TRADE POLICY REVIEW OF CANADA
March 12, 2003
Statement of U.S. Representative

Thank you, Madame Chair. We offer our congratulations on your new role . On behalf of the United States, I welcome this opportunity to participate in Canada's Trade Policy Review and want to commend the Secretariat's report, which provided us a comprehensive review of recent developments in Canada's trade policy. We wish to thank the discussant for his interesting and thought provoking remarks and we appreciate the Canadian Government's participation today, both from Ottawa and Geneva, and their openness in preparing its report to this body, as well as the time and effort that went into it.

We have provided detailed questions and comments on Canada's trade regime for this body to consider, and we look forward to receiving responses from the Canadian delegation, which will further enhance our understanding of Canada's trade policy and its future direction.

Madame Chair, more than 40 percent of Canada's gross domestic product can be attributed to foreign trade. As a major beneficiary of an open global trading system, Canada, like the United States, has a large stake in furthering liberalization of world trade, and shares many of our priorities. We welcome in particular Canada's participation in the current round of WTO negotiations on agriculture and services and we appreciate our partnership with them on many issues.

Canada and the United States have an especially close relationship. Roughly $1.4 billion worth of goods and services cross our border every day, representing the largest 2-way trading partnership in the world. The North American Free Trade Agreement, and the US-Canada Free Trade Agreement before it, reflect the strength and long history of close partnership and economic interdependence between our nations. Despite the challenging economic and security situation since September 2001, trade across the United States' and Canada's border has remained vibrant, even as our two governments work together to enhance border security.

The United States' trade deficit with Canada was $49.8 billion in 2002, a decrease of $3.1 billion from $52.8 billion in 2001. U.S. goods exports in 2002 were $160.8 billion, down 1.6 percent from the previous year. Corresponding U.S. imports from Canada were $210.6 billion, down 2.6 percent. Canada is currently the largest export market for U.S. goods.

U.S. exports of private commercial services (i.e., excluding military and government) to Canada were $24.3 billion in 2001 (latest data available), and U.S. imports were $18.1 billion. Sales of services in Canada by majority U.S.-owned affiliates were $44.3 billion in 2000 (latest data available), while sales of services in the United States by majority Canada-owned firms were $51.3 billion.

The stock of U.S. foreign direct investment (FDI) in Canada in 2001 was $139.0 billion, up from $128.8 billion in 2000. U.S. FDI in Canada is concentrated largely in manufacturing, finance and petroleum sectors.

Madame Chair, good and active trading partners not surprisingly from time to time have disagreements with each other on some aspects of this trade. Members of this body are aware that Canada and the United States are engaged in discussions within the WTO on softwood lumber trade. The United States is very encouraged by recent bilateral work to find a negotiated settlement. We look forward to continuing the productive dialog of recent weeks with Canada on this issue, and it is in this vein that we will ask questions of Canada during this session on its subsidy programs and its commitments under Article 25 of the WTO Agreement on Subsidies and Countervailing measures. Also pertaining to Article 25 of the Subsidies Agreement, we are interested in an explanation of Canada's requirements for commercial fisheries, specifically how factors such as oversupply are regarded in support given to commercial fishers.

The United States is also concerned with practices of the Canadian Wheat Board (CWB). The CWB continues to enjoy government-sanctioned monopoly status as well as other privileges that restrict competition. The United States is committed to seek reform of state trading enterprises through the adoption of new rules in the WTO agriculture negotiations, which are part of the Doha Development Agenda launched in November 2001. As a vital trading partner, we hope that Canada will employ only the least trade-restrictive State Trading Enterprise measures, and in this Trade Policy Review session, we will seek to learn more on the CWB's accounting practices.

The United States is also interested in Canadian requirements for foods fortified with vitamins and minerals. Some Canadian requirements have created a costly burden for American food manufacturers who export to Canada. Health Canada restricts marketing of breakfast cereals and other products, such as orange juice, that are fortified with vitamins and/or minerals at certain levels in the United States. The current regulatory regime requires that calcium-enhanced orange juice be treated as a drug, for example, and forces manufacturers to label vitamin and mineral fortified breakfast cereals as "meal replacements." We will seek further clarification on Temporary Marketing Authorization Letters and the consistency and transparency in this process.

We agree with Canada's assessment that, looking to the future, management of the Canada-US trade relationship needs to take into account our increasing economic integration. The Canada-US Smart Border Declaration is an impressive example of recent efforts mutually to reinforce public and economic security. As the Government of Canada indicated in its report, Canada and the United States signed the Smart Border Declaration on December 12, 2001 and began implementing its action plan to build a border for the 21st century. The initiative, built upon previous cooperative efforts between our two countries, including the Canada-US Partnership, is intended to enhance the security of our shared border while facilitating the legitimate flow of people and commerce. The action plan has four pillars: the free flow of people, the free flow of goods, secure infrastructure, and coordination and information-sharing in the pursuit of these objectives.

The U.S. and Canada have worked closely in several other trade enhancing and outreach efforts. This has included efforts through APEC and the OECD to ensure effective support for the Doha Development Agenda. The U.S. would like to recognize and support Canada's position of increased cooperation between the WTO and other international intergovernmental organizations and we share Canada's support of capacity building.

Madame Chair, Canada is one of the most dynamic and open economies in the world and among the world's strongest and most dedicated proponents of free trade. As one of Canada's closest friends and allies, as well as its largest trading partner, we share a strong common interest in Canada's continued growth and prosperity. It is with this perspective in mind that we believe Canada will take our comments and questions in the constructive spirit in which they are intended. We hope this Trade Policy Review will help draw Canada's attention to those areas where it can further liberalize its regime or align itself with emerging global positions.
Thank you.