Canada Summary
Though Canada is one of the largest and richest countries in the world, its relatively small population demands that it look beyond its own borders for the bulk of its economic transactions. Canada's prosperity is highly correlated with its success as a trading nation: an estimated one-fourth jobs in Canada is linked to goods or services which are exported to global markets. As an export-oriented economy, Canada maintains a fundamental interest in the continued expansion and modernization of a multilateral, transparent, rules-based trading system.
Agriculture
Canada is the world's third largest exporter of agri-food products, after the United States and the European Union. As the most open of the G-7 economies, Canada's primary negotiating objective is to level the international playing field. Canada is seeking the elimination of all export subsidies as quickly as possible; the elimination or substantial reduction of trade-distorting domestic support such as price supports and ceilings; substantial improvements in market access for all agricultural and food products; as well as strict sanitary and phytosanitary (SPS) standards that rely exclusively on objective scientific data. It is an active member of the Cairns Group - a collection of 16 medium sized net-exports of agricultural goods, who share this negotiating position. [1]
In March 2003, the United States initiated a WTO panel to examine whether the Canadian Wheat Board (CWB) complies with WTO law. This is the ninth time the US has initiated investigations of the CWB, a state trading enterprise marketing Canadian grain both domestically and abroad as well as providing government guaranteed payments to farmers. In April 2004, The World Trade Organization ruled that the Canadian Wheat Board is a legal trading entity and doesn't harm markets, undermining a U.S. attempt to dismantle the body. Domestically, however, the US Commerce Department has assigned a provisional 3.94 percent countervailing duty on Canadian durum and hard red spring wheat imports. [2]
Canada-US Trade Relations: The Softwood Lumber Dispute
Canada's principal trading partner is the United States, accounting for roughly 82% of Canadian exports and some 71% of its imports in 2001. [3] In recent years, however, the two nations have been engaged in a dispute concerning the lumber trade. The dispute is centered around stumpage fees: set amounts charged to companies that harvest timber on public lands. The US holds that Canadian stumpage fees are too low, making them de facto subsidies. In August 2001, the Bush administration responded by levying a countervailing duty on imports of Canadian softwood (easy-to-saw wood such as pine or spruce, used in building) at a level of 18.8%. In addition, the US imposed an 8.4% anti-dumping duty on the imports, two months thereafter. A NAFTA decision levied in August 2003, however, ruled that US anti-dumping calculations were flawed because they are based on US prices, and do not consider Canadian market conditions. Two weeks later a WTO panel ruled similarly that the US calculations were exaggerated and, further, that the financial benefit accrued to Canadian producers do not constitute a subsidy, and thus do not justify current US duties. The US has appealed this panel ruling, and no agreement has yet been reached between the two nations. While some Canadian lumber groups want to escalate the conflict, others recognize that the fight will be costly and should be avoided by accommodating US demands. [4]
Development Goals
Canada maintains that the Doha Development Agenda holds the promise of benefits for all countries - developed and developing. It believes that active participation in the multilateral trading system can help reduce poverty. Furthermore, Canada recognizes that developing countries comprise 80% of the WTO's membership and that unless the concerns of these nations are addressed, progress within the WTO will be extremely difficult. In the context of the Doha round, Canada supports the development of policies geared toward integrating developing economies into the multilateral trading system.
A central part of Canada's approach to trade and development is the delivery of needs-based, coordinated, trade-related technical assistance and capacity-building programs. These programs aim to help developing countries negotiate effectively, to mainstream trade into plans for national development, and to build institutional capacity to take advantage of emerging trade opportunities in order to achieve poverty reduction. Canada committed $522 million to such efforts between January 2000 to July 2002 with a particular focus on providing technical assistance to African nations. Additionally, in April 2003, Canada tabled a proposal to enhance transparency of special and differential (S&D) treatment of developing countries for Sanitary and Phytosanitary Measures in an effort to address developing countries' difficulties in keeping up and conforming to SPS notifications. [5]
Most significant among its development-focused actions in the past year, was the Canadian government's decision to amend its patent laws to allow generic pharmaceutical companies to produce and export patent-protected drugs to countries unable to manufacture their own. The Canadian government's announcement followed a WTO General Council decision in August 2003 to relax restrictions in the TRIPS agreement on using compulsory licensing to produce generic medicines in one country for export to another. The Canadian Pharmaceutical Act makes Canada the first country to put the WTO decision into operation. [6] See also the GTN Intellectual Property page.
Investment
Canada also proposes further action on investment policy. The stock of Canadian direct investment abroad increased over four-fold from $98.4 billion in 1990 to $432 billion in 2002. Over the same period, the stock of foreign direct investment in Canada more than doubled, from $131 billion to $349 billion. The decisive defeat of the Multilateral Agreement on Investment has led Canada to explore other avenues to achieve a coordinated investment policy, such as bilateral initiatives. Since 1989, Canada has concluded 22 bilateral foreign investment protection and promotion agreements (FIPAs), bringing into force a framework of legally binding rules to protect Canada's foreign investments in specific countries.
Trade in Services
The service sector is leading Canada's transformation to a knowledge-based economy. As a significant exporter of services, Canada relies on multilateral, legally enforceable rules on trade in services. Canada is pursuing multilateral, legally enforceable rules that will allow increased access to foreign markets for Canadian services firms. It is working collectively with other WTO members to further enhance the transparency and clarity of the General Agreement on Trade in Services (GATS) in order to make it more user-friendly. On March 31, 2001, Canada made public the full text of the initial conditional offer it presented to its trading partners in the GATS negotiations. Canada was the first country to commit to making its offer public. Canada's initial offer contains the proposed guarantees of market access and non-discrimination that it would offer to other countries in exchange for greater access to foreign services markets. [7]
Competition
Canada supports the establishment of a multilateral framework on competition policy, though there was no agreement reached at Cancun to pursue negotiations. Canada believes that a framework for competition policy will ensure that the gains from trade and investment liberalization are not undermined by the anti-competitive behavior of private actors. By establishing a coherent set of principles for sound competition policy among all members, a multilateral agreement would ensure a competitive environment and a more transparent and predictable climate for foreign trade and investment. Canada holds that an agreement would also contribute to the important objective of building institutional capacity in developing countries.
Environment and Labor Rights
Canada's negotiating position includes a focus on environmental, labor and human rights issues. While it acknowledges that trade measures should not be used for non-trade ends, the Canadian government wants to integrate the emerging international consensus on core labor standards and multilateral environmental agreements into the World Trade Organization. Specifically, it seeks to include an environmental impact assessment as part of the trade policy review mechanism, the reduction of environmentally unfriendly domestic subsidies, and better disciplines for Process and Production Methods (PPMs) and observation of trade measures in Multilateral Environmental Agreements (MEAs). Similarly, the Canadian government urges the WTO to adopt core labor standards, grant the International Labor Organization (ILO) observer status and integrate labor issues into the Trade Policy Review Mechanism (TPRM).
Looking Ahead
Canada will continue to dedicate its efforts to managing its trade relationship with the United States, with a view to ensuring cooperation on trade policy issues of mutual interest and the resolution of bilateral trade issues. There is no doubt that NAFTA, which marked its 10th anniversary on January 1, 2004, has served Canada exceedingly well, with regard to expanding its trade and investment opportunities with the United States. However, present disputes between the two countries represent remaining stumbling blocks within Canada's most important trade relationship.
Canada will remain committed to seeking an ambitious outcome in the current World Trade Organization negotiations, as outlined by the Doha Development Agenda. By setting an example of openness to trade, Canada is well positioned to pursue its main objectives of reform in agricultural trade, increased market access, and strengthened rules governing trade.
Last updated April 2004.
[1] Canada Position on Agriculture
[2] "US Files WTO Case Against Canadian Wheat Policy," Dow Jones, 6 March 2003
[3] WTO Trade Policy Review - Canada 2002
[4] For more info on this dispute see: Canada DFAIT Softwood Lumber Page
[5] DFAIT - Canada's Poition on Trade and development
[6] "Canadian Pharmaceutical Act Vigorously Discussed," BRIDGES Trade News Digest, 10 March 2004
[7] Canada's initial proposal in WTO Services Negotiations (March 2001)
Statistics
Links
|
