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WTO Trade Policy Review of Canada
June 23, 2011

U.S. Statement by David Shark,
Deputy Permanent Representative to the World Trade Organization

As Delivered

June 20. 2011

Thank you, Mr. Chairman.

We would like to warmly welcome Director General Robert Ready, Ambassador John Gero, and the Canadian delegation to the ninth review of the trade policies and practices of Canada. The United States offers its compliments to Canada for its thoughtful and thorough submission to the Secretariat. As always, we thank the Secretariat for its valuable report on the recent developments in Canada’s economic and trade policy. We appreciate Canada’s written responses to our detailed questions and comments, which, when we have had a chance to review them, will further enhance our understanding of the future direction of Canadian trade policy. Finally, we would like to thank the discussant, Ambassador John Adank of New Zealand, for his insightful remarks and for his help in making Canada’s Trade Policy Review (TPR) a productive effort.

The relationship between the United States and Canada remains among the closest and most extensive in the world. It is reflected in the enormous volume of bilateral trade–the equivalent of $1.4 billion a day in goods. And Canada and the United States have one of the world’s largest investment relationships.

Canada is the United States’ largest trading partner and export market. Canada is the leading export market for 35 of the 50 U.S. states and is a larger market for U.S. goods than all 27 countries of the European Union. U.S. exports to Canada in 2010 grew by $46 billion, larger than the growth to China, Japan, the United Kingdom and Germany combined.

As the Canadian government points out, trade relations between our two countries are supported by the disciplines of the WTO and the North American Free Trade Agreement (NAFTA). The NAFTA is now in its 18th year and the elimination of tariffs as set out in this agreement was completed in 2008. Since the implementation of NAFTA in 1994, total two-way merchandise trade between the United States and Canada has grown by more than 265%. The NAFTA has also proved instrumental in helping our two countries resolve long-standing bilateral irritants and liberalize rules in several areas, including agriculture, services, energy, financial services, investment, and government procurement. In short, the NAFTA, and the U.S.-Canada Free Trade Agreement before it, reflects the strength and long history of close partnership and economic interdependence between our nations.

This year the United States and Canada marked the first anniversary of the U.S.-Canada Agreement on Government Procurement. For years, the United States and other countries sought access to Canadian provincial procurement markets. Under this bilateral Agreement, the United States and Canada were able to deepen their trade relationship by negotiating a “win-win” deal creating new permanent access to our respective procurement markets. Canada agreed to provide U.S. suppliers with access to procurement of all of its provinces and two of its territories under the World Trade Organization’s Government Procurement Agreement (GPA), and the U.S. gave Canada access to the procurement of the 37 states that it covers under the GPA. Canada’s coverage for the first time of its provinces under the GPA has contributed to the forward momentum of the revision of the GPA. In addition, through September of this year, U.S. suppliers have access to additional construction projects undertaken by Canadian sub-central entities, and Canadian suppliers have been able to compete for projects under several programs funded by the American Recovery and Reinvestment Act of 2009. Our shared success on procurement with the help of the GPA serves as a strong example of how we can cooperate on other common challenges.

We are pleased that the United States and Canada implemented the Softwood Lumber Agreement in October 2006 which ended a number of pending dispute settlement cases and offered an opportunity to work together on a long-term solution to trade in softwood lumber. We are continuing our efforts to resolve matters that arise under this Agreement.

The United States and Canadian governments have worked closely and successfully together internationally to advance economic opportunity and the rule of law in the field of intellectual property. Our productive partnership has included developing new approaches to preventing piracy and counterfeiting. Fourteen years ago, Canada played a critical role on the international level in helping to achieve agreement in the World Intellectual Property Organization on the WIPO Copyright Treaty and the WIPO Performances and Phonograms Treaty – agreements that have been so critical to shaping the global response to internet piracy that we have come to know them as the WIPO “Internet Treaties.” Our cooperation in WTO consultations regarding China’s protection and enforcement of intellectual property rights (IPR), and in the North American Leaders’ Summit, are both important examples of the power of our partnership to secure shared interests.

We welcome the Canadian government’s recent reaffirmation of its commitment to reform its copyright regime. Going back 14 years, multiple Canadian governments have sought to modernize Canada’s copyright laws to meet the challenges of the digital era based on internationally recognized norms. We hope 2011 will be the year this goal is achieved. While we do not yet know precisely what the new reform will look like, we are encouraged by the Government’s commitment to develop meaningful legislation that will be consistent with international standards.

We are also negotiating partners on the Anti-Counterfeiting Trade Agreement (ACTA). ACTA establishes a state-of-the-art international framework that provides a model for effectively combating global proliferation of commercial-scale counterfeiting and piracy in the 21st century. It is designed to deepen international cooperation, promote strong enforcement practices, including at our borders, and ultimately sustain North American jobs in innovative and creative industries.

Canada, however, is also a trans-shipment route for counterfeit goods into the United States. This is due primarily to the fact that Canadian border authorities lack ex officio authority (the authority to target, search and seize counterfeit goods on their own initiative). The Canadian Border Services Agency needs this authority, which its counterparts have long had in the United States and other countries. ACTA, to which Canada is a negotiating party, would require signatories to grant their border authorities ex officio authority. We look forward to Canada enacting legislation to provide its border agents with this authority.

We hope this Trade Policy Review can help draw Canada’s attention to those areas where it can further liberalize its regime and enhance its global and regional competitiveness. In some key sectors, unfortunately, we have noted little-to-no meaningful change in Canada’s key sectors since Canada’s last Trade Policy Review in 2007.

Despite our successful cooperation on certain aspects of IPR protection, significant weaknesses in Canada’s IPR regime continue to concern us. We hope to see the fulfillment of the Canadian government’s efforts to pass meaningful copyright reform legislation.

We also remain concerned about Canada’s telecommunications and cable TV restrictions, its overly broad investment screening criteria, and its discriminatory approach to audiovisual services, all of which continue to create significant trade barriers for U.S. investors and exporters. For example, Canada’s foreign equity limits of 47 percent in its telecommunications sector, unprecedented for a developed market, are considered a major impediment by U.S. industry. Although Canada has discussed liberalization for the past ten years, telecom liberalization remains controversial, especially now that telecom networks are becoming AV distribution platforms; a proceeding now underway to consider further liberalization specifically excludes any video platforms. Canada has been unwilling to make any commitments in other video platforms (cable, satellite TV) in either the WTO or FTAs, and yet access to these “converged” platforms is increasingly important to global trade interests, and is increasingly what new networks are designed to offer.

Canada’s rejection in November 2010 of Australia’s BHP Billiton bid to take over Saskatchewan’s Potash Corporation raised questions regarding Canada’s historically welcoming attitude toward foreign investment. We trust that Canada’s decision in that case reflects no more than a rigorous application of its domestic law and that it will continue to demonstrate openness to foreign investment in the future.

Trade in agriculture and agri-food products comprise an important component of our vibrant and mutually beneficial bilateral trading relationship. In recent years, Canada has implemented a series of revisions to its government dairy programs, standards, and import procedures which have raised serious concerns among the U.S. dairy industry. We find this trend troubling and hope that Canada will evaluate its dairy as well as its overall agriculture policy to ensure that agricultural trade between our two great nations can flourish.

With respect to aerospace financing provided by the Canadian federal and or provincial governments, the United States reiterates its position that any launch aid associated with the C-Series aircraft must be consistent with Canada’s international trade obligations.

We also note that there appears to be an issue with respect to the federal government obtaining complete and timely information from the provincial governments for the purposes of meeting Canada’s WTO notification obligations in the technical barriers to trade and subsidies contexts. We would ask Canada to examine these issues and address them appropriately.

We appreciate Canada’s strong commitment to the WTO. We note that in its Report, the Canadian government states that it sees its participation in the Doha negotiations as essential. Canada emphasizes its commitment to the successful conclusion of the Doha Round, underlining its view that “achieving an ambitious and balanced agreement is in the interest of all Members, and that a positive outcome for Doha is especially necessary in these difficult economic times.” The United States welcomes Canada’s commitment to the Round, a commitment that we share. We appreciate Canada’s active participation in the difficult task facing Members in assessing next steps in the Round, and trying to determine what is achievable in the coming months. We would also like to take this opportunity to express appreciation for Canada’s contributions to the work of the WTO through the service of Canada’s Ambassador, John Gero, as Chairman of the General Council in 2010.

In the spirit of friendship and frankness that characterizes relations between our two great countries, the United States looks forward to learning more about Canada’s trade policy regime and practices during this 2011 Trade Policy Review. And we wish Canada a successful TPR.

Thank you.