting 
shares.  
 
Source:  WTO Secretariat, based on information provided by the Government of Canada. Canada WT/TPR/S/179 
 Page 17 
 
 
28. Several provinces and the Yukon regulate the owne rship of land by foreigners, primarily with 
respect to non-urban agricultural and recreational land.32  According to the Canadian authorities, 
exemptions to provincial regulations  on foreign ownership of land are routine.  Provincial and federal 
governments may impose limitations on foreign partic ipation in privatization.  Under the Canada 
Business Corporations Act, "constraints" may be placed on the issue, transfer, and ownership of 
shares in federally incorporated corporations to a llow such corporations to meet Canadian ownership 
requirements in sectors where these requirements ar e a condition to operate or to receive benefits.33  
Some federal and provincial measures relating to  energy may also affect foreign investment 
(Chapter IV(3)). 
29. In October 2002, Canada notified under the WTO Agreement on Trade-Related Investment 
Measures the websites containing publications produ ced by the federal, provincial, and territorial 
governments "in which TRIMs may be found".34 
30. Under the GATS, Canada made extensive comm itments regarding the supply of services 
through commercial presence.  Additi onally, Canada is a party to the OECD Code of Liberalization of 
Capital Movements and the OECD National Treatment Instrument.35 
31. There are 22 bilateral investment agreements in force between Canada and other countries 
(Table II.2).  The majority are based on the invest ment chapter of the NAFTA and share the following 
features:  a broad definition of covered investment s;  national and MFN treatment obligations with 
regard to the pre- and post-establishment phases;  standards of treatment and protection;  rules 
concerning expropriation and compensation payable;  free transfer of funds;  and dispute settlement 
between investors and the host State through internati onal arbitration.  An agreement with Peru has 
been signed and, according to the authorities, is e xpected to be ratified soon.  Agreements with 
El Salvador and South Africa were signed but were never ratified.  Canada is negotiating investment 
agreements with China and India. 
Table II.2 
Bilateral Investment Agreements, 2006 
Agreements based on OECD model 
Country Entry into force Country Entry into force 
Poland 22.11.1990 Russia 27.06.1991 
Argentina 29.04.1993 Hungary 21.11.1993 
Czech Republic 09.03.1992 Slovakia 09.03.1992 
Agreements based on NAFTA 
Ukraine 24.07.1995 Latvia 27.07.1995 
Philippines 13.11.1996 Trinidad and Tobago 08.07.1996 
Barbados 17.01.1997 Ecuador 06.06.1997 
Venezuela 28.01.1998 Panama 13.02.1998 
Egypt 03.11.1997 Thailand 24.09.1998 
Armenia 29.03.1999 Uruguay 02.06.1999 
Lebanon 19.06.1999 Costa Rica 29.09.1999 
Croatia 30.01.2001 Romania 11.02.1997 
Source: DFAIT online information, "L isting of Canada's existing FIPAs".  View ed at:  http://www.international.gc.ca/tna-
 nac/fipa_list-en.asp. 
                                                      
32 See, for example, Foreign Ownership of Land Regulations. 
33 Section 174(1). 
34 WTO document G/TRIMS/N/2/Rev.9/Add.10, 11 October 2002. 
35 The Code of Liberalization contains legally bi nding obligations regarding the liberalization of 
specified capital movements, including foreign direct investment, subject to certain exceptions and country-
specific reservations.  The National Treatment Instrument contains a le gally non-binding commitment to accord 
national treatment to foreign-owned or controlled firms in the post-establishment phase. WT/TPR/S/179 Trade Policy Review 
Page 18 
 
 
32. The NAFTA and the free-trade agreement with Chile contain separate chapters on foreign 
investment.  The free-trade agreements with Costa Rica and Israel do not cover investment. 
33. Canada is a party to the Convention on the R ecognition and Enforcement of Foreign Arbitral 
Awards, which entered into force in Canada in 1986.  It is not a member of the International Centre 
for the Settlement of Investment Disputes (ICSID).  The Canadian authorities indicate that Canada is 
making efforts to join ICSID. 
(5) INTERNATIONAL RELATIONS  
(i) World Trade Organization 
34. Canada is an original Member of the WTO.  Canada participated in the post-Uruguay Round 
negotiations on telecommunications and financial services;  its commitments in these areas were 
annexed to the Fourth and Fifth Protocols to the GATS.36  Canada is a party to the Agreement on 
Government Procurement and a participant in the Information Technology Agreement. 
35. Canada implemented the WTO Agreement thr ough the World Trade Organization Agreement 
Implementation Act, which entered into force on 1 January 1995.  This Act "approves" the WTO 
Agreement without giving it the force of law in Canada.37  The Act prohibits private parties from 
bringing actions against federal or provincial bodi es to enforce rights and obligations under the WTO 
Agreement.38  The World Trade Organization Agreemen t Implementation Act amended 23 federal 
statutes to bring them into conformity with the WTO Agreement.39  Following the adoption of the 
Act, the Governor-in-Council promulgated additiona l regulations implementing further aspects of the 
WTO Agreement. 
36. Canada has met most of its WTO notificati on obligations between 2003 and September 2006.  
Exceptions include notifications on state-trading en terprises, rules of origin, import licensing, and 
government procurement (Table AII.2). 
37. In the context of the Doha Development Age nda, Canada has made numerous contributions 
or proposals in a wide range of areas, including tr ade facilitation, agriculture, market access for non-
agricultural goods, services, subsidies, anti-dumpi ng and countervailing duties, and intellectual 
property.  Additionally, Canada has made pr oposals related to the WTO dispute settlement 
mechanism.  These proposals cover issues like tran sparency, the panel selection process, and the 
treatment of confidential information.40  Canada sponsored some  70 documents catalogued under 
document series "TN" (trade negotiations) in th e WTO Documents Online database between January 
2003 and October 2006. 
38. Since the inception of the WTO, Canada has b een respondent in 14 disputes, and complainant 
in 27.  It has also joined cons ultations and participated as a third party in 61 cases.  Altogether, 
Canada has participated in about 30% of all WTO disputes. 
39. Since January 2003, Canada has been involved as respondent in six cases (Table AII.3).  Two 
new panels were established as a result of complain ts against Canada during the review period.  As 
                                                      
36 WTO documents GATS/SC/16/Suppl.3, 11 April 1997, and Suppl.4/Rev.1, 6 June 2000. 
37 Section 8. 
38 Section 6. 
39 Steger (1997). 
40 See, for example, WTO document TN/DS/W/41, 24 January 2003. Canada WT/TPR/S/179 
 Page 19 
 
 
complainant, Canada has been involved in eight cases during the review period, six of which were 
against the United States. 
(ii) Preferential trade agreements and other arrangements 
(a) Free-trade agreements 
40. The NAFTA provisions covering trade in goods we re notified to the GATT in February 1993;  
those covering trade in services were notified to the WTO in March 1995.41  The NAFTA entered into 
force on 1 January 1994.42  Under the NAFTA, remaining tari ffs on imports from Mexico were 
eliminated by January 2003.  As a result, and subject  to origin requirements, all imports from Mexico 
and the United States enter Canada duty free, with  the exception of certain supply-managed dairy, 
poultry, and egg tariff lines, which Canada excl uded from tariff liberalization under NAFTA.  Since 
2003, Canada and its NAFTA partne rs have implemented several changes to the product-specific 
rules of origin contained in Annex 401 of the NAFTA (Chapter III(2)(ii)).  The purpose of these 
changes is to make it easier for manufac turers to qualify for duty-free treatment. 
41. A number of anti-dumping and countervailing dut y measures were subject to disputes under 
Chapter 19 of the NAFTA, which provides for bi -national panel reviews of anti-dumping and 
countervailing duty final determina tions and underlying legislation.  In October 2006, one Canadian 
determination was being reviewed  under Chapter 19, while 11 determ inations by the United States 
were under review as a result of requests by the Canadian Government or Canadian producers.43 
42. Trade in softwood lumber has been the main  source of friction between Canada and the 
United States as regards products, particularly sin ce the expiry of the 1996 U.S.-Canada Softwood 
Lumber Agreement in 2001.  In an effort to en d the WTO and NAFTA disputes that followed, Canada 
and the United States signed a new agreement on softwood lumber in September 2006.  Under the 
new agreement, Canada must apply restrictions on exports of Canadian softwood lumber to the 
United States when lumber prices fall below a cert ain level (Chapter III(3)(ii)).  In addition, the 
United States revoked anti-dumping and countervaili ng duty orders on Canadian softwood lumber, 
and refunded a share of the duty deposits collected si nce 2002 to Canadian expor ters.  Canada and the 
United States also agreed to te rminate certain softwood lumber l itigation in the WTO, the NAFTA, 
and U.S. courts. 
43. Disputes relating to the investment provisions  of NAFTA Chapter 11 are settled through an 
investor-state arbitration process.  Three new inv estment disputes have been initiated against the 
Government of Canada since 2003.  The first concer ns certain measures taken by the Government of 
Ontario that have allegedly interfered with the e xport of dairy products of two Canadian companies 
owned by U.S. investors.44  In the second dispute, a U.S. fore stry company alleges that certain 
measures related to log exports fro m British Columbia contravene th e investment provisions of the 
NAFTA.45  The third dispute concerns a U.S. invest or who alleges that measures taken by the 
Government of Ontario prevented an Ontario company it controls from developing an abandoned 
mine as a landfill site.46 
                                                      
41 GATT document L/7176, 1 February 1993, and WTO document S/C/N/4, 1 March 1995. 
42 North American Free Trade Agreement Implementation Act, 23 June 1993. 
43 NAFTA Secretariat online information, "Sta tus Report:  NAFTA & FTA Dispute Settlement 
Proceedings".  Viewed at:  h ttp://www.nafta-sec- alena.org/DefaultSite/in dex_e.aspx?DetailID=9. 
44 GL Farms LLC and Carl Adams v. The Government of Canada, 5 June 2006. 
45 Merrill & Ring Forestry LLP v. The Government of Canada, 25 September 2006. 
46 V.G. Gallo v. The Government of Canada, 12 October 2006. WT/TPR/S/179 Trade Policy Review 
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44. Another dispute, which be gan in 2000, remains pending.47  The dispute focuses on allegations 
that Canada Post engages in anti-competitive pr actices, and on the alleged favourable treatment 
provided by Canada Border Services Agency to Canada Post's courier services.  Regarding the 
allegations of anti-competitive practices by Canada Post, the arbitration tribunal held in its interim 
award on jurisdiction that anti-competitive conduct, by itself, did not fall within the scope of the 
tribunal's jurisdiction under NAFTA Chapter 11. 
45. One NAFTA Chapter 11 dispute, concerning Cana da's ban on the export of certain wastes, 
was concluded in December 2002.48  A tribunal had ruled in November 2000 that the measure 
breached Canada's obligations under Chapter 11.  Cana da filed an application with the Federal Court 
of Canada in February 2001 seeking review of the tribunal's decision.  The Federal Court dismissed 
Canada's application in January 2004. 
46. The provisions of the Canada-Chile Free Trad e Agreement covering goods were notified to 
the WTO in August 1997;  those covering services were notified in November 1997.49  The agreement 
entered into force in July 1997.50  Remaining tariffs on Canada's imports from Chile were eliminated 
by January 2003, except for certain supply-managed da iry, poultry, and egg tariff lines, which are not 
subject to tariff reduction commitments under the agreement (Chapter III(2)(iv)).  The agreement 
contains a bilateral exemption from the use of anti-dumping measures.51  It also contains an 
exemption from the application of global safeguard measures, unless imports from the other party account for a substantial share of total imports and contribute importantly to the serious injury caused 
by the imported goods.
52  The agreement's provisions on services and investment are modelled on the 
NAFTA.  In November 2006, Canada and Chile signed  an agreement to add a chapter on government 
procurement.  There have been no di sputes under the agreement (November 2006). 
47. The Canada-Costa Rica Free Trade Agreement was notified to the WTO in January 2003.53  It 
entered into force in November 2002.54  Canada will eliminate all tariffs on imports from Costa Rica 
by January 2011, except on beef and certain suppl y-managed dairy, poultry, and egg tariff lines, 
which are not subject to tariff reduction commitme nts under the agreement (Chapter III(2(iv)).  The 
parties retain the right to apply anti-dumping duti es on bilateral imports and to apply global safeguard 
measures on imports from each other.  The provis ions on global safeguards mirror those in the 
Canada-Chile Free Trade Agreement.  The ag reement does not contain disciplines on services, 
investment, or government procurement.  Ther e have been no disputes under the agreement. 
48. The Canada-Israel Free Trade Agreement entere d into force and was notified to the WTO in 
January 1997.55  The agreement eliminated all tariffs on industrial goods and reduced or eliminated 
those on certain agricultural goods (Chapter III(2 (iv)).  The agreement contains disciplines on 
government procurement;  it does not cover servi ces or investment.  Canada and Israel began 
implementing additional tariff concessions in agricu lture in November 2003.  Products on which 
Canada eliminated tariffs include fresh cut roses a nd various vegetables and juices.  There have been 
no disputes under the agreement.  Although, in practi ce, the CIFTA covers the territory where Israel’s 
                                                      
47 United Parcel Service of Amer ica, Inc. ("UPS") v. Government of Canada, 19 April 2000. 
48 S.D. Myers Inc. v. Government of Canada, 30 October 1998. 
49 WTO documents WT/REG38/N/1, 26 August 1997, and S/C/N/65, 13 November 1997. 
50 Canada-Chile Free Trade Agreement Implementation Act, 25 April 1997. 
51 Article M-01. 
52 Article F-02. 
53 WTO document WT/REG147/N/1, 17 January 2003. 
54 Canada-Costa Rica Free Trade Agreement Implementation Act, 18 December 2001. 
55 Canada-Israel Free Trade Agreement Implementa tion Act, 18 December 1996;  and WTO document 
WT/REG31/N/1, 23 January 1997. Canada WT/TPR/S/179 
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customs laws apply (including the West Bank and G aza), in February 1999 Canada and the Palestine 
Liberation Organization on behalf of the Palestinia n Authority signed the Joint Canadian-Palestinian 
Framework on Economic Cooperati on and Trade, designed to improve market access and customs 
procedures on a reciprocal basis.  The framework mirrors the CIFTA. 
49. Canada has bilateral trade agreements with  Australia and New Zealand.  The Canada-
Australia Trade Agreement entered into force in 196 0 and was amended last in 1973.  The Trade and 
Economic Co-operation Agreement w ith New Zealand has been in fo rce since 1982.  Preferential 
treatment under both agreements is very limited, as preferences have been  eroded by subsequent 
unilateral and multilateral libera lization (Chapter III(2)(iv)). 
(b) Unilateral tariff preferences 
50. Canada grants unilateral preferential tariff treatment under the Commonwealth Caribbean 
Country Tariff (CARIBCAN) (Chapter III(2)(iv)).  In mid-2006, Canada requested an extension of the 
waiver granted by the WTO General C ouncil for the implementation of CARIBCAN.56  The current 
waiver expires in December 2006.57  Unilateral preferential tariff treatment is also granted under the 
General Preferential Tariff (GPT) and the Least-Developed Country Tariff (LDCT) 
(Chapter III(2)(iv)).  In January 2003, duty-free tr eatment under the LDCT was expanded to virtually 
all products, subject to origin requirements.58  Both schemes have been extended until 2014.59 
(c) Other initiatives 
51. Canada and Korea launched negotiations towards a free-trade agreement in July 2005.  The 
negotiations cover tariff eliminati on and reduction, trade facilitation, non-tariff measures, services, 
investment, competition, government procurement, a nd intellectual property rights.  An eighth round 
of negotiations was held in Seoul in November 2006. 
52. Canada and the members of the European Free Trade Association (EFTA, comprising 
Iceland, Liechtenstein, Norway, and Switzerland) re -started formal negotiations toward a free-trade 
agreement in November 2006;  efforts to conclude  an agreement have been ongoing since 1998.  The 
Canadian authorities indicated that any resulting agreement between Canada and EFTA will focus on 
tariff elimination and is not expected to include substantial new obligations in services, investment, 
and intellectual property. 
53. Canada and the EU agreed on a framework for a Trade and Investment Enhancement 
Agreement (TIEA) in March 2004.  The framework de fines the scope of negotiations towards a future 
TIEA in regulatory cooperation, services, governme nt procurement, trade facilitation, investment, 
competition, e-commerce, sustainable development, intellectual property rights, science and 
technology cooperation, sm all and medium-size enterprises, civil society consultations, and dispute 
settlement.60  Three rounds of negotiations  have taken place since May 2005;  Canada and the EU 
have decided to pause the negotiations until the r esults of the Doha Development Agenda are known. 
                                                      
56 WTO document G/C/W/555, 4 July 2007. 
57 WTO document WT/L/185, 18 October 1996. 
58 Canada Border Services Agency, Customs Noti ce CN-361, Order Amending the Schedule to the 
Customs Tariff (Least-developed Country Tariff) and Re gulations Amending the General Preferential Tariff and 
Least Developed Country Tariff Rules of Origin Regulations. 
59 Bill C-21, An Act to Amend the Customs Tariff, 29 April 2004. 
60 DFAIT online information, "Regional and Bilateral Initiatives:  Canada-European Union Trade and 
Investment Enhancement Agreement.  Viewed at:  http://www.international.gc.ca/tna-nac/EU-en.asp. WT/TPR/S/179 Trade Policy Review 
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54. Canada-EU relations are also framed by th e 1976 Framework Agreement for Commercial and 
Economic Co-operation, the 1996 Joint Political D eclaration on Canada-EU Relations, and the 2004 
Canada-EU Partnership Agenda, wh ich set goals for broadening Ca nada-EU relations in trade, 
economic, and foreign policy issues.  A Joint Co operation Committee and a Trade and Investment 
Sub-Committee consider bilateral tr ade, economic, and social issues. 
55. Canada and Japan completed an Ec onomic Framework in November 2005.61  The framework 
aims to reinforce existing bilateral economic ties and address emerging trade issues.  To this end, it identifies fifteen "priority areas of cooperation".  Di scussions under the framework have resulted in a 
cooperation agreement on anti-competitive activities, an enhanced customs cooperation arrangement, 
a memorandum of understanding on bilateral investme nt promotion cooperation, an agreement on 
social security, and an informal framework docum ent on food safety cooperation.  Other issues being 
considered in the context of the framework include  double taxation and air transport.  The framework 
also contains the terms of reference of a joint st udy to examine the benefits and costs of further 
bilateral trade and investment promotion and liberalization. 
56. Canada is a member of the Asia Pacific Ec onomic Co-operation (APEC) forum.  Like other 
members, Canada has an action plan describing th e measures it intends to adopt to achieve APEC's 
goal of "free and open trade and invest ment" by 2010 for developed economies.
62 
57. Formal negotiations towards a free-trade ag reement between Canada  and El Salvador, 
Guatemala, Honduras, and Nicaragua were launched in  November 2001.  The authorities indicate that 
these negotiations are well-advanced, and that efforts continue to conclude an agreement in the near 
future. 
58. Canada and Singapore launched free-trade agr eement negotiations in October 2001.  No 
negotiations were held between October 2003 an d November 2006, when Canada and Singapore 
agreed to resume formal negotiations with a view to concluding them by early 2007. 
59. Canada supports the resumption of negotiations towards a Free Trade Area of the Americas, 
which have been stalled since February 2004.63 
60. Canada has held exploratory discussion on possible free-trade negotiations with the 
Dominican Republic, Andean Community members, and CARICOM members. 
(iii) Aid for trade 
61. Canada is an active participant in the WT O's work on aid for trade and the Enhanced 
Integrated Framework, and was a member of the Task Force on Aid for Trade. 
62. As part of its development cooperation strate gy, Canada seeks to help developing countries 
integrate into the global trading system by assisting in the implementation of trade agreements, and by 
                                                      
61 DFAIT online information, "Regional and Bilateral Initiatives:  Introduction to the Canada-Japan 
Economic Framework and Joint Study".  Viewed at:  http://www.international.gc .ca/tna-nac/RB/japan-intro-
en.asp. 
62 APEC online information, "APEC Electronic In dividual Action Plan (e -IAP)".  Viewed at:  
http://www.apec-iap.org. 
63 See, for example, DFAIT online information, "F ree Trade Area of the Amer icas".  Viewed at:  
http://www.international.gc.c a/tna-nac/ftaa1-en.asp. Canada WT/TPR/S/179 
 Page 23 
 
 
helping "entrepreneurs, especially in rural areas,  to supply goods and services to local, regional and 
international markets".64 
63. The Policy on Private Sector Development of  the Canadian International Development 
Agency (CIDA) identifies the following initiativ es to increase the participation of developing 
countries in regional and international markets:  capacity building in analysing, formulating, 
negotiating, and implementing trade policy;  suppor t for participation in regional trade bodies, the 
WTO, and international financial institutions;  technical assistance for more secure trade, enhanced 
supply chain linkages, and local trade network development;  and technical assistance in customs administration, phytosanitary regulations and labe lling requirements, logistical and consumer taste 
issues, and quality control.
65 
64. Regarding funding for trade-related infrastructure,  the Canadian authorities noted that CIDA's 
infrastructure programming depended primarily on recipient countries' needs, and was rarely seen from a purely trade perspective.  They also indicated  that trade-related infrastructure funding includes 
activities to create an enabling environment for in frastructure, and programming that facilitates the 
access to and the use of infrastructure and its services by target populations. 
65. Canada's aid for trade support averaged US$94.1 million per year between 2001 and 2004.
66  
Support for trade policy and regulations averag ed US$30.9 million per year, and accounted for 
between 20% and 40% of total aid for trade in each year between 2001 and 2004.  Support for trade 
development averaged US$32.8 million per year, rangi ng between 26% and 46% of total aid for trade 
during the period.  Support for trade-related infr astructure averaged US$30.5 million;  its share in 
total aid for trade was between 35% and 45% every year except in 2001, when it was 14%.  Both the 
level and composition of aid for trade have b een subject to fluctuations (Chart II.1). 
66. The bulk of support for trade policy and regula tions in 2003-04 consisted of support in the 
areas of sanitary and phytosanitary measures, region al trade agreements, and trade mainstreaming;  
support for trade development targeted mostly ma rket analysis and development, business support 
services and institutions, and public private-sector networking.  The top in dividual recipients of 
support for trade policy and regulations in 2003-04 were China and Guyana;  for trade development, 
the top individual recipients were Bangladesh, Nigeria, and Mali. 
67. Africa was the top recipient of funding commitments for activities in support of trade-related 
infrastructure, accounting for almost half of th e total commitments in this area from 2001 to 2004.67  
Asia was the second largest recipient, with 27% of  the total, followed by Latin America and the 
Caribbean, with 17%.  The least-developed countries as a group received 7% of total commitments for 
trade-related infrastructure.  Commitments were  directed mostly at the communications sector, 
followed by energy, and transport and storage. 
                                                      
64 CIDA (2005). 
65 CIDA (2003). 
66 Aid for trade data in this section comprise support under the "trade policy and regulations" and "trade 
development" categories of the WTO/OECD Trade Capac ity Building Database, and support for trade-related 
infrastructure under the following "purpose codes" in th e OECD Creditor Reporting Sy stem:  "2.1 transport and 
storage", "2.2 communications", and "2.3 energy generation and supply".  Data are provided on the basis of 
commitments, rather than expenditures.  A commitment is a firm obligation expressed in writing and backed by 
the necessary funds, undertaken by an official donor to provide assist ance for a specified purpose and under 
specified financial terms and conditions for the benefit of the recipient country. 
67 The shares for Africa, Asia, and Latin America and the Caribbean were calculated on the basis of aid 
for trade for individual countries and for each region as a group.  The sh ares exclude aid for trade for Europe 
and "unallocated" aid for trade under the OECD Creditor Reporting System. WT/TPR/S/179 Trade Policy Review 
Page 24 
 
 
0306090120150
2001 2002 2003 2004Chart II.1
Support for aid for trade, 2001-04
US$ million
  Source:  WTO Secretariat, based on WTO/OECD Trade Capacity Bu ilding Database and OECD Creditor Reporting System. 
                   Viewed at:  http://tcbdb.wto.org/ and http://www1.oecd.org/scripts/cde/members/dcdauthenticate_crsTCE.asp.Infrastructure
Trade development
Trade policy and re gulations