RESTRICTED  WORLD  TRADE  
ORGANIZATION  WT/TPR/S/246 
4 May 2011  
 
(11-2202) 
Trade Policy Review Body  
   
 
  
 
TRADE POLICY REVIEW 
 
Report by the Secretariat 
 
CANADA 
 
  
 
This report, prepared for the ninth Trade Policy Review of Canada, has been 
drawn up by the WTO Secretariat on its own responsibility.  The Secretariat has, 
as required by the Agreement establishing the Trade Policy Review Mechanism 
(Annex 3 of the Marrakesh Agreement Establishing the World Trade 
Organization), sought clarification from Canada on its trade policies and 
practices. 
 
Any technical questions arising from this report may be addressed to 
Mr. Jacques Degbelo (tel:  022 739 5583),  Mr. Thomas Friedheim (tel:  022 739 
5083), Ms. Katie Waters (tel:  022 739 5067), and Mr. Rosen Marinov 
(tel:  022 739 6391). 
 
Document WT/TPR/G/246 contains the policy statement submitted by Canada. 
 
 
Note: This report is subject to restricted circ ulation and press embargo until the end of the first 
session of the meeting of the Trade Policy Review Body on Canada. Canada   WT/TPR/S/246
   Page iii 
 
 
CONTENTS 
 Page 
SUMMARY   ix 
I. ECONOMIC ENVIRONMENT 1 
 (1) M AIN FEATURES OF THE ECONOMY  1 
 (2) E CONOMIC DEVELOPMENTS  3 
(3) T RADE AND INVESTMENT PATTERNS  7 
II. TRADE AND INVESTMENT REGIME 10  (1) G
ENERAL FRAMEWORK  10 
 (2) I NVESTMENT REGIME  13 
  (i) Investment Canada Act 14 
  (ii) Foreign investment limitations by sector 17 
  (iii) Investment promotion       17 
  (iv) International agreements containing investment provisions   17 
 (3) P ARTICIPATION IN THE WTO 18 
 (4) P REFERENTIAL TRADE RELATIONS  20 
 (5) A ID FOR TRADE  20 
III. TRADE POLICIES AND PRACTICES BY MEASURE 23 
 (1) I NTRODUCTION  23 
 (2) M EASURES DIRECTLY AFFECTING IMPORTS  24 
  (i) Procedures 24 
  (ii) Rules of origin 27   (iii) Customs valuation 28 
  (iv) Tariffs 29 
  (v) Other duties and charges affecting imports 35 
(vi) Import controls and licensing 40 
  (vii) Contingency measures 43 
  (viii) Technical regulations, conformity assessment, and standards 46 
(ix) Sanitary and phytosanitary measures 50 
 (3) M
EASURES DIRECTLY AFFECTING EXPORTS  55 
  (i) Procedures 55 
  (ii) Export taxes, charges and levies 56 
  (iii) Export controls and licensing 57 
  (iv) Export finance, insurance, and guarantees 59   (v) Export promotion and marketing assistance 64 
 (vi) Other measures affecting exports 66 
 (4) M
EASURES AFFECTING PRODUCTION AND TRADE  68 
  (i) Incentives and other assistance to business 68 
  (ii) Government procurement 71 
  (iii) State-trading, state-owne d companies, and privatization 79 
  (iv) Competition policy and price controls 81 
  (v) Intellectual property rights 87 WT/TPR/S/246  Trade Policy Review
Page iv 
 
 
 
  Page 
IV. TRADE POLICIES BY SECTOR 94 
 (1) I NTRODUCTION  94 
 (2) A GRICULTURE AND FISHERIES  95 
  (i) Border measures 96 
  (ii) Domestic programmes 97 
  (iii) Export measures 101   (iv) Evolution of support and protection 101 
  (v) Selected commodities 103 
  (vi) Fisheries 107 
 (3) M
INING AND ENERGY  108 
  (i) Institutional and legal framework 109 
  (ii) Natural gas 111   (iii) Oil 112 
 (iv) Electricity 113 
  (v) Renewable energy 114 
 (4) M
ANUFACTURING  116 
  (i) Overview 116 
  (ii) Automotive industry 118 
  (iii) Aircraft 120 
  (iv) Textiles and clothing 121   (v) Shipbuilding 122 
 (5) T
ELECOMMUNICATIONS , BROADCASTING AND POSTAL SERVICES  123 
  (i) Telecommunications 123 
  (ii) Broadcasting 128 
  (iii) Postal services 129 
 (6) F INANCIAL SERVICES  130 
  (i) Overview 130 
  (ii) Regulatory framework 134 
  (iii) Banking services 137   (iv) Insurance services 138 
  (v) Securities 140 
 (7) T
RANSPORT SERVICES  140 
  (i) Air transport 140 
  (ii) Maritime transport 144 
 (8) P ROFESSIONAL SERVICES  148 
  (i) Legal services 148 
  (ii) Accounting services 151 
  (iii) Architectural and engineering services 152 
   
REFERENCES   155 
APPENDIX TABLES  159 Canada   WT/TPR/S/246
   Page v 
 
 
CHARTS 
 
 Page 
I. ECONOMIC ENVIRONMENT 
 I.1 Canada's Economic Action Plan, 2009/10-2010/11 3 
I.2 Canadian provinces' tax rates on new business investment, 2006-12 7 
 III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
III.1 Frequency distribution of MFN tariff rates, 2010 31 III.2 Tariff escalation by ISIC 2-digit industry, 2010 33 
III.3 Canada's business volumes by industry and geographic markets, 2006-09 63 
III.4 Full Time Equivalents (FTE) by region and by business line, 2009/10 65  
IV. TRADE POLICIES BY SECTOR 
 IV.1 Canadian tariff relief on machinery, equipment and industrial inputs 117 
 
TABLES 
 
I. ECONOMIC ENVIRONMENT 
 
I.1 Selected macroeconomi c indicators, 2005-10 1 
I.2 Canada's balance of international payments, 2005-10 4 I.3 Major measures affecting Canada's tax base, 2006-10 6 
 
II. TRADE AND INVESTMENT REGIME  
II.1 CDSR lifecycle approach to regulatory development, 2007 12 
II.2 Investment Canada Act:  Summary of review requirements 16 II.3 Canada's participation in investment-related agreements, 2010 18 
II.4 Summary profile of Canada's WTO participation 19 
 III. TRADE POLICIES AND PRACTICES BY MEASURE 
 
III.1 Timeframes for submission of pre-arrival information by mode 25 III.2 CBSA trade facilitation and border security programmes 26 
III.3 Structure of applied MFN tariff in Canada, 2006 and 2010 32 
III.4 Tariff lines where applied rates exceed bound rates, 2010 33 
III.5 Tariff remissions, 2007-10         35 
III.6 GST/HST and Provincial Sales Tax Rates, January 2011 36 III.7 Products subject to excise duties under the Excise Act, 2001 37 
III.8 Selected provincial tax rates, January 2011 38 
III.9 Products subject to import licensing requirements, 2011 42 III.10 Initiated anti-dumping investigations, 1 July 2006 to 30 June 2010 44 
III.11 Initiated countervailing investigations, 1 July 2006 to 30 June 2010 46 
III.12 SPS measures notified by Canada, 2007-10 52 III.13 Timeframes for reporting exports, 2011 55 
III.14 EDC finance, insurance, and guarantee programmes, 2010 61 
III.15 Amounts disbursed under TCS programmes, 2006/07-2009/10     66 III.16 Programmes notified to the WTO, 2006/07-07/08      69 
III.17 Selected tax credits and deductions from corporate income tax, 2006 and 2010   70 
III.18 Business Development Bank of Canada support, 2006-10     71 WT/TPR/S/246  Trade Policy Review
Page vi 
 
 
    Page  
 III.19 Value of government procurement in Canada, 2004-10     72 
III.20 Agreements covering gov ernment procurement      74 
III.21 Federal government procurement bidding processes      77 III.22 Key features of notified st ate-trading enterprises      79 
III.23 Federal Crown corporations, 31 July 2010       80 
III.24 Amendments to Canada's Competition Act, 2009      83 III.25 Competition Act enforcement, 31 March 2007-31 March 2010     85 
III.26 Agreements/arrangements covering competition issues, December 2010    86 
III.27 National IPR legislation and international agreements      88  
IV. TRADE POLICIES BY SECTOR 
 IV.1 Evolution of Canadian support and protection, 2006-09 100 
IV.2 Federal and provincial government support in the agriculture and agri-food sector 102 
IV.3 Indicators for se lected agricultural co mmodities, 2006-09 103 
IV.4 Selected indicators of the Canadian mining and energy industries, 2008-09 109 
IV.5 Selected indicators of the Canadian automotive industry 118 
IV.6 Assistance for the automobile in dustry, as at 21 February 2010  119 
IV.7 Selected indicators of the Canadi an textiles and apparel industries 121 
IV.8 Canadian's extraordinary financing framework, 2008-10 130 
IV.9 Market share for selected operations in Canada, 2006-10 132 
IV.10 Financial institutions operating in Canada, 2006 and 2010 133 IV.11 Approvals granted for selected operations in Canada, 2009-10 136 
IV.12 Incorporation requirements under federal legislation, 2011 137 
IV.13 Main areas of scheduled flight activity, 2009 141 IV.14 Domestic market share of the main Canadian  airlines (offered seat kilometres), 2007-10 141 
IV.15 Canadian-registered fleet by type, 2007-09 145 
 
APPENDIX TABLES 
 
I. ECONOMIC ENVIRONMENT 
 
AI.1 Merchandise exports and re-exports by group of products, 2005-10 161 
AI.2 Merchandise imports by group of products, 2005-10 163 
AI.3 Merchandise
 exports by trading partner, 2005-10 165 
AI.4 Merchandise imports by trading partner, 2005-10 167 AI.5 International trade in se rvices by category, 2005-10 169 
AI.6 Service exports by trading partner, 2005-09 170 
AI.7 Service imports by trading partner, 2005-09 171 AI.8 Canada's international investment position, 2005-09 172 
 
II. TRADE AND INVESTMENT REGIME  
AII.1 Constitutional division of legislative author ity between federal government and provinces 173 
AII.2 Selected foreign ownership restrictions by sector, 2010 174 AII.3 Involvement in the WTO dispute settlement mechanism, 2007-10 175 
AII.4 Notifications to the WTO, January 2006 to October 2010 177 
 Canada   WT/TPR/S/246
   Page vii 
 
 
    Page  
III. TRADE POLICIES AND PRACTICES BY MEASURE  
AIII.1 Summary analysis of MFN tariff, 2010 179 
AIII.2 Tariff averages for preferential agr eements in force as of February 2007 181 
AIII.3 Tariff averages for preferential agr eements implemented since February 2007 183 
AIII.4 Non-reciprocal tariff preferences granted by Canada 185 
AIII.5 Canadian participation in conformity assessment agreements, 2011 186 AIII.6 Laws, regulations, agreements and policie s directly affecting government procurement 
 in Canada  187 
AIII.7 Main tariff lines where AVEs could not be estimated, 2010 189 AIII.8 Main provincial and territorial tax credit programmes, 2010 193 
 
IV. TRADE POLICIES BY SECTOR  
AIV.1 MFN tariff quotas, fill rates, and their re spective administration methods, 2008 and 2009 195 
AIV.2 Main new or modified federal agricultural programmes, 2007-10 200 AIV.3 Provincial/Territorial Marketing Boards with powers to conduct price pooling or 
 single desk selling 203 
AIV.4 Electricity regulation in the Canadian provinces and territories 204 
AIV.5 Selected Federal Government Support Schemes for renewable energy 206 
AIV.6 MFN tariff by ISIC Rev.2 classification, 2010 208  Canada   W/TPR/S/246
   Page ix 
 
 
 SUMMARY 
1. Since its last review in 2007, Canada 
has taken steps to further improve the productivity and competitiveness of its economy, including through unilateral trade liberalization.  There are some exceptions to 
Canada's generally open trade and investment 
regimes, notably in agriculture and cultural sectors.  The domestic market remains fragmented by, inter alia , barriers to internal 
trade and regulatory complexity, despite the 
implementation of an Agreement on Internal 
Trade between the Fede ral and sub-federal 
governments. Moreover, the Federal and provincial governments are still involved in economic (including commercial) activities, particularly through Crown corporations, 
marketing boards, and foreign investment 
reviews. 
2. Driven by a strong and dynamic 
services sector (almost 80% of GDP), as well as rich endowments in natural resources, the 
Canadian economy is quite diversified.  The 
manufacturing sector still contributes about 12% to GDP. 
3. Thanks in part to its strong 
macroeconomic fundame ntals, Canada has 
weathered the global recession well, without 
resorting to trade measures to further protect domestic production.  The large stimulus package under the Economic Action Plan has also played its part.  The total value of stimulus measures in 2009/10 and 2010/11 
amounted to approxima tely Can$60 billion, 
with resources mainly targeted at infrastructure investments, and support for industries and communities.  The auto industry was one of the main beneficiaries.  An 
additional Can$200 billion was committed to 
Canada's financial system, but not fully drawn upon.  The economy experienced a relatively brief recession (three quarters), although merchandise exports were particularly affected.  By June 2010, the economy had 
virtually recovered the losses of GDP and 
employment experienced during the recession. 4. The Federal Government's long term 
economic strategy, Advantage Canada, sets out its priorities in developing a stronger, more dynamic and globally competitive economy by creating various tax, regulatory, infrastructure and other economic advantages.  A Global 
Commerce Strategy has also been developed 
to expand Canadian access to global markets through trade and investment.  The strategy has prompted the Government to pursue more vigorously trade, investment, and air services 
agreements.  Since its last TPR, new FTAs 
have entered into force with Peru and the European Free Trade Association (EFTA);  Canada has signed FTAs with Colombia, Jordan and Panama, and negotiations with several other countries and groupings, 
including the European Union, are underway.  
While Canada has affirmed that it sees the WTO as the cornerstone of its trade policy, its considerably expanded FTA agenda marks a 
departure with its past practice. 
5. Canada's regime for oversight and 
control of foreign direct investment (FDI) remains relatively complex, involving a net benefit test for major acquisitions of Canadian companies as well as sector-specific FDI 
restrictions in telecommunications, fishing, 
mining, air transport, cultural businesses, book publishing and distribution, periodical publishing, broadcasting, and film distribution.  There has been some liberalization of the FDI regime over the review period:  foreign 
ownership restrictions  on Canadian satellite 
carriers have been removed;  the general threshold that applies to investors from WTO Members for the net benefit review of direct acquisitions is to be increased to Can$1 billion 
(from Can$299 million in 2010);  and a 
Can$5 million review threshold for transport services, financial services, and uranium production has been eliminated.  On the other hand, new provisions in Canada's Investment Act enable the Minister of Industry to review 
any proposed or existing foreign investment 
on national security grounds;  this creates uncertainty for investors. WT/TPR/S/246  Trade Policy Review
Page x 
 
 
 6. A major development in Canada's 
import regime over the review period has been the elimination of customs duties on 1,374 tariff lines (manufacturing inputs, and machinery and equipment), in order to boost the competitiveness and productivity of the 
Canadian manufacturing sector.  This initiative 
has been launched as the sector continues to struggle due to, inter alia, enhanced global 
competition, partly related to the appreciation of the Canadian dollar.  As a result of 
unilateral liberalization, Canada's simple 
average applied MFN tariff decreased from 6.5% in 2006 to 5.4% in 2010.  However, tariffs remain very high on certain agricultural products, particularly dairy products with MFN out-of-quota tariffs averaging 237.3%, 
and tariff escalation is present in certain 
industries. 
7. There has been a drop in the number 
of contingency measures, nearly half of which still affect steel products.  Over the review 
period, Canada imposed 10 definitive anti-
dumping and 6 definitive countervailing duties.  It has never imposed any safeguard measures.  While import licensing requirements have remained largely 
unchanged, public consultations are ongoing 
with a view to expanding SPS-related licensing to a range of food products and ingredients.  This new regulatory initiative comes amidst the modernization of Canada's food safety legislation and procedures within 
the framework of the Food and Consumer 
Safety Action Plan.  Various specific trade concerns have been raised by WTO Members in the SPS and TBT committees, notably with respect to cheese and tobacco. 
8. A key feature of the Canadian 
economy, from a regulatory perspective, is the constitutional division of authority between the Federal Government and Canada's ten provinces and three territories.  While the federal government has formal responsibility 
for international trade, there are several areas 
where provinces and territories have regulatory autonomy.  These include agriculture;  natural resources;  electricity;  investment;  government procurement;  food 
safety;  technical regulations;  taxation;  and services.  The Agreement on Internal Trade (AIT) seeks to reduce and eliminate, to the extent possible, barriers to the free movement of persons, goods, services and investment 
within Canada.  There have been various 
amendments to the AIT over the review period, amongst others, to enhance labour mobility;  clarify which investment incentives are to be avoided;  reduce discriminatory SPS 
and TBT measures;  and strengthen dispute 
settlement procedures.  Most provinces have now harmonized their respective sales tax with the federal General Sales Tax. 
9. The 2007 Cabinet Directive on 
Streamlining Regulation marks a new 
initiative of regulatory reform.  The Directive 
promotes a "life-cycle" approach to new or amended regulations to ensure that they remain useful.  A similar approach has already been used for statutes governing federally 
regulated financial institutions, which lapse 
every five years, for review and updating as necessary.  The new Directive also commits regulatory agencies to applying cost-benefit analysis as part of the regulatory impact 
analysis statement (RIAS), and making the 
greatest possible use of international standards.  Further efforts are being made to improve the Canadian business environment by reducing unnecessary regulations (Red Tape Reduction Commission). 
10. The competition regime has been 
further improved over the review period.  However, a number of areas are still exempt from the Competition Act.  State-owned enterprises (Crown corporations), both at the 
federal and sub-fede ral levels, have 
monopolies or exclusive rights over certain economic activities, including the importation and sale of alcoholic beverages, the marketing and sale of certain freshwater fish and fish products, and the provision of certain types of 
mandatory insurance.  Some state-owned 
enterprises are exempt from federal and/or provincial taxes, regardless of the nature (commercial or non-commercial) of their Canada   W/TPR/S/246
   Page xi 
 
 
 activities.  The mandatory "single-desk" 
selling system of the Canadian Wheat Board, a state-trading enterprise, remains unchanged. 
11. A bilateral agreement with the 
United States has opened up, for the first time, sub-federal procurement opportunities in 
Canada to suppliers from the United States.  
The provincial procurement commitments have been implemented through the WTO Agreement on Government Procurement (GPA) and offered to other GPA members on 
the basis of mutually acceptable concessions.  
Under its "Buy Canada" policy, the Federal Government has launched a procurement programme for Canadian navy and coast guard ships, estimated at over Can$30 billion during the next 30 years.  In the area of intellectual 
property rights, Canada has, inter alia , taken 
steps to strengthen copyright protection.  The price review process for patented medicines has also been improved. 
12. A large array of measures and 
institutions at the national and 
provincial/territorial level support Canadian businesses.  In 2010, over 440 programmes provided financial support to Canadian companies;  around one-quarter of these may 
help companies to boost export sales.  In 
addition, there are well over one hundred programmes in support of Canada's agriculture and agri-food sector.  A range of trade finance and related support services are offered by state-owned enterprises, including Export 
Development Canada, the Canadian 
Commercial Corporation, and the Business Development Bank of Canada.  While they operate on commercial principles, their risk tolerance may exceed that of private sector 
institutions. 
13. Various tax breaks, some exclusively 
targeted at Canadian-controlled companies, are available to assist businesses.  Customs tariff remissions may be provided on an ad hoc basis.  Provincial sales tax and fuel tax 
exemptions or rebates are available to 
encourage certain commercial activities.  Excise tax reductions or exemptions are available to producers of locally produced beer 
and wine.  Federal and provincial incentives are available in areas such as film and TV production;  investment;  research and development;  mineral exploration;  and renewable energy. 
14. Canada is a major producer of 
minerals and metals;  it is the world's second largest producer of hydroelectric energy, third largest producer of natural gas, and sixth largest producer of oil.  Over the review 
period, the Federa l Government has 
streamlined the federal regulatory process for large natural resource projects by opening a Major Projects Management Office, which acts as a single window into the federal regulatory and approval system.  The Federal 
and some provincial Governments have 
launched a number of new or successor programmes to support the generation of renewable energies.  The measures include price, tax and R&D incentives, as well as 
minimum renewable fuel content rules.  
Ontario's Feed-in-Tariff programme also includes local content requirements. 
15. In the market for mobile telephone 
services, the Government has opened the door 
for more competition by setting aside radio 
spectrum for new market entrants.  This step was taken as a result of concerns about relatively high prices and comparatively low penetration of wireless services in Canada, possibly due to weak competition in this 
market segment.  Canada has also initiated 
public consultations on its remaining FDI restrictions on facilities-based telecom carriers intended to foster more competition. 
16. Canada's federal re gime on financial 
services has been strengthened in response to 
the global financial tu rmoil.  Provinces and 
territories still retain considerable regulatory authority in their respective jurisdictions, particularly with respect to securities trading and insurance.  A new framework for federal 
incorporation of cooperative credit institutions 
is likely to give rise to further consolidation of the Canadian financial services market.  The WT/TPR/S/246  Trade Policy Review
Page xii 
 
 
 federal regime on insurance services has been 
clarified;  foreign insurers no longer need federal approval to insure Canadian risks from a head office or a branch outside Canada.  A framework for federal incorporation of providers of marine insurance has also been 
put in place;  as of 1 January 2010, foreign 
insurers are no longer allowed to "insure in Canada" marine risks without prior authorization from the Office of the Superintendent of Financial Institutions. 
17. The Federal Government has also 
taken steps to strengthen the competitiveness of the Canadian maritime industry by eliminating a 25% tariff on imported ships;  and assisting investments in Canadian port infrastructure within the framework of the 
Economic Action Plan and other initiatives.  
The Government has launched new programmes in support of research and development by the aircraft industry.  Under its "Blue Sky" policy of 2006, the Federal 
Government has negotiated bilateral air 
services agreements with over 50 countries.  Canada's most comprehensive air transport agreement was signed with the European Union in 2009. 
18. Canada has a dualistic agricultural 
sector as a matter of policy.  It is a leading exporter of commodities, such as wheat, coarse grains, oilseeds (and related products), pork, beef and live cattle, which generally receive little government assistance and 
protection.  This contrasts with mainly 
inward-looking "supply-managed" subsectors (dairy and poultry, and related products), which are shielded from market forces through tariff quotas (with very high out-of-quota 
tariffs), export subsidies, production quotas, 
and other measures. 19. At the core of Canada's new 
agricultural policy framework (Growing Forward), adopted since its last Review, is a suite of new or modified "business risk management" programmes which provide Canadian agricultural producers with a 
complex income safety net;  AgriStability's 
payments partially compensate for farm income losses;  AgriInvest subsidizes savings by farmers;  AgriInsurance subsidizes crop insurance;  and AgriRecovery provides ad hoc 
financial assistance in the event of natural 
disasters.  Some of these programmes overlap with provincial programmes. 
20. Overall, Canada ha s made substantial 
progress over the past two decades in reforming its agricultural sector, as producers 
have become less dependent on border 
measures, and government support as a source of revenue.  This trend has continued in 2007-09, mainly because of higher world market prices for agricultural commodities.  
However, under the Growing Forward 
framework, the supply management system remains a pillar of Canadian agricultural policy.  There is scope for reform of Canada's highly protected dairy and other supply-
managed subsectors to make them more 
market-oriented.